TIDMVSL
RNS Number : 0794B
VPC Specialty Lending Invest. PLC
29 September 2022
29 September 2022
VPC SPECIALTY LING INVESTMENTS PLC
(the "Company" or "Parent Company" with its subsidiaries
(together) the "Group")
Half-Year Report and Unaudited Financial Statements
For the Six-Month Period Ended 30 June 2022
The Board of Directors (the "Board") of VPC Specialty Lending
Investments PLC (ticker: VSL) present the Company's Half-Year
Report and Unaudited Financial Statements for the period ended 30
June 2022.
Enquiries
For further information, please contact:
Victory Park Capital via Jefferies or Winterflood
Brendan Carroll (Senior Partner (below) info@vpcspecialtylending.com
and Co-Founder)
Gordon Watson (Partner)
Jefferies International Limited Tel: +44 20 7029 8000
Stuart Klein
Neil Winward
Gaudi le Roux
Winterflood Securities Limited Tel: +44 20 3100 0000
Neil Morgan
Chris Mills
Link Company Matters Limited (Company Tel: +44 20 7954 9567
Secretary) Email: VPC@linkgroup.co.uk
A copy of the Company's Half Year Report will shortly be
available to view and download from the Company's website,
https://vpcspecialtylending.com . Neither the contents of the
Company's website nor the contents of any website accessible from
hyperlinks on the Company's website (or any other website) is
incorporated into or forms part of this announcement.
All page numbers below refer to the Half-Year Report on the
Company's website.
Further information on VPC Specialty Lending Investments PLC is
available at https://vpcspecialtylending.com .
LEI: 549300UPEXC5DQB81P34
FINANCIAL HIGHLIGHTS
RETURN SUMMARY AS AT 30 JUNE 2022
Net Asset Value per Ordinary Share
105.51p
(30 June 2021: 106.19p)
(31 December 2021: 114.14p)
NAV (Cum Income) Return
- 4.06%
(30 June 2021: + 15.12%)
(31 December 2021: + 27.60%)
Total Shareholder Return at 30 June 2021(1)
(based on share price)
- 5.21%
(30 June 2021: + 11.82%)
(31 December 2021: + 27.32%)
Dividends per Ordinary Share(2)
4.00p
(30 June 2021: 4.00p)
(31 December 2021: 8.00p)
Revenue Return
+ GBP13.21 million
(30 June 2021: + GBP9.60 million)
(31 December 2021: + GBP21.12 million)
Total Net Return
- GBP12.88 million
(30 June 2021: + GBP39.95 million)
(31 December 2021: + GBP73.21 million
Ordinary Share Price
at 30 June 2022
83.40p
(30 June 2021: 84.00p)
(31 December 2021: 92.20p)
Discount to NAV
at 30 June 2022
20.95%
(30 June 2021: 20.90%)
(31 December 2021: 19.22%)
(1) Net of issue costs.
(2) Dividends declared and paid which relate to the period.
INTRODUCTION TO THE COMPANY
VPC Specialty Lending Investments PLC (the "Company" or "VSL")
provides asset-backed lending solutions to emerging and established
businesses ("Portfolio Companies") with the goal of building
long-term, sustainable income generation. VSL focuses on providing
capital to vital segments of the economy, which for regulatory and
structural reasons are underserved by the traditional banking
industry. Among others, these segments include small business
lending, working capital products, consumer finance and real
estate. VSL offers shareholders access to a diversified portfolio
of opportunistic credit investments originated by non-bank lenders
with a focus on the rapidly developing technology-enabled lending
sector.
The Company's investing activities are undertaken by Victory
Park Capital Advisors, LLC (the "Investment Manager" or "VPC"). VPC
is an established private capital manager headquartered in the
United States with a global presence. VPC identifies and finances
emerging and established businesses globally and seeks to provide
the Company with attractive yields on its portfolio of credit
investments. VPC offers a differentiated private lending approach
by financing Portfolio Companies through asset-backed delayed draw
term loans, which is referred to as "Balance Sheet Lending,"
designed to limit downside risk while providing shareholders with
strong income returns. Through rigorous due diligence and credit
monitoring by the Investment Manager, the Company generates stable
income with significant downside protection.
This half year report for the period to 30 June 2022 includes
the results of the Company (also referred to as the "Parent
Company") and its consolidated subsidiaries (together the "Group").
The Company (No. 9385218) was admitted to the premium listing
segment of the Official List of the Financial Conduct Authority
("FCA") (the "Official List") and to trading on the London Stock
Exchange's main market for listed securities (the "Main Market") on
17 March 2015, raising GBP200 million by completing a placing and
offer for subscription (the "Issue"). The Company raised a further
GBP183 million via a C Share issue on 2 October 2015. The C Shares
were converted into Ordinary Shares and were admitted to the
Official List and to trading on the Main Market on 4 March
2016.
The Company's investment objectives are to:
v generate an attractive total return for shareholders of
consistent distributable income and capital growth through
asset-backed lending;
v achieve portfolio diversification to emerging and established
businesses across different industries and geographies with the
goal of building long-term, sustainable value; and
v enable shareholders to benefit from equity upside through
equity-linked securities issued in conjunction with asset-backed
lending.
CHAIRMAN'S STATEMENT
This report covers the half-year results for the Company for the
period to 30th June 2022. Over this period , the Company delivered
a total return of -4.06% and declared quarterly dividends totalling
4.00 pence per share. While share prices have been volatile this
year , our asset value has remained stable and , more importantly ,
our dividend has remained unaltered.
It has been an unpredictable and volatile macroeconomic
environment. After two years of resilience during the pandemic ,
2022 has brought further economic and geopolitical challenges .
These include persistently high inflation , a rising interest rate
environment , and war in Ukraine. I am therefore encouraged that
our Investment Manager has continued to manage risk effectively
while supporting Portfolio Companies.
The Company and the Investment Manager were deeply saddened to
note the death of Her Majesty Queen Elizabeth II on 8 September
2022, and offer their sincere condolences to The Royal Family.
THE COMPANY ' S BUSINESS ACTIVITY
The Company continues to generate positive returns from its core
lending business. The core lending business , which represented 70%
of the total portfolio at 30 June 2022 , is unquestionably the most
important aspect.
In our last Annual Report , we highlighted that the Company
benefited significantly from its equity interests during 2021 but I
feel it is important to remind investors that they were for the
most part a by-product of its core lending activity. The equity
interests have been volatile in the year to date and their fall has
led to an overall negative NAV return for the period. This was
largely because the equity interests derived from the core lending
business give us equity participation (at minimal cost) in the
high-growth technology companies to which we lend and such entities
have seen their share prices fall this year. During this review
period , the proportion of our overall portfolio represented by
equity investments has reduced from 26% to 22%. This reduction is
partly resulting from equity sales conducted during the period ,
and partly because of market movements. Therefore , while equities
experienced a significant decline through the first six months of
2022 , particularly in terms of lower equity valuations for the
technology sector , we consider this to have had only a muted
impact on the Company.
Similarly, our entry into the SPAC market in 2021 was a result
of the Investment Manager's extensive deal sourcing network in the
fintech universe and SPAC deals presented a low-cost way to
capitalise on this network for the benefit of our shareholders.
SPACs raise capital in an initial public offering and use the cash
to merge with a private company and take it public , usually within
two years. However , this year , the SPAC market has struggled
against the backdrop of rising interest rates , and the derating of
technology companies. Our SPAC holdings have been no exception to
this industry trend. To date , the Company has only invested GBP3.9
million in SPACs , which represented approximately 1.4% of Net
Asset Value.
Returning to the core lending business , this continues to
benefit from a secure lending position , which delivered minimal
capital losses and a high level of income generation that supports
regular dividend payments. Most of the Company ' s asset-backed
investments are delayed draw , floating rate senior secured loans
that have equity subordination. These asset-backed investments are
also backed by underlying collateral consisting of consumer loans ,
small business loans , and other types of collateral.
Lastly, the Audit Committee now has a standing item dedicated to
Environmental, Social and Governance ("ESG") factors, showing the
commitment to responsibility and transparency in this space.
More information about the performance of the Company ' s
investments can be found in the Investment Manager ' s Report.
INVESTOR ENGAGEMENT
Demonstrating income resilience is also another important aspect
of the Company ' s approach. In June 2022 , the Board of Directors
undertook an engagement exercise with a significant number of major
shareholders. We took the opportunity to ask them why they owned
shares in the Company , the place their investment occupied within
their broader portfolio , and what we provided that was most
important to them. Of the shareholders we contacted , the majority
communicated that the Company ' s ability to deliver a stable and
predictable level of income return was overwhelmingly the most
important factor in their investment decision.
We continue to live in an era where achieving a consistent level
of investment income is no small feat , and many of our investors
communicated that the dependability of our dividend payments
provided them the opportunity to invest in other more
growth-focused investments , knowing that their income targets and
requirements would continue to be met. We found our discussions
with shareholders to be both instructive and reassuring , serving
as a valuable reminder of their expectations of the Company and the
importance of our income stream. The Board will therefore continue
to carry out regular engagement exercises and solicit shareholder
feedback on a regular basis.
THE COMPANY ' S ESG IMPACT
As an investment trust , the Company does not itself have
employees , property , factories , and the like , and our ability
to positively impact what we contribute flows to the greatest
extent from our Investment Manager and the opportunities we are
invested in through the portfolio. The Investment Manager aims to
operate and invest responsibly , ethically , and fairly and we
continue to review our environmental , social , and governance ( "
ESG " ) stance. Decisions taken are made with due consideration to
long-term sustainability and impact on stakeholders. For example ,
the Directors and Investment Manager are mindful of their carbon
footprints if they are required to travel on Company business.
The Board and the Investment Manager remain committed to
ensuring the Company ' s culture is aligned with its stated purpose
, values , and strategy. The Company has several policies and
procedures in place to assist with maintaining a culture of good
governance , including policies and procedures relating to all
aspects of diversity , including gender diversity. The Company
recognises that diversity enables it to benefit from a wider range
of skills , knowledge , experience , backgrounds , and
perspectives. Through the Company ' s lending and investment
activities , it can have a positive impact on the world in which we
operate. Because of this , the Investment Manager is committed to
leading by example , taking a positive and progressive approach to
responsible investing , and seeking to play its part in building a
more sustainable financial system.
OUTLOOK
While the pandemic provided many challenges to navigate, the
portfolio showed its resiliency over the last six months. We
believe this resilience comes from a combination of the nature of
the assets we invest in , the types of risk and security measures
we take , and the Investment Manager ' s credit expertise in
choosing to lend to the right people and businesses and then
closely following those borrowers. This gives us confidence that
the Company ' s investments are well positioned to weather
continued volatility or the potential deterioration in the credit
environment which may be on the horizon.
That said , we remain in a period of heightened uncertainty ,
with inflation still at worryingly high levels , and interest rates
on an upward path. The outlook is all the more challenging because
interest rates have been at historic lows for many years. We can
draw a great deal of comfort from the fact that the Company ' s
asset-based , senior secured credit strategy was designed to offer
greater structural protections than traditional lenders , with an
emphasis on capital preservation and income generation across
market cycles. Moreover , its core lending activity - which is
largely conducted on a floating rate basis - was conducted during
this low-interest rate environment , which offers a significant
element of protection as we move into an era of higher rates.
Additionally , it has been satisfying to see the Investment
Manager has raised capital for a new fund during the review period.
This demonstrates the strength of the Investment Manager and its
team , commitment to the asset class, positive recognition of its
investment philosophy and approach , and its ability to respond to
the needs of investors with innovation and conviction.
Finally , your Board and I would like to thank shareholders for
their continued support.
Graeme Proudfoot
Chairman
28 September 2022
INVESTMENT MANAGER'S REPORT
PERFORMANCE REVIEW
Despite the continued challenging societal , economic , and
market activity during the first half of the year , the Company
believes the portfolio remains in a strong position due to the
protections structured into the balance sheet investments.
During the period , the Company generated a total return of
-4.06% for shareholders , declared dividends for the period of 4.00
pence per share and the NAV per share as at 30 June 2022 was
105.51. The Company generated gross revenue returns of 5.88% as a
percentage of NAV in the first half of 2022 from the Company ' s
balance sheet investments , continuing the strong performance trend
of the past few years. Gross capital returns of -8.15% were
primarily driven by unrealised losses from the Company ' s
privately-held and publicly traded equity investments. Finance
costs were -0.76% and operating expenses and management fees were
-0.97% for the period. A full summary of the returns can be found
below:
PORTFOLIO UPDATE
Overall, the Company is seeing an increase in demand for private
debt as a practical alternative to growth equity financing for
emerging businesses. As geopolitical issues and continued market
uncertainty have dampened start-up funding globally in the first
half of 2022, the evidence suggests that growth-stage companies are
increasingly turning to debt financing to support their expansion
plans. The Company encountered a similar trend during the Global
Financial Crisis in 2008, where businesses began increasingly
looking for non-traditional sources of capital. The Company expects
this trend to continue.
The Company ' s asset backed investment portfolio primarily
consists of senior secured floating rate credit facilities with
interest rate floors typically in the 1.0% to 2.0% range. Recent
moves in interest rates have positively affected revenue returns as
rates on the Company ' s facilities reset on a monthly basis. In
the last few months , short-term interest rates have increased
materially , reaching 2.29% for three-month rates (at 30 June
2022). Further rises in short-term rates would continue to increase
the revenue returns in the near term but could potentially lead to
greater credit risk as portfolio companies start to see a
corresponding increased interest expense.
In June , the Company took the opportunity to increase its
credit reserves under IFRS9 by 18.9% or GBP2 , 351 , 199 during the
period. In keeping with the Company ' s IFRS9 policy , these
reserves are reviewed each month to assess the likelihood of
incurring any loss either (i) in the normal course of events , or
(ii) in an adverse scenario. Given the continued volatility and
uncertainty evident in the macroeconomic environment , the Company
continued to attribute a probability weighting of 100% to the
likelihood of a " Stress Scenario " . The Company will continue to
review the IFRS9 reserves each month to determine the need for any
further changes.
As discussed in the Chairman ' s Statement above , the SPAC
market has struggled amidst recent market volatility and rising
interest rates. Overall , SPAC losses in the Company are largely
unrealized and inception-to-date performance remains at GBP2.43
million (0.83% of the Company ' s NAV as at 30 June 2022). Bakkt
Holdings , Inc. ( " BKKT " ) , a digital asset platform based in
the United States , represents a large portion of losses in the
first half of 2022. Despite volatility in the market , the Company
has recognized positive inception-to-date returns on the BKKT
investment equal to 0.73% of the Company ' s NAV as at 30 June
2022. The BKKT trading lock-up expires in October 2022, giving the
Company additional flexibility in managing the position.
PORTFOLIO COMPOSITION
The Company continued to implement the strategy of deploying
capital across a broad range of Portfolio Companies with a
diversity of geographies , borrower types and credit quality. Below
are the breakouts of the Company ' s portfolio composition as at 30
June 2022:
Gross Asset Allocation (1)
==================================== ====
Debt 70%
==================================== ====
Common Stock 5%
==================================== ====
Preferred Stock 13%
==================================== ====
Warrant 4%
==================================== ====
Convertible Debt 7%
==================================== ====
Cash 1%
==================================== ====
Investment Exposure by Sector (2)
==================================== ====
Fintech 69%
==================================== ====
e-Commerce 25%
==================================== ====
Legal Finance 3%
==================================== ====
SPAC 3%
==================================== ====
Investment Exposure, Geography (2)
==================================== ====
United States 66%
==================================== ====
Europe 11%
==================================== ====
Latin America 14%
==================================== ====
Asia 9%
==================================== ====
(1) Percentages calculated on a look-through basis to the
Company's investee entities and SPVs.
(2) Calculations using gross asset exposure and not reduced for
gearing. Excludes cash.
