TIDMVSL
RNS Number : 4554N
VPC Specialty Lending Invest. PLC
30 September 2021
30 September 2021
VPC SPECIALTY LING INVESTMENTS PLC
(the "Company" or "Parent Company" with its subsidiaries
(together) the "Group" )
Half-Year Report and Unaudited Financial Statements
For the Six-Month Period Ended 30 June 2021
The Board of Directors (the "Board") of VPC Specialty Lending
Investments PLC (ticker: VSL) present the Company's Half-Year
Report and Unaudited Financial Statements for the period ended 30
June 2021.
Enquiries
For further information, please contact:
Victory Park Capital via Jefferies or Winterflood
Brendan Carroll (Senior Partner (below) info@vpcspecialtylending.com
and Co-Founder)
Gordon Watson (Partner)
Jefferies International Limited Tel: +44 20 7029 8000
Stuart Klein
Neil Winward
Gaudi le Roux
Winterflood Securities Limited Tel: +44 20 3100 0000
Neil Morgan
Chris Mills
Link Company Matters Limited (Company Tel: +44 20 7954 9567
Secretary) Email: VPC@linkgroup.co.uk
A copy of the Company's Half Year Report will shortly be
available to view and download from the Company's website,
https://vpcspecialtylending.com . Neither the contents of the
Company's website nor the contents of any website accessible from
hyperlinks on the Company's website (or any other website) is
incorporated into or forms part of this announcement.
All page numbers below refer to the Half-Year Report on the
Company's website.
Further information on VPC Specialty Lending Investments PLC is
available at https://vpcspecialtylending.com .
LEI: 549300UPEXC5DQB81P34
FINANCIAL HIGHLIGHTS
RETURN SUMMARY AS AT 30 JUNE 2021
Net Asset Value per Ordinary Share
106.19p
(30 June 2020: 89.78p)
(31 December 2020: 95.72p)
NAV (Cum Income) Return
+ 15.12%
(30 June 2020: + 0.48%)
(31 December 2020: + 11.12%)
Total Shareholder Return at 30 June 2021(1)
(based on share price)
+ 11.82%
(30 June 2020: - 10.49%)
(31 December 2020: + 10.87%)
Dividends per Ordinary Share(2)
4.00p
(30 June 2020: 4.00p)
(31 December 2020: 8.00p)
AS AT AS AT AS AT
30 JUNE 2021 30 JUNE 2020 31 DECEMBER
2020
----------------------------------------- ---------------- --------------- ----------------
Total Net Assets attributable to equity GBP295,507,964 GBP260,396,391 GBP270,537,108
shareholders of the Parent Company
(on a consolidated basis)
========================================= ================ =============== ================
Ordinary Share price 84.00p 66.00p 78.70p
========================================= ================ =============== ================
Discount to Net Asset Value 20.90% 26.49% 17.77%
========================================= ================ =============== ================
Net return on ordinary activities after GBP39,946,428 GBP(3,457,994) GBP22,954,679
taxation
========================================= ================ =============== ================
Revenue Return on ordinary activities GBP9,598,498 GBP15,148,516 GBP23,898,852
after taxation
========================================= ================ =============== ================
Ordinary Shares repurchased (in the
period) (4,370,972) (22,266,293) (29,654,941)
========================================= ================ =============== ================
Shares in issue (at the end of the
period) 278,276,392 290,036,012 282,647,364
========================================= ================ =============== ================
(1) Net of issue costs.
(2) Dividends declared and paid which relate to the period.
INTRODUCTION TO THE COMPANY
VPC Specialty Lending Investments PLC (the "Company" or "VSL")
provides asset-backed lending solutions to emerging and established
businesses ("Portfolio Companies") with the goal of building
long-term, sustainable income generation. VSL focuses on providing
capital to vital segments of the economy, which for regulatory and
structural reasons are underserved by the traditional banking
industry. Among others, these segments include small business
lending, working capital products, consumer finance and real
estate. VSL offers shareholders access to a diversified portfolio
of opportunistic credit investments originated by non-bank lenders
with a focus on the rapidly developing technology-enabled lending
sector.
The Company's investing activities are undertaken by Victory
Park Capital Advisors, LLC (the "Investment Manager" or "VPC"). VPC
is an established private capital manager headquartered in the
United States with a global presence. VPC identifies and finances
emerging and established businesses globally and seeks to provide
the Company with attractive yields on its portfolio of credit
investments. VPC offers a differentiated private lending approach
by financing Portfolio Companies through asset-backed delayed draw
term loans, which is referred to as "Balance Sheet Lending,"
designed to limit downside risk while providing shareholders with
strong income returns. Through rigorous due diligence and credit
monitoring by the Investment Manager, the Company generates stable
income with significant downside protection.
This half year report for the period to 30 June 2021 includes
the results of the Company (also referred to as the "Parent
Company") and its consolidated subsidiaries (together the "Group").
The Company (No. 9385218) was admitted to the premium listing
segment of the Official List of the Financial Conduct Authority
("FCA") (the "Official List") and to trading on the London Stock
Exchange's main market for listed securities (the "Main Market") on
17 March 2015, raising GBP200 million by completing a placing and
offer for subscription (the "Issue"). The Company raised a further
GBP183 million via a C Share issue on 2 October 2015. The C Shares
were converted into Ordinary Shares and were admitted to the
Official List and to trading on the Main Market on 4 March
2016.
The Company's investment objectives are to:
v generate an attractive total return for shareholders of
consistent distributable income and capital growth through
asset-backed lending;
v achieve portfolio diversification to emerging and established
businesses across different industries and geographies with the
goal of building long-term, sustainable value; and
v enable shareholders to benefit from equity upside through
equity-linked securities issued in conjunction with asset-backed
lending.
CHAIRMAN'S STATEMENT
I am pleased to present to you the half year results for the
Company for the period to 30th June 2021. I took over as Chairman
following the Annual General Meeting of the Company on 24 June
2021, succeeding Kevin Ingram, and I must begin by recording my
appreciation and the renewed thanks of the whole Board to Kevin for
his leadership of and service to the Company since its launch in
2015. First as Chairman of the Audit Committee and then as
Chairman. I am also happy to report that against the challenging
and continued effect of COVID-19, the Company delivered a total
return of 15.12% and declared quarterly dividends that totalled
4.00 pence per share. While the macro backdrop for non-traditional
credit has continued to be volatile through the first half of 2021,
VPC's risk mitigation procedures, the resilience and performance of
the investment portfolio and the new investments made in 2021 have
driven the strong returns for the period. Recent performance and
returns continue to differentiate the Company from many of its
peers in the investment trust lending sector.
INVESTMENTS
BALANCE SHEET LOAN INVESTMENTS
The Company's balance sheet loan investments continue to
represent the bulk of its portfolio and deliver a stable and
predictable level of income return as all contractual cash payments
have been received through the date of this report. As at 30 June
2021, the balance sheet portfolio comprised 26 portfolio companies
with a weighted average coupon rate (excluding gearing) of 10.82%
and a weighted average remaining life of 32 months. During the
period, seven new balance sheet investments were made by the
Company and three fully exited. Most of these investments are
delayed draw, floating rate senior secured loans that have equity
subordination. The balance sheet investments are backed by
underlying collateral consisting of consumer loans, small business
loans and other types of collateral.
On 1 March 2021, the Company signed a USD$130 million gearing
facility with Massachusetts Mutual Life Insurance Company
("MassMutual"). The MassMutual facility was negotiated at
attractive terms including a three-year revolving period, an
interest rate lower than that of the previous facility, an option
to upsize the facility from $130 million to $200 million and a
six-year maturity. This facility will continue to provide flexible
and cost-effective borrowing for the Company to continue to grow
the balance sheet investment portfolio while maintaining a modest
look-through gearing ratio.
EQUITY INVESTMENTS
The Company's equity investments have delivered strong returns
during the first half of the year. Many of these investments were
acquired in conjunction with making the Company's balance sheet
loan investments. The equity investments are made up of common
stock, preferred stock, warrants and convertible debt. As at 30
June 2021, the Company had exposure to 37 portfolio companies
through the equity investments which comprise approximately 18% of
NAV (14% at 31 December 2020; 11% at 30 June 2020). At the same
date, NAV comprised approximately 11% of cost and 7% unrealised
gains on the equity investments, including the SPAC investments,
and during the first six months of the year, the equity investments
generated a gross capital return of 14.23%.
SPAC Investments
Over the last twelve months, the Company has had the opportunity
to enter the special purpose acquisition company ("SPAC") space as
the Investment Manager has launched four SPACs. VPC has used its
industry expertise and network to identify opportunities within the
sector. As at the date of this report, the Investment Manager has
been able to find attractive financial technology deals for three
of the SPACs and continues to work on identifying a target for the
fourth. The Company has invested just over 1% of NAV in SPACs, and
at 30 June 2021, the SPACs represented approximately 7% of NAV of
which 6% of the total is unrealised gain. The Board is encouraged
by the strong performance of the portfolio, including equities,
which has resulted in outperformance against its UK listed peer
group. Given the overall strength of the equity markets to 30 June
2021, the Board is cautious about the prospects for similar
performance for the remainder of the year.
SHARE PRICE DISCOUNT MANAGEMENT
Through 30 June 2021, the share price discount to NAV ranged
from 6.60% to 18.81%. The discount narrowed during the first half
of the year and was less volatile than the volatility in 2020, it
remains a major area of focus for both the Board and the Investment
Manager. While we consider that having strong and consistent
investment performance is a precondition for reducing the discount
at which the Company's shares trade, we also continue to work with
the Investment Manager on the initiatives described in our Annual
Report. During the year, the Company bought back a total of
4,370,972 shares at an average price of 85.61p, representing 1.55%
of the Company's issued shares as at 31 December 2020 and at an
average discount to NAV of 13.80%.
OUTLOOK
During the period, the Board has been directing our focus not
only on strategy but towards the Company's positioning, improving
the way in which our investment proposition is articulated, to the
way that environmental, social and governance factors are
incorporated into our investment process and the environmental
impact of the Company. The Investment Manager has built the
Company's investment portfolio using its expertise in managing
credit and performance through multiple credit cycles along with
the processes and systems that have been put in place to monitor
risk. The Board and Investment Manager continuously monitor
business continuity plans and operational resilience strategies to
take all reasonable steps to continue meeting the Company's
regulatory obligations and to assess operational risks, the ability
to continue operating and the steps it needs to take to serve and
support the Company's shareholders.
As of the date of this report, we are pleased to note that our
balance sheet lending investments have remained resilient to the
macroeconomic stress resulting from the COVID-19 pandemic and have
continued to perform in line with expectations. At the same time,
our equity holdings have performed strongly, adding materially to
our returns. We believe that the Company's investments are well
positioned to weather continued volatility or deterioration, due to
the pandemic, in the credit environment as the effects of the
immediate fiscal stimulus in the U.S. start to be reduced and the
longer-term impacts of the crisis unfold. More detail about the
performance of the Company's investments can be found in the
Investment Manager's Report.
Finally, your Board and I would like to thank shareholders for
their continued support.
Graeme Proudfoot
Chairman
30 September 2021
INVESTMENT MANAGER'S REPORT
VPC employees had returned to the office on a limited basis,
however with the recent updates and guidance from the Centers for
Disease Control and Prevention ("CDC") in the United States and
increase in transmission of COVID-19 to those that are vaccinated,
the VPC Senior Leadership team felt it was prudent for the safety
of our employees and their families to work from home until is
deemed safe to return. VPC will continue to evaluate the situation,
monitor the requirements and guidelines from the CDC and address
any additional precautions required before returning to the office.
During this time, employees are welcome to continue to work in the
office, utilise resources and meet with visitors at their comfort
level, provided they continue to follow the procedures outlined in
the corporate Pandemic Response Plan.
As it relates to portfolio management, we remain focused on
proactive risk management and controls across the portfolio. Our
senior management team continues to hold multiple calls each week
and the investment teams are in constant contact with our Portfolio
Companies to proactively ensure that they are taking prudent steps
to mitigate risk on a real time basis.
PERFORMANCE REVIEW
Despite the continued challenging societal, economic and market
activity during the first half of the year, we believe the
portfolio is in a strong position due to the protections structured
into the balance sheet investments. Since the onset of the
pandemic, VPC has been proactive and decisive in its portfolio
management. In addition to relying on the structured portfolio
protections in place, VPC's senior management team has been in
constant communication with each Portfolio Company to ensure that
they are taking prudent steps to mitigate risk on a real time
basis.
During the period, the Company generated a total return of
15.12% for shareholders, declared dividends for the period of 4.00p
and the NAV per share as at 30 June 2021 was 106.19p. The Company
generated gross revenue returns of 6.14% as a percentage of NAV in
the first half of 2021 from the Company's balance sheet
investments, continuing the strong performance trend of the past
few years. Equity capital returns of 14.23% were driven by strong
performance of the Company's equity investments, which includes the
SPAC investments. Finance costs were -0.88% and operating expenses
and management fees were -1.09% for the period.
PORTFOLIO UPDATE
As of the date of this report, the existing balance sheet debt
portfolio has continued to perform in line with expectations. While
the world has not yet returned to "normal", collateral across asset
classes has remained healthy and stable and there has not been any
signs of a resurgence in the volatility witnessed in 2020. In the
U.S. there has been a marked rebound in consumer demand for credit,
while credit metrics remain in line with expectations. The
portfolio has continued to see a significant growth in eCommerce
related assets, as that sector has remained a growth sector in
economies around the world.
After the unprecedented uncertainty in early 2020, in the latter
half of the year the Manager began to assess the investing
landscape and re-engage in underwriting new investments, closing
three new balance sheet debt investments in the second half of
2020. These investments have benefited from the lessons learned
through COVID-19, and from the new perspectives on the economic
environment. During the first half of 2021, the Company has
continued to find new investments and has added seven new balance
sheet investments to the portfolio. We believe that the post-COVID
investments present attractive risk adjusted returns and will
continue to provide growth opportunities over the coming years.
SPAC UPDATES
As the Chairman noted, in the last year, we identified a highly
attractive opportunity to use our expertise and relationships as an
investment manager in the financial technology sector to supplement
our core business model and apply it to the SPAC market. We have
launched four SPACs in the last ten months and to date have
announced potential targets for three of the four SPACs. The
Company has invested at a cost of just over 1% of NAV in the four
SPACs. In the latest NAV dated 31 August 2021, the discounted
market value of the SPAC holdings was a total of GBP27,756,999 or
9% of NAV.
Below is a summary of the three proposed deals and a breakdown
of each of the Company's investments in the SPACs at 30 June 2021.
As at 30 June 2021, the investment in VPC Impact Acquisition
Holdings II was held at cost as the proposed deal had not yet been
announced.
SPAC Investment Summary at 30 June 2021
VPC Impact
Acquisition VPC Impact Acquisition VPC Impact Acquisition L&F Acquisition
Holdings Holdings II Holdings III Corp. Total
--------------- ---------------------- ---------------------- --------------- -----------
Investment Status Deal Announced Post-IPO(1) Deal Announced Post-IPO
------------------ --------------- ---------------------- ---------------------- --------------- -----------
Bakkt Holdings,
Target LLC Dave Inc.
