TIDMRMII TIDMTTM
RNS Number : 0781I
RM Infrastructure Income PLC
10 August 2021
RM INFRASTRUCTURE INCOME PLC
(the "Company" or "RMII")
LEI: 213800RBRIYICC2QC958
HALF-YEARLY REPORT FOR THE SIX MONTHSED 30 JUNE 2021
RM Infrastructure Income PLC, which specialises in secured
social and environmental infrastructure lending, announces its
results for the six months ended 30 June 2021 (the "Period").
Highlights
-- Strong momentum in Net Asset Value as pandemic-related
valuations have recovered as the outlook becomes clearer
-- Share price performance relative to the NAV has stabilised
-- Diversified portfolio of GBP128 million invested across 34 loans
o 7 new investments and 9 repayments in the Period
o 15% Floating rate investments and set to increase over the
next period
o Short weighted average life of the investments; approximately
2.74 years creating reinvestment opportunities and limiting
duration risk
-- CBILS partially UK government guaranteed loans now represent
25% of the gross assets of the portfolio offering a material credit
enhancement
-- Company name and ticker change to RM Infrastructure Income
PLC and "RMII" to reflect narrower investment focus on Social and
Environmental Infrastructure sectors
o New focus loans now represent 40% of the portfolio
o Including funding commitments in place but undrawn, this
exposure rises to 46% and is expected to increase to circa 55% over
the second half of 2021
-- The Good Economy completed a scoring of the portfolio during
H1 2021 and will use this as their baseline scoring for the Impact
Report due in 2022
-- Second interim dividend of 1.625 pence per Ordinary Share;
3.25 pence per Ordinary Share aggregate dividend for the Period
-- NAV total return for the Period is 5.0%
Financial Information As at 30 June 2021 As at 30 June 2020
Gross asset value (GBP'000) GBP124,769 GBP122,274
Net Asset Value ("NAV")
(GBP'000) GBP112,348 GBP110,536
NAV per Ordinary Share (pence) 95.25p 91.16p
Ordinary Share price (pence) 90.00p 77.00p
Ordinary Share price discount
to NAV (5.5%) (15.5%)
Norman Crighton, Chair, RMII said:
"I am pleased to report a period of strong performance for the
portfolio, which has demonstrated its considerable resilience
throughout the challenges of the past year. We have made excellent
progress with our new investment focus, which our new company name
now reflects, with further social and environmental infrastructure
investments expected during the year. The proportion of loans that
benefit from the UK Government Guarantee due to CBILS increased to
25% of gross assets during the Period, offering investors a
material credit enhancement of the portfolio. The outlook remains
promising as the economic environment improves and the Investment
Manager continues to grow its strong pipeline of impact
opportunities within the new focus sectors."
Thomas Le Grix De La Salle, Portfolio Manager, said:
"As the economic recovery continues, the portfolio is well
positioned to generate attractive NAV growth and a positive total
return. Looking towards H2 2021, we believe RM Infrastructure
Income's refined focus on social and environmental infrastructure
investments, will improve the overall counterparty risk, with a
degree of income often serviced directly or indirectly by UK
government entities. RM Funds have now deployed 25% of GAV into
CBILS facilities and is keeping an open dialogue with government
institutions about potential future schemes. As a firm we continue
to invest in the Company, via partial reinvestment of our
management fees demonstrating a continued alignment of interest
with our Shareholders."
For further information, please contact:
RM Funds - Investment Manager
James Robson
Pietro Nicholls
Thomas Le Grix De La Salle 0131 603 7060
Singer Capital Markets - Financial Adviser
and Broker
James Maxwell
Asha Chotai 020 7496 3000
Peel Hunt LLP - Financial Adviser and Broker
Luke Simpson
Liz Yong 020 7418 8900
Tulchan Communications LLP - Financial PR 0207 353 4200
Elizabeth Snow rmii@tulchangroup.com
Oliver Norgate
PraxisIFM Fund Services (UK) Limited - Administrator
and Company Secretary
Brian Smith
Ciara McKillop 020 4513 9260
ABOUT US
How we invest
RM Infrastructure Income plc (the "Company") aims to generate
attractive and regular dividends through investment in secured debt
instruments of UK Small and Medium sized Enterprises ("SMEs"),
mid-market corporates and/or individuals including any loan,
promissory notes, lease, bond, or preference share (such debt
instruments, as further described in the prospectus, being "Loans")
sourced or originated by RM Capital Markets Limited (the
"Investment Manager") with a degree of inflation protection through
index-linked returns where appropriate.
Where we invest
Having had a general sectoral lending approach since inception,
the Company narrowed the sector focus during H1 2021 to investments
within the social and environmental infrastructure sectors.
Our ethos
The Company aims to make a difference with the deployment of its
capital and as such has adopted an impact framework allowing the
measurement and reporting of impact from investments made. In
addition to this the firm seeks to target investments directly
linked to achieving outcomes linked to six Sustainable Development
Goals ("SDGs").
Key sectors
Social infrastructure Environmental infrastructure
Healthcare Childcare & Education Clean Energy & Renewables Waste
Accommodation Management
Energy Efficiency & Carbon Reduction
---------------------------------------------------------------
Impact outcomes: Impact outcomes:
* Improving supply of quality, affordable housing and * Improving availability of sustainable energy
accommodation solutions
* Improving quality and availability of childcare and * Improving recycling, waste and sustainable water us
education services e
solutions
* Improving quality and accessibility of health and
social care services * Improving sustainability of buildings and transport
---------------------------------------------------------------
PORTFOLIO AT A GLANCE
As at 30 June As at 30 June
Financial Information 2021 2020
Gross asset value (GBP'000) GBP124,769 GBP122,274
Net Asset Value ("NAV") (GBP'000) GBP112,348 GBP110,536
NAV per Ordinary Share (pence) 95.25p 91.16p
Ordinary Share price (pence) 90.00p 77.00p
Ordinary Share price discount to NAV(1) (5.5%) (15.5%)
Accrued entitlement of Zero Dividend Preference
("ZDP") Share (pence)(2) - 107.98p
Dividend (pence) paid in respect of the
Period 3.250p 3.325p
Performance Summary
% change(3,5) % change(4,5)
Total return - Ordinary Share NAV and dividends(1) +5.0% -3.4%
Total return - Ordinary Share price and
dividends(1) +7.3% -19.5%
(1) These are Alternative Performance Measures
("APMs").
(2) Based on the net assets attributable to the ZDP Shares as at 30
June 2020. RM ZDP plc was put into voluntary liquidation and ZDP shareholders
were paid the Final Capital Entitlement on 6 April 2021.
(3) Total returns for the period to 30 June 2021, including
dividend reinvestment.
(4) Total returns for the period to 30 June 2020, including
dividend reinvestment.
(5) Source: Bloomberg.
Alternative Performance Measures ("APMs")
The financial information and performance summary data
highlighted in the footnote to the above tables are considered to
represent the APMs of the Company. Definitions of these APMs,
together with how these measures have been calculated can be found
in the half yearly report.
CHAIR'S STATEMENT
On behalf of the Board, I am pleased to report on the first half
of 2021 (the "Period"). The Period has seen continued strong
momentum in Net Asset Value ("NAV") movement as the economy unlocks
and the conservative mark downs of portfolio valuations taken
during the peak of the COVID-19 pandemic, are gradually released as
the outlook becomes clearer.
