TIDMLBOW
RNS Number : 4579N
ICG-Longbow Snr Sec UK Prop DebtInv
30 September 2021
ICG-Longbow Senior Secured UK Property Debt Investments
Limited
Interim Report And
Unaudited Condensed Consolidated Interim Financial
Statements
For the six months ended 31 July 2021
ICG-Longbow Senior Secured UK Property Debt Investments Limited
("the Company") is pleased to announce the released of its Interim
Financial Statements for th e six months ended 31 July 2021 which
will shortly be available on the Company's website at
(ww.lbow.co.uk) where further information on the Company can also
be found.
All capitalised terms are defined in the Glossary of Capitalised
Defined Terms unless separately defined.
Financial Highlights
Key Developments
-- Commencement of capital return to shareholders; capital
distribution of 5.5 pence per ordinary share announced post-period
end.
-- Dividend maintained at 1.5 pence per share per quarter for
the six month period to 31 July 2021.
-- Total loan commitments of GBP110.6 million as at 31 July
2021, as the portfolio continues to reduce in line with the
investment objective, in order to return capital to
shareholders.
-- No losses incurred or impairment provisions required on any portfolio investments.
Performance
-- NAV of GBP119.13 million as at 31 July 2021 (31 January 2021: GBP 119.25 million).
-- Profit after tax of GBP 3.52 million for the six months ended
31 July 2021 (31 July 2020: GBP3.72 million).
-- Earnings per share for the period of 2.90 pence (31 July 2020: 3.07 pence).
Dividend
-- Total dividends paid or declared for the period ended 31 July
2021 of 3 pence per share (31 July 2020: 3 pence per share), made
up as follows:
o Interim dividend of 1.5 pence per share paid in respect of quarter ended 30 April 2021.
o Interim dividend of 1.5 pence per share approved in respect of quarter ended 31 July 2021.
Investment Portfolio
-- As at 31 July 2021, the Group's investment portfolio
comprised eight loans with an aggregate principal balance of
GBP106.47 million, representing 91.1% of the shareholders' equity
(31 January 2021: nine loans with aggregate principal balance of
GBP109.32 million, representing 91.7% of the shareholders'
equity).
-- Total loan commitments as at 31 July 2021 were GBP110.6
million (31 January 2021: GBP117.3 million).
-- As at 29 September 2021, the aggregate drawn balance was GBP
104.8 million, with total commitments of GBP 108.6 million.
-- The portfolio continues to prove resilient in the face of
Covid-linked economic and market disruption.
Chairman's Statement
Introduction
On behalf of the Board, I am pleased to present the Interim
Financial Statements for the Group for the six months ended 31 July
2021.
The reporting period saw the steady emergence of the UK economy
from the winter Covid-19 lockdown. The Government 'roadmap' out of
lockdown published in February 2021 allowed many businesses to plan
for full re-opening and, although the final steps were delayed by a
few weeks, all major domestic restrictions were lifted in England
on 19(th) July, with the devolved administrations following shortly
thereafter.
The recovery shown by the UK economy during the period was
generally stronger than expected, led by the confidence generated
by a rapid and successful vaccine rollout. While the first quarter
lockdown suppressed output, the UK has since seen strong growth
figures. This has been replicated in the labour markets, where the
furlough scheme succeeded in mitigating effects on the unemployment
rate. The number of job vacancies has also reached a record high.
Given the typical relationship between employment figures and
occupier demand for property, this looks to be positive for the
Company's markets.
While the challenges of the winter months now lie ahead, with
the possibility of waning immunity to Covid and emergence of new
variants leading to requirements for booster shots or further
restrictions, it currently appears as though the UK economy may
emerge from the pandemic scarred with materially higher public
borrowing but able to sustain reasonable growth.
Despite this dislocation, the Company has continued to deliver a
robust performance. In addition, the risk profile of several of its
investments has continued to improve as the Investment Manager has
worked with the Group's borrowers to position each investment as
securely as possible. This has led to partial repayments of the
Southport Hotel (via a catch up of capitalised interest) and
Quattro loans. There is no anticipated shortfall in interest or
capital on any of the Group's investments, and no impairment
provisions are required.
In January 2021, shareholders approved an amendment to the
Company's investment objective and policy to allow for the orderly
return of capital as the Company's investments begin to repay. The
first such repayments were received in July and early August 2021,
and, subsequent to the period end, your Board approved a capital
distribution to shareholders of 5.5 pence per ordinary share,
equating to approximately GBP6.7 million.
Although the Company's objective is for an orderly realisation
of its assets, the Board continues to believe that the Company's
shares offer an attractive investment return, with the current
share price secured against a portfolio with a weighted average LTV
of circa 70%. Furthermore, while the share price remains below the
Company's current NAV, the Board believes that the credit
improvements seen across the portfolio (particularly in some of the
investments impacted by Covid), warrants the narrowing or
elimination of this discount.
Portfolio
As a result of the amended investment policy, the Company did
not make any new investments during the period. Under existing
committed facilities, GBP3.9 million in aggregate was advanced to
assist borrowers with delivery of their business plans. As at the
date of this report, undrawn commitments total GBP 3.8 million and
the Company intends to maintain sufficient cash balances to meet
these future obligations.
During the reporting period, the GBP5.7 million Halcyon loan was
repaid in full, with additional exit and prepayment fees of
approximately GBP0.1 million. Shortly after the period end, a
series of partial repayments of the Quattro loan were received,
following a refinancing of one of the portfolio assets, together
with the sale of newly-constructed residential apartments at one of
the remaining properties.
As a result of these repayments and continued advances on
committed facilities, pro forma LTV as at the date of these
accounts is 70.1%, at a weighted average interest coupon of 7.15%,
with returns further enhanced by contractual arrangement and exit
fees.
Revenue and Profitability
Income from the loan portfolio for the period totalled GBP4.67
million (31 July 2020: GBP4.95 million) as the Company had lower
drawn balances, on average, than in the comparable prior year
period. Profits for the period after tax were GBP3.52 million (31
July 2020: GBP3.72 million).
Earnings per share for the period were lower at 2.90 pence (31
July 2020: 3.07 pence), as a result of accruals for the proposed
liquidation of the Group's Luxembourg holding company, which the
Board believes will generate cost savings for shareholders over the
remaining life of the Company. Save for the impact of this accrual,
the dividend was fully covered by earnings.
Dividend Performance
The Company paid a first interim dividend of 1.50 pence per
share in respect of the quarter ended 30 April 2021 on 6 August
2021, and on 29 September 2021 declared a second interim dividend
in respect of the quarter ended 31 July 2021 of 1.5 pence per
share.
As highlighted above, the Group's investments generated
sufficient income to provide for a covered dividend during the
reporting period, albeit that a prudent level of accruals for
future wind up costs modestly reduced headline earnings per
share.
NAV and Share Price Performance
The Group's NAV was largely unchanged at GBP119.13 million as at
31 July 2021 (31 January 2021: GBP119.25 million), consistent with
a substantially stable investment portfolio during a period of
great uncertainty.
The Company's share price was broadly stable in the period,
trading in a range of 85.00 to 92.60 pence per share.
Board and Corporate Structure Changes
During the period the Board announced that Patrick Firth would
not stand for re-election at the Company's forthcoming AGM,
retiring from the Board with effect from 28 June 2021. The Board
would like to thank Patrick for his service and guidance since the
Company's initial public offering.
As highlighted in our annual report and accounts, due to the
Company's move to a new investment objective, your Board will
continue with four members. Fiona Le Poidevin has been appointed as
the new Chairman of the Audit and Risk Committee and brings a
wealth of experience to the role.
Outlook
We are pleased to have been able to pay a substantially covered
dividend during the period. During the orderly realisation phase,
it is the Board's intention to continue to pay dividends from our
net income.
The Board is aware that shareholders will be eager to understand
the likely timing and quantum of future capital distributions.
While the loan maturity dates set out later in this report give
some guidance as to anticipated repayments, the underlying
borrowers do have the right to repay earlier (subject to meeting
any applicable prepayment fees). Occasionally, loans may extend
beyond their scheduled maturity.
However, certain of the properties securing the Group's loans
are currently either under offer for sale or intended to be
marketed for sale. While there can be no assurance that any such
sales will complete, our current expectation is that a minimum of
GBP 10 million of loans will be repaid, and a similar amount of
capital will be returnable to shareholders, before the calendar
year end.
The Board will communicate with shareholders on a timely basis
with progress on all future capital distributions.
Jack Perry
Chairman
29 September 2021
Investment Manager's Report
The Investment Manager's Report refers to the performance of the
loans and the portfolio for the 6 months to 31 July 2021 and the
general market conditions prevailing at that date. The Investment
Manager continues to work closely with the Board to ascertain any
residual or consequential impacts of the Covid-19 pandemic and
associated policy response. Any forward-looking statements in this
report reflect the latest information available as at 29 September
2021.
Investment Objective
The investment objective of the Group, as approved by the
shareholders of the Company, was revised in January 2021 and is now
to conduct an orderly realisation of the assets of the Group.
Fund facts
-------------------- ---------------- ----------- ------------------------
Closed ended investment
Fund launch: 5 February 2013 Fund type: company
-------------------- ---------------- ----------- ------------------------
Investment Manager: ICG-Longbow Domicile: Guernsey
-------------------- ---------------- ----------- ------------------------
Base currency: GBP Listing: London Stock Exchange
-------------------- ---------------- ----------- ------------------------
Issued shares: 121.3 million ISIN code: GG00B8C23S81
-------------------- ---------------- ----------- ------------------------
Investment Advisory
fee: 1.0% LSE code: LBOW
-------------------- ---------------- ----------- ------------------------
Website: www.lbow.co.uk
----------- ------------------------
Key portfolio statistics at
Share price & NAV at 31 July 2021 31 July 2021
---------------------------------------------------- -----------------------------------------
Share price (pence per
share): 89.60 Number of investments: 8
--------------------------------------- ----------- ------------------------------- --------
Percentage capital invested(2)
NAV (pence per share): 98.21 : 91.1%
--------------------------------------- ----------- ------------------------------- --------
Weighted avg. investment
Premium/(Discount): (8.8%) coupon: 7.17%
--------------------------------------- ----------- ------------------------------- --------
Approved dividend (pence
per share)(1) : 1.5 Weighted avg. LTV: 70.6%
--------------------------------------- ----------- ------------------------------- --------
Dividend payment date(1) 5 November
: 2021
--------------------------------- -----------------
(1) For the Quarter ended 31
July 2021. Ex-Dividend Date is
7 October 2021
(2) Loans advanced at amortised
cost / Total equity attributable
to the owners of the Company.
