TIDMSSIF

RNS Number : 2390T

Secured Income Fund PLC

24 March 2021

24 March 2021

Secured Income Fund plc

("SSIF" or the "Company")

Half-Yearly Financial Report

For the six months ended 31 December 2020

 
 
 A copy of the Company's Half-Yearly Report and Condensed Financial 
  Statements for the six months ended 31 December 2020 will shortly 
  be available to view and download from the Company's website, https://kkvim.com/secured-income-fund/ 
  . Neither the contents of the Company's website nor the contents 
  of any website accessible from hyperlinks on the Company's website 
  (or any other website) is incorporated into or forms part of this 
  announcement. 
 Enquiries to: 
 
 
 Directors 
  David Stevenson (Chair)              tel: +44 7973 873785 
  Susan Gaynor Coley                   tel: +44 7977 130673 
  Brett Miller                         tel: +44 7770 447338 
 KKV Investment Management Limited   Investor.communications@kkvim.com 
  Catherine Halford Riera 
 finnCap Ltd.                        tel: +44 20 7220 0500 
  Corporate Finance: William Marle 
  / Giles Rolls 
  Sales: Mark Whitfeld 
 https://kkvim.com/secured-income-fund/ 
 
 
 The following text is extracted from the Half-Yearly Report and Unaudited 
  Condensed Financial Statements of the Company for the six months 
  ended 31 December 2020. 
 
 
                                              Strategic Report 
                                                 Key Points 
                                               31 December            31 December 
                                                      2020                   2019 
                                               (unaudited)            (unaudited)                   30 June 
                                                                                             2020 (audited) 
 Net assets ([1])                            GBP41,262,000          GBP48,686,000             GBP45,532,000 
 NAV per Ordinary Share                             78.26p                 92.36p                    86.37p 
 Share price                                        66.50p                 85.25p                    76.50p 
 Discount to NAV                                    15.03%                   7.7%                     11.4% 
 Profit/(loss) for the period                   GBP820,000             GBP399,000              GBP(913,000) 
 Dividend per share declared in 
  respect of the period                              8.50p                  3.50p                     7.00p 
 Dividend cover                                       0.15                   0.67                      0.44 
 Total return per Ordinary Share 
  (based on NAV) ([2])                               +1.8%                  +0.8%                     -1.8% 
 Total return per Ordinary Share 
  (based on share price) ([2])                       -0.4%                  -3.5%                     -9.2% 
 Ordinary Shares in issue                       52,660,350             52,660,350                52,660,350 
                                    In addition to the Ordinary Shares in issue, 50,000 Management 
  ([1])                              Shares of GBP1 each are in issue (see note 20). 
                                    Total return per Ordinary Share has been calculated by comparing 
  ([2])                              the NAV or share price, as applicable, at the start of the period 
                                     with the NAV or share price, as applicable, plus dividends paid, 
                                     at the period end. 
 
 
 
                        Overview and Investment Strategy 
 
 General information 
 Secured Income Fund plc (the "Company", "Fund" or "SIF") was incorporated 
  in England and Wales under the Companies Act 2006 on 13 July 2015 
  with registered number 09682883. It is an investment company, as 
  defined in s833 of the Companies Act 2006. Its shares were admitted 
  to trading on the London Stock Exchange Specialist Fund Segment on 
  23 September 2015 ("Admission"). 
 
 Change of name 
 On 18 July 2020, the Company changed its name from SQN Secured Income 
  Fund plc to Secured Income Fund plc. 
 
 Continuation vote 
 On 19 June 2020, the Company held a continuation vote (the "Continuation 
  Vote") that, in line with the Directors' recommendation, did not 
  pass. This vote was required under the Articles as the Company did 
  not have a Net Asset Value of at least GBP250 million as at 31 December 
  2019. As the Continuation Vote did not pass, the Directors (as required 
  under the Articles) convened a further general meeting of the Company 
  on 17 September 2020 at which Shareholders approved the managed wind-down 
  of the Company. 
 