Introduction
The share price performance relative to the NAV has stabilised
within the target 6% discount to NAV as detailed in the Company's
prospectus. There were some modest share buy-backs undertaken early
in the Period and whilst it is pleasing that no further share
buy-backs have been required since February, there is more work to
be done in order to return the share price to a premium to NAV.
It has been a busy six months for the Company and alongside the
Investment Manager, we were pleased to announce a refreshed
investment focus and corresponding Company name change. In
addition, ahead of the Company's fourth Annual General Meeting
("AGM"), Investors were consulted on a liquidity opportunity, as
set out within the prospectus.
Strong NAV performance
It is pleasing to see the expected rebound in the NAV. For the
same period last year, I commented that "the capital values which
have been marked lower over the period are expected to recover as
the market moves to a more normal environment" and this has
certainly been the case. The % total NAV returns are as follows:
the last six months 5.0%, the last year 11.9% and the Inception to
Date ("ITD") has grown from 13.9% at 30 June 2020 to 27.5% as at
the period end.
The Investment Manager remains confident in the outlook,
expecting still further capital value increases within the
portfolio.
Delivering stable income
Since inception there have been 17 quarterly distributions on or
above target to Shareholders totalling 25.85 pence per share.
The Company paid a fourth interim dividend of 1.625 pence per
Ordinary Share in respect of the period from 1 October 2020 to 31
December 2020 on 26 March 2021, leading to a full year dividend for
2020 of 6.5 pence per Ordinary Share. In addition, the first
interim dividend of 1.625 pence per Ordinary Share in respect of
the period from 1 January 2021 to 31 March 2021 was paid on 25 June
2021.
The Board has declared a second interim dividend of 1.625 pence
per Ordinary Share in respect of the period from 1 April 2021 to 30
June 2021, which will be payable on 24 September 2021 to
Shareholders on the register at the close of business on 3
September 2021. Therefore, the aggregate dividend declared in
respect of the Period is 3.25 pence per Ordinary Share.
As at 30 June 2021, the Company had 117,944,782 Ordinary Shares
in issue and the closing mid-price was 90 pence per share. The NAV
per Ordinary Share was 95.25 pence, which is an increase of 2.00
pence from the 31 December 2020 NAV per Ordinary Share of 93.26
pence. Correspondingly the share price to NAV was a circa 5.5%
discount. The positive NAV movement reflects the underlying
portfolio NAV total return of 5.0% year to date less the aggregate
distributions of 3.25 pence per share paid to Shareholders in the
Period.
Name Change
On 22 July, after the period end the Company's name was changed
to RM Infrastructure Income PLC, with the ticker "RMII" to reflect
the narrower investment focus on the Social and Environmental
Infrastructure sectors.
Liquidity opportunity
Within its 2020 Annual Report & Accounts issued on the 29
March 2021, the Company announced that in connection with the
proposal detailed in its 2016 IPO Prospectus, and in order to offer
Shareholders a liquidity opportunity prior to its fourth AGM, on 8
June 2021, it would engage with Shareholders to consider their
liquidity needs and structure a set of proposals that were suitable
and cost effective. The Company consulted widely with Shareholders,
representing 90% of shares currently in issue and I am pleased to
report that Shareholders were overwhelmingly supportive of the
Company's performance, particularly during the pandemic and its
recovery, as well as the updated investment focus and strategy.
There was very limited appetite from those Shareholders to
participate in a liquidity opportunity. As a result, and noting the
disproportionate administrative and cost burden, the Board
determined that the next liquidity opportunity will be put to
Shareholders in three years' time, however, should the shares trade
at an average discount of more than zero per cent. as measured over
the six-month period commencing on 1 October 2022 and ending on 31
March 2023, the Board will seek to bring the liquidity opportunity
consultation forward by 12 months, to two years' time.
Portfolio
The portfolio size remained largely stable with 34 loans and
invested assets of GBP128 million, despite a number of repayments
and new investments during the Period. Overall, at the Period end,
private debt investments represented circa 94% of the portfolio
holdings (with the breakdown being 79% bespoke bilateral loans, 15%
within club or syndicated private loans) and 2% in more liquid
public corporate debt. The final exposure was 4% within equity
(unlevered ownership of a student accommodation asset in
Coventry.)
Compared to the position at the Company's year end, the average
yield on investments at 9.00% is 37 basis points lower. The
weighted average life of the investments is approximately 2.74
years, which is down from 3.04 years at the Company's year end. The
Board has asked the Investment Manager to structure the portfolio
with a weighted average life not materially exceeding 3-years
immediately prior to the next liquidity opportunity.
The number of senior secured loans or Coronavirus Business
Interruption Loan Scheme ("CBILS") classified loans within the
portfolio has increased over the Period from 46.8% to 51%. The
percentage of investments linked to Sonia/Libor has reduced over
the Period from 28% to 15%. The Investment Manager expects to grow
this Sonia/Libor linked exposure over time however notes that the
overall exposure to changes in inflation expectations is limited
given the relatively short duration and high yield of the
portfolio.
The portfolio continues to be well diversified across
investments and sectors. The largest portfolio investment is 9.1%
of NAV and the top 10 investments represent circa 57.7% of NAV. Any
currency exposures arising from investments are largely hedged back
into sterling to minimise any currency exchange risk. The
Investment Manager has made good progress on increasing the
proportion of the portfolio aligned to the new investment focus and
they will discuss this within their Investment Management
report.
ESG and Your Company
In the Chair's Statement in the last Annual Report several
paragraphs were dedicated to a discussion on how the Company could
engage more effectively with stakeholders on Environmental, Social
and Governance issues. As the Board is appointed to represent the
interests of our Shareholders, several were contacted for their
views before other stakeholders were approached to ensure the
approach being taken as the right one for both Shareholders and
other stakeholders.
As the Directors have made corporate governance central to their
entire approach to the custodianship of Shareholders' interests,
more time was spent discussing, on a confidential basis,
Environmental and Social (E&S) issues and what approach is
taken by the various groups. I would like to thank all those who
took part.
All but one of the stakeholders approached was willing to
discuss E&S issues in detail and those agreeable gave up a
great deal of their valuable time to help in this process. The
feedback obtained confirmed what the Board had thought; E&S
issues have become a vital ingredient in how companies are managed
as well as becoming a more important criteria of how investments
are selected. However, the details were surprising, comforting, and
inspiring.
All our stakeholders are treating E&S issues with an
increasing sense of importance. The smaller groups approached also
recognised this but felt that, at the moment, they did not have the
resources to properly address them. They asked to be updated about
our findings which I am happy to do.
As an important first step many contacted believed that those
stakeholders who qualify, should sign up to the UN Principles of
Responsible Investment ("UNPRI") and we will be encouraging as many
as possible to do so. Another powerful message was that all
stakeholders use interactions with other groups to promote the ESG
agenda. Investment managers should consider how the companies they
invest in are promoting ESG. In particular, investment managers
should use interactions with any groups they contact to promote
good ESG practices. This includes the companies in which investment
managers invest on behalf of shareholders, other shareholders they
might interact with, as well as governments, national pension funds
and other interested parties. Most importantly, these interactions,
and their results, should be communicated to shareholders in the
next annual report.
