TIDMRMII TIDMTTM
RNS Number : 1558V
RM Infrastructure Income PLC
08 August 2022
RM INFRASTRUCTURE INCOME PLC
HALF-YEARLY REPORT
FOR THE SIX MONTHSED 30 JUNE 2022
About us
How we invest
RM Infrastructure Income plc (the 'Company') aims to generate
attractive and regular dividends through investment in secured debt
instruments of UK Small and Medium sized Enterprises ('SMEs'), and
mid-market corporates and/or individuals including any loan,
promissory notes, lease, bond, or preference share (such debt
instruments, as further described in the prospectus, being 'Loans')
sourced or originated by RM Capital Markets Limited (the
'Investment Manager') with a degree of inflation protection through
index-linked returns where appropriate.
Where we invest
Having had a general sectoral lending approach since inception,
the Company has narrowed the sector focus since 2021 to investments
within the social and environmental infrastructure sectors.
Our ethos
The Company aims to make a difference with the deployment of its
capital and as such has adopted an impact framework allowing the
measurement and reporting of impact from investments made. In
addition to this the firm seeks to target investments directly
linked to achieving outcomes linked to six Sustainable Development
Goals ("SDGs").
Company highlights (as at 30 June
2022)
3.250p 27% of GAV GBP128.6m
Dividend pence per share CBILS* and RLS** loans Gross assets
+2.7% 35 1.91 years
Average life of
NAV Total return Number of loans investments
*Coronavirus Business Interruption
Loan Scheme
**Recovery Loan Scheme
Portfolio at a glance
Financial Information
As at 30 June As at 30 June
2022 2021
----------------------------------------- -------------- --------------
Gross asset value (GBP'000) GBP 128,630 GBP124,769
Net Asset Value ("NAV") (GBP'000) GBP110,389 GBP112,348
NAV per Ordinary Share (pence) 93.68p 95.25p
Ordinary Share price (pence) 90.75p 90.00p
Ordinary Share price discount to NAV(1) (3.1%) (5.5%)
Dividend (pence) paid in respect of the
Period 3.250p 3.250p
Performance Summary
% change(2,4) % change(3,4)
----------------------------------------- -------------- --------------
Total return - Ordinary Share NAV and
dividends(1) +2.7% +5.0%
Total return - Ordinary Share price and
dividends(1) -1.1% +7.3%
(1) These are Alternative Performance Measures ("APMs").
(2) Total returns for the period to 30 June 2022, including
dividend reinvestment.
(3) Total returns for the period to 30 June 2021, including
dividend reinvestment.
(4) Source: The Company's Factsheet.
Alternative Performance Measures ("APMs")
The financial information and performance summary data
highlighted in the footnote to the above tables represent are
considered to represent the APMs of the Company. Definitions of
these APMs together with how these measures have been calculated
can be found in the Interim Report.
PORTFOLIO SUMMARY ( as at 30 June 2022)
Largest 10 loans by drawn amounts across the entire
portfolio
Investment type Valuation Percentage
(+)
Business activity (Private/Public/Bond) GBP'000 of gross
asset (%)
-------------------------------- ----------------------- ---------------- -----------
Care home Private Loans 11,830 9.2
Asset finance Private Loans 10,163 7.9
Automotive parts manufacturing Private Loans 8,899 6.9
Hotel Private Loans 8,474 6.6
Gym franchise Private Loans 7,906 6.1
Healthcare Bond 6,891 5.4
Hotel Private Loans 6,468 5.0
Care home Private Loans 4,985 3.9
Hotel Private Loans 4,982 3.9
Student Accommodation Private Loans 4,981 3.9
-------------------------------- ----------------------- ---------------- -----------
Ten largest holdings 75,579 58.8
Other private loan investments 47,288 36.8
Wholly owned asset 3,593 2.8
--------------------------------------------------------- ---------------- -----------
Total holdings 126,460 98.4
Other net current assets 2,170 1.6
--------------------------------------------------------- ---------------- -----------
Gross assets 128,630 100.0
--------------------------------------------------------- ---------------- -----------
* The Company's gross assets comprise the net asset values of
the Company's Ordinary Shares and the Bank loan, with the
calculation can be found in the Interim Report.
(+) Valuation conducted by external Valuation Agent.
CHAIR'S STATEMENT
Introduction
Dear Shareholders,
On behalf of the Board, I am pleased to report on the first half
of 2022 (the "Period"). The first six months of the year have seen
a robust Net Asset Value ("NAV") and Share Price Total Return
outperformance versus more traditional corporate bond funds and
leveraged loan indices.
I noted 12 months ago in this report that "the Board is
conscious of rising prices and the threat of inflation to fixed
income securities. With that in mind the Investment Manager has
constructed a high yielding portfolio of largely fixed rate
exposures with a short duration...should a global bond market
sell-off materialise this will mitigate the risk for the Company
portfolio". This expected global bond decline has occurred sharply
over the first half of the year and our focus on investing in
bespoke, short duration and high yielding loans originated by the
Investment Manager combined with robust security packages has
served us well during this period.
Credit spreads as measured by the Markit iTraxx Europe Crossover
index have widened materially, doubling from 240 to 580 at the
Period end. These levels were last seen during the peak fear month
of March 2020 from Covid-19 and before that 10-years ago during the
European sovereign debt crisis.
In addition to wider corporate spreads, UK government bond
yields have risen by approximately 125bps on 5 year and 140bps on
10 year instruments. This increase in government yields has
contributed to UK government and corporate bonds that price over
the "risk free rate" to fall by approximately 5% for 5-year
instruments and 10% for 10-year instruments. This vindicates our
intention at this point of the interest cycle to keep the duration
of the RMII portfolio at or under 3 years and thus minimise any
interest rate exposure.
During the Period, The Good Economy released their first Impact
Report which had several positive conclusions and a number of
recommendations to achieve further progress which are now being
implemented. The Investment Manager will go into this in further
details within their report.
Robust NAV performance
The NAV % Total Return for the Period was 2.68% which is
slightly behind our target, however, when set against the weaker
backdrop for credit as described above, we believe this is
satisfactory.
Delivering stable income
Since inception there have been 21 quarterly distributions on or
above target to Shareholders totalling 32.35 pence.
The Company paid the fourth interim dividend for the fourth
quarter of 2021 of 1.625 pence per Ordinary Share on 25 March 2022
leading to a full year dividend for 2021 of 6.5 pence per share. In
addition, the first interim dividend of 1.625 pence per share for
Q1 2022 was paid on 24 June 2022.