 Investment objective and policy 
 On 17 September 2020, the Shareholders approved the adoption of a 
  new investment objective and policy of the Company, as follows: 
 The Company will be managed with the intention of realising all remaining 
  assets in the Portfolio in a prudent manner consistent with the principles 
  of good investment management and with a view to returning cash to 
  Shareholders in an orderly manner. 
 
  The Company will pursue its investment objective by effecting an 
  orderly realisation of its assets in a manner that seeks to achieve 
  a balance between maximising the value received from those assets 
  and making timely returns of capital to Shareholders. This process 
  might include sales of individual assets, mainly structured as loans, 
  or running off the Portfolio in accordance with the existing terms 
  of the assets, or a combination of both. 
 
 As part of the realisation process, the Company may also exchange 
  existing debt instruments for equity securities where, in the opinion 
  of the Board, the Company is unlikely to be able to otherwise realise 
  such debt instruments or will only be able to realise them at a material 
  discount to the outstanding principal balance of that debt instrument. 
 
  The Company will cease to make any new investments or to undertake 
  capital expenditure except where, in the opinion of both the Board 
  and the Investment Manager (or, where relevant, the Investment Manager's 
  successors): 
 
        *    the investment is a follow-on investment made in 
             connection with an existing asset in order to comply 
             with the Company's pre-existing obligations; or 
 
 
        *    failure to make the follow-on investment may result 
             in a breach of contract or applicable law or 
             regulation by the Company; or 
 
 
        *    the investment is considered necessary to protect or 
             enhance the value of any existing investments or to 
             facilitate orderly disposals. 
 
 
 
       Any cash received by the Company as part of the realisation process 
       prior to its distribution to Shareholders will be held by the Company 
       as cash on deposit and/or as cash equivalents. 
 
       The Company will not undertake new borrowing. 
 
       Any material change to the investment policy would require Shareholder 
       approval. 
 
 Prior to 17 September 2020, the investment objective and policy was 
  as follows: 
 
 Investment objective 
 The investment objective of the Company was to provide Shareholders 
  with attractive risk adjusted returns, principally in the form of 
  regular, sustainable dividends, through investment predominantly 
  in a range of secured loans and other secured loan-based instruments 
  originated through a variety of channels and diversified by way of 
  asset class, geography and duration. 
 
 Investment policy 
 The Company achieved its investment objective by investing in a range 
  of secured loan assets mainly through wholesale secured lending opportunities, 
  secured trade and receivable finance and other collateralised lending 
  opportunities. Loan assets included both direct loans as well as 
  other instruments with loan-based investment characteristics (for 
  example, but not limited to, bonds, loan participations, syndicated 
  loans, structured notes, collateralised obligations or hybrid securities) 
  and may have included (subject to the limit set out below) other 
  types of investment (for example, equity or revenue- or profit-linked 
  instruments). The Company may have made investments through alternative 
  lending platforms that present suitable investment opportunities 
  identified by the Investment Manager. 
 
                              Chairman's Statement 
 
 Introduction 
 I am pleased to provide Shareholders with my Chairman's statement, 
  covering the interim results from 1 July 2020 to 31 December 2020. 
  Over the reporting period, the Company has continued to reduce platform 
  and third-party debt. Despite continued macro uncertainty caused 
  by Brexit, wider geopolitical issues and the continuing Covid-19 
  pandemic, the target income has continued to be delivered for Shareholders 
  and KKV Investment Management Limited (the "Investment Manager") 
  has made a good start to returning capital as defined in the wind 
  down plan presented to the Board. So far, the Secured Income Fund 
  plc (the "Company") has returned 8.5p per share to Shareholders since 
  the wind down proposals were adopted in September. 
 
 Secured Income Fund plc (LSE: SSIF) is a UK-listed specialist investment 
  trust with a focus on secured investments that produce regular, collateralised 
  income from investments made in a portfolio of loans to lower middle 
  market companies in the UK and the rest of the world. 
 