------------------ --------------- ---------------------- ---------------------- --------------- -----------
Total Value
as at
30 June 2021 $21,493,681 $1,254,358 $8,764,219 $168,051 $31,680,309
------------------ --------------- ---------------------- ---------------------- --------------- -----------
Total Cost as
at
30 June 2021 $2,708,301 $1,254,358 $1,247,795 $168,051 $5,378,505
------------------ --------------- ---------------------- ---------------------- --------------- -----------
(1) The Company disclosed in August 2021 that VPC Impact
Acquisition Holdings II announced a merger with Kredivo. As at 30
June 2021 the investment in the SPAC was held at cost.
VPC Impact Acquisition Holdings
VPC Impact Acquisition Holdings (NASDAQ: VIHAU, VIH and VIHAW)
("VIH"), announced on September 17, 2021 that the U.S. Securities
and Exchange Commission ("SEC") has declared effective VIH's
Registration Statement on Form S-4 (the "Registration Statement"),
as amended, which was filed in connection with VIH's previously
announced business combination (the "Business Combination") with
Bakkt. This announcement paves the way for the vote for the
business combination and moves this transaction one step closer to
completion.
VPC Impact Acquisition Holdings II
In August 2021, Kredivo, the leading digital consumer credit
platform in Southeast Asia, announced plans to become a publicly
traded company via merger with VPC Impact Acquisition Holdings II
(VIH II). Through VIH II's sponsor entity, the Fund made a $1.3
million investment in the SPAC and currently owns 823,703 Class B
Shares and 666,691 private placement warrants in VIH II and as of
June 30, 2021, the position was held at cost. Please reference the
FinAccel press release from the Company dated 3 August 2021 for
further information.
VPC Impact Acquisition Holdings III
In June 2021, Dave, a leading banking app with 10 million
customers, announced plans to become publicly traded company via
merger with VPC Impact Acquisition Holdings III, Inc. (VIH III).
Through VIH III's sponsor entity, the Fund made a $1.3 million
investment in the SPAC and currently owns 817,142 Class B Shares
and 663,192 private placement warrants in VIH III and as of June
30, 2021, the position was valued at $8.8 million. Please reference
the Dave press release from the Company dated 7 June 2021 for
further information.
PORTFOLIO COMPOSITION
As at 30 June 2021, consumer exposure accounted for 65% of the
invested portfolio, while small business exposure accounted for
35%. Investments in U.S. portfolio companies accounted for 76% of
the invested portfolio, investments in Latin American portfolio
companies accounted for 13% with the remaining exposure in Europe,
the UK and Asia. Investments in the debt portfolio accounted for
70% of NAV with the fair market value of the equity investments
comprising 25% of NAV.
Gross Asset Allocation (1)
======================================== ====
Debt 73%
======================================== ====
Common Stock 9%
======================================== ====
Preferred Stock 8%
======================================== ====
Warrant 3%
======================================== ====
Convertible Debt 4%
======================================== ====
Cash 3%
======================================== ====
Net (Cum Income) Allocation (1)
======================================== ====
Debt 70%
======================================== ====
Common Stock 10%
======================================== ====
Preferred Stock 7%
======================================== ====
Warrant 3%
======================================== ====
Convertible Debt 5%
======================================== ====
Cash 5%
======================================== ====
Investment Exposure, Borrower Type (2)
======================================== ====
Consumer 65%
======================================== ====
SME 35%
======================================== ====
Investment Exposure, Geography (2)
======================================== ====
United States 76%
======================================== ====
United Kingdom 3%
======================================== ====
Europe 6%
======================================== ====
Latin America 13%
======================================== ====
Asia 2%
======================================== ====
(1) Percentages calculated on a look-through basis to the
Company's investee entities and SPVs.
(2) Calculations using gross asset exposure and not reduced for
gearing. Excludes cash.
SUMMARY HIGHLIGHTS FOR THE FIRST HALF OF 2021
v January 2021: VPC Impact Acquisition Holdings (NASDAQ: "VIH")
announced on 11 January 2021 that it had entered into a definitive
agreement to combine with Bakkt Holdings, LLC.
v February 2021: The Company declared a dividend of 2.00p for
the three-month period to 31 December 2020.
v March 2021: The Company fully exited its equity investment in
Elevate Credit, Inc. (NYSE: ELVT) and the Company funded equity
investments in VPC Impact Acquisition Holdings II (NASDAQ: VPCB)
and VPC Impact Acquisition Holdings III (NYSE: VPCC) for USD$1.3
million each. Additionally, the Company closed on a USD$130 million
gearing facility with Massachusetts Mutual Life Insurance Company,
which was used to repay the Company's previous gearing facility
with Pacific Western Bank and the first-out participation facility
on Avant, held with Axos Bank.
v April 2021: The Company fully exited its balance sheet
investments in ATA KS Holdings, LLC and reinvested in in three new
balance sheet and equity investments in Razor Group GmbH ("Razor"),
Moonshot Holdings LLC ("Moonshot"), and CHEQ Limited ACN
("Beforepay").
v May 2021: The Company declared its 13th consecutive dividend
of 2.00 pence per share for the three-month period to 31 March
2021.
v May 2021: The Company invested in three new balance sheet
investments in Pattern Brands, Inc. ("Pattern"), Factory 14
S.a.r.l. ("Factory 14") and Holland Law Firm ("Holland").
v June 2021: VPC Impact Acquisition Holdings III, Inc. (NYSE:
VPCC) ("VPCC") entered into a definitive agreement to combine with
Dave. The business combination, which remains subject to VPCC
shareholder and customary regulatory approval approvals, is
expected to close in the third or fourth quarter of 2021.
SUBSEQUENT EVENTS
v July 2021: The Company invested in one new balance sheet
investment, TALA Mobile, S.A.P.I. DE C.V. ("Tala").
v August 2021: The Company declared its 14th consecutive
dividend of 2.00 pence per share for the three-month period to 30
June 2021.
v August 2021: VPC Impact Acquisition Holdings II (NASDAQ: VPCB)
("VPCB"), a special purpose acquisition company sponsored by VPC
Impact Acquisition Holdings Sponsor II, LLC, an affiliate of
Victory Park Capital, announced it has entered into a definitive
agreement to combine with FinAccel Pte. Ltd.
RISKS AND UNCERTAINTIES
Although there are several risks and uncertainties, we believe
that the most significant include:
v Changes in interest rates: While the Company's investment
portfolio primarily consists of floating rate credit facilities
with interest rate floors, changes in interest rates could affect
our investments, the profitability of the portfolio companies and
that of the underlying borrowers, potentially leading to lower
returns or changes in repayments or default rates of the underlying
borrowers. Lower interest rates may also lead to increased
refinancing activity.
v Potential risk of refinancing: The Company retains a right of
first refusal ("ROFR") to match the credit facility terms offered
by any third-party on most of the Company's investments. In an
instance where the market pricing and underlying risk for these
deals are not in line with the Company's investment objectives, we
will not exercise the ROFRs. We have a significant pipeline of
undrawn capacity as well as new deal flow that allows us to quickly
reinvest the liquidity generated by a potential refinancing event
in the near term. The increasingly competitive environment might
affect the ability to quickly reinvest capital if this trend
continues over the long-term.
v Potential changes in credit risk: There is inherent risk in
the Company's underlying investments of a borrower default and a
majority of the underlying exposure is in the U.S. Given the short
duration of the collateral in the portfolio, the underly portfolio
companies continue to generate sufficient cash flow. The potential
for credit risk remains heightened during the COVID-19 pandemic and
we remain vigilant in the risk analysis performed for all portfolio
companies.
v Potential operational risk impact from the COVID-19 pandemic:
The Investment Manager continues to review its business continuity
plans and operational resilience strategies on an ongoing basis and
will take all reasonable steps to continue meeting its regulatory
obligations and to assess operational risks, the ability to
continue operating and the steps it needs to take to serve and
support its clients, including the Board.
OUTLOOK
While credit has continued to perform well, the impacts of
COVID-19, particularly the Delta variant, continue to have
significant impacts on economies around the globe. In the U.S., we
are seeing the reinstatement of various regional COVID-19
restrictions, and the prospect for more to come if circumstances do
not improve. Simultaneously we are seeing inflation numbers that
have not been seen for decades which may or may not prove
persistent. While none of these looming issues has manifested in
collateral deterioration or negative performance, the environment
remains highly uncertain, and we continue to monitor credit very
closely across the portfolio.
We believe the investment portfolio offers favourable returns
relative to other areas of the credit markets while simultaneously
carrying lower levels of overall risk, especially in the current
economic environment. While we often discuss the underlying credit
performance of our balance-sheet investments, it is also important
to emphasise that we have additional layers of protection beyond
our direct asset security. Due to the structured nature of our
balance-sheet investments, including (in most cases) corporate
guarantees and significant first-loss protection, our investments
are not affected by changes in credit performance until a platform
defaults and all corporate resources (separate from our borrowing
base of loan collateral) are exhausted. In addition to monitoring
the credit performance, we monitor the overall corporate
performance of our Portfolio Companies, including attending board
meetings as an observer and having weekly update calls with
management.
We continue to look for and identify other trends that can
create opportunities for investments in the future. We will
continue to deploy capital cautiously and we believe the portfolio
is well positioned to withstand any potential challenges to come
this year and next.
Victory Park Capital Advisors, LLC
Investment Manager
30 September 2021
DIRECTORS' RESPONSIBILITY STATEMENT
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
The Directors acknowledge responsibility for the Half-Year
Financial Report and confirm that to the best of their
knowledge:
(a) the unaudited consolidated financial statements have been
prepared in accordance with UK-adopted IAS 34 'Interim Financial
Reporting' and give a true and fair view of the assets,
liabilities, financial position and profit for the period of the
Group as required by the Disclosure Guidance and Transparency Rules
("DTR") 4.2.4 R;
(b) the Interim Management Report (including the Chairman's
Statement and the Investment Manager's Report) includes a fair
review of the information required by DTR 4.2.7 R (indication of
important events that have occurred during the six-month period to
30 June 2021 and their impact on the set of consolidated financial
statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year);
and
(c) the Half-Year Financial Report includes a fair review of the
information concerning related party transactions as required by
DTR 4.2.8 R.
Signed on behalf of the Board by:
Graeme Proudfoot
Chairman
30 September 2021
INTERIM MANAGEMENT REPORT
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
CAUTIONARY STATEMENT
This Interim Management Report has been prepared solely to
provide additional information to shareholders to assess the
strategies of the Company and its subsidiaries (together "the
Group"). The Interim Management Report should not be relied on by
any other party or for any other purpose.
The Interim Management Report contains certain forward-looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the time of
their approval of the Half-Year Financial Report but such
statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
ACTIVITIES
The activities of the Group are described in the Chairman's
Statement and in the Investment Manager's Report. Refer to the
Chairman's Statement on page 5 and the Investment Manager's Report
on pages 7 through 10 of the Half-Year Financial Report. Further
refer to Note 1 to the consolidated financial statements.
STRATEGY AND INVESTMENT OBJECTIVES
The important events that have occurred during the period under
review and the key factors influencing the consolidated financial
statements are described in the Chairman's Statement and in the
Investment Manager's Report.
Refer to the Chairman's Statement on page 5 and the Investment
Manager's Report on pages 7 through 10 of the Half-Year Financial
Report.
GOING CONCERN
As stated in Note 2 to the consolidated financial statements,
the Directors are satisfied that the Group has sufficient resources
to continue in operation for the foreseeable future, a period not
less than 12 months from the date of this Half-Year Report.
Accordingly, they continue to adopt the going concern basis in
preparing the consolidated financial statements.
PRINCIPAL RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the Group's performance over the
remaining six months of the financial period and could cause actual
results to differ materially from expected and historical results.
Refer to the Investment Manager's Report on pages 7 through 10 of
the Half-Year Financial Report as well as Note 5 to the
consolidated financial statements for the potential risks and
uncertainties. The principal risks and uncertainties are consistent
with those disclosed in the Annual Report for the year ended 31
December 2020 which can be found on the Company's website.
FINANCIAL PERFORMANCE
The financial and operational highlights of the Group can be
found on page 3 of the Half-Year Financial Report.