The Board has declared a second interim dividend of 1.625 pence
per Ordinary Share for Q2 2022, which will be payable on 30
September 2022 to Shareholders on the register at the close of
business on 2 September 2022. Therefore, the aggregate dividend in
respect of the Period is 3.25 pence per Ordinary Share.
As of 30 June 2022, the Company had 117,840,988 Ordinary Shares
in issue and the closing mid-price was 90.75 pence per Ordinary
Share. The NAV per Ordinary Share was 93.68 pence, correspondingly
the share price to NAV was a circa 3.1% discount.
Portfolio
The portfolio remained stable with 35 loans, which is the same
number of loans as at 31 December 2021 and invested assets of
GBP131m (GBP132m as at 31 December 2020). Overall private debt
investments represent circa 94% of the portfolio holdings and 4%
within equity (unlevered ownership of investment reference 68,
student accommodation asset Coventry.)
Compared to the position at the Company's year end, the average
yield on investments of 8.73% for the Period is 30 basis points
higher and the weighted average life of the investments for the
Period is approximately 1.91 years, which has fallen from 2.22
years at the Company's year end. The percentage of investments
linked to Sonia/Libor reduced from 11% to 8% as some floating rate
exposure was repaid. However, this is expected to increase again
over H2 2022 as most new investments have coupons linked to SONIA
or Bank of England base rates. Our messaging has been consistent
since IPO; government yields have been unsustainably low and within
the portfolio we have not been seeking to take duration risk. Thus,
during the Period, the short dated average life of the portfolio
has been a key component of the outperformance versus other more
liquid fixed income funds and the investment manager will further
elaborate on this within their report.
The number of senior secured loans or Coronavirus Business
Interruption Loan Scheme ("CBILS") / Recovery Loan Scheme ("RLS")
classified loans within the portfolio has increased over the Period
from 61% to 63%.
The portfolio continues to be well diversified across
investments and sectors and the top 10 investments represent circa
67.7% of NAV and with regards to the focus sectors 50% of NAV is
now invested into Social & Environmental Infrastructure
transactions.
During the latter part of July and in early August the Board
visited two of your holdings, Trent and Clyde Street. These two
investments could not be more different. Trent is a manufacturing
business with a long and proud history, adapting to a changing
world and reinventing itself as all businesses must do from time to
time. On the other hand, Clyde Street is a brand-new hotel with
Virgin Group as its operator which is due to open soon. The Board
wishes both ventures every success in the future.
Outlook
For the first time since pre-quantitative easing, we are now
seeing dispersion within the broader corporate bond market where
risk is currently being more accurately reflected by individual
credit spreads. This offers opportunities in more broadly
syndicated private loans which we have not seen since the RMII IPO
in 2016, furthermore the bespoke loans originated by RM Funds price
above the syndicated credit curve and allows for wider pricing and
better terms to be negotiated by the Investment Manager.
Our key theme is that now is a good time to be a credit investor
and probably the best environment to be deploying and investing
capital. Risk is being appropriately priced and, in our view,
offers compelling investor returns with the ability to structure
enhanced security and improved covenants on transactions at this
point of the economic cycle as credit conditions tighten. Since
IPO, private credit as measured by RMII and other investment trusts
specialising in direct lending have demonstrated resilience in
preserving capital versus public bond and loan markets alternatives
(as measured by high yield and leveraged loan indices or exchange
traded funds). This is important for investors looking to generate
total returns principally from fixed income and in particular
corporate lending.
The Board are grateful for the support of Shareholders and are
delighted to have such a broad investor base. We would also like to
thank RM Funds and the other professional advisors for their hard
work and support. Please do not hesitate to contact me through Peel
Hunt or Singer Capital Markets if any additional information is
required.
Norman Crighton
Chairman
5 August 2022
INVESTMENT MANAGER'S REPORT
Overview
Income Performance & NAV % Total Return
RM Funds is pleased with the Company's continued positive
performance in the Period, in which the portfolio delivered a
steady net interest income with two further dividends declared and
paid in the Period totalling 3.25 pence per Ordinary Share.
Overall, since inception there have been 21 distributions totalling
32.35 pence per Ordinary Share to Shareholders.
The NAV % Total Return for the period was 2.68%. Whilst slightly
behind the Company's target, the portfolio's performance versus the
observable credit peer group is favourable, as outlined below:
NAV % Total
Return
---------------
YTD ITD
------- ------
RM Infrastructure Income NAV 2.68 34.22
RM Infrastructure Income Share
Price TR -1.06 28.23
S&P European Leveraged Loan
Index -7.62 8.73
MarkIT iBoxx EUR Liquid High
Yield TRI -13.40 0.21
Since IPO in December 2016 the Markit iBoxx EUR liquid High
Yield Total Return has been broadly flat with the index down YTD
-13.4%. The S&P European Leverage Loan index has fared better,
however is still down -7.62% YTD and up 8.73% since December 2016.
Set against this, the Share Price Total Return % and NAV Total
Return % for RMII has been materially better than these
comparables.
Share Price
The Company's share price has pulled back from 95.00 pence to
90.75 pence at the Period end. Again, as shown in the table above,
when set against the performance of other fixed income funds this
we believe is satisfactory. The share price discount has remained
relatively stable moving from -0.89% at year end to -3.13% as of 30
June 2022, with no buybacks conducted during the Period.
The target remains to continue to reduce this discount and
return to a share price premium to NAV. Overall, the share
price/discount trend is supportive that this will happen when fixed
income markets start to firm up a little and capital starts to flow
back into the space.
Sustainability and Impact Framework
Sustainability and ESG are at the heart of the RM Fund's
investment process. The Investment Manager incorporates
comprehensive ESG screening for each transaction in addition to the
independent Impact Reporting Score and targeting sustainability
linked lending.
The Good Economy, a leading social advisory firm, has been
engaged by the Company to provide an independent assessment on the
ESG and Impact outcomes of the portfolio. They conducted a scoring
of the portfolio during H1 2021 and released their first impact
report during April 2022. The key findings were as follows:
-- Portfolio alignment with RMII impact objectives has increased
by 4% in the last 12 months above the baseline alignment figure of
46%.
-- The average Impact Score across the portfolio for only those
investments which align to RMII's impact objectives is 42.56, which
will provide a baseline against which to measure progress in future
reporting cycles.
-- RMII's current portfolio of loans is estimated to support
approximately 1,115 jobs. The majority of these are in the
construction industry.