 Performance 
 All loans underwritten since April 2017 are performing in line with 
  expectations and there has been a marked improvement in performance 
  over the reporting period after the initial impact of Covid-19 had 
  been felt by our borrowers. I am pleased to observe that amortisation 
  and general trading conditions have improved. 
 
 For the reporting period ended 31 December 2020, the Company generated 
  a net profit of GBP0.8 million comprised of earnings per Ordinary 
  Share of 1.56p (compared to loss of GBP0.9 million and loss per Ordinary 
  Share of 1.73p for the year ended 30 June 2020). The Company's NAV 
  at 31 December 2020 was GBP41.3 million (78.26p (cum income) per 
  Ordinary Share) compared to GBP45.5 million (86.37p per Ordinary 
  Share) as at 30 June 2020. The fall in the NAV was due to the payment 
  of dividends of 9.67p in the period, with a total return for the 
  reporting period of 1.8%. 
 
 Foreign exchange hedging was removed in September 2020, with details 
  of USD and EUR exposure published in monthly factsheets allowing 
  Shareholders to make their own hedging arrangements as appropriate. 
  As a result of this investors should be aware that there might be 
  some impact on the Company if FX markets move markedly. 
 
 Note that all returns are net of all fees and no gearing was applied 
  to the portfolio during the reporting period. 
 
 Corporate Activity 
 As reported in the full year accounts, on 5 June 2020, the Company 
  novated the contract to manage the portfolio to KKV Investment Management 
  Limited, following the management team into their new entity. Continuity 
  of management has been maintained with the same core team responsible 
  for the portfolio, this allows for the smooth run-off of the portfolio 
  as it starts the process of wind down. 
 
 Upon the recommendation of the Board, in June 2020, Shareholders 
  voted for the Company to go into a managed wind down. This decision 
  was made after the Company was unable to raise new capital and meet 
  its original goal to increase shareholder capital to GBP250 million 
  by December 2019. The Board of Directors and the Investment Manager 
  have begun work on an orderly wind-down of the business and have 
  made a good start on the return of capital to investors expeditiously, 
  avoiding capital erosion where possible. No new underwriting commitments 
  have been made and arrangements were made for loans to begin amortisation 
  in line with contractual terms. 
 
 Costs have been monitored carefully and management fees were renegotiated 
  to reflect the wind down status of the Company, details of which 
  were reported in my last report and commenced on 17 September 2020. 
 
 Dividends 
 The Company elected to designate all dividends for the period ended 
  31 December 2020 as interest distributions to its Shareholders. In 
  doing so, the Company took advantage of UK tax treatment by "streaming" 
  income from interest-bearing investments into dividends that will 
  be taxed in the hands of Shareholders as interest income. 
 
 As a consequence of the decision to proceed with a managed wind-down, 
  the Board reviewed the dividend policy and decided to cease paying 
  monthly dividends, paying quarterly dividends instead, as well as 
  returning excess capital as and when the Company has excess cash 
  reserves available for distribution. Since September 2020, the Company 
  has been able to make distributions equivalent to 8.5p per share, 
  with a total of 9.67p per share being paid in the period. 
 
 Capital Distributions 
 Given the better than expected outlook for distribution of capital, 
  the Company has considered the method used for future distributions. 
  After careful consideration and discussions with a number of Shareholders, 
  the Board believes that one of the fairest and most cost-efficient 
  ways of returning substantial amounts of cash to Shareholders is 
  by adopting a B Share Scheme, whereby the Company will be able to 
  issue redeemable B Shares to Shareholders. These are then redeemed 
  on a Redemption Date without further action being required by Shareholders. 
  The Board also intends to continue to make dividend payments, where 
  possible, in accordance with the Company's dividend policy. 
 
 The quantum and timing of a Return of Capital to Shareholders following 
  receipt by the Company of the net proceeds of realisations of investments 
  will be dependent on the Company's liabilities and general working 
  capital requirements. Accordingly, any Return of Capital will be 
  at the discretion of the Board, which will announce details of each 
  Return of Capital, including the relevant Record Date, Redemption 
  Price and Redemption Date, through an RNS Announcement, a copy of 
  which will be posted to Shareholders. 
 
