TWENTYFOUR SELECT MONTHLY INCOME FUND LIMITED
Interim Management Report and Unaudited Condensed Interim
Financial Statements
For the period from 1 October 2019 to 31 March
2020
LEI: 549300P9Q5O2B3RDNF78
(Classified Regulated Information, under DTR 6 Annex 1 section
1.2)
The Directors of TwentyFour Select Monthly Income Fund Limited
(the “Company”) announce the results for the period ended
31 March 2020. The Report will
shortly be available via the Company's Portfolio Manager’s
website www.twentyfouram.com and will shortly be available for
inspection online at www.morningstar.co.uk/uk/NSM
SUMMARY INFORMATION
The Company
TwentyFour Select Monthly Income Fund Limited (the “Company”) was
incorporated with limited liability in Guernsey, as a closed-ended investment company
on 12 February 2014. The Company’s
Shares were listed with a Premium Listing on the Official List of
the UK Listing Authority and admitted to trading on the Main Market
of the London Stock Exchange (“LSE”) on 10
March 2014.
Investment Objective and Investment Policy
The Company’s investment objective is to generate attractive risk
adjusted returns, principally through income distributions.
The Company’s investment policy is to invest in a diversified
portfolio of credit securities.
The portfolio can be comprised of any category of credit
security, including, without prejudice to the generality of the
foregoing, bank capital, corporate bonds, high yield bonds,
leveraged loans, payment-in kind notes and asset backed securities.
The portfolio will include securities of a less liquid nature. The
portfolio will be dynamically managed by TwentyFour Asset
Management LLP (the “Portfolio Manager”) and, in particular, will
not be subject to any geographical restrictions.
The Company maintains a portfolio diversified by issuer; the
portfolio comprises at least 50 Credit Securities. No more than 5%
of the portfolio value will be invested in any single Credit
Security or issuer of Credit Securities, tested at the time of
making or adding to an investment in the relevant Credit Security.
Uninvested cash, surplus capital or assets may be invested on a
temporary basis in:
- Cash or cash equivalents, money market instruments, bonds,
commercial paper or other debt obligations with banks or other
counterparties having a “single A” or higher credit rating as
determined by any internationally recognised rating agency which,
may or may not be registered in the EU; and
- Any “government and public securities” as defined for the
purposes of the Financial Conduct Authority (the “FCA”) Rules.
Efficient portfolio management techniques are employed by the
Company, including currency and interest rate hedging and the use
of derivatives to manage key risks such as interest rate
sensitivity and to mitigate market volatility. The Company’s
currency hedging policy will only be used for efficient portfolio
management and not to attempt to enhance investment returns.
The Company will not employ gearing or derivatives for
investment purposes. The Company may use borrowing for short-term
liquidity purposes, which could be achieved through arranging a
loan facility or other types of collateralised borrowing
instruments including repurchase transactions and stock lending.
The Articles restrict the borrowings of the Company to 10% of the
Company’s Net Asset Value (“NAV”) at the time of drawdown.
At launch the Company had a target net total return on the
original issue price of between 8% and 10% per annum. This
comprised a target dividend payment of 6p and a target capital
return of 2p-4p, both based on the original issue amount of 100p.
There is no guarantee that this can or will be achieved,
particularly given the current low interest rate environment. As
such the total return generated has been lower than initially
anticipated, although the 6p dividend per annum has consistently
been met and the Portfolio Manager is confident, based on the
current outlook, that this dividend target will be maintained in
the current year. Refer to note 19 to the Financial Statements for
details of the Company’s dividend policy.
In accordance with the Listing Rules, the Company can only make
a material change to its investment policy with the approval of its
Shareholders by Ordinary Resolution.
Shareholder Information
Maitland Institutional Services Limited (“Maitland”) is responsible
for calculating the NAV per share of the Company. Maitland
delegated this responsibility to Northern Trust International Fund
Administration Services (Guernsey)
Limited (the “Administrator”). However, Maitland still performs an
oversight function. The unaudited NAV per Ordinary Share will be
calculated as at the close of business on every Wednesday that is
also a business day and the last business day of every month and
will be announced by a Regulatory Information Service the following
business day.
Financial Highlights
|
|
|
|
For
the period from 01.10.19 to 31.03.20 |
|
For
the year ended 30.09.19 |
For
the period from 01.10.18 to 31.03.19 |
|
|
|
|
|
|
|
|
| Total Net
Assets |
|
|
£149,206,696 |
|
£167,827,286 |
£166,654,883 |
|
|
|
|
|
|
|
|
| Net Asset
Value per Share |
|
|
72.40p |
|
90.63p |
90.00p |
|
|
|
|
|
|
|
|
| Share
price |
|
|
78.00p |
|
93.00p |
91.40p |
|
|
|
|
|
|
|
|
| Premium to
NAV |
|
|
7.73% |
|
2.62% |
1.56% |
|
|
|
|
|
|
|
|
| Dividends
declared during the period/year |
|
|
3.00p |
|
6.34p |
3.00p |
|
|
|
|
|
|
|
|
| Dividends
paid during the period/year |
|
|
3.34p |
|
6.55p |
3.55p |
As at 20 May 2020, the premium had
moved to 5.99%. The estimated NAV per share and share price stood
at 76.61p and 81.20p, respectively.
Ongoing Charges
Ongoing charges for the six month period ended have been calculated
in accordance with the Association of Investment Companies (the
"AIC") recommended methodology. The ongoing charges for the six
month period ended 31 March 2020 were
1.09% (31 March 2019: 1.13%) on an
annualised basis.
CHAIRPERSON’S STATEMENT
For the period from 1 October 2019 to
31 March 2020
Not in living memory have risk assets seen such a dramatic
sell-off, over such a short period of time, as they did in
March 2020. This was obviously the
dominant factor for the six-month period ended 31 March 2020. In the proceeding five months,
market sentiment was driven by a strong technical backdrop, driving
credit spreads ever tighter as yield became an ever more scarce
commodity. The Portfolio Managers’ main concern going into 2020 was
reinvestment risk, with approximately 9% of the underlying Company
assets expected to either redeem in or amortise over the year
ahead.
This all changed in early March, when it became clear that the
COVID-19 epidemic had spread beyond China and new epicentres had formed in
South Korea and Italy; the realisation that the world was
facing a pandemic shock immediately reverberated through markets.
Liquidity evaporated from credit markets and prices gapped lower as
indiscriminate selling from ETFs sparked a wave of forced selling
from leveraged accounts that breached margin calls. The result was
two to three weeks of a self-fulfilling spiral of falling
prices.
The impact on the Company was considerable given many leveraged
accounts are invested in AT1 and CLOs, two sectors to which the
Company is exposed for relative value reasons. The Company showed a
17.41% decline over the six month period to 31 March 2020, with -20.94% derived from March
alone. CLOs (26% average allocation over the period) contributed to
10.4% of the total decline and AT1s (27% average allocation over
the period) accounted for 3.4% of the total decline over the
period.
Despite the dramatic change in asset valuations, the Portfolio
Managers’ concerns regarding reinvestment risk have been alleviated
and market opportunities have become more abundant now than at any
time since the inception of the Company. As a result of this, 20.9
million new shares were issued (raising £15.2m for the Company)
before period end, and a further 2.2 million between period end and
the date of this report, both at a premium to the NAV, as investors
have been attracted by the opportunity of the Company’s gross
expected yield increasing to over 13%, the highest level it has
been.
As regards the impact on the business, the UK government has
implemented unprecedented measures to restrict the possibility of
transmission of the COVID-19 virus by limiting personal contact and
international travel. The impact on the portfolio management team
has been relatively muted, with “work from home” (“WFH”) systems
all operating very well and investment committee meetings taking
place virtually, twice a week, rather than monthly. Trading has
also operated smoothly, although with most of the investment bank
trading desks also working from home, liquidity has been further
negatively impacted. As regards operational resilience, the
functioning of front and back office systems have been tested under
Business Continuity Plans and have performed well. Both the
Portfolio Manager and the Administrator as well as other service
providers continue to meet all business requirements.
Whilst the ultimate scope and duration of the COVID-19 measures
are currently unclear, they are likely to have a severe impact on
the UK Economy, which the government and the Bank of England are attempting to offset with both
traditional and unconventional fiscal and monetary policy measures.
The assets in the portfolio will undoubtedly be impacted by this,
although many sectors have probably already seen the highs, in
terms of spreads, and have begun the recovery process, with many
banks and insurance bonds having recovered 50-60% of the price
moves already. As rating agencies begin to analyse corporates for
the new economic reality, ratings will ultimately be cut, but it’s
too early currently to say what the impact will have, but high
yields in particular will probably lag the recovery, and this
includes CLOs, which holds high yield rated leveraged loans. The
structured nature of the CLOs will mean that further analysis is
required to gauge how each deal and tranche will ultimately
perform, but the Portfolio Manager does not currently expect any
losses on the bonds held by the Company.
The Company experienced a challenging final month of the period,
which resulted in a -17.41% total return for the period, with all
the decline occurring in March. The Portfolio Managers utilised
some of the new share inflow to enhance the overall credit quality
of the portfolio, extend the credit spread duration and increase
the overall yield, which should be seen as an attractive medium to
long term strategy for investors; particularly as the outlook for
rates is likely to keep yield as a scarce commodity over the long
term.
The Company was not exempt from the market turmoil, the share
price briefly trading at a 35% discount to NAV. This share price
discount was brief and corrected as additional information on the
market was provided by the Portfolio Manager, an updated NAV was
published and buyers of the stock returned. The return of the share
price premium and ongoing demand for the shares, allowed the
issuance of 20% of the issued share capital at a premium of 3% to
NAV. The Board also considered buying back shares when the shares
recently traded, albeit briefly, at a discount.