Summary
At 31 July 2021 the investment portfolio comprised eight
loans.
Given the Company's revised investment objective, no new
investments were made in the period and lending activity in the
period was limited to making further advances totalling GBP3.9
million under the committed facilities on existing portfolio loans.
The Group received repayment in full of the GBP5.7 million Halcyon
loan, with additional exit and prepayment fees of GBP0.1
million.
As at the period end:
-- Reduction in total commitments to GBP110.6 million (31
January 2021: GBP117.3 million) with par value of the loan
portfolio falling to GBP106.5 million (31 January 2021: GBP109.3
million)
-- Weighted average LTV of 70.6% (31 January 2021: 69.3%)
-- Weighted average interest coupon of 7.17% (31 January 2021:
7.19%), before recognition of arrangement and exit fees
-- NAV per share of 98.21 pence (31 January 2021: 98.31 pence)
Following period end, the Group received a series of partial
repayments of the Quattro loan, in line with an exit strategy for
the investment agreed with the Sponsor. These payments totalled GBP
2.0 million in aggregate, from a combination of sales and
refinancing of certain of the assets securing the loan.
Group Performance
During the period the Group received 84% of the interest due
under the loans, with the remainder paid or expected to be received
after period end.
Modest loan advances were made under committed funding
facilities on the Northlands, Affinity, GMG and LBS loans,
totalling GBP3.9 million in aggregate.
The Group received repayment in full of the GBP5.7 million
Halcyon loan, with additional exit fees of GBP0.1 million. A
repayment of GBP1.1 million was received on the Southport hotel
loan representing the catch up of previously capitalised interest.
The total outstanding loan balance fell by GBP2.8 million in the
period. NAV per share for the period was largely stable.
Portfolio LTV stood at 70.6% at period end, slightly ahead of
the year end figure as a result of the new loan advances, the
Halcyon loan repayment and receipt of a number of property
revaluations across the portfolio. In certain cases, for example
the GMG and Affinity loans, the benefit of the capital expenditure
works funded by the new loan advances has not yet been reflected in
the underlying property values.
At period end, the Group had GBP10.5 million of cash, which is
sufficient to cover its committed but undrawn funding obligations
of GBP4.1 million and to allow for a capital distribution to
shareholders, as highlighted in the Chairman's Statement. There
were no drawings on the Company's Revolving Credit Facility during
the period, and the outstanding balance as at 31 July 2021 was
nil.
The weighted average loan coupon was largely unchanged in the
quarter, and the weighted average unexpired loan term reduced to
approximately 1.4 years. As these loans repay the Company intends
to return capital to shareholders in line with its investment
objective.
Portfolio
Portfolio statistics 31 July 2021 31 January 2021
Number of loan investments 8 9
--------------- ----------------
Aggregate principal advanced GBP106,467,217 GBP109,258,944
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Undrawn loan commitments GBP4,087,714 GBP8,021,889
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Weighted average LTV 69.7% 69.3 %
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Weighted average interest coupon p.a. 7.17% 7.19 %
--------------- ----------------
Weighted average unexpired loan term 1.38 years 1.76 years
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Weighted average unexpired interest income protection 0.65 years 0.72 years
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Cash held GBP10,466,329 GBP8,773,640
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Investment Portfolio as at 31 July 2021
Balance
Day undrawn
Unexp. Day 1 1 (GBPm) Current
Balance outstanding LTV
term balance LTV (1, 2) (2)
Project Region Sector Term start (years) (GBPm) (%) (GBPm) (%)
South
Quattro East Mixed use Oct-17 0.00 9.00 83.7 8.86 80.2
South
Affinity West Office Mar-18 0.79 14.20 67.3 17.30 0.40 68.4
North
Southport West Hotel Feb-19 1.71 12.50 59.5 15.00 72.8
Northlands London Mixed use Aug-19 1.21 9.00 55.3 9.96 2.54 55.6
RoyaleLife National Residential Sept-19 2.21 20.27 74.3 25.38 74.6
LBS London Office Oct-19 1.21 4.92 69.3 6.47 58.9
North
Knowsley West Industrial Feb-20 1.71 3.50 60.3 7.75 63.1
GMG London Office July-20 1.21 12.75 70.0 15.74 1.15 76.8
Total / weighted average 1.38 86.14 68.2 106.46 4.09 70.6
--------------------------------------- ------------ --------- --------- ----- -------------------- -------- --------
(1) For the RoyaleLife facility, Balance outstanding includes
capitalised interest
(2) After quarter end, the Quattro loan was repaid by GBP2.0
million with the outstanding balance now GBP6.86 million. LTV is
76.4% as at the date of this Report
Economy and Financial Market Update
The Q1 2021 lockdown restrictions weighed down UK GDP, with a
1.6% quarterly fall, followed by (provisional) 4.8% growth in Q2 as
restrictions eased and the economy steadily re-opened. According to
the ONS, the economy remains 4.4% smaller than pre-pandemic levels,
although Capital Economics is now forecasting a return to the
February 2020 position by October. This outturn would, in our view,
be remarkable in the context of the unprecedented GDP falls of 12
months ago and the bearish economic forecasts earlier this
year.
The recovery has however come with a huge impact on the public
finances. As at July 2021 public sector debt reached GBP2.2
trillion, reflecting 99% of GDP, and on an upward trajectory
despite Government borrowing since April 2021 significantly
undershooting OBR projections. In the coming months there will be
ever louder calls for more spending on public sector pay,
education, and recovery programmes in the lead up to the Autumn
spending review, to supplement the recently announced increases
awarded to the NHS and social care. While this is initially to be
funded through the 1.25% tax rise branded as a 'health and social
care levy', it is hard to see how the Government can materially
restrain wider spending and a return to anything approaching a
balanced budget seems unlikely.
As a result, market observers have paid ever closer attention to
the Bank of England's messaging on its asset buying (QE) programme
and interest rate outlook. Latest guidance suggests any unwinding
of QE will now follow Bank rate reaching 0.5% (previously 1.5%). If
this tapering is used as the principal monetary tightening tool,
interest rates may be held lower for longer, and indeed 15 - 30yr
SONIA swap rates remain in the 0.75% area.
Despite the resurgence of inflationary pressures, CPI data in
the 12 months to July 2021 was in line with the Bank of England's
2% target, and down from the 2.5% seen in the 12 months to June.
The August figures showed a jump to 3.2%, however, and forecasters
estimate that this could rise to 4% - 4.5% by the fourth quarter,
before falling back in 2022 - providing that this does not persist
into ever faster pay growth.
As it stands, the UK labour market has proved resilient to the
worst of the Covid effects, driven by use of the furlough scheme
and, more recently, strong job creation. The UK unemployment rate
was 4.6% in the three months to July 2021, and job vacancies are
now over a million - a record high. The haulage and hospitality
industries are among many struggling to recruit in sufficient
numbers, and this is feeding into real pay growth.
The employment outlook, easing of lockdown restrictions and a
'vaccine bounce' has led to rising consumer confidence, with both
July and August showing an improvement on January 2020
(pre-pandemic) levels. It remains to be seen whether the potential
for a new wave of Covid infections as a result of restrictions
easing and schools returning will affect this in the coming
months.
Occupational Demand/Supply
After a sharp rise in London vacancy rates in 2020 and the first
quarter of 2021, there is evidence to suggest that availability is
stabilising at the half year as work from home restrictions end and
companies rethink their occupational requirements. Recent data from
Savills suggest that active tenant requirements in Central London
total 10 million sq ft, up 41% from the same period last year.
In many regional markets, there is still a significant
supply/demand imbalance notwithstanding the effects of the
pandemic. Vacancy rates in the 'Big Six' markets remain below 8%,
according to Jones Lang LaSalle, in many cases lower for the best
Grade A buildings. As a result of this tight supply there were
record rents set in H1 2021 for prime space in Manchester and
Glasgow, among other markets. Take up remains lower than the long
run average but transactional demand is steadily improving.
The industrial markets continue to show strength. Take up for
the first half of larger (100,000 sq ft+) units was 24.8 million
square feet, in line with prior year figures. Supply remains tight,
with only six months' worth remaining in the market, even allowing
for forecast new scheme completions. As a result rental growth is
still evident, according to MSCI data, and may even be
strengthening, especially for distribution warehouses.
In the retail markets - where for the avoidance of doubt the
Group has negligible exposure - official void rates are 15%, but
this masks differences between sectors, with out of town retail
parks showing only around a 7% void. On high streets and in
shopping centres, many stores are now occupied on flexible
agreements; post- CVA terms; or on a business rates-only basis. In
weaker centres some stores are 'leased' effectively on nil rent
terms. There are now signs that rents in some stronger locations
are stabilising as occupiers take the decision to 'lock in' to the
new terms available, and the retail warehouse sector remains
reasonable buoyant, driven by demand from discounters, food stores
and bulky goods operators.
Property Investment Market
After a 12 month period of suppressed transaction volumes, there
is early evidence indicating a sustained level of investor demand
for real estate, driven by the weight of global capital targeting
the UK (and consistent with global LBO interest in equity markets).
