DJ M&G Credit Income Investment Trust plc: 2021 Interim Results
M&G Credit Income Investment Trust plc (MGCI) M&G Credit Income Investment Trust plc: 2021 Interim Results 16-Sep-2021 / 15:43 GMT/BST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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LEI: 549300E9W63X1E5A3N24
M&G Credit Income Investment Trust plc
Half Year Report and unaudited Condensed Financial
Statements for the six months ended 30 June 2021
Copies of the Half Year Report can be obtained from the following website:
www.mandg.co.uk/creditincomeinvestmenttrust
Company highlights
Company summary
M&G Credit Income Investment Trust plc (the 'Company') was incorporated on 17 July 2018 as a public company limited by shares. Admission to the London Stock Exchange's (LSE) main market for listed securities and dealings in its Ordinary Shares commenced on 14 November 2018. The Company is an investment trust within the meaning of section 1158 of the Corporation Tax Act (CTA) 2010.
Key dates
Period end 30 June 2021 2021 First interim dividend: Payment date May 2021 2021 Second interim dividend: Payment date August 2021
Future dividend timetable
Payment date 2021 Third interim November 2021 2021 Fourth interim February 2022 2022 First interim May 2022 2022 Second interim August 2022
Financial highlights
As at As at
Key data 30 June 2021 31 December 2020
(unaudited) (audited)
Net assets (GBP'000) 146,297 146,628
Net asset value (NAV) per Ordinary Share 102.04p 101.40p
Ordinary Share price (Mid-market) 97.20p 92.00p
Discount to NAV[a] 4.74% 9.27%
Ongoing charges figure[a] 1.08%[b] 0.87%
Six months ended Year ended
Return and dividends per Ordinary Share 30 June 2021 31 December 2020
(unaudited) (audited)
Capital return 2.0p 1.3p
Revenue return 1.3p 2.9p
NAV total return[a] 3.3% 3.7%
Share price total return[a] 8.7% (9.7)%
First interim dividend 0.74p 0.85p
Second interim dividend 0.76p[c] 0.77p
Third interim dividend - 0.71p
Fourth interim dividend - 1.95p[c]
Total dividends declared 1.50p 4.28p
[a] Alternative Performance Measure.
[b] The increase in the ongoing charges figure mainly shows the annualised effect of the increase in the investment management fee from 0.5% to 0.7% per annum. This increase in fee took effect on 1 April 2021, reflecting the fact that the portfolio is now appropriately positioned with regard to the Company's dividend target set at launch.
[c] Paid after the period/year end. Please see note 6 for further information.
Investment objective and policy
Investment objective
The Company aims to generate a regular and attractive level of income with low asset value volatility.
Investment policy
The Company seeks to achieve its investment objective by investing in a diversified portfolio of public and private debt and debt-like instruments ('Debt Instruments'). Over the longer term, it is expected that the Company will be mainly invested in private Debt Instruments, which are those instruments not quoted on a stock exchange.
The Company operates an unconstrained investment approach and investments may include, but are not limited to:
Asset-backed securities, backed by a pool of loans secured on, amongst other things, residential and
* commercial mortgages, credit card receivables, auto loans, student loans, commercial loans and corporate
loans;
* Commercial mortgages;
* Direct lending to small and mid-sized companies, including lease finance and receivables financing;
* Distressed debt opportunities to companies going through a balance sheet restructuring;
* Infrastructure-related debt assets;
* Leveraged loans to private equity owned companies;
* Public Debt Instruments issued by a corporate or sovereign entity which may be liquid or illiquid;
* Private placement debt securities issued by both public and private organisations; and
* Structured credit, including bank regulatory capital trades.
The Company invests primarily in Sterling denominated Debt Instruments. Where the Company invests in assets not denominated in Sterling, it is generally the case that these assets are hedged back to Sterling.
Investment restrictions
There are no restrictions, either maximum or minimum, on the Company's exposure to sectors, asset classes or geography. The Company, however, achieves diversification and a spread of risk by adhering to the limits and restrictions set out below.
The Company's portfolio comprises a minimum of 50 investments.
The Company may invest up to 30% of Gross Assets in below investment grade Debt Instruments, which are those instruments rated below BBB- by S&P or Fitch or Baa3 by Moody's or, in the case of unrated Debt Instruments, which have an internal M&G rating below BBB-.
The following restrictions will also apply at the individual Debt Instrument level which, for the avoidance of doubt, does not apply to investments to which the Company is exposed through collective investment vehicles:
Secured Debt Instruments Unsecured Debt Instruments Rating (% of Gross Assets) [a] (% of Gross Assets) AAA 5% 5%[b] AA/A 4% 3% BBB 3% 2% Below investment grade 2% 1%
[a] Secured Debt Instruments are secured by a first or secondary fixed and/or floating charge.
[b] This limit excludes investments in G7 Sovereign Instruments.
For the purposes of the above investment restrictions, the credit rating of a Debt Instrument is taken to be the rating assigned by S&P, Fitch or Moody's or, in the case of unrated Debt Instruments, an internal rating by M&G. In the case of split ratings by recognised rating agencies, the second highest rating will be used.
The Company typically invests directly, but it also invests indirectly through collective investment vehicles which are managed by an M&G Entity. The Company may not invest more than 20% of Gross Assets in any one collective investment vehicle and not more than 40% of Gross Assets in collective investment vehicles in aggregate. No more than 10% of Gross Assets may be invested in other investment companies which are listed on the Official List.
Unless otherwise stated, the above investment restrictions are to be applied at the time of investment.
Borrowings
The Company is managed primarily on an ungeared basis although the Company may, from time to time, be geared tactically through the use of borrowings. Borrowings will principally be used for investment purposes, but may also be used to manage the Company's working capital requirements or to fund market purchases of Shares. Gearing represented by borrowing will not exceed 30% of the Company's Net Asset Value, calculated at the time of draw down, but is typically not expected to exceed 20% of the Company's Net Asset Value.
Hedging and derivatives
The Company will not employ derivatives for investment purposes. Derivatives may however be used for efficient portfolio management, including for currency hedging.
Cash management
The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds ('Cash and Cash Equivalents').
There is no restriction on the amount of Cash and Cash Equivalents that the Company may hold and there may be times when it is appropriate for the Company to have a significant Cash and Cash Equivalents position. For the avoidance of doubt, the restrictions set out above in relation to investing in collective investment vehicles do not apply to money market type funds.