RELATED PARTY TRANSACTIONS
Related party transactions are disclosed in Note 13 to the
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 2020 31 DECEMBER
2020
NOTE GBP GBP GBP
------------------------------- ----- -------------- ------------------------ ----------------------------------
Assets
=============================== ===== ============== ======================== ==================================
Cash and cash equivalents 12,827,525 14,835,744 6,416,028
=============================== ===== ============== ======================== ==================================
Cash posted as collateral 2,038,095 1,100,000 1,140,000
=============================== ===== ============== ======================== ==================================
Derivative financial assets - 1,416,582 5,758,880
=============================== ===== ============== ======================== ==================================
Interest receivable 4,174,208 4,182,426 3,613,047
=============================== ===== ============== ======================== ==================================
Dividend and distribution
receivable 3,763 15,138 3,812
=============================== ===== ============== ======================== ==================================
Other assets and prepaid
expenses 2,699,365 1,121,703 889,148
=============================== ===== ============== ======================== ==================================
Loans at amortised cost 3,7 291,351,321 318,953,868 293,123,379
=============================== ===== ============== ======================== ==================================
Investment assets designated
as held
at fair value through profit
or loss 3 107,162,812 39,092,920 51,417,983
------------------------------- ----- -------------- ------------------------ ----------------------------------
Total assets 420,257,089 380,718,381 362,362,277
------------------------------- ----- -------------- ------------------------ ----------------------------------
Liabilities
=============================== ===== ============== ======================== ==================================
Management fee payable 8 168,635 66,156 92,241
=============================== ===== ============== ======================== ==================================
Performance fee payable 8 7,047,774 - 4,040,085
=============================== ===== ============== ======================== ==================================
Derivative financial
liabilities 3,692,219 155,933 -
=============================== ===== ============== ======================== ==================================
Unsettled share buyback
payable 169,147 229,947 -
=============================== ===== ============== ======================== ==================================
Deferred income 192,170 329,321 253,403
=============================== ===== ============== ======================== ==================================
Other liabilities and accrued
expenses 8 1,066,774 1,305,245 1,332,920
=============================== ===== ============== ======================== ==================================
Notes payable 6 112,385,146 118,132,012 86,087,183
------------------------------- ----- -------------- ------------------------ ----------------------------------
Total liabilities 124,721,865 120,218,614 91,805,832
------------------------------- ----- -------------- ------------------------ ----------------------------------
Total assets less total
liabilities 295,535,224 260,499,767 270,556,445
------------------------------- ----- -------------- ------------------------ ----------------------------------
Capital and reserves
=============================== ===== ============== ======================== ==================================
Called-up share capital 20,300,000 20,300,000 20,300,000
=============================== ===== ============== ======================== ==================================
Share premium account 161,040,000 161,040,000 161,040,000
=============================== ===== ============== ======================== ==================================
Other distributable reserve 112,779,136 121,391,830 116,520,960
=============================== ===== ============== ======================== ==================================
Capital reserve (20,053,701) (68,018,577) (50,393,578)
=============================== ===== ============== ======================== ==================================
Revenue reserve 20,221,752 24,472,138 21,847,960
=============================== ===== ============== ======================== ==================================
Currency translation reserve 1,220,777 1,211,000 1,221,766
Total equity attributable to
equity shareholders of the
Parent Company 295,507,964 260,396,391 270,537,108
------------------------------- ----- -------------- ------------------------ ----------------------------------
Non-controlling interests 15 27,260 103,376 19,337
Total equity 295,535,224 260,499,767 270,556,445
------------------------------- ----- -------------- ------------------------ ----------------------------------
Net Asset Value per Ordinary
Share 9 106.19p 89.78p 95.72p
These consolidated financial statements of VPC Specialty Lending
Investments PLC registered number 9385218 were approved and
authorised for issue by the Board and signed on its behalf by :
Graeme Proudfoot
Chair
30 September 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUE CAPITAL TOTAL
NOTE GBP GBP GBP
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Revenue
==================== ==================================== ============================ ============================ ============================
Net gain (loss) on
investments 4 - 38,544,646 38,544,646
==================== ==================================== ============================ ============================ ============================
Foreign exchange
gain (loss) - (1,667,217) (1,667,217)
==================== ==================================== ============================ ============================ ============================
Interest income 14,989,688 9,781 14,999,469
Other income 4 2,994,307 - 2,994,307
Total return 17,983,995 36,887,210 54,871,205
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Expenses
==================== ==================================== ============================ ============================ ============================
Management fee 8 1,780,159 - 1,780,159
==================== ==================================== ============================ ============================ ============================
Performance fee 8 1,693,853 5,353,921 7,047,774
==================== ==================================== ============================ ============================ ============================
Credit impairment
losses 7 - 1,102,970 1,102,970
==================== ==================================== ============================ ============================ ============================
Other expenses 2,084,520 82,389 2,166,909
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Total operating
expenses 5,558,532 6,539,280 12,097,812
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Finance costs 2,826,965 - 2,826,965
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Net return on
ordinary
activities
before taxation 9,598,498 30,347,930 39,946,428
Taxation on - - -
ordinary activities
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Net return on
ordinary
activities
after taxation 9,598,498 30,347,930 39,946,428
-------------------- ------------------------------------ ---------------------------- ---------------------------- ----------------------------
Attributable to:
==================== ==================================== ============================ ============================ ============================
Equity shareholders 9,598,498 30,339,877 39,938,375
========================================================== ============================ ============================ ============================
Non-controlling
interests - 8,053 8,053
=================== ===================================== ============================ ============================ ============================
Return per Ordinary Share (basic and diluted) 3.25p 10.27p 13.52p
Other comprehensive income
========================================================== ============================ ============================ ============================
Currency translation differences - (1,119) (1,119)
---------------------------------------------------------- ---------------------------- ---------------------------- ----------------------------
Total comprehensive income 9,598,498 30,346,811 39,945,309
---------------------------------------------------------- ---------------------------- ---------------------------- ----------------------------
Attributable to:
========================================================== ============================ ============================ ============================
Equity shareholders 9,598,498 30,338,888 39,937,386
========================================================== ============================ ============================ ============================
Non-controlling
interests - 7,923 7,923
==================== ==================================== ============================ ============================ ============================
The total column of this statement represents the Group's
statement of comprehensive income, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and also international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. The supplementary
revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All
items in the above Statement derive from continuing operations.
Amounts in Other comprehensive income may be reclassified to profit
or loss in future periods.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX-MONTH PERIODED 30 JUNE 2020
(UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUE CAPITAL TOTAL
NOTE GBP GBP GBP
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Revenue
========================= =========================== ============================ ============================ ============================
Net gain (loss) on
investments 4 - (9,532,461) (9,532,461)
========================= =========================== ============================ ============================ ============================
Foreign exchange gain
(loss) - (1,662,430) (1,662,430)
========================= =========================== ============================ ============================ ============================
Interest income 21,342,243 58,353 21,400,596
Other income 4 1,014,268 - 1,014,268
Total return 22,356,511 (11,136,538) 11,219,973
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Expenses
========================= =========================== ============================ ============================ ============================
Management fee 8 1,798,060 - 1,798,060
========================= =========================== ============================ ============================ ============================
Performance fee 8 - - -
========================= =========================== ============================ ============================ ============================
Credit impairment losses 7 - 7,304,791 7,304,791
========================= =========================== ============================ ============================ ============================
Other expenses 1,123,033 165,181 1,288,214
Total operating expenses 2,921,093 7,469,972 10,391,065
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Finance costs 4,286,902 - 4,286,902
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Net return on ordinary
activities
before taxation 15,148,516 (18,606,510) (3,457,994)
Taxation on ordinary - - -
activities
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Net return on ordinary
activities
after taxation 15,148,516 (18,606,510) (3,457,994)
------------------------- --------------------------- ---------------------------- ---------------------------- ----------------------------
Attributable to:
========================= =========================== ============================ ============================ ============================
Equity shareholders 15,148,516 (18,644,222) 11,149,760
====================================================== ============================ ============================ ============================
Non-controlling
interests - 37,712 37,712
========================= =========================== ============================ ============================ ============================
Return per Ordinary Share (basic and diluted) 4.97p -6.11p -1.15p
Other comprehensive income
====================================================== ============================ ============================ ============================
Currency translation differences - 8,146 8,146
------------------------------------------------------ ---------------------------- ---------------------------- ----------------------------
Total comprehensive income 15,148,516 (18,598,364) (3,449,848)
------------------------------------------------------ ---------------------------- ---------------------------- ----------------------------
Attributable to:
====================================================== ============================ ============================ ==============================
Equity shareholders 15,148,516 (18,640,800) (3,492,284)
====================================================== ============================ ============================ ==============================
Non-controlling
interests - 42,436 42,436
========================= =========================== ============================ ============================ ==============================
The total column of this statement represents the Group's
statement of comprehensive income, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and also international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. The supplementary
revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All
items in the above Statement derive from continuing operations.
Amounts in Other comprehensive income may be reclassified to profit
or loss in future periods.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2020
(AUDITED) (AUDITED) (AUDITED)
REVENUE CAPITAL TOTAL
NOTE GBP GBP GBP
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Revenue
=================== ====== ============================ ============================ ============================
Net gain (loss) on
investments 4 - 1,845,962 1,845,962
=================== ====== ============================ ============================ ============================
Foreign exchange
gain (loss) - (2,970,304) (2,970,304)
=================== ====== ============================ ============================ ============================
Interest income 35,454,974 524,984 35,979,958
Other income 4 5,799,767 - 5,799,767
Total return 41,254,741 (599,358) 40,655,383
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Expenses
=================== ====== ============================ ============================ ============================
Management fee 8 3,394,740 - 3,394,740
=================== ====== ============================ ============================ ============================
Performance fee 8 4,040,085 - 4,040,085
=================== ====== ============================ ============================ ============================
Credit impairment
losses 7 - 112,550 112,550
=================== ====== ============================ ============================ ============================
Other expenses 2,313,540 232,265 2,545,805
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Total operating
expenses 9,748,365 344,815 10,093,180
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Finance costs 7,607,524 - 7,607,524
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Net return on
ordinary
activities
before taxation 23,898,852 (944,173) 22,954,679
Taxation on - - -
ordinary
activities
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Net return on
ordinary
activities
after taxation 23,898,852 (944,173) 22,954,679
------------------- ------ ---------------------------- ---------------------------- ----------------------------
Attributable to:
=================== ====== ============================ ============================ ============================
Equity shareholders 23,898,852 (1,019,223) 22,879,629
=========================== ============================ ============================ ============================
Non-controlling
interests - 75,050 75,050
=================== ====== ============================ ============================ ============================
Return per Ordinary Share
(basic and diluted) 8.08p -0.34p 7.74p
Other comprehensive income
=========================== ============================ ============================ ============================
Currency translation
differences - 21,443 21,443
--------------------------- ---------------------------- ---------------------------- ----------------------------
Total comprehensive income 23,898,852 (922,730) 22,976,122
--------------------------- ---------------------------- ---------------------------- ----------------------------
Attributable to:
=========================== ============================ ============================ ============================
Equity shareholders 23,898,852 (1,005,035) 22,893,817
=========================== ============================ ============================ ============================
Non-controlling
interests - 82,305 82,305
=================== ====== ============================ ============================ ============================
The total column of this statement represents the Group's
statement of comprehensive income, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 and also international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union. The supplementary
revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All
items in the above Statement derive from continuing operations.
Amounts in Other comprehensive income may be reclassified to profit
or loss in future periods.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
CALLED-UP SHARE OTHER (UNAUDITED) (UNAUDITED) CURRENCY TOTAL NON- (UNAUDITED)
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION SHAREHOLDERS' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
----------------- ------------------ -------------------- ------------------------- ------------------------ ------------------------- ---------------------- -------------------------- ----------------------- --------------------
Opening balance
at
1 January 2021 20,300,000 161,040,000 116,520,960 (50,393,578) 21,847,960 1,221,766 270,537,108 19,337 270,556,445
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Amounts paid on
buyback
of Ordinary
Shares - - (3,741,824) - - - (3,741,824) - (3,741,824)
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Contributions by
non-controlling
interests - - - - - - - - -
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Distributions to
non-controlling
interests - - - - - - - - -
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Return on
ordinary
activities
after taxation - - - 30,339,877 9,598,498 - 39,938,375 8,053 39,946,428
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Dividends
declared
and paid - - - - (11,224,706) - (11,224,706) - (11,224,706)
----------------- ------------------ -------------------- ------------------------- ------------------------ ------------------------- ---------------------- -------------------------- ----------------------- --------------------
Other
comprehensive
income
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Currency
translation
differences - - - - - (989) (989) (130) (1,119)
================= ================== ==================== ========================= ======================== ========================= ====================== ========================== ======================= ====================
Closing balance
at
30 June 2021 20,300,000 161,040,000 112,779,136 (20,053,701) 20,221,752 1,220,777 295,507,964 27,260 295,535,224
----------------- ------------------ -------------------- ------------------------- ------------------------ ------------------------- ---------------------- -------------------------- ----------------------- --------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX-MONTH PERIODED 30 JUNE 2020
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
CALLED-UP SHARE OTHER (UNAUDITED) (UNAUDITED) CURRENCY TOTAL NON- (UNAUDITED)
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION SHAREHOLDERS' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
----------------- ---------------------- ------------------------ ------------------------------ --------------------------- ---------------------------- --------------------------- -------------------------------- ---------------------------- ------------------------
Opening balance
at
1 January 2020 20,300,000 161,040,000 136,682,176 (49,374,355) 21,623,852 1,207,578 291,479,251 60,940 291,540,191
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Amounts paid on
buyback
of Ordinary
Shares - - (15,290,346) - - - (15,290,346) - (15,290,346)
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Contributions by
non-controlling
interests - - - - - - - - -
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Distributions to
non-controlling
interests - - - - - - - - -
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Return on
ordinary
activities
after taxation - - - (18,644,222) 15,148,516 - (3,495,706) 37,712 (3,457,994)
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Dividends
declared
and paid - - - - (12,300,230) - (12,300,230) - (12,300,230)
----------------- ---------------------- ------------------------ ------------------------------ --------------------------- ---------------------------- --------------------------- -------------------------------- ---------------------------- ------------------------
Other
comprehensive
income
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Currency
translation
differences - - - - - 3,422 3,422 4,724 8,146
================= ====================== ======================== ============================== =========================== ============================ =========================== ================================ ============================ ========================
Closing balance
at
30 June 2020 20,300,000 161,040,000 121,391,830 (68,018,577) 24,472,138 1,211,000 260,396,391 103,376 260,499,767
----------------- ---------------------- ------------------------ ------------------------------ --------------------------- ---------------------------- --------------------------- -------------------------------- ---------------------------- ------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
(AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED) (AUDITED)
CALLED-UP SHARE OTHER (AUDITED) (AUDITED) CURRENCY TOTAL NON- (AUDITED)
SHARE PREMIUM DISTRIBUTABLE CAPITAL REVENUE TRANSLATION SHAREHOLDERS' CONTROLLING TOTAL
CAPITAL ACCOUNT RESERVE RESERVE RESERVE RESERVE EQUITY INTERESTS EQUITY
GBP GBP GBP GBP GBP GBP GBP GBP GBP
----------------- ------------------ -------------------- ------------------------- ---------------------- ----------------------- ---------------------- -------------------------- ----------------------- --------------------
Opening balance
at
1 January 2020 20,300,000 161,040,000 136,682,176 (49,374,355) 21,623,852 1,207,578 291,479,251 60,940 291,540,191
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Amounts paid on
buyback
of Ordinary
Shares - - (20,161,216) - - - (20,161,216) - (20,161,216)
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Contributions by
non-controlling
interests - - - - - - - - -
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Distributions to
non-controlling
interests - - - - - - - (123,908) (123,908)
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Return on
ordinary
activities
after taxation - - - (1,019,223) 23,898,852 - 22,879,629 75,050 22,954,679
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Dividends
declared
and paid - - - - (23,674,744) - (23,674,744) - (23,674,744)
----------------- ------------------ -------------------- ------------------------- ---------------------- ----------------------- ---------------------- -------------------------- ----------------------- --------------------
Other
comprehensive
income
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Currency
translation
differences - - - - - 14,188 14,188 7,255 21,443
================= ================== ==================== ========================= ====================== ======================= ====================== ========================== ======================= ====================
Closing balance
at
31 December
2020 20,300,000 161,040,000 116,520,960 (50,393,578) 21,847,960 1,221,766 270,537,108 19,337 270,556,445
----------------- ------------------ -------------------- ------------------------- ---------------------- ----------------------- ---------------------- -------------------------- ----------------------- --------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 31 DECEMBER
2020 2020
GBP GBP GBP
------------------------------------------ --------------- ----------------------- -----------------------------
Cash flows from operating activities:
========================================== =============== ======================= =============================
Total comprehensive income 39,945,309 (3,449,848) 22,976,122
=========================================== =============== ======================= =============================
Adjustments for:
========================================== =============== ======================= =============================
- Interest income (14,999,469) (21,400,596) (35,979,958)
=========================================== =============== ======================= =============================
- Dividend and distribution income (2,994,307) (1,014,268) (5,799,767)
=========================================== =============== ======================= =============================
- Finance costs 2,826,965 4,286,902 7,607,524
=========================================== =============== ======================= =============================
- Exchange (gains) losses 1,667,217 1,662,430 2,970,304
-------------------------------------------
Total 26,445,715 (19,915,380) (8,225,775)
------------------------------------------- --------------- ----------------------- -----------------------------
Gain on investment assets (38,544,646) 9,532,461 (1,845,962)
=========================================== =============== ======================= =============================
(Gain) loss on derivative financial
instruments 10,980,503 (20,749,369) (1,402,050)
=========================================== =============== ======================= =============================
Decrease (increase) in other assets and
prepaid expenses (1,810,217) (227,546) 5,009
=========================================== =============== ======================= =============================
Increase (decrease) in management fee
payable 76,394 (77,259) (51,174)
=========================================== =============== ======================= =============================
Increase (decrease) in performance fee
payable 3,007,689 (7,410,614) (3,370,529)
=========================================== =============== ======================= =============================
Decrease in deferred income (61,233) (161,001) (236,919)
=========================================== =============== ======================= =============================
Decrease in accrued expenses and other
liabilities (701,861) (629,895) (458,591)
=========================================== =============== ======================= =============================
Interest received 14,438,308 22,448,520 37,597,261
=========================================== =============== ======================= =============================
Purchase of loans (104,041,783) (64,081,377) (105,292,885)
=========================================== =============== ======================= =============================
Redemption or sale of loans 101,968,924 114,742,276 160,405,704
=========================================== =============== ======================= =============================
Impairment of loans 1,102,970 7,304,791 112,550
-------------------------------------------
Net cash inflow (outflow) from operating
activities 12,860,763 40,775,607 77,236,639
------------------------------------------- --------------- ----------------------- -----------------------------
Cash flows from investing activities:
========================================== =============== ======================= =============================
Investment income received 2,994,356 1,018,502 5,815,327
=========================================== =============== ======================= =============================
Purchase of investment assets (24,402,638) (6,322,262) (16,671,467)
=========================================== =============== ======================= =============================
Sale of investment assets 5,874,872 3,275,979 8,538,783
=========================================== =============== ======================= =============================
Decrease of cash posted as collateral (898,095) (120,000) (160,000)
=========================================== =============== ======================= =============================
Net cash inflow (outflow) from investing
activities (16,431,505) (2,147,781) (2,477,357)
------------------------------------------- --------------- ----------------------- -----------------------------
Cash flows from financing activities:
========================================== ============== ============== ============================
Dividends distributed (11,224,706) (12,300,230) (23,674,744)
=========================================== ============== ============== ============================
Treasury shares repurchased (3,572,677) (15,112,905) (20,213,722)
=========================================== ============== ============== ============================
Distributions to non-controlling
interests - - (123,908)
=========================================== ============== ============== ============================
Increase (decrease) in note payable 27,250,133 (1,641,963) (23,502,528)
=========================================== ============== ============== ============================
Finance costs paid (2,391,251) (3,701,025) (7,165,276)
=========================================== ============== ============== ============================
Net cash inflow (outflow) from financing
activities 10,061,499 (32,756,123) (74,680,178)
------------------------------------------- -------------- -------------- ----------------------------
Net change in cash and cash equivalents 6,490,757 5,871,703 79,104
=========================================== ============== ============== ============================
Exchange gains (losses) on cash
and cash equivalents (79,261) 2,832,919 205,802
=========================================== ============== ============== ============================
Cash and cash equivalents at the
beginning of the period 6,416,028 6,131,122 6,131,122
-------------------------------------------
Cash and cash equivalents at the
end of the period 12,827,524 14,835,744 6,416,028
------------------------------------------- -------------- -------------- ----------------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
1. GENERAL INFORMATION
VPC Specialty Lending Investments PLC (the "Parent Company")
with its subsidiaries (together "the Group") is focused on
asset-backed lending to emerging and established businesses with
the goal of building long-term, sustainable income generation. The
Group focuses on providing capital to vital segments of the economy
that are underserved by the traditional banking industry, including
small businesses, working capital products, consumer finance and
real estate, among others. The Group executes this strategy by
identifying investment opportunities across various industries and
geographies to offer shareholders access to a diversified portfolio
of opportunistic credit investments originated by non-bank lenders
with a focus on the rapidly developing technology-enabled lending
sector. The Parent Company, which is limited by shares, was
incorporated and domiciled in England and Wales on 12 January 2015
with registered number 9385218. The Parent Company commenced its
operations on 17 March 2015 and intends to carry on business as an
investment trust within the meaning of Chapter 4 of Part 24 of the
Corporation Tax Act 2010.