This approach works well for most investment managers, but not
all. Those taking a more quantitative approach to managing
shareholders investments will understandably give ESG issues less
emphasis in their stock selection. This does not mean that the
staff at such a management house are less concerned with ESG
issues, only that their concerns manifest themselves in different
ways. All stakeholders should take this into consideration where
appropriate and the Board will work to ensure that the ESG approach
developed is broad enough to encompass these nuances.
The overwhelming impression gained was that changes being made
to E&S were being driven from the ground up, by shareholders,
clients and staff rather than by governments or industry bodies.
The response to this pressure has been varied and highlights the
breadth of issues that E&S challenges raise. Some individuals
contacted have taken it upon themselves to push E&S matters up
the corporate agenda, whereas others have created committees to
ensure that ESG issues are promoted within their organisation and
encouraged in the wider community. As one person said, "If we pay
anyone, then we believe they should adhere to our ESG principles."
The Board could not agree more with that sentiment. It is time that
the standards we have set in Corporate Governance for many years
are now extended to E&S.
On Environmental issues, the main concern is naturally climate
change and the responses to that pressing problem were fascinating.
Several recognised that business travel is one of the biggest
sources of carbon emissions within their workplace and had used
offset programs in the past. Some were now in the process of
refining that approach to find the best offset program or reduce
business travel accordingly. Others still were looking to quantify
less obvious sources of carbon emissions by asking staff to detail
their modes of travel to work. Once the problem has been measured,
it is much easier to work on a solution. The Board felt this was a
very sensible approach and will be adopting this in the coming
months for your Company. Many were looking to lower carbon
emissions by encouraging more environmentally friendly modes of
transport such as cycling or walking to work, which may mean the
installation of bicycle racks and showers. Only one of the
companies approached was able to say that they used green suppliers
for their electricity, but we are sure that number will increase
over time as this is an obvious way to reduce everyone's carbon
footprint.
The response to Social issues was even more interesting. The
Directors now, thankfully, rarely encounter the social issues that
were seen in the past such as sexism, racism, bullying to name but
a few. The service providers employed by your Company seem to have,
by and large, successfully addressed these problems. However other
social issues are being addressed by many of your service
providers, the most important of which is mental health.
Shareholders should be very pleased that a portion of the money
that the Board pays to service providers on your behalf is being
used to address this issue, which has been brought clearly into
focus during the current pandemic. Several directors have worked in
the industry long enough to have lost friends and colleagues to
suicide, drugs, alcohol or just over-work to understand the
importance of good mental health support. Commendably, some
stakeholders are also expanding this care into support for groups
outside their offices. Many stakeholders support local charities.
One stakeholder has gone even further and now donates 10% of
corporate profit to charities around the world, selected by
employees.
The E&S issues touched on above should be important in a
civilised society but all too often they are downplayed in the
quest for profit. One stakeholder approached did not have an ESG
department but did have an Ethics Committee, and that is arguably
more important. If we are acting in an ethical manner, then are not
the Environmental and Social issues mentioned above already covered
by ethics? An Ethics Committee with a broad enough remit and the
power to address issues raised should cover all the ESG problems
and many more.
Many groups approached suggested that the Company should
introduce a framework to measure progress in ESG issues. I am
reluctant to do this now as many groups already have a great deal
of form-filling to deal with and adding to that burden should be
avoided. We will however continue to discuss ESG with our
stakeholders on an informal basis for the moment and I will report
back to shareholders in the next Annual Report.
At the moment, your Board will be satisfied to see an
improvement in ESG standards from all of your stakeholders. Some
are just beginning to address E&S issues whereas others have a
very sophisticated approach. We look forward to helping everyone
work together to improve all aspects of ESG for the investment
trust industry.
The investment trust industry pays billions of pounds to
investment managers and hundreds of millions of pounds to
accountants, lawyers, company secretaries and all the other groups
that make our industry run effectively. It is clear that
shareholders of investment trusts have recently added E&S to
their list of priorities along with G. I believe the boards of
investment trusts, as the representatives of shareholders, have a
duty to reflect these new priorities to other stakeholders, and to
ensure that these new concerns are communicated well. Just as the
industry responded to higher governance standards during my career
from the 1990s onwards, so must the entire industry react to
increasing concerns to E&S standards. On behalf of my fellow
directors and Shareholders, I look forward to helping everyone work
together to improve all aspects of ESG for the investment trust
industry.
Outlook
We believe there is a great deal of interest in, and therefore
of capital poised to flow into, strategies which offer a strong ESG
framework combined with an Impact scoring and reporting framework.
This focus, combined with continued strong trading performance
should enable further growth in the size of the Company over
time.
The Investment Manager has reported they are confident in the
outlook for both the NAV growth and continued income generation
within the portfolio. There is further work to be done on reducing
the discount of the NAV to the share price and this will be the
focus of all stakeholders over the remaining 6 months.
The Board is conscious of rising prices and the threat of
inflation to fixed income securities. With that in mind the
Investment Manager has constructed a high yielding portfolio of
largely fixed rate exposures with a short duration. In addition,
the floating rate element of the portfolio is 15% and this is set
to increase over the next period. Should a global bond market
sell-off materialise this will mitigate the risk for the Company's
portfolio.
The Board is grateful for the support of Shareholders and are
delighted to have such a broad investor base. We would also like to
thank RM Funds and the other professional advisors for their hard
work and support. Please do not hesitate to contact me through Peel
Hunt or Singer Capital Markets if any additional information is
required.
Norman Crighton
Chair of the Board of Directors
9 August 2021
INVESTMENT MANAGER'S REPORT
Total Return ahead of target
RM Funds ("RM" or the "Investment Manager") is pleased with the
Company's continued positive performance in the Period, in which
the portfolio delivered a steady net interest income margin. In
addition, the continued revaluation higher of some Company's
assets, which had been marked lower during the COVID outbreak,
added to the NAV percentage total return which for the six months
to 30 June 2021 was 5.0%. Since IPO the Inception to Date ("ITD")
NAV has grown to 27.5% as at the period end.
Portfolio Performance
Despite the economy remaining in lockdown for much of the
Period, the portfolio's performance has been extremely resilient.
Several assets have been revalued higher over the period to reflect
the improving outlook and sentiment. The Investment Manager still
believes there are further asset values that will be revalued by
the Valuation Agent over the coming months which will allow the
Company to meet its objective of returning the NAV to above the
opening post-IPO NAV of 98.00 pence.
The portfolio's performance versus the observable credit peer
group is favourable. For the Period, the Markit IBOX Euro Liquid
High Yield index had a total return of +1.32% and the S&P
European Leveraged Loan index had a total return of +1.1%.
Share Price
The share price has appreciated from 87.00 pence to 90.00 pence
as a mid-price to give a total shareholder return of 7.3% for the
Period. The share price discount has reduced from -6.7% at year end
to -5.5% as at 30 June 2021. There were limited share buybacks
conducted over January and February comprising 359,500 shares over
five transactions at an average purchase price of 87.29 pence.
The target is to continue to reduce this discount and return to
a share price premium to NAV which was the case for each of the 36
months for the Company pre-COVID-19.