According to Lambert Smith Hampton, GBP13.9bn of deals were
transacted in Q2 2021, some 7% above the five-year quarterly
average, with more than 50% of deal volumes accounted for by
overseas investors. These volumes were accompanied by an increase
in pricing with average yields tightening by 13bp in Q2 2021,
according to Lambert Smith Hampton.
A significant amount of capital remains focused on the office
sector, with investors seeking assets which have, or can be
improved to give, strong sustainability credentials and a flexible
workspace offering. Brookfield has been particularly acquisitive,
with purchases including the Arlington Business Park portfolio for
GBP0.7 billion and 30 Fenchurch Street in London for GBP0.6
billion. In the regions we have seen major deals reported in
Glasgow (GBP200m for a property on Bothwell St) and Bristol
(GBP135m for the Assembly building, leased to BT). The latter was
at a 4.6% yield and the largest deal in the city for 15 years.
Investor demand for industrial assets appears relentless, and as
a result yields have compressed further, with London estates
particularly sought after. Among many notable transactions, Goodman
acquired Howlem Trading Estate in Tottenham for GBP130m, a circa
2.5% yield, and Aberdeen Standard acquired an Amazon-leased
warehouse in Hinckley for a circa 3% yield. The UK industrial
market remains pressured by the inexorable rise of e-commerce and
distribution requirements, compounded by the limited supply of new
available space.
Finance Markets
During the reporting period the Cass Business School UK
Commercial Real Estate Finance Report was published, covering the
2020 calendar year and thus the onset of Covid-19. The research
reported total new lending in 2020 down 23% from a year earlier,
because of the coronavirus pandemic. An improvement in origination
activity was witnessed in the second half of 2020, mirroring the
busy H2 2020 experienced ICG Real Estate's lending programmes.
Coming into 2021 we saw ongoing green shoots emerge in the UK
CMBS market, which has been largely stagnant since the GFC and with
only sporadic issuance over the past few years. Transactions have
been led by Bank of America and Morgan Stanley, with borrowers (so
far) being limited to the largest global players, notably
Blackstone (in respect of loans to its Mileway industrial and
logistics platform) and Brookfield (London office and retail park
loans).
Senior loan pricing reset at higher rebased levels in Q1 2021,
with 'prime' office margins for example reported at an average 229
bps, a c50bps increase from the prior year. Increased competition
saw these spreads tighten significantly towards the end of the
reporting period, particularly for larger ticket deals , driven by
the modest return of CMBS market activity and competition among
European banks and insurers including the likes of ING, Axa and the
German Pfandbrief and Landesbanks. This competition is particularly
acute on low LTV or long income deals, with lending margins now
below 150 basis points.
We have yet to see any spread compression reach the mid-market,
where there remains a funding gap driven by the retrenchment of UK
clearing banks, which is only partially offset by growth of
alternative lenders. In the banking market, l everage on new
transactions remains conservative at between 50% - 55% LTV on
average, and indeed ICG Real Estate's analysis of the FY 2020
accounts of the major clearing banks shows average LTVs across
their lending books reported as ranging from 38% LTV (Barclays) to
50% (Lloyds).
In the market more widely, our long-held thesis of bank
retrenchment driving a reduction in lending appetite continues to
be borne out, with a GBP1.1 billion contraction in net lending to
property during Q2 2021, according to the Bank of England. With UK
banks having provided approximately GBP80 billion of Covid-recovery
loans since the onset of the pandemic, according to Government
data, we believe that these banks' lending appetite and internal
credit committee time for real estate debt will remain limited in
the near- to medium-term.
Portfolio Profile and Activity
The Group's investment portfolio was largely stable during the
reporting period, with no new investments and the sole repayment
being the exit of the GBP5.7 million Halcyon loan. We also saw
partial repayments of the Southport loan (being the catch up of
previously capitalised interest) and shortly after period end a
GBP1.7 million repayment of the Quattro loan, following the
refinancing of one of the portfolio properties.
The Group continues to make advances under committed funding
facilities in support of its borrowers' business plans. In
particular, the major development and refurbishment works on the
Knowsley and GMG loans, respectively, were largely completed during
the period and this results in a significant improvement in the
risk profile for those loans, which in the case of the GMG facility
has yet to be fully reflected in the value.
As a result of the portfolio changes, the Company's weighted
average LTV is now 70.6%, with a weighted average unexpired loan
term of 1.38 years. With no new investment occurring, these loan
terms will continue to reduce allowing for the prospect of capital
distributions to shareholders upon final repayment.
The weighted average interest coupon is 7.17%, and as
highlighted in prior reports this is supplemented by contractual
arrangement fees paid at closing and exit fees upon repayment.
Several of the remaining loans continue to feature coupon
protection or other minimum earnings clauses, which give the
prospect (but not the certainty) of additional fees should
facilities repay early.
Business plan highlights across the portfolio during the quarter
included:
-- Completion of the pre-let development of an industrial unit
on vacant land at the Knowsley property;
-- Record summer trading at the Southport hotel, driven by a rise in 'staycations';
-- Substantial completion of refurbishment works at the property
securing the GMG loan, with two new lettings in solicitors'
hands;
-- Further letting activity at the Spectrum office property, securing the Affinity loan
We have seen improvements in the credit profile of some of the
Group's more challenging investments, with partial repayments of
both the Southport and Quattro loans, and a welcome increase in
sales velocity in the RoyaleLife portfolio, where challenges remain
with tight working capital, but the outlook is positive. Here, the
Investment Manager agreed to staged payments of interest from the
sponsor in exchange for an increase to the minimum earnings on the
loan, which will benefit shareholders in the event of early
repayment.
Portfolio Outlook
The Group's loan commitments totalled approximately GBP110
million at period end, of which circa GBP106 million was drawn. It
has ample available liquidity to meet remaining loan commitments
whilst commencing the process of returning capital to
shareholders.
The Company recently announced a first capital distribution of
5.5 pence per ordinary share (equating to approximately GBP6.7
million), to be paid on or around 30 September 2021. This allows
the Company to retain cash balances sufficient to meet working
capital requirements and future funding obligations, which totalled
approximately GBP4.1 million at period end.
Further capital distributions are expected to follow repayments
received from the Group's loan portfolio. The Investment Manager is
aware that certain of the properties securing the Group's loans are
either under offer for sale or intended to be marketed for sale in
the coming months. While there can be no assurance that any such
sales will complete, our current guidance is that we expect a
minimum of GBP 10 million of loans will be repaid, and a similar
amount of shareholder capital returned, by the calendar year
end.
We will provide shareholders with regular updates on the outlook
for capital distributions when appropriate, but continue to be
satisfied with the Group's loan portfolio which retains a first
mortgage position with an average LTV of approximately 70%.
Loan Portfolio
As set out above, as at 31 July 2021, the Group's portfolio
comprised of eight loans with an aggregate balance outstanding of
GBP106.47 million.
A summary of each of the individual loans as at 31 July 2021 is
set out below :
Quattro
In October 2017, the Group advanced a new GBP9.00 million loan to a private property company,
secured by three mixed use assets in and around the London Borough of Kingston. The Group
initially financed a GBP6.00 million participation in the loan subsequently acquiring the
minority GBP3.00 million position from ICG following an equity issuance under the 2017 Placing
Programme. The initial LTV ratio was 83.3%.
The loan has passed its maturity date during the period and all rights have been reserved
in respect of this default. The sponsor is pursuing an exit from the loan via a combination
of sales and refinancing, and after quarter end the first property was sold under this agreed
process, with the Group receiving repayment of GBP1.7 million. Subsequently, the Company received
a further GBP0.3 million from a residential apartment sale.
The LTV as at the date of these accounts is 76.4%. We remain comfortable with the Company's
security position.
Property profile Debt profile
Number of properties 3 Day one debt GBP9,000,000
-------------- -------------------------- -------------
Property value GBP11,050,000 Debt outstanding GBP8,858,259
-------------- -------------------------- -------------
Property value per sq. ft. GBP290 Original term 3.2 years
-------------- -------------------------- -------------
Property area (sq. ft.) 38,038 Maturity January 2021
-------------- -------------------------- -------------
Number of tenants 7 LTV as at 31 July 80.2%
-------------- -------------------------- -------------
Weighted lease length 6.5 years Loan exposure per sq. ft. GBP233
-------------- -------------------------- -------------
Affinity
On 28 February 2018, a new GBP16.20 million commitment was made, of which GBP14.20 million
was advanced, to refinance a multi-let office property in Bristol, and to provide a GBP2.00
million capital expenditure facility to fund a refurbishment programme. Subsequently, the
loan was increased to GBP16.70 million in support of the borrower's business plan and thereafter
a further GBP1.00 million loan commitment was made to allow for further upgrade works to the
property.
The property is currently 93% occupied with a contracted rent of GBP1.9 million per annum.
The sponsor has continued to invest in the property, most recently introducing a flexible
workspace offering into the building.
Property profile Debt profile
Number of properties 1 Day one debt GBP14,200,000
-------------- -------------------------- --------------
Property value GBP25,300,000 Debt outstanding GBP17,299,963
-------------- -------------------------- --------------
Property value per sq. ft. GBP221 Original term 4.2 years
-------------- -------------------------- --------------
Property area (sq. ft.) 114,364 Maturity May 2022
-------------- -------------------------- --------------
Number of tenants 15 LTV as at 31 July 68.4%
-------------- -------------------------- --------------
Weighted lease length 2.5 years Loan exposure per sq. ft. GBP151
-------------- -------------------------- --------------
Southport
Initially a GBP15.0 million loan commitment, secured by a hotel and leisure complex in Southport,
Merseyside. The initial loan to value ratio was 59.5%. The business plan focused on investing
in improving the asset, renovating the bedrooms and thereafter driving room rates. Substantially
all business plan works across the hotel were completed prior to the onset of Covid-19.
In 2020 the Government's Covid restrictions meant the hotel was largely closed for trade,
and the Investment Manager agreed to an element of interest capitalisation during this period
to support the loan sponsor through the disruption. Subsequently, the sponsor reached agreement
with one of the property's commercial tenants for a lease surrender. The premium paid by the
tenant was sufficient to repay the previously capitalised interest, with the loan balance
of GBP15.0 million consistent with the original commitment.