The Group's investment manager is Victory Park Capital Advisors,
LLC (the "Investment Manager"), a US Securities and Exchange
Commission registered investment adviser. The Investment Manager
also acts as the Alternative Investment Fund Manager of the Group
under the Alternative Investment Fund Managers Directive ("AIFMD").
The Parent Company is defined as an Alternative Investment Fund and
is subject to the relevant articles of the AIFMD.
The Group will invest directly or indirectly into available
opportunities, including by making investments in, or acquiring
interests held by, third party funds (including those managed by
the Investment Manager or its affiliates). Direct investments may
include consumer loans, SME loans, advances against corporate trade
receivables and/or purchases of corporate trade receivables ("Debt
Instruments") originated by platforms which engage with and
directly lend to borrowers ("Portfolio Companies"). Such Debt
Instruments may be subordinated in nature, or may be second lien,
mezzanine or unsecured loans. Indirect investments may include
investments in Portfolio Companies (or in structures set up by
Portfolio Companies) through the provision of credit facilities
("Credit Facilities"), equity or other instruments. Additionally,
the Group's investments in Debt Instruments and Credit Facilities
may be made through subsidiaries of the Parent Company or through
partnerships or other structures. The Group may also invest in
other specialty lending related opportunities through any
combination of debt facilities, equity or other instruments.
As at 30 June 2021, the Company had total issued equity in the
form of 382,615,665 Ordinary Shares (31 December 2020: 382,615,665;
30 June 2020: 382,615,665) of which 278,276,392 were outstanding
(31 December 2020: 282,647,364; 30 June 2020: 290,036,012) and
104,339,273 were held as treasury shares (31 December 2020:
99,968,301; 30 June 2020: 92,579,653). These shares are listed on
the premium segment of the Official List of the Financial Conduct
Authority and trade on the London Stock Exchange's main market for
listed securities.
As at 30 June 2021, Northern Trust Hedge Fund Services LLC (the
"Administrator") has been appointed as the administrator of the
Group. The Administrator is responsible for the Group's general
administrative functions, such as the calculation and publication
of the Net Asset Value ("NAV") and maintenance of the Group's
accounting records.
For any terms not herein defined, refer to Part X of the IPO
Prospectus. The Parent Company's IPO Prospectus dated 26 February
2015 is available on the Parent Company's website,
www.vpcspecialtylending.com.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies followed by the Group are set
out in Note 2 of the Annual Report for the year ended 31 December
2020.
Basis of preparation
The consolidated financial statements present the financial
performance of the Group for the six-month period to 30 June 2021.
These statements have been prepared in accordance with the
Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority and UK-adopted IAS34 'Interim Financial Reporting.'
The consolidated financial statements for the period ended 30
June 2021 have not been audited or reviewed by the Group's auditors
and do not constitute statutory financial statements as defined in
Section 434 of the Companies Act 2006. They do not include all
financial information required for full annual financial
statements. The consolidated financial statements and the
comparative financial statements have been prepared using the
accounting policies adopted in the audited financial statements for
the year ended 31 December 2020.
The consolidated financial statements have been prepared on a
going concern basis under the historical cost convention, as
modified by the valuation of investments and derivative financial
instruments at fair value. The Directors have reviewed the
financial projections of the Group and Company from the date of
this report, which shows that the Group and Company will be able to
generate sufficient cash flows in order to meet its liabilities as
they fall due. In assessing the Group's and Company's ability to
continue as a going concern, the Directors have considered the
Company's investment objective, risk management policies, capital
management, the nature of its portfolio and expenditure
projections.
Additionally, the Directors have considered the risks arising of
reduced asset values and economic disruption caused by the COVID-19
pandemic. The Investment Manager has also performed a range of
stress tests and demonstrated to the Directors that even in an
adverse scenario of depressed markets that the Group could still
generate sufficient funds to meet its liabilities over the next
twelve months. The Directors believe that the Group has adequate
resources, an appropriate financial structure and suitable
management arrangements in place to continue in operational
existence for the foreseeable future being a period of at least
twelve months from the date of this report. Having assessed the
principal risks, the Directors considered it appropriate to adopt
the going concern basis of accounting in preparing the consolidated
financial statements. The principal accounting policies adopted are
set out below.
Where presentational guidance set out in the Statement of
Recommended Practice ("SORP") for investment trusts issued by the
Association of Investment Companies ("AIC") in November 2014 and
updated in October 2019 with consequential amendments is consistent
with the requirements of IFRS, the Directors have sought to prepare
the consolidated financial statements on a basis compliant with the
recommendations of the SORP.
The Parent Company and Group's presentational currency is Pound
Sterling (GBP). Pound Sterling is also the functional currency
because it is the currency of the Parent Company's share capital
and the currency which is most relevant to the majority of the
Parent Company's shareholders. The Group enters into forward
currency Pound Sterling hedges where operating activity is
transacted in a currency other than the functional currency.
Critical accounting estimates
The preparation of financial statements in conformity with UK
adopted IFRS requires the Company to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and
expenses during the reporting period. Although these estimates are
based on the Directors' best knowledge of the amount, actual
results may differ ultimately from those estimates.
The areas requiring a higher degree of judgement or complexity
and areas where assumptions and estimates are significant to the
financial statements, are in relation to effective interest rate,
expected credit losses and investments at fair value through profit
or loss. These are detailed below.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Base case and stress case cash flow methodology under IFRS 9
Each loan in the Group's investment portfolio is analysed to
assess the likelihood of the Group incurring any loss either (i) in
the normal course of events, or (ii) in a stress scenario. Given
that these positions are typically secured by specific collateral,
commonly in the form of cash flow receivables or similar assets,
and often further secured by guarantees from the operating
business, the analysis looks at the impacts on both the specific
collateral, as well as any obligations of the operating business to
understand how the Group's investment would fair in each scenario.
The loss rate assumptions for each transaction are established
using all available historical loss performance data on the
specific asset pool being assessed, supplemented by additional
sources as needed.
The significant estimates used on a significant percentage of
the Group's investments within these scenarios are:
v Impact on receivable loss rates in a stress scenario - 1.1x to
2.1x (31 December 2020: 1.1x to 2.1x);
v Range of net losses - 0.0% to 46.2% (31 December 2020: 0.0% to
42.3%);
v Revenue growth / declines - 0.76x - 1.00x revenue factor (31
December 2020: N/A); and
v Margin growth / decline - (2.5%) - 0.00% period change (31
December 2020: N/A).
Further detail on these estimates and the methodology applied
are set out below.
Base case
To establish the base case model, a representative portfolio is
established based on the specific nature of the underlying
collateral. The expected cash flows are assessed based on the
relevant collateral parameters which will vary based on the
specific asset class being assessed. In certain instances, the
collateral cash flows may entail the presumed sale of collateral
assets to third parties based on expected market values. Cash flow
and market assumptions are based on a combination of (1) historical
collateral data, (2) management forecasts, (3) proxy data from
comparable assets or businesses, and (4) judgement from the
Investment Manager's investment professionals based on general
research and knowledge. The last input component is the terms of
the Group's investment, which includes the applicable advance rate
and interest rate which are based on the prevailing terms and
circumstances of the facility.
The representative portfolio is deemed to reflect the most
reliable and relevant information available about the portfolio
attributes and expected performance. As part of the ongoing
investment monitoring and risk management process, the Investment
Manager is monitoring performance on the underlying collateral on a
monthly basis to identify whether performance indicators are
trending positively or negatively, and how much cushion exists
compared to contractual covenant trigger levels. Any such changes
would be reviewed to determine whether an adjustment is required to
the model assumptions.
Stress case
Once the Base Case scenario is established, one or more "Stress
Case" scenario(s) is created for each transaction. The Stress Case
is established by stressing the inputs that are most directly tied
to outcomes to an extent consistent with a severe recession or
comparably severe deterioration in the investment position. The
primary driver of collateral value for many asset classes is the
loss rates on the underlying receivables as these have the most
direct impact on liquidation outcomes. For other asset classes it
may include revenue yields, market values, or other economic
variables. Certain variables with less significant impacts on the
cash flow outcomes may be held constant to enhance model
explanatory power. Stress variables may be adjusted to reflect the
fact that stress will emerge (and dissipate) over a period of time
rather than being an immediate and constant impact.
2008 Recession Loss Scalars
by Asset and Population
Subprime & Deep Near Prime Prime
Subprime Vintage Score 601-660 Vintage Score above
Vintage Score below 660
601
--------------------- ----------------------- ---------------------
Student Loan 0% 10% 8%
--------------------- ----------------------- ---------------------
Retail 17% 10% 3%
--------------------- ----------------------- ---------------------
Personal Loan 16% 41% 108%
--------------------- ----------------------- ---------------------
Auto 24% 54% 88%
--------------------- ----------------------- ---------------------
Credit Card 43% 71% 132%
--------------------- ----------------------- ---------------------
Source: Assessing Performance of Consumer Lending Assets through
Macroeconomic Shocks, Second Order Solutions (June 2019)
Among the most heavily represented populations in the Group's
borrower portfolios are personal loans (or amortising installment
loans). As seen in the above table, default rates on these loans
increased by 1.16x-2.08x. Each portfolio was assessed based on the
applicable stress factor range based on the product and borrower
population.
Establishing impairment reserves
Once the model has been run at the stressed scenario, if the
cash flows continue to support the payment of an investment's
principal and interest, the portfolio is deemed to have adequate
coverage. If there is a shortfall in principal payments, a further
assessment is done to note whether there are any excluded variables
that need to be considered in determining the need for reserves on
the position, including taking into account other additional credit
enhancements provided in each deal (i.e., corporate guarantees,
etc.). Such assessment would consider the likelihood of a scenario
that could pose a loss and the expected magnitude of such loss in
order to determine the appropriate reserve level.
IFRS 9 calls for an assessment of the probability of default
over the upcoming 12 months, and thus the Investment Manager
provides a view of the probability of such a severe scenario
occurring in the next 12 months for each of the investments which
are at risk of incurring a loss (as some of the variables will vary
between investments). Typically, the Investment Manager reviews
macroeconomic data to assess the probability of a recession or
stress scenario over a 12-month horizon, however such an analysis
was not applicable during the current period as the determinations
were made based on deal specific circumstances for each of the
relevant investments. Given the continuation of COVID-19 around the
globe and the ensuing macroeconomic impacts of the crisis, relevant
models have assumed a 100% (31 December 2020: 100%) probability of
a stress scenario, which is a conservative approach.
Regarding the likelihood of an economic recession in the
upcoming 12-month period, as at 30 June 2021 an increase in the
likelihood of an economic recession would have no impact on the
expected credit losses.
Measurement of the expected credit loss allowance
The calculation of the Group's ECL allowances and provisions
against loan commitments and guarantees under IFRS 9 is highly
complex and involves the use of significant judgement and
estimation. This includes the formulation and incorporation of
multiple forward-looking economic conditions into ECL to meet the
measurement objective of IFRS 9. The most significant judgements
that have been discussed above are considered to be the expected
life of the financial instrument, what is considered to be a
significant increase in credit risk to affect a movement between
stages, and the effect of potential future economic scenarios.