Coronavirus Business Interruption Loan Scheme ("CBILS")
The CBILS scheme closed to new applications on the 31 March
2021, but pre-qualified prospective investments were granted a
grace period to reach financial close under the scheme rules. The
portfolio's CBILS exposure increased over the Period from GBP15
million to GBP32 million with CBILS partially UK government
guaranteed loans now representing 25% (from 12% at year-end ) of
the gross assets of the portfolio. All CBILS loans benefit from a
UK Government Guarantee, protecting a minimum of 80% of the
principal and 100% of the first year's interest.
Name change and narrower investment focus
The name and ticker change to RM Infrastructure Income PLC and
"RMII" which reflect the narrower investment focus and activities
of the Company took place post period end on 22 July.
There has been good progress over the Period in allocating to
the new focus sectors which now represent 40% (from 35%) of the
portfolio's holdings. These are spread across 16 (from 13) holdings
within 5 (from 4) sectors. Including funding commitments in place
but undrawn, this exposure rises to 46% and is expected to increase
to circa 55% over the second half of 2021. RM Funds expects a
number of refinancings of non-core exposure during 2022 which will
allow the Investment Manager to further allocate to Social &
Environmental Infrastructure.
Sustainability and Impact Framework
Sustainability and ESG is at the heart of the RM Funds
investment process. The Investment Manager incorporates
comprehensive ESG screening for each transaction in addition to the
independent Impact Reporting score and targeting sustainability
linked lending.
The Good Economy, a leading social advisory firm, has been
engaged by the Company to provide an independent assessment on the
ESG and Impact outcomes of the portfolio. They conducted a scoring
of the portfolio during H1 2021 and will use this as their baseline
scoring for the Impact Report due in 2021 alongside the annual
report.
Investment Manager aligned with shareholder interest
RM purchased 25,000 Ordinary Shares in the Company during the
Period. This takes the direct investment in the Company to
1,262,325 and including shares owned across the management team to
in excess of 1,500,000. The Investment Manager continues to believe
this is the best way of demonstrating its alignment with the
interests of other Shareholders.
Market environment
The stock market rally that has occurred since the depths of the
pandemic sell-off in March 2020- has been surprising in its extent
given the pandemic's well documented damage to global markets. The
UK Government support mechanisms, whilst welcome, could be creating
future issues as money has been pumped into every aspect of the
economy. One can also see pressures now on labour and product
prices; the question is how transitory will this be? Currently the
market expectations are for a brief spike in prices before the
initial demand surges abate, however given the low yields within
the government bond market there is significant risks that the
market is underestimating these inflationary pressures. The yield
on the 10-year UK government bond rose during the period from circa
30bps to 85bps. Whilst this is a material move given the initial
starting point as the yield has more than doubled the current 85bp
yield level is still extremely low by historic standards. There are
therefore clear risks to government bonds, investment grade and
high yield prices should these government benchmark yields move
materially higher. In such an environment the Investment Manager
believes the short duration and high yielding nature of the Company
portfolio will be the right part of the fixed income market to be
invested within.
Portfolio Update
As at the Period end, the Ordinary Share portfolio capital was
fully deployed. The average yield on investments of 9.00% was
slightly lower by 37bp than at year end. The portfolio remains well
diversified with 34 investments across 13 sectors. The CBILS UK
Government partial guarantee also offers a material credit
enhancement for the portfolio. Due to 15% of the investments having
their coupons linked to Libor and the maturity on fixed rate
investments generally limited, duration is low and as outlined
above there is manageable exposure to any sharp move higher in
global interest rate expectations.
Overall, the portfolio has performed well with income generation
of GBP5.3 million (up from GBP4.8 million in H2 2020) and this was
split between cash pay and Payment in Kind ("PIK") 79%/21% (in-line
with H2 2020). There were 7 new investments and 9 repayments which
again demonstrates the successful execution of the business
strategy as the Company makes loans, receives interest from
borrowers and continues to get repaid. From inception to date
GBP290 million has been invested across 73 transactions.
As at 31 December 2020 there were four loans adversely impacted
by the pandemic which required enhanced monitoring. We are pleased
to report an overall improvement over the Period, with two
investments now removed from enhanced monitoring, and the
Investment Manager expects this trend to continue. The key
developments during the Period were:
1. Energie Fitness. The valuation was lowered over the Period
from 85% to 82.5% to reflect that the UK had entered another
shutdown and that the outlook for the business was unclear. The
value of the 28% equity ownership of the business remains valued at
zero. Operationally, it is pleasing to report that the Period has
ended very strongly for the business. As the recent lockdowns have
eased the gym membership has rebounded to over 100,000 members and
momentum remains strong. There have been new franchise sales, the
launch of a digital platform (over 76,000 classes were delivered
over the lockdown periods from a standing start) and international
master franchise sales. It seems likely that, subject to the
agreement from the valuation agent, this asset will be re-valued
higher to reflect this operational improvement and the high yield
compared to other comparable fixed-income instruments. It is also
likely that there will be value ascribed to the equity ownership.
This loan will remain under enhanced monitoring.
2. Hotel development, Glasgow. It was announced during the
Period that the operator of the hotel will be Virgin Hotels.
Construction remains on track for the hotel to be finished during
Q4 2021. This loan will remain under enhanced monitoring.
3. Purpose built student accommodation "PBSA", Coventry. The
administration process was concluded during the Period and the
asset is now fully owned by the Company. An Operations and
Maintenance ("O&M") Contract was signed in with a reputable
student accommodation provider (the "Operator") to manage the
lettings process. The asset is currently valued at GBP5.1million on
a "day 1 basis" i.e. open but with no trading history. The
Investment Manager expects NAV growth from this asset in time, as
occupancy becomes established and stabilised with a target
valuation in excess of GBP6.5 million. The Investment Manager is
encouraged by the valuations attached to both private and public
transactions within the UK student accommodation sector. Within the
short space of time since appointment, the Operator reports
pre-lettings for 2021/22 is currently at 20%, with the expectation
of increased pre-lets during the summer period. Given marketing
only started recently this level of lettings is encouraging and the
asset is on target to achieve good occupancy for the 2021/22
academic year. As the enforcement process has been finalised this
asset has now been removed from enhanced monitoring.
4. Automotive Parts. The business is well managed with a
high-quality sponsor. Trading performance was above forecast for H1
2021 and the asset valuation was increased during the Period by the
Valuation Agent from 85% of nominal value to 95% of nominal value.
The borrower notified the lending group of its intention to revert
to paying the original loan payment terms of 50% cash / 50% PIK
from Q3. This will significantly reduce the overall percentage of
the Company's portfolio which is paid in PIK as Beinbauer has been
the largest contributor of PIK during 2020 and H1 2021. Given the
movement back to cash pay and the current yield versus comparable
fixed income securities the Investment Manager feels it is likely
that this asset will be returned to a valuation of 100% of nominal
value over H2 2021. This asset has now been removed from enhanced
monitoring.
Outlook
The outlook remains very promising as the portfolio's
performance has been robust during 2020 and H1 2021, and the
economic environment for the portfolio is improving. The running
yield on the vehicle is 7.22% (dividend target / mid share price)
which equates to a spread of 400bp versus the iShares EUR High
Yield Corp Bond UCITS ETF. The Investment Manager believes this
offers investors an excellent opportunity to invest in a seasoned
portfolio with over 50 months' track record that has distributed
25.85 pence to investors since IPO.