SUMMARY HIGHLIGHTS FOR THE FIRST HALF OF 2022
v January 2022: VPC Impact Acquisition Holdings III , INC. ( "
VPCC " ) , a special purpose acquisition company sponsored by
Victory Park Capital and Dave , Inc. (NASDAQ: DAVE) announced that
the business combination closed following approval by VPCC
stockholders. On 17 January 2022 , one of the Company ' s
privately-held investments , Beforepay , closed its IPO and began
trading on the Australian Stock Exchange under the ticker B4P.
v February 2022: The Company declared its 15th consecutive
dividend of 2.00p for the three-month period to 31 December
2021.
v March 2022: VPC Impact Acquisition Holdings II (NASDAQ:VPCB) (
" VPCB " ) , a special purpose acquisition company sponsored by VPC
Impact Acquisition Holdings Sponsor II , LLC ( " VPC Sponsor " ) ,
an affiliate of Victory Park Capital ( " VPC " ) , and FinAccel ,
the parent company of Kredivo , the leading AI- enabled digital
consumer credit platform in Southeast Asia , announced the mutual
termination of their previously announced business combination
agreement. On 31 March 2022 , the Company paid its 16th consecutive
dividend of 2.00 pence per share.
v April 2022: On 28 April 2022 , the Company released its 2021
Annual Report , which can be found on the Company ' s website.
v June 2022: The Company announced that at its Annual General
Meeting held on 13 June 2022 , all the resolutions set out in the
Notice of Annual General Meeting were passed by the requisite
majority. On 14 June 2022 , the Company declared its 17th
consecutive dividend of 2.00 pence per share for the three-month
period to 31 March 2022.
SUBSEQUENT EVENTS
v July 2022: On 12 July 2022 , one of the Company ' s
privately-held investments , WeFox (formerly known as Finance Fox)
, announced that it raised $400 million in a Series D round of
funding , giving the German company a post-money valuation of $4.5
billion. The unrealised gain from the renewed valuation was
accounted for in the Company ' s June NAV minus a 20% liquidity
discount. Also on 12 July 2022 , one of the Company ' s
privately-held investments , Pattern Brands , announced that it
raised $25 million in a Series B fundraising , on top of the $60
million of acquisition capital brought in last year , led by new
investors Toba Capital , Verlinvest , and BAM Elevate , alongside
existing investors Primary , RRE Ventures , and Victory Park
Capital. The unrealised gain from the renewed valuation was
accounted for in the Company ' s June NAV minus a 20% liquidity
discount.
v August 2022: On 3 August 2022 , ZeroFox , Inc. , a VPC
portfolio company and an enterprise software-as-a-service leader in
external cybersecurity , reported the closing of its previously
announced business combination with L&F Acquisition Corp ( "
L&F " ) , a special purpose acquisition company , and ID
Experts Holdings , Inc. ( " IDX " ). On 4 August 2022 , the
combined company began trading under NASDAQ: ZFOX. Victory Park
Capital was proud to be part of ZeroFox ' s journey , particularly
in a challenging SPAC market environment.
RISKS AND UNCERTAINTIES
Although there are several risks and uncertainties , the Company
believes that the most significant include:
v Rising interest rates: While the Company ' s investment
portfolio primarily consists of floating rate credit facilities
with interest rate floors , changes in interest rates could affect
our investments , the profitability of the portfolio companies ,
and that of the underlying borrowers , potentially leading to lower
returns or changes in repayments or default rates of the underlying
borrowers.
v Potential risk of refinancing: The Company retains a right of
first refusal ( " ROFR " ) to match the credit facility terms
offered by any third party on most of the Company ' s investments.
In an instance where the market pricing and underlying risk for
these deals are not in line with the Company ' s investment
objectives , the Company will not exercise the ROFRs. The Company
has a significant pipeline of undrawn capacity as well as new deal
flow that allows the team to quickly reinvest the liquidity
generated by a potential refinancing event in the near term. The
increasingly competitive environment might affect the ability to
quickly reinvest capital if this trend continues over the long
term.
v Potential changes in credit risk: There is inherent risk in
the Company ' s underlying investments of a borrower default and a
majority of the underlying exposure is in the U.S. Given the short
duration of the collateral in the portfolio , the underly portfolio
companies continue to generate sufficient cash flow.
INVESTMENT MANAGER UPDATE
VPC had a robust first half of 2022. As at 1 August 2022, VPC's
team included 48 employees across its locations in Chicago, New
York, Los Angeles, Miami, Austin, and London. During the second
quarter of 2022, VPC made several middle to senior-level hires
across its investor relations, middle office, and front office
teams. The Investment Manager continues to operate in a hybrid
workplace, with employees working from the office and home for
three and two days per week, respectively.
As it relates to portfolio management , the Investment Manager
remains focused on proactive risk management and controls across
its portfolio. Senior management holds multiple calls each week and
the investment team is in regular contact with Portfolio Companies
to proactively monitor risk and performance. Further, in June 2022,
VPC's Asset Backed Opportunistic Credit ("ABOC") strategy held its
final close on approximately $2.4 billion across its commingled
vehicles and separately managed accounts. The Investment Manager is
gratified by the strong support shown by its existing and new
investors.
In June 2022 , the Company declared its 17th consecutive
quarterly dividend payment of 2.00p per share for the three-month
period to 31 March 2022. In an era where high levels of income are
increasingly hard to maintain , the Company is proud of its proven
track record of earning consistently high returns for investors
while protecting downside risk via credit enhancement and deep
structuring expertise.
OUTLOOK
At the time of writing , the global economic outlook remains
uncertain. The after-effects of the heart of the COVID-19 pandemic
have given way to fears of persistently high inflation and negative
global growth. Central banks are under pressure to fight inflation
, which has resulted in interest rates rising to levels not seen in
decades. In addition , the invasion of Ukraine by Russia has led to
increased market volatility and widespread sanctions on Russian
assets and individuals , contributing to a spiking oil price and
concern over long-term energy valuations. The Company continues to
monitor these risks closely and will do its best to make sure the
portfolio can perform regardless of the economic environment , by
offering capital protection and income generation throughout
various market cycles.
As the Company navigates through the uncertainty , the Team
exercises caution. The Company structures and underwrites
investments with a focus on downside protection in addition to
stress-testing collateral across various scenarios. For example ,
while the Company ' s investment portfolio primarily consists of
floating rate credit facilities with interest rate floors , a
rising interest rate environment has the potential to affect
investments , the profitability of the Portfolio Companies (and
that of the underlying borrowers) , potentially leading to lower
returns or changes in repayments or default rates of the underlying
borrowers.
From a purely macroeconomic standpoint , we believe that the
current portfolio ' s main advantages include the floating rate ,
shorter duration , and fully amortising underlying collateral.
While the quality of the underlying credit performance of
balance-sheet investments is critical , it is also important to
emphasise the additional layers of protection beyond direct asset
security. Due to the structured nature of the Company's
balance-sheet investments , including (in most cases) corporate
guarantees and significant first-loss protection , investments are
generally not affected by changes in credit performance until a
platform defaults and all corporate resources (separate from the
borrowing base of loan collateral) are exhausted. In addition to
monitoring credit performance , the team monitors the overall
corporate performance of all Portfolio Companies , including
attending board meetings as an observer and having weekly update
calls with management.
Historically , private debt as an asset class has been seen as a
stable choice in times of volatility. With an uncertain market
environment and an especially volatile past few years , allocators
have been increasingly turning to private debt for insulation from
broader market shifts. Returns are also giving participants even
more confidence in this asset class , particularly considering
recent volatility in the public markets. Private debt has continued
to exhibit strong performance , and the Company believes capital
allocation to private debt could eventually overtake real estate.
With inflation reaching new heights and interest rates on the rise
, the Company believes inflows to private debt - and specifically
strategies focused on asset-backed lending - will continue as
investors seek alternatives to traditional fixed income. VPC ' s
asset-backed , senior secured credit strategy aims to offer higher
yields and greater structural protections than traditional lenders
, with an emphasis on capital preservation and income generation
across market cycles.
Victory Park Capital Advisors , LLC
Investment Manager
28 September 2022
DIRECTORS' RESPONSIBILITY STATEMENT
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
The Directors acknowledge responsibility for the Half-Year
Financial Report and confirm that to the best of their
knowledge:
(a) the unaudited consolidated financial statements have been
prepared in accordance with UK-adopted IAS 34 ' Interim Financial
Reporting ' and give a true and fair view of the assets ,
liabilities , financial position , and profit for the period of the
Group as required by the Disclosure Guidance and Transparency Rules
( " DTR " ) 4.2.4 R ;
(b) the Interim Management Report (including the Chairman ' s
Statement and the Investment Manager ' s Report) includes a fair
review of the information required by DTR 4.2.7 R (indication of
important events that have occurred during the six-month period to
30 June 2022 and their impact on the set of consolidated financial
statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year) ;
and
(c) the Half-Year Financial Report includes a fair review of the
information concerning related party transactions as required by
DTR 4.2.8 R.
Signed on behalf of the Board by:
Graeme Proudfoot
Chairman
28 September 2022
INTERIM MANAGEMENT REPORT
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
CAUTIONARY STATEMENT
This Interim Management Report has been prepared solely to
provide additional information to shareholders to assess the
strategies of the Company and its subsidiaries (together " the
Group " ). The Interim Management Report should not be relied on by
any other party or for any other purpose.
The Interim Management Report contains certain forward-looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the time of
their approval of the Half-Year Financial Report but such
statements should be treated with caution due to the inherent
uncertainties , including both economic and business risk factors ,
underlying any such forward-looking information.
ACTIVITIES
The activities of the Group are described in the Chairman ' s
Statement and in the Investment Manager ' s Report. Refer to the
Chairman ' s Statement on page 6 and the Investment Manager ' s
Report on pages 8 through 10 of the Half-Year Financial Report.
Further refer to Note 1 to the consolidated financial
statements.
STRATEGY AND INVESTMENT OBJECTIVES
The important events that have occurred during the period under
review and the key factors influencing the consolidated financial
statements are described in the Chairman ' s Statement and in the
Investment Manager ' s Report.
Refer to the Chairman ' s Statement on page 6 and the Investment
Manager ' s Report on pages 8 through 10 of the Half-Year Financial
Report.
GOING CONCERN
As stated in Note 2 to the consolidated financial statements ,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future , a period not
less than 12 months from the date of this Half-Year Report.
Accordingly , they continue to adopt the going concern basis in
preparing the consolidated financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the Group ' s performance over the
remaining six months of the financial period and could cause actual
results to differ materially from expected and historical results.
Refer to the Investment Manager ' s Report on pages 8 through 10 of
the Half-Year Financial Report as well as Note 5 to the
consolidated financial statements for the potential risks and
uncertainties. The principal risks and uncertainties are consistent
with those disclosed in the Annual Report for the year ended 31
December 2021 which can be found on the Company ' s website.
FINANCIAL PERFORMANCE
The financial and operational highlights of the Group can be
found on pages 3 through 4 of the Half-Year Financial Report.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in Note 13 to the
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
(UNAUDITED) (UNAUDITED) (AUDITED)
31 DECEMBER
30 JUNE 2022 30 JUNE 2021 2021
NOTES GBP GBP GBP
========================================== ===== ============ ============ ===========
Assets
3 , 603 , 12 , 827 , 6 , 300 ,
Cash and cash equivalents 872 525 572
========================================== ===== ============ ============ ===========
6 , 657 , 2 , 038 , 4 , 133 ,
Cash posted as collateral 120 095 588
========================================== ===== ============ ============ ===========
2 , 069 ,
Derivative financial assets - - 698
========================================== ===== ============ ============ ===========
4 , 715 , 4 , 174 , 4 , 708 ,
Interest receivable 312 208 481
========================================== ===== ============ ============ ===========
Dividend and distribution receivable 4 , 362 3 , 763 3 , 996
========================================== ===== ============ ============ ===========
4 , 869 , 2 , 699 , 2 , 877 ,
Other assets and prepaid expenses 842 365 815
========================================== ===== ============ ============ ===========
3 , 259 , 567 291 , 351 279 , 339
Loans at amortised cost 7 , 849 , 321 , 002
========================================== ===== ============ ============ ===========
Investment assets designated as held 134 , 486 107 , 162 141 , 797
at fair value through profit or loss 3 , 636 , 812 , 222
========================================== ===== ============ ============
413 , 904 420 , 257 441 , 230
Total assets , 993 , 089 , 374
========================================== ===== ============ ============ -----------
Liabilities
========================================== ===== ============ ============ ===========
Management fee payable 8 434 , 554 168 , 635 155 , 399
========================================== ===== ============ ============ ===========
7 , 047 , 12 , 913 ,
Performance fee payable 8 - 774 280
========================================== ===== ============ ============ ===========
6 , 326 , 3 , 692 , 1 , 508 ,
Derivative financial liabilities 320 219 675
========================================== ===== ============ ============ ===========
Unsettled share buyback payable - 169 , 147 -
========================================== ===== ============ ============ ===========
Deferred income 99 , 607 192 , 170 174 , 603
========================================== ===== ============ ============ ===========
1 , 655 , 1 , 066 , 1 , 550 ,
Other liabilities and accrued expenses 146 774 415
========================================== ===== ============ ============ ===========
5 , 565 ,
Dividend and distribution payable 528 - -
========================================== ===== ============ ============ ===========
106 , 175 112 , 385 107 , 267
Notes payable 6 , 885 , 146 , 260
========================================== ===== ============ ============
120 , 257 124 , 721 123 , 569
Total liabilities , 040 , 865 , 632
========================================== ===== ============ ============ -----------
293 , 647 295 , 535 317 , 660
Total assets less total liabilities , 953 , 224 , 742
========================================== ===== ============ ============ -----------
Capital and reserves
========================================== ===== ============ ============ ===========
20 , 300 , 20 , 300 , 20 , 300 ,
Called-up share capital 000 000 000
========================================== ===== ============ ============ ===========
161 , 040 161 , 040 161 , 040
Share premium account , 000 , 000 , 000
========================================== ===== ============ ============ ===========
112 , 779 112 , 779 112 , 779
Other distributable reserve , 146 , 136 , 146
========================================== ===== ============ ============ ===========
(24 , 468 (20 , 053 1 , 667 ,
Capital reserve , 269) , 701) 026
========================================== ===== ============ ============ ===========
22 , 689 , 20 , 221 , 20 , 615 ,
Revenue reserve 448 752 367
========================================== ===== ============ ============ ===========
1 , 256 , 1 , 220 , 1 , 213 ,
Currency translation reserve 135 777 245
========================================== ===== ============ ============ ===========
Total equity attributable to shareholders 293 , 596 295 , 507 317 , 614
of the Parent Company , 460 , 964 , 784
========================================== ===== ============ ============ -----------
Non-controlling interests 15 51 , 493 27 , 260 45 , 958
========================================== ===== ============ ============ -----------
293 , 647 295 , 535 317 , 660
Total equity , 953 , 224 , 742
========================================== ===== ============ ============ ===========
Net Asset Value per Ordinary Share 9 105.51p 106.19p 114.14p
========================================== ===== ============ ============ ===========
The financial statements on pages 13 to 41 were approved by the
Board of Directors on 28 September 2022 and signed on its behalf
by:
Graeme Proudfoot
Chair
28 September 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
(UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUE CAPITAL TOTAL
NOTES GBP GBP GBP
====================================== ===== =========== =========== ===========
Revenue
====================================== ===== =========== =========== ===========
(23 , 605 (23 , 605
Net gain (loss) on investments 4 - , 365) , 365)
====================================== ===== =========== =========== ===========
Foreign exchange gain (loss) - (215 , 548) (215 , 548)
====================================== ===== =========== =========== ===========
13 , 625 , 13 , 625 ,
Interest income 4 589 - 589
====================================== ===== =========== =========== ===========
5 , 645 , 5 , 645 ,
Other income 4 129 - 129
-------------------------------------- ----- ----------- ----------- -----------
19 , 270 (23 , 820 (4 , 550
Total return , 718 , 913) , 195)
-------------------------------------- ----- ----------- ----------- -----------
Expenses
====================================== ===== =========== =========== ===========
1 , 990 , 1 , 990 ,
Management fee 8 424 - 424
====================================== ===== =========== =========== ===========
Performance fee 8 - - -
====================================== ===== =========== =========== ===========
2 , 313 , 2 , 313 ,
Credit impairment losses (recoveries) 7 - 947 947
====================================== ===== =========== =========== ===========
1 , 023 , 1 , 023 ,
Other expenses 217 - 217
-------------------------------------- ----- ----------- ----------- -----------
3 , 013 , 2 , 313 , 5 , 327 ,
Total operating expenses 641 947 588
-------------------------------------- ----- ----------- ----------- -----------
3 , 051 , 3 , 051 ,
Finance costs 940 - 940
-------------------------------------- ----- ----------- ----------- -----------
Net return on ordinary activities 13 , 205 (26 , 134 (12 , 929
before taxation , 137 , 860) , 723)
====================================== ===== =========== =========== ===========
Taxation on ordinary activities - - -
-------------------------------------- ----- ----------- ----------- -----------
Net return on ordinary activities 13 , 205 (26 , 134 (12 , 929
after taxation , 137 , 860) , 723)
-------------------------------------- ----- ----------- ----------- -----------
Attributable to:
====================================== ===== =========== =========== ===========
13 , 205 , (26 , 134 (12 , 930
Equity shareholders 137 , 860) , 158)
====================================== ===== =========== =========== ===========
Non-controlling interests - 435 435
====================================== ===== =========== =========== ===========
Return per Ordinary Share (basic
and diluted) 4.75p (9.39)p (4.65)p
-------------------------------------- ----- ----------- ----------- -----------
Other comprehensive income
====================================== ===== =========== =========== ===========
Currency translation differences - 47 , 990 47 , 990
-------------------------------------- ----- ----------- ----------- -----------
13 , 205 (26 , 086 (12 , 881
Total comprehensive income , 137 , 870) , 733)
-------------------------------------- ----- ----------- ----------- -----------
Attributable to:
====================================== ===== =========== =========== ===========
13 , 205 , (26 , 092 (12 , 887
Equity shareholders 137 , 405) , 268)