Valuation of unquoted investments
The valuation of unquoted investments and investments for which
there is an inactive market is a key area of judgement and may
cause material adjustment to the carrying value of those assets and
liabilities. The unquoted equity assets are valued on periodic
basis using techniques including a market approach, costs approach
and/or income approach. The valuation process is collaborative,
involving the finance and investment functions within the
Investment Manager with the final valuations being reviewed by the
Board's Audit and Valuation Committee. The specific techniques used
typically include earnings multiples, discounted cash flow
analysis, the value of recent transactions, and, where appropriate,
industry rules of thumb. The valuations often reflect a synthesis
of a number of different approaches in determining the final fair
value estimate. The individual approach for each investment will
vary depending on relevant factors that a market participant would
take into account in pricing the asset. Changes in fair value of
all investments held at fair value are recognised in the
Consolidated Statement of Comprehensive Income as a capital item.
On disposal, realised gains and losses are also recognised in the
Consolidated Statement of Comprehensive Income as a capital item.
Transaction costs are included within gains or losses on
investments held at fair value, although any related interest
income, dividend income and finance costs are disclosed separately
in the Consolidated Financial Statements. The ultimate sale price
of investments may not be the same as fair value. Refer to Note
3.
Critical accounting judgments
Judgement is required to determine whether the Parent Company
exercises control over its investee entities and whether they
should be consolidated. Control is achieved where the Parent
Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its
activities. The Parent Company controls an investee entity when the
Parent Company is exposed to, or has rights to, variable returns
from its investment and has the ability to affect those returns
through its power over the entity. At each reporting date, an
assessment is undertaken of investee entities to determine control.
In the intervening period, assessments are undertaken where
circumstances change that may give rise to a change in the control
assessment. These include when an investment is made into a new
entity, or an amendment to existing entity documentation or
processes. When assessing whether the Parent Company has the power
to affect its variable returns, and therefore control investee
entities, an assessment is undertaken of the Parent Company's
ability to influence the relevant activities of the investee
entity. These activities include considering the ability to appoint
or remove key management or the manager, which party has decision
making powers over the entity and whether the manager of an entity
is acting as principal or agent. The assessment undertaken for
entities considers the Parent Company's level of investment into
the entity and its intended long-term holding in the entity and
there may be instances where the Parent Company owns less than 51%
of an investee entity but that entity it consolidated. Further
details of the Parent Company's subsidiaries are included in Note
14.
The Group's investments in associates all consist of limited
partner interest in funds. There are no significant restrictions
between investors with joint control or significant influence over
the associates listed above on the ability of the associates to
transfer funds to any party in the form of cash dividends or to
repay loans or advances made by the Group.
3. FAIR VALUE MEASUREMENT
Financial instruments measured and reported at fair value are
classified and disclosed in one of the following fair value
hierarchy levels based on the significance of the inputs used in
measuring its fair value:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities;
Level 2 - Inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices); and
Level 3 - Pricing inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
An investment is always categorised as Level 1, 2 or 3 in its
entirety. In certain cases, the fair value measurement for an
investment may use a number of different inputs that fall into
different levels of the fair value hierarchy. In such cases, an
investment's level within the fair value hierarchy is based on the
lowest level of input that is significant to the fair value
measurement. The assessment of the significance of a particular
input to the fair value measurement requires judgment and is
specific to the investment.
Valuation of investments in funds
The Group's investments in funds are subject to the terms and
conditions of the respective fund's offering documentation. The
investments in funds are primarily valued based on the latest
available financial information. The Investment Manager reviews the
details of the reported information obtained from the funds and
considers: (i) the valuation of the fund's underlying investments;
(ii) the value date of the NAV provided; (iii) cash flows
(calls/distributions) since the latest value date; and (iv) the
basis of accounting and, in instances where the basis of accounting
is other than fair value, fair valuation information provided by
the funds. If necessary, adjustments to the NAV are made to the
funds to obtain the best estimate of fair value. The funds in which
the Group invests are close-ended and unquoted. No adjustments have
been determined to be necessary to the NAV as provided as at 30
June 2021 as this reflects fair value under the relevant valuation
methodology. The NAV is provided to investors only and is not made
publicly available.
Valuation of equity securities
Fair value is determined based on the Group's valuation
methodology, which is either determined using market comparables,
discounted cash flow models or recent transactions.
In using a valuation methodology based on the discounting of
forecasted cash flows of the Portfolio Company, significant
judgment is required in the development of an appropriate discount
rate to be applied to the forecasted cash flows. The assumptions
incorporated in the valuation methodologies used to estimate the
enterprise value consists primarily of unobservable Level 3 inputs,
including management assumptions based on judgment. For example,
from time to time, a Portfolio Company has exposure to potential or
actual litigation. In evaluating the impact on the valuation for
such items, the amount that a market participant would consider in
estimating fair value is considered. These estimates are highly
subjective, based on the Group's assessment of the potential
outcome(s) and the related impact on the fair value of such
potential outcome(s). A change in these assumptions could have a
material impact on the determination of fair value.
In using a valuation methodology based on comparable public
companies or sales of private or public comparable companies,
significant judgment is required in the application of discounts or
premiums to the prices of comparable companies for factors such as
size, marketability and relative performance.
Under the yield analysis approach, expected future cash flows
are discounted back using a discount rate. The discount rate used
incorporates market based yields for similar credits to the public
market and the underlying risk of the individual credit.
Fair value disclosures
The following table analyses the fair value hierarchy of the
Group's assets and liabilities measured at fair value at 30 June
2021:
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
--------------------------
Investment assets
designated
as held at fair value GBP GBP GBP GBP
-------------------------- ------------------ ------------------------ ------------------------ ------------------
Investments in funds 11,653,612 - - 11,653,612
========================== ================== ======================== ======================== ==================
Equity securities 95,509,200 - 23,359,474 72,149,726
Total 107,162,812 - 23,359,474 83,803,338
========================== ================== ======================== ======================== ==================
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
--------------
Derivative
financial
assets GBP GBP GBP GBP
-------------- ------------------------ ------------------------ ------------------------ ------------------------
Forward - - - -
foreign
exchange
contracts
Total - - - -
============== ======================== ======================== ======================== ========================
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
------------------------
Derivative financial
liabilities GBP GBP GBP GBP
------------------------ ------------------- ------------------------ ------------------- ------------------------
Forward foreign
exchange contracts 3,692,219 - 3,692,219 -
Total 3,692,219 - 3,692,219 -
======================== =================== ======================== =================== ========================
There were no movements between Level 1 and Level 2 fair value
measurements during the period ended 30 June 2021 and GBP6,419,396
of investment fair value transferred from Level 3 to Level 2 during
the period.
The following table analyses the fair value hierarchy of the
Group's assets and liabilities measured at fair value at 30 June
2020:
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
--------------
Investment
assets
designated
as held at
fair value GBP GBP GBP GBP
-------------- ----------------------- ----------------------------- ----------------------------- -------------------------
Investments
in funds 3,710,091 - - 3,710,091
============== ======================= ============================= ============================= =======================
Equity
securities 35,382,829 1,208,896 - 34,173,933
Total 39,092,920 1,208,896 - 37,884,024
============== ======================= ============================= ============================= =======================
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
------------------------------------
Derivative financial assets GBP GBP GBP GBP
------------------------------------ ------------ ------------ ------------ ------------------------
Forward foreign exchange contracts 1,416,582 - 1,416,582 -
Total 1,416,582 - 1,416,582 -
==================================== ============ ============ ============ ========================
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
------------------------------------
Derivative financial liabilities GBP GBP GBP GBP
------------------------------------ ------------ ------------ ------------ ------------
Forward foreign exchange contracts 155,933 - 155,933 -
Total 155,933 - 155,933 -
==================================== ============ ============ ============ ============
There were no movements between Level 1 and Level 2 fair value
measurements during the period ended 30 June 2020 and no transfers
into and out of Level 3 fair value measurements for the Group.
The following table analyses the fair value hierarchy of the
Group's assets and liabilities measured at fair value at 31
December 2020:
(AUDITED) (AUDITED) (AUDITED) (AUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
------------------------
Investment assets
designated
as held at fair value GBP GBP GBP GBP
------------------------ ------------------- ------------------------ ------------------------ -------------------
Investments in funds 2,522,367 - - 2,522,367
======================== =================== ======================== ======================== ===================
Equity securities 48,895,616 2,954,366 - 45,941,250
Total 51,417,983 2,954,366 - 48,463,617
======================== =================== ======================== ======================== ===================
(AUDITED) (AUDITED) (AUDITED) (AUDITED)
TOTAL LEVEL 1 LEVEL 2 LEVEL 3
------------------------
Derivative financial
assets GBP GBP GBP GBP
------------------------ ------------------- ------------------------ ------------------- ------------------------
Forward foreign
exchange
contracts 5,758,880 - 5,758,880 -
Total 5,758,880 - 5,758,880 -
======================== =================== ======================== =================== ========================
There were no movements between Level 1 and Level 2 fair value
measurements during the year ended 31 December 2020 and no
transfers into and out of Level 3 fair value measurements for the
Group.
The following table presents the movement in Level 3 positions
for the period for the Group at 30 June 2021:
(UNAUDITED)
INVESTMENTS (UNAUDITED)
IN FUNDS EQUITY SECURITIES
GBP GBP
----------------------------------------------- ------------ -------------------
Beginning balance, 1 January 2021 2,522,367 45,941,250
================================================ ============ ===================
Purchases 9,462,777 14,936,631
================================================ ============ ===================
Sales (93,226) (2,815,737)
================================================ ============ ===================
Transfers in/(out) - (6,419,396)
================================================ ============ ===================
Net change in unrealised foreign exchange
gains (losses) (507,668) (1,428,705)
================================================ ============ ===================
Net realised gains (losses) - 142,090
================================================ ============ ===================
Net change in unrealised gains (losses) 269,362 21,793,593
Ending balance, 30 June 2021 11,653,612 72,149,726
================================================ ============ ===================
The following table presents the movement in Level 3 positions
for the period for the Group at 30 June 2020:
(UNAUDITED)
INVESTMENTS (UNAUDITED)
IN FUNDS EQUITY SECURITIES
GBP GBP
----------------------------------------------- ------------ -------------------
Beginning balance, 1 January 2020 4,461,946 34,638,575
================================================ ============ ===================
Purchases - 6,322,262
================================================ ============ ===================
Sales (718,047) (2,557,932)
================================================ ============ ===================
Net change in unrealised foreign exchange
gains (losses) 266,317 3,166,821
================================================ ============ ===================
Net change in unrealised gains (losses) (300,125) (7,395,793)
Ending balance, 30 June 2020 3,710,091 34,173,933
================================================ ============ ===================
The following table presents the movement in Level 3 positions
for the year ended 31 December 2020 for the Group:
(AUDITED)
INVESTMENTS (AUDITED)
IN FUNDS EQUITY SECURITIES
GBP GBP
----------------------------------------------- ------------- -------------------
Beginning balance, 1 January 2020 4,461,946 34,638,575
================================================ ============= ===================
Purchases - 16,671,467
================================================ ============= ===================
Sales (1,376,253) (7,162,530)
================================================ ============= ===================
Net change in unrealised foreign exchange
gains (losses) (624,808) (1,010,734)
================================================ ============= ===================
Realised gains (losses) - (8,676,617)
================================================ ============= ===================
Net change in unrealised gains (losses) 61,482 11,481,089
Ending balance, 31 December 2020 2,522,367 45,941,250
================================================ ============= ===================
The net change in unrealised gains is recognised within gains on
investments in the Consolidated Statement of Comprehensive
Income.
Quantitative information regarding the unobservable inputs for
Level 3 positions is given below:
FAIR VALUE
AT
30 JUNE
2021
DESCRIPTION GBP VALUATION TECHNIQUE UNOBSERVABLE INPUT RANGE
=================== ============ ===================== =============================== ======================
Investments 11,653,612 Net asset value N/A N/A
in funds
=================== ============ ===================== =============================== ======================
Equity securities 46,657,470 Market Comparables Rights and Preferences 10.0% - 40.0%
Discount
Price Per Share US$3.30 - EUR3,671.49
Price to Earnings (Comparable
Median) 8.9x
Price to Book (Comparable
Median) 2.1x
Private Company Discount 0.1
Black Scholes Analysis US$0.0002 -
- Price Per Share EUR3,404.00
Black Scholes Analysis 20.0% - 30.0%
- Rights and Preferences
Discount
Black Scholes Analysis 0.13% - 0.87%
- Risk Free Rate
Black Scholes Analysis 1.8 years -
- Term 5.0 years
Black Scholes Analysis 20.0% - 40.0%
- Volatility
=================== ============ ===================== =============================== ======================
Equity securities 10,144,750 Discounted Cash
Flows Discount Rate 8.0% - 50.0%
Annual FCF Growth Rate 3.00%
Deal Execution Risk Discount 8.00%
====================================================================================== ======================
Equity securities 15,347,506 Transaction
Price Price Per Share US$0.002 - US$10.81
Deal Execution Risk Discount 10.0% - 20.0%
Illiquidity Discount 10.0% - 20.0%
N/A N/A
-------------------------------------------------------------------------------------- ----------------------
The investments in funds consist of investments in VPC Offshore
Unleveraged Private Debt Fund, L.P, and VPC Synthesis, L.P. These
are valued based on the NAV as calculated at the balance sheet
date. No adjustments have been deemed necessary to the NAV as it
reflects the fair value of the underlying investments, as such no
specific unobservable inputs have been identified. The NAVs are
sensitive to movements in interest rates due to the funds'
underlying investment in loans.
If the price per share from recent transactions of the equity
securities valued based on market comparables increased / decreased
by 5% it would have resulted in an increase / decrease to the total
value of those equity securities of GBP1,373,427 which would affect
the Net gain / (loss) on investments within the capital return
column of the Consolidated Statement of Comprehensive Income.
If the rights and preferences discount of the equity securities
valued based on market comparables increased / decreased by 5% it
would have resulted in an increase / decrease to the total value of
those equity securities of GBP1,689,095 which would affect the Net
gain / (loss) on investments within the capital return column of
the Consolidated Statement of Comprehensive Income.
If the price of all the investment assets held at period end,
including individually those mentioned above, had increased /
decreased by 10% it would have resulted in an increase / decrease
in the total value the investments in funds and equity securities
of GBP8,380,334 which would affect the Net gain / (loss) on
investments within the capital return column of the Consolidated
Statement of Comprehensive Income.