There is a strong pipeline of opportunities within the new focus
sectors, cash remains the constraining factor as the Company has
largely fully committed its capital for the medium term. The
Investment Manager is looking forward to the share price returning
to a premium to NAV so that the Company can grow allowing a
reduction in the Total Expense Ratio ("TER") and increasing the
daily traded liquidity of the stock combined with a larger and more
diverse portfolio.
RM Capital Markets Limited
9 August 2021
PORTFOLIO
Largest 10 loans by drawn amounts across the entire portfolio as
at 30 June 2021
Business activity Instrument type Valuation+ Percentage
of
(Private/Public/Bond/Equity) GBP'000 gross assets
(%)
-------------------------------- ------------------------------ ----------- -------------
Asset Backed Lending Private Loans 10,194 8.2
Hotel Private Loans 8,292 6.6
Automotive Parts Manufacturer Private Loans 7,816 6.3
Hotel Private Loans 6,328 5.1
Health and Well-being Private Loans 6,271 5.0
Student accommodation Private Loans 5,782 4.6
Student accommodation Equity** 5,100 4.1
Student accommodation Private Loans 5,000 4.0
Hotel Private Loans 5,000 4.0
Care home Private Loans 5,000 4.0
-------------------------------- ------------------------------ ----------- -------------
Ten largest holdings 64,783 51.9
Other private loan investments 51,230 41.1
Bond investments 7,334 5.9
---------------------------------------------------------------- ----------- -------------
Total holdings 123,347 98.9
Other net current assets 1,422 1.1
Gross assets* 124,769 100.0
---------------------------------------------------------------- ----------- -------------
* The gross assets comprise the net asset values of the Company
and the Bank loan, the calculation can be found in the half yearly
report.
+ Valuation conducted by external Valuation Agent.
** Refer to point 3 of the portfolio update in the Investment
Manager's statement.
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management
report in accordance with the Financial Conduct Authority ("FCA")
Disclosure Guidance and Transparency Rules ("DTR"). The Chair's
Statement and the Investment Manager's report in this half-yearly
report provide details of the important events which have occurred
during the Period and their impact on the financial statements. The
following statements on related party transactions, going concern
and the Directors' Responsibility Statement, together, constitute
the Interim Management Report for the Company for the six months
ended 30 June 2021. The outlook for the Company for the remaining
six months of the year ending 31 December 2021 is discussed in the
Chair's Statement and the Investment Manager's Report.
Principal and emerging risks and uncertainties
A detailed explanation of the principal and emerging risks and
uncertainties to the Company are detailed in the Company's most
recent Annual Report for the year ended 31 December 2020, which can
be found on the Company's website at https://rm-funds.co.uk/
rm-infrastructure-income/
Since the publication of the 2020 Annual Report on 26 March
2021, the COVID-19 pandemic continues to be a serious threat to
most parts of the global economy and the Board continues to monitor
the situation closely and is in regular contact with the Investment
Manager and the Company's other service providers in order to
assess and mitigate the impact on the Company's investment
objectives, portfolio and shareholders. Otherwise, in the view of
the Board, these principal and emerging risks and uncertainties are
substantially unchanged from the year end and are as much
applicable to the remaining six months of the financial year, as
they are to the six months under review.
The Board has a dynamic risk management register in place to
help identify principal and emerging risks in the business and
oversee the effectiveness of internal controls and processes. The
principal and emerging risks and uncertainties facing the Company
are as follows:
-- Market risks;
-- Risks associated with meeting the Company's investment objective or target dividend yield;
-- Financial risks, corporate governance and internal controls risks;
-- Regulatory risks;
-- The ongoing impact of the global pandemic; and
-- The increasing geopolitical tensions in the region.
Related party transactions
The Company's Investment Manager, RM Capital Markets Limited is
considered a related party under the Listing Rules. Details of the
amounts paid to the Company's Investment Manager and the Directors
during the Period are detailed in the Notes to the Financial
Statements.
Going concern
The Directors have adopted the going concern basis in preparing
the financial statements. The following is a summary of the
Directors' assessment of the going concern status of the
Company.
The Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least twelve months from the date of this document. In reaching
this conclusion, the Directors have considered the Company's
portfolio of investments of GBP123.3 million (30 June 2020:
GBP119.3 million; 31 December 2020: GBP122.7 million) as well as
its income and expense flows and the cash position of GBP4.2
million (30 June 2020: GBP2.3 million; 31 December 2020: GBP2.2
million). The Company's net assets at 30 June 2021 were GBP112.3
million (30 June 2020: GBP110.5 million; 31 December 2020: GBP110.4
million). The total expenses (excluding finance costs and taxation)
for the period ended 30 June 2021 were GBP1.1 million (30 June
2020: GBP1.2 million; 31 December 2020: GBP2.4 million). At the
date of approval of this document, based on the aggregate of
investments and cash held, the Company has substantial operating
expenses cover.
In light of the COVID-19 pandemic the Directors have fully
considered each of the Company's loans. Income obligations have
been met by borrowers and there is a diverse portfolio of Loan
investments; Directors see an increase in the risk to the income
from the Company loans within the portfolio as the outlook is
uncertain. However, these loans have a number of specific lender
protections (such as loan to value covenants and cashflow or
earnings covenants) which are being monitored. A prolonged and deep
market decline could lead to falling values to the underlying
business or interruptions to cashflow, however the Company
currently has more than sufficient liquidity available to meet any
future obligations.
Given the level of market volatility experienced due to the
impact of the COVID-19 pandemic, the Investment Manager has
performed stress tests on the Company's income and expenses and the
Directors remain comfortable with the liquidity of the Company. The
market and operational risks associated with the COVID-19 pandemic,
and the ongoing economic impact of measures introduced to combat
its spread, were discussed and are continually monitored by the
Board.
The Investment Manager, Administrator and other key service
providers are providing regular updates on operational resilience.
The Board is satisfied that the key service providers have the
ability to continue to operate efficiently in a remote or virtual
working environment, as had been demonstrated since March 2020.
Statement of Directors' Responsibility for the Half-Yearly
Report
The Directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within
the Half-yearly report has been prepared in accordance with IAS 34
Interim Financial Reporting.
-- The Interim Management Report includes a fair review of the
information required by 4.2.7R and 4.2.8R of the FCA's Disclosure
Guidance and Transparency Rules.
Norman Crighton
Chair of the Board of Directors
9 August 2021
Condensed unaudited Statement of Comprehensive Income
For the six months ended 30 June 2021
Six months ended Six months ended Year ended 31 December
30 June 2021 30 June 2020 2020*
Revenue Capital Total Revenue Capital Total Revenue Capital Total
NOTES GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains/(losses)
on investments - 2,310 2,310 - (8,310) (8,310) (565) (5,210) (5,775)
Income 4 5,311 - 5,311 5,610 - 5,610 10,942 - 10,942
Investment
management
fee 5 (517) - (517) (542) - (542) (1,088) - (1,088)
Other expenses 5 (523) (36) (559) (580) (70) (650) (1,192) (145) (1,337)
----------------- ------ ---------- -------- -------- -------- -------- -------- -------- -------- --------
Return before
finance costs
and taxation 4,271 2,274 6,545 4,488 (8,380) (3,892) 8,097 (5,355) 2,742
Finance costs (373) - (373) (320) - (320) (635) - (635)
----------------- ------ ---------- -------- -------- -------- -------- -------- -------- -------- --------
Return on ordinary
activities before
taxation 3,898 2,274 6,172 4,168 (8,380) (4,212) 7,462 (5,355) 2,107
Taxation 6 (4) 4 - (4) 4 - (246) - (246)
----------------- ------ ---------- -------- -------- -------- -------- -------- -------- -------- --------
Return on
ordinary
activities
after taxation 3,894 2,278 6,172 4,164 (8,376) (4,212) 7,216 (5,355) 1,861
----------------- ------ ---------- -------- -------- -------- -------- -------- -------- -------- --------
Return per
ordinary
share (pence) 8 3.30p 1.93p 5.23p 3.42p (6.87p) (3.45p) 5.96p (4.43p) 1.53p
----------------- ------ ---------- -------- -------- -------- -------- -------- -------- -------- --------
* Audited
The total column of this statement is the profit and loss account of the
Company.
