TIDMGABI TIDMGABC
RNS Number : 7268L
GCP Asset Backed Income Fund Ltd
10 September 2019
GCP Asset Backed Income Fund Limited
(the "Company" and/or "GCP Asset Backed")
LEI 213800FBBZCQMP73A815
The Directors of the Company are pleased to announce the
Company's interim results for the period ended 30 June 2019. The
full half-yearly report and unaudited interim condensed financial
statements can be accessed via the Company's website at
https://www.graviscapital.com/funds/gcp-asset-backed/literature
For further information, please contact:
Gravis Capital Management Limited +44 (0) 20 3405 8500
David Conlon
Dion Di Miceli
Cenkos Securities plc +44 (0)20 7397 8900
Will Rogers
Tom Scrivens
Oliver Packard
Sapna Shah
Buchanan/Quill +44 (0)20 7466 5000
Helen Tarbet
Sam Emery
Nick Croysdill
Henry Wilson
ABOUT THE COMPANY
GCP Asset Backed Income Fund Limited is a listed investment
company which focuses predominantly on investments in UK asset
backed loans across a range of sectors.
The Company seeks to provide shareholders with attractive
risk-adjusted returns through regular, growing distributions and
modest capital appreciation over the long term.
The Group is currently invested in a diversified portfolio of
asset backed loans across the social infrastructure, property,
energy and infrastructure and asset finance sectors.
The Company is a closed-ended investment company incorporated in
Jersey. The Company has a premium listing on the Official List of
the FCA with its shares admitted to trading on the Premium Segment
of the Main Market of the LSE on 23 October 2015. At 30 June 2019,
its market capitalisation was GBP471.7 million. The Company is a
constituent of the FTSE All--Share Index.
AT A GLANCE - 30 JUNE 2019
HY17 HY18 HY19
--------------------------- ------ ------- ---------
Market capitalisation GBPm 260.6 324.7 471.7
Value of investments GBPm 218.5 308.1 421.1
Dividends for the period p 3.00 3.30(1) 3.10(2)
Ordinary share price p 108.25 102.50 107.00
NAV per ordinary share p 100.22 101.53 102.31(3)
Profit for the period GBPm 5.3 10.2 13.2
--------------------------- ------ ------- ---------
HIGHLIGHTS FOR THE PERIOD
-- Dividends of 3.1(2) pence per share, in line with the
Company's target(4) of 6.2 pence per share for the year ending 31
December 2019. The dividend was more than fully covered by basic
earnings per share of 3.45 pence, giving a dividend cover ratio(5)
of 1.1 times covered.
-- Total shareholder return(5) for the period of 5.4% (prior
period: 2.0%) and an annualised total return since IPO(5) of
8.1%.
-- Profit for the period of GBP13.2 million, up from GBP10.2
million in the six month comparable period.
-- NAV per ordinary share of 102.31(3) pence at 30 June 2019, up
from 101.74 pence per share at the year end.
-- Loans of GBP55.4 million advanced secured against 20 projects.
-- Exposure to a diversified and partially inflation and/or
interest rate protected portfolio of 40 asset backed loans with a
third party valuation of GBP421.2 million at 30 June 2019.
-- Post period end, the Group advanced GBP13.0 million secured against eight projects.
1. Includes a special dividend of 0.25 pence per share.
2. Includes a quarterly dividend of 1.55 pence per share for the
quarter to 30 June 2019, which was declared and paid post period
end.
3. Does not include a provision for the dividend in respect of
the quarter to 30 June 2019, which was declared post period
end.
4. The target dividend set out above is a target only and not a
profit forecast or estimate and there can be no assurance that it
can be met.
5. APM - refer to glossary for definitions and calculation methodology.
INVESTMENT OBJECTIVES AND KPIs
The Group makes asset backed investments to meet the following
key objectives:
ATTRACTIVE RISK ADJUSTED
RETURNS REGULAR, GROWING DISTRIBUTIONS CAPITAL APPRECIATION
---------------------------- ------------------------------ ------------------------------
To provide shareholders To provide shareholders To achieve modest appreciation
with returns that are with regular, growing in shareholder value
attractive with regard dividend distributions. over the long term.
to both the level of
return achieved and the
risk taken.
---------------------------- ------------------------------ ------------------------------
KEY PERFORMANCE INDICATORS
---------------------------- ------------------------------ ------------------------------
The Group is exposed The Company is on track The Company's ordinary
to a diversified, partially to meet its dividend shares were trading at
inflation and/or interest target(1) for the year 107.00 pence per share
rate protected portfolio ending 31 December 2019, at the period end and
of loans secured against with the Company having have traded at a premium
contracted medium to paid or declared dividends to NAV throughout the
long-term cash flows totalling 3.10 pence period.
and/or physical assets. per ordinary share for
the period(1) .
40 3.10p 107.00p
Number of investments Dividends paid or declared Share price of ordinary
at 30 June 2019 in respect of the period shares at 28 June 2019
to 30 June 2019
8.1% 43% 4.6%
Weighted average annualised Percentage of portfolio Premium to ordinary share
yield(2) on investment by value with inflation NAV at 30 June 2019
portfolio and/or interest rate
protection
---------------------------- ------------------------------ ------------------------------
Further information on Company performance can be found
below.
1. Information in relation to dividends set out above is for
illustrative purposes only and is not intended to be, and should
not be taken as a profit forecast or estimate.
2. APM - refer to glossary for definitions and calculation methodology.
PORTFOLIO AT A GLANCE
A diversified portfolio of 40 asset backed loans with an average
life of six years which are partially inflation and/or interest
rate protected. The loans fall within the following sectors and are
secured against assets and cash flows predominantly in the UK:
Asset finance GBP24.5 million, 6%
Property GBP186.4 million, 44%
Energy and infrastructure GBP51.1 million, 12%
Social infrastructure GBP159.2 million, 38%
SENIOR RANKING SECURITY
63%
WEIGHTED AVERAGE ANNUALISED YIELD(1)
8.1%
INFLATION AND/OR INTEREST RATE PROTECTION
43%
1. APM - refer to glossary for definitions and calculation methodology.
CHAIRMAN'S INTERIM STATEMENT
The Company continues to deliver regular income to shareholders
and continues to meet its aim of increasing its dividend.
Introduction
I am pleased to report that the Company has had continued strong
performance with increased profitability and further uplift in the
NAV, and that it remains on track to meet its dividend target for
the year.
The Board is positive about the quality and continued
performance of the underlying portfolio of loans and the ability to
generate asset backed income. This, along with the efficient
deployment of funds raised during the period, allows the Company to
continue to deliver regular, growing distributions to its
shareholders and meet its aim of increasing its dividend. The
dividend remains fully covered by earnings per ordinary share of
3.45 pence.
Equity issuance and credit facility
The Company successfully raised GBP63.3 million of additional
equity capital in the period by way of a share placing at a price
of 105.00 pence per ordinary share. The capital was used to repay
GBP39.3 million drawn down under the RCF during the period in
addition to funding investments. Post period end a further GBP13
million has been deployed, meaning a substantial proportion of the
placing proceeds have been invested.
The Company entered into an agreement to increase its RCF in the
period, providing access to an RCF of up to GBP50 million with
RBSI, of this, GBP40 million is priced at a margin of 2.10% plus
LIBOR and GBP10 million is priced at a margin of 1.7% plus LIBOR.
It is the Company's intention to utilise this facility before
raising additional equity.
Investments
During the period the Group invested GBP55.4 million in 20
assets, of which six were new and 14 were follow--on transactions,
improving the diversification and risk profile of the Company. The
Group continues to target and invest into key sectors with existing
borrowers who have demonstrated strong governance and stewardship
of their businesses.
A total of GBP8.9 million of principal was returned under
existing loan agreements and all principal repaid is invested at
prevailing market rates to ensure it generates attractive returns.
The Company factors in the return of principal into its funding
needs and intends to utilise its RCF to mitigate against cash
drag.
In the period one loan defaulted on its obligations. The
principal value of the loan was GBP3.2 million and at the period
end the Valuation Agent made a downward revaluation of GBP0.6
million against this loan. The Investment Manager is in advance
discussions to dispose of all but one asset secured against the
loan and is expecting to achieve a resolution in line with the
current valuation. This is the only non--payment of a loan
originated by the Company to date and the Board and Investment
Manager have utilised the learning from this loan to adjust both
its borrower reporting and underwriting criteria. The remainder of
the portfolio of loans has performed in line with, or exceeded, the
Investment Manager's expectations.
NAV and share price performance
At the period end, the net assets of the Company were GBP451
million. The NAV per ordinary share increased from 101.74 pence at
31 December 2018 to 102.31(1) pence at 30 June 2019. The NAV growth
the Company has experienced in this period is being driven by the
efficient deployment of capital at a weighted average annualised
yield(2) of 8.1%.
The Company's ordinary shares have consistently traded at a
premium to NAV in the period, with an average premium over the six
month period of 4.9%. At 28 June 2019, the share price per ordinary
share was 107.00 pence and the shares were trading at a 4.6%
premium to NAV.
Dividend policy
The Company is targeting(3) an annual dividend of 6.2 pence per
ordinary share, which the Directors expect to grow modestly. To
date this has been achieved with the dividend target increased
every year since IPO. The Directors are pleased to note that the
Company remains on track to deliver this target for the year ending
31 December 2019, with the Company having declared dividends
totalling 3.1 pence per ordinary share in respect of the period
ended 30 June 2019.
Market overview and outlook
Market conditions remain supportive, with the Company seeing a
strong pipeline of attractive asset backed financing opportunities.
The Company continues to benefit from its highly selective approach
to targeting high quality borrowers with which it can grow the
portfolio.
The growing concerns over the absence of a negotiated Brexit
deal and resultant political uncertainties continue to be a
principal concern for economic stability in the UK. However,
uncertainty can often create opportunities for those willing to
commit the time and resource in areas where mainstream lenders have
become less active. The Company remains focused on opportunities
that may offer an attractive risk reward return dynamic.