Assets and liabilities not carried at fair value but for which
fair value is disclosed
The following table presents the fair value of the Group's
assets and liabilities not measured at fair value through profit
and loss at 30 June 2021 but for which fair value is disclosed. The
carrying value has been used where it is a reasonable approximation
of fair value:
(UNAUDITED) (UNAUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
=========== ====================== ======================
Assets
=========== ====================== ======================
Loans 291,351,321 291,351,321
=========== ====================== ======================
Total 291,351,321 291,351,321
=========== ====================== ======================
The following table presents the fair value of the Group's
assets and liabilities not measured at fair value through profit
and loss at 30 June 2020 but for which fair value is disclosed. The
carrying value has been used where it is a reasonable approximation
of fair value:
(UNAUDITED) (UNAUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
======== ============= =============
Assets
======== ============= =============
Loans 318,953,868 318,957,282
======== ============= =============
Total 318,953,868 318,957,282
======== ============= =============
The following table presents the fair value of the Group's
assets and liabilities not measured at fair value through profit
and loss at 31 December 2020 but for which fair value is disclosed.
The carrying value has been used where it is a reasonable
approximation of fair value:
(AUDITED) (AUDITED)
CARRYING FAIR MARKET
VALUE VALUE
GBP GBP
=========== ====================== ======================
Assets
=========== ====================== ======================
Loans 293,123,379 293,123,379
=========== ====================== ======================
Total 293,123,379 293,123,379
=========== ====================== ======================
4. INCOME AND GAINS ON INVESTMENTS AND LOANS
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 2020 31 DECEMBER 2020
GBP GBP GBP
--------------------------------------- ------------------------------------ ------------- -----------------
Other Income
======================================= ==================================== ============= =================
Distributable income from investments
in funds 644,529 26,667 609,083
======================================= ==================================== ============= =================
Interest income from investment
assets 2,349,778 626,115 4,791,537
======================================= ==================================== ============= =================
Other income - 361,486 399,147
======================================= ==================================== ============= =================
Total 2,994,307 1,014,268 5,799,767
======================================= ==================================== ============= =================
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 2020 31 DECEMBER 2020
GBP GBP GBP
---------------------------------- -------------------------------- ------------- ---------------------------------
Net gains (losses) on investments
================================== ================================ ============= =================================
Realised (loss) gain on sale
of investments (1,616,556) 601,633 (9,159,855)
================================== ================================ ============= =================================
Unrealised gain (loss) on
investment
in funds 269,362 (300,125) 61,482
================================== ================================ ============= =================================
Unrealised gain (loss) on equity
securities 39,891,840 (9,833,969) 10,944,335
================================== ================================ ============= =================================
Total 38,544,646 (9,532,461) 1,845,962
================================== ================================ ============= =================================
5. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
Introduction
Risk is inherent in the Group's activities, but it is managed
through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls. The Group is
exposed to market risk (which includes currency risk, interest rate
risk and other price risk), credit risk and liquidity risk arising
from the financial instruments held by the Group.
Risk management structure
The Directors are ultimately responsible for identifying and
controlling risks. Day to day management of the risks arising from
the financial instruments held by the Group has been delegated to
Victory Park Capital Advisors, LLC as Investment Manager to the
Parent Company and the Group.
The Investment Manager regularly reviews the investment
portfolio and industry developments to ensure that any events which
impact the Group are identified and considered. This also ensures
that any risks affecting the investment portfolio are identified
and mitigated to the fullest extent possible.
The Group has no employees and the Directors have all been
appointed on a non-executive basis. Whilst the Group has taken all
reasonable steps to establish and maintain adequate procedures,
systems and controls to enable it to comply with its obligations,
the Group is reliant upon the performance of third-party service
providers for its executive function. In particular, the Investment
Manager, the Custodian, the Administrator, Corporate Secretary and
the Registrar will be performing services which are integral to the
operation of the Group. Failure by any service provider to carry
out its obligations to the Group in accordance with the terms of
its appointment could have a materially detrimental impact on the
operation of the Group.
The principal risks and uncertainties that could have a material
impact on the Group's performance have not changed from those set
out in detail on pages 15 to 18 of the Annual Report for the year
ended 31 December 2020.
In seeking to implement the investment objectives of the Parent
Company while limiting risk, the Parent Company and the Group are
subject to the investment limits restrictions set out in the Credit
Risk section of this note.
Liquidity risk
Liquidity risk is defined as the risk that the Group may not be
able to settle or meet its obligations on time or at a reasonable
price. Ordinary Shares are not redeemable at the holder's
option.
The maturities of the non-current financial liabilities are
disclosed in Note 6.
Current financial liabilities consisting of fees payable,
accrued expenses and other liabilities are all due within three
months.
The Investment Manager manages the Group's liquidity risk by
investing primarily in a diverse portfolio of assets. At 30 June
2021, 2% of the loans had a stated maturity date of less than a
year (31 December 2020: 15%; 30 June 2020: 24%).
The Group and Parent Company continuously monitor for
fluctuation in currency rates. The Parent Company performs stress
tests and liquidity projections to determine how much cash should
be held back to meet potential future obligations to settle margin
calls arising from foreign exchange hedging.
6. NOTE PAYABLE
The Group entered into contractual obligations with third
parties to structurally subordinate a portion of the principal
directly attributable to existing investments. The cash flows
received by the Group from the underlying investments are used to
pay the lender principal, interest, and draw fees based upon the
stated terms of the Credit Facility. Unless due to a fraudulent
act, as defined by the Credit Facilities, none of the Group's other
investment assets can be used to satisfy the obligations of the
Credit Facilities in the event that those obligations cannot be met
by the subsidiaries. Each subsidiary with a Credit Facility is a
bankruptcy remote entity.
The table below provides details of the outstanding debt of the
Group at 30 June 2021:
OUTSTANDING
INTEREST PRINCIPAL
30 JUNE 2021 (UNAUDITED) RATE GBP MATURITY
--------------------------- ------------ ----------------------------- -------------
3.95% + 1M
Credit Facility 03-2021 LIBOR 74,323,590 1 March 2027
Total 74,323,590
========================================== ============================
The table below provides details of the outstanding debt of the
Group at 30 June 2020:
OUTSTANDING
INTEREST PRINCIPAL
30 JUNE 2020 (UNAUDITED) RATE GBP MATURITY
--------------------------- ------------ ------------- ------------
Credit Facility 11-2018 4.25% + 1M 64,570,806 30 November
LIBOR 2022
Total 64,570,806
========================================== ============
The table below provides details of the outstanding debt of the
Group at 31 December 2020:
OUTSTANDING
INTEREST PRINCIPAL
31 DECEMBER 2020 (AUDITED) RATE GBP MATURITY
============================ ================== ============================ ============
30 November
Credit Facility 11-2018 4.25% + 1M LIBOR 37,534,297 2022
============================ ================== ============================ ============
Total 37,534,297
================================================ ============================ ============
The Group entered into contractual obligations with a third
party to structurally subordinate a portion of principal directly
attributable to an existing loan facility. The Group is obligated
to pay a commitment fee and interest to the third party on the
obligation as interest is paid on the underlying loan facility. In
the event of a default on the loan facility, the third party has
first-out participation rights on the accrued and unpaid interest
as well as the principal balance of the note.
The table below provides details of the outstanding first-out
participation liabilities of the Group at 30 June 2021:
OUTSTANDING
PRINCIPAL
30 JUNE 2021 (UNAUDITED) GBP MATURITY
---------------------------------- ---------------------------- ----------
First-Out Participation 03-2017 20,244,010 1 January
2024
================================== ============================ ==========
First-Out Participation 04-2019 17,817,546 1 January
2024
================================== ============================ ==========
Total 38,061,556
================================== ============================ ==========
The table below provides details of the outstanding first-out
participation liabilities of the Group at 30 June 2020:
OUTSTANDING
PRINCIPAL
30 JUNE 2020 (UNAUDITED) GBP MATURITY
--------------------------------- ------------ --------------
First-Out Participation 06-2015 11,152,655 13 June 2021
================================= ============ ==============
First-Out Participation 03-2017 22,556,070 1 January
2024
================================= ============ ==============
First-Out Participation 04-2019 19,852,481 1 January
2024
================================= ============ ==============
Total 53,561,206
================================= ============ ==============
The table below provides details of the outstanding first-out
participation liabilities of the Group at 31 December 2020:
OUTSTANDING
PRINCIPAL
31 DECEMBER 2020 (AUDITED) GBP MATURITY
--------------------------------- ------------ -------------
First-Out Participation 06-2015 10,109,810 13 June 2021
================================= ============ =============
First-Out Participation 03-2017 20,446,931 1 January
2024
================================= ============ =============
First-Out Participation 04-2019 17,996,145 1 January
2024
================================= ============ =============
Total 48,552,886
================================= ============ =============
The table below provides the movement of the notes payable for
the period ended 30 June 2021 for the Group:
NOTES
PAYABLE
(UNAUDITED) GBP
============================================================== =============================
Beginning balance, 1
January 2021 86,087,183
=============================================================== =============================
Purchases 155,710,709
================================================================ =============================
Sales (128,460,576)
================================================================ =============================
Net change in unrealised foreign exchange gains (losses) (952,170)
================================================================ =============================
Ending balance, 30 June
2021 112,385,146
=============================================================== =============================
The table below provides the movement of the notes payable for
the period ended 30 June 2020 for the Group:
NOTES
PAYABLE
(UNAUDITED) GBP
============================================================== =============================
Beginning balance, 1
January 2020 111,667,069
=============================================================== =============================
Purchases 40,758,337
================================================================ =============================
Sales (42,400,300)
================================================================ =============================
Net change in unrealised foreign exchange gains (losses) 8,106,906
================================================================ =============================
Ending balance, 30 June
2020 118,132,012
=============================================================== =============================
The table below provides the movement of the notes payable for
the year ended 31 December 2020 for the Group:
NOTES
PAYABLE
(AUDITED) GBP
===================================================== =============
Beginning balance, 1 January
2020 111,667,069
====================================================== =============
Purchases 40,758,337
======================================================== =============
Sales (64,260,865)
======================================================== =============
Net change in unrealised foreign exchange gains
(losses) (2,077,358)
======================================================= =============
Ending balance, 31 December
2020 86,087,183
====================================================== =============
7. IMPAIRMENT OF FINANCIAL ASSETS AT AMORTISED COST
The table below provides details of the investments at amortised
cost held by the Group for the period ended 30 June 2021 under IFRS
9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(UNAUDITED) GBP GBP GBP GBP
==================== ============= =========== ============ =============
Loans at amortised
cost 300,945,981 9,549,220 45,440 291,351,321
Total 300,945,981 9,549,220 45,440 291,351,321
==================== ============= =========== ============ =============
The table below provides details of the investments at amortised
cost held by the Group for the period ended 30 June 2020 under IFRS
9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(UNAUDITED) GBP GBP GBP GBP
==================== ============ ============ ============ =============
Loans at amortised
cost 335,957,589 15,605,793 1,397,928 318,953,868
Total 335,957,589 15,605,793 1,397,928 318,953,868
==================== ============ ============ ============ =============
The table below provides details of the investments at amortised
cost held by the Group for the year ended 31 December 2020 under
IFRS 9:
COST BEFORE LOANS CARRYING
ECL ECL WRITTEN-OFF VALUE
(AUDITED) GBP GBP GBP GBP
==================== ============= =========== ============ =============
Loans at amortised
cost 303,128,410 8,489,159 1,515,872 293,123,379
Total 303,128,410 8,489,159 1,515,872 293,123,379
==================== ============= =========== ============ =============
Credit impairment losses
The credit impairment losses of the Group for the six months
ended 30 June 2021 comprised of the following under IFRS 9:
CREDIT IMPAIRMENT
LOSSES
30 JUNE 2021
(UNAUDITED) GBP
================================================ ==================
Loans written off 45,440
================================================ ==================
Change in expected credit losses 1,060,061
================================================ ==================
Currency translation on expected credit losses (2,531)
================================================ ==================
Credit impairment losses 1,102,970
================================================ ==================
The credit impairment losses of the Group for the six months
ended 30 June 2020 comprised of the following under IFRS 9:
CREDIT IMPAIRMENT
LOSSES
30 JUNE 2020
(UNAUDITED) GBP
================================================ ==================
Loans written off 1,397,928
================================================ ==================
Change in expected credit losses 5,974,181
================================================ ==================
Currency translation on expected credit losses (67,318)
================================================ ==================
Credit impairment losses 7,304,791
================================================ ==================
The impairment charge of the Group as at 31 December 2020
comprised of the following under IFRS 9:
CREDIT IMPAIRMENT
LOSSES
31 DECEMBER 2020
(AUDITED) GBP
================================================ ==================
Loans written off 1,515,872
================================================ ==================
Change in expected credit losses (1,142,453)
================================================ ==================
Currency translation on expected credit losses (260,869)
================================================ ==================
Credit impairment losses 112,550
================================================ ==================
Impairment of loans written off
Impairment charges of loans written off of GBP45,440 (31
December 2020: GBP1,515,872; 30 June 2020: GBP1,397,928) are
included in credit impairment losses on the Consolidated Statement
of Comprehensive Income.
Provision for expected credit losses
As at 30 June 2021, the Group has created a reserve provision on
the outstanding principal of the Group's loans of GBP9,549,220 (31
December 2020: GBP8,489,159; 30 June 2020: GBP15,605,793), which
have been recorded in the Group's Consolidated Statement of
Financial Position. The majority of the loans reserved against by
the Group would be classified as secured other when being assessed
for the credit quality of loans.