The hotel remained closed for trading for much of the reporting period. However since reopening
trading has been strong, with all key operating metrics exceeding pre-pandemic levels and
a robust pipeline of forward bookings. The property was revalued during the period at GBP20.6
million, providing a LTV at period end of 72.8%.
Property profile Debt profile
Number of properties 1 Day one debt GBP12,500,000
-------------- -------------------------- --------------
Property value (GBP) GBP20,600,000 Debt outstanding GBP15,000,000
-------------- -------------------------- --------------
Property value (GBP/bedroom) GBP154,887 Original term 4 years
-------------- -------------------------- --------------
Property value (GBP/sq. ft.) GBP453 Maturity April 2023
-------------- -------------------------- --------------
Bedrooms 133 LTV as at 31 July 72.8%
-------------- -------------------------- --------------
Property area (sq. ft.) 45,430 Loan exposure per bedroom GBP112,782
-------------- -------------------------- --------------
Northlands
In October 2019 the Group provided a GBP12.50 million commitment to the sponsor, secured by
a highly diversified portfolio of high street retail, office and tenanted residential units
located predominantly in London and the South East. The initial loan amount was GBP9.00 million
with a LTV ratio of 55.3%.
The sponsor's business plan includes implementation of a planning consent to develop residential
apartments on one of the sites in the portfolio, and in support of this the Group provided
a GBP3.50 million capital expenditure commitment. This commitment has been steadily drawn
during the period, with the outstanding balance now GBP9.96 million.
Progress against business plan has been steady, and during the period a revaluation of the
portfolio showed an improvement of approximately 10% since loan closing, reflecting the ongoing
investment in the assets.
Property profile Debt profile
Number of properties 14 Day one debt GBP9,000,000
-------------- --------------------------
Property value GBP17,906,500 Debt outstanding GBP9,963,590
-------------- -------------------------- -------------
Property value per sq. ft. GBP147 Original term 3.0 years
-------------- -------------------------- -------------
Property area (sq. ft.) 121,285 Maturity October 2022
-------------- -------------------------- -------------
Number of tenants 113 LTV as at 31 July 55.6%
-------------- -------------------------- -------------
Weighted lease length 3.2 years Loan exposure per sq. ft. GBP85
-------------- -------------------------- -------------
RoyaleLife
In September 2019 the Group provided a GBP24.6 million commitment to an affiliate of RoyaleLife,
the UK's leading provider of bungalow homes, secured by a portfolio of ten assets in the residential
bungalow homes sector. The facility forms part of a larger four-year, GBP142.7 million loan
originated by the Investment Manager, with the Group participating alongside two other funds
managed by the Investment Manager.
The initial loan drawn down was GBP20.3 million, with the balance comprising a capital expenditure
commitment in support of the borrower's business plan.
The Sponsor's home sales were adversely affected by Covid-19 and the subsequent lockdown restrictions,
and as a result the Investment Manager agreed to capitalise some of the interest due on the
loan, with the sponsor also committing new equity capital into the business. The total outstanding
loan balance is now GBP25.38 million, above the day 1 commitment owing to the capitalised
interest.
Following the easing of lockdown restrictions and to aid working capital recovery, the Investment
Manager agreed to staged payments of interest from the sponsor, in exchange for an increase
to the minimum earnings due from the loan. This will be beneficial for shareholders in the
event of any early repayment.
Property profile Debt profile
Number of properties 10 Day one debt GBP20,267,119
------------------- -------------------
Property value (GBP) * GBP34,026,976 Debt outstanding GBP25,382,017
------------------- ------------------- --------------
Number of tenants n/a Original term 4.1 years
------------------- ------------------- --------------
Weighted lease length n/a Maturity October 2023
------------------- ------------------- --------------
LTV as at 31 July 74.6%
------------------------------------------------------------------------ --------------
*pro rata based on Company's share of total loan
------------------- --------------
LBS
In September 2019, the Group entered into a GBP6.5 million loan commitment with a fund advised
by LBS Properties, secured by a multi-let office property in Farringdon, London.
The loan carried an initial LTV ratio of 69.0%, and included a capital expenditure commitment
in support of the borrower's business plan for a full refurbishment of the property. The refurbishment
works were completed ahead of schedule, a new tenant was secured for the majority of the space
and an improvement in the valuation was recorded, with the LTV now 58.9 % . Loan performance
was stable during the period but remains ahead of business plan overall.
Property profile Debt profile
Number of properties 1 Day one debt GBP4,922,000
-------------- -------------------------- -------------
Property value GBP11,000,000 Debt outstanding GBP6,474,586
-------------- -------------------------- -------------
Property value per sq. ft. GBP1,042 Original term 3.1 years
-------------- -------------------------- -------------
Property area (sq. ft.) 10,557 Maturity October 2022
-------------- -------------------------- -------------
Number of tenants 1 LTV as at 31 July 58.9%
-------------- -------------------------- -------------
Weighted lease length 9.0 years Loan exposure per sq. ft. GBP613
-------------- -------------------------- -------------
Knowsley
The Group entered into a new GBP7.75 million loan commitment in March 2020 to an affiliate
of Seybourne Estates, secured by a multi-let industrial property in Knowsley, Merseyside.
The property is spread over 37 acres and originally comprised an income-producing industrial
estate which provides cashflow to service the loan, alongside a development site which was
pre-let to a new tenant. The Sponsor completed the build out of this property during the period,
and the lease has now commenced with the loan fully drawn.
Following completion of the Sponsor's business plan, the property was independently revalued
at GBP12.29 million, reflecting a LTV as at the date of these accounts of 63.1%. We are aware
that the Sponsor is in discussions for a possible sale of all or part of the security property
which, if concluded, would see the Group's loan repaid.
Property profile Debt profile
Number of properties 1 Day one debt GBP3,500,000
-------------- -------------------------- -------------
Property value GBP12,290,000 Debt outstanding GBP7,750,000
-------------- -------------------------- -------------
Property value per sq. ft. GBP77 Original term 3.1 years
-------------- -------------------------- -------------
Property area (sq. ft.) 160,149 Maturity April 2023
-------------- -------------------------- -------------
Number of tenants 5 LTV as at 31 July 63.1%
-------------- -------------------------- -------------
Weighted lease length 6.8 years Loan exposure per sq. ft. GBP48
-------------- -------------------------- -------------
GMG
In July 2020 the Group entered into a GBP16.9 million commitment with an affiliate of GMG
Real Estate, secured by an office property in St James's, London. The Group is participating
in a larger three-year, GBP22.3 million loan alongside another client of the Investment Manager.
The property was originally leased to a UK Government Agency, with a short unexpired lease
term. The tenant vacated the property allowing the sponsor to complete a renovation of the
space, in line with the business plan and using funds from the committed facility. The refurbishment
works completed after period end and the sponsor has had some early letting success, with
two floors in solicitors' hands at levels ahead of business plan.
With the works now finalised the LTV is stated based on the independent valuer's assumed valuation
upon completion, with the LTV on this basis being 76.8%. We expect this to steadily fall as
new leases are agreed.
Property profile Debt profile
Number of properties 1 Day one debt GBP12,753,393
------------------ ---------------------------
Property value GBP20,495,700 Debt outstanding GBP15,738,802
------------------ --------------------------- --------------
Property value per sq. ft. GBP1,239 Original term 2.2 years
------------------ --------------------------- --------------
Property area (sq. ft.) 21,786 Maturity October 2022
------------------ --------------------------- --------------
Number of tenants - LTV as at 31 July 76.8%
------------------- -------------------------- --------------
Weighted lease length - Loan exposure per sq. ft. GBP941
------------------- -------------------------- --------------
* pro rata based on Company's share of total loan
Subsequent Events
Significant subsequent events have been disclosed in Note 11 to
the Financial Statements .
ICG Real Estate
29 September 2021
Directors' Responsibilities Statement
The Directors are responsible for preparing this Interim
Financial Report in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
-- The Unaudited Condensed Consolidated Interim Financial
Statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU; and
-- The Chairman's Statement and Investment Manager's Report
include a fair review of the information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the Unaudited Condensed Consolidated Interim Financial
Statements; and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position and performance of the entity
during that period; and any changes in the related party
transactions described in the last Annual Report and Financial
Statements that could do so.
On behalf of the Board
Jack Perry
Chairman
29 September 2021
Principal Risks and Uncertainties
The Company, through its subsidiary, invests primarily in UK
commercial real estate loans of a fixed rate nature; as such, it is
exposed to the performance of the borrower, and underlying property
on which its loans are secured. The Company's key risks are
discussed below. In this statement, references to the Company also
apply to the Group as a whole.
The Directors have identified the following as the key risks
faced by the Company:
-- timing of capital repayments and dividend maintenance;
-- inability to secure sales or refinancing of underlying properties;
-- non-payment of interest;
-- fall in collateral values and accuracy of valuations;
-- economic risk; and
-- portfolio diversification.
The principal risks and uncertainties of the Company were
identified in further detail in the Annual Report and Financial
Statements for the year ended 31 January 2021. The Covid-19
pandemic has had a profound impact on economic and certain market
conditions in the six months ended 31 July 2021. The effect of the
pandemic on the Company's portfolio of loans and its assessment of
new investment opportunities has been assessed by the Investment
Manager and is discussed in detail elsewhere in this report. The
Company's principal risk factors are fully discussed in the
Company's Prospectus, available on the Company's website
(www.lbow.co.uk) and should be reviewed by shareholders.