All the revenue and capital items in the above statement derive from continuing
operations.
'Return on ordinary activities after taxation' is also the 'Total comprehensive
income for the Period'.
Condensed unaudited Statement of Financial Position
As at 30 June As at 30 June As at 31 December
2021 2020 2020*
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ -------------- -------------- ------------------
Fixed assets
Investments at fair value through
profit or loss 3 123,347 119,296 122,705
Investments in subsidiary - 50 50
Current assets
Cash and cash equivalents 4,176 2,275 2,218
Receivables 3,405 12,962 10,498
--------------------------------------- ------ -------------- -------------- ------------------
7,581 15,237 12,716
Payables: amounts falling due
within one year
Payables (6,159) (9,704) (2,645)
Intercompany loan payable - (11,738) (11,942)
Bank loan - Credit facility (12,421) (2,605) (10,500)
(18,580) (24,047) (25,087)
--------------------------------------- ------ -------------- -------------- ------------------
Net current liabilities (10,999) (8,810) (12,371)
--------------------------------------- ------ -------------- -------------- ------------------
Total assets less current liabilities 112,348 110,536 110,384
--------------------------------------- ------ -------------- -------------- ------------------
Net assets 112,348 110,536 110,384
--------------------------------------- ------ -------------- -------------- ------------------
Capital and reserves: equity
Share capital 7 1,179 1,213 1,184
Share premium 70,167 70,148 70,168
Special reserve 44,910 47,584 45,277
Capital reserve (7,134) (12,433) (9,412)
Revenue reserve 3,226 4,024 3,167
Total shareholders' funds 112,348 110,536 110,384
--------------------------------------- ------ -------------- -------------- ------------------
NAV per share - Ordinary Shares
(pence) 9 95.25p 91.16p 93.26p
--------------------------------------- ------ -------------- -------------- ------------------
* Audited
Approved by the Board of Directors and authorised for issue on 9
August 2021.
RM Infrastructure Income plc incorporated in England and Wales
with registered number 10449530.
Condensed unaudited Statement of Changes in Equity
For the six months ended 30
June 2021
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
Balance as at beginning
of the period 1,184 70,168 45,277 (9,412) 3,167 110,384
Return on ordinary activities - - - 2,278 3,894 6,172
Redemption of shares 7 (5) 5 (367) - - (367)
Share buyback costs - (6) - - - (6)
Dividend paid 10 - - - - (3,835) (3,835)
Balance as at 30 June
2021 1,179 70,167 44,910 (7,134) 3,226 112,348
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
For the six months ended 30 June 2020
Share
Share premium Special Capital Revenue
capital account reserve reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
Balance as at beginning
of the period 1,222 70,146 48,304 (4,057) 3,913 119,528
Return on ordinary activities - - - (8,376) 4,164 (4,212)
Buy back of shares 7 (9) 9 (720) - - (720)
Shares buy back costs - (7) - - - (7)
Dividend paid 10 - - - - (4,053) (4,053)
Balance as at 30 June
2020 1,213 70,148 47,584 (12,433) 4,024 110,536
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
For the year ended 31 December 2020*
Share
Share premium Special Capital Revenue
capital account reserve reserves reserves Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
Balance as at beginning of
the year 1,222 70,146 48,304 (4,057) 3,913 119,528
Return on ordinary activities - - - (5,355) 7,216 1,861
Buy back of shares 7 (38) 38 (3,027) - - (3,027)
Shares buy back costs - (16) - - - (16)
Dividend paid 10 - - - - (7,962) (7,962)
Balance as at 31 December
2020 1,184 70,168 45,277 (9,412) 3,167 110,384
------------------------------- ------ --------- --------- --------- ---------- ---------- -----------
* Audited
Distributable reserves comprise: the revenue reserve; capital reserves
attributable to realised profits; and the special reserve.
Share capital represents the nominal value of shares that have been issued.
The share premium includes any premiums received on the issue of share
capital. Any transaction costs associated with the issuing of shares
are deducted from share premium.
Condensed unaudited Statement of Cash Flows
For the six months ended
30 June 2021
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2021 2020 2020*
GBP'000 GBP'000 GBP'000
------------------------------------------ --- --------------- --------------- -----------------
Operating activities
Return on ordinary activities
before finance costs and taxation** 6,545 (3,892) 2,742
Adjustment for (gains)/losses
on investments (2,310) 7,989 5,357
Increase in receivables (237) (7,827) (958)
(Decrease)/increase in payables (320) 7,786 481
PIK adjustments to the operating
cash flow (1,306) - (2,081)
Net cash flow from operating
activities 2,372 4,056 5,541
------------------------------------------ --- --------------- --------------- -----------------
Investing activities
Private loan repayments/ bonds
sales proceeds 37,816 14,792 33,479
Private loans issued/ bonds
purchases (30,583) (22,641) (44,435)
Purchase of investments (5,100) - -
Net cash flow from/ (used
in) investing activities 2,133 (7,849) (10,956)
------------------------------------------ --- --------------- --------------- -----------------
Financing activities
Finance costs (260) (124) (234)
Zero Dividend Preference Shares
('ZDP') loan principal 10,870 - -
ZDP loan interest payable 1,186 - -
ZDP loan principal and accumulated
interest paid (12,056) - -
Ordinary Share bought back 7 (367) (720) (3,027)
Ordinary Share buyback costs (6) (7) (16)
Oaknorth loan facility drawdown 18,521 7,300 17,800
Oaknorth loan facility repaid (16,600) (4,700) (7,300)
Equity dividends paid 10 (3,835) (4,053) (7,962)
Net cash flow used in financing
activities (2,547) (2,304) (739)
------------------------------------------ --- --------------- --------------- -----------------
Increase/(decrease) in cash 1,958 (6,097) (6,154)
Opening balance at beginning
of the period/year 2,218 8,372 8,372
------------------------------------------ --- --------------- --------------- -----------------
Balance as at the period/year
end 4,176 2,275 2,218
------------------------------------------ --- --------------- --------------- -----------------
*Audited
** Cash inflow from interest on investment holdings was GBP3,352,000
(30 June 2020: GBP4,960,000; 31 December 2020: GBP8,960,000).
Notes to the financial statements
1. GENERAL INFORMATION
RM Infrastructure Income plc (formerly RM Secured Direct Lending plc)
(the "Company") was incorporated in England and Wales on 27 October 2016
with registered number 10449530, as a closed-ended investment company.