The Board and Investment Manager regularly assess the investment
pipeline and wider market conditions. Yields continue to contract
in a number of investment areas, due to the limited supply of
investments and the low interest rate environment. Nonetheless, the
Investment Manager continues to source attractive opportunities in
its key sectors which remain value accretive to shareholders.
While the UK banking market remains subjected to political and
regulatory restrictions, the structure of the Company ensures that
it can continue to deliver its strategic aims whilst taking
advantage of the gaps that these regulations and restrictions
create.
The Board and the Investment Manager have taken steps to ensure
that its portfolio remains attractive in both high inflation and
high interest rate environments. It has done this by ensuring that
43% of the portfolio has partial inflation and/or interest rate
protection.
Governance and compliance
The Board recognises the importance of a strong corporate
governance culture and continues to maintain principles of good
corporate governance as set out in the AIC Code.
Principal risks and uncertainties
The Directors consider that the principal risks and
uncertainties facing the Company, in particular the uncertainty
relating to the impact of Brexit, remain substantially unchanged
since the publication of the Company's 2018 annual report and
financial statements and are expected to remain relevant to the
Company for the next six months of its financial year. The
principal risks include (but are not limited to) credit risk,
economic risk, key resource risk, regulatory risk and execution
risk.
The principal uncertainty facing the Company is the impact of
Brexit on the principal risks, particularly given the absence of a
negotiated Brexit deal. Further details can be found on pages 32 to
35 of the 2018 annual report and financial statements.
Going concern statement
Under the AIC Code and applicable regulations, the Directors are
required to satisfy themselves that it is reasonable to assume that
the Company is a going concern.
The Directors have undertaken a thorough review of the Company's
ability to continue as a going concern including reviewing the cash
flows and the level of cash balances as at the reporting date as
well as taking forecasts of future cash flows into
consideration.
After making enquiries of the Investment Manager and the
Administrator and having reassessed the principal risks, the
Directors are satisfied that there are no material uncertainties in
the Company's ability to continue in operational existence for the
foreseeable future, being a period of at least twelve months from
the date on which the half-yearly report and financial statements
are approved. Based on its assessment and considerations, the
Directors have concluded that it is appropriate to adopt the going
concern basis of accounting in preparing the half-yearly report and
unaudited interim condensed financial statements.
Environmental, social and governance
The Board believes that a commitment to strong principles of ESG
should be embedded in, and complement all investment decisions. The
Board is delighted to note the positive environmental impact the
investments in the waste recycling facility and CNG stations are
having. The Board is looking forward to investing further into
these sectors.
The Investment Manager continues to explore new areas which will
have a positive environmental or social impact whilst also
performing well from a debt perspective.
On behalf of the Board
Alex Ohlsson
Chairman
9 September 2019
1. Does not include a provision for the dividend in respect of
the quarter to 30 June 2019, which was declared post period
end.
2. APM - refer to glossary for definitions and calculation methodology.
3. The target dividend set out above is a target only and not a
profit forecast or estimate and there can be no assurance that it
can be met.
COMPANY PERFORMANCE
The Company continues to deliver regular income to
shareholders.
Dividends paid or declared in respect of the period
3.10p
HY19
3.30p(1)
HY18
Relevance to strategy
The dividend reflects the Company's ability to deliver regular,
sustainable, long-term dividends and is a key element of total
return.
Basic earnings per share
3.45p
HY19
3.73p
HY18
Relevance to strategy
Basic EPS represents the earnings generated by the Company's
investment portfolio in line with the investment strategy.
Annualised total return since IPO(2)
8.1%
HY19
6.5%
HY18
Relevance to strategy
Total return measures the delivery of the Company's strategy, to
provide shareholders with attractive total returns in the longer
term.
Annualised dividend yield
5.8%
HY19
6.2%(1)
HY18
Relevance to strategy
The dividend yield measures the Company's ability to deliver on
its investment strategy of generating regular, sustainable,
long--term dividends.
Profit for the period
GBP13.2m
HY19
GBP10.2m
HY18
Relevance to strategy
Profit for the period measures the Company's ability to deliver
attractive risk--adjusted returns from its investment
portfolio.
NAV per ordinary share
102.31p(3)
HY19
101.53p
HY18
Relevance to strategy
Growth in NAV per share measures the Company's ability to
deliver modest capital appreciation over the long term.
1. Includes a special dividend of 0.25 pence per share.
2. APM - refer to glossary for definitions and calculation methodology.
3. Does not include a provision for the dividend in respect of
the quarter to 30 June 2019, which was declared post period
end.
INVESTMENT MANAGER'S REPORT
The Company's investment objective is to generate attractive
risk-adjusted returns through regular, growing distributions and
modest capital appreciation over the long term.
3.10p
Dividends paid or declared for the period
5.4%
Total shareholder return(1) for the period
INVESTMENT OBJECTIVE AND POLICY
The Investment Manager
Gravis Capital Management Limited provides discretionary
investment management and risk management services to the Group
which includes investment identification, investment due diligence
and structuring, investment monitoring, the management and
reporting of the existing loan portfolio and financial reporting
support. Investment decisions are made on behalf of the Group by
the Investment Manager's investment committee, with an update
provided to the Board on a quarterly basis and additional updates
when significant events have occurred. The Board has overall
responsibility for the Group's activities, including the review of
investment activity, performance, control and supervision of the
Investment Manager.
The Investment Manager also provides advice regarding the
Company's equity and debt funding requirements. The Investment
Manager is the AIFM to the Company. The basis of the remuneration
of the Investment Manager is set out in note 15 to the unaudited
interim condensed financial statements.
Summary investment policy
The Company makes investments(2) in a diversified portfolio of
senior and subordinated debt instruments which are secured against,
or comprise, contracted, predictable medium to long-term cash flows
and/or physical assets.
The Company's investments will typically be unquoted and will
include, but not be limited to, senior loans, subordinated loans,
mezzanine loans, bridge loans and other debt instruments. The
Company may also make limited investments in equities,
equity-related derivative instruments such as warrants, controlling
equity positions (directly or indirectly) and/or directly in
physical assets.
The Company will at all times invest and manage its assets in a
manner which is consistent with the objective of spreading
investment risk. This will include diversification by asset type,
counterparty, locality and revenue source.
Further information on the Company's investment objective,
policy and restrictions is set out in the Company's 2018 annual
report and financial statements, which is available on the
Company's website.
1. APM - refer to glossary for definitions and calculation methodology.
2. The Company makes its investments through its wholly owned
Subsidiary. Refer to note 1 for further information.
Asset backed lending overview
Asset backed lending is an approach to structuring investments
used to fund infrastructure, industrial or commercial projects,
asset financing and equipment leases. Asset backed lending relies
on the following to create security against which investment can be
provided:
-- the intrinsic value of physical assets; and/or;
-- the value of long-term, contracted cash flows generated from
the sale of goods and/or services produced by an asset.
Asset backed lending is typically provided to a Project Company,
a corporate entity established with the specific purpose of owning,
developing and operating an asset. Financing is provided to the
Project Company with recourse solely to the shares held in, and
assets held by, that Project Company.
Cash generation to service loans and other financing relies on
the monetisation of the goods and/or services the Project Company's
assets provides. Lenders implement a security structure that allows
them to take control of the Project Company and its assets to
optimise the monetisation of goods and/or services associated with
such assets if the Project Company has difficulties complying with
its financing terms.
Typically, an asset backed lending structure involves a number
of counterparties, who enter into contractual relationships with
the Project Company that apportion value and risk through providing
services (e.g. operations and maintenance) associated with the
development, ownership and/or operations of an asset. In
structuring an asset backed loan, the Project Company will seek to
ensure risks (and associated value) are apportioned to those
counterparties best able to manage them. This ensures the effective
pricing and management of risks inherent in the asset. Further, it
also means the residual risks (and potential rewards) being taken
by the Project Company are well understood by the parties providing
finance to such company.
The benefits associated with asset backed debt investments
Investment in asset backed loans offers relatively secure and
predictable returns to their lenders when compared with general
corporate or unsecured lending. Further, the reduction since 2007
in the availability of mainstream debt (primarily from banks) has
created the potential for more attractive pricing on debt
investments, particularly where such investments have been
originated and structured to accommodate the borrowers' specific
requirements. In particular, where borrowers may not have access to
mainstream financing for reasons other than the creditworthiness of
the relevant proposition, such as loan size, tenure, structure or
an understanding of the underlying cash flows and/or asset,
attractive rates are available for those willing to commit the
resource, innovation and time to understanding and identifying a
solution for a specific borrower's requirements.
A key benefit arising from the Investment Manager's approach to
asset backed lending is transparency. A loan secured against a
specific asset (within a Project Company established specifically
for that asset) is capable of analysis broadly by reference to a
set of known variables such as:
-- how an asset generates cash flow;
-- its current value;
-- expected future value;
-- the competence of its service providers; and
-- the availability of alternative parties in the event of a
failure by one or more service providers.
The need to fully understand the risks associated with a given
asset and structure arrangements with experienced service providers
to effectively manage those risks requires specialist skills and
resources. For this reason, the Company's target market remains
underserviced by mainstream lenders therefore offering an
attractive risk--adjusted return for parties with relevant
experience and access to the required resources.
INVESTMENT PORTFOLIO
Portfolio performance
The Investment Manager, along with its advisers, monitors
investments against strict reporting and information requirements
as set out in the investment documentation. Where assets are in
construction, the Investment Manager employs third party specialist
consultants to monitor progress against key milestones and
drawdowns.
In the period, one of the Company's smallest loans in the energy
and infrastructure sector was revalued downward by GBP0.6 million
or 13bps of NAV by the Valuation Agent due to defaulting against
its obligations. Discussions are well advanced with a purchaser to
dispose all but one of the assets secured by this loan at or around
the current book value.
The remainder of the portfolio of asset backed investments have
all performed in line with, or exceeded, the Investment Manager's
expectations, with all the remaining loans fully up to date on
amounts due.
All assets in construction are proceeding in line with
expectations and post period end two assets finished construction.
The Company has had significant success funding construction
assets, comprising four care homes, four student accommodation
sites, one co-living project, one multi--use community facility and
one material recovery facility.