-- RMII continues to be more regionally distributed than the
average private debt fund, with 99% of the value of live loans in
the UK being invested outside of London compared to the industry
average of 65%
Investment Manager aligned with Shareholder interest
RM Funds purchased 25,000 Ordinary Shares in the Company during
the Period. This takes the direct investment in the Company to
1,291,625. The Investment Manager continues to believe this is the
best way of demonstrating its alignment with the interests of other
Shareholders. Since the Period end RM Funds have acquired a further
12,500 Ordinary Shares, taking the Investment Manager's total
holding of Ordinary Shares to 1,304,125.
Market environment
Quantitative easing compressed spreads in liquid bonds as
central bank buying combined with cheap money meant that in the
search for yield investors purchased many names indiscriminately
and taking substantial duration and credit exposures. This risk
/reward profile in traditional corporate bond funds seemed
unattractive to RM Funds. The recent reversal in credit spreads and
underlying government bond yields has been swift and regardless of
whether there is a recession or not, credit now offers attractive
opportunities. For private credit, all in yields and borrower cost
of funds are rising to reflect tighter credit conditions. This is a
good thing for investors seeking to allocate to the sector as this
lender led market allows for continued strengthening of covenant
and security packages combined with higher returns.
A year ago, in the 2021 Interim Report we noted that "the yield
on the 10-year UK government bond rose during the period from circa
30bps to 85bps. Whilst this is a material move given the initial
starting point as the yield has more than doubled the current 85bps
yield level is still extremely low by historic standards. There are
therefore clear risks to government bonds, investment grade and
high yield prices should these government benchmark yields move
materially higher".
Within the investment team at RM Funds this has therefore been
our base case scenario outcome for several years and hence the
focus on short-dated maturities and high yielding well covenanted
loans. UK Government 10-year yields are at 2.2% at the Period end
leading to price declines in the "risk free" 10-year UK Government
bonds of circa 15% since the last half yearly report was released.
This higher UK government yield curve combined with wider credit
spreads has led to meaningful price reductions across corporate
bonds.
Portfolio Update
As at the Period end, the capital available for investment was
largely fully deployed and the average yield on investments was
8.73%, this has increased by 30bps since the year ended 31 December
2021 and reflects the yield widening during the Period. The
portfolio remains well diversified with 35 investments across 12
sectors. RM Funds continues to believe that the CBILS and the
Recovery Loan Scheme, UK Government partial guarantee also offers a
material credit enhancement for the portfolio.
RM Funds continue to be able to originate a strong pipeline of
transactions and the constraining factor is the availability of
capital due to the share price discount to NAV. Should this change,
the Investment Manager is well placed to be able to swiftly deploy
further capital.
Overall, income generation of GBP5.25m was similar to the first
half of 2021 (GBP5.3m H1 2021), split between cash pay and Payment
in Kind ("PIK") 85%/15% which is up from 79%/21% during the same
period last year. For the Period, there were nine drawdowns to
existing facilities, five new investments, six partial repayments
and three full repayments which again further demonstrate the
successful execution of the business strategy as the Company makes
loans, receives interest from borrowers and continues to get
repaid.
The portfolio NAV was circa 50% invested into the focus sectors
of Social & Environmental which is expected to increase to over
60% by year end as several vintage loans are expected to be repaid
over the remainder of the year having now come out of their
non-call period and are relatively expensive capital for our
borrowers.
As at 31 December 2021 there were three loans which were under
enhanced monitoring by the investment team and at the end of the
Period this still remains the case. The key developments during the
Period for each of these loans are detailed below:
1. Trent Capital (Loan Reference 62 & 63)
Overview: This loan is to a company focused on the manufacture
of zero carbon home heating products: air source heat pumps and
electric boilers. It is estimated that 31% of UK carbon reduction
comes from domestic heating and hot water and RM sees the support
of these businesses operating in this sector as key to meeting
carbon reduction targets. This loan also has a property portfolio
providing significant additional collateral. The total market value
exposure is currently 4.15 % of Company net assets.
Update: The loan balance has reduced by GBP392,900 during the
Period due to a partial refinancing of the secured assets.
Realising the secured collateral is expected to accelerate in H2 as
marketing of the secured properties is well underway. Underlying
business performance of the operating entity has been robust in the
Period with a material increase in gross margin observed. Operating
costs have been reduced over recent months which will lead to
material improvements in credit metrics over the remainder of the
year, allowing further deleveraging of the exposure. The Company
also has an equity position in Trent, currently valued at zero.
2. Hotel development & contractor, Glasgow (Loan References 58, 79, 80 & 92)
Overview: This hotel was scheduled to open in June 2022 and is
to be operated by Virgin Hotels under a 35-year Hotel Management
Agreement. The total market value exposure that is correlated to
the outcome of this asset is currently 10.38% of Company net
assets.
Update: Well documented global supply chain issues have delayed
practical completion from June 2022 to October 2022. This has led
to increased cost overrun on the project which is currently being
addressed by the lending group. To reflect the increase in risk of
this project, the credit provisions have been increased over the
Period. Most of the exposure has been funded by CBILS or RLS loans
and to date the loans have been marked lower to reflect the delayed
opening date. Consequently, the downside exposure from current
marks is limited given the partial government guarantee provided by
such CBILS/RLS facilities.
3. Purpose Built Student Accommodation ("PBSA"), Coventry (Loan reference 68)
Overview: This asset is wholly owned by RMII and has had delays
becoming income generative due to issues obtaining recommissioning
approval from the fire department. These issues largely relate to
the works conducted by the original scheme architect and main
contractor and are being addressed so that students can take
occupation of the building.
Update : a substantial works programme has been undertaken over
recent months to assess why the current cladding and building is
non-compliant and to appoint contractors and consultants to ensure
compliance. Work is progressing with a view to being open during
the 2022/2023 academic year. Concurrent to this work stream a legal
claim is being progressed with a view to obtaining payment for
these works from the original scheme contractors.
Construction assets
Overall construction funding accounts for 16.39% of gross
assets. RM Funds has successfully originated several aged care
construction facilities. A lack of bank funding has offered
opportunities for specialist lenders such as RMII to structure high
quality loans with excellent risk adjusted returns. One aged care
home construction project has reached practical completion during
the Period and a second is due to reach practical completion
shortly. A third aged care home is about to start the construction
cycle with the loan document being recently executed.
The other material construction asset is the hotel development
as described above which is expected to reach completion during the
second half of 2022.
Outlook
Whilst the markets are volatile with inflation and rises in
interest rates dominating investors thoughts, the actual outlook
for investors seeking corporate bond exposure is now better than it
has been for many years. Quantitative Easing and the movement to
Quantitative Tapering combined with a shift in interest rate
expectations have led to a significant movement in prices such that
credit and interest rate risks are beginning to be priced more
appropriately by the public markets. Benchmark names are trading at
multi year elevated yield levels thus offering real value.