Changes to investment policy
Any material change to the Company's investment policy set out above will require the approval of Shareholders by way of an ordinary resolution at a general meeting and the approval of the Financial Conduct Authority (FCA).
Investment strategy
The Company seeks to achieve its investment objective by investing in a diversified portfolio of public and private debt and debt-like instruments of which at least 70% is investment grade. The Company is mainly invested in private debt instruments. This part of the portfolio generally includes debt instruments which are nominally quoted but are generally illiquid. Most of these will be floating rate instruments, purchased at inception and with the intention to be held to maturity or until prepaid by issuers; shareholders can expect their returns from these instruments to come primarily from the interest paid by the issuers.
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The remainder of the Company's portfolio is invested in cash, cash equivalents and quoted debt instruments, which are more readily available and which can generally be sold at market prices when suitable opportunities arise. These instruments may also be traded to take advantage of market conditions. Fixed rate instruments will often be hedged in order to protect the portfolio from adverse changes in interest rates. Shareholders can expect their returns from this part of the portfolio to come from a combination of interest income and capital movements.
Chairman's statement
Performance
I am delighted that your Company continues to show returns above those originally targeted at its launch. The NAV total return for the half year to 30 June 2021 was 3.3%. Including dividends paid, the annualised NAV total return was 4.8% from inception to 30 June 2021. Your Board considers these to be strong performances, noting the relatively low risk in the underlying investments.
In the first quarter of the year markets were preoccupied by the risk of inflation and economic overheating which led to a global sell-off in government bonds. During this period the Company's short position in the 10 year gilt future successfully offset any pricing weakness related to interest rate risk in our holdings. By hedging interest rate risk and maintaining low duration our Investment Manager was able to negate the effect of rising risk-free rates on portfolio returns, allowing the Company to capture positive credit spread performance.
Although upward pressure on government bond yields cooled during the second quarter, sovereign debt markets remained volatile. As the period progressed, central banks began to discuss timelines for the tightening of monetary policy. Counterintuitively, government bond markets, led by the US, rallied to end the quarter at levels last seen at the end of February. Our Investment Manager was able to benefit from the strength of credit markets over this period to realise capital gains on the sale of bonds that had been purchased at much cheaper levels during 2020. These capital gains, along with low portfolio duration, contributed to the NAV outperforming fixed income indices such as the ICE BofA Sterling and Collateralised Index (down by 2.6%) and the ICE BofA European Currency Non-Financial High Yield 2% Constrained Index (up by 3.0%) over the period.
Share buybacks and discount management
Your Board believes the volatility in the price of the Ordinary Shares has not reflected the stability and low volatility of the underlying NAV. On 30 April 2021, the Company announced a 'zero discount' policy (the 'Policy') to seek to manage the discount or premium to NAV at which the Company's Ordinary Shares trade.
The Policy has been adopted because the Board believes that it is important for Shareholders to be able to benefit appropriately from the Company's investment objective which is to generate a regular and attractive level of income with low asset value volatility. The Company therefore will seek to ensure that the Ordinary Shares trade close to NAV in normal market conditions through a combination of Ordinary Share buybacks and the issue of new Ordinary Shares, or resale of Ordinary Shares held in treasury, where demand exceeds supply. Further issuance would allow the Company to take advantage of opportunities in the private debt markets as they arise, as well as to increase the size of the Company, which should reduce the ongoing charges figure and improve the liquidity of the Ordinary Shares.
Your Company has undertaken a number of share buybacks pursuant to the Policy. In addition, the Company's Investment Manager has held meetings with both existing and potential investors. Pleasingly, these endeavours, coupled with a more positive market backdrop, have led to a narrowing of the discount to NAV at which the Ordinary Shares trade.
The Company's Ordinary Share price traded at an average discount to NAV of 7.5% during the period from 2 January to 30 June 2021. On 30 June 2021 the Ordinary Share price was 97.20p, representing a 4.7% discount to NAV as at that date. As at 30 June 2021, 1,238,000 shares had been purchased as part of the Policy and were held in treasury.
Board
Mark Hutchinson retired from the Board on 31 August 2021. This coincided with Mark leaving his role as Chair of Private Assets at M&G Alternatives Investment Management Limited, your Company's Investment Manager. We thank him for his wise counsel, commitment and for his considerable contribution since the inception of the Company.
Your Board has commenced the search process for an additional non-executive Director and, in due course, will consider replacing Mark.
Dividends and transition from LIBOR to SONIA
Your Company is currently paying three, quarterly interim dividends at an annual rate of LIBOR plus 3%, calculated by reference to the opening NAV as at 1 January 2021, adjusted for the payment of the last dividend in respect of the last financial year (adjusted opening NAV). In addition your Company will pay a variable, fourth interim dividend to be determined after the year end, which will take into account the net income over the whole financial year and, if appropriate, any capital gains. The Company paid dividends of 0.74p and 0.76p per Ordinary Share in respect of the quarters to 31 March 2021 and 30 June 2021 respectively.
The Company currently uses the average daily three-month LIBOR as its reference for the purposes of its targeted dividend rate. LIBOR is in the process of being phased out by 31 December 2021 in favour of a new measure called Sterling Overnight Index Average (SONIA).
Since the global financial crisis over a decade ago, banks have been making less use of the interbank lending market. This has raised the question of the robustness and reliability of some of the rates which arise from that process, particularly at the less frequently used maturity points. Additionally, LIBOR has faced concerns regarding its reputation, since manipulation of quotes for the rates by some market participants was discovered to have taken place around the time of the global financial crisis. Financial regulators need standard measures of market interest rates to be trusted and relevant and for the process used to calculate them to be credible, transparent and robust for the long term. Instead of quotations provided by a panel of banks, which is the process for the calculation of LIBOR, regulators have decided that benchmark rates must hereafter both be administered by central banks and be based on actual transactions in deep and liquid markets. Introducing SONIA to replace LIBOR for sterling interest rates aims to achieve those objectives.
The key difference between the two measures is that LIBOR is forward-looking and SONIA is backward-looking: SONIA cannot be determined until the end of an agreed interest period.
Although SONIA gives a different result from LIBOR, based upon the performance of the two measures over the recent past, we do not expect our adoption of it to make a significant difference.