During the period, one social infrastructure loan has been
revalued upwards by the Valuation Agent who determines a fair value
for each asset using a discounted cash flow methodology.
The Group's property loans, predominantly, those relating to
residential property, benefit from a relatively low average LTV of
54%. This provides significant headroom in the underlying asset
values to absorb movements in property valuations. Further, the
tenor of any given loan is short relative to the duration of the
relevant facility, offering further protection from material market
movements over the medium and long term.
PORTFOLIO ANALYSIS
SECTOR TYPE
Property 44%
Social Infrastructure 38%
Energy and Infrastructure 12%
Asset finance 6%
SECURITY RANKING
Senior 63%
Mezzanine 37%
TERM PROFILE
<10 yrs 76%
10-15 yrs 7%
>15yrs 17%
INTEREST RATE PROFILE
<7% 12%
7-8% 48%
>8% 40%
LOCATION
UK 84%
Europe 8%
Australia 6%
USA 2%
Top ten investments by value
------------------------------------------------------------------------------------------------------
Investment Sector type % of portfolio Asset class Multi/single
by value asset exposure
-------------- -------------------------- ---------------- ---------------------- ----------------
Co-living Co Property 7.7% Residential Multi asset
1 property
Development Property 6.1% Residential Multi asset
Fin Co 6 property
Bridging Co Property 5.6% Residential Multi asset
2 property
Student Accom Social infrastructure 5.1% Student accommodation Single asset
2
Student Accom Social infrastructure 4.3% Student accommodation Single asset
3
Bridging Co Property 4.1% Residential Multi asset
1 property
Student Accom Social infrastructure 4.1% Student accommodation Single asset
1
Property Co Social infrastructure 3.6% Social housing Multi asset
2
Waste Infra. Energy and infrastructure 3.3% Material recovery Single asset
Co facility
Student Accom Social infrastructure 3.2% Student accommodation Single asset
4
-------------- -------------------------- ---------------- ---------------------- ----------------
A full list of the Group's portfolio can be found on the
Company's website.
Investment portfolio and new investments
At 30 June 2019, the Group was exposed to a diversified
portfolio of 40 asset backed investments with a fair value of
GBP421.2 million, of which 63% benefit from senior security and 43%
from partial inflation and/or interest rate protection. The
weighted average annualised yield(1) on the Group's investments was
8.1%, with a weighted average expected term of six years.
The key metrics above, principally yield and inflation and/or
interest rate protection, are in line with the same period last
year, demonstrating that the Company is continuing to deploy new
capital efficiently at rates that are value accretive to both new
and existing shareholders.
The portfolio is primarily backed by assets in the UK,
representing 84% of such security, with the remainder of the
Group's security provided by assets located in Europe, Australia
and the USA. The Company has minimal currency exposure (which is
hedged) with 99% of investments denominated in Pound Sterling.
During the period, the Group made investments totalling GBP55.4
million. The Group, with the Investment Manager, has sought to
expand the portfolio into new asset classes. This has included
children's nurseries, forward hedging contracts and management
service agreements in the social infrastructure and asset finance
sectors.
The Group has targeted these asset classes as the Investment
Manager believes these have growth potential and strong underlying
security, and therefore will benefit from the Company's targeted,
bespoke lending approach.
The Investment Manager continues to see a strong pipeline of
attractive asset backed financing opportunities across all of its
core sectors.
INVESTMENTS MADE DURING THE PERIOD(2)
SECTOR AVERAGE TERM SECURITY STATUS INVESTMENTS REPAYMENTS
--------------------- ------------ ------------------- ------------------------ ------------------ --------------
Property 5 years Senior/Subordinated Operational/Construction GBP35.2 million(3) GBP4.2 million
Asset finance 10 years Senior Operational GBP6.0 million GBP3.4 million
Energy and
infrastructure 9 years Senior Operational/Construction GBP2.0 million GBP1.3 million
Social infrastructure 13 years Senior/Subordinated Operational/Construction GBP12.2 million -
--------------------- ------------ ------------------- ------------------------ ------------------ --------------
Total GBP55.4 million GBP8.9 million
--------------------- ------------ ------------------- ------------------------ ------------------ --------------
INVESTMENTS MADE POST PERIOD(2)
SECTOR AVERAGE TERM SECURITY STATUS INVESTMENTS REPAYMENTS
--------------------- ------------ ------------------- ------------------------ ----------------- --------------
Property 3 years Senior/Subordinated Operational GBP3.0 million(3) GBP3.0 million
Asset finance 5 years Senior Operational GBP2.0 million -
Energy and
infrastructure 3 years Senior Operational GBP0.4 million GBP0.3 million
Social infrastructure 14 years Senior/Subordinated Operational/Construction GBP7.6 million -
--------------------- ------------ ------------------- ------------------------ ----------------- --------------
Total GBP13.0 million GBP3.3 million
--------------------- ------------ ------------------- ------------------------ ----------------- --------------
1. APM - refer to glossary for definitions and calculation methodology.
2. The Company makes its investments through its wholly owned
Subsidiary. Refer to note 1 for further information.
3. Include development projects that were subject to review by
the Board under the Company's investment approval process, refer
below.
FINANCIAL REVIEW
The Company has generated total income of GBP15.9 million, paid
dividends of 3.1(1) pence per share and generated a total
shareholder return of 5.4% for the period.
Financial performance
The Company has prepared its half-yearly report and unaudited
interim condensed financial statements in accordance with IAS 34
Interim Financial Reporting.
In the period to 30 June 2019, the Company's portfolio generated
investment income of GBP15.9 million. Profit for the period was
GBP13.2 million, with basic EPS of 3.45 pence. The Company's
ongoing charges ratio(2) , calculated in accordance with the AIC
methodology, was 1.2% for the twelve month period to 30 June
2019.
The Company paid a dividend of 1.55 pence per share for the
quarter to 31 March 2019 with a further dividend of 1.55 pence for
the quarter to 30 June 2019, declared post period end, on 24 July
2019.
Investment valuation
The weighted average annualised discount rate across the
portfolio at 30 June 2019 was 8.1%. The valuation of investments is
sensitive to changes in discount rates applied. A sensitivity
analysis detailing the impact of a change in discount rates is
given in note 14.3.
The Valuation Agent carries out a fair market valuation of the
Group's investments on behalf of the Board on a semi-annual basis
(previously, all valuations had been performed on a quarterly
basis). Any assets which may be subject to discount rate changes
are valued on a quarterly basis. The valuation principles used by
the Valuation Agent are based on a discounted cash flow
methodology. A fair value for each asset acquired by the Group is
calculated by applying a discount rate (determined by the Valuation
Agent) to the cash flow expected to arise from each asset.
Cash position
The Company received interest payments of GBP17.2 million and
capital repayments of GBP9.6 million in the period, in line with
expectations. The Company paid dividends of GBP11.1 million
(excluding dividends settled in shares(3) ) during the period and a
further GBP6.8 million (excluding dividends settled in shares(3) )
post period end. Total cash reserves at the period end were GBP69.5
million. On 2 September 2019, the Company issued 207,288 ordinary
shares in lieu of cash for the interim dividend for the period 1
April 2019 to 30 June 2019 which represented 3.3% of the shares in
issue as at the record date of 2 August 2019.
Borrowings
In April 2019, the Company entered into an agreement with RBSI
in respect of an increase to the RCF entered into on 13 January
2017 and extended on 21 August 2018. The increased RCF is for an
amount of GBP50 million, with GBP40 million maturing in August 2020
(plus a twelve month extension option, with lender approval)
charged at a rate of LIBOR plus 2.10% and GBP10 million maturing in
December 2019 charged at a reduced rate of LIBOR plus 1.70%.
Conflicts of interest
During the period, the Group advanced a further GBP7.6 million
to the construction of a number of private student accommodation
developments in Australia. Post period end, the Company advanced a
loan of GBP1.9 million to finance a construction project for
private student accommodation in Boston, USA. The directors of the
Investment Manager directly or indirectly own an equity interest in
these development projects. In accordance with the Company's
investment approval process, the investments were reviewed and
approved by the Board.
GCP Infra
Where there is any overlap for a potential investment with GCP
Infra, GCP Infra has a right of first refusal over such
investment.
During the period, three investments were offered to GCP Infra
under its right of first refusal; all were declined as a result of
falling outside of the GCP Infra investment policy.
To date, no investments offered to GCP Infra have been
accepted.
Gravis Capital Management Limited
Investment Manager and AIFM
9 September 2019
1. Includes a quarterly dividend of 1.55 pence per share for the
quarter to 30 June 2019, which was declared and paid post period
end.
2. APM - refer to glossary for definitions and calculation methodology.
3. Dividends settled in shares are where shareholders have
elected to take the scrip dividend alternative.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Under the terms of the DTRs of the FCA, the Directors are
responsible for preparing the half-yearly report and unaudited
interim condensed financial statements in accordance with
applicable regulations.
The Directors confirm to the best of their knowledge that:
-- the unaudited interim condensed financial statements have
been prepared in accordance with IAS 34 Interim Financial
Reporting;
-- the Chairman's interim statement and the Investment Manager's
report constitute the Company's interim management report, which
includes a fair review of the information required by DTR 4.2.7R
(indication of important events during the first six months and
description of principal risks and uncertainties for the remaining
six months of the year); and
-- the unaudited interim condensed financial statements include
a fair review of the information required by DTR 4.2.8R (disclosure
of related parties' transactions and changes therein).
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Jersey governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
Alex Ohlsson
Chairman
Colin Huelin
Director
9 September 2019
INDEPENT REVIEW REPORT
To GCP Asset Backed Income Fund Limited
Report on review of the unaudited interim condensed financial
statements
Our conclusion
We have reviewed the accompanying unaudited interim condensed
financial statements of GCP Asset Backed Income Fund Limited (the
"Company") as of 30 June 2019. Based on our review, nothing has
come to our attention that causes us to believe that the
accompanying unaudited interim condensed financial statements are
not prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The accompanying unaudited interim condensed financial
statements comprise:
-- the unaudited interim condensed statement of financial position as of 30 June 2019;
-- the unaudited interim condensed statement of comprehensive
income for the six month period then ended;
-- the unaudited interim condensed statement of changes in
equity for the six month period then ended;
-- the unaudited interim condensed statement of cash flows for
the six month period then ended; and
-- the notes, comprising a summary of significant accounting
policies and other explanatory information.