Condensed Consolidated Statement of Comprehensive Income
FOR THE SIX MONTH PERIOD TO 31 JULY 2021
1 February 2021 to 1 February 2020 to 1 February 2020 to
31 July 2021 31 July 2020 31 January 2021
GBP GBP GBP
Notes (Unaudited) (Unaudited) (Audited)
---------------------------------------- ---------------------------------------- ---------------------------------------
Income
Income from loans 4,640,240 4,649,438 9,655,862
Other fee income
from loans 34,000 296,547 297,979
Income from cash and
cash equivalents - 47 49
Total income 4,674,240 4,946,032 9,953,890
---------------------------------------- ---------------------------------------- ---------------------------------------
Expenses
Investment
management/advisory
fees 9 595,958 595,971 1,195,588
Other expenses 10 262,617 447,180 740,022
Reorganisation costs 156,800 - 208,397
Directors'
remuneration 91,375 98,750 199,953
Finance costs 47,382 84,655 194,664
Total expenses 1,154,132 1,226,556 2,538,624
---------------------------------------- ---------------------------------------- ---------------------------------------
Profit for the
period/year before
tax 3,520,108 3,719,476 7,415,266
---------------------------------------- ---------------------------------------- ---------------------------------------
Taxation charge 2,079 - 4,461
Profit for the
period/year after
tax 3,518,029 3,719,476 7,410,805
---------------------------------------- ---------------------------------------- ---------------------------------------
Total comprehensive
income for the
period/year 3,518,029 3,719,476 7,410,805
---------------------------------------- ---------------------------------------- ---------------------------------------
Basic and diluted
Earnings per Share
(pence) 5 2.90 3.07 6.11
---------------------------------------- ---------------------------------------- ---------------------------------------
All items within the above statement have been derived from
discontinuing activities on the basis of the orderly realisation of
the company's assets.
The Group has no recognised gains or losses for either period
other than those included in the results above, therefore, no
separate statement of other comprehensive income has been
prepared.
The accompanying notes form an integral part of these Interim
Financial Statements.
Condensed Consolidated Statement of Financial Position
As at 31 July 2021
31 July 2021 31 January 2021 31 July 2020
GBP GBP GBP
Notes (Unaudited) (Audited) (Unaudited)
------------- ----------------------------- -----------------------------
Assets
Cash and cash equivalents 10,466,329 8,773,640 2,183,556
Trade and other receivables 1,620,797 1,233,834 1,976,770
Loans advanced at amortised cost 4 108,468,063 110,712,112 120,674,195
------------- ----------------------------- -----------------------------
Total assets 120,555,189 120,719,586 124,834,521
------------- ----------------------------- -----------------------------
Liabilities
Loan Payable - - 4,400,000
Other payables and accrued
expenses 1,427,105 1,470,447 1,237,626
------------- ----------------------------- -----------------------------
Total liabilities 1,427,105 1,470,447 5,637,626
------------- ----------------------------- -----------------------------
Net assets 119,128,084 119,249,139 119,196,895
------------- ----------------------------- -----------------------------
Equity
Share capital 119,115,310 119,115,310 119,115,310
Retained earnings 12,774 133,829 81,585
------------- ----------------------------- -----------------------------
Total equity attributable to the
owners of the Company 119,128,084 119,249,139 119,196,895
------------- ----------------------------- -----------------------------
Number of ordinary shares in
issue at period/year end 6 121,302,779 121,302,779 121,302,779
------------- ----------------------------- -----------------------------
Net Asset Value per ordinary
share (pence) 5 98.21 98.31 98.26
------------- ----------------------------- -----------------------------
The Interim Financial Statements were approved by the Board of
Directors on 29 September 2021 and signed on their behalf by:
Jack Perry Fiona Le Poidevin
Chairman Director
29 September 2021 29 September 2021
The accompanying notes form an integral part of these Interim
Financial Statements.
Condensed Consolidated Statement of Changes in Equity
For the six month period to 31 July 2021
Number Share Retained
of shares capital earnings Total
GBP GBP GBP
Notes (Unaudited) (Unaudited) (Unaudited)
As at 1 February 2021 121,302,779 119,115,310 133,829 119,249,139
Profit for the period - - 3,518,029 3,518,029
Dividends paid 7 - - (3,639,084) (3,639,084)
As at 31 July 2021 121,302,779 119,115,310 12,774 119,128,084
------------ ------------ ------------ ------------
For the six month period to 31 July 2020
Number Share Retained
Notes of shares capital earnings Total
GBP GBP GBP
(Unaudited) (Unaudited) (Unaudited)
As at 1 February 2020 121,302,779 119,115,310 1,192 119,116,502
Profit for the period - - 3,719,476 3,719,476
Dividends paid 7 - - (3,639,083) (3,639,083)
As at 31 July 2020 121,302,779 119,115,310 81,585 119,196,895
------------ ------------ ------------ ------------
The accompanying notes form an integral part of these Interim
Financial Statements.
Condensed Consolidated Statement of Cash Flows
For the six month period to 31 July 2021
1 February 2021 to 1 February 2020 to 1 February 2020 to
31 July 2021 31 July 2020 31 January 2021
GBP GBP GBP
Notes (Unaudited) (Unaudited) (Audited)
------------------- ------------------- -------------------
Cash flows generated from operating activities
Profit for the period/year 3,518,029 3,719,476 7,410,805
Adjustments for non-cash items and working
capital movements:
Movement in other receivables (386,963) (691,304) 51,632
Movement in other payables and accrued
expenses (45,402) (764,525) (522,614)
Movement in tax payable 2,061 - (9,090)
Loan amortisation (608,726) 197,071 (512,292)
2,478,999 2,460,718 6,418,441
Loans advanced (3,938,975) (20,721,920) (27,442,180)
Arrangement fees paid - - 297,980
Loans repaid 4 6,791,749 21,500,000 38,593,726
Net loans (advanced)/repaid less arrangement
fees 2,852,774 778,080 11,449,526
------------------- ------------------- -------------------
Net cash generated from operating activities 5,331,773 3,238,798 17,867,967
------------------- ------------------- -------------------
Cash flows used in financing activities
Net amounts repaid on loan facility - (800,000) (5,200,000)
Dividends paid 7 (3,639,084) (3,639,083) (7,278,168)
------------------- ------------------- -------------------
Net cash used in financing activities (3,639,084) (4,439,083) (12,478,168)
------------------- ------------------- -------------------
Net movement in cash and cash equivalents 1,692,689 (1,200,285) 5,389,799
Cash and cash equivalents at the start of the
period/year 8,773,640 3,383,841 3,383,841
Cash and cash equivalents at the end of the
period/year 10,466,329 2,183,556 8,773,640
------------------- ------------------- -------------------
The accompanying notes form an integral part of these Interim
Financial Statements.
Notes to the Unaudited Condensed Consolidated Interim Financial
Statements
For the six month period to 31 July 2021
1. General information
ICG-Longbow Senior Secured UK Property Debt Investments Limited
is a non-cellular company limited by shares and was incorporated in
Guernsey under the Companies Law on 29 November 2012 with
registered number 55917 as a closed-ended investment company. The
registered office address is Floor 2, PO Box 286, Trafalgar Court,
Les Banques, St Peter Port, Guernsey, GY1 4LY.
The Company's shares were admitted to the Premium Segment of the
Official Lists and to trading on the Main Market of the London
Stock Exchange on 5 February 2013.
The unaudited condensed consolidated financial statements
comprise the financial statements of the Group as at 31 July
2021.
In line with the revised Investment Objective and Policy
approved by shareholders in the Extraordinary General Meeting in
January 2021, the Company is now undertaking an orderly realisation
of its investments. As sufficient funds become available the Board
intends to return capital to shareholders, taking account of the
Company's working capital requirements and funding commitments.
ICG Alternative Investment Limited is the external discretionary
investment manager. The Board resolved to simplify its corporate
structure by collapsing the Luxembourg subsidiary company which has
historically acted as the lender for the Group's investments.
Following year ended 31 January 2021, the process of winding up the
Luxembourg company has now commenced.
2. Accounting policies
a) Basis of preparation
The Interim Financial Statements included in this Interim
Report, have been prepared in accordance with IAS 34 'Interim
Financial Reporting', as adopted by the EU, and the Disclosure and
Transparency Rules of the FCA.
The Interim Financial Statements have not been audited or
reviewed by the Company's Auditor.
The Interim Financial Statements do not include all the
information and disclosures required in the Annual Report and
Financial Statements and should be read in conjunction with the
Company's Annual Report and Financial Statements for the year ended
31 January 2021, which are available on the Company's website
(www.lbow.co.uk). The Annual Report and Financial Statements have
been prepared in accordance with IFRS as adopted by the EU.
The same accounting policies and methods of computation have
been followed in the preparation of these Interim Financial
Statements as in the Annual Report and Financial Statements for the
year ended 31 January 2021.
The Company applied, for the first time, certain standards and
amendments, which are effective for annual periods beginning on or
after 1 January 2021. The new standards or amendments to existing
standards and interpretations, effective from 1 January 2021, did
not have a material impact on the Company's interim condensed
financial statements. It is not anticipated that any standard which
is not yet effective, will have a material impact on the Company's
financial position or on the performance of the Company's
statements.
b) Going concern
The Directors, at the time of approving the Interim Financial
Statements, are required to satisfy themselves that they have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and do
not consider there to be any threat to the going concern status of
the Group. At the EGM of the Company on 14 January 2021, following
a recommendation from the Board published in a circular on 16
December 2020, shareholders voted by the requisite majority in
favour of a change to the Company's Objectives and Investment
Policy which would lead to an orderly realisation of the Company's
assets and a return of capital to shareholders.
It is intended that the investments will be realised as and when
the loans fall due, and the Directors expect that the investments
will be held to maturity with the last loan repaying by the end of
2023. Whilst the Directors are satisfied that the Company has
adequate resources to continue in operation throughout the
realisation period and to meet all liabilities as they fall due,
given the Company is now in a managed wind down, the Directors
consider it appropriate to adopt a basis other than a going concern
in preparing the consolidated financial statements. The basis of
valuation for investments is fair value, recognising the realisable
value of each investment in the orderly wind down of the Company.