Your Board has, therefore, decided that it is in the best interests of Shareholders and the Company simply to substitute SONIA for LIBOR with effect from 1 January 2022 for the purpose of guidance on future dividends as well as for benchmarking the Company's investment performance.
The adoption of SONIA will not affect the way in which the portfolio is managed. Your Company's Investment Manager continues to believe that an annual total return, and thus ultimately a dividend yield, of LIBOR (and SONIA from January 2022) plus 4% will continue to be achievable although there can be no guarantee that this will occur in any individual year.
Outlook
Your Company's portfolio (including irrevocable commitments) is now 58.9% invested in private (non- listed) assets, with an additional investment of some 10% in illiquid publicly listed assets which are intended to be held to maturity. Public bond valuations are currently expensive by historical standards and on a risk adjusted basis appear unattractive relative to the target return of the Company. Our Investment Manager will continue to grow the private asset portion of the portfolio to achieve additional returns compared to public markets, further progressing the yield of the portfolio.
The Company maintains access to an undrawn GBP25 million revolving credit facility which should enable us to weather any future market shocks while having the firepower to purchase suitable assets as they arise. We have not yet used this facility but it continues to provide a valuable source of additional liquidity.
Based upon income earned and gains on sales of securities already realised in the portfolio, we believe the Company is in a good position to achieve its return and dividend objectives, as set out above in the section entitled 'Dividends and transition from LIBOR to SONIA', for the current financial year.
David Simpson
Chairman
16 September 2021
Investment manager's report
We are pleased to report strong NAV total return performance of 3.3% in the first half of the year which leaves the Company currently ahead of its dividend target. For the period ended 30 June 2021, the Company had declared dividend payments of 1.50p per Ordinary Share (of which 0.74p per Ordinary Share was paid in May 2021 and 0.76p per Ordinary Share was paid in August 2021). The share price total return from 1 January to 30 June 2021 was 8.7%.
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In the first half of 2021 financial markets focus changed from considering the risks associated with the shock caused by the global spread of the COVID-19 pandemic, to those posed by the huge fiscal and monetary stimulus which central banks provided as a response to that initial shock. Asset purchasing programmes succeeded in keeping borrowing costs low and corporate issuers of varying credit quality continued to have access to cheap levels of investor capital. Investors looking for increased returns were forced along the credit curve into 'riskier' sectors and in many cases, out of investment grade and into high yield credit. Against this backdrop, we continued to adopt a patient and prudent approach to deploying capital, with a focus on ensuring that returns were commensurate to underlying credit risk.
Portfolio activity and positioning
The focus in markets during the early part of the year was the rise of inflation and the reaction of sovereign debt markets. The yield on the 10 year US Treasury almost doubled over the first quarter, whilst that of the 10 year UK gilt widened to approximately four times the level seen at the end of 2020 - at one point spiking to a near two-year high. In the Eurozone, the yield on the German 10 year bund touched its highest level since the onset of the pandemic. Whilst risk-free rates climbed higher, corporate credit spreads continued to tighten. Against this backdrop, the Company began the year cautiously positioned and continued to reduce risk over the period. The Company's short position in the 10 year gilt future successfully offset any depreciation in the value of the portfolio's holdings resulting from the change in interest rates.
By contrast, volatility in credit markets remained subdued with central banks committed to providing monetary stimulus in the short term. Investment grade and high yield credit spreads continued to tighten over the period, reaching multi-year lows and finishing inside pre-COVID levels, testament to the success of central bank asset purchase programmes in suppressing corporate yields. Whilst this limited our ability to invest in large parts of the public market, we were able to sell into this strength and realise notable capital gains in the portfolio, whilst reinvesting proceeds into higher yielding private assets.
Despite elevated volumes of new issuance in both investment grade and high yield credit, portfolio activity in the second quarter of the year slowed. A high appetite for yield in public markets limited the amount of attractively priced deals, with most offering yields well inside the target return of the Company. However, the pipeline of potential private transactions has remained strong since the start of the year and in total over the period we added a further 9.2% of private and illiquid assets to the portfolio.
As at 30 June 2021, the funded private asset portion of the portfolio had increased to 50.9% (versus 44.1% at 31 December 2020) with an additional investment of 6% in Private Assets transacted after the period end, or committed to be drawn down beyond the date of this report. Further commitments of GBP2.9m (c.2%) since the period end are expected to take the Company's overall private asset exposure to approximately 58.9%.
Outlook
As inflation continues to ramp up, fundamental credit analysis of issuers and their cash flow profiles will become more important than ever in assessing relative value. In such an environment, our extensive research capabilities of over 100 analysts covering public and private credit means we are well positioned to continue to seek the right investment opportunities for the portfolio.
There remain many risks on the horizon as we enter the second half of the year. Most notable of these is the spread of a more transmissible strain of the COVID-19 virus, the Delta variant, which is already leading to economic growth forecasts being revised. In some countries there remain heightened geopolitical risks, particularly discord between the US and China, recent cyber security attacks and continued friction between the UK and EU following the former's official exit from the European Union.
We view the main threat to market stability as the tapering of economic stimulus by central banks and how it is signalled to investors. Economies have rebounded more swiftly than anticipated and inflation in the UK and US has spiked notably beyond the long term target of 2%, with the latter far more pronounced due to its outsized fiscal stimulus. However, the recovery has been uneven with employment remaining below pre-pandemic levels and a premature pullback of accommodative monetary policy could damage the longer term economic recovery. The issue is complicated in that the risk is double edged, as continuing to provide fiscal stimulus to an already overheating economy could lead to undesirably high inflation for years to come, which may prove difficult to reverse. Therefore, the predominant theme in markets as we enter the second half of the year is the discussion on whether the current levels of inflation are 'transitory' (resulting from pent-up demand caused by social restrictions but expected to reduce over time) or 'persistent' (a structural shift indicating longer term inflationary trends.) The action of central banks in response to the challenge of the evolving inflationary environment looks set to have the biggest bearing on the path of the economic recovery as we continue through 2021 and into 2022.
If current market conditions persist, we will continue to increase the yield of the portfolio by selling public bonds, realising capital gains and reinvesting proceeds into new private investment opportunities. This rotation into higher yielding private assets with stronger structural protections will further improve the credit quality of the portfolio. There is currently a healthy deal pipeline of private opportunities offering yields in line with our long term target.