The unaudited interim condensed financial statements have been
prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibilities and those of the Directors
The Directors are responsible for the preparation and
presentation of the audited interim condensed financial statements
in accordance with Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the unaudited
interim condensed financial statements based on our review. This
report, including the conclusion, has been prepared for and only
for the Company for the purpose of complying with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of interim financial
information performed by the independent auditor of the entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-yearly
report and unaudited interim condensed financial statements and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the unaudited
interim condensed financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Jersey, Channel Islands
9 September 2019
UNAUDITED INTERIM CONDENSED STATEMENT OF COMPREHENSIVE
INCOME
For the period ended 30 June 2019
Period ended Period ended
30 June 2019 30 June 2018
Notes GBP'000 GBP'000
------------------------------------------------------------------------ ----- ------------ ------------
Income
Net changes in fair value of financial assets and financial liabilities
at fair value through profit or loss 3 15,746 12,694
Fee income 3 132 141
Deposit interest income 3 - 8
------------------------------------------------------------------------ ----- ------------ ------------
Total income 15,878 12,843
------------------------------------------------------------------------ ----- ------------ ------------
Expenses
Investment management fees (1,698) (1,341)
Operating expenses (475) (547)
Directors' remuneration (52) (51)
------------------------------------------------------------------------ ----- ------------ ------------
Total expenses (2,225) (1,939)
------------------------------------------------------------------------ ----- ------------ ------------
Total operating profit before finance costs 13,653 10,904
------------------------------------------------------------------------ ----- ------------ ------------
Finance costs
Finance expenses 4 (495) (688)
------------------------------------------------------------------------ ----- ------------ ------------
Total profit and comprehensive income 13,158 10,216
------------------------------------------------------------------------ ----- ------------ ------------
Basic earnings per share (pence) 7 3.45 3.73
------------------------------------------------------------------------ ----- ------------ ------------
Diluted earnings per share (pence) 7 3.45 3.22
------------------------------------------------------------------------ ----- ------------ ------------
All items in the above statement are derived from continuing
operations.
The notes on below form an integral part of the financial
statements.
UNAUDITED INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
(Audited)
As at As at
30 June 31 December
2019 2018
Notes GBP'000 GBP'000
------------------------------------------------------ ----- ----------- -----------
Assets
Financial assets at fair value through profit or loss 8 421,139 378,350
Other receivables and prepayments 9 1,084 1,796
Derivative financial instruments 14 - 33
Cash and cash equivalents 10 69,486 9,206
------------------------------------------------------ ----- ----------- -----------
Total assets 491,709 389,385
------------------------------------------------------ ----- ----------- -----------
Liabilities
Other payables and accrued expenses 12 (1,606) (2,795)
Derivative financial instruments 14 (39) -
Interest bearing loans and borrowings 11 (39,032) -
------------------------------------------------------ ----- ----------- -----------
Total liabilities (40,677) (2,795)
------------------------------------------------------ ----- ----------- -----------
Net assets 451,032 386,590
------------------------------------------------------ ----- ----------- -----------
Equity
Share capital 13 443,207 380,235
Retained earnings 7,825 6,355
------------------------------------------------------ ----- ----------- -----------
Total equity 451,032 386,590
------------------------------------------------------ ----- ----------- -----------
Ordinary shares in issue 13 440,863,028 379,962,298
------------------------------------------------------ ----- ----------- -----------
NAV per ordinary share (pence per share) 102.31 101.74
------------------------------------------------------ ----- ----------- -----------
The unaudited interim condensed financial statements were
approved and authorised for issue by the Board of Directors on 9
September 2019 and signed on its behalf by:
Alex Ohlsson
Chairman
Colin Huelin
Director
The notes on below form an integral part of the financial
statements.
UNAUDITED INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2019
Share Retained Total
capital earnings equity
Notes GBP'000 GBP'000 GBP'000
----------------------------------------------------- ----- ------- -------- --------
Balance as at 1 January 2019 380,235 6,355 386,590
Total profit and comprehensive income for the period - 13,158 13,158
Equity shares issued 13 63,955 - 63,955
Share issue costs (983) - (983)
Dividends paid 6 - (11,688) (11,688)
----------------------------------------------------- ----- ------- -------- --------
Balance at 30 June 2019 443,207 7,825 451,032
----------------------------------------------------- ----- ------- -------- --------
UNAUDITED INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2018
Share Retained Total
capital earnings equity
Notes GBP'000 GBP'000 GBP'000
----------------------------------------------------- ----- ------- -------- -------
Balance as at 1 January 2018 241,326 3,709 245,035
Total profit and comprehensive income for the period - 10,216 10,216
Equity shares issued 13 74,896 - 74,896
Share issue costs (16) - (16)
Dividends paid 6 - (8,533) (8,533)
----------------------------------------------------- ----- ------- -------- -------
Balance at 30 June 2018 316,206 5,392 321,598
----------------------------------------------------- ----- ------- -------- -------
UNAUDITED INTERIM CONDENSED STATEMENT OF CASH FLOWS
For the period ended 30 June 2019
Period ended Period ended
30 June 2019 30 June 2018
Notes GBP'000 GBP'000
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash flows from operating activities
Total operating profit before finance costs 13,653 10,904
Adjustments for:
Net changes in fair value of financial assets at fair value through profit or loss 3 (15,746) (12,694)
Realised gains on forward foreign exchange contracts 87 75
(Decrease)/increase in other payables and accrued expenses (369) 220
Decrease in other receivables and prepayments 264 117
----------------------------------------------------------------------------------- ----- ------------ ------------
(2,111) (1,378)
----------------------------------------------------------------------------------- ----- ------------ ------------
Interest received from Subsidiary 17,165 11,487
Investment in Subsidiary (54,858) (56,079)
Capital repayments from Subsidiary 9,590 7,867
----------------------------------------------------------------------------------- ----- ------------ ------------
Net cash flow used in operating activities (30,214) (38,103)
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash flows from financing activities
Proceeds from interest bearing loans and borrowings 11 39,332 -
Proceeds from the issue of ordinary shares 63,333 -
Share issue costs (893) (27)
Finance costs paid (212) (171)
Dividends paid 6 (11,066) (8,134)
----------------------------------------------------------------------------------- ----- ------------ ------------
Net cash flow generated from/(used in) financing activities 90,494 (8,332)
----------------------------------------------------------------------------------- ----- ------------ ------------
Net increase/(decrease) in cash and cash equivalents 60,280 (46,435)
Cash and cash equivalents at beginning of the period 9,206 61,094
----------------------------------------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end of the period 69,486 14,659
----------------------------------------------------------------------------------- ----- ------------ ------------
Net cash flow used in operating activities includes:
Interest received from bank deposits - 8
----------------------------------------------------------------------------------- ----- ------------ ------------
Interest received from Subsidiary 17,165 11,435
----------------------------------------------------------------------------------- ----- ------------ ------------
Non-cash items:
Purchase of financial assets: indexation (420) (492)
Interest received from Subsidiary 420 492
Scrip dividend 6 (622) (399)
Equity issue in respect of scrip dividend 622 399
----------------------------------------------------------------------------------- ----- ------------ ------------
The notes on below form an integral part of the financial
statements.
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL
STATEMENTS
For the period ended 30 June 2019
1. General information
The Company is a public closed-ended investment company
incorporated on 7 September 2015 and domiciled in Jersey, with
registration number 119412. The Company is governed by the
provisions of the Companies Law and the CIF Law.
The ordinary and C shares (when in issue) of the Company are
admitted to the Official List of the FCA and are traded on the
Premium Segment of the Main Market of the LSE.
The Company makes its investments through its wholly owned
Subsidiary, by subscribing for the Secured Loan Notes issued by the
Subsidiary, the majority of which are listed on the TISE. The
Subsidiary subsequently on-lends the funds to borrowers. The wholly
owned Subsidiary is GABI UK, incorporated in England and Wales on
23 October 2015 (registration number 9838893), and together with
its subsidiary, GABI GS, and the Company comprises the Group. The
Company, through its Subsidiary, seeks to meet its investment
objective through a diversified portfolio of investments which are
secured against, or comprise, contracted, predictable medium to
long-term cash flows and/or physical assets. The Group's
investments will predominantly be in the form of medium to
long-term fixed or floating rate loans which are secured against
cash flows and/or physical assets which are predominantly UK
based.
The Group's investments will typically be unquoted and will
include, but not be limited to, senior loans, subordinated loans,
mezzanine loans, bridge loans and other debt instruments. The Group
may also make limited investments in equities, equity-related
derivative instruments such as warrants, controlling equity
positions (directly or indirectly) and/or directly in physical
assets.
The Group will at all times invest and manage its assets in a
manner which is consistent with the objective of spreading
investment risk.
Where possible, investments are structured to benefit from
partial inflation and/or interest rate protection.
Further information on the Company's investment objective,
policy and restrictions is set out in its 2018 annual report and
financial statements, which is available on the Company's
website.
At 30 June 2019, the Company had one wholly owned Subsidiary,
GABI UK (31 December 2018: one). GABI GS is a wholly owned
subsidiary of GABI UK and was incorporated in England and Wales on
4 January 2017 (registration number 10546087) and is indirectly
owned by the Company. The registered office address for GABI UK and
GABI GS is 24 Savile Row, London W1S 2ES.
GABI GS has been set up to hold class A shares as security for a
loan issued to an underlying borrower. This is intended to isolate
the holding of shares as security (and any associated liabilities
under the shareholder agreements associated with such shares from
the Company). The class A shares carry no economic or voting rights
except in the event of default under the loan. In the event of
default by the underlying borrower, the class A shares become
effective whereby GABI GS is entitled to control voting rights over
the underlying borrower.
2. Significant accounting policies
The principal accounting policies applied in the preparation of
these unaudited interim condensed financial statements are set out
below. These policies have been consistently applied throughout the
periods presented.