====================================== ===== =========== =========== ===========
Non-controlling interests - 5 , 535 5 , 535
====================================== ===== =========== =========== ===========
The total column of this statement represents the Group ' s
statement of comprehensive income , prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The supplementary revenue and
capital columns are both prepared under guidance published by the
Association of Investment Companies ( " AIC " ). All items in the
above Statement derive from continuing operations. Amounts in Other
comprehensive income may be reclassified to profit or loss in
future periods.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIODED 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUE CAPITAL TOTAL
NOTES GBP GBP GBP
================================== ===== =========== ==================== ====================
Revenue
================================== ===== =========== ==================== ====================
38 , 544 , 38 , 544 ,
Net gain (loss) on investments 4 - 646 646
================================== ===== =========== ==================== ====================
(1 , 667 , (1 , 667 ,
Foreign exchange gain (loss) - 217) 217)
================================== ===== =========== ==================== ====================
14 , 989 , 14 , 999 ,
Interest income 4 688 9 , 781 469
================================== ===== =========== ==================== ====================
2 , 994 , 2 , 994 ,
Other income 4 307 - 307
---------------------------------- ----- ----------- -------------------- --------------------
17 , 983 36 , 887 54 , 871
Total return , 995 , 210 , 205
---------------------------------- ----- ----------- -------------------- --------------------
Expenses
================================== ===== =========== ==================== ====================
1 , 780 , 1 , 780 ,
Management fee 8 159 - 159
================================== ===== =========== ==================== ====================
1 , 693 , 5 , 353 , 7 , 047 ,
Performance fee 8 853 921 774
================================== ===== =========== ==================== ====================
1 , 102 , 1 , 102 ,
Credit impairment losses 7 - 970 970
================================== ===== =========== ==================== ====================
2 , 084 , 2 , 166 ,
Other expenses 520 82 , 389 909
---------------------------------- ----- ----------- -------------------- --------------------
5 , 558 , 6 , 539 , 12 , 097
Total operating expenses 532 280 , 812
---------------------------------- ----- ----------- -------------------- --------------------
2 , 826 , 2 , 826 ,
Finance costs 965 - 965
---------------------------------- ----- ----------- -------------------- --------------------
Net return on ordinary activities 9 , 598 , 30 , 347 , 39 , 946 ,
before taxation 498 930 428
================================== ===== =========== ==================== ====================
Taxation on ordinary activities - - -
---------------------------------- ----- ----------- -------------------- --------------------
Net return on ordinary activities 9 , 598 , 30 , 347 39 , 946
after taxation 498 , 930 , 428
---------------------------------- ----- ----------- -------------------- --------------------
Attributable to:
================================== ===== =========== ==================== ====================
9 , 598 , 30 , 339 , 39 , 938 ,
Equity shareholders 498 877 375
================================== ===== =========== ==================== ====================
Non-controlling interests - 8 , 053 8 , 053
================================== ===== =========== ==================== ====================
Return per Ordinary Share (basic
and diluted) 3.25p 10.27p 13.52p
---------------------------------- ----- ----------- -------------------- --------------------
Other comprehensive income
================================== ===== =========== ==================== ====================
Currency translation differences - (1 , 119) (1 , 119)
---------------------------------- ----- ----------- -------------------- --------------------
9 , 598 , 30 , 346 39 , 945
Total comprehensive income 498 , 811 , 309
---------------------------------- ----- ----------- -------------------- --------------------
Attributable to:
================================== ===== =========== ==================== ====================
9 , 598 , 30 , 338 , 39 , 937 ,
Equity shareholders 498 888 386
================================== ===== =========== ==================== ====================
Non-controlling interests - 7 , 923 7 , 923
================================== ===== =========== ==================== ====================
The total column of this statement represents the Group ' s
statement of comprehensive income , prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The supplementary revenue and
capital columns are both prepared under guidance published by the
Association of Investment Companies ( " AIC " ). All items in the
above Statement derive from continuing operations. Amounts in Other
comprehensive income may be reclassified to profit or loss in
future periods.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
(AUDITED) (AUDITED) (AUDITED)
REVENUE CAPITAL TOTAL
NOTES GBP GBP GBP
================================== ===== ========== ========== ==========
Revenue
================================== ===== ========== ========== ==========
67 , 114 , 67 , 114 ,
Net gain (loss) on investments 4 - 995 995
================================== ===== ========== ========== ==========
(2 , 049 , (2 , 049 ,
Foreign exchange gain (loss) - 374) 374)
================================== ===== ========== ========== ==========
33 , 158 , 33 , 158 ,
Interest income 4 150 524 , 984 150
================================== ===== ========== ========== ==========
4 , 419 , 4 , 419 ,
Other income 4 620 - 620
---------------------------------- ----- ---------- ---------- ----------
37 , 577 65 , 065 102 , 643
Total return , 770 , 621 , 391
---------------------------------- ----- ---------- ---------- ----------
Expenses
================================== ===== ========== ========== ==========
3 , 802 , 3 , 802 ,
Management fee 8 097 - 097
================================== ===== ========== ========== ==========
3 , 733 , 9 , 179 , 12 , 913 ,
Performance fee 8 910 370 280
================================== ===== ========== ========== ==========
3 , 636 , 3 , 636 ,
Credit impairment losses 7 - 142 142
================================== ===== ========== ========== ==========
3 , 212 , 3 , 372 ,
Other expenses 166 159 , 909 075
---------------------------------- ----- ---------- ---------- ----------
10 , 748 12 , 975 23 , 723
Total operating expenses , 173 , 421 , 594
---------------------------------- ----- ---------- ---------- ----------
5 , 706 , 5 , 706 ,
Finance costs 429 - 429
---------------------------------- ----- ---------- ---------- ----------
Net return on ordinary activities 21 , 123 , 52 , 090 , 73 , 213 ,
before taxation 168 200 368
================================== ===== ========== ========== ==========
Taxation on ordinary activities - - -
---------------------------------- ----- ---------- ---------- ----------
Net return on ordinary activities 21 , 123 52 , 090 73 , 213
after taxation , 168 , 200 , 368
---------------------------------- ----- ---------- ---------- ----------
Attributable to:
================================== ===== ========== ========== ==========
21 , 123 , 52 , 060 , 73 , 183 ,
Equity shareholders 168 604 772
================================== ===== ========== ========== ==========
Non-controlling interests - 29 , 596 29 , 596
================================== ===== ========== ========== ==========
Return per Ordinary Share (basic
and diluted) 7.55p 18.62p 26.17p
---------------------------------- ----- ---------- ---------- ----------
Other comprehensive income
================================== ===== ========== ========== ==========
Currency translation differences - (11 , 496) (11 , 496)
---------------------------------- ----- ---------- ---------- ----------
21 , 123 52 , 078 73 , 201
Total comprehensive income , 168 , 704 , 872
---------------------------------- ----- ---------- ---------- ----------
Attributable to:
================================== ===== ========== ========== ==========
21 , 123 , 52 , 052 , 73 , 175 ,
Equity shareholders 168 083 251
================================== ===== ========== ========== ==========
Non-controlling interests - 26 , 621 26 , 621
================================== ===== ========== ========== ==========
The total column of this statement represents the Group ' s
statement of comprehensive income , prepared in accordance with
UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The supplementary revenue and
capital columns are both prepared under guidance published by the
Association of Investment Companies ( " AIC " ). All items in the
above Statement derive from continuing operations. Amounts in Other
comprehensive income may be reclassified to profit or loss in
future periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
CALLED
UP SHARE OTHER CURRENCY TOTAL NON-
SHAREHOLDERS
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION ' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Opening balance 161 , 20 ,
at 20 , 300 040 , 112 , 779 1 , 667 615 , 1 , 213 317 , 614 317 ,
1 January 2022 , 000 000 , 146 , 026 367 , 245 , 784 45 , 958 660 , 742
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Amounts paid on
buyback
of Ordinary
Shares - - - - - - - - -
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Contributions by
non-controlling
interests - - - - - - - - -
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Distributions to
non-controlling
interests - - - - - - - - -
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Return on
ordinary (26 ,
activities 135 , 13 , 205 (12 , 930 (12 , 929
after taxation - - - 295) , 137 - , 158) 435 , 723)
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Dividends (11 ,
declared 131 , (11 , 131 (11 , 131
and paid - - - - 056) - , 056) - , 056)
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
Other
comprehensive
income (loss)
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Currency
translation
differences - - - - - 42 , 890 42 , 890 5 , 100 47 , 990
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
Closing balance 161 , (24 , 22 ,
at 20 , 300 040 , 112 , 779 468 , 689 , 1 , 256 293 , 596 293 ,
30 June 2022 , 000 000 , 146 269) 448 , 135 , 460 51 , 493 647 , 953
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
CALLED
UP SHARE OTHER CURRENCY TOTAL NON-
SHAREHOLDERS
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION ' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Opening balance
at 1 January 20 , 300 161 , 040 116 , 520 (50 , 393 21 , 847 1 , 221 270 , 537 270 , 556
2021 , 000 , 000 , 960 , 578) , 960 , 766 , 108 19 , 337 , 445
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Amounts paid on
buyback
of Ordinary (3 , 741 (3 , 741 (3 , 741
Shares - - , 824) - - - , 824) - , 824)
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Contributions by
non-controlling
interests - - - - - - - - -
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Distributions to
non-controlling
interests - - - - - - - - -
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Return on
ordinary
activities 30 , 339 9 , 598 39 , 938 39 , 946
after taxation - - - , 877 , 498 - , 375 8 , 053 , 428
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Dividends
declared and (11 , 224 (11 , 224 (11 , 224
paid - - - - , 706) - , 706) - , 706)
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
Other
comprehensive
income
================ =========== =========== ============= =========== =========== =========== ============ =========== ===========
Currency
translation
differences - - - - - (989) (989) (130) (1 , 119)
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
Closing balance
at 30 20 , 300 161 , 040 112 , 779 (20 , 053 20 , 221 1 , 220 295 , 507 295 , 535
June 2021 , 000 , 000 , 136 , 701) , 752 , 777 , 964 27 , 260 , 224
---------------- ----------- ----------- ------------- ----------- ----------- ----------- ------------ ----------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2021
(AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED)
CALLED
UP SHARE OTHER CURRENCY TOTAL NON-
S
HAREHOLDERS
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION ' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Opening balance 20 , 161 , (50 , 21 , 270 ,
at 300 , 040 , 116 , 520 393 , 847 , 1 , 221 270 , 537 556 ,
1 January 2021 000 000 , 960 578) 960 , 766 , 108 19 , 337 445
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Amounts paid on
buyback
of Ordinary (3 , 741 (3 , 741 (3 , 741
Shares - - , 814) - - - , 814) - , 814)
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Contributions by
non-controlling
interests - - - - - - - - -
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Distributions to
non-controlling
interests - - - - - - - - -
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Return on
ordinary
activities 52 , 060 21 , 123 73 , 183 73 , 213
after taxation - - - , 604 , 168 - , 772 29 , 596 , 368
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Dividends (22 , (22 ,
declared 355 , (22 , 355 355 ,
and paid - - - - 761) - , 761) - 761)
---------------- --------- --------- ------------- --------- --------- ----------- ----------- ----------- ---------
Other
comprehensive
income
================ ========= ========= ============= ========= ========= =========== =========== =========== =========
Currency
translation (11 ,
differences - - - - - (8 , 521) (8 , 521) (2 , 975) 496)
---------------- --------- --------- ------------- --------- --------- ----------- ----------- ----------- ---------
Closing balance
at 20 , 161 , 20 , 317 ,
31 December 300 , 040 , 112 , 779 1 , 667 615 , 1 , 213 317 , 614 660 ,
2021 000 000 , 146 , 026 367 , 245 , 784 45 , 958 742
---------------- --------- --------- ------------- --------- --------- ----------- ----------- ----------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
(UNAUDITED) (UNAUDITED) (AUDITED)
31 DECEMBER
30 JUNE 2022 30 JUNE 2021 2021
GBP GBP GBP
============================================ ============ ========================= ===========
Cash flows from operating activities:
============================================ ============ ========================= ===========
(12 , 881 39 , 945 , 73 , 201 ,
Total comprehensive income , 733) 309 872
============================================= ============ ========================= ===========
Adjustments for:
============================================ ============ ========================= ===========
(13 , 625 (14 , 999 (33 , 158
-- Interest income , 589) , 469) , 150)
============================================= ============ ========================= ===========
(5 , 645 , (2 , 994 , (4 , 419 ,
-- Dividend and distribution income 129) 307) 620)
============================================= ============ ========================= ===========
3 , 051 , 2 , 826 , 5 , 706 ,
-- Finance costs 940 965 429
============================================= ============ ========================= ===========
1 , 667 , 2 , 049 ,
-- Exchange losses 215 , 548 217 374
--------------------------------------------- ------------ ------------------------- -----------
(28 , 884 26 , 445 43 , 379
Total , 963) , 715 , 905
--------------------------------------------- ------------ ------------------------- -----------
Loss (gain) on investment assets designated
as held at fair value through profit 25 , 665 , (38 , 544 (67 , 354
or loss 146 , 646) , 436)
============================================= ============ ========================= ===========
(Gain) loss on derivative financial (38 , 465 10 , 980 , (6 , 131 ,
instruments , 735) 503 547)
============================================= ============ ========================= ===========
Decrease in other assets and prepaid (1 , 992 , (1 , 810 , (1 , 988 ,
expenses 027) 217) 667)
============================================= ============ ========================= ===========
(Decrease) increase in performance (12 , 913 3 , 007 ,
fee payable , 280) 689 63 , 158
============================================= ============ ========================= ===========
8 , 873 ,
Increase in management fee payable 279 , 155 76 , 394 195
============================================= ============ ========================= ===========
Decrease in deferred income (74 , 996) (61 , 233) (78 , 800)
============================================= ============ ========================= ===========
Increase (decrease) in accrued expenses
and other liabilities 63 , 958 (701 , 861) 250 , 148
============================================= ============ ========================= ===========
13 , 618 , 14 , 438 , 32 , 062 ,
Interest received 758 308 716
============================================= ============ ========================= ===========
(21 , 754 (104 , 041 (129 , 180
Purchase of loans , 375) , 783) , 445)
============================================= ============ ========================= ===========
67 , 164 , 101 , 968 145 , 742
Redemption or sale of loans 260 , 924 , 133
============================================= ============ ========================= ===========
1 , 102 , 3 , 636 ,
Impairment of loans (1 , 583) 970 142
--------------------------------------------- ------------ ------------------------- -----------
5 , 019 , 12 , 860 29 , 273
Net cash inflow from operating activities 848 , 763 , 502
--------------------------------------------- ------------ ------------------------- -----------
Cash flows from investing activities:
============================================ ============ ========================= ===========
5 , 644 , 2 , 994 , 4 , 419 ,
Investment income received 763 356 436
============================================= ============ ========================= ===========
Purchase of investment assets designated
as held at fair value through profit (18 , 841 (24 , 402 (51 , 430
or loss , 577) , 638) , 977)
============================================= ============ ========================= ===========
Sale of investment assets designated
as held at fair value through profit 14 , 851 , 5 , 874 , 30 , 929 ,
or loss 369 872 189
============================================= ============ ========================= ===========
(2 , 523 , (2 , 993 ,
Decrease of cash posted as collateral 532) (898 , 095) 588)
--------------------------------------------- ------------ -------------------------
(16 , 431 (19 , 075
Net cash outflow from investing activities (868 , 977) , 505) , 940)
--------------------------------------------- ------------ ------------------------- -----------
Cash flows from financing activities:
============================================ ============ ========================= ===========
(5 , 565 , (11 , 224 (22 , 355
Dividends distributed 528) , 706) , 761)
============================================= ============ ========================= ===========
(3 , 572 , (3 , 741 ,
Treasury shares repurchased - 677) 814)
============================================= ============ ========================= ===========
(1 , 091 , 27 , 250 , 21 , 180 ,
(Decrease) increase in note payable 375) 133 077
============================================= ============ ========================= ===========
(3 , 011 , (2 , 391 , (5 , 739 ,
Finance costs paid 167) 251) 082)
--------------------------------------------- ------------ -------------------------
(9 , 668 10 , 061 (10 , 656
Net cash outflow from financing activities , 070) , 499 , 580)
--------------------------------------------- ------------ ------------------------- -----------
(5 , 517 , 6 , 490 ,
Net change in cash and cash equivalents 199) 757 (459 , 018)
============================================= ============ ========================= ===========
2 , 820 ,
Exchange gains on cash and cash equivalents 499 (79 , 261) 343 , 562
============================================= ============ ========================= ===========
Cash and cash equivalents at the beginning 6 , 300 , 6 , 416 , 6 , 416 ,
of the period 572 028 028
-----------
Cash and cash equivalents at the 3 , 603 , 12 , 827 6 , 300 ,
end of the period 872 , 524 572
--------------------------------------------- ------------ ------------------------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
1. GENERAL INFORMATION
VPC Specialty Lending Investments PLC (the "Company" or "Parent
Company") with its subsidiaries (together "the Group") is focused
on asset backed lending to emerging and established businesses with
the goal of building long-term, sustainable income generation. The
Group focuses on providing capital to vital segments of the economy
that are underserved by the traditional banking industry, including
small businesses, working capital products, consumer finance and
real estate, among others. The Group executes this strategy by
identifying investment opportunities across various industries and
geographies to offer shareholders access to a diversified portfolio
of opportunistic credit investments originated by non-bank lenders
with a focus on the rapidly developing technology-enabled lending
sector. The Parent Company, which is limited by shares, was
incorporated and domiciled in England and Wales on 12 January 2015
with registered number 9385218. The Parent Company commenced its
operations on 17 March 2015 and 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 Group's investment manager is Victory Park Capital Advisors,
LLC (the "Investment Manager"), a US Securities and Exchange
Commission registered investment adviser. The Investment Manager
also acts as the Alternative Investment Fund Manager of the Group
under the Alternative Investment Fund Managers Directive ("AIFMD").