M&G Alternatives Investment Management Limited
16 September 2021
Portfolio analysis
Top 20 Holdings
Percentage of portfolio of investments
(including cash on deposit and derivatives)
As at 30 June 2021
M&G European Loan Fund 12.16
Sonovate Limited Var. Rate 12 Apr 2022 1.80
Atlas 2020 1 Trust Var. Rate 30 Sep 2050 1.65
Westbourne 2016 1 WR Senior Var. Rate 30 Sep 2023 1.59
Delamare Finance FRN 1.279% 19/02/2029 1.59
Finance for Residential Social Housing 8.569% 4 Oct 2058 1.54
Hall & Woodhouse Var. Rate 30 Dec 2023 1.53
Signet Excipients Var. Rate 20 Oct 2025 1.42
Newday Partnership Funding 2017-1 FRN 0.8053% 15 Dec 2027 1.39
Regenter Myatt Field North Var. Rate 31 Mar 2036 1.35
Hammond Var. Rate 28 Oct 2025 1.32
Project Driver TL Var. Rate 1.32
RIN II 1.778% 10 Sep 2030 1.26
Dragon Finance FRN 1.3665% 13 Jul 2023 1.14
Finance for Residential Social Housing 8.369% 4 Oct 2058 1.12
Lewisham Var. Rate 12 Feb 2023 1.10
NewRiver REIT 3.5% 7 Mar 2028 1.09
Marston's Issuer FRN 1.7083% 15 Oct 2031 1.07
Ripon Mortgages FRN 1.2814% 20 Aug 2056 1.05
Hammerson 6% 23 Feb 2026 1.04
Total 37.53
Source: State Street.
Geographical exposure
Percentage of portfolio of investments
As at 30 June 2021
(excluding cash on deposit and derivatives)
United Kingdom 60.06%
United States 7.40%
France 3.09%
European Union 2.80%
Australia 2.23%
Other 24.42%
Source: M&G and State Street as at 30 June 2021
Portfolio overview
As at 30 June 2021 % Cash on deposit 3.20 Public 46.22 Asset-backed securities 22.12 Bonds 24.10 Private 50.86 Asset-backed securities 6.72 Bonds 2.45 Investment funds 12.16 Loans 19.03 Private placements 0.99 Other 9.51 Derivatives (0.28) Debt derivatives (0.17) Forwards (0.11) Total 100.00
Source: State Street.
Credit rating breakdown
As at 30 June 2021 % Unrated (0.28) Derivatives (0.28) Cash and investment grade 77.29 Cash on deposit 3.20 AAA 5.52 AA+ 1.85 AA 3.94 AA- 3.38 A+ 0.21 A 0.65 A- 2.30 BBB+ 8.71 BBB 12.94 BBB- 25.11 M&G European Loan Fund (ELF) (see note) 9.48 Sub-investment grade 22.99 BB+ 4.33 BB 5.39 BB- 2.55 B+ 1.77 B 2.96 B- 1.95 CCC+ 0.64 CCC- 0.48 D 0.24 M&G European Loan Fund (ELF) (see note) 2.68 Total 100.00
Source: State Street.
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Note: ELF is an open-ended fund managed by M&G which invests in leveraged loans issued by, generally, substantial private companies located in the UK and Continental Europe. ELF is not rated and the Investment Manager has determined an implied rating for this investment, utilising rating methodologies typically attributable to collateralised loan obligations. On this basis, 78% of the Company's investment in ELF has been ascribed as being investment grade, and 22% has been ascribed as being sub-investment grade. These percentages have been utilised on a consistent basis for the purposes of determination of the Company's adherence to its obligation to hold no more than 30% of its assets in below investment grade securities.
Top 20 holdings %
Company Description
as at 30 June 2021
Open-ended fund managed by M&G that invests in leveraged loans issued by, generally,
M&G European Loan Fund substantial private companies located in the UK and Continental Europe. The fund's objective is
to create attractive levels of current income for investors while maintaining relatively low
12.16% volatility of NAV. (Private)
Sonovate Limited Var.
Rate 12 Apr 2022 Bilateral loan to a company providing companies in the recruitment industry with an integrated
service that incorporates placement management, invoicing and financing. (Private)
1.80%
Atlas 2020 1 Trust Var. Floating-rate, senior tranche of a bilateral RMBS transaction backed by a pool of Australian
Rate 30 Sep 2050 equity release mortgages. (Private)
1.65%
Westbourne 2016 1 WR
Senior Var. Rate 30 Sep Westbourne provides working capital finance to SMEs in the UK. The company is focused on small
2023 borrowers and has employed an advanced technology platform for the application, underwriting
and monitoring of loans. (Private)
1.59%
Delamare Finance FRN
1.279% 19/02/2029 Floating-rate, senior tranche of a CMBS secured by the sale and leaseback of 33 Tesco
superstores and 2 distribution centres. (Public)
1.59%
Finance for Residential High grade (AA/Aa3), fixed-rate bond backed by cash flows from housing association loans.
Social Housing 8.569% 4 (Public)
Oct 2058
1.54%
Hall & Woodhouse Var.