In addition to the usual communication activities, the Company
broker and Portfolio Manager were active in providing investors
with updates on the market and portfolio during the recent market
disruptions. This included various investor meetings or calls, a
webinar and various written comments.
The Company's ability to pay, and the applicability of paying,
the ongoing dividend is reviewed by a Committee of the Board at a
monthly meeting when the Company’s solvency and cash available to
meet its liabilities are considered. In addition, the Portfolio
Manager analyses future income and sustainability of the dividend
and this is reviewed by the Board on a quarterly basis.
On behalf of the Board, I would like to thank the shareholders
for their continued support.
Claire Whittet
Chair
26 May 2020
PORTFOLIO MANAGER’S REPORT
For the period from 1 October 2019 to
31 March 2020
The last three months of 2019 produced very strong performance
for credit assets as the two main geopolitical risks that dominated
investor thinking last year, namely the trade war between the US
and China and the Brexit
negotiations, both de-escalated as the year-end approached.
The period actually started on an uncertain footing as tensions
increased between the US and China, with the Trump administration imposing
more tariffs on the Chinese economy before the 13th round of trade
talks. However, as the quarter progressed, confidence grew
that a ‘phase one’ agreement could be reached and this led to
spreads tightening in credit and US equity indices reaching new
all-time highs.
Tensions elsewhere still remained, however, with the US imposing
$7.5bn of tariffs on the European
Union, following a WTO ruling of unfair state subsidies given to
Airbus Industries. In addition, US ISM manufacturing data hit a
10-year low and the IMF cut global growth forecasts. This led to
high expectations of a cut to the Fed Funds rate, which the FOMC
delivered on 30 October 2020. A
Turkish offensive in Syria,
attacking the Kurdish held region, also impaired sentiment in the
emerging markets sector.
The other major geopolitical risk was that of a ‘hard’ Brexit.
This dominated the quarter for UK investors and culminated in the
12 December 2019 general election,
with a high degree of investor relief evident as Boris Johnson secured a strong working majority
for the Conservative government. While there remains a high degree
of uncertainty regarding the bilateral deal with the EU and how
long it might take to be negotiated, the election did guarantee a
functioning government, which quickly passed the last deal
negotiated by the Johnson-led government, and sterling credit
spreads enjoyed a strong run into the year-end.
2020 started with sentiment remaining very positive and credit
performed well, even though investors were reminded very early on
that risks could quickly arise when a senior commander of the
Iranian Revolutionary Guard Corps was killed in a US drone strike ,
causing tensions in the Middle
East to escalate and giving support once again to risk-off
rates products. As the risks of an Iranian retaliation dissipated,
investors quickly discounted the risk of a widespread conflict and
risk-on assets resumed their rally with US equities reaching record
highs again towards the end of January.
News of a novel coronavirus outbreak in China impacted sentiment once more, though the
initial mood was one of caution rather than fear, particularly as
the unprecedented (at that stage at least) lockdown of the
Wuhan province, where the virus
originated, seemed initially to give Chinese authorities some
control over the situation.
However, as the number of reported cases in Italy spiked higher, sentiment deteriorated
dramatically as it became clear we were dealing with a worldwide
pandemic. This led to some extraordinary moves across asset
classes, with the S&P 500 suffering its worst day since the
global financial crisis in 2008 and US Treasuries, the ultimate
safe haven for many investors, trading inside 1% across the curve –
something never previously seen with the 30-year bond reaching an
all-time tight of 0.997%. Credit markets were frozen as investors
scrambled for cash, causing bond prices to fall regardless of
quality or maturity in the fastest sell-off ever that we can
recall.
The pandemic had many consequences; international borders being
shut, central banks stepping up easing measures and governments
launching fiscal stimulus packages. Some governments also took
steps to restrict movement of citizens within their countries with
lockdowns and curfews, led by Italy as it extended the lockdown from its
northern region to the entire country. The effect was a near
shutdown of large parts of the global economy as the economic cycle
ended and a deep recession was opened. While the tenor of this
recession is expected to be relatively short, the magnitude is
expected to be very large in the first instance.
The US Federal Reserve announced an emergency interest rate cut
of 50bp on March 3, taking the Fed
Funds rate to 1-1.25%. This was the first time the Fed had cut
interest rates outside of a scheduled meeting since August 2008 after the fall of Lehman Brothers.
Unfortunately, this did little to alleviate concerns and risk
assets continued to fall with expectations of fiscal stimulus
increasing.
The UK was the first country to announce coordinated fiscal and
monetary action, cutting interest rates by 50bp to 25bp, and
importantly for the banking sector also reducing the
countercyclical capital buffer to 0%, freeing up capital equivalent
to a capacity of £290bn, to support and encourage banks to lend
through the uncertainty and downturn ahead. The central bank
meeting was quickly followed by Chancellor of the Exchequer,
Rishi Sunak, announcing several
fiscal measures to support the economy and country during the
pandemic. The European Central Bank (“ECB”) held its policy meeting
as scheduled and although it did not cut interest rates (already at
-0.5%), it did announce an increase in its asset purchase program
and also reduced capital requirements for banks. However, the
market was underwhelmed at the conference and the response was
muted.
With risk-on assets continuing to slide rapidly the Fed stepped
back in with several measures. Firstly, another emergency rate cut
of 100bp took the range to 0-0.25% and more importantly, a
liquidity programme that included buying government bonds,
mortgage-backed securities and, for the first time in the central
bank’s history, corporate debt and ETFs. Supporting this, a $2tr
package of spending and tax breaks passed a vote in the Senate
(after a couple of delays in the process as politicians reached
agreement), which improved sentiment and led to a bounce in asset
prices. Across the globe major economies announced very large scale
supportive packages, with aid for businesses, tax breaks and
support for the unemployed. The central banks continued with rate
cuts, including one more from the Bank of England, as well as almost unlimited liquidity
packages to assist markets and encourage the banks to keep lending.
The IMF also signalled it was ready with $1tr to support struggling
countries.
Adding fuel to the fire, another major headwind for markets was
the collapse of Russia’s alliance with OPEC and Saudi Arabia’s
subsequent response to open the taps, which led to the biggest fall
in the price of oil since the Gulf War in 1991. The price fell by
more than 50% to under $25 a barrel,
adding to already heightened market volatility, especially in the
US high yield market where there are a large number of energy
companies. There was little recovery as the price war goes on and
oil finished Q1 2020 close to its lows.
As we moved into Q2, the price fell further to $20 a barrel, however as we approached the expiry
of the May contract on the 20 April, the inability of contract
holders to take physical delivery of the oil, saw the oil price
stray into negative territory. Prices quickly recovered to towards
$20 again for the June contract, and
as we approached mid-May, prices had recovered to $30 as OPEC agreed to supply cuts and on news
that demand from China was
remaining robust. However price volatility is expect to
remain for the foreseeable future.
Portfolio Commentary
The aggressive sell-off and total evaporation of market liquidity
was felt through all sectors and risk asset prices gapped lower in
a vacuum, with the added headwinds of forced ETF and
margin selling and investment banks being reluctant to
position the risk. Correlations broke down early in March, which
only fuelled a further dash for liquidity which lasted about two
weeks, but left asset prices extremely dislocated, with even
fundamentally strong bonds trading down by over 40 points.
The global economic shut down will have dire consequences for
many companies, particularly those cyclical in nature and those
operating in industries such as energy, commodities, autos, travel
and retail, to name a few, and wholesale downgrades are also
expected. The portfolio is expected to be negatively impacted, in
due course, by downgrades, however the Portfolio Manager has
avoided many of the weaker sectors and overall held less than 5%
combined in the Euro, UK and US HY corporate bond sectors, as at
the end of March.
The CLO portion of the portfolio, 20.8% as at the end of March,
will so be negatively impacted by the global pandemic and the
subsequent economic shut downs. These contain portfolios of mainly
high yielding, European, leverage loans. The ratings of these
leverage loans are expected to be lowered by the rating agencies
over time and this could result in automatic actions being taking
by the CLO managers, depending on what triggers are hit. Dividends
to equity holders (the Company does not hold equity tranches) and
subordinated management fees could be turned off to protect the
debt holders in the CLOs, and if leverage loan losses are severe
enough, coupons to the lower rated tranches could also be suspended
– which would have to be repaid at a later date upon the recovery
of the deal. The Portfolio Management team do not currently expect
any losses to the CLO holdings.
The Portfolio Managers were active in investing the liquidity
available in the Company and the issue of shares at the end of
March allowed them to source fundamentally sound bonds at cheap
valuations, adding significant value to the portfolio. The new
capital issued has been mostly invested in the Bank and Insurance
sectors, which the Portfolio Managers feel are best positioned to
prosper in the post-pandemic environment. The average ratings of
the purchases have also been higher, with over 40% of new
investments made (covering the last 3 months) having an investment
grade rating and almost 50% being rated BB.
As would be expected, the strong performance accumulated over
the first four months of the period was quickly wiped out by the
sharp moves in March. Credit indices posted negative returns
across the board in March, with the Coco Bond Market index falling
12.7%, Euro HY falling by 12.8%, sterling HY by 10.8% and US HY by
11.9% - all in £ terms.
Over the period, the Company declined -17.41% (NAV per Share,
total return) during the six months.