The allowance for expected credit losses comprised the following
as at 30 June 2021:
30 JUNE 2021
(UNAUDITED) GBP
================================================ =============
Beginning balance 1 January 2021 8,489,159
================================================ =============
Change in expected credit losses or equivalent 1,060,061
================================================ =============
Ending balance 30 June 2021 9,549,220
================================================ =============
The allowance for expected credit losses comprised the following
as at 30 June 2020:
30 JUNE 2020
(UNAUDITED) GBP
================================================ =============================================
Beginning balance 1 January 2020 9,631,612
================================================ =============================================
Change in expected credit losses or equivalent 5,974,181
================================================ =============================================
Ending balance 30 June 2020 15,605,793
================================================ =============================================
The allowance for expected credit losses comprised the following
as at 31 December 2020:
31 DECEMBER 2020
(AUDITED) GBP
================================================ =================
Beginning balance 1 January 2020 9,631,612
================================================ =================
Change in expected credit losses or equivalent (1,142,453)
================================================ =================
Ending balance 31 December 2020 8,489,159
================================================ =================
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 30 June 2021:
30 JUNE 2021
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= ================================== ================================== ================================== ========================================
Stage 1 - - - -
============= ================================== ================================== ================================== ========================================
Stage 2 - - - -
============= ================================== ================================== ================================== ========================================
Stage 3 9,549,220 - - 9,549,220
Expected
credit
losses 9,549,220 - - 9,549,220
============= ================================== ================================== ================================== ========================================
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 30 June 2020:
30 JUNE 2020
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= =============================== ================================== ================================== ===============================
Stage 1 5,848,813 - - 5,848,813
============= =============================== ================================== ================================== ===============================
Stage 2 9,507,820 - - 9,507,820
============= =============================== ================================== ================================== ===============================
Stage 3 249,160 - - 249,160
Expected
credit
losses 15,605,793 - - 15,605,793
============= =============================== ================================== ================================== ===============================
Below is a breakout of the provision for expected credit losses
by stage of the ECL model as at 31 December 2020:
31 DECEMBER
2020
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= ================================ ================================== ================================== =====================================
Stage 1 61,040 - - 61,040
============= ================================ ================================== ================================== =====================================
Stage 2 524,804 - - 524,804
============= ================================ ================================== ================================== =====================================
Stage 3 7,903,315 - - 7,903,315
Expected
credit
losses 8,489,159 - - 8,489,159
============= ================================ ================================== ================================== =====================================
Below is a breakout of the carrying value of loans by stage of
the ECL model as at 30 June 2021:
30 JUNE 2021
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= ================================== ================================== ================================== ========================================
Stage 1 211,642,138 62,481,728 11,990,510 286,114,376
============= ================================== ================================== ================================== ========================================
Stage 2 - - - -
============= ================================== ================================== ================================== ========================================
Stage 3 5,236,945 - - 5,236,945
Loans at
amortised
cost 216,879,083 62,481,728 11,990,510 291,351,321
============= ================================== ================================== ================================== ========================================
Below is a breakout of the carrying value of loans by stage of
the ECL model as at 30 June 2020:
30 JUNE 2020
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= =============================== ================================== ================================== ===============================
Stage 1 275,251,782 - 36,311,006 311,562,788
============= =============================== ================================== ================================== ===============================
Stage 2 7,265,370 - - 7,265,370
============= =============================== ================================== ================================== ===============================
Stage 3 125,710 - - 125,710
Loans at
amortised
cost 282,642,862 - 36,311,006 318,953,868
============= =============================== ================================== ================================== ===============================
Below is a breakout of the carrying value of loans by stage of
the ECL model as at 31 December 2020:
31 DECEMBER
2020
(UNAUDITED) CONSUMER SME LEGAL FINANCE GBP
============= ============================== ================================== ================================== ===================================
Stage 1 231,471,825 12,296,728 41,934,631 285,703,184
============= ============================== ================================== ================================== ===================================
Stage 2 3,176,854 - - 3,176,854
============= ============================== ================================== ================================== ===================================
Stage 3 4,243,341 - - 4,243,341
Loans at
amortised
cost 238,892,020 12,296,728 41,934,631 293,123,379
============= ============================== ================================== ================================== ===================================
8. FEES AND EXPENSES
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a management fee and a
performance fee together with reimbursement of reasonable expenses
incurred by it in the performance of its duties.
Investment management fees
The management fee is payable in Pound Sterling monthly in
arrears and is at the rate of 1/12 of 1.0% per month of NAV (the
"Management Fee"). For the period from Admission until the date on
which 90% of the net proceeds of the Issue have been invested or
committed for investment (other than in Cash Instruments), the
value attributable to any Cash Instruments of the Group held for
investment purposes will be excluded from the calculation of NAV
for the purposes of determining the Management Fee.
The Investment Manager shall not charge a management fee twice.
Accordingly, if at any time the Group invests in or through any
other investment fund or special purpose vehicle and a management
fee or advisory fee is charged to such investment fund or special
purpose vehicle by the Investment Manager or any of its affiliates,
the Investment Manger agrees to either (at the option of the
Investment Manager): (i) waive such management fee or advisory fee
due to the Investment Manager or any of its affiliates in respect
of such investment fund or special purpose vehicle, other than the
fees charged by the Investment Manager under the Management
Agreement; or (ii) charge the relevant fee to the relevant
investment fund or special purpose vehicle, subject to the cap set
out in the paragraph below, and ensure that the value of such
investment shall be excluded from the calculation of the NAV for
the purposes of determining the Management Fee payable pursuant to
the above. The management fee expense of the Group for the period
is GBP1,780,159 (31 December 2020: GBP3,394,740; 30 June 2020:
GBP1,798,060).
Notwithstanding the above, where such investment fund or special
purpose vehicle employs leverage from third parties and the
Investment Manager or any of its affiliates is entitled to charge
it a fee based on gross assets in respect of such investment, the
Investment Manager may not charge a fee greater than 1.0% per annum
of gross assets in respect of any investment made by the Parent
Company or any member of the Group.
Performance fees
The performance fee is calculated by reference to the movements
in the Adjusted Net Asset Value since the end of the Calculation
Period in respect of which a performance fee was last earned or
Admission if no performance fee has yet been earned. The payment of
any performance fees to the Investment Manager will be conditional
on the Parent Company achieving at least a 5.0% per annum total
return for shareholders relative to a 30 April 2017 High Water
Mark.
The performance fee will be calculated in respect of each 12
month period starting on 1 January and ending on 31 December in
each calendar year (a "Calculation Period") and provided further
that if at the end of what would otherwise be a Calculation Period
no performance fee has been earned in respect of that period, the
Calculation Period shall carry on for the next 12 month period and
shall be deemed to be the same Calculation Period and this process
shall continue until a performance fee is next earned at the end of
the relevant period.
The performance fee will be equal to the lower of (i) in each
case as at the end of the Calculation Period, an amount equal to
(a) Adjusted Net Asset Value minus the Adjusted Hurdle Value, minus
(b) the aggregate of all Performance Fees paid to the Manager in
respect of all previous Calculation Periods; and (ii) the amount by
which (a) 15% of the total increase in the Adjusted Net Asset Value
since the Net Asset Value as at 30 April 2017 (being the aggregate
of the increase in the Adjusted Net Asset Value in the relevant
Calculation Period and in each previous Calculation Period) exceeds
(b) the aggregate of all Performance Fees paid to the Manager in
respect of all previous Calculation Periods. In the foregoing
calculation, the Adjusted Net Asset Value will be adjusted for any
increases or decreases in the Net Asset Value attributable to the
issue or repurchase of any Ordinary Shares in order to calculate
the total increase in the Net Asset Value attributable to the
performance of the Parent Company.
"Adjusted Net Asset Value" means the Net Asset Value plus (a)
the aggregate amount of any dividends paid or distributions made in
respect of any Ordinary Shares and (b) the aggregate amount of any
dividends or distributions accrued but unpaid in respect of any
Ordinary Shares, plus the amount of any Performance Fees both paid
and accrued but unpaid, in each case after the Effective Date and
without duplication. "Adjusted Hurdle Value" means the Net Asset
Value as at 30 April 2017 adjusted for any increases or decreases
in the Net Asset Value attributable to the issue or repurchase of
any Ordinary Shares increasing at an uncompounded rate equal to the
Hurdle. The "Hurdle" means a 5% per annum total return for
shareholders.
The Investment Manager shall not charge a performance fee twice.
Accordingly, if at any time the Group invests in or through any
other investment fund, special purpose vehicle or managed account
arrangement and a performance fee or carried interest is charged to
such investment fund, special purpose vehicle or managed account
arrangement by the Investment Manager or any of its affiliates, the
Investment Manager agrees to (and shall procure that all of its
relevant affiliates shall) either (at the option of the Investment
Manager): (i) waive such performance fee or carried interest
suffered by the Group by virtue of the Investment Manager's (or
such relevant affiliate's/affiliates') management of (or advisory
role in respect of) such investment fund, special purpose vehicle
or managed account, other than the fees charged by the Investment
Manager under the Management Agreement; or (ii) calculate the
performance fee as above, except that in making such calculation
the NAV (as of the date of the High Water Mark) and the Adjusted
NAV (as of the NAV calculation date) shall not include the value of
any assets invested in any other investment fund, special purpose
vehicle or managed account arrangement that is charged a
performance fee or carried interest by the Investment Manager or
any of its affiliates (and such performance fee or carried interest
is not waived with respect to the Group). The performance fee
expense of the Group for the period is GBP7,047,774 (31 December
2020: GBP4,040,085; 30 June 2020: GBPnil).
9. NET ASSET VALUE PER SHARE
(UNAUDITED) (UNAUDITED) (AUDITED)
AS AT AS AT AS AT
30 JUNE 2021 30 JUNE 2020 31 DECEMBER 2020
------------------------------ ---------------- ---------------- ------------------
Ordinary Shares
============================== ================ ================ ==================
Net assets GBP 295,507,964 GBP 260,396,391 GBP 270,537,108
============================== ================ ================ ==================
Shares in issue 278,276,392 290,036,012 282,647,364
============================== ================ ================ ==================
Net asset value per Ordinary
Share 106.19p 89.78p 95.72p
============================== ================ ================ ==================
10. RETURN PER ORDINARY SHARE
Basic earnings per share is calculated using the weighted
average number of shares in issue during the year, excluding the
average number of Shares purchased by the Parent Company and held
as Treasury Shares.
(UNAUDITED) (UNAUDITED) (AUDITED)
AS AT AS AT AS AT
30 JUNE 2021 30 JUNE 2020 31 DECEMBER
2020
======================================== =============== =============== ===============
Profit for the period GBP 39,938,375 -GBP 3,495,706 GBP 22,879,629
======================================== =============== =============== ===============
Average number of shares in issue
during the period 280,766,314 305,045,099 295,430,078
======================================== =============== =============== ===============
Earnings per Share (basic and diluted) 14.22p -1.15p 7.74p
======================================== =============== =============== ===============
The Parent Company has not issued any shares or other
instruments that are considered to have dilutive potential.
11. SHAREHOLDERS' CAPITAL
Set out below is the issued share capital of the Company as at
30 June 2021:
NOMINAL VALUE NUMBER
(UNAUDITED) GBP OF SHARES
----------------- -------------- ------------
Ordinary Shares 0.01 278,276,392
Set out below is the issued share capital of the Company as at
30 June 2020:
NOMINAL VALUE NUMBER
(UNAUDITED) GBP OF SHARES
----------------- -------------- ------------
Ordinary Shares 0.01 290,036,012
Set out below is the issued share capital of the Company as at
31 December 2020:
NOMINAL VALUE NUMBER
(AUDITED) GBP OF SHARES
----------------- -------------- -------------
Ordinary Shares 0.01 282,647,364
Rights attaching to the Ordinary Shares
The holders of the shares are entitled to receive, and to
participate in, any dividends declared in relation to the shares.
The holders of the shares shall be entitled to all of the Parent
Company's remaining net assets after taking into account any net
assets attributable to other share classes in issue. The shares
shall carry the right to receive notice of, attend and vote at
general meetings of the Parent Company. The consent of the holders
of shares will be required for the variation of any rights attached
to the shares. The net return per share is calculated by dividing
the net return on ordinary activities after taxation by the number
of shares in issue.
Voting rights
Subject to any rights or restrictions attached to any shares, on
a show of hands, every shareholder present in person has one vote
and every proxy present who has been duly appointed by a
shareholder entitled to vote has one vote, and on a poll, every
shareholder (whether present in person or by proxy) has one vote
for every share of which he is the holder. A shareholder entitled
to more than one vote need not, if he votes, use all his votes or
cast all the votes he uses the same way. In the case of joint
holders, the vote of the senior who tenders a vote shall be
accepted to the exclusion of the vote of the other joint holders,
and seniority shall be determined by the order in which the names
of the holders stand in the register of members.
No shareholder shall have any right to vote at any general
meeting or at any separate meeting of the holders of any class of
shares, either in person or by proxy, in respect of any share held
by him unless all amounts presently payable by him in respect of
that share have been paid.
Variation of rights & distribution on winding up
Subject to the provisions of the Act as amended and every other
statute for the time being in force concerning companies and
affecting the Parent Company (the "Statutes"), if at any time the
share capital of the Parent Company is divided into different
classes of shares, the rights attached to any class may be varied
either with the consent in writing of the holders of three-quarters
in nominal value of the issued shares of that class or with the
sanction of an extraordinary resolution passed at a separate
meeting of the holders of the shares of that class (but not
otherwise) and may be so varied either whilst the Parent Company is
a going concern or during or in contemplation of a winding-up.
At every such separate general meeting the necessary quorum
shall be at least two persons holding or representing by proxy at
least one-third in nominal value of the issued shares of the class
in question (but at any adjourned meeting any holder of shares of
the class present in person or by proxy shall be a quorum), any
holder of shares of the class present in person or by proxy may
demand a poll and every such holder shall on a poll have one vote
for every share of the class held by him. Where the rights of some
only of the shares of any class are to be varied, the foregoing
provisions apply as if each group of shares of the class
differently treated formed a separate class whose rights are to be
varied.
The Parent Company has no fixed life but, pursuant to the
Articles, an ordinary resolution for the continuation of the Parent
Company will be proposed at the annual general meeting of the
Parent Company to be held in 2025 and, if passed, every five years
thereafter. Upon any such resolution, not being passed, proposals
will be put forward within three months after the date of the
resolution to the effect that the Parent Company be wound up,
liquidated, reconstructed or unitised.
If the Parent Company is wound up, the liquidator may divide
among the shareholders in specie the whole or any part of the
assets of the Parent Company and for that purpose may value any
assets and determine how the division shall be carried out as
between the shareholders or different classes of shareholders.
The table below shows the movement in shares during the period
through 30 June 2021:
SHARES IN SHARES IN
ISSUE AT ISSUE AT
THE THE
FOR THE PERIOD FROM 1 JANUARY 2021 BEGINNING SHARES OF
OF
TO 30 JUNE 2021 (UNAUDITED) THE PERIOD REPURCHASED THE PERIOD
==================================== ============ ============ ============
Ordinary Shares 282,647,364 (4,370,972) 278,276,392
==================================== ============ ============ ============
The table below shows the movement in shares during the period
through 30 June 2020:
SHARES IN SHARES IN
ISSUE AT ISSUE AT
THE THE
FOR THE PERIOD FROM 1 JANUARY 2020 BEGINNING SHARES OF
OF
TO 30 JUNE 2020 (UNAUDITED) THE PERIOD REPURCHASED THE PERIOD
==================================== ====================== ============= ============
Ordinary Shares 312,302,305 (22,266,293) 290,036,012
==================================== ====================== ============= ============
The table below shows the movement in shares during the period
through 31 December 20 20 :
SHARES IN SHARES IN
ISSUE AT THE ISSUE AT
THE
FOR THE YEAR FROM 1 JANUARY 2020 BEGINNING SHARES OF
OF
TO 31 DECEMBER 2020 THE PERIOD REPURCHASED THE PERIOD
================================== ============= ============= ============
Ordinary Shares 312,302,305 (29,654,941) 282,647,364
================================== ============= ============= ============
Share buyback programme
During the period, the Company continued to repurchase shares
through the share buyback programme. All shares bought back are
held in treasury as at 30 June 2021. Details of the programme are
as follows:
ORDINARY AVERAGE LOWEST HIGHEST TOTAL
SHARES PRICE PER PRICE PER PRICE PER TREASURY
MONTH OF PURCHASE (UNAUDITED) PURCHASED SHARE SHARE SHARE SHARES
=============================== =========== ========== ========== ========== =============
January 2021 - - - - 99,968,301
=============================== =========== ========== ========== ========== =============
February 2021 583,465 88.25p 86.65p 88.99p 100,551,766
=============================== =========== ========== ========== ========== =============
March 2021 1,587,507 84.01p 82.61p 89.77p 102,139,273
=============================== =========== ========== ========== ========== =============
April 2021 550,000 85.56p 85.39p 85.80p 102,689,273
=============================== =========== ========== ========== ========== =============
May 2021 600,000 85.63p 85.00p 86.20p 103,289,273
=============================== =========== ========== ========== ========== =============
June 2021 1,050,000 84.07p 83.48p 84.07p 104,339,273
=============================== =========== ========== ========== ========== =============
Other distributable reserve
During the period, the Company declared and paid dividends of
GBPNil (31 December 2020: GBPNil, 30 June 2020: GBPNil) from the
other distributable reserve. Further, the cost of the buyback of
ordinary shares as detailed above was funded by the other
distributable reserve of GBP3,741,824 (31 December 2020:
GBP35,049,382; 30 June 2020: GBP15,290,346).