Rate 30 Dec 2023 Bilateral loan to a regional UK brewer that manages a portfolio of 219 freehold and leasehold
pubs. (Private)
1.53%
Signet Excipients Var. Fixed-rate loan secured against two large commercial premises in London, currently leased to 2
Rate 20 Oct 2025 FTSE listed UK corporations. (Private)
1.42%
NewDay Partnership
Funding 2017-1 FRN High grade ABS (AAA). UK Creditcard. Securitisation of a portfolio of designated consumer
0.8053% 15 Dec 2027 credit card, store card and instalment credit accounts initially originated or acquired by
NewDay Ltd in the UK. (Public)
1.39%
Regenter Myatt Field PFI (Private Finance Initiative) floating-rate, amortising term loan relating to the already
North Var. Rate 31 Mar completed refurbishment and ongoing maintenance of residential dwellings and communal
2036 infrastructure in the London borough of Lambeth. (Private)
1.35%
Hammond Var. Rate 28 Secured, bilateral real estate development loan backed by a combined portfolio of 2 office
Oct 2025 assets leased to an underlying roster of global corporate tenants. (Private)
1.32%
Project Driver TL Var. Senior term loan to a provider of hire purchase financing on used domestic motor vehicles to
Rate consumers in the UK. (Private)
1.32%
RIN II FRN 1.778% 10
Sep 2030 Mixed CLO (AAA). Consists primarily of senior secured infrastructure finance loans managed by
RREEF America L.L.C. (Public)
1.26%
Dragon Finance FRN Floating-rate, subordinated tranche of a securitisation of the sale and leaseback of 10
1.3665% 13 Jul 2023 supermarket sites sponsored by J Sainsbury plc ('Sainsbury's'). (Public)
1.14%
Finance for Residential
Social Housing 8.369% 4
Oct 2058 High grade (AA), fixed rate bond backed by cash flows from housing association loans. (Public)
1.12%
Lewisham Var. Rate 12 Senior secured, fixed-rate term loan funding the costs of acquiring and developing a site in
Feb 2023 Lewisham to provide 758-bed purpose-built student accommodation and 67 affordable housing
units. (Private)
1.10%
NewRiver REIT 3.5% 7
Mar 2028 NewRiver REIT PLC operates as a real estate investment trust investing in retail properties
throughout the United Kingdom. Fixed, callable bond. Senior unsecured. (Public)
1.09%
Marston's Issuer FRN Marston's PLC is a leading independent brewing and pub retailing business. Marston's Issuer PLC
1.7083% 15 Oct 2031 operates as a special purpose entity on behalf of Marstons PLC, formed for the purpose of
issuing debt securities to repay existing credit facilities, refinance indebtedness, and for
1.07% acquisition purposes. (Public)
Ripon Mortgages FRN High Grade ABS (AA+/Aaa). UK RMBS. The portfolio comprises buy-to-let loans originated by
1.2814% 20 Aug 2056 Bradford and Bingley and Mortgage Express, secured over residential properties located in
England and Wales. (Public)
1.05%
Hammerson 6% 23 Feb Hammerson plc develops, builds, and manages commercial buildings, offices, and shopping centres
2026 mainly operating throughout the United Kingdom, but also with investment and development
activities in France and Germany Senior unsecured, bullet bond. (Public)
1.04%
Interim management report and statement of directors' responsibilities
Interim management report
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal factors that could impact the remaining six months of the financial period are set out in the Chairman's statement and the Investment Manager's report.
Principal risks
The principal risks faced by the Company during the remaining six months of the year can be divided into various areas as follows:
* Market risk; * Credit risk; * Investment management performance risk; * Liquidity risk; * Dividend policy risk; * Operational risk; * Regulatory, legal and statutory risk: changes in laws, government policy or regulations; and * Sustainability risk.
These are consistent with the principal risks described in more detail in Company's Annual Report and Financial Statements for the year ended 31 December 2020, which can be found in the Strategic Report on pages 17 to 22 and in note 14 on pages 95 to 98 and which are available on the website at: www.mandg.co.uk/creditincomeinvestmenttrust The Board continues to review the societal and economic impacts of governmental responses to theCOVID-19 pandemic, as well as the operational risks that the pandemic poses to the Company and its service providers. The duration and ultimate impact of the pandemic remains difficult to predict and the Board will continue to monitor and report on material developments on an ongoing basis.
For further information on the impact of COVID-19 on the Company's principal risks and uncertainties, please refer to the Investment Manager's report.
The Investment Manager and the Company's other third-party service providers have implemented appropriate business continuity plans and remain fully operational whilst their staff continue to predominantly work from home. Notwithstanding the overarching impact of COVID-19, in the view of the Board, the principal risks facing the Company since the previous report remain unchanged and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review.
Going concern In accordance with the latest guidance issued by the Financial Reporting Council, the Directors have undertaken and documented a rigorous assessment of whether the Company is a going concern. The Directors considered all available information when undertaking the assessment.
The Directors believe that the Company has appropriate financial resources to enable it to meet its day-to-day working capital requirements and the Directors believe that the Company is well placed to continue to manage its business risks.
In assessing the going concern basis of accounting, the Directors have also considered the COVID-19 pandemic and the impact this may have on the Company's investments and the Company's NAV.
The Directors consider that the Company has adequate resources to continue in operational existence for the next 12 months. For this reason they continue to adopt the going concern basis of accounting in preparing these condensed financial statements. Related party disclosure and transactions with the Investment Manager M&G Alternatives Investment Management Limited, as Investment Manager, is a related party to the Company. The management fee due to the Investment Manager for the period is disclosed in the condensed income statement and in note 3, and amounts outstanding at the period end are shown in note 8. The Company holds an investment in M&G European Loan Fund which is managed by M&G Investment Management Limited. At the period end this was valued at GBP17,458,741 and represented 12.16% of the Company's investment portfolio.
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DJ M&G Credit Income Investment Trust plc: 2021 -5-
The Directors of the Company are related parties. The Chairman receives an annual fee of GBP41,000, the Chairman of the Audit Committee receives an annual fee of GBP35,750 and a non-executive Director receives an annual fee of GBP30,750. Mark Hutchinson was employed by M&G as Chair of Private Assets and the Company as a non-executive Director until 31 August 2021 and agreed to waive his fees. There are certain situations where the Company undertakes purchase and sale transactions with other M&G managed funds. All such transactions are subject to the provisions of M&G's fixed income dealing procedures and prior approval by senior fixed income managers authorised by M&G to approve such trades. Trades are conducted on liquidity and pricing terms which at the relevant time are no worse than those available to the Company from dealing with independent third parties.
Statement of directors' responsibilities
The Directors confirm that to the best of their knowledge:
the condensed set of financial statements has been prepared in accordance with Financial Reporting
Standard 104 (Interim Financial Reporting) and give a true and fair view of the assets, liabilities,
* financial position and profit or loss of the Company; and
this Interim management report, together with the Chairman's statement, Investment Manager's report and
* the condensed set of financial statements include a fair review of the information required by:
DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events
that have occurred during the six months ended 30 June 2021 and their impact on the condensed set of
a. financial statements; and a description of the principal risks for the remaining six months of the
period; and
DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that
b. have taken place during the six months ended 30 June 2021 and that have materially affected the
financial position or performance of the Company during that period; and any changes in the related
party transactions that could do so.