Market Outlook and Strategy
The team will be paying very close attention to coronavirus
developments; signs that it is plateauing in the current hotspots,
how China recovers as it reopens
its economy, and any progress towards mass testing and vaccines.
These are currently the key drivers of sentiment and will be a big
factor in determining market direction.
Key data releases will be important as the Portfolio Managers
look for early signs of how the virus shutdown is impacting
economies. There was the first sign of this in March with the US
jobless claims number, which came in at an all-time high of
3.28m.
In addition, the Portfolio Managers will be paying very close
attention to the credit environment, as the number of downgrades is
expected to increase substantially, particularly in the cyclical
industries, which will also be the areas that are likely to suffer
from an increasing insolvency rate. Given that the Portfolio
Managers were focused on end of cycle risks, the portfolio does not
have significant risk to cyclical sectors. Knowing that the
world is still in the very early stages of recession, the focus for
the managers will be on adding high quality, resilient credit from
the most robust sectors, staying away from the bottom end of the
credit spectrum, where defaults will be concentrated. Given the
very high yields available in strong corporates and financials, the
team will focus on extending the portfolio’s maturity profile to
lock into these yields for longer. Volatility is likely to
remain elevated and the Portfolio Managers will put money to work
in a very cautious manner.
TwentyFour Asset Management LLP
26 May 2020
TOP TWENTY HOLDINGS
As at 31 March 2020
|
|
Credit |
|
Percentage of |
|
Nominal/ |
Security |
Fair
Value * |
Net
Asset |
|
Shares |
Sector |
£ |
Value |
| Nationwide Bldg
Society 10.25 29/06/2049 |
40,960 |
Financial - Banks |
5,447,680 |
3.65 |
| Coventry Bldg Society
6.875 31/12/2049 |
4,560,000 |
Financial - Banks |
4,149,600 |
2.78 |
| Aldermore Group 11.875
31/12/2049 |
3,350,000 |
Financial - Banks |
3,350,000 |
2.25 |
| Oaknorth Bank 7.75
01/06/2028 |
2,500,000 |
Financial - Banks |
2,543,750 |
1.70 |
| Santander UK |
2,000,000 |
Financial - Banks |
2,535,888 |
1.70 |
| Bracken Midco1 8.875
15/10/2023 |
2,960,000 |
High
Yield - European |
2,372,643 |
1.59 |
| Capital Bridging
Finance 1 MEZZ 12/11/2018 |
2,500,000 |
ABS |
2,362,500 |
1.58 |
| Phoenix Group 5.75
31/12/2049 |
2,780,000 |
Financial - Insurance |
2,355,425 |
1.58 |
| Paragon Group of
Companies 7.25 09/09/2026 |
2,200,000 |
Financial - Banks |
2,312,858 |
1.55 |
| Societe Generale 7.375
31/12/2049 |
2,960,000 |
Financial - Banks |
2,219,390 |
1.49 |
| Armada Euro Clo
15/07/33 |
4,000,000 |
ABS |
2,126,242 |
1.43 |
| Investec 6.75 FRN
31/12/2049 |
2,500,000 |
Financial - Banks |
2,082,567 |
1.40 |
| Rothesay Life 6.875
31/12/2049 |
2,500,000 |
Financial - Insurance |
2,074,246 |
1.39 |
| Barclays PLC 7.875
31/12/2049 |
2,365,000 |
Financial - Banks |
2,066,123 |
1.38 |
| Charles Street Conduit
FRN 08/12/2065 |
2,000,000 |
ABS |
2,020,000 |
1.35 |
| Pension Insurance 6.5
03/07/2024 |
1,780,000 |
Financial - Insurance |
1,960,727 |
1.31 |
| Banco Bilbao Vizcaya
Argentaria 8.875 29/12/2049 |
2,200,000 |
Financial - Banks |
1,909,857 |
1.28 |
| Banco de Sabadell 6.5
31/12/2049 |
2,800,000 |
Financial - Banks |
1,848,649 |
1.24 |
| Virgin Money UK 8.75
FRN 31/12/2049 |
2,050,000 |
Financial - Banks |
1,839,875 |
1.23 |
| Onesavings Bank 9.125
31/12/2049 |
2,200,000 |
Financial - Banks |
1,804,000 |
1.21 |
| Total |
|
|
49,382,020 |
33.09 |
* Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The full portfolio listing of bonds and asset backed securities
(“ABS”) as at 31 March 2020 can be
obtained from the Administrator on request.
BOARD MEMBERS
Biographical details of the Directors are as follows:
Claire Whittet – (Chair) (age
65)
Ms Whittet is a resident of Guernsey and has 40 years’ experience in the
banking industry. She joined Rothschild Bank International Ltd as a
Director in 2003 and was latterly Managing Director and Co-Head
before becoming a Non-Executive Director on her retirement in 2016.
She began her career at the Bank of Scotland where she was for 19 years in a
variety of personal and corporate finance roles and subsequently,
joined Bank of Bermuda as Global
Head of Private Client Credit before joining Rothschild.
Ms Whittet is a Non-Executive Director of a number of listed
investment funds and PE entities which invest in a wide range of
assets.
Ms Whittet holds an MA from Edinburgh
University, is a member of the Chartered Institute of
Bankers in Scotland, a member of
the Chartered Insurance Institute, a Chartered Banker, a member of
the Institute of Directors and holds the Institute of Directors
Diploma in Company Direction. Ms Whittet was appointed to the Board
on 12 February 2014.
Christopher F. L. Legge –
(Non-executive Director) (age 64)
Mr Legge is a Guernsey resident
and worked for Ernst & Young in Guernsey from 1983 to 2003. Having joined the
firm as an audit manager in 1983, he was appointed a partner in
1986 and managing partner in 1998. From 1990 to 1998, he was head
of Audit and Accountancy and was responsible for the audits of a
number of banking, insurance, investment fund, property fund and
other financial services clients. He also had responsibility for
the firm’s training, quality control and compliance functions. He
was appointed managing partner for the Channel Islands region in 2000 and merged the
business with Ernst & Young LLP in the United Kingdom. He retired from Ernst &
Young in 2003.
Mr Legge currently holds a number of Non-Executive Directorships
in the financial services sector and also chairs the Audit
Committees of several UK listed companies. He is an FCA and holds a
BA (Hons) in Economics from the University of Manchester. Mr Legge was appointed to the
Board on
12 February 2014.
Ian Martin - (Non-executive
Director) (age 56)
Mr Martin has over 36 years’ experience in finance gathered in a
variety of multi asset investment focused roles in the UK,
Asia, Switzerland and South America. More recently he was the Chief
Investment Officer (CIO) and Head of Asset Management and Research
at Lloyds Bank in Geneva and then
Head of Bespoke Portfolio Management and Advisory for key clients
in UBP Bank in Geneva. Previous
roles have included senior roles in equity derivatives and multi
asset trading as well as CIO and Managing Director of a Fund of
Hedge funds company.
He has an MSc, is a Fellow of the Institute of Directors (IOD)
holding the Chartered Director qualification as well as being a
Chartered Member of the Chartered Institute of Securities and
Investment (CISI). Mr Martin was appointed to the Board on
15 July 2014.
STATEMENT OF PRINCIPAL RISKS AND
UNCERTAINTIES
The Company’s assets are comprised of Bonds and Asset Backed
Securities carrying exposure to risks related to the underlying
assets backing the security or the originator of the security. The
Company’s principal risks are therefore market or economic in
nature.
The principal risks assessed by the Board relating to the
Company were disclosed in the Annual Report and Audited Financial
Statements for the year ended 30 September
2019. The principal risks disclosed include market risk,
liquidity risk, credit risk, foreign currency risk and reinvestment
risk. A detailed explanation of these can be found in the annual
report. Whilst the Board and Portfolio Manager do not consider
these risks to have changed, and they remain relevant for the
remaining six months of the year, the COVID-19 pandemic has had a
very significant negative effect on capital markets. This has
increased volatility and the current crisis has engendered market
disruptions which have the potential to affect market liquidity.
The majority of the employees of all the Company’s service
providers are currently working remotely .The Board have received
assurances from these service providers that their business
continuity plans moved into operation and that all essential
services are being provided on a timely basis but there is a risk
of potential disruption from these services should the situation
deteriorate further
Market risk is risk
associated with changes in market prices including spreads,
interest rates, economic uncertainty, changes in laws and national
and international political circumstances.
Reinvestment risk is
the risk that any monies resulting from principal and income
payments from a bond are reinvested at a lower interest rate than
that captured when the bond was initially purchased.
The investment
portfolio is comprised of Asset Backed Securities and Bonds which
expose the Company to credit risk, being the risk that a
counterparty will default on its contractual obligations resulting
in financial loss to the Company.
Liquidity risk is that
the Company does not have sufficient cash resources to meet
obligations, including the dividend target and tenders as they fall
due or can only do so on terms that are materially
disadvantageous.
Foreign currency risk
is the risk that the value of a financial instrument will fluctuate
due to changes in foreign exchange rates. The Company is exposed to
foreign currency risk through its investment is in predominantly
Euro denominated assets although mitigates this risk through
hedging.
The UK government in
common with its European neighbours has implemented unprecedented
measures to restrict the possibility of transmission of the
COVID-19 virus by limiting personal contact and international
travel. Whilst the ultimate scope and duration of these measures is
currently unclear, they are likely to have a severe impact on the
UK Economy, which both the government and the Bank of England are attempting to offset with both
traditional and unconventional fiscal and monetary policy measures.