The Parent Company is defined as an Alternative Investment Fund and
is subject to the relevant articles of the AIFMD.
The Group will invest directly or indirectly into available
opportunities, including by making investments in, or acquiring
interests held by, third party funds (including those managed by
the Investment Manager or its affiliates). Direct investments may
include consumer loans, SME loans, advances against corporate trade
receivables and/or purchases of corporate trade receivables ("Debt
Instruments") originated by platforms which engage with and
directly lend to borrowers ("Portfolio Companies"). Such Debt
Instruments may be subordinated in nature, or may be second lien,
mezzanine or unsecured loans. Indirect investments may include
investments in Portfolio Companies (or in structures set up by
Portfolio Companies) through the provision of credit facilities
("Credit Facilities"), equity or other instruments. Additionally,
the Group's investments in Debt Instruments and Credit Facilities
may be made through subsidiaries of the Parent Company or through
partnerships or other structures. The Group may also invest in
other specialty lending related opportunities through any
combination of debt facilities, equity or other instruments.
As at 30 June 2022, the Parent Company had equity in the form of
382,615,665 Ordinary Shares, 278,276,392 Ordinary Shares in issue
and 104,339,273 Ordinary Shares in Treasury (31 December 2021:
382,615,665 Ordinary Shares, 282,647,364 Ordinary Shares in issue
and 99,968,301 Ordinary Shares in Treasury; 30 June 2021:
382,615,665 Ordinary Shares, 278,276,392 Ordinary Shares in issue
and 104,339,273 Ordinary Shares in Treasury). The Ordinary Shares
are listed on the premium segment of the Official List of the UK
Listing Authority and trade on the London Stock Exchange's main
market for listed securities.
Citco Fund Administration (Cayman Islands) Limited (the
"Administrator") is the administrator of the Group. The
Administrator is responsible for the Group's general administrative
functions, such as the calculation and publication of the Net Asset
Value ("NAV") and maintenance of the Group's accounting
records.
For any terms not herein defined, refer to Part X of the IPO
Prospectus. The Parent Company's IPO Prospectus dated 26 February
2015 is available on the Parent Company's website,
www.vpcspecialtylending.com .
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies followed by the Group are set
out in Note 2 of the Annual Report for the year ended 31 December
2021.
Basis of preparation
The consolidated financial statements present the financial
performance of the Group and Company for the six-month period ended
30 June 2022. These statements have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority and UK-adopted IAS34 ' Interim
Financial Reporting. '
The consolidated financial statements for the period ended 30
June 2022 have not been audited or reviewed by the Group ' s
auditors and do not constitute statutory financial statements as
defined in Section 434 of the Companies Act 2006. They do not
include all financial information required for full annual
financial statements. The consolidated financial statements and the
comparative financial statements have been prepared using the
accounting policies adopted in the audited financial statements for
the year ended 31 December 2021.
The Directors have reviewed the financial projections of the
Group and Company from the date of this report , which shows that
the Group and Company will be able to generate sufficient cash
flows in order to meet its liabilities as they fall due. In
assessing the Group ' s and Company ' s ability to continue as a
going concern , the Directors have considered the Company ' s
investment objective , risk management policies , capital
management , the nature of its portfolio and expenditure
projections.
Additionally , the Directors have considered the risks arising
of reduced asset values and economic disruption caused by
unforeseen geopolitical events, including war, terrorist attacks,
natural disasters, and ongoing pandemics, which could create
economic, financial, and business disruptions. The Investment
Manager has also performed a range of stress tests and demonstrated
to the Directors that even in an adverse scenario of depressed
markets that the Group could still generate sufficient funds to
meet its liabilities over the next twelve months. The Directors
believe that the Group has adequate resources , an appropriate
financial structure and suitable management arrangements in place
to continue in operational existence for the foreseeable future
being a period of at least twelve months from the date of this
report.
Based on their assessment and considerations above , the
Directors have concluded that the financial statements of the Group
and Company should continue to be prepared on a going concern basis
and the financial statements have been prepared accordingly.
Where presentational guidance set out in the Statement of
Recommended Practice ( " SORP " ) for investment trusts issued by
the Association of Investment Companies ( " AIC " ) in November
2014 and updated in October 2019 with consequential amendments is
consistent with the requirements of IFRS , the Directors have
sought to prepare the consolidated financial statements on a basis
compliant with the recommendations of the SORP.
The Parent Company and Group ' s presentational currency is
Pound Sterling (GBP). Pound Sterling is also the functional
currency because it is the currency of the Parent Company ' s share
capital and the currency which is most relevant to the majority of
the Parent Company ' s shareholders. The Group enters into forward
currency Pound Sterling hedges where operating activity is
transacted in a currency other than the functional currency.
Critical accounting estimates
The preparation of financial statements in conformity with
international accounting standards requires the Group to make
judgements , estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting
period. Although these estimates are based on the Directors ' best
knowledge of the amount , actual results may differ ultimately from
those estimates.
The areas requiring a higher degree of judgement or complexity
and areas where assumptions and estimates are significant to the
financial statements , are in relation to expected credit losses
and investments at fair value through profit or loss. These are
detailed below.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Measurement of the expected credit loss allowance
The calculation of the Group ' s ECL allowances and provisions
against loan commitments and guarantees under IFRS 9 is highly
complex and involves the use of significant judgement and
estimation. This includes the formulation and incorporation of
multiple forward-looking economic conditions into ECL to meet the
measurement objective of IFRS 9. The most significant estimates
that are discussed below are considered to be the expected life of
the financial instrument , what is considered to be a significant
increase in credit risk to affect a movement between stages , and
the effect of potential future economic scenarios.
Base case and stress case cash flow methodology under IFRS 9
Each loan in the Group ' s investment portfolio is analysed to
assess the likelihood of the Group incurring any loss either (i) in
the normal course of events , or (ii) in a stress scenario. Given
that these positions are typically secured by specific collateral
and often further secured by guarantees from the operating business
, the analysis looks at the impacts on both the specific collateral
, as well as any obligations of the operating business to
understand how the Group ' s investment would fair in each
scenario. The collateral performance assumptions for each
transaction are established using all available historical
performance data on the specific asset pool being assessed ,
supplemented by additional sources as needed.
Base case
To establish the base case model , a representative portfolio is
established based on the specific nature of the underlying
collateral. The expected cash flows are assessed based on the
relevant collateral parameters which will vary based on the
specific asset class being assessed. In certain instances the
collateral cash flows may entail the presumed sale of collateral
assets to third parties based on expected market values. Cash flow
and market assumptions are based on a combination of (1) historical
collateral data , (2) management forecasts , (3) proxy data from
comparable assets or businesses , and (4) judgement from the
investment professionals based on general research and
knowledge.
The model is then burdened with the following costs: (1)
servicing costs which broadly reflect the expected costs of either
(i) engaging a backup servicer to wind down the portfolio , or (ii)
of operating the business through a liquidation ; (2) upfront
liquidation costs to reflect potential expenses associated with
moving into liquidation ; and (3) ongoing liquidation costs to
reflect incremental costs born to oversee the liquidation.
The last input component is the terms of the Group ' s
investment , which includes the applicable advance rate and
interest rate which are based on the prevailing terms and
circumstances of the facility.
The representative portfolio is deemed to reflect the most
reliable and relevant information available about the portfolio
attributes and expected performance. As part of the ongoing
investment monitoring and risk management process , the Investment
Manager is monitoring performance on the underlying collateral on a
monthly basis to identify whether performance indicators are
trending positively or negatively , and how much cushion exists
compared to contractual covenant trigger levels. Any such changes
would be reviewed to determine whether an adjustment is required to
the model assumptions.
For the Group ' s asset backed balance sheet investments , the
Investment Manager performs a similar analysis as with our
financial services asset backed balance sheet investments , though
in those cases we are assessing the likely return on legal sector
investments based on historical data and expert judgement and
stressing the return and/or loss expectation on those platforms. In
general , those assets by their nature tend to be uncorrelated
across both the macro economy as well as across the portfolio(s) ,
which has an impact on the range of outcomes factored into the
model.
Stress case
Once the Base Case scenario is established , one or more "
Stress Case " scenario(s) is (are) created for each transaction.
The Stress Case is established by stressing the inputs that are
most directly tied to outcomes to an extent consistent with a
severe recession or comparably severe deterioration in the
investment position. The primary driver of collateral value for
many asset classes is the loss rates on the underlying receivables
as these have the most direct impact on liquidation outcomes. For
other asset classes it may include revenue yields , market values ,
or other economic variables. Certain variables with less
significant impacts on the cash flow outcomes may be held constant
to enhance model explanatory power. Stress variables may be
adjusted to reflect the fact that stress will emerge (and
dissipate) over a period of time rather than having an immediate
and constant impact.
Establishing Impairment Reserves
Once the model has been run at the stressed scenario , if the
cash flows continue to support the payment of all VPC principal and
interest after the burdens of servicing and liquidation costs , the
portfolio is deemed to have adequate coverage based solely on
direct collateral. If there is a shortfall in principal payments ,
a further assessment is done to note whether there are any excluded
variables that need to be considered in determining the need for
reserves on the position , including other additional credit
enhancements provided in each deal (i.e. , corporate guarantees ,
boot collateral , etc.). Such assessment would consider the
likelihood of a scenario that could pose a loss or impairment and
the expected magnitude of such loss in order to determine the
appropriate reserve level.
IFRS 9 calls for an assessment of the probability of default
over the upcoming 12 months , and thus VPC will also provide a view
of the probability of such a severe scenario occurring in the next
12 months for each of the investments which are at risk of
incurring a loss (as some of the variables will vary between
investments). VPC reviews macroeconomic data and central bank
indicators to assess the probability of a recession or stress
scenario over a forward looking 12-month horizon. Such information
may be supplemented with additional investment level or
macroeconomic information to determine the appropriate
probabilities of stress (most commonly any such adjustments would
be to apply additional likelihood of stress). In certain instances
, the assessed impairment reserves are constant across all
scenarios , this most commonly occurs when the assessed impairment
reserves are zero. In these instances there shall be no need to
assess probability weightings as it would not impact the overall
analysis.
Valuation of unquoted investments
The valuation of unquoted investments and investments for which
there is an inactive market is a key area of judgement and may
cause material adjustment to the carrying value of those assets and
liabilities. The unquoted equity assets are valued on periodic
basis using techniques including a market approach , costs approach
and/or income approach. The valuation process is collaborative ,
involving the finance and investment functions within the
Investment Manager with the final valuations being reviewed by the
Board ' s Audit and Valuation Committee. The specific techniques
used typically include earnings multiples , discounted cash flow
analysis , the value of recent transactions , and , where
appropriate , industry rules of thumb. The valuations often reflect
a synthesis of a number of different approaches in determining the
final fair value estimate. The individual approach for each
investment will vary depending on relevant factors that a market
participant would take into account in pricing the asset. Changes
in fair value of all investments held at fair value are recognised
in the Consolidated Statement of Comprehensive Income as a capital
item. On disposal , realised gains and losses are also recognised
in the Consolidated Statement of Comprehensive Income as a capital
item. Transaction costs are included within gains or losses on
investments held at fair value , although any related interest
income , dividend income and finance costs are disclosed separately
in the Consolidated Financial Statements. The ultimate sale price
of investments may not be the same as fair value. Refer to Note
3.
Critical accounting judgments
Judgement is required to determine whether the Parent Company
exercises control over its investee entities and whether they
should be consolidated. Control is achieved where the Parent
Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its
activities. The Parent Company controls an investee entity when the
Parent Company is exposed to , or has rights to , variable returns
from its investment and has the ability to affect those returns
through its power over the entity. At each reporting date , an
assessment is undertaken of investee entities to determine control.
In the intervening period , assessments are undertaken where
circumstances change that may give rise to a change in the control
assessment. These include when an investment is made into a new
entity , or an amendment to existing entity documentation or
processes. When assessing whether the Parent Company has the power
to affect its variable returns , and therefore control investee
entities , an assessment is undertaken of the Parent Company ' s
ability to influence the relevant activities of the investee
entity. These activities include considering the ability to appoint
or remove key management or the manager , which party has decision
making powers over the entity and whether the manager of an entity
is acting as principal or agent. The assessment undertaken for
entities considers the Parent Company ' s level of investment into
the entity and its intended long-term holding in the entity and
there may be instances where the Parent Company owns less than 51%
of an investee entity but that entity is consolidated. Further
details of the Parent Company ' s subsidiaries are included in Note
14.
The Group ' s investments in associates all consist of limited
partner interest in funds. There are no significant restrictions
between investors with joint control or significant influence over
the associates listed above on the ability of the associates to
transfer funds to any party in the form of cash dividends or to
repay loans or advances made by the Group.
3. FAIR VALUE MEASUREMENT
Financial instruments measured and reported at fair value are
classified and disclosed in one of the following fair value
hierarchy levels based on the significance of the inputs used in
measuring its fair value:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities ;
Level 2 - Inputs other than quoted prices included in Level 1
that are observable for the asset or liability , either directly
(as prices) or indirectly (derived from prices) ; and
Level 3 - Pricing inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
An investment is always categorised as Level 1 , 2 or 3 in its
entirety. In certain cases , the fair value measurement for an
investment may use a number of different inputs that fall into
different levels of the fair value hierarchy. In such cases , an
investment ' s level within the fair value hierarchy is based on
the lowest level of input that is significant to the fair value
measurement. The assessment of the significance of a particular
input to the fair value measurement requires judgment and is
specific to the investment.
The Group ' s investments in funds are subject to the terms and
conditions of the respective fund ' s offering documentation. The
investments in funds are primarily valued based on the latest
available financial information. The Investment Manager reviews the
details of the reported information obtained from the funds and
considers: (i) the valuation of the fund ' s underlying investments
; (ii) the value date of the NAV provided ; (iii) cash flows
(calls/distributions) since the latest value date ; and (iv) the
basis of accounting and , in instances where the basis of
accounting is other than fair value , fair valuation information
provided by the funds. If necessary , adjustments to the NAV are
made to the funds to obtain the best estimate of fair value. The
funds in which the Group invests are close-ended and unquoted. No
adjustments have been determined to be necessary to the NAV as
provided as at 30 June 2022 as this reflects fair value under the
relevant valuation methodology. The NAV is provided to investors
only and is not made publicly available.