2.1 Basis of preparation
The unaudited interim condensed financial statements for the
period ended 30 June 2019 have been prepared in accordance with IAS
34 Interim Financial Reporting.
They do not include all financial information required for full
annual financial statements and should be read in conjunction with
the Company's 2018 annual report and financial statements. The
financial statements for the year ended 31 December 2018 were
audited by the Independent Auditor, who issued an unqualified audit
opinion.
The financial risk management objectives include (but are not
limited to) market risk, interest rate risk, credit risk, currency
risk and liquidity risk which are detailed in full on pages 88 to
91 of the 2018 annual report and financial statements. The Board
considers that these remain unchanged.
The accounting policies adopted in the unaudited interim
condensed financial statements are the same as those applied in the
annual report and financial statements for the year ended 31
December 2018. The audited annual report and financial statements
were prepared in accordance with IFRS issued by the IASB and
interpretations issued by IFRIC as approved by IASC, which remain
in effect.
The financial information contained within the unaudited interim
condensed financial statements does not constitute full statutory
accounts as defined in Companies Law. The financial information for
the period ended 30 June 2019 has been reviewed by the Company's
Independent Auditor, in accordance with International Standard on
Review Engagements 2410, Review of Interim Financial Information
performed by the Independent Auditor of the Company and were
approved for issue on 9 September 2019.
The unaudited interim condensed financial statements have been
prepared under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities held at
fair value through profit or loss.
In accordance with the investment entities exemption contained
in IFRS 10 Consolidated Financial Statements, the Directors have
determined that the Company continues to meet the definition of an
investment entity and as a result the Company is not required to
prepare consolidated financial statements. The Company's investment
in its Subsidiary is measured at fair value and treated as a
financial asset through profit or loss in the statement of
financial position (refer to note 2.2(b)).
The Company raises capital through the issue of ordinary shares
and C shares. The net assets attributable to the C share class,
when in issue, are accounted for and managed by the Company as a
distinct pool of assets, with the Company ensuring that separate
cash accounts are created and maintained. Expenses are either
specifically allocated to an individual share class or split
proportionally by the NAV of each share class.
Going concern
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that the Company
has the resources to continue in business for the foreseeable
future, being a period of at least twelve months from the date on
which these unaudited interim condensed financial statements were
approved. Furthermore, the Directors are not aware of any material
uncertainties that may cast doubt upon the Company's ability to
continue as a going concern. Therefore, the unaudited interim
condensed financial statements have been prepared on a going
concern basis.
2.2 Significant accounting estimates and judgements
The preparation of unaudited interim condensed financial
statements in accordance with IFRS requires the Directors to make
estimates and judgements that affect the reported amounts
recognised in the unaudited interim condensed financial statements.
However, uncertainty about these assumptions and judgements could
result in outcomes that require a material adjustment to the
carrying amount of the asset or liability in the future. There are
no changes in estimates reported in prior financial statements that
require disclosure in these financial statements.
(a) Critical accounting estimates and assumptions
Fair value of instruments not quoted in an active market
The Company's investments are made by subscribing for the
Secured Loan Notes issued by the Subsidiary. The Subsidiary's
assets consist of investments held by the Subsidiary, which
represent secured loan facilities issued to the Project
Companies.
The Subsidiary's assets are not quoted in an active market and
therefore, the fair value is determined using a discounted cash
flow methodology, adjusted as appropriate for market, credit and
liquidity risk factors, (refer to note 14.3 for further
information), which requires assumptions to be made regarding
future cash flows and the discount rates applied to these cash
flows. The Subsidiary's investments are valued by a third party
Valuation Agent on a semi-annual basis. Investments subject to
discount rate changes are valued on a quarterly basis (previously,
all valuations had been performed on a quarterly basis).
The models used by the Valuation Agent use observable data to
the extent practicable. However, areas such as credit risk (both
own and counterparty); volatilities and correlations require
estimates to be made. Changes in assumptions about these factors
could affect the reported fair value of financial instruments.
The determination of what constitutes 'observable' requires
significant judgement by the Company. The Company considers
observable data to be market data that is readily available,
regularly distributed or updated, reliable and verifiable, not
proprietary, and provided by independent sources that are actively
involved in the relevant market.
The investment in the Subsidiary is held at fair value through
profit or loss, with income distributions and interest payments
from the Subsidiary included as part of the fair value movement
calculation together with any unrealised movement in the fair value
of the holding in the Subsidiary.
The value of the investment in the Subsidiary is based on the
aggregate of the NAV of the Subsidiary and the value of the Secured
Loan Notes issued by the Subsidiary. Refer to note 8 for further
details.
(b) Critical judgements
Assessment as investment entity
The Directors have concluded that the Company continues to meet
the definition of an investment entity.
Entities that meet the definition of an investment entity within
IFRS 10 Consolidated Financial Statements are required to measure
their subsidiaries at fair value through profit or loss rather than
consolidate. The criteria which define an investment entity are as
follows:
-- an entity that obtains funds from one or more investors for
the purpose of providing those investors with investment
services;
-- an entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both; and
-- an entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Directors have concluded that the Company continues to meet
the characteristics of an investment entity, in that it:
-- raises funds from investors through the issue of equity, has
more than one investor and its investors are not related parties,
other than those disclosed in note 15;
-- invests in a portfolio of investments held by the Subsidiary
for the purposes of generating risk-adjusted returns through
regular distributions and modest capital appreciation; and
-- the Company's investments are held at fair value through
profit or loss with the performance of its portfolio evaluated on a
fair value basis.
Accordingly, the Company's Subsidiary is not consolidated, but
rather the investment in the Subsidiary is accounted for at fair
value through profit or loss. The value of the investment in the
Subsidiary is based on the aggregate of the NAV of the Subsidiary
and the value of the Secured Loan Notes issued by the
Subsidiary.
Accounting for C share class
(i) Classification as financial liability or equity
instrument
The Directors have assessed the characteristics of the C share
class and concluded that the C shares while in issue meet the
definition of a liability under IAS 32 Financial Instruments:
Presentation. The C shares are non-derivatives that include a
contractual obligation under the terms of the issue to deliver a
variable number of an issuer's own ordinary shares. The C shares
(under IAS 32) therefore meet the definition of a financial
liability, and are classified as such while in issue. At 30 June
2019, there were no C shares in issue.
(ii) Recognition and measurement of the financial liability
Whilst in issue, the C shares are recognised as a financial
liability and measured at amortised cost within the unaudited
interim condensed financial statements. For further information
refer to note 2.2(b) of the Company's annual report and financial
statements for the year ended 31 December 2018.
(c) Functional and presentation currency
The primary objective of the Company is to generate returns in
Pound Sterling, its capital raising currency. The Company's
performance is evaluated in Pound Sterling. Therefore, the
Directors consider Pound Sterling as the currency that most
faithfully represents the economic effects of the underlying
transactions, events and conditions.
The unaudited interim condensed financial statements are
presented in Pound Sterling and all values have been rounded to the
nearest thousand pounds (GBP'000) except where otherwise
indicated.
(d) Segmental information
The Directors view the operations of the Company as one
operating segment, being the investment portfolio of asset backed
loans held through the Subsidiary, which is a registered UK
company. All significant operating decisions are based on the
analysis of the Subsidiary's investments as one segment, which is
consistent with the 2018 annual report and financial statements.
The financial results from this segment are equivalent to the
financial results of the Company as a whole, which are evaluated
regularly by the Directors.
3. Operating income
The table below analyses the operating income derived from the
Company's financial assets and financial liabilities at fair value
through profit or loss:
Period ended Period ended
30 June 2019 30 June 2018
GBP'000 GBP'000
------------------------------------------------------------------------------ ------------ ------------
Loan interest realised(1) 17,798 11,927
Unrealised (loss)/gain on investments at fair value through profit or loss(2) (2,067) 733
Unrealised loss on forward foreign exchange contracts (72) (41)
Realised gains on forward foreign exchange contracts 87 75
------------------------------------------------------------------------------ ------------ ------------
Total 15,746 12,694
------------------------------------------------------------------------------ ------------ ------------
1. Represents interest received from the Subsidiary and is
included as part of the fair value movement calculation in line
with the Company's accounting policy.
2. Refer to note 8 for further information.
The table below analyses the fees and other interest income
earned by the Company by type:
Period ended Period ended
30 June 2019 30 June 2018
GBP'000 GBP'000
------------------------ ------------ ------------
Arrangement fee income 91 136
Commitment fee income 41 5
Deposit interest income - 8
------------------------ ------------ ------------
Total 132 149
------------------------ ------------ ------------
4. Finance expenses
Period ended Period ended
30 June 2019 30 June 2018
GBP'000 GBP'000
----------------------------------------- ------------ ------------
Return on C share financial liability(1) - 517
Loan arrangement fees 107 92
Loan commitment fee 67 79
Loan interest 321 -
----------------------------------------- ------------ ------------
Total 495 688
----------------------------------------- ------------ ------------
1. C shares issued in October 2017, converted in April 2018.
5. Taxation
Profits arising in the Company for the period 1 January 2019 to
30 June 2019 are subject to tax at the standard rate of 0% (30 June
2018: 0%) in accordance with the Income Tax Law.
6. Dividends
Period ended Period ended
Pence 30 June 2019 30 June 2018
Quarter ended Dividend per share GBP'000 GBP'000
----------------------------------------------- ------------------------ ------------- ------------- -------------
Current period dividends
30 June 2019 / 2018 Special dividend - / 0.250 - -
30 June 2019(1) / 2018 Second interim dividend 1.550 / 1.525 - -
31 March 2019 / 2018 First interim dividend 1.550 / 1.525 5,894 4,828
----------------------------------------------- ------------------------ ------------- ------------- -------------
Total 3.100 / 3.300
----------------------------------------------- ------------------------ ------------- ------------- -------------
Prior period dividends
31 December 2018 / 2017 Fourth interim dividend 1.525 / 1.525 5,794 3,705
30 September 2018 / 2017 Third interim dividend 1.525 / 1.525 - -
----------------------------------------------- ------------------------ ------------- ------------- -------------
Total 3.050 / 3.050
----------------------------------------------- ------------------------ ------------- ------------- -------------
Dividends in the statement of changes in equity 11,688 8,533
------------------------------------------------------------------------- ------------- ------------- -------------
Dividends settled in shares(2) (622) (399)
------------------------------------------------------------------------- ------------- ------------- -------------
Dividends in the statement of cash flows 11,066 8,134
------------------------------------------------------------------------- ------------- ------------- -------------
On 24 July 2019, the Company declared a second interim dividend
of 1.55 pence per ordinary share amounting to GBP6.8 million
(including dividends settled in shares(2) ) which was paid on 2
September 2019 to ordinary shareholders on the register at close of
business on 2 August 2019.