The Company’s portfolio will be impacted by any risks emerging
from changes in the macroeconomic environment. The Company intends
to mitigate the risk of this uncertainty on the liquidity of its
shares by providing regular shareholder updates. In making this
assessment, the Board has considered and continues to monitor the
impact of COVID-19 on the current and future operations of the
Company, including when considering tap issues.
Related Parties
Related party balances and transactions are disclosed in note 14 of
these Unaudited Condensed Interim Financial Statements.
Going Concern
Under the 2018 UK Corporate Governance Code and applicable
regulations, the Directors are required to satisfy themselves that
it is reasonable to assume that the Company is a going concern and
to identify any material uncertainties to the Company’s ability to
continue as a going concern for at least 12 months from the date of
approving these Unaudited Condensed Interim Financial
Statements.
The Board believes that it is appropriate to adopt the going
concern basis in preparing the Unaudited Condensed Interim
Financial Statements in view of its holding in cash and cash
equivalents and certain more liquid investments within the
portfolio and the income deriving from those investments, meaning
the Company has adequate financial resources to meet its
liabilities as they fall due.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
- these Unaudited Condensed Interim Financial Statements have
been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting" and give a true and fair view of
the assets, liabilities, financial position and profit or loss of
the Company as required by the UK Listing Authority’s Disclosure
and Transparency Rule (“DTR”) 4.2.4R.
- This interim management report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the period from 1 October 2019 to
31 March 2020 and their impact on the
Unaudited Condensed Interim Financial Statements; and a description
of the principal risks and uncertainties for the remaining six
months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken place during the
period from 1 October 2019 to
31 March 2020 and that have
materially affected the financial position or performance of the
Company during that period as included in note 14.
By order of the Board,
Claire Whittet
Chair
Christopher Legge
Director
26 May 2020
INDEPENDENT REVIEW REPORT
TO TWENTYFOUR SELECT MONTHLY INCOME FUND LIMITED
Report on the unaudited condensed interim financial
statements
_______________________________________________________________________________________________
Our conclusion
We have reviewed TwentyFour Select Monthly Income Fund Limited's
unaudited condensed interim financial statements (the "interim
financial statements") in the Interim Management Report and
Unaudited Condensed Interim Financial Statements of TwentyFour
Select Monthly Income Fund Limited for the 6-month period ended
31 March 2020. Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
‘Interim Financial Reporting’, and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority.
_______________________________________________________________________________________________
What we have reviewed
The interim financial statements comprise:
- the condensed statement of financial position as at
31 March 2020;
- the condensed statement of comprehensive income for the period
then ended;
- the condensed statement of cash flows for the period then
ended;
- the condensed statement of changes in equity for the period
then ended; and
- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim
Management Report and Unaudited Condensed Interim Financial
Statements have been prepared in accordance with International
Accounting Standard 34, ‘Interim Financial Reporting’, and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom’s Financial Conduct Authority.
As disclosed in note 2 to the interim
financial statements, the financial reporting framework that has
been applied in the preparation of the full annual financial
statements of the Company is The Companies (Guernsey) Law, 2008 and International
Financial Reporting Standards (IFRSs).
_______________________________________________________________________________________________
Responsibilities for the interim
financial statements and the review
_______________________________________________________________________________________________
Our responsibilities and those of the
Directors
The Interim Management Report and Unaudited Condensed Interim
Financial Statements, including the interim financial statements,
is the responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the Interim Management
Report and Unaudited Condensed Interim Financial Statements in
accordance with International Accounting Standard 34, ‘Interim
Financial Reporting’, and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom’s Financial Conduct
Authority.
Our responsibility is to express a
conclusion on the interim financial statements in the Interim
Management Report and Unaudited Condensed Interim Financial
Statements based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom’s Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
_______________________________________________________________________________________________
What a review of interim financial
statements involves
We conducted our review in accordance
with International Standard on Review Engagements 2410, ‘Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity’ issued by the International Auditing and Assurance
Standards Board. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing and, consequently, does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
We have read the other information
contained in the Interim Management Report and Unaudited Condensed
Interim Financial Statements and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
26 May 2020
(a) The maintenance and integrity of the TwentyFour Select
Monthly Income Fund Limited website is the responsibility of the
directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to
the financial statements since they were initially presented on the
website.
(b) Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the period from 1 October 2019 to
31 March 2020
|
|
|
|
|
For
the period from 01.10.19 to 31.03.20 |
|
For
the period from 01.10.18 to 31.03.19 |
|
|
|
Notes |
|
|
|
£ |
|
£ |
| Income |
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
| Interest income on
financial assets at fair value through profit and loss |
|
|
|
|
|
|
6,953,324 |
|
6,024,029 |
| Net foreign currency
(losses)/gains |
|
|
7 |
|
|
|
(348,703) |
|
2,765,645 |
Net losses on
financial assets at
fair value through profit or loss |
|
|
8 |
|
|
|
(33,334,098) |
|
(7,190,770) |
| Total
(loss)/income |
|
|
|
|
|
|
(26,729,477) |
|
1,598,904 |
|
|
|
|
|
|
|
|
|
|
| Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Portfolio management
fees |
|
|
14 |
|
|
|
(628,844) |
|
(624,367) |
| Directors' fees |
|
|
14 |
|
|
|
(58,000) |
|
(55,500) |
| Administration
fees |
|
|
15 |
|
|
|
(59,457) |
|
(59,210) |
| AIFM management
fees |
|
|
15 |
|
|
|
(40,154) |
|
(39,934) |
| Audit fee |
|
|
|
|
|
|
(27,940) |
|
(25,049) |
| Custody fees |
|
|
15 |
|
|
|
(9,796) |
|
(9,086) |
| Broker fees |
|
|
|
|
|
|
(24,944) |
|
(23,185) |
| Depositary fees |
|
|
15 |
|
|
|
(13,923) |
|
(13,768) |
| Legal fees |
|
|
|
|
|
|
(8,813) |
|
(36,128) |
| Other expenses |
|
|
|
|
|
|
(47,537) |
|
(57,322) |
| Total
expenses |
|
|
|
|
|
|
(919,408) |
|
(943,549) |
|
|
|
|
|
|
|
|
|
|
| Total
comprehensive (loss)/income for the period |
|
|
|
(27,648,885) |
|
655,355 |
|
|
|
|
|
|
|
|
|
|
| (Loss)/earnings per
Ordinary Share - |
|
|
|
|
|
|
|
|
|
| Basic &
Diluted |
|
|
3 |
|
|
|
(0.149) |
|
0.004 |
All items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of these Unaudited
Condensed Interim Financial Statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 March 2020
|
|
|
31.03.20 |
|
30.09.19 |
| Assets |
Notes |
|
£ |
|
£ |
| Current
assets |
|
|
(Unaudited) |
|
(Audited) |
| Financial assets at
fair value through profit and loss |
|
|
|
|
|
| -
Investments |
8 |
|
135,286,801 |
|
158,334,767 |
| - Derivative
assets: Forward currency contracts |
|
|
22,901 |
|
686,397 |
| Shares issued
receivable |
9 |
|
15,372,431 |
|
- |
| Amounts due from
broker |
|
|
- |
|
629,488 |
| Other receivables |
10 |
|
3,022,787 |
|
2,717,968 |
| Cash and cash
equivalents |
|
|
2,113,544 |
|
7,197,759 |
| Total current
assets |
|
|
155,818,464 |
|
169,566,379 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
| Current
liabilities |
|
|
|
|
|
| Amounts due to
broker |
|
|
3,787,540 |
|
444,938 |
| Other payables |
11 |
|
596,835 |
|
282,609 |
| Financial liabilities
at fair value through profit and loss |
|
|
|
|
|
| - Derivative
liabilities: Forward currency contracts |
|
|
2,009,928 |
|
34,760 |
| Interest income
received in advance |
|
|
217,465 |
|
976,786 |
| Total current
liabilities |
|
|
6,611,768 |
|
1,739,093 |
|
|
|
|
|
|
| Total net
assets |
|
|
149,206,696 |
|
167,827,286 |
|
|
|
|
|
|
| Equity |
|
|
|
|
|
| Share capital
account |
12 |
|
195,330,097 |
|
180,201,379 |
| Retained earnings |
|
|
(46,123,401) |
|
(12,374,093) |
|
|
|
|
|
|
| Total
equity |
|
|
149,206,696 |
|
167,827,286 |
|
|
|
|
|
|
| Ordinary Shares in
issue |
12 |
|
206,079,151 |
|
185,179,151 |
|
|
|
|
|
|
| Net Asset Value per
Ordinary Share (pence) |
5 |
|
72.40 |
|
90.63 |
The Unaudited Condensed Interim Financial Statements were
approved by the Board of Directors on 26 May
2020 and signed on its behalf by:
Claire Whittet
Chair
Christopher Legge
Director
The accompanying notes are an integral part of these Unaudited
Condensed Interim Financial Statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
for the period from 1 October 2019 to
31 March 2020
|
|
|
Share
capital |
|
Retained |
|
|
|
|
|
account |
|
earnings |
|
Total |
|
|
Notes |
£ |
|
£ |
|
£ |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| Balance
at 1 October 2019 |
|
180,201,379 |
|
(12,374,093) |
|
167,827,286 |
| Issue of
shares |
|
15,372,431 |
|
- |
|
15,372,431 |
| Share
issue costs |
|
(153,724) |
|
- |
|
(153,724) |
| Income
equalisation on new issues |
4 |
(89,989) |
|
89,989 |
|
- |
|
Distributions paid |
|
- |
|
(6,190,412) |
|
(6,190,412) |
| Total
comprehensive (loss)/income for the period |
- |
|
(27,648,885) |
|
(27,648,885) |
|
|
|
|
|
|
|
|
| Balance
at 31 March 2020 |
|
195,330,097 |
|
(46,123,401) |
|
149,206,696 |
|
|
|
|
|
|
|
|
|
|
|
Share
capital |
|
Retained |
|
|
|
|
|
account |
|
earnings |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
|
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| Balance
at 1 October 2018 |
|
177,393,446 |
|
(7,650,356) |
|
169,743,090 |
| Issue of
shares |
|
2,847,700 |
|
- |
|
2,847,700 |
| Share
issue costs |
|
(33,602) |
|
- |
|
(33,602) |
| Income
equalisation on new issues |
4 |
(6,165) |
|
6,165 |
|
- |
|
Distributions paid |
|
- |
|
(6,557,660) |
|
(6,557,660) |
| Total
comprehensive (loss)/income for the period |
- |
|
655,355 |
|
655,355 |
|
|
|
|
|
|
|
|
| Balance
at 31 March 2019 |
|
180,201,379 |
|
(13,546,496) |
|
166,654,883 |
The accompanying notes are an integral part of these Unaudited
Condensed Interim Financial Statements.