Valuation of equity securities
Fair value is determined based on the Group ' s valuation
methodology , which is either determined using market comparables ,
discounted cash flow models or recent transactions.
Under the Enterprise Valuation Waterfall Analysis , the Group
estimates the fair value of a portfolio company using traditional
valuation methodologies including market , income , and cost
approaches , as well as other applicable industry-specific
approaches and then waterfall the enterprise value over the
portfolio company ' s securities in order of their preference
relative to one another. Some or all the traditional valuation
methodologies are weighted based on the individual circumstances of
the portfolio company to determine an estimate of the enterprise
value. The traditional valuation methodologies consist of valuation
estimates based on: valuations of comparable public companies ,
recent sales of private and public comparable companies ,
discounting the forecasted cash flows of the portfolio company ,
estimating the liquidation or collateral value of the portfolio
company ' s assets , third-party valuations of the portfolio
company or its assets , considering offers from third-parties to
buy the portfolio company , estimating the value to potential
strategic buyers and considering the value of recent investments in
the equity securities of the portfolio company. To determine the
enterprise value of a portfolio company , its historical and
projected financial results , as well as other factors that may
impact value , such as exposure to litigation , loss of significant
customers or other contingencies are considered. This financial and
other information is generally obtained from the Group ' s
portfolio companies , and in most cases represents unaudited ,
projected , or pro-forma financial information.
In using a valuation methodology based on the discounting of
forecasted cash flows of the portfolio company , significant
judgment is required in the development of an appropriate discount
rate to be applied to the forecasted cash flows. When applicable ,
a weighted average cost of capital approach is used to derive a
discount rate that takes into account i) the risk-free rate ii) the
cost of debt for creditworthiness and iii) the cost of equity for
performance risk. The three inputs to the discount rate are based
on third-party market studies , portfolio company interest rates ,
and an overall understanding of the inherent risk in the cash
flows. The remaining assumptions incorporated in the valuation
methodologies used to estimate the enterprise value consist
primarily of unobservable Level 3 inputs , including management
assumptions based on judgment. For example , from time to time , a
portfolio company has exposure to potential or actual litigation.
In evaluating the impact on the valuation for such items , the
amount that a market participant would consider in estimating fair
value is considered. These estimates are highly subjective , based
on the Group ' s assessment of the potential outcome(s) and the
related impact on the fair value of such potential outcome(s). A
change in these assumptions could have a material impact on the
determination of fair value.
In using a valuation methodology based on comparable public
companies or sales of private or public comparable companies ,
significant judgment is required in the application of discounts or
premiums to the prices of comparable companies for factors such as
size , marketability and relative performance. Related to the use
of private company transactions , when a portfolio company closes
on new equity , the new round ' s implied valuation is used in
valuing the equity investment. The use of an equity round includes
gaining an understanding of the resulting rights between equity
classes , and when applicable , a discount related to rights and
preference differences is applied to the implied valuation. In
addition , when a portfolio company has significant reason to
believe an equity round is closing in the near future , a
weighted-probability approach with the applicable discounts may be
used. Under the yield analysis approach , expected future cash
flows are discounted back using a discount rate. The discount rate
used incorporates market-based yields for similar credits to the
public market and the underlying risk of the individual credit.
Due to the inherent uncertainty of determining the fair value of
Level 3 assets that do not have a readily available market value ,
the fair value of the assets may differ significantly from the
values that would have been used had a ready market existed for
such assets and may differ materially from the values that may
ultimately be received or settled. Further , such assets are
generally subject to legal and other restrictions or otherwise are
less liquid than publicly traded instruments. If the Group were
required to liquidate a portfolio investment in a forced or
liquidation sale , the Group may realise significantly less than
the value at which such investment had previously been
recorded.
The selection of appropriate valuation techniques may be
affected by the availability of relevant inputs as well as the
relative reliability of the inputs. In some cases , one valuation
technique may provide the best indication of fair value while in
other circumstances , multiple valuation techniques may be
appropriate. The results of the application of the various
techniques may not be equally representative of fair value , due to
factors such as assumptions made in the valuation.
In some situations , the Group may determine it appropriate to
evaluate and weigh the results to develop a range of possible
values , with the fair value based on the Group ' s assessment of
the most representative point within the range.
Investments may be classified as Level 2 when market information
becomes available , yet the investment is not traded in an active
market and/or the investment is subject to transfer restrictions ,
or the valuation is adjusted to reflect illiquidity and/or
non-transferability.
The Group , at times , may hold Level 1 investments and will use
the available market quotes to value the investments. As noted
above , these investments may include an illiquid period in which
the investment does not have the ability to trade and will be
classified as Level 2.
Fair value disclosures
The following table analyses the fair value hierarchy of the
Group ' s assets and liabilities measured at fair value at 30 June
2022:
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
INVESTMENT ASSETS DESIGNATED TOTAL LEVEL 1 LEVEL 2 LEVEL 3
AS HELD AT FAIR VALUE GBP GBP GBP GBP
----------------------------- ----------- ------------- ------------- -------------
52 , 591 , 52 , 591 ,
Preferred Stock 726 - - 726
============================= =========== ============= ============= =============
23 , 667 , 23 , 667 ,
Convertible Notes 939 - - 939
============================= =========== ============= ============= =============
19 , 769 ,
Common Stock 130 3 , 473 , 696 6 , 706 , 650 9 , 588 , 784
============================= =========== ============= ============= =============
19 , 362 , 19 , 362 ,
Warrants 631 - - 631
============================= =========== ============= ============= =============
19 , 095 , 19 , 095 ,
Investments in funds 209 - - 209
============================= =========== ============= ============= =============
134 , 486 3 , 473 , 6 , 706 , 124 , 306
Total , 635 696 650 , 289
----------------------------- ----------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
---------------------------
DERIVATIVE FINANCIAL ASSETS GBP GBP GBP GBP
--------------------------- ----------- ----------- ----------- -----------
Forward foreign exchange
contracts - - - -
Total - - - -
--------------------------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
---------------------------------
DERIVATIVE FINANCIAL LIABILITIES GBP GBP GBP GBP
--------------------------------- ------------- ----------- ------------- -----------
Forward foreign exchange
contracts 6 , 326 , 320 - 6 , 326 , 320 -
6 , 326 , 6 , 326 ,
Total 320 - 320 -
--------------------------------- ------------- ----------- ------------- -----------
There were no movements between Level 1 and Level 2 fair value
measurements during the period ended 30 June 2022 and no investment
fair value transferred from Level 3 to Level 2 during the
period.
The following table analyses the fair value hierarchy of the
Group ' s assets and liabilities measured at fair value at 30 June
2022:
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
INVESTMENT ASSETS DESIGNATED TOTAL LEVEL 1 LEVEL 2 LEVEL 3
AS HELD AT FAIR VALUE GBP GBP GBP GBP
----------------------------- ----------- ----------- ----------- -----------
11 , 653 , 11 , 653 ,
Investments in funds 612 - - 612
============================= =========== =========== =========== ===========
95 , 509 , 23 , 359 , 72 , 149 ,
Equity securities 200 - 474 726
----------------------------- ----------- ----------- ----------- -----------
107 , 162 23 , 359 , 83 , 803 ,
Total , 812 - 474 338
----------------------------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
---------------------------
DERIVATIVE FINANCIAL ASSETS GBP GBP GBP GBP
--------------------------- ----------- ----------- ----------- -----------
Forward foreign exchange
contracts - - - -
Total - - - -
--------------------------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
---------------------------------
DERIVATIVE FINANCIAL LIABILITIES GBP GBP GBP GBP
--------------------------------- ------------- ----------- ------------- -----------
Forward foreign exchange
contracts 3 , 692 , 219 - 3 , 692 , 219 -
3 , 692 , 3 , 692 ,
Total 219 - 219 -
--------------------------------- ------------- ----------- ------------- -----------
There were no movements between Level 1 and Level 2 fair value
measurements during the period ended 30 June 2022 and GBP6 , 419 ,
396 of investment fair value transferred from Level 3 to Level 2
during the period.
The following table analyses the fair value hierarchy of the
Group ' s assets and liabilities measured at fair value at 31
December 2021:
(AUDITED) (AUDITED) (AUDITED) (AUDITED)
INVESTMENT ASSETS DESIGNATED TOTAL LEVEL 1 LEVEL 2 LEVEL 3
AS HELD AT FAIR VALUE GBP GBP GBP GBP
----------------------------- ---------- ---------- ------------- ----------
12 , 531 , 12 , 531 ,
Investments in funds 090 - - 090
============================= ========== ========== ============= ==========
49 , 501 , 11 , 992 , 21 , 201 , 16 , 308 ,
Common stock 940 005 450 485
============================= ========== ========== ============= ==========
38 , 090 , 38 , 090 ,
Preferred stock 065 - - 065
============================= ========== ========== ============= ==========
20 , 984 , 19 , 864 ,
Warrant 976 - 1 , 120 , 366 610
============================= ========== ========== ============= ==========
20 , 689 , 20 , 689 ,
Convertible debt 151 - - 151
----------------------------- ---------- ---------- ------------- ----------
141 , 797 11 , 992 , 22 , 321 , 107 , 483
Total , 222 005 816 , 401
----------------------------- ---------- ---------- ------------- ----------
(AUDITED) (AUDITED) (AUDITED) (AUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
DERIVATIVE FINANCIAL ASSETS GBP GBP GBP GBP
---------------------------- ------------- --------- ------------- ---------
Forward foreign exchange
contracts 2 , 069 , 698 - 2 , 069 , 698 -
---------------------------- ------------- --------- ------------- ---------
2 , 069 , 2 , 069 ,
Total 698 - 698 -
---------------------------- ------------- --------- ------------- ---------
(AUDITED) (AUDITED) (AUDITED) (AUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
---------------------------------
DERIVATIVE FINANCIAL LIABILITIES GBP GBP GBP GBP
--------------------------------- ------------- --------- ------------- ---------
Forward foreign exchange
contracts 1 , 508 , 675 - 1 , 508 , 675 -
1 , 508 , 1 , 508 ,
Total 675 - 675 -
--------------------------------- ------------- --------- ------------- ---------
The following table presents the movement in Level 3 positions
for the period ended 30 June 2022 for the Group:
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
INVESTMENTS COMMON PREFERRED CONVERTIBLE
TOTAL IN FUNDS STOCK STOCK WARRANT DEBT
GBP GBP GBP GBP GBP GBP
========================= ========= =========== =========== =========== =========== ===========
Beginning balance , 107 , 483 12 , 531 16 , 308 38 , 090 19 , 864 20 , 689
1 January 2021 , 401 , 090 , 485 , 065 , 610 , 151
========================= ========= =========== =========== =========== =========== ===========
17 , 880 3 , 556 3 , 298 6 , 482 4 , 006
Purchases , 810 , 974 , 146 , 835 535 , 960 , 895
========================= ========= =========== =========== =========== =========== ===========
(14 , 851 (9 , 718 (3 , 931
Sales , 369) (428 , 164) , 009) (687 , 454) (85 , 744) , 998)
========================= ========= =========== =========== =========== =========== ===========
Net change in unrealised 13 , 793 3 , 435 8 , 706 2 , 903
gains (losses) , 447 , 309 (299 , 838) , 280 (952 , 195) , 891
========================= ========= =========== =========== =========== =========== ===========
Ending balance , 30 124 , 306 19 , 095 9 , 588 52 , 591 19 , 362 23 , 667
June 2022 , 289 , 209 , 784 , 726 , 631 , 939
========================= ========= =========== =========== =========== =========== ===========
The following table presents the movement in Level 3 positions
for the period ended 30 June 2021 for the Group:
(UNAUDITED) (UNAUDITED)
(UNAUDITED) INVESTMENTS EQUITY
TOTAL IN FUNDS SECURITIES
GBP GBP GBP
========================================== =========== ============= ===========
48 , 463 , 45 , 941 ,
Beginning balance , 1 January 2021 617 2 , 522 , 367 250
========================================== =========== ============= ===========
24 , 399 , 14 , 936 ,
Purchases 408 9 , 462 , 777 631
========================================== =========== ============= ===========
(2 , 908 , (2 , 815 ,
Sales 963) (93 , 226) 737)
========================================== =========== ============= ===========
(6 , 419 , (6 , 419 ,
Transfers in (out) 396) - 396)
========================================== =========== ============= ===========
Net change in unrealised foreign exchange (1 , 936 , (1 , 428 ,
gains (losses) 373) (507 , 668) 705)
========================================== =========== ============= ===========
Net realised gains (losses) 142 , 090 - 142 , 090
========================================== =========== ============= ===========
22 , 062 , 21 , 793 ,
Net change in unrealised gains (losses) 955 269 , 362 593
83 , 803 , 11 , 653 , 72 , 149 ,
Ending balance , 30 June 2021 338 612 726
========================================== =========== ============= ===========
The following table presents the movement in Level 3 positions
for the year ended 31 December 2021 for the Group:
(AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED)
INVESTMENTS COMMON PREFERRED CONVERTIBLE
TOTAL IN FUNDS STOCK STOCK WARRANT DEBT
GBP GBP GBP GBP GBP GBP
========================= ========= =========== ========= ========= ========= ===========
Beginning balance , 48 , 463 2 , 522 11 , 072 19 , 771 4 , 996 10 , 101
1 January 2021 , 617 , 367 , 305 , 889 , 048 , 008
========================= ========= =========== ========= ========= ========= ===========
45 , 439 19 , 086 7 , 661 2 , 250 5 , 338 11 , 101
Purchases , 031 , 855 , 428 , 450 , 445 , 853
========================= ========= =========== ========= ========= ========= ===========
(25 , 600 (16 , 220 (4 , 899 (1 , 275 (2 , 656
Sales , 304) , 038) , 071) , 157) , 064) (549 , 974)
========================= ========= =========== ========= ========= ========= ===========
Net change in unrealised 39 , 181 7 , 141 2 , 473 17 , 342 12 , 186
gains (losses) , 057 , 906 , 823 , 883 , 181 36 , 264
========================= ========= =========== ========= ========= ========= ===========
Ending balance , 31 107 , 483 12 , 531 16 , 308 38 , 090 19 , 864 20 , 689
December 2021 , 401 , 090 , 485 , 065 , 610 , 151
========================= ========= =========== ========= ========= ========= ===========
The net change in unrealised gains (losses) is recognised within
gains (losses) on investments in the Consolidated Statement of
Comprehensive Income.
Quantitative information regarding the unobservable inputs for
Level 3 positions as at 30 June 2022 is given below:
FAIR VALUE
AT
30 JUNE
2022 VALUATION
DESCRIPTION GBP TECHNIQUE UNOBSERVABLE INPUT RANGE
================== ========== ================== ============================ ===============
Price to Earnings 7.0x
5 , 404 , Discounted Cash Price to Book 1.5x
Common Stock 837 Flows Discount Rate 20.0%
Transaction Price/
2 , 733 , Recent Round
300 Price Illiquidity Discount 30.0%
1 , 346 ,
680 Transaction Price Cost Basis of Investment N/A
Transaction Price/ Deal Execution Risk Discount 0.44%
Recent Round Recent Round Price per
103 , 967 Price Share $0.688
================== ========== ================== ============================ ===============
Discount Rate 23.0%
14 , 284 Discounted Cash Annual Free Cash Flow
Convertible Notes , 615 Flows Growth Rates 3.0%
5 , 584 ,
298 Transaction Price Cost Basis of Investment N/A
Rights and Preferences
Transaction Price/ Discount 0%
1 , 985 , Recent Round Recent Round Price per
750 Price Share $5.56
Recent Round Price per
Transaction Price/ Share EUR10 , 530.89
1 , 813 , Recent Round
276 Price Illiquidity Discount 18.0%
================== ========== ================== ============================ ===============
Recent Round Price per $0.2974 - EUR3
Transaction Price/ Share , 671.49
25 , 584 Recent Round Rights and Preferences
Preferred Stock , 885 Price Discount 0% - 20%
Transaction Price/ Illiquidity Discount 0.0% - 20%
11 , 068 Recent Round Recent Round Price per
, 686 Price Share $0.45 - $28.38
Transaction Price/
7 , 442 , Recent Round Recent Round Price per
180 Price Share $1.43 - $33.55
Transaction Price/ Deal Execution Risk Discount 0%
6 , 121 , Recent Round Recent Round Price per
596 Price Share $9.71
Transaction Price/
2 , 374 , Recent Round
379 Price Price Per Share $8.7879
================== ========== ================== ============================ ===============
Investments in 19 , 095
Funds , 209 Net Asset Value N/A N/A
================== ========== ================== ============================ ===============
$0.69 - EUR10
Price Per Share , 530.89
Rights and Preferences 0% - 40%
Discount 2.92% - 3.01%
Risk Free Rate 1.78 years -
13 , 399 Term 5 years
Warrants , 344 Black Scholes Volatility 3% - 40.0%
3 , 282 , Total Enterprise
302 Value Revenue Multiple 1.75x
Deal Execution Risk Discount
Transaction Price/ , 20% ,
2 , 454 , Recent Round Recent Round Price per
183 Price Share $52.01
Recent Round Price per
Transaction Price/ Share , $3.30 ,
Recent Round Rights and Preferences
226 , 802 Price Discount 40%
124 , 306
Total , 289
================== ========== ================== ============================ ===============
The investments in funds consist of investments in VPC Synthesis
, L.P. and VPC Offshore Unleveraged Private Debt Fund Feeder , L.P.