The Half Year Report and unaudited condensed set of financial statements were approved by the Board of Directors on 16 September 2021 and the above responsibility statement was signed on its behalf by:
David Simpson
Chairman
16 September 2021
Condensed income statement
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net gains/(losses) on investments 7 - 541 541 - (1,661) (1,661) - 2,714 2,714
Net gains/(losses) on derivatives 7 - 2,428 2,428 - (2,701) (2,701) - (1,368) (1,368)
Net currency (losses)/gains (36) (140) (176) 44 141 185 (7) 451 444
Income 3 2,735 - 2,735 2,451 - 2,451 5,195 - 5,195
Investment management fee (451) - (451) (355) - (355) (714) - (714)
Other expenses (254) - (254) (294) - (294) (464) - (464)
Net return on ordinary activities before 1,994 2,829 4,823 1,846 (4,221) (2,375) 4,010 1,797 5,807
finance costs and taxation
Finance costs 5 (61) - (61) - - - (24) - (24)
Net return on ordinary activities before 1,933 2,829 4,762 1,846 (4,221) (2,375) 3,986 1,797 5,783
taxation
Taxation on ordinary activities - - - - - - - - -
Net return attributable to Ordinary 1,933 2,829 4,762 1,846 (4,221) (2,375) 3,986 1,797 5,783
Shareholders after taxation
Net return per Ordinary Share (basic and 2 1.34p 1.96p 3.30p 1.40p (3.20)p (1.80)p 2.88p 1.30p 4.18p
diluted)
The total column of this statement represents the Company's profit and loss account. The 'Revenue' and 'Capital' columns represent supplementary information provided under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
The Company has no other comprehensive income and therefore the net return on ordinary activities after taxation is also the total comprehensive income for the period.
The accompanying notes form an integral part of these condensed financial statements.
Condensed statement of financial position
As at 30 June As at 30 June As at 31
2021 2020 December
(unaudited) (unaudited) 2020 (audited)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair value through profit or loss 7 139,439 135,227 140,091
Current assets
Derivative financial assets held at fair value through profit 7 - - 225
or loss
Receivables 8 1,798 1,080 1,345
Cash and cash equivalents 8 6,944 11,362 7,278
8,742 12,442 8,848
Current liabilities
Derivative financial liabilities held at fair value through 7 (408) (944) -
profit or loss
Payables 8 (1,476) (5,992) (2,311)
(1,884) (6,936) (2,311)
Net current assets 6,858 5,506 6,537
Net assets 146,297 140,733 146,628
Capital and reserves
Called up share capital 9 1,447 1,447 1,447
Share premium 42,217 42,208 42,217
Special distributable reserve 10 97,296 98,831 98,499
Capital reserve 9 4,313 (2,669) 3,349
Revenue reserve 1,024 916 1,116
Total shareholders' funds 146,297 140,733 146,628
Net Asset Value per Ordinary Share (basic and diluted) 2 102.04p 97.23p 101.40p
The accompanying notes form an integral part of these condensed financial statements.
Approved and authorised for issue by the Board of Directors on 16 September 2021 and signed on its behalf by:
David Simpson
Chairman
Company registration number: 11469317
16 September 2021
Condensed statement of changes in equity
Called up Special
Six months ended 30 June 2021 Ordinary Share Share distributable Capital Revenue Total
(unaudited) premium reserve reserve reserve
capital
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2020 1,447 42,217 98,499 3,349 1,116 146,628
Purchase of Ordinary Shares to be - - (1,203) - - (1,203)
held in treasury
Net return attributable to - - - 2,829 1,933 4,762
shareholders
Dividends paid 6 - - - (1,865) (2,025) (3,890)
Balance at 30 June 2021 1,447 42,217 97,296 4,313 1,024 146,297
Called up Ordinary
Six months ended 30 June 2020 Share Share Special distributable Capital Revenue Total
(unaudited) premium reserve reserve reserve
capital
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2019 1,300 28,229 99,000 1,968 1,735 132,232
Issue of Ordinary Shares 9 147 13,979 - - - 14,126
Net return attributable to - - - (4,221) 1,846 (2,375)
shareholders
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DJ M&G Credit Income Investment Trust plc: 2021 -6-
Dividends paid 6 - - (169) (416) (2,665) (3,250)
Balance at 30 June 2020 1,447 42,208 98,831 (2,669) 916 140,733
Called up Special
Year ended 31 December 2020 Note Ordinary Share Share distributable Capital Revenue Total
(audited) premium reserve reserve reserve
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2019 1,300 28,229 99,000 1,968 1,735 132,232
Issue of Ordinary Shares 9 147 13,945 - - - 14,092
Purchase of Ordinary Shares to be - - (129) - - (129)
held in treasury
Initial public offering costs - 43 - - - 43
written off
Net return attributable to - - - 1,797 3,986 5,783
shareholders
Dividends paid 6 - - (372) (416) (4,605) (5,393)
Balance at 31 December 2020 1,447 42,217 98,499 3,349 1,116 146,628
The accompanying notes form an integral part of these condensed financial statements.
Condensed cash flow statement
Note Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Net profit/(loss) before finance costs and taxation 4,823 (2,375) 5,807
Adjustments for:
Net gains/(losses) on investments 7 (541) 1,661 (2,714)
Net gains/(losses) on derivatives 7 (2,428) 2,701 1,368
Decrease/(increase) in receivables 133 50 (253)
(Decrease) in payables (165) (341) (96)
Purchases of investments(a) 7 (19,439) (43,731) (78,730)
Sales of investments(a) 7 22,437 37,644 68,430
Net cash inflow/(outflow) from operating activities 4,820 (4,391) (6,188)
Financing activities
Finance costs 5 (61) - (24)
Issue of Ordinary Shares - 14,126 14,092
Initial public offering costs written off - - 43
Purchase of Ordinary Shares to be held in treasury (1,203) - (129)
Dividend paid 6 (3,890) (3,250) (5,393)
Net cash (outflow)/inflow from financing activities (5,154) 10,876 8,589
(Decrease)/Increase in cash and cash equivalents (334) 6,485 2,401
Cash and cash equivalents at the start of the period/year 7,278 4,877 4,877
(Decrease)/Increase in cash and cash equivalents as above (334) 6,485 2,401
Cash and cash equivalents at the end of the period/year 8 6,944 11,362 7,278
[a] Receipts from the sale of, and payments to acquire investment securities have been classified as components of cash flows from operating activities because they form part of the company's dealing operations.
The accompanying notes form an integral part of these condensed financial statements.