 The adoption of a B Share Scheme will not limit the ability of the 
  Company to return cash to Shareholders by using other mechanisms 
  and, if the B Share Scheme is adopted, the Board will continue to 
  review its tax effectiveness and cost efficiency over time. The Board's 
  proposal to adopt a B Share Scheme at this point in time should not 
  be taken as any indication as to the likely timing or quantum of 
  any future returns of cash to Shareholders and Shareholders should 
  not conclude that returns of capital over the next few months are 
  likely. 
 
 Notice of a General Meeting of Shareholders was published on 26 February 
  2021 and I am pleased to report that these arrangements were accepted 
  by Shareholders. 
 
 Discount 
 During the reporting period, the Company traded at an average discount 
  to NAV of 17.6%. 
 
 Board of Directors 
 There have been no changes to Board composition during the reporting 
  period. 
 
 Outlook 
 The outlook for direct loans held in the portfolio has improved since 
  my last report and this trend is expected to continue as businesses 
  have adjusted to the challenges of the Covid-19 pandemic. 
 
 The Board still expects the wind-down plan will likely take two or 
  three years to execute with the objective of delivering investors 
  total proceeds as close to NAV as possible, less the unavoidable 
  expenses required in the wind down process. However, as stated, we 
  have already taken steps to reduce costs and will continue to do 
  this over the coming months. As we have already outlined in the full 
  year report, our goal in the managed wind-down is to achieve a balance 
  between maximising the value received from those assets and making 
  timely returns of capital to Shareholders. 
 
 Market conditions have continued to be challenging but the immediate 
  risks to the portfolio, as presented at the start of the pandemic 
  in Q1 2020, have largely dissipated which is a testament to the careful 
  management of borrower relationships by the Investment Manager. However, 
  the Investment Manager remains vigilant and is mindful of the challenges 
  posed by any reduction in furlough and bounce back policies that 
  have greatly assisted some of our counterparties. As always, we shall 
  keep investors informed of any developments as they occur, in the 
  months to come. 
 
 We thank investors for their continued support and hope that the 
  consistent high level of income and the healthy start to the wind 
  down of the Company is welcomed by Shareholders. 
 
 David Stevenson 
 Chairman 
 23 March 2021 
 
 
                         Investment Manager's Report 
 
 Overview 
 KKV Investment Management Limited ("KKV") assumed investment adviser 
  responsibility for the Company on 5 June 2020. 
 
 Following the decision by Shareholders not to support continuation, 
  we are working hard on plans to return capital to Shareholders in 
  as expeditious way as possible without damaging capital value. Since 
  the wind down of the Company commenced in September 2020, we have 
  returned 8.5 pence to Shareholders via dividend distribution and 
  we continue to accumulate cash enabling us to continue with this 
  policy. 
 
 We are again able to report that the Company has continued to reduce 
  the overall legacy exposure to 14.3% with peer to peer lending making 
  up only 0.5% of the portfolio. IFRS 9 impairment provisions have 
  been increased on legacy investments and now stands at 7.7% of the 
  total NAV value. We have revised our IFRS 9 policy to reflect an 
  industry standard approach and have provided full details of this 
  further in the report. Note that the difference in provisioning was 
  less than 1% when implemented in November 2020. 
 
 The Company remains unlevered for investment and working capital 
  purposes. 
 
 Despite the challenges of Brexit and the Covid pandemic, we have 
  not had cause to impair our direct loan exposures to date and have 
  observed a marked improvement in trading conditions for all our borrowers, 
  particularly from our wholesale investments. Therefore, the Company 
  has not credit impaired any direct loan exposures to date. 
 
 Business Update 
 KKV is owned by Kvika banki, an Iceland bank specialising in asset 
  management with a total of GBP3bn assets under management with KKV 
  representing 9% of this total. 
 
