TIDMHONY
RNS Number : 8670O
Honeycomb Investment Trust PLC
12 February 2021
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12 February 2021
Honeycomb Investment Trust plc
Honeycomb Investment Trust plc (the "Company") announces that
the Investment Manager's monthly factsheet for 31 December 2020 is
now available on its website at http://www.honeycombplc.com .
Net Asset Value per Share
The Company announces that its unaudited Net Asset Value ("NAV")
per share as at 31 December 2020 on a cum-income basis was 1,013.5
pence, based on a NAV of GBP357.2 million, and on an ex-income
basis was 1,017.8 pence, based on a NAV of GBP358.9 million. The
NAVs have been calculated by Apex Fund Services (UK) Ltd.
December Factsheet
Honeycomb Investment Trust plc (the "Company") delivered a NAV
return of 0.67% for the month, which is equivalent to 7.9% per
annum. This brings total NAV return for 2020 to 7.7%.
Alongside the strong return performance for the year the Company
has also made significant progress in a number of other areas
including moving to a main market listing, putting in place an
active buyback program, diversifying the shareholder register and
securing long term debt facilities. This leaves Honeycomb in a
robust position heading into 2021.
2020 Performance and Portfolio
The portfolio has performed well throughout 2020 despite the
challenging macro backdrop. This was demonstrated by a reduction in
bad debts and impairments in the year with 1.0% charge on credit
assets in 2020 vs 1.3% in 2019. This performance can be attributed
to:
1) A focus on credit investments secured on loan portfolios of
non-bank lenders with strong downside protection from senior
ranking to the lender or borrower equity as well as security over
the cashflow generated by the loan portfolio. This senior ranking
provides insulation from increasing defaults in the portfolio and
provides a stability of returns; and
2) Resilience exhibited by the specialty finance industry
throughout COVID with cash collections from loan portfolios
returning to pre-pandemic levels by Q3. We have also seen the
significant majority of customers, who took payment holidays,
return to full contractual payments.
The Company has also benefited from the decision taken at the
beginning of 2019 to reduce the exposure to consumer direct
unsecured loans where the Company owns the entire loan rather than
having the senior exposure with the non-bank retaining the junior
equity. Whilst the yield on these loans is higher the potential
volatility, running impairments and cost to service means it is
more attractive to reallocate the capital to secured exposures.
This part of the portfolio has reduced to 6% at December 2020.
Investments assets finished the year at GBP571m which was
broadly flat on prior year (Dec-19 GBP589m). Through the initial
COVID period we reduced originations and stopped new investment
activity and focused on portfolio management and cash collection to
ensure robust performance. This resulted in the portfolio shrinking
in Q2 and Q3 before seven new investment opportunities were
completed in Q4.
Offsetting some of the strong performance in the asset portfolio
was one off costs incurred in relation to the debt facilities. The
existing debt facilities matured in April 2020 and due to the COVID
pandemic the refinancing with a new bank was delayed. This meant
that there was additional costs in extending the existing facility
before a short term 12 month facility could be arranged. In
September the Company completed its longer term (3 year) Topco
facility with a European Bank. In addition, two other SPV
financings were completed in the year meaning Honeycomb ended 2020
with long term and larger debt facilities providing a strong
liquidity position and an ability to grow without further
refinancing.
Embedding ESG through the Company
The Company's target markets have a strong positive ESG impact
which have become ever more critical in the current environment in
five key areas:
1) Lending to support SMEs and communities is ever more critical
in the current environment and the Company works with lenders who
are close to their customers and are able to offer tailored
offerings to support them in a prudent way.
2) Our real estate lending strategy is critical to improving the
quality of the property stock across the UK and Europe and the
creation of affordable, efficient and good value homes.
3) Lending to support financial inclusion at a time when
mainstream lenders are offering only the most vanilla automated
products. Our partners that are nimble and work closely with
customers are able to offer high quality lending offerings.
4) Lending to support improved energy efficiency in the home is
one of the key ways that individuals can have a real positive
impact on the environment. Starting with home improvements, this is
now moving to the electrification of transport.
5) All our lending partners are required to demonstrate and
embed the highest quality of governance and their own three lines
of defence which we ensure is being complied with as part of our
on-going monitoring.
Overall, the opportunity for specialist lenders with more nimble
business models are able to work closely with customers, react
quickly to the changing environment to create tailored and
responsible lending products to support the economy in this
challenging and dynamic environment.
This document is made available for information purposes only
and does not contain any representations or constitute an offer to
sell or the solicitation of an offer to acquire or subscribe for
any securities of the Company. All investments are subject to risk.
Prospective investors are advised to seek expert legal, financial,
tax and other professional advice before making any investment
decision. The value of investments may fluctuate and past
performance is no guarantee of future results.
For further information about this announcement please
contact:
Pollen Street Capital - Investment Manager
Matthew Potter / Julian Dale: +44 (0)20 3728 6750
Liberum Capital Limited - Joint Broker
Chris Clarke / Louis Davies: +44 (0)20 3100 2000
Cenkos Securities plc - Joint Broker
Justin Zawoda-Martin / Rob Naylor: +44 (0)20 7397 8900
Link Company Matters Limited - Corporate Secretary
Paul Johnston: +44 (0)20 7954 9552
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