The Company commenced its operations on 15 December 2016. The Company
intends to carry on business as an investment trust within the meaning
of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
On 6 April 2021, the Company's subsidiary RM ZDP Plc was placed into voluntary
liquidation, therefore the Company did not prepare the consolidated financial
statements for the period.
The Company's investment objective is to generate attractive and regular
dividends through investment in secured debt instruments of UK SMEs and
mid-market corporates including any loan, promissory notes, lease, bond
or preference share sourced or originated by the Investment Manager with
a degree of inflation protection through index-linked returns where appropriate.
The registered office is 1st Floor, Senator House, 85 Queen Victoria Street,
London, EC4V 4AB.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Statement of compliance
The interim unaudited financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting and the Disclosure Guidance and
Transparency Rules ('DTRs') of the UK's Financial Conduct Authority. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the financial statements
of the Company as at and for the year ended 31 December 2020. The financial
statements of the Company as at and for the year ended 31 December 2020
were prepared in accordance with International Financial Reporting Standards
('IFRS') as issued by the International Accounting Standards Board ('IASB').
The financial information for the year ended 31 December 2020 in the interim
unaudited financial statements has been extracted from the audited Annual
Report and Accounts.
When presentational guidance set out in the Statement of Recommended Practice
('SORP') for Investment Companies issued by the Association of Investment
Companies ('the AIC') in April 2021 is consistent with the requirements
of 'IFRS', the Directors have sought to prepare the financial statements
on a basis compliant with the recommendations of the SORP.
Going concern
The Directors have adopted the going concern basis in preparing the financial
statements. Details of the Directors
assessment of the going concern status of the Company, which considered
the adequacy of the Company's resources and the impacts of the COVID-19
pandemic.
Accounting policies
The accounting policies used by the Company in preparing these interim
unaudited financial statements are the same as those applied by the Company
in its financial statements as at and for the year ended 31 December 2020.
3. INVESTMENT AT FAIR VALUE THROUGH PROFIT
OR LOSS
Six months Year ended
Six months ended 30 ended 30 June 31 December
June 2021 2020 2020
GBP'000 GBP'000 GBP'000
-------------------------- -------------------- --------------- -------------
Financial assets held:
Equity investments 5,100 - -
Bond investments 2,695 6,202 2,695
Private loan investments 115,552 113,094 120,010
123,347 119,296 122,705
-------------------------- -------------------- --------------- -------------
4. INCOME
Six months ended Six months ended Year ended 31
30 June 2021 30 June 2020 December 2020
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- ---------------
Income from investments
Bond and loan interest 3,814 5,417 8,817
Bond and loan PIK interest 1,307 - 1,879
Arrangement fees 31 64 102
Delayed Compensation fees
received - 62 46
Prepayment fee - - 58
Other income 159 67 40
----------------- ----------------- ---------------
Total 5,311 5,610 10,942
---------------------------- ----------------- ----------------- ---------------
5. INVESTMENT MANAGEMENT FEE AND OTHER EXPENSES
Six months ended Six months ended Year ended 31
30 June 2021 30 June 2020 December 2020
GBP'000 GBP'000 GBP'000
------------------------ ----------------- ----------------- ---------------
Expenses charged to
revenue:
Investment management
fees 517 542 1,088
Other administration
charges 523 580 1,192
Total revenue expenses 1,040 1,122 2,280
------------------------ ----------------- ----------------- ---------------
Expenses charged to capital:
Capital transaction
costs 36 70 145
------------------------ ----------------- ----------------- ---------------
Total capital expenses 36 70 145
------------------------ ----------------- ----------------- ---------------
The Company's Investment Manager is RM Capital Markets Limited. Under the
amended Investment Management Agreement, effective 1 April 2020, the Investment
Manager is entitled to receive a management fee payable monthly in arrears
or as soon as practicable after the end of each calendar month an amount
one-twelfth of:
(a) 0.875 per cent. of the prevailing NAV in the event that the prevailing
NAV is up to or equal to GBP250 million; or
(b) 0.800 per cent. of the prevailing NAV in the event that the prevailing
NAV is above GBP250 million but less than GBP500 million; or
(c) 0.750 per cent. of the prevailing NAV in the event that the prevailing
NAV is above GBP500 million.
The management fee shall be payable in sterling on a pro-rata basis in respect
of any period which is less than a complete calendar month.
There is no performance fee payable to the Investment Manager.
6. TAXATION
Six months ended Six months ended Year ended 31 December
30 June 2021 30 June 2020 2020
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Analysis of tax charge
/ (credit) the period:
Corporation tax 4 (4) - 4 (4) - 246 - 246
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total current
tax charge/(credit) 4 (4) - 4 (4) - 246 - 246
---------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
7. SHARE CAPITAL
As at 31 December
As at 30 June 2021 As at 30 June 2020 2020
---------------------- ------------------------ ----------------------
No. of No. of
Shares GBP'000 No. of Shares GBP'000 Shares GBP'000
------------------ ------------ -------- -------------- -------- ------------ --------
Allotted, issued
& fully paid:
Ordinary shares
of 1p 117,944,782 1,179 121,259,581 1,213 118,364,282 1,184
------------------ ------------ -------- -------------- -------- ------------ --------
Share movement
The table below sets out the share movement for the six months
ended 30 June 2021.
--------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 30 June
balance issued back 2021
------------------------ ----------------- ---------- --------------- -------------
Ordinary Shares 118,364,282 - (419,500) 117,944,782
-------------------------- ----------------- ---------- --------------- -------------
At the period end 4,279,799 of the above Ordinary Shares were held in
Treasury.
Ordinary Share buy backs
During the period, the Company bought back 419,500 Ordinary Shares for
an aggregate cost of GBP367,000.
The table below sets out the share movement for the six months
ended 30 June 2020.
--------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 30 June
balance issued back 2020
------------------------ ----------------- ---------- --------------- -------------
Ordinary Shares 122,224,581 - (965,000) 121,259,581
-------------------------- ----------------- ---------- --------------- -------------
At the period end 965,000 of the above Ordinary Shares were held in Treasury.
Ordinary Share buy backs
During the year, the Company bought back 965,000 Ordinary Shares for
an aggregate cost of GBP720,000.
The table below sets out the share movement for the year ended
31 December 2020.
--------------------------------------------------------------------------
Shares
in issue
Shares at
Opening Shares bought 31 December
balance issued back 2020
------------------------ ----------------- ---------- --------------- -------------
Ordinary Shares 122,224,581 - (3,860,299) 118,364,282
-------------------------- ----------------- ---------- --------------- -------------
At the year end 3,860,299 of the above Ordinary Shares were held
in Treasury.
Ordinary Share buy backs
During the year, the Company bought back 3,860,299 Ordinary
Shares for an aggregate cost of GBP3,027,000.