7. Earnings per share
Basic earnings per share are calculated by dividing profit for
the period attributable to ordinary shareholders of the Company by
the weighted average number of ordinary shares in issue during the
period. Diluted earnings per share are calculated by dividing the
profit attributable to ordinary shareholders by the diluted
weighted average number of ordinary shares and the C shares issued
in the period up to the date of conversion, based on their value at
issue.
Weighted
average
number of
Profit ordinary Pence
GBP'000 shares per share
------------------------------------ -------- ----------- ----------
Period ended 30 June 2019
Basic earnings per ordinary share 13,158 381,544,924 3.45
Diluted earnings per ordinary share 13,158 381,544,924 3.45
------------------------------------ -------- ----------- ----------
Period ended 30 June 2018
Basic earnings per ordinary share 10,216 273,567,685 3.73
------------------------------------ -------- ----------- ----------
Diluted earnings per ordinary share 10,216 317,490,337 3.22
------------------------------------ -------- ----------- ----------
1. The second interim dividend was declared after the period end
and is therefore not accrued for in the unaudited interim condensed
financial statements.
2. Dividends settled in shares are where shareholders have
elected to take the scrip dividend alternative.
8. Financial assets at fair value through profit or loss
The Company's financial assets at fair value through profit or
loss comprise its investment in the Subsidiary, which represents
amounts advanced to finance the Group's investment portfolio in the
form of Secured Loan Notes and equity, in addition to derivatives
(see note
14) utilised for the purpose of hedging foreign currency
exposure. The Company's investment in the Subsidiary at 30 June
2019 comprised:
(Audited)
30 June 31 December
2019 2018
Debt - Secured Loan Notes up to GBP1,000,000,000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ---------- ------------
Opening balance 377,916 261,507
Purchase of financial assets 54,446 129,227
Repayment of financial assets (9,590) (16,041)
Unrealised (loss)/gain on investments at fair value through profit or loss:
Unrealised valuation (loss)/gain (681) 889
Unrealised foreign exchange (loss)/gain (76) 163
Other unrealised movements on investments(1) (420) 2,171
-------------------------------------------------------------------------------- ---------- ------------
Total unrealised (loss)/gain on investment at fair value through profit or loss (1,177) 3,223
-------------------------------------------------------------------------------- ---------- ------------
Total 421,595(2) 377,916(2)
-------------------------------------------------------------------------------- ---------- ------------
1. Other unrealised movements on investments at fair value
through profit or loss are attributable to the timing of the debt
service payments.
2. The difference between the valuation of the Secured Loan
Notes and the underlying investments of the Subsidiary is as a
result of payment timings and differing application of the
effective interest rate in respect of some of the underlying
investments.
(Audited)
30 June 31 December
2019 2018
Equity - representing one ordinary share in the Subsidiary GBP'000 GBP'000
--------------------------------------------------------------------------- -------- ------------
Opening balance 434 244
Unrealised (loss)/gain on investments at fair value through profit or loss (890) 190
--------------------------------------------------------------------------- -------- ------------
Total (456)(1) 434
--------------------------------------------------------------------------- -------- ------------
1. Current negative value due to timing differences on
intercompany debt service payments due on the Secured Loan
Notes.
Financial assets at fair value through profit or loss 421,139 378,350
------------------------------------------------------ ------- -------
The above represents a 100% interest in the Subsidiary at period
end 30 June 2019 (31 December 2018: 100%).
9. Other receivables and prepayments
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
---------------------------------- -------- ------------
Arrangement fees 10 59
Intercompany receivable - 101
Loan arrangement fees unamortised - 290
Loan interest receivable 1,052 1,302
Prepayments 22 44
---------------------------------- -------- ------------
Total 1,084 1,796
---------------------------------- -------- ------------
10. Cash and cash equivalents
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
-------------------------- -------- ------------
Cash and cash equivalents 69,486 9,206
-------------------------- -------- ------------
Total 69,486 9,206
-------------------------- -------- ------------
11. Interest bearing loans and borrowings
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
------------------------------------------------------- -------- ------------
Opening balance - -
Proceeds from interest bearing loans and borrowings(1) 39,332 14,000
Repayment of interest bearing loans and borrowings - (14,000)
Loan arrangement fees unamortised (300) -
------------------------------------------------------- -------- ------------
Total 39,032 -
------------------------------------------------------- -------- ------------
Any amounts drawn under the facility are to be used in, or
towards, the making of investments (including a reduction of the
available commitment as an alternative to cash cover for entering
into forward foreign exchange contracts) in accordance with the
Company's investment policy.
During the period from the start of the year to 15 April 2019,
the Company drew down GBP20 million on 20 February 2019, GBP3
million on 29 March 2019 and GBP5 million on 11 April 2019,
resulting in a total drawn down of GBP28 million as at 15 April
2019(1) .
On 15 April 2019, the Company entered into an agreement with
RBSI to increase the existing RCF from GBP30 million to GBP50
million, represented by GBP40 million maturing in August 2020 (plus
a twelve month extension option, with lender approval) and GBP10
million maturing in December 2019.
Subsequent to 16 April 2019, the Company drew down GBP4 million
on 29 April 2019, GBP1.93 million on 9 May 2019, GBP4 million on 21
May 2019 and GBP1.4 million on 20 June 2019, resulting in a total
drawn down of GBP39.3 million as at 30 June 2019(1) . The GBP10
million facility was unutilised at the period end.
The total cost incurred to establish the facility was GBP767,000
(including an arrangement fee of GBP680,000); and an amount of
GBP107,000 in respect of these costs was amortised during the
period ended 30 June 2019 and charged through the statement of
comprehensive income.
Interest on amounts drawn under the GBP40 million facility is
charged at LIBOR plus 2.10% per annum and LIBOR plus 1.70% under
the GBP10 million facility. A commitment fee is payable on undrawn
amounts of 0.84% on the GBP40 million facility and 0.68% on the
GBP10 million facility.
During the period, utilisation requests were submitted to RBSI
in relation to the open forward foreign exchange contracts. These
utilisations restrict the amount available for drawdown, and at the
period end, a utilisation request for the sum of GBP549,000 (31
December 2018: GBP612,000) was in place, which limited the amount
available for drawdown on the RCF to GBP49.5 million.
Subsequent to the period end, on 1 July 2019 the Company repaid
in full, the GBP39.3 million which had been drawn down during the
period which was originally due for repayment on 30 September 2019.
The Company incurred breakage costs of GBP19,000 in respect of the
early repayment. The breakage costs are treated as a post period
end transaction and are not included in these financial
statements.
The RCF with RBSI is secured against the investment in the
Subsidiary.
At 30 June 2019, the Company is in full compliance with all loan
covenants stipulated in the RCF agreement.
1. Not including the amount drawn down as an alternative to cash
cover for the open forward foreign exchange contracts.
12. Other payables and accrued expenses
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
---------------------------- -------- ------------
Accruals 609 446
Amounts due to Subsidiary - 232
Loan commitment fee accrued 24 52
Investment in Subsidiary(1) - 1,203
Investment management fees 858 838
Share issue costs 115 24
---------------------------- -------- ------------
Total 1,606 2,795
---------------------------- -------- ------------
1. Amounts due to the Subsidiary for the making of investments,
which represents commitments outstanding by the Subsidiary to the
Project Companies.
13. Authorised and issued share capital
(Audited)
30 June 2019 31 December 2018
------------------------------------------------------ -------------------- --------------------
Number Number
Share capital account of shares GBP'000 of shares GBP'000
------------------------------------------------------ ----------- ------- ----------- -------
Ordinary shares issued at no par value and fully paid
Shares in issue at beginning of the period 379,962,298 380,235 242,966,606 241,326
Equity shares issued through:
Placing 60,317,181 63,333 12,440,190 13,000
Scrip dividend 583,549 622 911,857 941
Ordinary shares issued upon conversion of C shares - - 123,643,645 125,210
------------------------------------------------------ ----------- ------- ----------- -------
Total shares issued in the period/year 60,900,730 63,955 136,995,692 139,151
------------------------------------------------------ ----------- ------- ----------- -------
Share issue costs - (983) - (242)
------------------------------------------------------ ----------- ------- ----------- -------
Total 440,863,028 443,207 379,962,298 380,235
------------------------------------------------------ ----------- ------- ----------- -------
The Company's share capital is represented by ordinary
shares.
The authorised share capital of the Company on incorporation was
represented by an unlimited number of no par value ordinary
shares.
At 30 June 2019, the Company's issued share capital comprised
440,863,028 ordinary shares (31 December 2018: 379,962,298), none
of which were held in treasury.
14. Financial instruments
The table below sets out the classifications of the carrying
amounts of the Company's financial assets and financial liabilities
into categories of financial instruments.