There has been no material change in the carrying value of the
investments. No material adjustments have arisen as a result of
ceasing to apply the going concern basis.
c) Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors, as a
whole. The key measure of performance used by the Board to assess
the Group's performance and to allocate resources is the total
return on the Group's Net Asset Value, as calculated under IFRS,
and therefore no reconciliation is required between the measure of
profit or loss used by the Board and that contained in the Interim
Financial Statements.
For management purposes, the Group is organised into one main
operating segment, being the provision of a diversified portfolio
of UK commercial property backed senior debt investments.
The majority of the Group's income is derived from loans secured
on commercial and residential property in the United Kingdom.
Due to the Group's nature, it has no employees.
The Group's results do not vary significantly during reporting
periods as a result of seasonal activity.
3. Critical accounting judgements in applying the Group's accounting policies
The preparation of the Interim Financial Statements under IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future period
if the revision affects both current and future periods.
Critical judgements
In assessing ECL, the Board has made critical judgements in
relation to the staging of the loans and assessments which impact
the loss given default. In assessing whether the loans have
incurred a significant increase in credit risk the Investment
Manager, on behalf of the Board, assesses the credit risk attaching
to each of the loans. The Group has adopted the Investment
Manager's internal credit rating methodology and has used its loss
experience to benchmark investment performance and potential
impairment for both Stage 1 and Stage 2 loans under IFRS 9
considering both probability of default and loss given default. The
judgement applied in allocating each investment to Stage 1, 2 or 3
is key in deciding whether losses are considered for the next 12
months or over the life of the loan. The Board has estimated that
two loans have shown evidence of heightened credit risk. In
assessing the ultimate ECL in relation to these loans, the Board
has made assumptions regarding the collateral value and headroom
over the principal loan amounts as well as the residual term of the
loans.
The measurement of both the initial and ongoing ECL allowance
for loan receivables measured at amortised cost is an area that
requires the use of significant assumptions about credit behaviour
such as likelihood of borrowers defaulting and the resulting
losses. In assessing the probability of default, the Board has
taken note of the experience and loss history of the Investment
Manager which may not be indicative of future losses. The default
probabilities are based on a number of factors including interest
cover and LTV headroom which the Investment Manager believes to be
a good predictor of the probability of default, in accordance with
recent market studies of European commercial real estate loans. The
effects of Covid-19 on certain real estate markets has impacted
valuations and resulting LTVs, with any future impact of the
pandemic across the wider markets remaining uncertain. However, the
Directors consider the loss given default to be close to zero as
the loans are the subject of very detailed due diligence procedures
on inception and close monitoring through their life to provide
early warning of a deteriorating credit position. In line with the
Company's investment strategy when the investments were made, most
loans benefit from significant LTV headroom, and business plans
designed to deliver further value increases overtime. Following the
change in Investment Strategy to one of orderly wind down the
Investment Manager, and the Board, have placed greater emphasis on
the source and delivery of repayment
over the residual term of each loan when assessing the risk of capital loss. As a result of these considerations, no loss allowance has been recognised based on 12-month ECLs for those in stage 1 nor for lifetime losses for those in stage 2, as any such impairment would be wholly insignificant to the Group.
Revenue recognition is considered a significant accounting
judgement and estimate that the Directors make in the process of
applying the Group's accounting policies.
The Directors also make estimates in determining the fair value
of prepayment options embedded within the contracts for loans
advanced. The key factors considered in the valuation of prepayment
options include the exercise price, the interest rate of the host
loan contract, differential to current market interest rates, the
risk free rate of interest, contractual terms of the prepayment
option, and the expected term of the option. Given the low
probability of exercise and undeterminable exercise date, the value
attributed to these embedded derivatives is considered to be GBPnil
(31 January 2021: GBPnil).
4. Loans advanced
(i) Loans advanced
31 July 2021 31 July 2021 31 January 2021 31 January 2021
Principal advanced Fair value (at amortised cost) Principal advanced Fair value (at amortised cost)
GBP GBP GBP GBP
Northlands 9,963,590 10,000,160 9,578,514 9,542,788
Halycon - - 5,732,465 5,864,704
Quattro 8,858,259 8,979,848 8,853,459 8,974,982
Affinity 17,299,963 17,657,901 16,700,000 17,010,855
Southport 15,000,000 15,132,877 16,059,285 16,157,217
RoyaleLife 25,382,017 26,549,925 25,382,017 26,174,473
LBS 6,474,586 6,501,067 6,283,119 6,271,791
Knowsley 7,750,000 7,785,753 7,750,000 7,747,844
GMG 15,738,802 15,860,532 12,981,133 12,967,458
106,467,217 108,468,063 109,319,992 110,712,112
------------------------------------ -------------------------------------- ------------------------------- -------------------------------
(ii) Valuation considerations
As noted above the Company is now in the process of an orderly
wind down. It remains the intention of the Manager and Directors to
hold loans through to their repayment date. The Directors consider
that the carrying value amounts of the loans, recorded at amortised
cost in the Interim Financial Statements, are approximately equal
to their fair value. For further information regarding the status
of each loan and the associated risks see the Investment Manager's
Report.
Amortised cost is calculated using the effective interest rate
method which takes into account all contractual terms (including
arrangement and exit fees) that are an integral part of the loan
agreement. As these fees are taken into account when determining
initial net carrying value, their recognition in profit or loss is
effectively spread over the life of the loan.
The Group's investments are in the form of bilateral loans, and
as such are illiquid investments with no readily available
secondary market. Whilst the terms of each loan includes repayment
and prepayment fees, in the absence of a liquid secondary market,
the Directors do not believe a willing buyer would pay a premium to
the par value of the loans to recognise such terms and as such the
amortised cost is considered representative of the fair value of
the loans.
Each property on which investments are secured was subject to an
independent, third party valuation at the time the investment was
entered into. All investments are made on a hold to maturity basis.
Each investment is monitored on a quarterly basis, in line with the
underlying property rental cycle, including a review of the
performance of the underlying property security. No market or other
events have been identified through this review process which would
result in a fair value of the investments significantly different
to the carrying value.
Whilst the forced closure of much of the UK economy due to
Covid-19 lockdown during the period has impacted rent collection
and business plan progress on a number of investments, resulting in
interest deferral, capitalisation and in some cases term
extensions, the balance outstanding in each case is at a
substantial discount to the value of the underlying real estate on
which they are secured, the Directors do not consider any loan to
be subject to specific impairment, or for there to be a risk of not
achieving full recovery, including arears of interest over the
residual term of each loan.
(iii) IFRS 9 - Impairment of Financial Assets
The internal credit rating of each loan as at 31 July 2021 has
been reviewed. Of the three loans identified as Stage Two assets at
31 January 2021, two have shown positive credit migration following
the delivery of the underlying business plans and one remains at
Stage Two. One additional loan showed deterioration in its internal
credit rating since 31 January 2021 and has been considered as a
stage 2 asset; all other loans showed no deterioration and were
considered as Stage 1 assets with no ECL over a twelve month
period.
As at 31 July 2021
Stage 1 Stage 2 Stage 3 Total
Principal advanced 80,308,995 26,158,222 - 106,467,217
----------- ----------- -------- ------------
Gross carrying value 81,830,314 26,637,749 108,468,063
Less ECL allowance - - - -
----------- ----------- -------- ------------
81,830,314 26,637,749 - 108,468,063
----------- ----------- -------- ------------
As at 31 January 2021
Stage 1 Stage 2 Stage 3 Total
Principal advanced 84,407,248 24,912,744 - 109,319,922
----------- ----------- -------- ------------
Gross carrying value 85,579,913 25,132,199 - 110,712,112
Less ECL allowance - - - -
----------- ----------- -------- ------------
85,579,913 25,132,199 - 110,712,112
----------- ----------- -------- ------------
The stage 2 loans at 31 July 2021 were Quattro and Affinity.
The Stage 2 loan, Quattro, was first identified as a Stage 2
asset at 31 January 2019 following a deterioration in credit rating
as a result of a reduction in interest cover as the interest
reserve was utilised. The borrower has made significant progress in
new lettings and adding value through the development of
residential apartments above one of the properties and, following
the period end made a first partial repayment of the loan following
an asset sale. The new apartments have been completed following the
period end and are now under offer for sale which will lead to a
further pay down of the loan and a consequential improvement in
risk profile. Whilst the loan has passed its formal maturity date,
given the positive progress in the period and favourable valuation
outlook, the Investment Manager has agreed a short-term extension
of the facility to allow for an orderly repayment. The loan remains
at Stage 2 and no provision for impairment is deemed necessary
given the level of valuation equity in the residual portfolio and
repayment plans in place.
In the case of the Affinity loan, in line with business plan,
the Sponsor has drawn down on capital expenditure facilities to
complete the refurbishment of the building, resulting in a higher
loan to value exposure. Whilst new lettings are in place leading to
increase contractual rents, these are currently in rent free
periods meaning interest cover has also reduced. Looking through to
the contractual income we expect the loan to exhibit material
credit improvement in the near term and as such no provision for
impairment is deemed necessary.
Two loans previously considered at Stage 2 (Southport and
RoyaleLife) due to the impact of Covid lockdowns on their
respective business plans have exhibited material credit
improvement, in terms of either asset valuation or operating
income, as the UK economy has reopened.
All other loans showed no deterioration and were considered as
Stage 1 assets with no ECL over a twelve month period.
Following the change in Investment Policy and expectation that
the Company will be wound up through an orderly repayment of loans
by the borrowers, and given the significant equity valuation buffer
present in all loans relative to the residual term, then,
notwithstanding the IFRS9 sensitivity analysis discussed below, the
loans are not considered to be permanently impaired and no
provision for ECL has been raised in the year.
A reconciliation of the ECL allowance was not presented as the
allowance recognised at period end was GBPnil.