Importantly private credit prices over public credit curves and
therefore we are expecting to see RMII portfolio yields continue to
rise as new capital is deployed with higher coupons. RM expect to
see continued higher pricing over the coming months leading to
increased coupons and thus RM think this environment is an
excellent one to be allocating capital to bespoke loans. Our focus
for the deployment of these new loans remains on linking coupons to
SONIA or Bank of England base rate and working with borrowers that
can pass through inflationary cost pressures within their
business.
RM Capital Markets Limited
5 August 2022
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
Report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Chair's
Statement and the Investment Manager's Report in this half-yearly
report provide details of the important events which have occurred
during the Period and their impact on the financial statements. The
following statements on related party transactions, going concern
and the Directors' Responsibility Statement, together, constitute
the Interim Management Report for the Company for the six months
ended 30 June 2022. The outlook for the Company for the remaining
six months of the year ending 31 December 2022 is discussed in the
Chair's Statement and the Investment Manager's Report.
Principal and emerging risks and uncertainties
The Board has a dynamic risk management register in place to
help identify principal and emerging risks in the business and
oversee the effectiveness of internal controls and processes. The
principal and emerging risks and uncertainties facing the Company
are as follows:
-- Market risk;
-- Liquidity risk;
-- Risks associated with meeting the Company's investment
objective or target dividend yield of 6.5%;
-- Financial risk including leverage and borrowing risk;
-- Regulatory risk and internal controls risk;
-- The ongoing impact of the global pandemic; and
-- The increasing geopolitical tensions in the region.
Emerging risks are considered by the Board at its quarterly
meetings and by the Audit and Management Engagement Committee as
part of its risk management and internal control review. Failure to
identify emerging risks may cause reactive actions rather than
being proactive and the Company could be forced to change its
structure, objective or strategy and, in worst ca se, could cause
the Company to become unviable.
A detailed explanation of the principal and emerging risks and
uncertainties to the Company are detailed in the Company's most
recent Annual Report for the year ended 31 December 2021, published
on 21 April 2022, which can be found on the Company's website at
https://rm-funds.co.uk/rm-infrastructure-income/investor-relations/.
The Board is of the opinion that these principal and emerging risks
are equally applicable to the remaining six months of the financial
year as they were to the six months being reported on.
Since the publication of the 2021 Annual Report and Accounts,
there continues to be increased risk levels within the global
economy posed by the secondary effects of the Covid-19 pandemic and
the war in Ukraine. The Board has considered the impact of the
continued uncertainty on the Company's investment objectives,
portfolio and stakeholders and, continues to monitor the situation
closely to both assess and mitigate any impact.
The Investment Manager and other key service providers provide
periodic reports to the Board on operational resilience. The Board
is satisfied that the key service providers have the ability to
continue their operations efficiently a hybrid working
environment.
Related party transactions
The Company's Investment Manager, RM Capital Markets Limited is
considered a related party under the Listing Rules. Details of the
amounts paid to the Company's Investment Manager and the Directors
during the Period are detailed in the Notes to the Financial
Statements.
Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this document. In reaching
this conclusion, the Directors have considered the Company's
portfolio of loan investments of GBP126.5 million (30 June 2021:
GBP123.3 million; 31 December 2021: GBP126.7 million) as well as
its income and expense flows and the cash position of GBP0.7
million (30 June 2021: GBP4.2 million; 31 December 2021: GBP3.3
million). The Company's net assets at 30 June 2022 were GBP110.4
million (30 June 2021: GBP112.3 million; 31 December 2021: GBP111.3
million). The total expenses (excluding finance costs and taxation)
for the period ended 30 June 2022 were GBP1.1 million (30 June
2021: GBP1.0 million; 31 December 2021: GBP2.6 million). At the
date of approval of this document, based on the aggregate of
investments and cash held, the Company has substantial operating
expenses cover.
As part of their assessment, the Directors have fully considered
each of the Company's loans, giving careful consideration to the
consequences for the Company of continuing uncertainties in the
global economy. Income obligations have been met by borrowers and
there is a diverse portfolio of Loan investments; Directors see an
increase in the risk to the income from the Company loans within
the portfolio as the outlook is uncertain. However, these loans
have a number of specific lender protections (such as loan to value
covenants and cashflow or earnings covenants) which are being
monitored.
Given the level of market volatility experienced due to the
ongoing impact of the Covid-19 pandemic, the Investment Manager has
performed stress tests on the Company's income and expenses and the
Directors remain comfortable with the liquidity of the Company. As
part of their assessment, the Board have fully considered and
assessed the Company's portfolio of investments, giving careful
consideration to the consequences for the Company of continuing
uncertainties in the global economy. The Russian invasion of
Ukraine and the ongoing Covid-19 pandemic have created significant
supply chain disruption, exacerbating inflationary pressures
worldwide. A prolonged and deep market decline could lead to
falling values to the underlying business or interruptions to
cashflow, however the Company currently has more than sufficient
liquidity available to meet any future obligations.
Statement of Directors' responsibility for the Interim
Report
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
the Half-yearly report has been prepared in accordance with IAS 34
Interim Financial Reporting.
-- The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure
Guidance and Transparency Rules.
Norman Crighton
Chairman
For and on behalf of the Board of directors
5 August 2022
Condensed unaudited Statement of Comprehensive Income
For the six months ended 30 June 2022
Six months ended Six months ended Year ended 31 December
30 June 2022 30 June 2021 2021*
Revenue Capital Total Revenue Capital Total Revenue Capital Total
NOTES GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(Losses)/gains
on investments - (929) (929) - 2,310 2,310 - 1,263 1,263
Income 4 5,446 - 5,446 5,311 - 5,311 11,164 - 11,164
Investment
management
fee 5 (490) - (490) (517) - (517) (1,013) - (1,013)
Other expenses 5 (612) - (612) (523) (36) (559) (1,598) - (1,598)
---------------- ------ -------- -------- ----------- ---------- ---------- ---------- -------- -------- --------
Return before
finance costs
and taxation 4,344 (929) 3,415 4,271 2,274 6,545 8,553 1,263 9,816
Finance costs (431) - (431) (373) - (373) (797) - (797)
---------------- ------ -------- -------- ----------- ---------- ---------- ---------- -------- -------- --------
Return on ordinary
activities before
taxation 3,813 (929) 2,984 3,898 2,274 6,172 7,756 1,263 9,019
Taxation 6 (15) - (15) (4) 4 - (14) - (14)
---------------- ------ -------- -------- ----------- ---------- ---------- ---------- -------- -------- --------
Return on
ordinary
activities
after taxation 3,898 (929) 2,969 3,894 2,278 6,172 7,742 1,263 9,005
---------------- ------ -------- -------- ----------- ---------- ---------- ---------- -------- -------- --------
Return per
ordinary
share (pence) 8 3.31p (0.79p) 2.52p 3.30p 1.93p 5.23p 6.56p 1.07p 7.63p
---------------- ------ -------- -------- ----------- ---------- ---------- ---------- -------- -------- --------
*Audited
The total column of this statement is the profit and loss account of the
Company.