 Despite the continued disruption to business due to the Covid pandemic, 
  we are pleased to report that the Company has been able to deliver 
  operational management with few glitches with all employees equipped 
  to work remotely throughout the period. All processes are functioning 
  and business continuity has been maintained to a good level. 
 
  Fund management responsibility has been consistent since April 2017. 
  During the reporting period, we have recruited further fund management 
  personnel to replace and enhance our capability within the team. 
 
 Max Zorza joined the business on 1 November 2020 assuming the role 
  of Chief Operating Officer. He previously held the role of Global 
  Chief Risk Officer for Architas Multi-Manager (part of the AXA Group) 
  and brings extensive operational experience to the firm. He has joined 
  the board of KKVIM and, alongside colleagues from Kvika Securities 
  Limited and Kvika banki hf, completes our management team reporting 
  to Ken Hillen, executive chairman. 
 
 Portfolio 
 There are eleven direct loans in the portfolio with an average of 
  GBP3.0m balance outstanding per loan and at an average interest rate 
  of 10.8%. Each loan has a bespoke legal documentation and is designed 
  to fit to the Company's and the borrower's requirements. There have 
  been no defaults in this portion of the portfolio underwritten by 
  KKV although we should caveat this statement with a warning that 
  as the pandemic continues we may see cause for prudent impairment. 
  At present and where required we have provided covenant and amortisation 
  relief or maturity extensions to our borrowers. In accordance with 
  IFRS 9 guidance provided by the PRA, we have not applied write downs 
  to these loans. 
 
 There is GBP5.9m now held in the legacy part of the portfolio, where 
  we have differentiated between peer to peer loans and those that 
  are held in loan note structures with professional counterparties. 
  These latter loans are larger in quantum and we have a closer relationship 
  with the underlying companies (further details relating to these 
  investments is provided later in the report). The total number of 
  loans via third parties have been reduced from 213 to 8 (April 2017 
  to December 2020) with a small number of loans amortising down each 
  month. As mentioned above, peer to peer lending now represents only 
  0.5% of the portfolio with the majority of the exposure impaired 
  100% as at the end of the reporting period. 
 
 
 No leverage has been used throughout the reporting period and all 
  assets are held in their base currency after a Board decision to 
  discontinue hedging of capital and interest in September 2020. Fluctuations 
  in the value of Sterling during the reporting period has meant that 
  these positions may be impacted and we have been providing a breakdown 
  of the FX exposures in the portfolio in the factsheet publications 
  in order to allow Shareholders the option to make their own hedging 
  arrangements. 
 
 There were no breaches of investment guidelines during the reporting 
  period. 
 
 As the portfolio in now in wind down, we have been focussed on urging 
  our third-party borrowers to repay debt. As stated in the last full 
  year accounts, we have begun to return capital to Shareholders via 
  dividend payments. 
 