CONDENSED STATEMENT OF CASH FLOWS
for the period from 1 October 2019 to
31 March 2020
|
|
For
the period from 01.10.19 to 31.03.20 |
|
For
the period from 01.10.18 to 31.03.19 |
|
Notes |
£ |
|
£ |
| Cash flows from
operating activities |
|
(Unaudited) |
|
(Unaudited) |
| Total comprehensive
(loss)/income for the period |
|
(27,648,885) |
|
655,355 |
| Adjustments for: |
|
|
|
|
Net losses on
financial assets at fair value through
profit or loss |
8 |
33,334,098 |
|
7,190,770 |
Amortisation
adjustment under effective interest rate
method |
8 |
(358,965) |
|
(207,918) |
| Unrealised losses on
derivatives |
7 |
2,638,665 |
|
104,432 |
| Exchange (gain)/loss
on cash and cash equivalents |
|
(2,451) |
|
2,765,910 |
| Increase in other
receivables |
10 |
(304,819) |
|
(142,388) |
| Decrease in other
payables |
11 |
(598,819) |
|
(50,095) |
| Purchase of
investments |
8 |
(25,666,097) |
|
(33,797,696) |
| Sale of
investments |
8 |
19,711,019 |
|
31,115,946 |
| Net cash generated
from operating activities |
|
1,103,746 |
|
7,634,316 |
|
|
|
|
|
| Cash flows used in
financing activities |
|
|
|
|
| Proceeds from issue of
ordinary shares |
12 |
- |
|
2,847,700 |
| Share issue costs |
12 |
- |
|
(33,602) |
| Dividend
distribution |
19 |
(6,190,412) |
|
(6,557,660) |
| Net cash outflow from
financing activities |
|
(6,190,412) |
|
(3,743,562) |
|
|
|
|
|
| (Decrease)/increase
in cash and cash equivalents |
|
(5,086,666) |
|
3,890,754 |
|
|
|
|
|
| Cash and cash
equivalents at beginning of period |
|
7,197,759 |
|
6,834,535 |
| Exchange gain/(loss)
on cash and cash equivalents |
|
2,451 |
|
(2,765,910) |
|
|
|
|
|
| Cash and cash
equivalents at end of period |
|
2,113,544 |
|
7,959,379 |
The accompanying notes are an integral part of these Unaudited
Condensed Interim Financial Statements.
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL
STATEMENTS
for the period from 1 October 2019 to
31 March 2020
1. General Information
TwentyFour Select Monthly Income Fund Limited (the “Company”) was
incorporated with limited liability in Guernsey, as a closed-ended investment company
on 12 February 2014. The Company’s
Shares were listed with a Premium Listing on the Official List of
the UK Listing Authority and admitted to trading on the Main Market
of the London Stock Exchange (“LSE”) on 10
March 2014.
The investment objective and policy is set out in the Summary
Information.
The Portfolio Manager of the Company is TwentyFour Asset
Management LLP (the “Portfolio Manager”).
2. Principal Accounting
Policies
a) Basis of preparation and Statement of compliance
The Unaudited Condensed Interim Financial Statements for the period
from 1 October 2019 to 31 March 2020 have been prepared on a going
concern basis in accordance with IAS 34, the Listing Rules of the
LSE and applicable legal and regulatory requirements.
The Unaudited Condensed Interim Financial Statements should be
read in conjunction with the audited annual financial statements
for the year ended 30 September 2019,
which were prepared in accordance with International Financial
Reporting Standards (“IFRS”) and for which an unqualified audit
report was issued by the independent auditor.
b) Changes in accounting policy
In the current financial period, there have been no changes to the
accounting policies from those applied in the most recent audited
annual financial statements.
c) Significant judgements and estimates
In the current financial period, there have been no changes to the
significant accounting judgements, estimates and assumptions from
those applied in the most recent audited annual financial
statements.
d) Standards, amendments and interpretations effective during
the period
At the reporting date of these Unaudited Condensed Interim
Financial Statements, there were no new standards, interpretations
and amendments applicable to the Company for the period ended
31 March 2020.
3. Loss/(earnings) per Ordinary
Share - Basic & Diluted
The loss per Ordinary Share - Basic and Diluted of 14.9p
(31 March 2019: 0.4p earnings) has
been calculated based on the weighted average number of Ordinary
Shares of 185,635,981 (31 March 2019:
184,832,997) and a net loss for the period of £27,648,885
(31 March 2019: £655,355 gain).
4. Income on Equalisation of New
Issues
In order to ensure there were no dilutive effects on earnings per
share for current shareholders when issuing new shares, earnings
have been calculated in respect of the accrued income at the time
of purchase and a transfer has been made from share capital to
income to reflect this. The transfer for the period amounted to
£89,989 (31 March 2019: £6,165).
5. Net Asset Value per Ordinary
Share
The net asset value of each Share of 72.40p (30 September 2019: 90.63p) is determined by
dividing the net assets of the Company attributed to the Shares of
£149,206,696 (30 September 2019: £167,827,286) by the
number of Shares in issue at 31 March
2020 of 206,079,151 (30 September
2019: 185,179,151).
6. Taxation
The Company has been granted
Exempt Status under the terms of The Income Tax (Exempt Bodies)
(Guernsey) Ordinance, 1989 to
income tax in Guernsey. Its
liability for Guernsey taxation is
limited to an annual fee of £1,200 (30
September 2019: £1,200).
7. Net
foreign currency (losses)/gains
|
|
|
|
|
|
|
For
the period from 01.10.19 to 31.03.20 |
|
For
the period from 01.10.18 to 31.03.19 |
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
£ |
|
£ |
| Movement
in net unrealised losses on forward currency contracts |
(2,638,665) |
|
(104,432) |
| Movement
in unrealised gains on spot currency contracts |
601 |
|
14,463 |
| Realised
gains on forward currency contracts |
596,276 |
|
2,955,715 |
| Realised
currency gains/(losses) on receivables/payables |
1,652,529 |
|
(76,092) |
| Unrealised
currency gains/(losses) on receivables/payables |
40,556 |
|
(24,009) |
|
|
|
|
|
|
|
(348,703) |
|
2,765,645 |
8.
Investments
|
|
|
|
|
|
|
As
at
31.03.20 |
|
As
at
30.09.19 |
|
|
|
|
|
|
|
(Unaudited) |
|
(Audited) |
|
|
|
|
|
|
|
£ |
|
£ |
|
Financial assets at fair value through profit and loss: |
|
|
|
|
Unlisted Investments: |
|
|
|
|
|
|
|
| Opening
amortised cost |
|
|
|
|
156,072,167 |
|
158,413,688 |
| Purchases at cost |
|
|
|
|
|
|
29,008,699 |
|
61,344,183 |
| Proceeds
on sale/principal repayment |
|
(19,081,532) |
|
(63,383,538) |
|
Amortisation adjustment under effective interest rate method |
358,965 |
|
511,152 |
| Realised
gain on sale/principal repayment |
|
804,168 |
|
4,595,217 |
| Realised
loss on sale/principal repayment |
|
(1,458,910) |
|
(5,408,535) |
| Closing
amortised cost |
|
|
|
|
165,703,557 |
|
156,072,167 |
|
|
|
|
|
|
|
|
|
|
| Unrealised
gain on investments |
|
633,873 |
|
5,579,321 |
| Unrealised
loss on investments |
|
(31,050,629) |
|
(3,316,721) |
| Fair value |
|
|
|
|
|
|
135,286,801 |
|
158,334,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
at
31.03.20 |
|
For
the period from 01.10.18 to 31.03.19 |
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
|
£ |
|
£ |
| Realised
gain on sale/principal repayment |
|
804,168 |
|
2,068,463 |
| Realised
loss on sale/principal repayment |
|
(1,458,910) |
|
(4,220,041) |
| Decrease
in unrealised gain |
|
|
(4,945,448) |
|
(3,190,931) |
| Increase
in unrealised loss |
|
|
|
(27,733,908) |
|
(1,848,261) |
| Net
loss on financial assets at fair value through profit or
loss |
(33,334,098) |
|
(7,190,770) |
The Company does not experience any seasonality or cyclicality
in its investing activities.
9. Shares issued receivable
As at 31 March 2020, £15,372,431 was
receivable relating to shares issued. All amounts are short term
and have been received post period end. Therefore, there is no
impairment to be recognised.