All the revenue and capital items in the above statement derive from continuing
operations.
'Return on ordinary activities after taxation' is also the 'Total comprehensive
income for the Period'.
The notes in the Interim Report form an integral part of these financial
statements.
Condensed unaudited Statement of Financial Position
As at 30 As at 30 As at 31
June 2022 June 2021 December 2021*
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ ----------- ----------- ----------------
Fixed assets
Investments at fair value through
profit or loss 3 126,460 123,347 126,674
Current assets
Cash and cash equivalents 690 4,176 3,310
Receivables 3,187 3,405 2,684
--------------------------------------- ------ ----------- ----------- ----------------
3,877 7,581 5,994
Payables: amounts falling due
within one year
Payables (1,707) (6,159) (1,847)
Bank loan - Credit facility (18,241) (12,421) (19,571)
(19,948) (18,580) (21,418)
--------------------------------------- ------ ----------- ----------- ----------------
Net current liabilities (16,071) (10,999) (15,424)
--------------------------------------- ------ ----------- ----------- ----------------
Total assets less current liabilities 110,389 112,348 111,250
--------------------------------------- ------ ----------- ----------- ----------------
Net assets 110,389 112,348 111,250
--------------------------------------- ------ ----------- ----------- ----------------
Capital and reserves: equity
Share capital 7 1,178 1,179 1,178
Share premium 70,168 70,167 70,168
Special reserve 44,813 44,910 44,813
Capital reserve (9,078) (7,134) (8,149)
Revenue reserve 3,308 3,226 3,240
Total shareholders' funds 110,389 112,348 111,250
--------------------------------------- ------ ----------- ----------- ----------------
NAV per share - Ordinary Shares
(pence) 9 93.68p 95.25p 94.41p
--------------------------------------- ------ ----------- ----------- ----------------
*Audited
Approved by the Board of Directors and authorised for issue on 5
August 2022.
RM Infrastructure Income plc incorporated in England and Wales
with registered number 10449530.
The notes in the Interim Report form an integral part of these
financial statements.
Condensed unaudited Statement of Changes in Equity
For the six months ended 30
June 2022
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- --------- --------- -------------
Balance as at beginning
of the period 1,178 70,168 44,813 (8,149) 3,240 111,250
Return on ordinary activities - - - (929) 3,898 2,969
Redemption of shares 7 - - - - - -
Share buyback costs - - - - - -
Dividend paid 10 - - - - (3,830) (3,830)
Balance as at 30 June
2022 1,178 70,168 44,813 (9,078) 3,308 110,389
------------------------------- ------ --------- --------- --------- --------- --------- -------------
For the six months ended 30 June 2021
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- --------- --------- -------------
Balance as at beginning
of the period 1,184 70,168 45,277 (9,412) 3,167 110,384
Return on ordinary activities - - - 2,278 3,894 6,172
Redemption of shares 7 (5) 5 (367) - - (367)
Share buyback costs - (6) - - - (6)
Dividend paid 10 - - - - (3,835) (3,835)
Balance as at 30 June
2021 1,179 70,167 44,910 (7,134) 3,226 112,348
------------------------------- ------ --------- --------- --------- --------- --------- -------------
For the year ended 31 December 2021*
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- --------- --------- -------------
Balance as at beginning of
the year 1,184 70,168 45,277 (9,412) 3,167 110,384
Return on ordinary activities - - - 1,263 7,742 9,005
Buy back of shares 7 (6) 6 (464) - - (464)
Shares buy back costs - (6) - - - (6)
Dividend paid 10 - - - - (7,669) (7,669)
------------------------------- ------ --------- --------- --------- --------- --------- -------------
Balance as at 31 December
2021 1,178 70,168 44,813 (8,149) 3,240 111,250
*Audited
Distributable reserves comprise: the revenue reserve; capital reserve
attributable to realised profits; and the special reserve.
Share capital represents the nominal value of shares that have been issued.
The share premium includes any premiums received on the issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from share premium.
The notes in the Interim Report form an integral part of these financial
statements.
Condensed unaudited Statement of Cash Flows
For the six months ended
30 June 2022
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2022 2021 2021*
GBP'000 GBP'000 GBP'000
------------------------------------------ --- --------------- --------------- -----------------
Operating activities
Return on ordinary activities
before finance costs and taxation** 3,415 6,545 9,816
Adjustment for losses/(gains)
on investments 720 (2,310) (823)
Adjustment to amortisation
costs - - 114
(Increase)/decrease in receivables (503) (237) 484
Decrease in payables (155) (320) (812)
PIK adjustments to the operating
cash flow (1,310) (1,306) (2,539)
Net cash flow from operating
activities 2,167 2,372 6,240
------------------------------------------ --- --------------- --------------- -----------------
Investing activities
Private loan repayments/ bonds
sales proceeds 13,455 37,816 56,292
Private loans issued/ bonds
purchases (12,651) (30,583) (44,582)
Realisation of investment
in subsidiary - non cash adjustment - - 50
Purchase of equity investments - (5,100) (5,100)
Net cash flow from investing
activities 804 2,133 6,660
------------------------------------------ --- --------------- --------------- -----------------
Financing activities
Finance costs (431) (260) (684)
Zero Dividend Preference Shares
('ZDP') loan principal - 10,870 -
ZDP loan interest payable - 1,186 -
ZDP loan principal and accumulated
interest paid - (12,056) (12,056)
Ordinary Share bought back 7 - (367) (464)
Ordinary Share buyback costs - (6) (6)
Oaknorth loan facility drawdown 5,670 18,521 30,071
Oaknorth loan facility repaid (7,000) (16,600) (21,000)
Equity dividends paid 10 (3,830) (3,835) (7,669)
Net cash flow used in financing
activities (5,591) (2,547) (11,808)
------------------------------------------ --- --------------- --------------- -----------------
(Decrease)/Increase in cash (2,620) 1,958 1,092
Opening balance at beginning
of the period/year 3,310 2,218 2,218
------------------------------------------ --- --------------- --------------- -----------------
Balance as at the period/year
end 690 4,176 3,310
------------------------------------------ --- --------------- --------------- -----------------
*Audited
** Cash inflow from interest on investment holdings was GBP3,650,000
(30 June 2021: GBP3,352,000; 31 December 2021: GBP9,561,000).