 
 Direct Loans 
               Principal         ECL            Loan Carrying 
                Balance          provision       Value at 
                Outstanding      at 31           Amortised        Amortisation/ 
                as at            December        Cost ([1])       Bullet           Term 
                31 December      2020            at 31 December   repayment/        remaining 
   Borrower     2020 GBP         GBP             2020 GBP         other             (years)       Asset Type      Currency     Yield 
                                                                  Interest 
                                                                   only during 
                                                                   availability 
                                                                   period, 
 Borrower                                                          then                         Wholesale 
  1            GBP10,000,000     GBP30,000      GBP9,970,000       amortisation    0.7 years     Lending        GBP          10% 
 Borrower      GBP4,445,121      GBP13,335      GBP4,431,786      Bullet           2.7 years    SME and         EUR          Variable 
  2                                                               repayment                      Leasing 
                                                                                                 Fund 
                                                                  Interest 
                                                                   only for 
                                                                   12 months, 
 Borrower                                                          then                         Medical 
  3            GBP4,389,173      GBP13,168      GBP4,376,006       amortisation    4.0 years     Services       USD          12% 
                                                                                                Film 
 Borrower                                                                                        Production 
  4            GBP2,839,217      GBP39,749      GBP2,799,468      Cash sweep       1.5 years     Financing      GBP          12% 
                                                                                                Film 
 Borrower                                                                                        Production 
  5            GBP2,650,245      GBP37,103      GBP2,613,141      Cash sweep       2.4 years     Financing      GBP          11% 
                                                                                                Film 
 Borrower                                                                                        Production 
  6            GBP2,232,343      GBP31,253      GBP2,201,091      Cash sweep       2.4 years     Financing      GBP          11% 
                                                                                                Film 
 Borrower                                                                                        Production 
  7            GBP2,018,527      GBP28,259      GBP1,990,268      Cash sweep       2.3 years     Financing      GBP          12% 
                                                                                                Film 
 Borrower                                                                                        Production 
  8            GBP1,993,637      GBP27,911      GBP1,965,726      Cash sweep       1.9 years     Financing      USD          12% 
                                                                  Interest 
                                                                   only during 
                                                                   availability 
                                                                   period, 
 Borrower                                                          then                         Leasing 
  9            GBP1,500,000      GBP4,500       GBP1,495,000       amortisation    0.7 year      Group          GBP          9.5% 
                                                                                                Film 
 Borrower                                                                                        Production 
  10           GBP502,186        GBP7,031       GBP495,155        Cash sweep       0.7 years     Financing      GBP          12% 
                                                                                                Laser and 
 Borrower                                                                                        LED 
  11           GBP385,488        GBP1,156       GBP384,332        Amortisation     2.0 years     Manufacturer   GBP          10% 
 Direct 
  Loans          GBP32,955,938     GBP233,466     GBP32,722,472 
  Total 
              The carrying values of loans at amortised cost disclosed in the 
  ([1])        table above do not include capitalised transaction fees, which 
               totalled GBP66,000 at 31 December 2020. 
 
 
 
 The following provides a narrative relating to some of our direct 
  loan investments. Names of counterparties have been omitted for commercial 
  and business sensitivity reasons. 
 
 SME Loan company (Borrower 1) - 24.2% of NAV 
 This is the largest individual facility provided by the Company and 
  has been in place since May 2017. This is a long-established lender 
  to the SME market. The loan is an interest only and upon maturity, 
  the debt amortises over nine months. This amortisation commenced 
  in January 2021 and the borrower has been able to increase the capital 
  repayments, allowing us comfort that they will be able to repay their 
  facility in full and on time. 
 
 Irish SME and Leasing Fund investment (Borrower 2) - 11.1% of NAV 
 This portfolio of 26 loans has continued to perform well despite 
  the wider economic downturn. They had positioned the portfolio for 
  a Brexit impact with large exposures to Tech and Education. In December 
  2020, they were able to report a 15.6% gross IRR (12.0% net IRR), 
  this having risen from 8% in March 2020. An independent review of 
  their book subsequently caused an aggressive mark to market of their 
  loans. All of this mark down has now been recovered. The majority 
  of loans are delivering income and the manager has been able to make 
  healthy distributions to the company during the reporting period. 
  The fund is now in its harvest phase and we expect capital distribution 
  to accelerate as loans mature or are refinanced. 
 
 US healthcare services company (Borrower 3) - 10.7% of NAV 
 This credit was underwritten in December 2019. The company specialises 
  in ancillary medical services to a number of hospitals in the American 
  Midwest including optometry, audiology, dentistry and podiatry. Security 
  is provided by debenture over all assets other than accounts receivable 
  (although considered to be of low value), a pledge over equity which 
  may not be diluted and a parental guarantee over all scheduled interest 
  and principal repayments. This last element is the most important 
  given the weaker balance sheet of the underlying business. They have 
  met all interest payments and have commenced amortisation on time. 
 
 This direct loan was considered of greatest risk of default when 
  the pandemic started given the nature of business and so we have 
  monitored receivables very tightly. 
 