These are valued based on the NAV as calculated at the balance
sheet date. No adjustments have been deemed necessary to the NAV as
it reflects the fair value of the underlying investments , as such
no specific unobservable inputs have been identified. The NAVs are
sensitive to movements in interest rates due to the funds '
underlying investment in loans.
If the illiquidity discount of the convertible debt valued based
on discounted cash flows increased / decreased by 10% it would have
resulted in an increase / decrease to the total value of those
securities of GBP7 , 750 , 481 , which would affect the Net gain /
(loss) on investments within the capital return column of the
Consolidated Statement of Comprehensive Income.
If the illiquidity discount of the preferred stock valued based
on discounted cash flows increased / decreased by 10% it would have
resulted in an increase / decrease to the total value of those
securities of GBP3 , 890 , 725 , which would affect the Net gain /
(loss) on investments within the capital return column of the
Consolidated Statement of Comprehensive Income.
If the volatility rate used for the warrants valued based on a
Black Scholes increased / decreased by 10% it would have resulted
in an increase / decrease to the total value of those equity
securities of GBP1 , 802 , 586 , which would affect the Net gain /
(loss) on investments within the capital return column of the
Consolidated Statement of Comprehensive Income.
If the price of all the investment assets held at period end ,
including individually those mentioned above , had increased /
decreased by 10% it would have resulted in an increase / decrease
in the total value the investments in funds and equity securities
of GBP12 , 430 , 629 which would affect the Net gain / (loss) on
investments within the capital return column of the Consolidated
Statement of Comprehensive Income.
Assets and liabilities not carried at fair value but for which
fair value is disclosed
The following table presents the fair value of the Group ' s
assets and liabilities not measured at fair value through profit
and loss at 30 June 2022 but for which fair value is disclosed. The
carrying value has been used where it is a reasonable approximation
of fair value:
(UNAUDITED) (UNAUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
======= =========== ===========
Assets
======= =========== ===========
259 , 567 , 259 , 567 ,
Loans 849 849
======= =========== ===========
259 , 567 259 , 567
Total , 849 , 849
======= =========== ===========
The following table presents the fair value of the Group ' s
assets and liabilities not measured at fair value through profit
and loss at 30 June 2021 but for which fair value is disclosed. The
carrying value has been used where it is a reasonable approximation
of fair value:
(UNAUDITED) (UNAUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
======= =========== ===========
Assets
======= =========== ===========
291 , 351 , 291 , 351 ,
Loans 321 321
======= =========== ===========
291 , 351 291 , 351
Total , 321 , 321
======= =========== ===========
The following table presents the fair value of the Group ' s
assets and liabilities not measured at fair value through profit
and loss at 31 December 2021 but for which fair value is
disclosed:
(AUDITED) (AUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
======= =========== ===========
Assets
======= =========== ===========
279 , 339 , 279 , 339 ,
Loans 002 002
======= =========== ===========
279 , 339 279 , 339
Total , 002 , 002
======= =========== ===========
For all other assets and liabilities not carried at fair value ,
the carrying value is a reasonable approximation of fair value.
4. INCOME AND GAINS ON INVESTMENTS AND LOANS
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
======================================= ============= ============= =============
Other Income
======================================= ============= ============= =============
Distributable income from investments
in funds 1 , 937 , 039 644 , 529 1 , 265 , 158
======================================= ============= ============= =============
Interest income from investment assets 3 , 490 , 818 2 , 349 , 778 2 , 088 , 723
======================================= ============= ============= =============
Other income 217 , 272 - 1 , 065 , 739
======================================= ============= ============= =============
5 , 645 , 2 , 994 , 4 , 419 ,
Total 129 307 620
======================================= ============= ============= =============
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
============================================ ============= =========== =============
Net gains (losses) on investments
============================================ ============= =========== =============
(1 , 616 ,
Realised (loss) gain on sale of investments 2 , 059 , 781 556) (239 , 441)
============================================ ============= =========== =============
Unrealised gains on investment in funds 3 , 435 , 309 269 , 362 7 , 141 , 906
============================================ ============= =========== =============
(29 , 100 , 39 , 891 , 60 , 212 ,
Unrealised gains on equity securities 455) 840 530
============================================ ============= =========== =============
(23 , 605 38 , 544 , 67 , 114 ,
Total , 365) 646 995
============================================ ============= =========== =============
5. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Introduction
Risk is inherent in the Group ' s activities , but it is managed
through a process of ongoing identification , measurement and
monitoring , subject to risk limits and other controls. The Group
is exposed to market risk (which includes currency risk , interest
rate risk and other price risk) , credit risk and liquidity risk
arising from the financial instruments held by the Group.
Risk management structure
The Directors are ultimately responsible for identifying and
controlling risks. Day to day management of the risks arising from
the financial instruments held by the Group has been delegated to
Victory Park Capital Advisors , LLC as Investment Manager to the
Parent Company and the Group.
The Investment Manager regularly reviews the investment
portfolio and industry developments to ensure that any events which
impact the Group are identified and considered. This also ensures
that any risks affecting the investment portfolio are identified
and mitigated to the fullest extent possible.
The Group has no employees , and the Directors have all been
appointed on a Non-Executive basis. Whilst the Group has taken all
reasonable steps to establish and maintain adequate procedures ,
systems and controls to enable it to comply with its obligations ,
the Group is reliant upon the performance of third-party service
providers for its executive function. In particular , the
Investment Manager , the Custodian , the Administrator , the
Corporate Secretary and the Registrar will be performing services
which are integral to the operation of the Group. Failure by any
service provider to carry out its obligations to the Group in
accordance with the terms of its appointment could have a
materially detrimental impact on the operation of the Group.
In seeking to implement the investment objectives of the Parent
Company while limiting risk , the Parent Company and the Group are
subject to the investment limits restrictions set out in the Credit
Risk section of this note.
Liquidity risk
Liquidity risk is defined as the risk that the Group may not be
able to settle or meet its obligations on time or at a reasonable
price. Ordinary Shares are not redeemable at the holder ' s
option.
The maturities of the non-current financial liabilities are
disclosed in Note 6.
The Investment Manager manages the Group ' s liquidity risk by
investing primarily in a diverse portfolio of assets. At 30 June
2022 , 16% of the loans had a stated maturity date of less than a
year (31 December 2021: 10% ; 30 June 2021: 2%).
The Group and Parent Company continuously monitor for
fluctuation in currency rates. The Parent Company performs stress
tests and liquidity projections to determine how much cash should
be held back to meet potential future to obligations to settle
margin calls arising from foreign exchange hedging.
6. NOTE PAYABLE
The Group entered into contractual obligations with a third
party to structurally subordinate a portion of the principal
directly attributable to existing investments. The cash flows
received by the Group from the underlying investments are used to
pay the lender principal , interest , and draw fees based upon the
stated terms of the Credit Facility. Unless due to a fraudulent act
, as defined by the Credit Facilities , none of the Group ' s other
investment assets can be used to satisfy the obligations of the
Credit Facilities in the event that those obligations cannot be met
by the subsidiaries. Each subsidiary with a Credit Facility is a
bankruptcy remote entity.
The table below provides details of the outstanding debt of the
Group at 30 June 2022:
OUTSTANDING
INTEREST PRINCIPAL
30 JUNE 2022 (UNAUDITED) RATE GBP MATURITY
========================= =============== =========== ============
87 , 230 ,
Credit Facility 03-2021 3.95%+1M LIBOR 610 1 March 2027
========================= =============== =========== ============
87 , 230 ,
Total 610
========================================== =========== ============
The table below provides details of the outstanding debt of the
Group at 30 June 2021:
OUTSTANDING
INTEREST PRINCIPAL
30 JUNE 2021 (UNAUDITED) RATE GBP MATURITY
========================= =============== =========== ============
74 , 323 ,
Credit Facility 03-2021 3.95%+1M LIBOR 590 1 March 2027
========================= =============== =========== ============
74 , 323 ,
Total 590
========================================== =========== ============
The table below provides details of the outstanding debt of the
Group at 31 December 2021:
OUTSTANDING
INTEREST PRINCIPAL
31 DECEMBER 2021 (AUDITED) RATE GBP MATURITY
=========================== =============== =========== ============
87 , 432 ,
Credit Facility 03-2021 3.95%+1M LIBOR 895 1 March 2027
=========================== =============== =========== ============
87 , 432 ,
Total 895
============================================ =========== ============
The Group entered into contractual obligations with a third
party to structurally subordinate a portion of principal directly
attributable to an existing loan facility. The Group is obligated
to pay a commitment fee and interest to the third party on the
obligation as interest is paid on the underlying loan facility. In
the event of a default on the loan facility , the third party has
first-out participation rights on the accrued and unpaid interest
as well as the principal balance of the note.
The table below provides details of the outstanding first-out
participation liabilities of the Group at 30 June 2022:
OUTSTANDING
PRINCIPAL
30 JUNE 2022 (UNAUDITED) GBP MATURITY
-------------------------------- ----------- --------------
18 , 945 ,
First-Out Participation 03-2017 275 1 January 2024
================================ =========== ==============
18 , 945 ,
Total 275
================================= =========== ==============
The table below provides details of the outstanding first-out
participation liabilities of the Group at 30 June 2021:
OUTSTANDING
PRINCIPAL
30 JUNE 2021 (UNAUDITED) GBP MATURITY
-------------------------------- ----------- --------------
20 , 244 ,
First-Out Participation 03-2017 010 1 January 2024
================================ =========== ==============
17 , 817 ,
First-Out Participation 04-2019 546 1 January 2024
================================ =========== ==============
38 , 061 ,
Total 556
================================= =========== ==============
The table below provides details of the outstanding first-out
participation liabilities of the Group at 31 December 2021:
OUTSTANDING
PRINCIPAL
31 DECEMBER 2021 (AUDITED) GBP MATURITY
-------------------------------- ------------- --------------
18 , 181 ,
First-Out Participation 03-2017 601 1 January 2024
================================ ============= ==============
First-Out Participation 04-2019 1 , 652 , 764 1 January 2024
================================ ============= ==============
19 , 834 ,
Total 365
================================= ============= ==============
The table below provides the movement of the notes payable for
the period ended 30 June 2022:
NOTES
PAYABLE
(UNAUDITED) GBP
========================================================= =============
107 , 267 ,
Beginning balance , 1 January 2022 260
========================================================= =============
Purchases 8 , 599 , 600
========================================================= =============
(21 , 346 ,
Sales 505)
========================================================= =============
11 , 655 ,
Net change in unrealised foreign exchange gains (losses) 530
========================================================= =============
106 , 175
Ending balance , 30 June 2022 , 885
========================================================= =============
The table below provides the movement of the notes payable for
the period ended 30 June 2021:
NOTES
PAYABLE
(UNAUDITED) GBP
========================================================= ===========================
86 , 087 ,
Beginning balance , 1 January 2021 183
========================================================= ===========================
155 , 710 ,
Purchases 709
========================================================= ===========================
(128 , 460
Sales , 576)
========================================================= ===========================
Net change in unrealised foreign exchange gains (losses) (952 , 170)
========================================================= ===========================
112 , 385
Ending balance , 30 June 2021 , 146
========================================================= ===========================
The table below provides the movement of the notes payable and
securities sold under agreements to repurchase for the year ended
31 December 2021 for the Group.
NOTES
PAYABLE
(AUDITED) GBP
========================================================= =============
86 , 087 ,
Beginning balance , 1 January 2021 183
========================================================= =============
179 , 944 ,
Purchases 080
========================================================= =============
(163 , 403
Sales , 782)
========================================================= =============
Net change in unrealised foreign exchange gains (losses) 4 , 639 , 779
========================================================= =============
107 , 267
Ending balance , 31 December 2021 , 260
========================================================= =============
7. IMPAIRMENT OF FINANCIAL ASSETS AT AMORTISED COST
The table below provides details of the investments at amortised
cost held by the Group for the period ended 30 June 2022 under IFRS
9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(UNAUDITED) GBP GBP GBP GBP
======================== =========== ========== =========== ===========
274 , 347 , 14 , 779 , 259 , 567 ,
Loans at amortised cost 352 503 - 849
======================== =========== ========== =========== ===========
274 , 347 14 , 779 , 259 , 567
Total , 352 503 - , 849
======================== =========== ========== =========== ===========
The table below provides details of the investments at amortised
cost held by the Group for the period ended 30 June 2021 under IFRS
9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(UNAUDITED) GBP GBP GBP GBP
======================== =========== ============= =========== ===========
300 , 945 , 291 , 351 ,
Loans at amortised cost 981 9 , 549 , 220 45 , 440 321
======================== =========== ============= =========== ===========
300 , 945 9 , 549 , 291 , 351
Total , 981 220 45 , 440 , 321
======================== =========== ============= =========== ===========
The table below provides details of the investments at amortised
cost held by the Group for the year ended 31 December 2021 under
IFRS 9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(AUDITED) GBP GBP GBP GBP
======================== =========== ========== =========== ===========
291 , 802 , 12 , 463 , 279 , 339 ,
Loans at amortised cost 975 973 - 002
======================== =========== ========== =========== ===========
291 , 802 12 , 463 , 279 , 339
Total , 975 973 - , 002
======================== =========== ========== =========== ===========
Credit impairment losses
The credit impairment losses of the Group for the six months
ended 30 June 2022 comprised of the following under IFRS 9:
CREDIT IMPAIRMENT LOSSES
30 JUNE 2022
(UNAUDITED) GBP
============================ ========================
Loan recovered (1 , 583)
============================= ========================
Change in loan loss reserve 2 , 315 , 530
============================= ========================
Currency translation -
============================ ========================
2 , 313 ,
Credit impairment losses 947
============================= ========================
The credit impairment losses of the Group for the six months
ended 30 June 2021 comprised of the following under IFRS 9:
CREDIT IMPAIRMENT LOSSES
30 JUNE 2021
(UNAUDITED) GBP
=============================================== ========================
Loans written off 45 , 440
================================================ ========================
Change in expected credit losses 1 , 060 , 061
================================================ ========================
Currency translation on expected credit losses (2 , 531)
================================================ ========================
1 , 102 ,
Credit impairment losses 970
================================================ ========================
The credit impairment losses of the Group for the year ended 31
December 2021 comprises of the following under IFRS 9:
CREDIT IMPAIRMENT LOSSES
31 DECEMBER 2021
(AUDITED) GBP
=============================================== ========================
Loans recovered (358 , 867)
================================================ ========================
Change in expected credit losses 3 , 974 , 814
================================================ ========================
Currency translation on expected credit losses 20 , 195
================================================ ========================
3 , 636 ,
Credit impairment losses 142
================================================ ========================
Impairment of loans written off
Impairment charges of loans written off (recovered) GBP(1 , 583)
(31 December 2021: GBP(358 , 867) ; 30 June 2021: GBP45 , 440) are
included in credit impairment losses on the Consolidated Statement
of Comprehensive Income.
Provision for expected credit losses
As at 30 June 2022 , the Group has created a reserve provision
on the outstanding principal of the Group ' s loans of GBP14 , 779
, 503 (31 December 2021: GBP12 , 463 , 973 ; 30 June 2021: GBP9 ,
549 , 220) , which have been recorded in the Group ' s Consolidated
Statement of Financial Position and are included in Credit
impairment losses on the Consolidated Statement of Comprehensive
Income.