Notes to the financial statements
1. GENERAL INFORMATION
RM Infrastructure Income plc (the "Company") was incorporated in England
and Wales on 27 October 2016 with registered number 10449530, as a closed-ended
investment company. The Company commenced its operations on 15 December
2016. The Company intends to carry on business as an investment trust
within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act
2010.
The Company's investment objective is to generate attractive and regular
dividends through investment in secured debt instruments of UK SMEs and
mid-market corporates including any loan, promissory notes, lease, bond
or preference share sourced or originated by the Investment Manager with
a degree of inflation protection through index-linked returns where appropriate.
The registered office is 6(th) Floor, 125 London Wall, Barbican, London
EC2Y 5AS.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Statement of compliance
The interim unaudited financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting and the Disclosure Guidance and
Transparency Rules ('DTRs') of the UK's Financial Conduct Authority. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the financial statements
of the Company as at and for the year ended 31 December 2021. The financial
statements for the year ended 31 December 2021 have been prepared in accordance
with the UK adopted international accounting standards. The financial
information for the year ended 31 December 2021 in the interim unaudited
financial statements has been extracted from the audited Annual Report
and Accounts.
When presentational guidance set out in the Statement of Recommended Practice
('SORP') for Investment Companies issued by the Association of Investment
Companies ('the AIC') in April 2021 is consistent with the requirements
of UK adopted international accounting standards, the Directors have sought
to prepare the financial statements on a basis compliant with the recommendations
of the SORP.
Going concern
The Directors have adopted the going concern basis in preparing the financial
statements. Details of the Directors
assessment of the going concern status of the Company, which considered
the adequacy of the Company's resources and the impacts of the ongoing
Covid-19 pandemic and the Russian invasion of Ukraine, are given in the
Interim Report.
Accounting policies
The accounting policies used by the Company in preparing these interim
unaudited financial statements are the same as those applied by the Company
in its financial statements as at and for the year ended 31 December 2021.
3. INVESTMENT AT FAIR VALUE THROUGH PROFIT
OR LOSS
Six months Year ended
Six months ended 30 ended 30 June 31 December
June 2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------- -------------------- --------------- -------------
Financial assets held:
Equity investments 3,593 5,100 3,600
Bond investments 6,891 2,695 7,346
Private loan investments 115,976 115,552 115,728
126,460 123,347 126,674
-------------------------- -------------------- --------------- -------------
4. INCOME
Six months ended Six months ended Year ended 31
30 June 2022 30 June 2021 December 2021
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- ---------------
Income from investments
Bond and loan interest 3,913 3,814 8,581
Bond and loan PIK interest 1,494 1,307 2,277
Arrangement fees 22 31 102
Delayed Compensation fees
received - - 19
Other income 17 159 185
----------------- ----------------- ---------------
Total 5,446 5,311 11,164
---------------------------- ----------------- ----------------- ---------------
5. INVESTMENT MANAGEMENT FEE AND OTHER EXPENSES
Six months ended Six months ended Year ended 31
30 June 2022 30 June 2021 December 2021
GBP'000 GBP'000 GBP'000
------------------------ ----------------- ----------------- ---------------
Expenses charged
to revenue:
Investment management
fees 490 517 1,013
Other administration
charges 612 523 1,598
Total revenue expenses 1,102 1,040 2,611
------------------------ ----------------- ----------------- ---------------
Expenses charged to capital:
Capital transaction
costs - 36 -
------------------------ ----------------- ----------------- ---------------
Total capital expenses - 36 -
------------------------ ----------------- ----------------- ---------------
The Company's Investment Manager is RM Capital Markets Limited. Under the
amended Investment Management Agreement, effective 1 April 2020, the Investment
Manager is entitled to receive a management fee payable monthly in arrears
or as soon as practicable after the end of each calendar month an amount
one-twelfth of:
(a) 0.875 per cent. of the prevailing NAV in the event that the prevailing
NAV is up to or equal to GBP250 million; or
(b) 0.800 per cent. of the prevailing NAV in the event that the prevailing
NAV is above GBP250 million but less than GBP500 million; or
(c) 0.750 per cent. of the prevailing NAV in the event that the prevailing
NAV is above GBP500 million.
The management fee shall be payable in sterling on a pro-rata basis in respect
of any period which is less than a complete calendar month.
There is no performance fee payable to the Investment Manager.
6. TAXATION
Six months ended Six months ended Year ended 31 December
30 June 2022 30 June 2021 2021
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
Analysis of tax charge
/ (credit)
for the period/year:
Corporation tax 15 - 15 4 (4) - 14 - 14
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
Total current
tax charge/(credit) 15 - 15 4 (4) - 14 - 14
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- ----------
7. SHARE CAPITAL
As at 31 December
As at 30 June 2022 As at 30 June 2021 2021
---------------------- ---------------------- ----------------------
No. of No. of No. of
Shares GBP'000 Shares GBP'000 Shares GBP'000
------------------ ------------ -------- ------------ -------- ------------ --------
Allotted, issued
& fully paid:
Ordinary shares
of 1p 117,840,988 1,178 117,944,782 1,179 117,840,988 1,178
------------------ ------------ -------- ------------ -------- ------------ --------
At the period end, the Company has 117,840,988 (30 June 2021:
117,944,782; 31 December 2021: 117,840,988) Ordinary Shares in
issue with voting rights and 4,383,593 (30 June 2021: 4,279,799; 31
December 2021: 4,383,593) Ordinary Shares held in Treasury.
Share movement
The table below sets out the share movement for the six months
ended 30 June 2022.
------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 30 June
balance issued back 2022
----------------------- ----------------- ----------- ------------- -------------
Ordinary Shares 117,840,988 - - 117,840,988
------------------------- ----------------- ----------- ------------- -------------
The table below sets out the share movement for the six months
ended 30 June 2021.