8. RETURN PER ORDINARY
SHARE
Total return per Ordinary Share is based on the gain on ordinary activities
after taxation of GBP6,172,000 (30 June 2020: loss of GBP4,212,000;
31 December 2020: gain of GBP1,861,000).
Based on the weighted average of number of 118,014,265 (30 June 2020:
121,913,263; 31 December 2020: 120,985,417) Ordinary Shares in issue
for the six months ended 30 June 2021, the returns per share were as
follows:
Six months ended 30 June Six months ended 30 June
2021 2020
Revenue Capital Total Revenue Capital Total
---------------------------- --------- --------- ------- --------- -------- --------
Return per Ordinary
Share 3.30p 1.93p 5.23p 3.42p (6.87p) (3.45p)
---------------------------- --------- --------- ------- --------- -------- --------
Year ended 31 December
2020
Revenue Capital Total
---------------------------- --------- --------- ------- --------- -------- --------
Return per Ordinary
Share 5.96p (4.43p) 1.53p
---------------------------- --------- --------- ------- --------- -------- --------
9. NET ASSET VALUE PER SHARE
The net asset value per share is based on Company's total shareholders'
funds of GBP112,348,000 (30 June 2020: GBP110,536,000; 31 December 2020:
GBP110,384,000), and on 117,944,782 (30 June 2020: 121,259,581; 31 December
2020: 118,364,282) Ordinary Shares in issue at the period end.
10. DIVID
On the 24 February 2021, the Directors approved the payment of a fourth
interim dividend for year ended 31 December 2020 to ordinary shareholders
at the rate of 1.625 pence per Ordinary Share. The dividend had a record
date of 5 March 2021 and was paid on 26 March 2021. The dividend was funded
from the Company's revenue reserve.
On 25 May 2021, the Directors approved the payment of an interim dividend,
in respect of the period from 1 January 2021 to 31 March 2021, at the rate
of 1.625 pence per Ordinary Share. The dividend had a record date of 4
June 2021 and was paid to Shareholders on 25 June 2021. The dividend was
funded from the Company's revenue reserve.
On 5 August 2021, the Directors approved the payment of an interim dividend
in respect of the period from 1 April 2021 to 30 June 2021, at the rate
of 1.625 pence per Ordinary Share. The dividend will have a record date
of 3 September 2021 and will be payable on 24 September 2021. The dividend
will be funded from the Company's Revenue reserve.
11. RELATED PARTY TRANSACTION
Fees payable to the Investment Manager are shown in the Statement of
Comprehensive Income. As at 30 June 2021 the fee outstanding to the Investment
Manager was GBP82,000 (30 June 2020: GBP354,000; 31 December 2020: GBP93,000).
Fees are payable at an annual rate of GBP36,000 to the Chair, GBP33,000
to the Chair of the Audit Committee and GBP30,000 to the other Director.
The Directors had the following shareholdings in the Company, all of
which are beneficially owned.
As at 30 June As at 30 June As at 31 December
2021 2020 2020
Ordinary Shares Ordinary Shares Ordinary Shares
Norman Crighton 29,982 29,982* 29,982
Guy Heald 20,000 20,000 20,000
Marlene Wood 20,000 20,000 20,000
*restated from previous
position
12. CLASSIFICATION OF FINANCIAL INSTRUMENTS
IFRS 13 requires the Company to classify its investments in a fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. IFRS 13 establishes a fair value hierarchy that prioritises
the inputs to valuation techniques used to measure fair value. The three
levels of fair value hierarchy under IFRS 13 are as follows:
Level 1
Inputs are quoted prices in active markets for identical assets or liabilities
that the entity can access at the measurement date.
Level 2
Inputs other than quoted market prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3
Inputs are unobservable for the asset or liability.
The classification of the Company's investments held at fair value through
profit or loss is detailed in the table below:
30 June 2021 30 June 2020
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- ---------- -------- ---------- -------- ----------- ---------- ---------
Financial assets:
Financial assets -
Private
loans and bonds - 13,528 - 13,528 - 33,893 - 33,893
Financial assets -
Private
loans - - 109,819 109,819 - - 85,403 85,403
Forward contract receivable 8,427 - 8,427 5,502 - 5,502
Financial
liabilities:
Forward contract
payable - (8,427) - (8,427) - (5,502) - (5,502)
Total financial
liabilities - 13,528 109,819 123,347 - 33,893 85,403 119,296
--------------------- ------------- ---------- -------- ---------- -------- ----------- ---------- ---------
31 December 2020
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- ---------- -------- ---------- -------- ----------- ---------- ---------
Financial assets:
Financial assets - Private
loans and bonds - 25,013 - 25,013
Financial assets - Private
loans - - 97,692 97,692
Forward contract receivable - 12,795 - 12,795
Financial
liabilities:
Forward contract payable - (12,795) - (12,795)
Total financial liabilities - 25,013 97,692 122,705
------------------------------------ ---------- -------- ---------- -------- ----------- ---------- ---------
Investments that trade in markets that are not considered to be active
but are valued based on quoted market prices, dealer quotations or alternative
pricing sources supported by observable inputs are classified within
Level 2.
Level 3 holdings are valued using a discounted cash flow analysis and
benchmarked discount/interest rates appropriate to the nature of the
underlying loan and the date of valuation.
Interest rates are a significant input into the Level 3 valuation methodology.
There have been no movements between levels during the reporting period.
The Company considers factors that may necessitate the transfers between
levels using the definition of the levels 1, 2 and 3 above.
13. POST BALANCE SHEET EVENTS
There are no other post period end events other than those disclosed
in this report.
14. Status of this Report
These financial statements are not the Company's statutory
accounts for the purposes of section 434 of the Companies Act 2006.
They are unaudited. The Half-yearly financial report will be made
available to the public at the registered office of the Company.
The report will be available in electronic format on the Investment
Manager's website( https://rm-funds.co.uk ).
The Half-yearly report was approved by the Board on 9 August
2021.
ALTERNATIVE PERFORMANCE MEASURES ('APMS')
Gross asset
The Company's gross assets comprise the net asset values of the Company's
Ordinary Shares and the bank loan-credit facility, with the breakdown
as follows:
Per Share
As at 30 June 2021 GBP'000 (Pence)
------------------------------------------ ------- ------------ ---------------
Ordinary Shares - NAV a 112,348 95.25
Bank Loan-Credit facility b 12,421 -
Gross asset value a+b 124,769 n/a
------------------------------------------ -------- ------------ ---------------
Discount
The amount, expressed as a percentage, by which the share price is less
than the Net Asset Value per share.
Per Share
As at 30 June 2021 (Pence)
--------------------------------------------- ------------- ----------------
NAV per Ordinary Share (p) a 95.25
Share price (p) b 90.00
Discount (b/a)-1 -5.5%
---------------------------------------------- -------------- ----------------
Total return
A measure of performance that includes both income and capital returns.
This takes into account capital gains and reinvestment of dividends paid
out by the Company into its Ordinary Shares on the ex-dividend date.
As at 30 June 2021 NAV Share Price
---------------------------------------- ------------ --------- ---------------
Opening at 1 January 2021 (p) a 93.25 87.00
Closing at 30 June 2021 (p) b 95.25 90.00
Dividend adjustment factor c 1.0279 1.0372
Adjusted closing (d = b x c) d 97.91 93.35
Total return (d/a)-1 5.0% 7.3%
---------------------------------------- ------------- --------- ---------------
Enquiries:
Brian Smith / Ciara McKillop 020 4513 9260
PraxisIFM Fund Services (UK) Limited
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END
IR SSFEFUEFSESA
(END) Dow Jones Newswires
August 10, 2021 02:00 ET (06:00 GMT)
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