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
----------------------------------------------------------- -------- ------------
Financial assets
Cash and cash equivalents 69,486 9,206
Other receivables and prepayments 1,084 1,796
----------------------------------------------------------- -------- ------------
Financial assets at amortised cost 70,570 11,002
----------------------------------------------------------- -------- ------------
Derivative financial instruments - 33
Investment in the Subsidiary 421,139 378,350
----------------------------------------------------------- -------- ------------
Financial assets at fair value through profit or loss 421,139 378,383
----------------------------------------------------------- -------- ------------
Total 491,709 389,385
----------------------------------------------------------- -------- ------------
Financial liabilities
Other payables and accrued expenses (1,606) (2,795)
Interest bearing loans and borrowings (39,032) -
----------------------------------------------------------- -------- ------------
Financial liabilities at amortised cost (40,638) (2,795)
----------------------------------------------------------- -------- ------------
Financial liabilities at fair value through profit or loss (39) -
----------------------------------------------------------- -------- ------------
Total (40,677) (2,795)
----------------------------------------------------------- -------- ------------
14.1 Derivatives
Derivative financial assets and liabilities comprise forward
foreign exchange contracts for the purpose of hedging foreign
currency exposure of the Company to a Euro denominated loan
investment made by the Subsidiary (for which the final repayment
date is 1 June 2025), the investment represents c.1% of the
portfolio by value. The Company intends to utilise the forward
foreign exchange contract on a rolling three month basis for the
term of the investment. Derivative financial assets and liabilities
are respectively classified as either financial assets or financial
liabilities at fair value through profit or loss. Recognition of
the derivative financial instruments takes place when the hedging
contracts are entered into. They are initially recognised and
subsequently measured at fair value; transaction costs, where
applicable, are included directly in finance costs. The Company
does not apply hedge accounting and consequently all gains or
losses are recognised in the unaudited interim condensed statement
of comprehensive income in 'net change in fair value of financial
assets and financial liabilities at fair value through profit or
loss'.
The table below sets out the forward foreign exchange contract
held by the Company at year end:
Principal Hedged Fair value
30 June 2019 Maturity amount amount GBP'000
--------------------------- ------------------ ------------ -------------- ----------
Contract EUR/GBP 23 September 2019 EUR7,071,845 (GBP6,311,330) (39)
--------------------------- ------------------ ------------ -------------- ----------
Principal Hedged Fair value
31 December 2018 (Audited) Maturity amount amount GBP'000
--------------------------- ------------------ ------------ -------------- ----------
Contract EUR/GBP 21 March 2019 EUR7,733,467 (GBP6,977,774) 33
--------------------------- ------------------ ------------ -------------- ----------
14.2 Capital management
The Company's capital is represented by share capital comprising
issued ordinary share capital and ordinary shares issued following
conversion of C shares, as well as credit facilities, as detailed
in note 11.
The Company may seek to raise additional capital from time to
time to the extent that the Board and the Investment Manager
believe the Company will be able to make suitable investments. The
Company raises capital only when it has a clear view of a robust
pipeline of advanced investment opportunities to ensure the rapid
deployment of capital.
The Company may borrow up to 25% of its NAV at such time any
such borrowings are drawn down. Refer to note 11 for further
information in relation to the RCF.
14.3 Fair value of financial assets
This note provides an update on the judgements and estimates
made by the Company in determining the fair value of the financial
instruments since the last annual report and financial
statements.
Fair value measurements
Investments measured and reported at fair value are classified
and disclosed in one of the following fair value hierarchy levels
depending on whether their fair value is based on:
-- Level 1: quoted prices in active markets for identical assets or 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); or
-- Level 3: inputs for the asset or liability that are not based
on observable market data ("unobservable inputs").
The table below analyses financial instruments measured at 30
June 2019, by the level in the fair value hierarchy into which the
fair value measurement is categorised. The amounts are based on the
values recognised in the unaudited interim condensed statement of
financial position.
Level 1 Level 2 Level 3
Date of valuation GBP'000 GBP'000 GBP'000 Total
-------------------------------------------------- --------------------------- -------- -------- -------- -------
Financial assets/(liabilities) measured at fair
value through profit or loss
Assets:
Investment in Subsidiary 30 June 2019 - - 421,139 421,139
Investment in Subsidiary 31 December 2018 (audited) - - 378,350 378,350
Derivative financial instruments 31 December 2018 (audited) - 33 - 33
-------------------------------------------------- --------------------------- -------- -------- -------- -------
Liabilities:
Derivative financial instruments 30 June 2019 - (39) - (39)
-------------------------------------------------- --------------------------- -------- -------- -------- -------
Investment in Subsidiary
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and end of the period:
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
--------------------------------------------------------------------------- ---------- ------------
Opening balance 378,350 261,751
Investment in Subsidiary 54,446 129,227
Capital repayments from Subsidiary (9,590) (16,041)
Unrealised (loss)/gain on investments at fair value through profit or loss (2,067)(1) 3,413
--------------------------------------------------------------------------- ---------- ------------
Closing balance 421,139 378,350
--------------------------------------------------------------------------- ---------- ------------
1. Refer to note 8 for further information.
The fair value of the investment in the Subsidiary consists of
both debt (the Secured Loan Notes) and equity (ordinary shares),
refer to note 8 for further information.
During the period there were no transfers of investments between
levels therefore no further disclosure is considered necessary
under IAS 34.
Basis of determining fair value
The Valuation Agent carries out semi-annual valuations (31
December 2018: quarterly valuations) of the financial assets of the
Subsidiary and the Secured Loan Notes. Any assets which may be
subject to discount rate changes are valued on a quarterly basis.
The NAVs calculated by the Administrator are reviewed by the
Investment Manager and the Directors on a quarterly basis (in
addition to the Valuation Agent's semi--annual valuation).
Valuation techniques
The value of the investment in the Subsidiary is based on the
aggregate of the NAV of the Subsidiary and the value of the Secured
Loan Notes issued by the Subsidiary. The Subsidiary's portfolio of
assets is held at fair value and its values are monitored on a
semi-annual basis by the Valuation Agent. The Valuation Agent
considers the movements in comparable credit markets and publicly
available information around each project in assessing the expected
future cash flows from each of the Subsidiary's investments.
The valuation principles used are based on a discounted cash
flow methodology. A fair value for each asset acquired by the Group
is calculated by applying a relevant market discount rate to the
contractual cash flow expected to arise from each asset.
The Valuation Agent determines the discount rate that it
believes the market would reasonably apply to each investment
taking, inter alia, into account the following significant
inputs:
-- Pound Sterling interest rates;
-- movements of comparable credit markets; and
-- observable yield on other comparable instruments.
In addition, the following are also considered as part of the
overall valuation process:
-- market activity and investor sentiment; and
-- changes to the economic, legal, taxation or regulatory environment.
The Valuation Agent exercises its judgement in assessing the
expected future cash flows from each investment. Given that the
investments are generally fixed income debt instruments (in some
cases with elements of inflation and/or interest rate protection)
or other investments with a similar economic effect, the focus of
the Valuation Agent is on assessing the likelihood of any
interruptions to the debt service payments, in light of the
operational performance of the underlying asset.
The value of the investment in the Subsidiary is based on the
aggregate of the NAV of the Subsidiary and the value of the Secured
Loan Notes issued by the Subsidiary. At 30 June 2019, the NAV was
as follows:
(Audited)
30 June 31 December
2019 2018
GBP'000 GBP'000
-------- -------- ------------
GABI UK (456)(1) 434
-------- -------- ------------
1. Refer to note 8 for further information.
The key driver of the NAV is the valuation of its portfolio of
secured loan facilities issued to the Project Companies.
The Secured Loan Notes issued by the Subsidiary that the Company
has subscribed for, are valued on a discounted cash flow basis in
line with the model used by the Valuation Agent, applying the
following discount rates:
Fair value(1) Valuation Key unobservable Discount
GBP'000 technique inputs rate
------------------------------------------------------ ------------- ---------- ---------------- --------
Financial assets at fair value through profit or loss Discounted Discount
30 June 2019 421,139 cash flow rate 8.1%
Financial assets at fair value through profit or loss Discounted Discount
31 December 2018 (audited) 378,350 cash flow rate 8.1%
------------------------------------------------------ ------------- ---------- ---------------- --------
1. Including the NAV of the Subsidiary.
The investments held by the Subsidiary are valued on a
discounted cash flow basis, in line with the methodology used by
the Valuation Agent. At the period end, discount rates ranged from
6-10% (31 December 2018: 6-14%).
The table below shows how changes in discount rates affect the
changes in the valuation of financial assets at fair value through
profit or loss. The range of discount changes has been determined
with reference to historic discount rates made by the Valuation
Agent.
30 June 2019
Change in discount rates (0.50%) 0.00% 0.50%
------------------------------------------------------------ ------- ------- -------
Value of financial assets at fair value (GBP'000) 428,997 421,139 413,606
Change in value of financial assets at fair value (GBP'000) 7,858 - (7,533)
------------------------------------------------------------ ------- ------- -------
31 December 2018 (audited)
Change in discount rates (0.50%) 0.00% 0.50%
------------------------------------------------------------ ------- ------- -------
Value of financial assets at fair value (GBP'000) 386,500 378,350 370,567
Change in value of financial assets at fair value (GBP'000) 8,150 - (7,783)
------------------------------------------------------------ ------- ------- -------
15. Related party disclosures
As defined by IAS 24 Related Party Disclosures, parties are
considered to be related if one party has the ability to control
the other party or exercise significant influence over the party in
making financial or operational decisions. Subsidiary companies are
also determined to be related parties as they are members of the
same group of companies.
Directors
The non-executive Directors of the Company are considered to be
the key management personnel of the Company. Directors'
remuneration for the period (including reimbursement of
Company-related expenses) totalled GBP52,000 (30 June 2018:
GBP51,000). At 30 June 2019, liabilities in respect of these
services amounted to GBP26,000 (31 December 2018: GBP25,000).
At 30 June 2019, the Directors of the Company held directly or
indirectly, and together with their family members, 123,942
ordinary shares in the Company (31 December 2018: 123,942).
Alex Ohlsson is the managing partner of Carey Olsen Jersey LLP,
the Company's Jersey legal advisers. Carey Olsen Jersey LLP has
provided legal services to the Company during the period. Carey
Olsen Jersey LLP maintains procedures to ensure that Mr Ohlsson has
no involvement in the provision of legal services to the
Company.
During the period, the aggregate sum of GBP20,000 was paid to
Carey Olsen Jersey LLP (30 June 2018: GBP15,000) in respect of
legal work of which GBP5,000 is outstanding at period end (31
December 2018: GBP10,000).
During the period, Joanna Dentskevich was a non-executive
director and chair of the risk committee of RBSI, the lender under
the RCF. In her role as a non-executive director of RBSI, Mrs
Dentskevich was not involved in the day-to-day services or
operational aspects of the business. Mrs Dentskevich resigned from
RBSI on 31 July 2019. Further details on the RCF can be found in
note 11.