(iv) IFRS 9 Impairment - Stress Analysis
As discussed above, the Group's ECL is a function of the
probability of default ("PD") and loss given default ("LGD"), where
PD is benchmarked against ICG Real Estate's internal credit rating
model and LGD is based on ICG Real Estate's track record of over
GBP3.7 billion of senior and whole loans which would satisfy the
Company's investment parameters.
Whilst all loans are expected to repay in full within their
residual term, the Company has performed stress analysis on its
expected credit loss by considering the impact of a one, two and
three grade deterioration in the credit rating of each loan as if
they were all Stage 2 assets and considered the impact of
impairment over the life of the loans.
As discussed above, the Covid-19 pandemic has impacted the
performance of a number of loans with a resultant reduction in
interest cover, and the capitalisation of interest leading to
higher LTV exposures. The Covid-19 pandemic and its impact of
valuation of the retail sector in particular has reduced ICG Real
Estate's recovery expectations for non-performing loans across its
wider benchmark portfolio, although it should be noted that the
Company has very limited exposure to the retail sector. As a
result, the application of stress tests in accordance with the
Company's policy results in a significantly higher risk profile
than pre Covid-19.
A three-grade stress on the portfolio would result in two loans
(Quattro and Affinity) moving to sub-standard or doubtful and two
loans being considered Sub-standard with a materially increased
probability of default and loss given default leading to 12 month
expected aggregate losses of GBP3.0 million.
The majority of loans still benefit from strong equity value
protection.
Stress test impact on Expected Credit Loss at 31 July 2021
ECL Impact 31 January
2021
-------------------------- ------------- -------------
One grade deterioration GBP236,000 GBP473,000
in credit rating
-------------
Two grade deterioration GBP857,000 GBP925,000
in credit rating
-------------
Three grade deterioration GBP3,026,000 GBP2,819,000
in credit rating
-------------
Outside the credit migration of loans described above under
Stage 2 loans, one Stage 1 loan, Halcyon, repaid in the period. The
remining loan portfolio is set out in 4(i) above and the current
performance of each loan is discussed in the Investment Manager's
report.
Other fee income from loans excluding capitalised loan
repayments totalled GBP 34,000 (31 January 2021: GBP297,979).
5. Earnings per share and Net Asset Value per share
Earnings per share
1 February 2021 1 February 2020
to 31 July 2021 to 31 July 2020
Profit for the period after tax (GBP) 3,518,029 3,719,476
Weighted average number of ordinary shares in issue 121,302,779 121,302,779
---------------- ----------------
Basic and diluted EPS (pence) 2.90 3.07
Adjusted basic and diluted EPS (pence) 2.90 3.07
================ ================
The calculation of basic and diluted Earnings per share is based
on the profit for the period and on the weighted average number of
ordinary shares in issue during the period.
The calculation of adjusted basic and diluted Earnings per share
is based on the profit for the period, adjusted for one-off other
fee income during the period totalling GBPnil (31 July 2020:
GBPnil).
There are no dilutive shares at 31 July 2021 (31 January 2021:
none).
Net Asset Value per share
31 July 2021 31 January 2021
NAV (GBP) 119,128,084 119,249,139
Number of ordinary shares in issue 121,302,779 121,302,779
------------- ----------------
NAV per share (pence) 98.21 98.31
============= ================
The calculation of NAV per share is based on Net Asset Value and
the number of ordinary shares in issue at the period/year end.
6. Share capital
The authorised share capital of the Company is represented by an
unlimited number of ordinary shares with or without a par value
which, upon issue, the Directors may designate as (a) ordinary
shares; (b) B shares; and (c) C shares, in each case of such
classes and denominated in such currencies as the Directors may
determine.
31 July 2021 31 January 2021
GBP GBP
Authorised
Ordinary shares of no par value Unlimited Unlimited
============= ================
Total No Total No
Issued and fully paid: 121,302,779 121,302,779
============ ============
GBP GBP
Share capital brought forward 119,115,310 119,115,310
Share capital 119,115,310 119,115,310
============ ============
7. Dividends
Dividends are recognised by the Company in the quarterly NAV
calculation following the declaration date. A summary of the
dividends declared and/or paid during the period/year ended 31 July
2021 and 31 January 2021 are set out below:
Dividend per share Total dividend
1 February 2021 to 31 July 2021 Pence GBP
Interim dividend in respect of quarter ended 31 January 2021 1.50 1,819,542
Interim dividend in respect of quarter ended 30 April 2021 1.50 1,819,542
3.00 3,639,084
=================== ================
Dividend per share Total dividend
1 February 2020 to 31 January 2021 Pence GBP
Interim dividend in respect of quarter ended 31 January 2020 1.50 1,819,542
Interim dividend in respect of quarter ended 30 April 2020 1.50 1,819,542
Interim dividend in respect of quarter ended 31 July 2020 1.50 1,819,542
Interim dividend in respect of quarter ended 31 October 2020 1.50 1,819,542
6.00 7,278,168
=================== ===============
Following shareholder approval of proposed changes to the
Company's Investment Objectives and Investment Policy which will
allow an orderly realisation of the Company's assets and return of
capital to shareholders, the Board expects the Company to continue
the payment of quarterly dividends whilst it remains prudent to do
so. The dividend payable per ordinary share will however reduce
over time as assets are realised and as capital is returned to
shareholders.
Rights attaching to Shares
The Company has a single class of ordinary shares which are not
entitled to a fixed dividend. At any General Meeting of the Company
each ordinary shareholder is entitled to have one vote for each
share held. The ordinary shares also have the right to receive all
income attributable to those shares and participate in
distributions made and such income shall be divided pari passu
among the holders of ordinary shares in proportion to the number of
ordinary shares held by them.
The Company's Articles include a B Share mechanism for returning
capital to Shareholders and following Shareholder approval on 14
January 2021, the Company will utilise this mechanism. When the
Board determines to return capital to Shareholders, the Company
will issue B Shares, paid up out of the Company's assets, to
existing Shareholders pro rata to their holding of Ordinary Shares
at the time of such issue. The amount paid up on the B Shares will
be equal to the cash distribution to be made to Shareholders via
the B Share Mechanism. The B Shares shall be redeemable at the
option of the Company following issue and the redemption proceeds
(being equal to the amount paid up on such B Shares) paid to the
holders of such B Shares on such terms and in such manner as the
Directors may from time to time determine. It is therefore expected
that the B Shares will only ever be in issue for a short period of
time and will be redeemed shortly after their issue in order to
make the return of capital to Shareholders.
It is intended that following each return of capital the Company
will publish a revised estimated Net Asset Value and Net Asset
Value per Ordinary Share based on the prevailing published Net
Asset Value and Net Asset Value per Ordinary Share adjusted to take
into account the return of capital.
The number of Ordinary shares in issue will remain
unchanged.
8. Financial Risk Management
The Group through its investment in senior loans is exposed to a
variety of financial risks. The main risks arising from the Group's
financial instruments are: market risk (including currency risk and
interest rate risk), credit risk and liquidity risk and are fully
disclosed on pages 57 to 61 of the Annual Report and Financial
Statements for 31 January 2021.
The Company's principal risk factors are fully discussed in the
Company's Prospectus, available on the Company's website
(www.lbow.co.uk) and should be reviewed by shareholders.
9. Related Party Transactions and Directors' Remuneration
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the party in making financial or operational
decisions.
In the opinion of the Directors, on the basis of shareholdings
advised to them, the Company has no immediate or ultimate
controlling party.
Directors
The Company Directors' fees for the period amounted to GBP91,375
(31 July 2020: GBP98,750) with outstanding fees of GBP30,524 (31
January 2021: GBP45,995) due to the Directors at 31 July 2021.
Investment Manager
Investment management/advisory fees for the period amounted to
GBP595,958 (31 July 2020: Investment management/advisory fees
GBP595,971) of which GBP894,297 (31 January 2021: GBP897,928) was
outstanding at the period/year end.
10. Other Expenses
The other expenses shown in the Consolidated Statement of
Comprehensive Income are made up as shown below.
1 February 2021 to 1 February 2020 to 1 February 2020 to
31 July 2021 31 July 2020 31 January 2021
GBP GBP GBP
(Unaudited) (Unaudited) (Audited)
---------------------------------------- ------------------------------------- ----------------------------------------
Luxco operating
expenses (3,652) 218,445 278,661
Broker fees 25,275 26,338 52,163
Administration
fees 114,896 85,000 172,421
Regulatory fees 14,557 11,030 19,351
Listing fees 6,255 6,886 13,375
Legal &
professional
fees 44,024 25,623 70,311
Public relation - 7,442 -
fees
Audit fees for
the Company 9,162 22,550 47,355
Audit fees for
the Subsidiary 17,682 10,028 14,885
Other expenses 34,418 33,838 71,500
Total expenses 262,617 447,180 740,022
---------------------------------------- ------------------------------------- ----------------------------------------
11. Subsequent events
The process of winding up the Luxembourg company is ongoing,
which will allow the loan investments to be transferred to the
Company. Over time the Company expects this restructuring to reduce
pro forma operating expenses by approximately GBP200,000 per annum,
the benefit of which will support the dividend and process of
shareholder capital return in future periods.