10. Other receivables
|
|
|
|
|
|
|
As
at
31.03.20 |
|
As
at
30.09.19 |
|
|
|
|
|
|
|
(Unaudited) |
|
(Audited) |
|
|
|
|
|
|
|
£ |
|
£ |
| Interest
income receivable |
|
|
2,873,128 |
|
2,479,801 |
| Prepaid expenses |
|
|
|
|
|
|
52,149 |
|
28,904 |
| Dividends
receivable |
|
|
|
|
96,909 |
|
209,263 |
| Foreign
currency receivable |
|
|
601 |
|
- |
|
|
|
|
|
|
|
3,022,787 |
|
2,717,968 |
11. Other payables
|
|
|
|
|
|
|
As
at
31.03.20 |
|
As
at
30.09.19 |
|
|
|
|
|
|
|
(Unaudited) |
|
(Audited) |
|
|
|
|
|
|
|
£ |
|
£ |
| Portfolio
management fees payable |
|
299,448 |
|
107,716 |
|
Administration fees payable |
|
|
28,454 |
|
23,322 |
| AIFM
management fees payable |
|
15,183 |
|
16,138 |
| Audit fees
payable |
|
|
|
|
|
24,845 |
|
54,000 |
| Other
expenses payable |
|
|
|
|
69,417 |
|
76,953 |
| Depositary
fees payable |
|
|
|
|
2,150 |
|
2,239 |
| Custody
fees payable |
|
|
|
|
3,614 |
|
2,241 |
| Share
issue costs payable |
|
|
|
153,724 |
|
- |
|
|
|
|
|
|
|
596,835 |
|
282,609 |
12. Share
Capital
Authorised Share Capital
The Directors may issue an unlimited number of Ordinary Shares at
no par value and an unlimited number of Ordinary Shares with a par
value.
Issued Share Capital
|
|
|
|
|
|
|
As
at
31.03.20 |
|
As
at
30.09.19 |
|
|
|
|
|
|
|
£ |
|
£ |
| Ordinary
Shares |
|
|
|
|
|
|
|
|
|
| Share
Capital at the beginning of the period/year |
|
|
180,201,379 |
|
177,393,446 |
| Issue of shares |
|
|
|
|
|
|
15,372,431 |
|
2,847,700 |
| Share issue costs |
|
|
|
|
|
|
(153,724) |
|
(33,602) |
| Income
equalisation on new issues |
|
(89,989) |
|
(6,165) |
| Total
Share Capital at the end of the period/year |
|
|
195,330,097 |
|
180,201,379 |
Reconciliation of number of Shares
|
|
|
|
|
|
|
31.03.20 |
|
30.09.19 |
|
|
|
|
|
|
|
Shares |
|
Shares |
| Ordinary
Shares |
|
|
|
|
|
|
|
|
|
| Shares at
the beginning of the period/year |
|
|
185,179,151 |
|
182,179,151 |
| Issue of shares |
|
|
|
|
|
|
20,900,000 |
|
3,000,000 |
| Total
Shares in issue at the end of the period/year |
|
|
206,079,151 |
|
185,179,151 |
The Ordinary Shares carry the following rights:
a) the Ordinary Shares carry
the right to receive all income of the Company attributable to the
Ordinary Shares.
b) the Shareholders present
in person or by proxy or present by a duly authorised
representative at a general meeting has, on a show of hands, one
vote and, on a poll, one vote for each Share held.
The Company has the right to issue and purchase up to 14.99% of
the total number of its own shares at £0.01 each, to be classed as
Treasury Shares and may cancel those Shares or hold any such Shares
as Treasury Shares, provided that the number of Shares held as
Treasury Shares shall not at any time exceed 10% of the total
number of Shares of that class in issue at that time or such amount
as provided in the Companies Law.
The Company held no Treasury as at 31
March 2020 (30 September 2019:
Nil).
13. Analysis of Financial Assets and
Liabilities by Measurement Basis as per Statement of Financial
Position
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
|
|
assets
at fair |
|
|
|
|
|
|
|
|
|
|
|
|
value
through |
|
Amortised |
|
|
|
|
|
|
|
|
|
|
profit
and loss |
|
Cost |
|
Total |
|
|
|
|
|
|
|
|
£ |
|
£ |
|
£ |
| 31
March 2020 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets |
|
|
|
|
|
|
| Financial
assets at fair value through profit and loss |
|
|
|
|
|
|
|
-Investments |
|
|
|
|
|
|
|
|
|
|
|
| -Bonds |
|
|
|
|
|
|
|
76,733,189 |
|
- |
|
76,733,189 |
|
-Asset backed securities |
|
|
|
|
|
58,553,612 |
|
- |
|
58,553,612 |
|
-Derivative assets: Forward currency contracts |
|
22,901 |
|
- |
|
22,901 |
| Shares
issued receivable |
|
|
|
|
|
|
15,372,431 |
|
- |
|
15,372,431 |
| Other
receivables (excluding prepaid expenses) |
|
- |
|
2,970,638 |
|
2,970,638 |
| Cash and
cash equivalents |
|
|
|
|
|
- |
|
2,113,544 |
|
2,113,544 |
|
|
|
|
|
|
|
|
150,682,133 |
|
5,084,182 |
|
155,766,315 |
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
|
|
liabilities at fair |
|
Other |
|
|
|
|
|
|
|
|
|
|
value
through |
|
financial |
|
|
|
|
|
|
|
|
|
|
profit and loss |
|
liabilities |
|
Total |
|
|
|
|
|
|
|
|
£ |
|
£ |
|
£ |
| 31
March 2020 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
| Amounts
due to broker |
|
|
|
|
|
|
- |
|
3,787,540 |
|
3,787,540 |
| Other
payables |
|
|
|
|
|
|
- |
|
596,835 |
|
596,835 |
| Financial
liabilities at fair value through profit and loss |
|
|
|
|
|
|
-Derivative liabilities: Forward currency contracts |
|
2,009,928 |
|
- |
|
2,009,928 |
|
|
|
|
|
|
|
|
2,009,928 |
|
4,384,375 |
|
6,394,303 |
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
|
|
assets
at fair |
|
|
|
|
|
|
|
|
|
|
|
|
value
through |
|
Amortised |
|
|
|
|
|
|
|
|
|
|
profit
and loss |
|
Cost |
|
Total |
|
|
|
|
|
|
|
|
£ |
|
£ |
|
£ |
| 30
September 2019 (Audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets |
|
|
|
|
|
|
| Financial
assets at fair value through profit and loss |
|
|
|
|
|
|
|
-Investments |
|
|
|
|
|
|
|
|
|
|
|
| -Bonds |
|
|
|
|
|
|
|
97,230,422 |
|
- |
|
97,230,422 |
|
-Asset backed securities |
|
|
|
|
|
61,104,345 |
|
- |
|
61,104,345 |
|
-Derivative assets: Forward currency contracts |
|
686,397 |
|
- |
|
686,397 |
| Amounts
due from broker |
|
|
|
|
|
|
- |
|
629,488 |
|
629,488 |
| Other
receivables (excluding prepaid expenses) |
|
- |
|
2,689,064 |
|
2,689,064 |
| Cash and
cash equivalents |
|
|
|
|
|
- |
|
7,197,759 |
|
7,197,759 |
|
|
|
|
|
|
|
|
159,021,164 |
|
10,516,311 |
|
169,537,475 |
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
|
|
|
|
|
liabilities at fair |
|
Other |
|
|
|
|
|
|
|
|
|
|
value
through |
|
financial |
|
|
|
|
|
|
|
|
|
|
profit and loss |
|
liabilities |
|
Total |
|
|
|
|
|
|
|
|
£ |
|
£ |
|
£ |
| 30
September 2019 (Audited) |
|
|
|
|
|
|
|
|
|
|
Financial Liabilities |
|
|
|
|
|
|
| Amounts
due to broker |
|
|
|
|
|
|
- |
|
444,938 |
|
444,938 |
| Other
payables |
|
|
|
|
|
|
- |
|
282,609 |
|
282,609 |
| Financial
liabilities at fair value through profit and loss |
|
|
|
|
|
|
-Derivative liabilities: Forward currency contracts |
|
34,760 |
|
- |
|
34,760 |
|
|
|
|
|
|
|
|
34,760 |
|
727,547 |
|
762,307 |
14. Related Parties
a) Directors’ Remuneration & Expenses
The Directors of the Company are remunerated for their services at
such a rate as the Directors determine. The aggregate fees of the
Directors will not exceed £150,000.
The Directors’ fees for the period/year and the outstanding fees
at period/year end are as follows.
|
|
|
|
|
|
|
31.03.20 |
|
30.09.19 |
|
|
|
|
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
|
| Claire
Whittet (Chair of the Board) |
|
22,000 |
|
42,000 |
|
Christopher Legge (Audit Committee Chairman) |
19,250 |
|
37,000 |
| Ian Martin
(MEC Chairman) |
|
|
16,750 |
|
32,000 |
| Total Directors'
fees |
|
|
|
|
|
|
58,000 |
|
111,000 |
Directors fees were increased as follows effective 1 October 2019: Chair: £44,000 (4.8% increase),
Audit Committee Chair: £38,500 (4.1% increase), MEC Chair £33,500
(4.7% increase) and an ordinary Director £31,500 (5% increase).