The allowance for expected credit losses comprised the following
as at 30 June 2022:
30 JUNE
2022
(UNAUDITED) GBP
=============================================== =============
12 , 463 ,
Beginning balance 1 January 2022 973
=============================================== =============
Change in expected credit losses or equivalent 2 , 315 , 530
=============================================== =============
14 , 779 ,
Ending balance 30 June 2022 503
=============================================== =============
The allowance for expected credit losses comprised the following
as at 30 June 2021:
30 JUNE
2021
(UNAUDITED) GBP
=============================================== =============
Beginning balance 1 January 2021 8 , 489 , 159
=============================================== =============
Change in expected credit losses or equivalent 1 , 060 , 061
=============================================== =============
9 , 549 ,
Ending balance 30 June 2021 220
=============================================== =============
The allowance for expected credit losses comprised the following
as at 31 December 2021:
31 DECEMBER
2021
(AUDITED) GBP
=============================================== =============
Beginning balance 1 January 2021 8 , 489 , 159
=============================================== =============
Change in expected credit losses or equivalent 3 , 974 , 814
=============================================== =============
12 , 463 ,
Ending balance 31 December 2021 973
=============================================== =============
12 , 463 ,
Ending balance 31 December 2021 973
=============================================== =============
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 30 June 2022:
LEGAL 30 JUNE
FINTECH E-COMMERCE FINANCE 2022
INTERNAL GRADE (UNAUDITED) GBP GBP GBP GBP
=========================== ============= ============= ========= =============
Stage 1 1 , 092 , 325 1 , 103 , 209 149 , 501 2 , 345 , 035
=========================== ============= ============= ========= =============
Stage 2 - - - -
=========================== ============= ============= ========= =============
12 , 434 , 12 , 434 ,
Stage 3 468 - - 468
13 , 526 , 1 , 103 , 14 , 779 ,
Expected credit losses 793 209 149 , 501 503
=========================== ============= ============= ========= =============
UNITED LATIN 30 JUNE
INTERNAL GRADE STATES AMERICA EUROPE ASIA 2022
(UNAUDITED) GBP GBP GBP GBP GBP
================ ============= ======== ========== ===== =============
Stage 1 1 , 907 , 422 - 437 , 613 - 2 , 345 , 035
================ ============= ======== ========== ===== =============
Stage 2 - - - - -
================ ============= ======== ========== ===== =============
12 , 434 , 12 , 434 ,
Stage 3 - - 468 - 468
Expected credit 1 , 907 , 12 , 872 , 14 , 779 ,
losses 422 - 081 - 503
================ ============= ======== ========== ===== =============
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 30 June 2021:
LEGAL 30 JUNE
FINTECH E-COMMERCE FINANCE 2021
INTERNAL GRADE (UNAUDITED) GBP GBP GBP GBP
============================= ========== ============= ======== =============
Stage 1 - - - -
============================= ========== ============= ======== =============
Stage 2 - - - -
============================= ========== ============= ======== =============
9 , 549 ,
Stage 3 220 - - 9 , 549 , 220
9 , 549 , 9 , 549 ,
Expected credit losses 220 - - 220
============================= ========== ============= ======== =============
UNITED LATIN 30 JUNE
INTERNAL GRADE STATES AMERICA EUROPE ASIA 2021
(UNAUDITED) GBP GBP GBP GBP GBP
==================== ======= ========== ============= ======== =============
Stage 1 - - - - -
==================== ======= ========== ============= ======== =============
Stage 2 - - - - -
==================== ======= ========== ============= ======== =============
Stage 3 - - 9 , 549 , 220 - 9 , 549 , 220
Loans at amortised 9 , 549 , 9 , 549 ,
cost - - 220 - 220
==================== ======= ========== ============= ======== =============
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 31 December 2021:
LEGAL 31 DECEMBER
FINTECH E-COMMERCE FINANCE 2021
INTERNAL GRADE (AUDITED) GBP GBP GBP GBP
========================= =========== ========== ======== ===========
Stage 1 - - - -
========================= =========== ========== ======== ===========
Stage 2 - - - -
========================= =========== ========== ======== ===========
12 , 463 , 12 , 463 ,
Stage 3 973 - - 973
12 , 463 12 , 463 ,
Expected credit losses , 973 - - 973
========================= =========== ========== ======== ===========
UNITED LATIN 31 DECEMBER
INTERNAL GRADE STATES AMERICA EUROPE ASIA 2021
(AUDITED) GBP GBP GBP GBP GBP
=================== ======= ======== ========== ===== ===========
Stage 1 - - - - -
=================== ======= ======== ========== ===== ===========
Stage 2 - - - - -
=================== ======= ======== ========== ===== ===========
12 , 463 , 12 , 463 ,
Stage 3 - - 973 - 973
Loans at amortised 12 , 463 , 12 , 463 ,
cost - - 973 - 973
=================== ======= ======== ========== ===== ===========
8. FEES AND EXPENSES
Investment management fees
Under the terms of the Management Agreement , the Investment
Manager is entitled to a management fee and a performance fee
together with reimbursement of reasonable expenses incurred by it
in the performance of its duties.
The management fee is payable in Pound Sterling monthly in
arrears and is at the rate of 1/12 of 1.0% per month of NAV (the "
Management Fee " ). For the period from Admission until the date on
which 90% of the net proceeds of the Issue have been invested or
committed for investment (other than in Cash Instruments) , the
value attributable to any Cash Instruments of the Group held for
investment purposes will be excluded from the calculation of NAV
for the purposes of determining the Management Fee. The management
fee expense of the Group for the period is GBP1 , 990 , 424 (31
December 2021: GBP3 , 802 , 097 ; 30 June 2021: GBP1 , 780 , 159) ,
of which GBP434 , 554 (31 December 2021: GBP155 , 399 ; 30 June
2021: GBP168 , 635) was payable as at 30 June 2022.
The Investment Manager shall not charge a management fee twice.
Accordingly , if at any time the Group invests in or through any
other investment fund or special purpose vehicle and a management
fee or advisory fee is charged to such investment fund or special
purpose vehicle by the Investment Manager or any of its affiliates
, the Investment Manager agrees to either (at the option of the
Investment Manager): (i) waive such management fee or advisory fee
due to the Investment Manager or any of its affiliates in respect
of such investment fund or special purpose vehicle , other than the
fees charged by the Investment Manager under the Management
Agreement ; or (ii) charge the relevant fee to the relevant
investment fund or special purpose vehicle , subject to the cap set
out in the paragraph below , and ensure that the value of such
investment shall be excluded from the calculation of the NAV for
the purposes of determining the Management Fee payable pursuant to
the above.
Notwithstanding the above , where such investment fund or
special purpose vehicle employs gearing from third parties and the
Investment Manager or any of its affiliates is entitled to charge
it a fee based on gross assets in respect of such investment , the
Investment Manager may not charge a fee greater than 1.0% per annum
of gross assets in respect of any investment made by the Parent
Company or any member of the Group.
Performance fees
The performance fee is calculated by reference to the movements
in the Adjusted Net Asset Value since the end of the Calculation
Period in respect of which a performance fee was last earned or
Admission if no performance fee has yet been earned. The payment of
any performance fees to the Investment Manager will be conditional
on the Parent Company achieving at least a 5.0% per annum total
return for shareholders relative to a 30 April 2017 High Water
Mark.
The performance fee will be calculated in respect of each 12
month period starting on 1 January and ending on 31 December in
each calendar year (a " Calculation Period " ) and provided further
that if at the end of what would otherwise be a Calculation Period
no performance fee has been earned in respect of that period , the
Calculation Period shall carry on for the next 12 month period and
shall be deemed to be the same Calculation Period and this process
shall continue until a performance fee is next earned at the end of
the relevant period. The performance fee expense for the period is
GBPNil (31 December 2021: GBP12 , 913 , 280 ; 30 June 2021: GBP7 ,
047 , 774) , of which none was payable as at 30 June 2022 (31
December 2021: GBP12 , 913 , 280 ; 30 June 2021: GBP7 , 047 ,
774).
The performance fee will be equal to the lower of (i) in each
case as at the end of the Calculation Period , an amount equal to
(a) Adjusted Net Asset Value minus the Adjusted Hurdle Value ,
minus (b) the aggregate of all Performance Fees paid to the Manager
in respect of all previous Calculation Periods ; and (ii) the
amount by which (a) 15% of the total increase in the Adjusted Net
Asset Value since the Net Asset Value as at 30 April 2017 (being
the aggregate of the increase in the Adjusted Net Asset Value in
the relevant Calculation Period and in each previous Calculation
Period) exceeds (b) the aggregate of all Performance Fees paid to
the Manager in respect of all previous Calculation Periods. In the
foregoing calculation , the Adjusted Net Asset Value will be
adjusted for any increases or decreases in the Net Asset Value
attributable to the issue or repurchase of any Ordinary Shares in
order to calculate the total increase in the Net Asset Value
attributable to the performance of the Parent Company.
" Adjusted Net Asset Value " means the Net Asset Value plus (a)
the aggregate amount of any dividends paid or distributions made in
respect of any Ordinary Shares and (b) the aggregate amount of any
dividends or distributions accrued but unpaid in respect of any
Ordinary Shares , plus the amount of any Performance Fees both paid
and accrued but unpaid , in each case after the Effective Date and
without duplication. " Adjusted Hurdle Value " means the Net Asset
Value as at 30 April 2017 adjusted for any increases or decreases
in the Net Asset Value attributable to the issue or repurchase of
any Ordinary Shares increasing at an uncompounded rate equal to the
Hurdle. The " Hurdle " means a 5% per annum total return for
shareholders.
The Investment Manager shall not charge a performance fee twice.
Accordingly , if at any time the Group invests in or through any
other investment fund , special purpose vehicle or managed account
arrangement and a performance fee or carried interest is charged to
such investment fund , special purpose vehicle or managed account
arrangement by the Investment Manager or any of its affiliates ,
the Investment Manager agrees to (and shall procure that all of its
relevant affiliates shall) either (at the option of the Investment
Manager): (i) waive such performance fee or carried interest
suffered by the Group by virtue of the Investment Manager ' s (or
such relevant affiliate ' s/affiliates ' ) management of (or
advisory role in respect of) such investment fund , special purpose
vehicle or managed account , other than the fees charged by the
Investment Manager under the Management Agreement ; or (ii)
calculate the performance fee as above , except that in making such
calculation the NAV (as of the date of the High Water Mark) and the
Adjusted NAV (as of the NAV calculation date) shall not include the
value of any assets invested in any other investment fund , special
purpose vehicle or managed account arrangement that is charged a
performance fee or carried interest by the Investment Manager or
any of its affiliates (and such performance fee or carried interest
is not waived with respect to the Group).
9. NET ASSET VALUE PER SHARE
(UNAUDITED) (UNAUDITED) (AUDITED)
AS AT AS AT AS AT
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
============================================= =========== =========== ===========
Net assets attributable to Shareholders 293 , 596 , 295 , 507 , 317 , 614 ,
of the Parent Company 460 964 784
============================================= =========== =========== ===========
Ordinary Shares in issue (excluding Treasury 278 , 276 , 278 , 276 , 278 , 276 ,
Shares) 392 392 392
============================================= =========== =========== ===========
Net asset value per Ordinary Share 105.51p 106.19p 114.14p
============================================= =========== =========== ===========
10. RETURN PER ORDINARY SHARE
Basic earnings per share is calculated using the weighted
average number of shares in issue during the year , excluding the
average number of Ordinary Shares purchased by the Parent Company
and held as Treasury Shares.
(UNAUDITED) (UNAUDITED) (AUDITED)
AS AT AS AT AS AT
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
======================================= =========== =========== ===========
(12 , 930 , 39 , 938 , 73 , 183 ,
Profit for the year 158) 375 772
======================================= =========== =========== ===========
Average number of Ordinary Shares in 278 , 276 , 280 , 766 , 279 , 617 ,
issue during the year 392 314 119
======================================= =========== =========== ===========
Earnings per Share (basic and diluted) (4.65)p 14.22p 26.17p
======================================= =========== =========== ===========
The Parent Company has not issued any shares or other
instruments that are considered to have dilutive potential.
11. SHAREHOLDERS' CAPITAL
Set out below is the issued share capital of the Company as at
30 June 2022. All shares issued are fully paid with none not fully
paid:
NOMINAL
VALUE NUMBER
(UNAUDITED) GBP OF SHARES
================ ======= ===========
278 , 276 ,
Ordinary Shares 0.01 392
================ ======= ===========
Set out below is the issued share capital of the Company as at
30 June 2021. All shares issued are fully paid with none not fully
paid:
NOMINAL
VALUE NUMBER
(UNAUDITED) GBP OF SHARES
================ ======= ===========
278 , 276 ,
Ordinary Shares 0.01 392
================ ======= ===========
Set out below is the issued share capital of the Company as at
31 December 2021. All shares issued are fully paid with none not
fully paid:
NOMINAL
VALUE NUMBER
(AUDITED) GBP OF SHARES
================ ======= ===========
278 , 276 ,
Ordinary Shares 0.01 392
================ ======= ===========
Rights attaching to the Ordinary Shares
The holders of the Ordinary Shares are entitled to receive , and
to participate in , any dividends declared in relation to the
Ordinary Shares. The holders of the Ordinary Shares shall be
entitled to all the Parent Company ' s remaining net assets after
taking into account any net assets attributable to other share
classes in issue. The Shares shall carry the right to receive
notice of , attend and vote at general meetings of the Parent
Company. The consent of the holders of Shares will be required for
the variation of any rights attached to the Ordinary Shares. The
net return per Ordinary Share is calculated by dividing the net
return on ordinary activities after taxation by the number of
shares in issue.
Voting rights
Subject to any rights or restrictions attached to any shares ,
on a show of hands every shareholder present in person has one vote
and every proxy present who has been duly appointed by a
shareholder entitled to vote has one vote , and on a poll , every
shareholder (whether present in person or by proxy) has one vote
for every share of which he is the holder. A shareholder entitled
to more than one vote need not , if he votes , use all his votes or
cast all the votes he uses the same way. In the case of joint
holders , the vote of the senior who tenders a vote shall be
accepted to the exclusion of the vote of the other joint holders ,
and seniority shall be determined by the order in which the names
of the holders stand in the Register.
No shareholder shall have any right to vote at any general
meeting or at any separate meeting of the holders of any class of
shares , either in person or by proxy , in respect of any share
held by him unless all amounts presently payable by him in respect
of that share have been paid.
Variation of rights & distribution on winding up
Subject to the provisions of the Act as amended and every other
statute for the time being in force concerning companies and
affecting the Parent Company (the " Statutes " ) , if at any time
the share capital of the Parent Company is divided into different
classes of shares , the rights attached to any class may be varied
either with the consent in writing of the holders of three-quarters
in nominal value of the issued shares of that class or with the
sanction of an extraordinary resolution passed at a separate
meeting of the holders of the shares of that class (but not
otherwise) and may be so varied either whilst the Parent Company is
a going concern or during or in contemplation of a winding-up.
At every such separate general meeting the necessary quorum
shall be at least two persons holding or representing by proxy at
least one-third in nominal value of the issued shares of the class
in question (but at any adjourned meeting any holder of shares of
the class present in person or by proxy shall be a quorum) , any
holder of shares of the class present in person or by proxy may
demand a poll and every such holder shall on a poll have one vote
for every share of the class held by him. Where the rights of some
only of the shares of any class are to be varied , the foregoing
provisions apply as if each group of shares of the class
differently treated formed a separate class whose rights are to be
varied.
The Parent Company has no fixed life but , pursuant to the
Articles , an ordinary resolution for the continuation of the
Parent Company will be proposed at the annual general meeting of
the Parent Company to be held in 2025 and , if passed , every five
years thereafter. Upon any such resolution , not being passed ,
proposals will be put forward within three months after the date of
the resolution to the effect that the Parent Company be wound up ,
liquidated , reconstructed or unitised.
If the Parent Company is wound up , the liquidator may divide
among the shareholders in specie the whole or any part of the
assets of the Parent Company and for that purpose may value any
assets and determine how the division shall be carried out as
between the shareholders or different classes of shareholders.