On Monday 13 September a return of capital in the sum of
GBP6,671,653 to the Company's shareholders was approved.
glossary of capitalised defined terms
"Administrator" means Ocorian Administration (Guernsey)
Limited;
"Admission" means the admission of the shares to the
premium-listing segment of the Official List and to trading on the
London Stock Exchange;
"AEOI" means Automatic Exchange of Information;
"Affinity" means Affinity Global Real Estate;
"Annual Report and Financial Statements" means the annual
publication of the Group provided to the shareholders to describe
their operations and financial conditions, together with their
Consolidated Financial Statements;
"Audit Committee" means the Audit and Risk Management Committee,
a formal committee of the Board with defined terms of
reference;
"Board" or "Directors" or "Board of Directors" means the
directors of the Company from time to time;
"Brexit" means the departure of the UK from the EU;
"CBI" means the Confederation of British Industry;
"Circular" means the Circular of the Company dated 16 December
2020, regarding proposal for a change to the Company's Objectives
and Investment Policy which would lead to an orderly realisation of
the Company's assets and a return of capital to shareholders;
"Companies Law" means the Companies (Guernsey) Law, 2008, (as
amended);
"Company" means ICG-Longbow Senior Secured UK Property Debt
Investments Limited;
"CVA" means Company Voluntary Arrangement;
"Disclosure Guidance and Transparency Rules" or "DTRs" means the
disclosure guidance published by the FCA and the transparency rules
made by the FCA under section 73A of FSMA;
"ECL" means expected credit losses;
"EGM" means the Extraordinary General Meeting of the Company
held on 14 January 2021;
"EPS" or "Earnings per share" means Earnings per ordinary share
of the Company and is expressed in Pounds Sterling;
"ERV" means Estimated Rental Value;
"EU" means the European Union;
"Euros" or "EUR" means Euros;
"FCA" means the UK Financial Conduct Authority (or its successor
bodies);
"Financial Statements" or "Consolidated Financial Statements"
means the audited consolidated financial statements of the Group,
including the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash
Flows, and associated notes;
"GDP" means gross domestic product;
"GFSC" means the Guernsey Financial Services Commission;
"GIIN" means Global Intermediary Identification Number;
"GMG" means GMG Real Estate;
"Group" means the Company, ICG Longbow Senior Secured UK
Property Debt Investments Limited together with its wholly owned
subsidiary, ICG Longbow Senior Debt S.A (Luxco);
"Halcyon" means Halcyon Ground Rents;
"IAS" means international accounting standards as issued by the
Board of the International Accounting Standards Committee;
"ICG" means Intermediate Capital Group plc;
"ICG Private Funds" means private real estate debt funds managed
or advised by the Investment Manager or its associates;
"IFRS" means the International Financial Reporting Standards,
being the principles-based accounting standards, interpretations
and the framework by that name issued by the International
Accounting Standards Board, as adopted by the EU;
"Interest Cover Ratio" or "ICR" means the debt/profitability
ratio used to determine how easily a company can pay interest on
outstanding debt;
"Interim Financial Statements" means the unaudited interim
condensed consolidated financial statements of the Group, including
the Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Consolidated Statement of Cash Flows, and associated
notes;
"Interim Report" means the Company's interim report and
unaudited interim condensed financial statements for the period
ended 31 July;
"Investment Grade Tenant" means a tenant that is rated Aaa to
Baa3 by MIS and/or AAA to BBB- by S&P;
"Investment Manager" or "ICG Real Estate" means ICG Alternative
Investment Limited;
"Investment Management Agreement" means Investment Management
Agreement dated 25 November 2020 between the Company and the
Investment Manager ICG Alternative Investment Limited;
"IPO" means the Company's initial public offering of shares to
the public, which completed on 5 February 2013 ;
"ISIN" means an International Securities Identification
Number;
"Knowsley" means Knowsley (Image Business Park) Limited;
"LBS" means LBS Properties Limited;
"LGD" means loss given default;
"Listing Rules" means the listing rules made by the FCA under
section 73A Financial Services and Markets Act 2000;
"London Stock Exchange" or "LSE" means London Stock Exchange
plc;
"LTV" means Loan to Value ratio;
"Luxco" or "Subsidiary" means the Company's wholly owned
subsidiary, ICG-Longbow Senior Debt S.A.;
"Luxembourg Administrator" means Ocorian Services (Luxembourg)
S.à r.l. being the administrator of Luxco;
"Main Market" means the main securities market of the London
Stock Exchange;
"Management Engagement Committee" means a formal committee of
the Board with defined terms of reference;
"MIS" means Moody's Investors Service;
"MSCI" means Morgan Stanley Capital Index;
"NAV per share" means the Net Asset Value per ordinary share
divided by the number of Shares in issue (other than shares held in
treasury);
"Net Asset Value" or "NAV" means the value of the assets of the
Group less its liabilities, calculated in accordance with the
valuation guidelines laid down by the Board, further details of
which are set out in the 2017 Prospectus;
"Nomination Committee" means a formal committee of the Board
with defined terms of reference;
"Northlands" means Northlands Portfolio;
"NMPIs" means Non-Mainstream Pooled Investments;
" OECD " means The Organisation for Economic Co-operation and Development;
"Official List" is the Premium Segment of the FCA's Official
List;
"ONS" means Office of National Statistics;
"IPO Prospectus" means the prospectus published on 31 January
2013 by the Company in connection with the IPO of ordinary
shares;
"PD" means probability of default;
"post-Covid" means the period after 23 March 2020;
"Prospectus " means the prospectus published in May 2018 by the
Company in connection with the placing programme;
"Quattro" means Quattro Portfolio;
"Registrar" Link Asset Services (Guernsey) Limited (formerly
Capita Registrars (Guernsey) Limited);
"Registrar Agreement" means the Registrar Agreement dated 31
January 2013 between the Company and the Registrar;
"RICS" means the Royal Institution of Chartered Surveyors;
"RoyaleLife" means the RoyaleLife portfolio;
"S&P" means Standard & Poor's Credit Market Services
Europe Limited, a credit rating agency registered in accordance
with Regulation (EC) No 1060/2009 with effect from 31 October
2011;
"SONIA" means Sterling Overnight Interbank Average Rate;
"Southport" means the Southport Hotel property;
"SPV" means special purpose vehicle;
"UK" or "United Kingdom" means the United Kingdom of Great
Britain and Northern Ireland;
"UK Listing Authority" or "UKLA" means the Financial Conduct
Authority;
"US" or "United States" means the United States of America, it
territories and possessions; and
"GBP" or "Pounds Sterling" or "Sterling" means British pound
sterling and "pence" means British pence.
directors and general information
Board of Directors Independent Auditor English Solicitors to
Jack Perry (Chairman) Deloitte LLP the Company
Stuart Beevor PO Box 137 Gowlings WLG (UK) LLP
Patrick Firth (Retired Regency Court 4 More London Riverside
28 June 2021) Glategny Esplanade London
Paul Meader St. Peter Port United Kingdom
Fiona Le Poidevin Guernsey SE1 2AU
GY1 3HW
Audit and Risk Committee Guernsey Advocates to
Patrick Firth (Chairman Guernsey Administrator the Company
- retired 28 June 2021) and Company Secretary Carey Olsen
Stuart Beevor Ocorian Administration Carey House
Paul Meader (Guernsey) Limited PO Box 98
Fiona Le Poidevin (Chairman P.O. Box 286 Les Banques
from 29 June 2021) Floor 2 St Peter Port
Trafalgar Court Guernsey
Management Engagement Les Banques GY1 4BZ
Committee St Peter Port
Jack Perry (Chairman) Guernsey Bankers
Patrick Firth (retired GY1 4LY The Royal Bank of Scotland
28 June 2021) International
Paul Meader Luxembourg Administrator Luxembourg Branch
Fiona Le Poidevin Ocorian Services (Luxembourg) Espace Kirchberg
Stuart Beevor S.à r.l The Square
6c Rue Gabriel Lippmann Building A-40 Avenue
Nomination Committee Munsbach J.F. Kennedy
Jack Perry (Chairman) Luxembourg L-1855
Stuart Beevor L-5365 Luxembourg
Patrick Firth (retired
28 June 2021) Depositary Butterfield Bank (Guernsey)
Paul Meader Ocorian Depositary (UK) Limited
Fiona Le Poidevin Limited PO Box 25
5(th) Floor Regency Court
Remuneration Committee 20 Fenchurch Street Glategny Esplanade
Jack Perry London St Peter Port
Stuart Beevor England Guernsey
Paul Meader (Chairman) EC3M 3BY GY1 3AP
Fiona Le Poidevin
Registrar Barclays Bank plc
Investment Manager Link Asset Services 6-8 High Street
ICG Alternative Investment (Guernsey) Limited St Peter Port
Limited Mont Crevelt House Guernsey
Procession House Bulwer Avenue GY1 3BE
55 Ludgate Hill St Sampsons
London Guernsey Lloyds Bank International
United Kingdom GY2 4LH Limited
EC4M 7JW PO Box 136
Corporate Broker and Sarnia House
Registered office Financial Adviser Le Truchot
PO Box 286 Cenkos Securities plc St Peter Port
Floor 2 6-8 Tokenhouse Yard Guernsey
Trafalgar Court London GY1 4EN
Les Banques United Kingdom
St Peter Port EC2R 7AS The Royal Bank of Scotland
Guernsey International
GY1 4LY Identifiers Royal Bank Place
GIIN: 6IG8VS.99999.SL.831 1 Glategny Esplanade
ISIN: GG00B8C23S81 St Peter Port
Sedol: B8C23S8 Guernsey
Ticker: LBOW GY1 4BQ
Website: www.lbow.co.uk
OakNorth Bank plc
6(th) Floor Nightingale
House
3(rd) Floor 57 Broadwick
Street
Soho
London
W1F 9QS
cautionary statement
The Chairman's Statement and the Investment Manager's Report
have been prepared solely to provide additional information for
shareholders to assess the Company's strategies and the potential
for those strategies to succeed. These should not be relied on by
any other party or for any other purpose.
The Chairman's Statement and Investment Manager's Report may
include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can
be identified by the use of forward-looking terminology, including
the terms "believes", "estimates", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager, concerning, amongst other things, the investment
objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance.
The Company's actual investment performance, results of
operations, financial condition, liquidity, distribution policy and
the development of its financing strategies may differ materially
from the impression created by the forward-looking statements
contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based.
ICG-Longbow Senior Secured UK Property Debt Investments
Limited
PO Box 286
Floor 2, Trafalgar Court
Les Banques, St Peter Port, Guernsey
GY1 4LY, Channel Islands.
T +44 (0) 1481 742742
F +44 (0) 1481 742698
Further information available online:
www.lbow.co.uk
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END
IR FLFVTAEIAFIL
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