 Media financing (Borrowers 4 through to 8 and Borrower 10) - 29.2% 
  of NAV 
 Over the course of the last three years, SIF has funded 8 films, 
  two of which have been fully repaid and loan obligations met in full. 
  The remaining six are at various stages of filming and distribution. 
 
 At the beginning of the pandemic, as lender we recognised the risk 
  that tax credits and distribution sales may be delayed and noted 
  the cancellation of a number of film festivals when sales activity 
  is at its most productive. We expected the shortfall in airline broadcast 
  and cinema sales to be somewhat compensated by online content providers 
  such as Sky and Netflix. In reality, we had one tax credit due during 
  May and this was paid in time by the Mexico tax authorities. 
 
 We duly offered three months extension to the timetables originally 
  set for these projects and monitored the progress of each films. 
  As at July, we have further extended and fully documented the maturity 
  dates for these loans by 12 months to allow for a longer period of 
  repayment. 
 
  All six loans are individual facilities and are ring-fenced as individual 
  risks. However, to mitigate the volatility of performance on individual 
  projects, we had allowed for a waterfall structure to allow for profit 
  share from higher performing assets to contribute to the overall 
  repayment of the whole portfolio. It is the managers view that this 
  mechanism will allow for all loans to be repaid in full over the 
  extended period granted. 
 
 As at December 2020, we have noted an uptick in distributions from 
  sales and tax credits for our portfolio of films. Three of our films 
  have received critical acknowledgment and benefitted from significant 
  media coverage, especially as it was one of the first feature films 
  after the first lock down. We closed out an FX hedging facility for 
  one of the dollar denominated films when FX rate movements allowed, 
  reducing the administration and capital requirement associated with 
  this position. 
 
 UK leasing company (Borrower 9) - 3.6% of NAV 
 This loan has been underwritten since July 2017 on a rolling twelve 
  month basis. It is a working capital facility to be used to warehouse 
  deals financed by block facilities already in place. The loan is 
  supported by a debenture and the company provides quarterly management 
  accounts and full year audited financials. The underlying portfolio 
  comprises a basket of loans split between two types of lending; 85% 
  asset finance/leases with a typical deal size of GBP15,000 and 15% 
  professional loans to white collar industry professionals supported 
  by personal guarantee. 
 
 Performance from the loan book has been strong and to date they have 
  not experienced further stress during the second lock down. The borrower 
  has commenced amortisation and they are meeting all interest calls 
  on time. 
 
 LED manufacturer in Ireland (Borrower 11) - 0.9% of NAV 
 This is a secured term loan that has been in place since May 2017 
  and is secured by a guarantee from the parent company, a debenture 
  over the borrower and a charge over equipment purchased via Capex 
  portion of the facility. 
 
 Their business has operated on a business as usual basis throughout 
  the lockdowns. The borrower changed some working practices to allow 
  for split shifts and those who are able to work from home are doing 
  so. The supply chain is working and customers continue to operate. 
 
 After granting a six month amortisation deferral, the borrower has 
  recommenced repayment of capital and we are discussing an early refinance 
  of the facility. 
 
 
 Legacy portfolio 
                                                                      Loan Carrying 
                        Principal Balance                        Value at Amortised 
                              Outstanding      ECL provision             Cost at 31 
                           at 31 December     at 31 December          December 2020 
 Borrower                        2020 GBP           2020 GBP                    GBP   Currency    Yield 
 Borrower 12                 GBP3,650,701          GBP10,952           GBP3,639,749   GBP         Variable 
 Borrower 13                 GBP1,000,000          GBP20,000             GBP980,000   GBP         17.0% 
 Borrower 14                   GBP475,494          GBP16,642             GBP458,851   USD         8.0% 
 Borrower 15                   GBP415,714         GBP415,714                      -   GBP         - 
 Borrower 16                   GBP486,109         GBP277,028             GBP209,081   GBP         9.7% 
 Borrower 17                   GBP340,763         GBP340,763                      -   EUR         - 
 Borrower 18                 GBP2,102,091       GBP2,102,091                      -   USD         - 
 Legacy Loans Total          GBP8,470,872       GBP3,183,190                       GBP5,287,682 
 