The table below shows the movement in shares through 30 June
2022:
SHARES IN SHARES IN
ISSUE AT THE ISSUE AT THE
BEGINNING
FOR THE PERIOD FROM 1 JANUARY 2022 OF SHARES OF
TO 30 JUNE 2022 (UNAUDITED) THE PERIOD REPURCHASED THE PERIOD
=================================== ============ =========== ============
278 , 276 , 278 , 276 ,
Ordinary Shares 392 - 392
=================================== ============ =========== ============
The table below shows the movement in shares through 30 June
2021:
SHARES IN SHARES IN
ISSUE AT THE ISSUE AT THE
BEGINNING
FOR THE PERIOD FROM 1 JANUARY 2021 OF SHARES OF
TO 30 JUNE 2021 (UNAUDITED) THE PERIOD REPURCHASED THE PERIOD
=================================== ============ =========== ============
282 , 647 , (4 , 370 , 278 , 276 ,
Ordinary Shares 364 972) 392
=================================== ============ =========== ============
The table below shows the movement in shares through 31 December
2021:
SHARES IN SHARES IN
ISSUE AT THE ISSUE AT THE
BEGINNING
FOR THE YEAR FROM 1 JANUARY 2021 OF SHARES OF
TO 31 DECEMBER 2021 (AUDITED) THE PERIOD REPURCHASED THE PERIOD
================================= ============ =========== ============
282 , 647 , (4 , 370 , 278 , 276 ,
Ordinary Shares 364 972) 392
================================= ============ =========== ============
Share buyback programme
All Ordinary Shares bought back through the share buyback
programme are held in treasury as at 30 June 2022. Details of the
programme are as follows:
ORDINARY AVERAGE LOWEST HIGHEST TOTAL
(UNAUDITED) SHARES PRICE PER PRICE PER PRICE PER TREASURY
DATE OF PURCHASE PURCHASED SHARE SHARE SHARE SHARES
================= ========= ========= ========= ========= ===========
104 , 339 ,
January 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
104 , 339 ,
February 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
104 , 339 ,
March 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
104 , 339 ,
April 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
104 , 339 ,
May 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
104 , 339 ,
June 2022 - 0.00p 0.00p 0.00p 273
================= ========= ========= ========= ========= ===========
Other distributable reserve
During the period , the Company declared and paid dividends of
GBPNil (31 December 2021: GBPNil , 30 June 2021: GBPNil) from the
other distributable reserve. Further , the cost of the buyback of
Ordinary Shares as detailed above was funded by the other
distributable reserve of GBPNil (31 December 2021: GBP3 , 741 , 824
, 30 June 2021: GBP3 , 741 , 824).
12. DIVIDS PER SHARE
The following table summarises the amounts recognised as
distributions to equity shareholders in the period :
(UNAUDITED) (UNAUDITED) (UNAUDITED)
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
================================================= =========== =========== ===========
2020 interim dividend of 2.00 pence per Ordinary 5 , 638 , 5 , 638 ,
Share paid on 1 April 2021 - 178 178
================================================= =========== =========== ===========
2021 interim dividend of 2.00 pence per Ordinary 5 , 586 , 5 , 586 ,
Share paid on 24 June 2021 - 527 527
================================================= =========== =========== ===========
2021 interim dividend of 2.00 pence per Ordinary 5 , 565 ,
Share paid on 23 September 2021 - - 528
================================================= =========== =========== ===========
2021 interim dividend of 2.00 pence per Ordinary 5 , 565 ,
Share paid on 23 December 2021 - - 528
================================================= =========== =========== ===========
2021 interim dividend of 2.00 pence per Ordinary 5 , 565 ,
Share paid on 31 March 2022 528 - -
================================================= =========== =========== ===========
2022 interim dividend of 2.00 pence per Ordinary 5 , 565 ,
Share Paid on 21 July 2022 528 - -
================================================= =========== =========== ===========
11 , 131 11 , 224 22 , 355
Total , 056 , 705 , 761
================================================= =========== =========== ===========
An interim dividend of 2.00 pence per Ordinary Share was
declared by the Board on 25 August 2022 in respect of the period to
30 June 2022 and will be paid to shareholders on 6 October 2022.
The interim dividend has not been included as a liability in these
accounts in accordance with International Accounting Standard 10:
Events After the Balance Sheet Date.
13. RELATED PARTY TRANSACTIONS
Each of the Directors is entitled to receive a fee from the
Parent Company at such rate as may be determined in accordance with
the Articles. Save for the Chair of the Board , the fees are GBP33
, 000 for each Director per annum. The Chair ' s fee is GBP55 , 000
per annum. The chair of the Audit and Valuation Committee may also
receive additional fees for acting as the chairman of such a
committee. The current fee for serving as the chair of the Audit
and Valuation Committee is GBP5 , 500 per annum.
All the Directors are also entitled to be paid all reasonable
expenses properly incurred by them in attending general meetings ,
board or committee meetings or otherwise in connection with the
performance of their duties. The Board may determine that
additional remuneration may be paid , from time to time , to any
one or more Directors in the event such Director or Directors are
requested by the Board to perform extra or special services on
behalf of the Parent Company.
As at 30 June 2022 , 30 June 2021 and 31 December 2021 , the
Directors ' interests in the Parent Company ' s Shares were as
follows:
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 30 JUNE 31 DECEMBER
2022 2021 2021
GBP GBP GBP
====================== ================ =========== =========== ===========
Clive Peggram Ordinary Shares 333 , 240 333 , 240 333 , 240
====================== ================ =========== =========== ===========
Elizabeth Passey Ordinary Shares 10 , 000 10 , 000 10 , 000
====================== ================ =========== =========== ===========
Graeme Proudfoot Ordinary Shares 130 , 000 130 , 000 130 , 000
====================== ================ =========== =========== ===========
Mark Katzenellenbogen Ordinary Shares 215,000 215 , 000 215 , 000
====================== ================ =========== =========== ===========
Oliver Grundy Ordinary Shares 30 , 000 - 30 , 000
====================== ================ =========== =========== ===========
Investment management fees for the period ended 30 June 2022 are
payable by the Parent Company to the Investment Manager and these
are presented on the Consolidated Statement of Comprehensive
Income. Details of investment management fees and performance fees
payable during the year are disclosed in Note 8.
During 2022 , as part of an amendment to its management
agreement , the Investment Manager continued to purchase Ordinary
Shares of the Parent Company with 20% of its monthly management
fee. The Ordinary Shares were purchased at the prevailing market
price. As at 30 June 2022 , the Investment Manager has purchased 4
, 729 , 267 (31 December 2021: 4 , 496 , 991 ; 30 June 2021 4 , 039
, 247) Ordinary Shares.
As at 30 June 2022 , Partners and Principals of the Investment
Manager held 510 , 000 (31 December 2021: 510 , 000 ; 30 June 2021:
510 , 000) Shares in the Parent Company.
The Group has invested in VPC Offshore Unleveraged Private Debt
Fund Feeder , L.P. The Investment Manager of the Parent Company
also acts as manager to VPC Offshore Unleveraged Private Debt Fund
Feeder , L.P. The principal activity of VPC Offshore Unleveraged
Private Debt Fund Feeder , L.P. is to invest in alternative finance
investments and related instruments with a view to achieving the
Parent Company ' s investment objective. As at 30 June 2022 the
Group owned 26% of VPC Offshore Unleveraged Private Debt Fund
Feeder , L.P. (31 December 2021: 26%) and the value of the Group '
s investment in VPC Offshore Unleveraged Private Debt Fund Feeder ,
L.P. was GBP1 , 327 , 188 (31 December 2021: GBP1 , 640 , 256 ; 30
June 2021: GBP2 , 031 , 539).
The Group has invested in VPC Synthesis , L.P. The Investment
Manager of the Parent Company also acts as manager to VPC Synthesis
, L.P. The principal activity of VPC Synthesis , L.P. is to invest
in alternative finance investments and related instruments with a
view to achieving the Parent Company ' s investment objective. As
at 30 June 2022 the Group owned 4% of VPC Synthesis , L.P. (31
December 2021: 4% ; 30 June 2021: 7%) and the value of the Group '
s investment in VPC Synthesis , L.P. was GBP17 , 768 , 021 (31
December 2021: GBP10 , 890 , 834 ; 30 June 2021: GBP10 , 890 ,
834).
The Investment Manager may pay directly various expenses that
are attributable to the Group. These expenses are allocated to and
reimbursed by the Group to the Investment Manager as outlined in
the Management Agreement. Any excess expense previously allocated
to and paid by the Group to the Investment Manager will be
reimbursed to the Group by the Investment Manager. At 30 June 2022
, GBP32 , 606 was due to the Investment Manager (31 December 2021:
GBP23 , 697 ; 30 June 2021: GBP24 , 038) and is included in the
Accrued expenses and other liabilities balance on the Consolidated
Statement of Financial Position.
14. SUBSIDIARIES
(UNAUDITED) (AUDITED)
PERCENTAGE (UNAUDITED) PERCENTAGE
OWNERSHIP PERCENTAGE OWNERSHIP
PRINCIPAL COUNTRY OF NATURE 31 JUNE OWNERSHIP 31 DECEMBER
NAME ACTIVITY INCORPORATION OF INVESTMENT 2022 31 JUNE 2021 2021
===================== =========== =============== =============== ============= ============= ============
VPC Specialty Investment USA Limited Sole limited Sole limited Sole limited
Lending Investments vehicle partner partner partner partner
Intermediate interest
, L.P.
===================== =========== =============== =============== ============= ============= ============
VPC Specialty Investment USA Limited Sole limited Sole limited Sole limited
Lending Investments vehicle partner partner partner partner
Intermediate interest
Holdings , L.P.
===================== =========== =============== =============== ============= ============= ============
VPC Specialty General USA Membership Sole member Sole member Sole member
Lending Investments partner interest
Intermediate
GP , LLC
===================== =========== =============== =============== ============= ============= ============
Fore London , Investment UK Limited Sole limited Sole limited Sole limited
L.P. vehicle partner partner partner partner
interest
===================== =========== =============== =============== ============= ============= ============
Fore London GP General UK Membership Sole member Sole member Sole member
, LLC partner interest
===================== =========== =============== =============== ============= ============= ============
Limited
Duxbury Court Investment partner
I , L.P. vehicle USA interest 95% 95% 95%
===================== =========== =============== =============== ============= ============= ============
Duxbury Court General Membership
I GP , LLC partner USA interest 95% 95% 95%
===================== =========== =============== =============== ============= ============= ============
Limited
Investment partner
Drexel I , L.P. vehicle USA interest 52% 52% 52%
===================== =========== =============== =============== ============= ============= ============
Drexel I GP , General Membership
LLC partner USA interest 52% 52% 52%
===================== =========== =============== =============== ============= ============= ============
The subsidiaries listed above as investment vehicles are
consolidated by the Group and there is no activity to consolidate
within the subsidiaries listed as general partners.
NAME REGISTERED ADDRESS
============================================== ======================================
VPC Specialty Lending Investments Intermediate 150 North Riverside Plaza , Suite 5200
, L.P. , Chicago , IL 60606
============================================== ======================================
VPC Specialty Lending Investments Intermediate 150 North Riverside Plaza , Suite 5200
Holdings , L.P. , Chicago , IL 60606
============================================== ======================================
VPC Specialty Lending Investments Intermediate 150 North Riverside Plaza , Suite 5200
GP , LLC , Chicago , IL 60606
============================================== ======================================
6th Floor , 65 Gresham Street , London
Fore London , L.P. , EC2V 7NQ United Kingdom
============================================== ======================================
150 North Riverside Plaza , Suite 5200
Fore London GP , LLC , Chicago , IL 60606
============================================== ======================================
150 North Riverside Plaza , Suite 5200
Duxbury Court I , L.P. , Chicago , IL 60606
============================================== ======================================
150 North Riverside Plaza , Suite 5200
Duxbury Court I GP , LLC , Chicago , IL 60606
============================================== ======================================
150 North Riverside Plaza , Suite 5200
Drexel I , L.P. , Chicago , IL 60606
============================================== ======================================
150 North Riverside Plaza , Suite 5200
Drexel I GP , LLC , Chicago , IL 60606
============================================== ======================================
15. NON-CONTROLLING INTERESTS
The non-controlling interests arises from investments in limited
partnerships considered to be controlled subsidiaries into which
there are other investors. The value of the non-controlling
interests at 30 June 2022 represents the portion of the NAV of the
controlled subsidiaries attributable to the other investors. As at
June 2022 , the portion of the NAV attributable to non-controlling
interests investments totaled GBP51 , 493 (31 December 2021: GBP45
, 958 ; 30 June 2021: GBP27 , 260). In the Consolidated Statement
of Comprehensive Income , the amount attributable to
non-controlling interests represents the increase in the fair value
of the investment in the period.
16. SUBSEQUENT EVENTS AFTER THE REPORTING PERIOD
The Company declared a dividend of 2.00 pence per Ordinary Share
, equalling GBP5 , 565 , 528 for the three-month period ended 30
June 2022 and paid the dividend on 6 October 2022.
There were no other significant events subsequent to the period
end.
SHAREHOLDER INFORMATION
FOR THE SIX-MONTH PERIODED 30 JUNE 2022
DEFINITIONS OF TERMS AND PERFORMANCE MEASURES
The Group uses the terms and alternative performance measures
below to present a measure of profitability which is aligned with
the requirements of our investors and potential investors , to draw
out meaningful subtotals of revenues and earnings and to provide
additional information not required for disclosure under accounting
standards to assist users of the financial statements in gauging
the profit levels of the Group. Alternative performance measures
are used to improve the comparability of information between
reporting periods , either by adjusting for uncontrollable or
one-off factors which impact upon IFRS measures or , by aggregating
measures , to aid the user understand the activity taking place.
The Strategic Report includes both statutory and adjusted measures
, the latter of which , reflects the underlying performance of the
business and provides a more meaningful comparison of how the
business is managed. APMs are not considered to be a substitute for
IFRS measures but provide additional insight on the performance of
the business. All terms and performance measures relate to past
performance:
Discount to NAV - Calculated as the difference in the NAV (Cum
Income) per Ordinary Share and the Ordinary Share price divided by
the NAV Cum (Income) per Ordinary Share.
Gross Returns - Represents the return on shareholder ' s funds
per share on investments of the Company before operating and other
expenses of the Company.
Look-Through Gearing Ratio - The aggregate gearing of the
Company and any investee entity (on a look-through basis ,
including borrowing through securitisations using SPVs) shall not
exceed 1.50 times its NAV (1.5x).
Market Capitalisation - Month-end closing share price multiplied
by the number of shares outstanding at month end.
NAV (Cum Income) or NAV or Net Asset Value - The value of assets
of the Company less liabilities determined in accordance with the
accounting principles adopted by the Company.
NAV (Cum Income) Return - The theoretical total return on
shareholders ' funds per share reflecting the change in NAV
assuming that dividends paid to shareholders were reinvested at NAV
at the time dividend was announced.
NAV per Share (Cum Income) - The NAV (Cum Income) divided by the
number of shares in issue.
Net Returns - Represents the return on shareholder ' s funds per
share on investments of the Company after operating and other
expenses of the Company.
Premium/(Discount) to NAV (Cum Income) - The amount by which the
share price of the Company is either higher (at a premium) or lower
(at a discount) than the NAV per Share (Cum Income) , expressed as
a percentage of the NAV per share.
Revenue Return - Represents the difference between the NAV (Cum
Income) Return and the NAV (Ex Income) Return as defined above.
Share Price - Closing share price at month end (excluding
dividends reinvested).
Total Shareholder Return - Calculated as the change in the
traded share price from 31 December 2021 to 30 June 2022 plus the
dividends declared during the first six months of 2022 divided by
the traded share price as at 31 December 2021.
CONTACT DETAILS OF THE ADVISORS
Directors Graeme Proudfoot (Chairman)
Oliver Grundy
Mark Katzenellenbogen
Elizabeth Passey
Clive Peggram
all of the registered office below
Registered Office 6(th) Floor
65 Gresham Street
London EC2V 7NQ
United Kingdom
Company Number 9385218
Website Address https://vpcspecialtylending.com
Corporate Brokers Jefferies International Limited
100 Bishpsgate
London EC2N 4JL
United Kingdom
Winterflood Securities Limited
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Investment Manager and AIFM Victory Park Capital Advisors ,
LLC
150 North Riverside Plaza
Suite 5200
Chicago
IL 60606
United States
Company Secretary Link Company Matters Limited
Beaufort House
51 New North Road
Exeter , Devon EX4 4EP
United Kingdom
Administrator Citco Fund Administration (Cayman
Islands) Limited
Harborside Plaza 10
3 Second Street , 6th Floor
Jersey City ,
NJ 07311
United States
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END
IR EAENPAESAEAA
(END) Dow Jones Newswires
September 29, 2022 02:00 ET (06:00 GMT)
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