Investment Manager
The Company is party to an investment management agreement with
the Investment Manager dated 28 September 2015 and as novated in
April 2017, pursuant to which the Company has appointed the
Investment Manager to provide discretionary portfolio and risk
management services relating to the assets on a day-to-day basis in
accordance with its investment objective and policies, subject to
the overall control and supervision of the Board.
As a result of the responsibilities delegated under this
investment management agreement, the Company considers it to be a
related party by virtue of being 'key management personnel'. Under
the terms of the investment management agreement, the notice period
of the termination of the Investment Manager by the Company is
twelve months, with such notice not being given prior to the fifth
anniversary of the Company's IPO.
For its services to the Company, the Investment Manager receives
an investment management fee which is calculated and paid quarterly
in arrears at an annual rate of 0.9% per annum of the prevailing
NAV of the Company less the value of the cash holdings of the
Company pro rata for the period for which such cash holdings have
been held. The Investment Manager receives an annual fee of
GBP25,000 in relation to its role as the Company's AIFM, which has
been increased annually at the rate of the RPI since IPO.
The Investment Manager has committed additional resource in
providing its client funds, including the Company, a more
comprehensive service which increases the level of transaction
advisory and marketing support received by the Company. The
Investment Manager receives additional fees from any issue of new
shares, in consideration for the provision of marketing and
investor introduction services. The Investment Manager has
appointed Highland Capital to assist it with the provision of such
services and pays all fees due to Highland Capital out of the fees
it receives from the Company,
During the period, the Company incurred GBP1,868,000 (30 June
2018: GBP1,352,000) in respect of the services outlined above:
GBP1,698,000 (30 June 2018: GBP1,341,000) in respect of investment
management and advisory services, GBP158,000 (30 June 2018: GBPnil)
in relation to the issuance of ordinary shares and GBP12,000 (30
June 2018: GBP11,000) in respect of AIFM services provided by the
Investment Manager. At 30 June 2019, liabilities in respect of
these services amounted to GBP865,000 (31 December 2018:
GBP845,000).
The Investment Manager, at its discretion, is entitled to an
arrangement fee of up to 1% of the value of each investment made by
the Company. The Investment Manager typically expects the cost of
any such fee to be covered by the borrowers, and not the Company.
To date, such fee in respect of all but three of the Group's
investments has been met and paid by borrowers. During the period,
the Investment Manager received GBP289,000 (30 June 2018:
GBP380,000) from arrangement fees which had been met by borrowers
and GBP40,000 (30 June 2018: GBPnil) from arrangement fees which
had been met by the Company. To the extent any arrangement fee
negotiated by the Investment Manager with a borrower exceeds 1%,
the benefit of any such excess is paid to the Company, for the
period to 30 June 2019 the Company received GBP91,000 (30 June
2018: GBP136,000).
A number of the directors of the Investment Manager also sit on
the board of the Subsidiary. The Company has delegated to the
Investment Manager through the investment management agreement, the
day-to-day operations of the Subsidiary.
At 30 June 2019, the key management personnel of the Investment
Manager, held directly or indirectly, and together with their
family members, 1,439,691 ordinary shares in the Company (31
December 2018: 1,777,577).
At 30 June 2019, the directors of the Investment Manager, and
their family members, directly or indirectly own an equity interest
in four of the Subsidiary's student accommodation investments,
refer to note 16 for details on post period end investments. These
investments are valued by the Valuation Agent in line with the
remaining portfolio.
Subsidiary
At 30 June 2019, the Company owned a 100% (31 December 2018:
100%) controlling stake in the Subsidiary. The Subsidiary is
considered to be a related party by virtue of being part of the
same group. The Company indirectly owns GABI GS; for further
information refer to note 1.
The following tables disclose the transactions and balances
between the Company and the Subsidiary.
30 June 30 June
2019 2018
Transactions GBP'000 GBP'000
------------------------------ -------- --------
Intercompany income received
Other income 41 5
Arrangement fee income 91 136
Loan interest income received 17,868 11,927
------------------------------ -------- --------
Total 18,000 12,068
------------------------------ -------- --------
(Audited)
30 June 31 December
2019 2018
Balances GBP'000 GBP'000
---------------------------------------------------------------------------------------------- -------- ------------
Intercompany balances payable - (1,435)
---------------------------------------------------------------------------------------------- -------- ------------
Intercompany balances receivable 1,062 1,462
---------------------------------------------------------------------------------------------- -------- ------------
Principal value of intercompany holdings within financial assets at fair value through profit
or loss 417,886 373,031
---------------------------------------------------------------------------------------------- -------- ------------
16. Subsequent events after the report date
On 1 July 2019, the Company repaid in full, the GBP39.3 million
drawn down from the Company's GBP50 million RCF with RBSI,
utilising cash proceeds generated from the June 2019 ordinary share
placing. The Company also paid GBP325,000 loan interest due to RBSI
and GBP19,000 loan breakage costs for the early loan repayment,
originally due to have been repaid on 30 September 2019.
On 24 July 2019, the Company declared a second interim dividend
of 1.55 pence per ordinary share amounting to GBP6.8 million
(including dividends settled in shares(1) ) which was paid on 2
September 2019 to ordinary shareholders on the register at 2 August
2019.
On 2 September 2019, 207,288 ordinary shares were admitted to
the premium segment of the Official List of the FCA and to trading
on the Premium Segment of the Main Market of the LSE, pursuant to
the scrip dividend alternative in lieu of cash for the second
interim dividend declared on 24 July 2019.
The Group made eight advances post period end totalling GBP13.0
million, two of which were new investments, including one
investment that the directors of the Investment Manager directly of
indirectly own an equity interest. The Group also received four
repayments totalling GBP3.3 million. Refer to the Investment
Manager's report and the financial review above for further
details.
1. Dividends settled in shares are where shareholders have
elected to take the scrip dividend alternative.
17. Ultimate controlling party
It is the view of the Board that there is no ultimate
controlling party.
GLOSSARY
AIC The Association of Investment Companies
AIC Code AIC Code of Corporate Governance
AIFM Alternative Investment Fund Manager
Annualised total return Total shareholder return expressed as a time weighted annual percentage
since IPO
APM Alternative performance measure
CIF Law Collective Investment Funds (Jersey) Law 1988
CNG Compressed natural gas
Companies Law Companies (Jersey) Law 1991, as amended
Company GCP Asset Backed Income Fund Limited
Dividend cover ratio Ratio of earnings to dividends calculated as dividends per share divided by earnings per
share
Dividend yield The dividend paid out to shareholders relative to the closing share price at the period
end,
expressed as a percentage
DTR Disclosure Guidance and Transparency Rules of the FCA
EPS Earnings per share
ESG Environmental, social and governance
FCA Financial Conduct Authority
GABI GS GABI GS Limited
GABI UK and/or the GCP Asset Backed Income (UK) Limited
Subsidiary
GCP Infra GCP Infrastructure Investments Limited, a third party company advised by the Investment
Manager
Group The Company, GABI UK and GABI GS
Highland Capital Highland Capital Partners Limited
HY17 Six months ended 30 June 2017
HY18 Six months ended 30 June 2018
HY19 Six months ended 30 June 2019
IAS International Accounting Standards
IASB International Accounting Standards Board
IASC International Accounting Standards Committee
IFRIC International Financial Reporting Interpretations Committee
IFRS International Financial Reporting Standards
Income Tax Law Income Tax (Jersey) Law 1961, as amended
IPO Initial public offering
LIBOR London inter-bank offered rate
LSE London Stock Exchange
LTV Loan-to-value
NAV Net asset value
Ongoing charges ratio Annual percentage reduction in shareholder return as a result of recurring operational
expenses
Project Company A special purpose vehicle which owns and operates an asset
RBSI The Royal Bank of Scotland International Limited
RCF Revolving credit facility
Secured Loan Notes Loan notes issued to the Company
TISE The International Stock Exchange
Total shareholder Share price growth with dividend deemed to be reinvested on the dividend payment date,
return assuming
a full take up of pre-emptive rights in respect of C share issues
Source: Bloomberg
Weighted average annualised The yield on the investment portfolio calculated with reference to the relative size of
yield each
investment, expressed as a percentage
Weighted average discount A rate of return used in valuation to convert a series of future anticipated cash flows
rate to
present value under a discounted cash flow approach. The rate is calculated with
reference
to the relative size of each investment
--------------------------- -----------------------------------------------------------------------------------------
CORPORATE INFORMATION
Directors and/or the Board
Alex Ohlsson (Chairman)
Colin Huelin
Joanna Dentskevich
Administrator, secretary and registered office of the
Company
Apex Financial Services (Alternative Funds) Limited (formerly
Link Alternative Fund Services (Jersey) Limited
12 Castle Street, St Helier
Jersey JE2 3RT
Advisers to English law
Gowling WLG (UK) LLP
4 More London Riverside
London SE1 2AU
Advisers to Jersey law
Carey Olsen Jersey LLP
47 Esplanade, St Helier
Jersey JE1 OBD
Broker
Cenkos Securities plc
6.7.8 Tokenhouse Yard
London EC2R 7AS
Depositary
Apex Financial Services (Corporate) Limited (formerly Link
Corporate Services (Jersey) Limited
12 Castle Street, St Helier
Jersey JE2 3RT
Independent Auditor
PricewaterhouseCooper CI LLP
37 Esplanade, St Helier
Jersey JE1 4XA
Investment Manager and AIFM
Gravis Capital Management Limited
24 Savile Row
London W1S 2ES
Principal banker and lender
Royal Bank of Scotland International Limited
71 Bank Street, St Helier
Jersey JE4 8PJ
Public relations
Quill Communications
107 Cheapside
London EC2V 6DN
Registrar
Link Market Services (Jersey) Limited
12 Castle Street, St Helier
Jersey JE2 3RT
Valuation Agent
Mazars LLP
Tower Bridge House
St Katherine's Way
London E1W 1DD
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UKUBRKRAKRAR
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