------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 30 June
balance issued back 2021
----------------------- ----------------- ----------- ------------- -------------
Ordinary Shares 118,364,282 - (419,500) 117,944,782
------------------------- ----------------- ----------- ------------- -------------
The table below sets out the share movement for the year ended
31 December 2021.
------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 31 December
balance issued back 2021
----------------------- ----------------- ----------- ------------- -------------
Ordinary Shares 118,364,282 - (523,294) 117,840,988
------------------------- ----------------- ----------- ------------- -------------
8. RETURN PER ORDINARY
SHARE
Total return per Ordinary Share is based on the gain on ordinary activities
after taxation of GBP2,969,000 (30 June 2021: gain of GBP6,172,000;
31 December 2021: gain of GBP9,005,000).
Based on the weighted average of number of 117,840,988 (30 June 2021:
118,014,265; 31 December 2021: 117,976,668) Ordinary Shares in issue
for the six months ended 30 June 2022, the returns per share were as
follows:
Six months ended 30 June Six months ended 30 June
2022 2021
Revenue Capital Total Revenue Capital Total
---------------------------- ---------- --------- ------ ---------- --------- ------
Return per ordinary
share 3.31p (0.79p) 2.52p 3.30p 1.93p 5.23p
---------------------------- ---------- --------- ------ ---------- --------- ------
Year ended 31 December
2021
Revenue Capital Total
---------------------------- ---------- --------- ------ ---------- --------- ------
Return per ordinary
share 6.56p 1.07p 7.63p
---------------------------- ---------- --------- ------ ---------- --------- ------
9. NET ASSET VALUE PER SHARE
The net asset value per share is based on Company's total shareholders'
funds of GBP110,389,000 (30 June 2021: GBP112,348,000; 31 December 2021:
GBP112,750,000), and on 117,840,988 (30 June 2021: 117,944,782; 31 December
2021: 117,840,988) Ordinary Shares in issue at the period/year end.
10. DIVID
On the 3 March 2022, the Directors approved the payment of a final interim
dividend for year ended 31 December 2021 to Ordinary Shareholders at the
rate of 1.625 pence per Ordinary Share. The dividend had a record date
of 4 March 2022 and was paid on 25 March 2022. The dividend was funded
from the Company's revenue reserve.
On 25 May 2022, the Directors approved the payment of an interim dividend
at the rate of 1.625 pence per Ordinary Share. The dividend had a record
date of 6 June 2022 and was paid on 24 June 2022. The dividend was funded
from the Company's revenue reserve.
On 2 August 2022, the Directors approved the payment of an interim dividend
at the rate of 1.625 pence per Ordinary Share. The dividend will have a
record date of 2 September 2022 and will be payable on 30 September 2022.
The dividend will be funded from the Company's revenue reserve.
11. RELATED PARTY TRANSACTION
Fees payable to the Investment Manager are shown in the Statement of
Comprehensive Income. As at 30 June 2022 the fee outstanding to the Investment
Manager was GBP80,000 (30 June 2021: GBP82,000; 31 December 2021: GBP84,000).
Fees are payable at an annual rate of GBP36,000 to the Chair, GBP33,000
to the Chair of the Audit and Management Engagement Committee and GBP30,000
to the other Director.
The Directors had the following shareholdings in the Company, all of
which are beneficially owned.
As at 30 June As at 30 June As at 31 December
2022 2021 2021
Ordinary shares Ordinary shares Ordinary shares
Norman Crighton 29,982 29,982 29,928
Guy Heald 20,000 20,000 20,000
Marlene Wood 20,000 20,000 20,000
12. CLASSIFICATION OF FINANCIAL INSTRUMENTS
IFRS 13 requires the Company to classify its investments in a fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. IFRS 13 establishes a fair value hierarchy that prioritises
the inputs to valuation techniques used to measure fair value. The three
levels of fair value hierarchy under IFRS 13 are as follows:
Level 1
Inputs are quoted prices in active markets for identical assets or liabilities
that the entity can access at the measurement date.
Level 2
Inputs other than quoted market prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3
Inputs are unobservable for the asset or liability.
The classification of the Company's investments held at fair value through
profit or loss is detailed in the table below:
30 June 2022 30 June 2021
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- -------- -------- --------- ---------- -------- -------- ------------
Financial assets:
Financial assets -
Private
loans and bonds - 6,891 - 6,891 - 13,528 - 13,528
Financial assets -
Private
loans - - 115,976 115,976 - - 109,819 109,819
Financial assets -
Equity
investment - - 3,593 3,539 - - - -
Forward contract
unrealised
loss - (66) - (66) - - -
Net financial assets
(including forwards)* - 6,825 119,569 126,394 - 13,528 109,819 123,347
----------------------- ---------- -------- -------- --------- ---------- -------- -------- ------------
*The net unrealised loss of GBP66,300 (30 June 2021: GBPnil) on forwards
is recognised within other creditors in the Statement of Financial Position.
-------------------------------------------------------------------------------------------------------------
31 December 2021
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ---------- -------- -------- --------- ---------- -------- -------- ------------
Financial assets:
Financial assets - Private
loans and bonds - 7,346 - 7,346
Financial assets - Private
loans - - 115,728 115,728
Financial assets - Equity
Investments - - 3,600 3,600
Forward contract unrealised
gain - 137 - 137
Net financial assets
(including forwards)* - 7,483 119,328 126,811
----------------------------------- -------- -------- --------- ---------- -------- -------- ------------
*The net unrealised gain of GBP136,729 on forwards is recognised within
other debtors in the Statement of Financial Position.
As at 30 June 2022, the fair value of the Company's loans is materially
equal to the carrying value.
Investments that trade in markets that are not considered to be active
but are valued based on quoted market prices, dealer quotations or alternative
pricing sources supported by observable inputs are classified within Level
2.
Level 3 holdings are valued using a discounted cash flow analysis and benchmarked
discount/interest rates appropriate to the nature of the underlying loan
and the date of valuation.
Interest rates are a significant input into the Level 3 valuation methodology.
There have been no movements between levels during the reporting period.
The Company considers factors that may necessitate the transfers between
levels using the definition of the levels 1, 2 and 3 above.
13. POST BALANCE SHEET EVENTS
Since the Period end the Investment Manager has acquired a further 12,500
Ordinary Shares, taking the Investment Manager's total holding of Ordinary
Shares to 1,304,125.
There are no other post period end events other than those disclosed
in this report.