Notes to the condensed financial statements
1 Accounting policies
The condensed financial statements have been prepared on a going concern basis under the historical cost convention, modified to include certain items at fair value, and in accordance with United Kingdom Accounting Standards, including Financial Reporting Standard 104 (FRS 104) Interim Financial Reporting issued by the Financial Reporting Council and the Statement of Recommended Practice (SORP) issued by the Association of Investment Companies (AIC) in October 2019 "Financial Statements of Investment Trust Companies and Venture Capital Trusts".
The annual Financial Statements have been prepared in accordance with the Financial Reporting Standard 102 (FRS 102) and the AIC SORP.
The accounting policies applied to this condensed set of financial statements are consistent with those applied in the Annual Report and Financial Statements for the year ended 31 December 2020.
The functional and presentational currency of the Company is pounds sterling because that is the currency of the primary economic environment in which the Company operates.
All values are recorded to nearest thousands, unless otherwise stated.
2 Returns and net asset value
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
Revenue return
Revenue return attributable to Ordinary Shareholders (GBP'000) 1,933 1,846 3,986
Weighted average number of shares in issue during the period/year 144,490,744 131,782,457 138,289,698
Revenue return per Ordinary Share (basic and diluted) 1.34p 1.40p 2.88p
Capital return
Capital return attributable to Ordinary Shareholders (GBP'000) 2,829 (4,221) 1,797
Weighted average number of shares in issue during the period/year 144,490,744 131,782,457 138,289,698
Capital return per Ordinary Share (basic and diluted) 1.96p (3.20)p 1.30p
Net return
Net return per Ordinary Share (basic and diluted) 3.30p (1.80)p 4.18p
NAV per Ordinary Share
Net assets attributable to Ordinary Shareholders (GBP'000) 146,297 140,733 146,628
Number of shares in issue at period/year end 143,367,771 144,745,771 144,605,771
NAV per Ordinary Share 102.04p 97.23p 101.40p
3 Income
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Income from investments
Interest income from Debt Instruments 2,421 2,180 4,633
Distributions from investment funds 260 227 468
Management fee rebate 51 36 78
2,732 2,443 5,179
Other income
Interest from cash and cash equivalents 3 8 16
2,735 2,451 5,195
4 Expenses
Non-audit fees (including VAT) payable to the auditor in respect of the agreed upon procedures on the Half Year Report as of 30 June 2021 are GBP12,600 (30 June 2020: GBP12,000). The agreed upon procedures did not constitute an audit engagement or a review of the Half Yearly Report.
5 Finance costs
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Commitment fee 37 - 15
Arrangement fees 6 - 3
Legal fees 18 - 6
61 - 24
On 19 October 2020 the Company entered into a GBP25 million revolving credit facility agreement with State Street Bank International GmbH. As at 30 June 2021 no amounts were drawn down.
6 Dividends
Six months ended Six months Year ended
ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
2019 second interim interest distribution of 1.33p - 1,729 1,729
2020 first interim interest distribution of 0.72p - 936 936
2020 second interim interest distribution of 0.63p - - 912
2020 third interim interest distribution of 0.71p - - 1,028
2020 fourth interim interest distribution of 0.77p 1,114 - -
2021 first interim interest distribution of 0.63p 911 - -
2,025 2,665 4,605
Capital
2019 second interim dividend of 0.32p - 416 416
2020 first interim dividend of 0.13p - 169 169
2020 second interim dividend of 0.14p - - 203
2020 fourth interim dividend of 1.18p 1,706 - -
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DJ M&G Credit Income Investment Trust plc: 2021 -7-
2021 first interim dividend of 0.11p 159 - -
1,865 585 788
On 27 July 2021 the Board declared a second interim dividend of 0.76p per Ordinary Share for the year ended 31 December 2021, which was paid on 27 August 2021 to Ordinary Shareholders on the register on 6 August 2021. The ex-dividend date was 5 August 2021.
In accordance with FRS 102, Section 32, 'Events After the End of the Reporting Period', the 2021 second interim dividend has not been included as a liability in this set of financial statements.
7 Investments held at fair value through profit or loss (FVTPL)
As at As at As at
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Opening valuation 140,316 127,316 127,316
Analysis of transactions made during the period/year
Purchases at cost 18,769 49,011 80,084
Sale proceeds (23,023) (37,682) (68,430)
Gains/(losses) on investments 2,969 (4,362) 1,346
Closing valuation 139,031 134,283 140,316
Closing cost 138,251 135,973 138,257
Closing investment holding gains/(losses) 780 (1,690) 2,059
Closing valuation 139,031 134,283 140,316
The Company received GBP23,023,000 from investments sold in the six months period ended 30 June 2021 (30 June 2020: GBP37,682,000). The book cost of these investments when they were purchased was GBP21,836,000 (30 June 2020: GBP38,477,000. These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
As at As at As at
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Gains on investments
Net realised gains/(losses) on disposal of investments 541 (1,661) 2,714
Net gains/(losses) on derivatives 2,428 (2,701) (1,368)
Net gains/(losses) on investments 2,969 (4,362) 1,346
As at As at As at
30 June 2021 30 June 2020 31 December
2020
GBP'000 GBP'000 GBP'000
Closing valuation
Investments at fair value through profit or loss 139,439 135,227 140,091
Derivative financial (liabilities)/assets held at fair value through profit or (408) (944) 225
loss
Closing valuation 139,031 134,283 140,316
8 Receivables, Cash and Cash Equivalents and Payables
As at As at As at
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Receivables
Sales for future settlement 586 38 -
Accrued income 1,128 990 1,204
Prepaid expenses 33 12 41
Management fee rebate 51 40 82
Other receivables - - 18
Total receivables 1,798 1,080 1,345
Cash and cash equivalents
Cash at bank 1,302 5,809 2,269
Amounts held at futures clearing houses 1,041 962 1,009
Cash on deposit 4,601 4,591 4,000
Total cash and cash equivalents 6,944 11,362 7,278
Payables
Purchases for future settlement 684 5,280 1,354
Expenses payable and deferred income 351 343 278
Management fee payable 438 318 677
Other payables 3 51 2
Total payables 1,476 5,992 2,311
9 Called up share capital
As at 30 June 2021 As at 30 June 2020 As at 31 December 2020
Number of Nominal Number of Nominal Number of Nominal
shares value GBP'000 shares value GBP'000 shares value GBP'000
Ordinary Shares of 1p
Ordinary Shares in issue at the beginning of 144,605,771 1,446 130,000,001 1,300 130,000,001 1,300
the period/year
Ordinary Shares issued during the period/ year - - 14,745,770 147 14,745,770 147
Purchase of Ordinary Shares held in treasury (1,238,000) (12) - - (140,000) (1)
Ordinary Shares in issue at the end of the 143,367,771 1,434 144,745,771 1,447 144,605,771 1,446
period/year
Treasury Shares (Ordinary Shares of 1p)
Treasury Shares at the beginning of the period 140,000 1 - - - -
/year
Purchase of Ordinary Shares held in treasury 1,238,000 12 - - 140,000 1
Treasury Shares at the end of the period/year 1,378,000 13 - - 140,000 1
Total Ordinary Shares in issue and in treasury 144,745,771 1,447 144,745,771 1,447 144,745,771 1,447
at the end of the period/year
The analysis of the capital reserve is as follows:
Six months ended 30 June 2021 Six months ended 30 June 2020 Year ended 31 December 2020
Realised Investment Total Realised Investment Total Realised Investment Total
capital holding capital capital holding capital capital holding capital
reserve gains reserve reserve gains reserve reserve gains reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Capital reserve at
the beginning of the 1,290 2,059 3,349 (265) 2,233 1,968 (265) 2,233 1,968
period/year
Gains/(losses) on
realisation of 4,248 - 4,248 (439) - (439) 1,520 - 1,520
investments at fair
value
Realised currency
gains during the (140) - (140) 141 - 141 451 - 451
period/year
Movement in - (1,279) (1,279) - (3,923) (3,923) - (174) (174)
unrealised losses
Dividends paid (1,865) - (1,865) (416) - (416) (416) - (416)
Capital reserve at
the end of the 3,533 780 4,313 (979) (1,690) (2,669) 1,290 2,059 3,349
period/year
The above split in capital reserve is shown in accordance with provisions of the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts', 2019.