12. DIVIDS PER SHARE
The following table summarises the amounts recognised as
distributions to equity shareholders in the period:
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 31 DECEMBER
2020 2020
GBP GBP GBP
=========================================== ============== ============ =============
2019 interim dividend of 2.00 pence per
Ordinary Share paid on 2 April 2020 - 6,184,004 6,184,004
============== ============ =============
2020 interim dividend of 2.00 pence per
Ordinary Share paid on 11 June 2020 - 6,116,226 6,116,226
=========================================== ============== ============ =============
2020 interim dividend of 2.00 pence per
Ordinary Share paid on 17 September 2020 - - 5,711,983
=========================================== ============== ============ =============
2020 interim dividend of 2.00 pence per
Ordinary Share paid on 17 December 2020 - - 5,662,531
=========================================== ============== ============ =============
2020 interim dividend of 2.00 pence per 5,638,178 - -
Ordinary Share paid on 1 April 2021
=========================================== ============== ============ =============
2021 interim dividend of 2.00 pence per 5,586,528 - -
Ordinary Share paid on 24 June 2021
=========================================== ============== ============ =============
Total 11,224,706 12,300,230 23,674,744
=========================================== ============== ============ =============
An interim dividend of 2.00 pence per Ordinary Share was
declared by the Board on 19 August 2021 in respect of the period to
30 June 2021 and was paid to shareholders on 23 September 2021. The
interim dividend has not been included as a liability in these
accounts in accordance with International Accounting Standard 10:
Events After the Balance Sheet Date.
13. RELATED PARTY TRANSACTIONS
Each of the Directors is entitled to receive a fee from the
Parent Company at such rate as may be determined in accordance with
the Articles. Save for the Chairman of the Board, the fees are
GBP33,000 for each Director per annum. The Chairman's fee is
GBP55,000 per annum. The chairman of the Audit and Valuation
Committee may also receive additional fees for acting as the
chairman of such a committee. The current fee for serving as the
chairman of the Audit and Valuation Committee is GBP5,500 per
annum.
All the Directors are also entitled to be paid all reasonable
expenses properly incurred by them in attending general meetings,
board or committee meetings or otherwise in connection with the
performance of their duties. The Board may determine that
additional remuneration may be paid, from time to time, to any one
or more Directors in the event such Director or Directors are
requested by the Board to perform extra or special services on
behalf of the Parent Company.
As at 30 June 2021, the Directors' interests in the Parent
Company's shares were as follows:
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 2021 30 JUNE 2020 31 DECEMBER
2020
================== ========== ============================= ============================= =============================
Ordinary
Kevin Ingram Shares NA 64,968 64,968
================== ========== ============================= ============================= =============================
Mark Ordinary
Katzenellenbogen Shares 215,000 140,000 215,000
================== ========== ============================= ============================= =============================
Richard Levy Ordinary NA 1,300,000 NA
Shares
================== ========== ============================= ============================= =============================
Ordinary
Elizabeth Passey Shares 10,000 10,000 10,000
================== ========== ============================= ============================= =============================
Ordinary
Clive Peggram Shares 333,240 258,240 333,240
================== ========== ============================= ============================= =============================
Ordinary
Graeme Proudfoot Shares 130,000 NA 50,000
================== ========== ============================= ============================= =============================
Oliver Grundy Ordinary - NA NA
Shares
================== ========== ============================= ============================= =============================
Investment management fees for the period ended 30 June 2021 are
payable by the Parent Company to the Investment Manager and these
are presented on the Consolidated Statement of Comprehensive
Income. Details of investment management fees and performance fees
payable during the year are disclosed in Note 8.
During 2021, the Investment Manager continued to purchase shares
of the Parent Company with 20% of its monthly management fee. The
shares were purchased at the prevailing market price. As at 30 June
2021, the Investment Manager has purchased 4,039,247 (31 December
2020: 3,705,991; 30 June 2020: 3,377,094) shares.
As at 30 June 2021, Partners and Principals of the Investment
Manager held 510,000 Ordinary Shares (31 December 2020: 510,000; 30
June 2020: 2,195,000) in the Parent Company.
The Group has invested in VPC Offshore Unleveraged Private Debt
Fund Feeder, L.P. The Investment Manager of the Parent Company also
acts as manager to VPC Offshore Unleveraged Private Debt Fund
Feeder, L.P. The principal activity of VPC Offshore Unleveraged
Private Debt Fund Feeder, L.P. is to invest in alternative finance
investments and related instruments with a view to achieving the
Parent Company's investment objective. As at 30 June 2021, the
Group owned 26% of VPC Offshore Unleveraged Private Debt Fund
Feeder, L.P. (31 December 2020: 26%; 30 June 2020: 26%) and the
value of the Group's investment in VPC Offshore Unleveraged Private
Debt Fund Feeder, L.P. was GBP2,031,539 (31 December 2020:
GBP2,454,004; 30 June 2020: GBP3,519,232).
The Group has invested in VPC Synthesis, L.P. The Investment
Manager of the Parent Company also acts as manager to VPC
Synthesis, L.P. The principal activity of VPC Synthesis, L.P. is to
invest in alternative finance investments and related instruments
with a view to achieving the Parent Company's investment objective.
As at 30 June 2021, the Group owned 7% of VPC Synthesis, L.P. (31
December 2020: NA; 30 June 2020: NA) and the value of the Group's
investment in VPC Synthesis, L.P. was GBP9,622,073 (31 December
2020: NA; 30 June 2020: NA).
The Investment Manager may pay directly various expenses that
are attributable to the Group. These expenses are allocated to and
reimbursed by the Group to the Investment Manager as outlined in
the Management Agreement. Any excess expense previously allocated
to and paid by the Group to the Investment Manager will be
reimbursed to the Group by the Investment Manager. At 30 June 2021,
GBP24,038 was due to the Investment Manager (31 December 2020:
GBP44,240 ; 30 June 2020: GBP20,369) and is included in the Other
liabilities and accrued expenses balance on the Consolidated
Statement of Financial Position.
14. SUBSIDIARIES
(UNAUDITED) (UNAUDITED) (AUDITED)
30 JUNE 31 DECEMBER
2021 30 JUNE 2020 2020
PRINCIPAL COUNTRY OF NATURE PERCENTAGE PERCENTAGE PERCENTAGE
NAME ACTIVITY INCORPORATION OF INVESTMENT OWNERSHIP OWNERSHIP OWNERSHIP
---------------------- ------------ ---------------- ---------------- ------------- -------------- -------------
VPC Specialty Investment US Limited Sole limited Sole limited Sole limited
Lending Investments vehicle partner partner partner partner
Intermediate, interest
L.P.
====================== ============ ================ ================ ============= ============== =============
VPC Specialty Investment US Limited Sole limited N/A N/A
Lending Investment vehicle partner partner
Intermediate interest
Holdings, L.P.
====================== ============ ================ ================ ============= ============== =============
VPC Specialty General US Membership Sole member Sole member Sole member
Lending Investments partner interest
Intermediate
GP, LLC
====================== ============ ================ ================ ============= ============== =============
Fore London, Investment UK Limited Sole limited Sole limited Sole limited
L.P. vehicle partner partner partner partner
interest
====================== ============ ================ ================ ============= ============== =============
Fore London General UK Membership Sole member Sole member Sole member
GP, LLC partner interest
====================== ============ ================ ================ ============= ============== =============
Limited
Duxbury Court Investment partner
I, L.P. vehicle US interest 95% 95% 95%
====================== ============ ================ ================ ============= ============== =============
Duxbury Court General Membership
I GP, LLC partner US interest 95% 95% 95%
====================== ============ ================ ================ ============= ============== =============
Limited
Investment partner
Drexel I, L.P. vehicle US interest 53% 53% 52%
====================== ============ ================ ================ ============= ============== =============
Drexel I GP, General Membership
LLC partner US interest 53% 53% 52%
====================== ============ ================ ================ ============= ============== =============
The subsidiaries listed above as investment vehicles are
consolidated by the Group.
NAME REGISTERED ADDRESS
================================== ========================================
VPC Specialty Lending Investments 150 North Riverside Plaza, Suite 5200,
Intermediate, L.P. Chicago, IL 60606
==================================== ============================================
VPC Specialty Lending Investments 150 North Riverside Plaza, Suite
Intermediate Holdings, L.P. 5200, Chicago, IL 60606
==================================== ==========================================
VPC Specialty Lending Investments 150 North Riverside Plaza, Suite
Intermediate GP, LLC 5200, Chicago, IL 60606
==================================== ==========================================
Fore London, L.P. 6(th) Floor, 65 Gresham Street, London,
EC2V 7NQ United Kingdom
================================== ============================================
Fore London GP, LLC 150 North Riverside Plaza, Suite
5200, Chicago, IL 60606
================================== ==========================================
Duxbury Court I, L.P. 150 North Riverside Plaza, Suite 5200,
Chicago, IL 60606
================================== ============================================
Duxbury Court I GP, 150 North Riverside Plaza, Suite
LLC 5200, Chicago, IL 60606
================================== ==========================================
Drexel I, L.P. 150 North Riverside Plaza, Suite 5200,
Chicago, IL 60606
================================== ============================================
Drexel I GP, LLC 150 North Riverside Plaza, Suite
5200, Chicago, IL 60606
================================== ==========================================
15. NON-CONTROLLING INTERESTS
The non-controlling interests arise from investments in limited
partnerships considered to be controlled subsidiaries into which
there are other investors. The value of the non-controlling
interests at 30 June 2021 represents the portion of the NAV of the
controlled subsidiaries attributable to the other investors. As at
30 June 2021, the portion of the NAV attributable to
non-controlling interests' investments totalled GBP27,260 (31
December 2020: GBP19,337; 30 June 2020: GBP103,376). In the
Consolidated Statement of Comprehensive Income, the amount
attributable to non-controlling interests represents the increase
in the fair value of the investment in the period.
16. SUBSEQUENT EVENTS AFTER THE REPORTING PERIOD
The Company, on 21 August 2021, declared a dividend of 2.00
pence per Ordinary Share for the three-month period ended 30 June
2021 and paid the dividend on 23 September 2021.
There were no other significant events subsequent to the period
end.
SHAREHOLDER INFORMATION
FOR THE SIX-MONTH PERIODED 30 JUNE 2021
DEFINITIONS OF TERMS AND PERFORMANCE MEASURES
The Group uses the terms and alternative performance measures
below to present a measure of profitability which is aligned with
the requirements of our investors and potential investors, to draw
out meaningful subtotals of revenues and earnings and to provide
additional information not required for disclosure under accounting
standards to assist users of the financial statements in gauging
the profit levels of the Group. Alternative performance measures
are used to improve the comparability of information between
reporting periods, either by adjusting for uncontrollable or
one-off factors which impact upon IFRS measures or, by aggregating
measures, to aid the user understand the activity taking place. The
Strategic Report includes both statutory and adjusted measures, the
latter of which, reflects the underlying performance of the
business and provides a more meaningful comparison of how the
business is managed. APMs are not considered to be a substitute for
IFRS measures but provide additional insight on the performance of
the business. All terms and performance measures relate to past
performance:
Discount to NAV - Calculated as the difference in the NAV (Cum
Income) per Ordinary Share and the Ordinary Share price divided by
the NAV Cum (Income) per Ordinary Share.
Gross Returns - Represents the return on shareholder's funds per
share on investments of the Company before operating and other
expenses of the Company.
Look-Through Gearing Ratio - The aggregate gearing of the
Company and any investee entity (on a look-through basis, including
borrowing through securitisations using SPVs) shall not exceed 1.50
times its NAV (1.5x).
Market Capitalisation - Month-end closing share price multiplied
by the number of shares outstanding at month end.
NAV (Cum Income) or NAV or Net Asset Value - T he value of
assets of the Company less liabilities determined in accordance
with the accounting principles adopted by the Company.
NAV (Cum Income) Return - The theoretical total return on
shareholders' funds per share reflecting the change in NAV assuming
that dividends paid to shareholders were reinvested at NAV at the
time dividend was announced.
NAV per Share (Cum Income) - The NAV (Cum Income) divided by the
number of shares in issue.
Net Returns - Represents the return on shareholder's funds per
share on investments of the Company after operating and other
expenses of the Company.
Premium/(Discount) to NAV (Cum Income) - The amount by which the
share price of the Company is either higher (at a premium) or lower
(at a discount) than the NAV per Share (Cum Income), expressed as a
percentage of the NAV per share.
Revenue Return - Represents the difference between the NAV (Cum
Income) Return and the NAV (Ex Income) Return as defined above.
Share Price - Closing share price at month end (excluding
dividends reinvested).
Total Shareholder Return - Calculated as the change in the
traded share price from 31 December 2020 to 30 June 2021 plus the
dividends declared during the first six months of 2021 divided by
the traded share price as at 31 December 2020.
CONTACT DETAILS OF THE ADVISORS
Directors Graeme Proudfoot (Chairman)
Oliver Grundy
Mark Katzenellenbogen
Elizabeth Passey
Clive Peggram
all of the registered office below
Registered Office 6(th) Floor
65 Gresham Street
London EC2V 7NQ
United Kingdom
Company Number 9385218
Website Address https://vpcspecialtylending.com
Corporate Brokers Jefferies International Limited
100 Bishpsgate
London EC2N 4JL
United Kingdom
Winterflood Securities Limited
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Investment Manager and AIFM Victory Park Capital Advisors,
LLC
150 North Riverside Plaza
Suite 5200
Chicago
IL 60606
United States
Company Secretary Link Company Matters Limited
Beaufort House
51 New North Road
Exeter, Devon EX4 4EP
United Kingdom
Administrator Northern Trust Hedge Fund Services
LLC
50 South LaSalle Street
Chicago
Illinois 60603
United States
Registrar Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
United Kingdom
Custodians Merrill Lynch, Pierce, Fenner &
Smith Incorporated
101 California Street
San Francisco
CA 94111
United States
Millennium Trust Company
2001 Spring Road
Oak Brook
IL 60723
United States
Legal Adviser Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
United Kingdom
Independent Auditors PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
United Kingdom
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END
IR EAXNNALLFEFA
(END) Dow Jones Newswires
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