No Directors fees were outstanding as at 31 March 2020 (30
September 2019: £Nil)
b) Shares held by related
parties
The Directors of the Company held the following shares
beneficially:
|
|
|
|
|
|
|
31.03.20 |
|
30.09.19 |
|
|
|
|
|
|
|
Shares |
|
Shares |
|
|
|
|
|
|
|
|
|
|
| Claire Whittet |
|
|
|
|
|
|
25,000 |
|
25,000 |
|
Christopher Legge |
|
|
|
|
|
50,000 |
|
50,000 |
| Ian Martin |
|
|
|
|
|
|
35,000 |
|
35,000 |
Directors are entitled to receive the dividends on any shares
held by them during the period. Dividends declared by the Company
are set out in note 19.
As at 31 March 2020, the Portfolio
Manager held no Shares (30 September
2019: no Shares) of the Issued Share Capital. Partners and
employees of the Portfolio Manager increased their holdings during
the period, and held 1,151,594 (30 September
2019: 1,010,642), which is 0.68% (30
September 2019: 0.55%) of the Issued Share Capital.
c) Portfolio Manager
The portfolio management fee is payable to the Portfolio Manager,
monthly in arrears at a rate of 0.75% per annum of the lower of
NAV, which is calculated weekly on each valuation day, or market
capitalisation of each class of shares. Total portfolio management
fees for the period amounted to £628,844 (31
March 2019: £624,367) of which £299,448 (30 September 2019: £107,716) is payable at period
end. The Portfolio Management Agreement dated 17 February 2014 remains in force until
determined by the Company or the Portfolio Manager giving the other
party not less than twelve months' notice in writing. Under certain
circumstances, the Company or the Portfolio Manager is entitled to
immediately terminate the agreement in writing.
The Portfolio Manager is also entitled to a commission of 0.175%
of the aggregate gross offering proceeds plus any applicable VAT in
relation to any issue of new Shares, following admission, in
consideration of marketing services that it provides to the
Company. During the period, the Portfolio Manager received £10,297
(31 March 2019: £5,145) in
commission.
15. Material Agreements
a) Alternative Investment Fund Manager (“AIFM”)
The Company’s AIFM is Maitland Institutional Services Limited. In
consideration for the services provided by the AIFM under the AIFM
Agreement the AIFM is entitled to receive from the Company a
minimum fee of £20,000 per annum and fees payable quarterly in
arrears at a rate of 0.07% of the Net Asset Value of the Company
below £50 million, 0.05% on Net Assets between £50 million and £100
million and 0.03% on Net Assets in excess of £100 million. During
the period, AIFM fees of £40,154
(31 March 2019: £39,934) were
charged to the Company, of which £15,183 (30
September 2019: £16,138) remained payable at the end of the
period.
b) Administrator and Secretary
Administration fees are payable to Northern Trust International
Fund Administration Services (Guernsey) Limited monthly in arrears at a rate
of 0.06% of the Net Asset Value of the Company below £100 million,
0.05% on Net Assets between £100 million and £200 million and 0.04%
on Net Assets in excess of £200 million as at the last business day
of the month subject to a minimum of £75,000 for each year. In
addition, an annual fee of £25,000 will be charged for corporate
governance and company secretarial services. During the period,
administration and secretarial fees of £59,457 (31 March 2019: £59,210) were charged to the
Company, of which £28,454 (30 September
2019: £23,322) remained payable at the end of the
period.
c) Broker
For its services as the Company’s broker, Numis Securities Limited
(the “Broker”) is entitled to receive a retainer fee of £50,000 per
annum and also a commission of 1% on all tap issues. During the
period, the Broker received £143,427 (31
March 2019: £28,477) in commission, which is charged as a
cost of issuance.
d) Depositary
Depositary’s fees are payable to Northern Trust (Guernsey) Limited monthly in arrears at a rate
of 0.0175% of the NAV of the Company below £100 million, 0.0150% on
Net Assets between £100 million and £200 million and 0.0125% on Net
Assets in excess of £200 million as at the last business day of the
month subject to a minimum of £25,000 for each year. During the
period, depositary fees of £13,923 (31 March
2019: £13,768) were charged to the Company, of which £2,150
(30 September 2019: £2,239) remained
payable at the end of the period.
The Depositary is also entitled to a Global Custody fee of a
minimum of £8,500 per annum plus transaction fees. Total Global
Custody fees and charges for the period amounted to £9,796
(31 March 2019: £9,086) of which
£3,614 (30 September 2019: £2,241) is
due and payable at the end of the period.
16. Financial Risk Management
The Company’s activities expose it to a variety of financial risks:
Market risk (including price risk, reinvestment risk, interest rate
risk and foreign currency risk), credit risk, liquidity risk and
capital risk.
These Unaudited Condensed Interim Financial Statements do not
include the financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Company’s annual financial statements for the
year ended 30 September 2019.
17. Fair Value Measurement
All assets and liabilities are carried at fair value or at carrying
value which equates to fair value.
IFRS 13 requires the Company to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
has the following levels:
(i) Quoted prices (unadjusted) in
active markets for identical assets or liabilities (level 1).
(ii) Inputs other than quoted prices
included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that
is, derived from prices including interest rates, yield curves,
volatilities, prepayment speeds, credit risks and default rates) or
other market corroborated inputs (level 2).
(iii) Inputs for the asset or liability that
are not based on observable market data (that is, unobservable
inputs) (level 3).
The following table analyses within the fair value hierarchy the
Company’s financial assets and liabilities (by class) measured at
fair value as at 31 March 2020.
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Assets |
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
|
(Unaudited) |
| Financial
assets at fair value |
|
|
|
|
|
|
|
| through
profit or loss |
|
|
|
|
|
|
|
|
-Investments |
|
|
|
|
|
|
|
|
-Bonds |
- |
|
66,319,552 |
|
10,413,637 |
|
76,733,189 |
|
-Asset
backed securities |
- |
|
58,553,612 |
|
- |
|
58,553,612 |
|
-Derivative assets:
Forward
currency contracts |
- |
|
22,901 |
|
- |
|
22,901 |
| Total
assets as at 31 March 2020 |
- |
|
124,896,065 |
|
10,413,637 |
|
135,309,702 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
| Financial
liabilities at fair value |
|
|
|
|
|
|
|
| through
profit or loss |
|
|
|
|
|
|
|
|
-Derivative
liabilities: Forward
currency contracts |
- |
|
2,009,928 |
|
- |
|
2,009,928 |
|
- |
|
2,009,928 |
|
- |
|
2,009,928 |
The following table analyses within the fair value hierarchy the
Company’s financial assets and liabilities (by class) measured at
fair value as at 30 September
2019.
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Assets |
|
(Audited) |
|
(Audited) |
|
(Audited) |
|
(Audited) |
| Financial
assets at fair value |
|
|
|
|
|
|
|
|
| through
profit or loss |
|
|
|
|
|
|
|
|
|
-Bonds |
|
- |
|
89,863,362 |
|
7,367,060 |
|
97,230,422 |
|
-Asset
backed securities |
|
- |
|
61,104,345 |
|
- |
|
61,104,345 |
|
-Derivative assets:
Forward
currency contracts |
|
- |
|
686,397 |
|
- |
|
686,397 |
Total
assets as at
30 September 2019 |
|
- |
|
151,654,104 |
|
7,367,060 |
|
159,021,164 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
| Financial
liabilities at fair value |
|
|
|
|
|
|
|
|
| through
profit or loss |
|
|
|
|
|
|
|
|
|
-Derivative
liabilities: Forward
currency contracts |
|
- |
|
34,760 |
|
- |
|
34,760 |
Total
liabilities as at
30 September 2019 |
|
- |
|
34,760 |
|
- |
|
34,760 |
Credit Securities which have a value based on quoted market
prices in active markets are classified in level 1. At the end of
the period, no Credit Securities held by the Company are classified
as level 1.
Credit Securities which are not traded or dealt on organised
markets or exchanges are classified in level 2 or level 3. Credit
securities priced at cost are classified as level 3. Credit
securities with prices obtained from independent price vendors,
where the Portfolio Manager is able to assess whether the
observable inputs used for their modelling of prices are accurate
and the Portfolio Manager has the ability to challenge these
vendors with further observable inputs, are classified as level 2.
Prices obtained from vendors who are not easily challengeable or
transparent in showing their assumptions for the method of pricing
these assets, are classified as level 3. Credit Securities priced
at an average of two vendors’ prices are classified as level 3.
Where the Portfolio Manager determines that the price obtained
from an independent price vendor is not an accurate representation
of the fair value of the Credit Security, the Portfolio Manager may
source prices from third party dealer quotes and if the price
represents a reliable and an observable price, the Credit Security
is classified in level 2. Any dealer quote that is over 20 days old
is considered stale and is classified as level 3.
There were no transfers between levels during the period.
Due to the inputs into the valuation of Credit Securities
classified as level 3 not being available or visible to the
Company, no meaningful sensitivity on inputs can be performed.