14. STATUS OF THIS REPORT
These interim financial statements are not the Company's
statutory accounts for the purposes of section 434 of the Companies
Act 2006. They are unaudited. The unaudited Half-yearly report will
be made available to the public at the registered office of the
Company. The report will also be available in electronic format on
the Company's website, https://rm-funds.co.uk/ . The information
for the year ended 31 December 2021 has been extracted from the
last published audited financial statements, unless otherwise
stated. The audited financial statement has been delivered to the
Registrar of Companies. The Company's auditor reported on those
accounts and their report was unqualified, did not draw attention
to any matters by way of emphasis and did not contain a statement
under sections 498(2) or 498(3) of the Companies Act 2006. The
Half-yearly report was approved by the Board of Directors on 5
August 2022.
ALTERNATIVE PERFORMANCE MEASURES ('APMS')
Gross asset
The Company's gross assets comprise the net asset values of the Company's
Ordinary Shares and the bank loan-credit facility, with the breakdown
as follows:
Per Share
As at 30 June 2022 GBP'000 (Pence)
------------------------------------------ ------- ------------ ---------------
Ordinary Shares - NAV a 110,389 93.68
Bank Loan-Credit facility b 18,241 -
Gross asset value a+b 128,630 n/a
------------------------------------------ -------- ------------ ---------------
Discount
The amount, expressed as a percentage, by which the share price is less
than the Net Asset Value per share.
Per Share
As at 30 June 2022 (Pence)
----------------------------------------------- ------------- --------------
NAV per Ordinary Share (pence) a 93.68
Share price (pence) b 90.75
Discount (b/a)-1 -3.1%
------------------------------------------------ -------------- --------------
Total return
A measure of performance that includes both income and capital returns.
This takes into account capital gains and reinvestment of dividends paid
out by the Company into its Ordinary Shares on the ex-dividend date.
As at 30 June 2022 NAV Share Price
------------------------------------------- ----------- -------- --------------
Opening at 1 January 2022 (pence) a 94.41 95.00
Closing at 30 June 2022 (pence) b 93.68 90.75
Dividend adjustment factor c 1.0348 1.0357
Adjusted closing (d = b x c) d 96.94 93.99
Total return (d/a)-1 2.68% -1.06%
------------------------------------------- ------------ -------- --------------
GLOSSARY
AIC Association of Investment Companies
Alternative Investment An investment vehicle under AIFMD. Under
Fund or "AIF" AIFMD (see below) the Company is classified
as an AIF.
Alternative Investment A European Union directive which came
Fund Managers Directive into force on 22 July 2013 and has been
or "AIFMD" implemented in the UK.
Annual General Meeting A meeting held once a year which Shareholders
or "AGM" can attend and where they can vote on
resolutions to be put forward at the
meeting and ask directors questions
about the Company in which they are
invested.
C Shares C Shares of 10 pence each in the capital
of the Company.
CTA 2010 Corporation Tax Act 2010.
Custodian An entity that is appointed to safeguard
a company's assets.
Discount The amount, expressed as a percentage,
by which the share price is less than
the net asset value per share.
Dividend Income receivable from an investment
in shares.
Ex-dividend date The date from which you are not entitled
to receive a dividend which has been
declared and is due to be paid to Shareholders.
Financial Conduct Authority The independent body that regulates
or "FCA" the financial services industry in the
UK.
Gearing A way to magnify income and capital
returns, but which can also magnify
losses. A bank loan is a common method
of gearing.
Index A basket of stocks which is considered
to replicate a particular stock market
or sector.
Investment company A company formed to invest in a diversified
portfolio of assets.
Investment Trust An investment company which is based
in the UK and which meets certain tax
conditions which enables it to be exempt
from UK corporation tax on its capital
gains. The Company is an investment
trust.
Leverage An alternative word for "Gearing".
Under AIFMD, leverage is any method
by which the exposure of an AIF is increased
through borrowing of cash or securities
or leverage embedded in derivative positions.
Under AIFMD, leverage is broadly similar
to gearing, but is expressed as a ratio
between the assets (excluding borrowings)
and the net assets (after taking account
of borrowing). Under the gross method,
exposure represents the sum of the Company's
positions after deduction of cash balances,
without taking account of any hedging
or netting arrangements. Under the commitment
method, exposure is calculated without
the deduction of cash balances and after
certain hedging and netting positions
are offset against each other.
Liquidity The extent to which investments can
be sold at short notice.
Loans or Secured Debt Secured debt instruments of UK SMEs
Instruments and mid-market corporates and/or individuals
including any loan, promissory notes,
lease, bond, or preference share such
debt instruments.
Net assets An investment company's assets less
its liabilities
Net asset value (NAV) Net assets divided by the number of
per Ordinary Share Ordinary Shares in issue (excluding
any shares held in treasury)
Ordinary Shares The Company's Ordinary Shares of 1 pence
each in the capital of the Company.
Portfolio A collection of different investments
held in order to deliver returns to
Shareholders and to spread risk.
Share buyback A purchase of a company's own shares.
Shares can either be bought back for
cancellation or held in treasury.
Share price The price of a share as determined by
a relevant stock market.
Treasury shares A company's own shares which are available
to be sold by a company to raise funds.
Volatility A measure of how much a share moves
up and down in price over a period of
time.
DIRECTORS, INVESTMENT MANAGER AND ADVISERS
DIRECTORS INVESTMENT MANAGER
Norman Crighton (Non-Executive RM Capital Markets Limited
Chair) 4th Floor, 7 Castle Street,
Guy Heald Edinburgh
Marlene Wood EH2 3AH
JOINT BROKER REGISTERED OFFICE*
Singer Capital Markets Advisory 6(th) Floor
LLP 125 London Wall
1 Bartholomew Lane London
London EC2Y 5AS
EC2N 2AX
JOINT BROKER ADMINISTRATOR AND COMPANY SECRETARY
Peel Hunt LLP Sanne Fund Services (UK) Limited
100 Liverpool Street 6(th) Floor
London 125 London Wall
EC2M 2AT London
EC2Y 5AS
CUSTODIAN AUDITORS
US Bank Global Corporate Trust Ernst & Young LLP
Services 25 Churchill Place
125 Old Broad Street Canary Wharf
London London
EC2N 1AR E14 5EY
AIFM Legal advisers
Sanne Fund Management (Guernsey) Gowling WLG (UK) LLP
Limited Sarnia House 4 More London Riverside
Le Truchot London
St Peter Port SE1 2AU
Guernsey
GY1 4NA
REGISTRAR VALUATION AGENT
Link Asset Services Mazars LLP
Central Square Tower Bridge House
29 Wellington Street Katherine's Way
Leeds London
LS1 4DL E1W 1DD
* Registered in England and Wales No. 10449530
For further information contact:
Sanne Fund Services (UK) Limited
Tel: 020 3327 9270
END
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IR SSAFMIEESEFA
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