10 Special distributable reserve
The share premium of GBP99,000,001 was cancelled on 12 February 2019 and transferred to the special distributable reserve, in accordance with section 610 of the Companies Act 2006. The Company may, at the discretion of the Board, pay all or part of any future dividends out of this special distributable reserve, taking into account the Company's investment objective.
11 Related party transactions
M&G Alternatives Investment Management Limited, as Investment Manager is a related party to the Company. The management fee payable to the Investment Manager for the period is disclosed in the condensed income statement and in note 3, amounts outstanding at the period end are shown in note 8.
The Company holds an investment in M&G European Loan Fund which is managed by M&G Investment Management Limited. At the period end this was valued at GBP17,458,741 (30 June 2020: GBP13,163,135) and represented 12.16% (30 June 2020: 9.53%) of the Company's investment portfolio.
The Directors of the Company are related parties. For further details of the annual fees payable to the Directors, please refer to the Related party disclosure and transactions with the Investment Manager section.
12 Fair value hierarchy
Under FRS 102 an entity is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the levels stated below.
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
-- Level 2: other significant observable inputs (including quoted prices for similar investments, interestrates, prepayments, credit risk, spread premium, credit ratings etc.).
-- Level 3: significant unobservable input (including the Company's own assumptions in determining the fairvalue of investments, discounted cashflow model or single broker quote).
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DJ M&G Credit Income Investment Trust plc: 2021 -8-
The financial assets measured at FVTPL are grouped into the fair value hierarchy as follows:
As at 30 June 2021 As at 30 June 2020 As at 31 December 2020
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at FVTPL
Debt Instruments - 60,039 61,941 121,980 - 99,465 22,599 122,064 - 87,572 35,232 122,804
Investment in - 17,459 - 17,459 - 13,163 - 13,163 - 17,287 - 17,287
funds
Derivatives - 151 - 151 - - - - - - - -
Financial
liabilities at
FVTPL
Derivatives (238) (321) - (559) (107) (837) - (944) (369) 594 - 225
Net fair value (238) 77,328 61,941 139,031 (107) 111,791 22,599 134,283 (369) 105,453 35,232 140,316
Valuation techniques for Level 3
The debt investments within the Company utilise a number of valuation methodologies such as a discounted cash flow model, which will use the relevant credit spread and underlying reference instrument to calculate a discount rate. Unobservable inputs typically include spread premiums and internal credit ratings.
Some debt instruments are valued at par and are monitored to ensure this represents fair value for these instruments. On a monthly basis these instruments are assessed to understand whether there is any evidence of market price movements, including impairment or any upcoming refinancing.
In addition, some are priced by a single broker quote, which is typically the traded broker, who provides an indicative mark.
13 Capital commitments
There were outstanding unfunded investment commitments of GBP4,821,000 (30 June 2020: GBP3,720,000) at the period/year end.
As at As at As at
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
Bayswater RD Mercury Var. Rate 31 May 2024 2,235 - -
Lewisham Var. Rate 12 Feb 2023 519 2,004 1,198
Greensky Var. Rate 11 Dec 2023 476 - 15
Jamshid Ventures Var. Rate 23 Jul 2023 328 - 786
Kaveh Ventures LLC Var. Rate 16 May 2022 323 - -
Harmoney Warehouse No 2 Var. Rate 31 Dec 2026 301 - -
Sonovate Var . Rate 12 Apr 2022 280 560 560
Bayswater RD Mercury Var. Rate 1 May 2024 201 - -
Valentine Senior Var. Rate 7 Mar 2022 133 133 133
Gate 1 Var. Rate 4 Jun 2022 (Junior) 21 167 110
Gate 1 Var. Rate 4 Jun 2022 (Senior) 4 165 94
Westbourne 2016 1 WR Senior Var. Rate 30 Sep 2023 - 597 598
Gate 2 Var. Rate 4 Jun 2021 - 94 -
4,821 3,720 3,494
14 Half Year Report
The financial information contained in this Half Year Report does not constitute statutory accounts as defined in section 434 - 436 of the Companies Act 2006.
The financial information for the six months ended 30 June 2020 and 30 June 2021 has not been reviewed or audited by the Company's auditors.
The figures and financial information for the year ended 31 December 2020 have been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the Auditor on those accounts was unqualified and did not contain a statement under sections 498(2) or (3) of the Companies Act 2006.
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ISIN: GB00BFYYL325, GB00BFYYT831 Category Code: IR TIDM: MGCI LEI Code: 549300E9W63X1E5A3N24 OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews Sequence No.: 122365 EQS News ID: 1234030 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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