The following table presents the movement in level 3 instruments
for the period ended 31 March 2020 by
class of financial instrument.
|
|
|
Bonds |
|
|
Asset
backed securities |
|
Total |
|
|
|
|
|
|
|
|
|
| 31 March 2020
(Unaudited) |
|
|
£ |
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
| Opening balance |
|
|
- |
|
|
7,367,060 |
|
7,367,060 |
| Net purchases |
|
|
- |
|
|
3,498,673 |
|
3,498,673 |
| Net realised gain for
the period |
|
|
- |
|
|
19,511 |
|
19,511 |
| Net
unrealised loss for the period |
|
- |
|
|
(471,607) |
|
(471,607) |
| Closing balance |
|
|
- |
|
|
10,413,637 |
|
10,413,637 |
The following table presents the movement in level 3 instruments
for the year ended
30 September 2019 by class of financial instrument.
|
|
|
Bonds |
|
|
Asset
backed securities |
|
Total |
|
|
|
|
|
|
|
|
|
| 30 September 2019
(Audited) |
|
|
£ |
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
|
| Opening balance |
|
|
65,597,915 |
|
|
9,709,398 |
|
75,307,313 |
| Net purchases |
|
|
(11,225,449) |
|
|
792,964 |
|
(10,432,485) |
| Net loss for the
year |
|
|
(1,517,620) |
|
|
(1,091,307) |
|
(2,608,927) |
| Net
unrealised gain/(loss) for the year |
|
289,073 |
|
|
(34,597) |
|
254,476 |
| Transfer into Level
3 |
|
|
- |
|
|
2,500,000 |
|
2,500,000 |
| Transfer out of Level
3 |
|
|
(53,143,919) |
|
|
(4,509,398) |
|
(57,653,317) |
| Closing balance |
|
|
- |
|
|
7,367,060 |
|
7,367,060 |
The following table analyses within the fair value hierarchy the
Company’s assets and liabilities not measured at fair value at
31 March 2020 but for which fair
value is disclosed.
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total |
| 31 March
2020 |
|
|
£ |
|
£ |
|
£ |
|
£ |
| Assets |
|
|
|
|
|
|
|
|
|
| Other receivables |
|
|
- |
|
3,022,787 |
|
- |
|
3,022,787 |
| Cash and
cash equivalents |
|
2,113,544 |
|
- |
|
- |
|
2,113,544 |
| Total |
|
|
2,113,544 |
|
3,022,787 |
|
- |
|
5,136,331 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
| Amounts
due to broker |
|
- |
|
3,787,540 |
|
- |
|
3,787,540 |
| Other payables |
|
|
- |
|
596,835 |
|
- |
|
596,835 |
| Total |
|
|
- |
|
4,384,375 |
|
- |
|
4,384,375 |
The following table analyses within the fair value hierarchy the
Company’s assets and liabilities not measured at fair value at
30 September 2019 but for which fair
value is disclosed.
|
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
|
Total |
| 30
September 2019 |
|
£ |
|
£ |
|
£ |
|
£ |
| Assets |
|
|
|
|
|
|
|
|
|
| Amounts
due from broker |
|
- |
|
629,488 |
|
- |
|
629,488 |
| Other receivables |
|
|
- |
|
2,717,968 |
|
- |
|
2,717,968 |
| Cash and
cash equivalents |
|
7,197,759 |
|
- |
|
- |
|
7,197,759 |
| Total |
|
|
7,197,759 |
|
3,347,456 |
|
- |
|
10,545,215 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
| Amounts
due to broker |
|
- |
|
444,938 |
|
- |
|
444,938 |
| Other payables |
|
|
- |
|
282,609 |
|
- |
|
282,609 |
| Total |
|
|
- |
|
727,547 |
|
- |
|
727,547 |
The assets and liabilities included in the above tables are
carried at amortised cost; their carrying values are a reasonable
approximation of fair value.
Cash and cash equivalents include deposits held with banks.
Amounts due to brokers and other payables represent the
contractual amounts and obligations due by the Company for
settlement of trades and expenses. Amounts due from brokers and
other receivables represent the contractual amounts and rights due
to the Company for settlement of trades and income.
18. Segmental Reporting
The Board is responsible for reviewing the Company’s entire
portfolio and considers the business to have a single operating
segment. The Board’s asset allocation decisions are based on a
single, integrated investment strategy, and the Company’s
performance is evaluated on an overall basis.
The Company invests in a diversified portfolio of Credit
Securities. The fair value of the major financial instruments held
by the Company and the equivalent percentages of the total value of
the Company are reported in the Top Twenty Holdings.
Revenue earned is reported separately on the face of the
Condensed Statement of Comprehensive Income as interest income on
financial assets at fair value through profit and loss being
interest income received from Credit Securities.
19. Dividend Policy
The Board intends to distribute an amount at least equal to the
value of the Company’s excess income, as defined below, arising
each financial year to the holders of Ordinary Shares. However,
there is no guarantee that the dividend target of 6.0 pence per Ordinary Share for each financial
year will be met or that the Company will make any distributions at
all.
Excess income is defined as the distributions made with respect
to any income period, which comprise (a) the accrued income of the
portfolio for the period (for these purposes, the Company’s income
will include the interest payable by the Credit Securities in the
portfolio and amortisation of any discount or premium to par at
which a Credit Security is purchased over its remaining expected
life), and (b) an additional amount to reflect any income purchased
in the course of any share subscriptions that took place during the
period. Including purchased income in this way ensures that
the income yield of the shares is not diluted as a consequence of
the issue of new shares during an income period and (c) any gain /
(loss) on the foreign exchange contracts caused by the libor
differentials between each foreign exchange currency pair. This
definition differs from the IFRS “net income” definition which also
recognises gains and losses on financial assets.
The Board expects that dividends will constitute the principal
element of the return to the holders of Ordinary Shares.
The Company declared the following dividends in respect of the
profit for the period ended 31 March
2020:
| Period to |
Dividend rate per Share (pence) |
Net
dividend paid Income
(£) |
Ex-dividend date |
Record date |
Pay
date |
| 31 October 2019 |
0.50 |
925,896 |
14
November 2019 |
15
November 2019 |
29
November 2019 |
| 30 November 2019 |
0.50 |
925,896 |
19
December 2019 |
20
December 2019 |
31
December 2019 |
| 31 December 2019 |
0.50 |
925,896 |
16
January 2020 |
17
January 2020 |
31
January 2020 |
| 31 January 2020 |
0.50 |
925,896 |
13
February 2020 |
14
February 2020 |
28
February 2020 |
| 28 February 2020 |
0.50 |
925,896 |
19 March
2020 |
20 March
2020 |
31 March
2020 |
| 31 March 2020 |
0.50 |
1,100,396 |
23 April
2020 |
24 April
2020 |
4 May
2020 |
Under the Companies (Guernsey)
Law, 2008, the Company can distribute dividends from capital and
revenue reserves, subject to the net asset and solvency test.
The net asset and solvency test considers whether a company is
able to pay its debts when they fall due, and whether the value of
a company’s assets is greater than its liabilities. The Board
confirms that the Company passed the net asset and solvency
test for each dividend paid.
20. Ultimate Controlling
Party
In the opinion of the Directors on the basis of shareholdings
advised to them, the Company has no ultimate controlling party.
21. Subsequent Events
These Unaudited Condensed Interim Financial Statements were
approved for issuance by the Board on 26 May
2020. Subsequent events have been evaluated to this
date.
Subsequent to the period end and up to the date of signing of
the Unaudited Condensed Interim Financial Statements, the following
events took place:
Dividend
declarations
| Declaration
date |
|
|
|
|
|
|
|
|
Dividend rate per Share (pence) |
| 16 April 2020 |
|
|
|
|
|
|
|
|
0.50 |
| 7 May 2020 |
|
|
|
|
|
|
|
|
0.50 |
Share issues
On 15 April 2020, 500,000 shares
issued from the block listing for a total consideration of
£378,350.
On 17 April 2020, 1,635,830 shares
issued from the block listing for a total consideration of
£1,273,330.
COVID-19
The UK government in common with its European neighbours has
implemented unprecedented measures to restrict the possibility of
transmission of the COVID-19 virus by limiting personal contact and
international travel. Whilst the ultimate scope and duration of
these measures is currently unclear, they are likely to have a
severe impact on the UK Economy, which both the government and the
Bank of England are attempting to
offset with both traditional and unconventional fiscal and monetary
policy measures. The Company’s portfolio will be impacted by any
risks emerging from changes in the macroeconomic environment.
CORPORATE INFORMATION
Directors
Claire Whittet (Chair)
Christopher Legge
Ian Martin |
Receiving Agent
Computershare Investor Services PLC
The Pavillions
Bridgewater Road
Bristol, BS13 8AE |
|
|
|
|
|
Registered Office
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey, GY1 3QL |
UK Legal Advisers to the Company
Eversheds Sutherland
One Wood Street
London, EC2V 7WS |
|
|
|
|
|
|
|
Portfolio Manager
TwentyFour Asset Management LLP
8th Floor The Monument Building
11 Monument Street
London, EC3R 8AF |
Guernsey Legal Advisers to the Company
Carey Olsen
Carey House
Les Banques
St Peter Port
Guernsey, GY1 4BZ |
|
|
|
|
|
|
|
Alternative Investment Fund Manager
Maitland Institutional Services Limited
Hamilton Centre
Rodney Way
Chelmsford, CM1 3BY |
Independent Auditor
PricewaterhouseCoopers CI LLP
PO Box 321
Royal Bank Place
Glategny Esplanade
St Peter Port
Guernsey, GY1 4ND |
|
|
|
|
|
|
|
|
Custodian, Principal Banker and Depositary
Northern Trust (Guernsey) Limited
PO Box 71
Trafalgar Court
Les Banques
St Peter Port
Guernsey, GY1 3DA |
Registrar
Computershare Investor Services (Guernsey) Limited
1st Floor
Tudor House
Le Bordage
St Peter Port
Guernsey, GY1 1DB |
|
|
|
|
|
|
|
|
Administrator and Company Secretary
Northern Trust International Fund Administration
Services (Guernsey) Limited
PO Box 255
Trafalgar Court
Les Banques
St Peter Port
Guernsey, GY1 3QL |
Broker and Financial Adviser
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London, EC4M 7LT |
|
|
|
|
|
|
|