 
 Co-Investments 
 We continue to separate pure peer to peer, technology platform-based 
  lending from the three investments that are characterised by professional 
  co-investment alongside other professional investors. After significant 
  corporate change for all three of these latter types of investment, 
  we provide the following narrative: 
 
 UK Venture Debt (Borrower 12) - 8.8% of NAV 
 This business has stabilised and made very good progress in winding 
  down the portfolio. We are now at a stage where only three loans 
  remain in the Loan Note structure and we are in negotiation to allow 
  for these loans to be managed under a different corporate structure 
  and capital to be returned to Shareholders. This will leave one loan, 
  the largest position in the portfolio, a broadband company, which 
  had previously been restructured. We shall arrange for the loan to 
  be held as a direct investment and receive deferred income on a sale 
  within the next two years. 
 
 As the portfolio runs off, we have received GBP3.8m cash over the 
  last six months to December 2020, leaving a balance of GBP3.6m. 
 
 
 UK Offshore platform (Borrower 13) - 3.8% of NAV 
 The final credit from this platform has been in place since early 
  2017 and is a real estate linked loan to a developer on the island 
  of Gibraltar. It is senior in a stack of other loans underwritten 
  by the platform itself. After two years of careful monitoring and 
  pressing for repayment, we have now been given notification that 
  this will be repaid in full with accrued and penalty interest. Throughout 
  the period of delinquency, we had not impaired the loan as to do 
  so would have encouraged the borrower to urge us to take a haircut 
  on final settlement. Our senior position ahead of the platform lender 
  also gave us comfort that the loan would be repaid in full but this 
  has required patience and perseverance. This engagement continues 
  and we are in weekly contact with the financiers and platform to 
  monitor progress. The platform remains confident that this loan will 
  be repaid in full. 
 
 US business promissory note (Borrower 14) - 1.1% of NAV 
 This loan is a working capital facility via a promissory note with 
  a maturity to July 2020. The borrower has been unable to settle the 
  loan and we have since been in protracted negotiations regarding 
  the reprofiling of the debt. At the time of writing, our expectations 
  and those of the borrower are not the same and we shall explore other 
  options for repayment. 
 
 Small company bond platform (Borrower 15) - 0.0% of NAV 
 The only outstanding debt from this platform was a recruitment business 
  that had undergone a protracted recovery process through the courts. 
  This loan is fully impaired. 
 
 Peer to Peer 
 During the reporting period, the Company has been able to reduce 
  the number of peer to peer loans in the portfolio from 14 to 5. 
 
 UK peer to peer loan platform (Borrower 16) - 0.5% of NAV 
 The platform is slowly amortising down with 9 loans being repaid 
  over the reporting period and only 5 loans remaining on the platform. 
  Two of the largest loans are 50% and 80% impaired and represent 99.1% 
  of the total outstanding balance. 
 
 
 Spanish peer to peer loan platform (Borrower 17) - 0.0% of NAV 
 We have assigned zero probability of any further collections on the 
  remaining 7 loans within the portfolio. We continued to push for 
  some return from these loans but after receiving a number of liquidation 
  confirmations, we concluded that there was very little probability 
  of recouping any further capital. 
 
 US peer to peer business (Borrower 18) - 0.0% of NAV 
 The final outstanding balance of this position has been fully impaired 
  and we have assigned no further ability to recoup funds from the 
  platform. 
 
 IFRS 9 Policy 
 In relation to IFRS 9 provisioning, KKV have implemented a revised 
  and robust systematic grading system to reflect the need to assess 
  risk consistently, taking into account market conditions and probability 
  of default per credit. This uses a ten-stage categorisation methodology. 
  We have decided to increase disclosure of our credit policy for Shareholders 
  to achieve a clear understanding of our approach. 
 
 Our credit model is designed to put each asset into a risk category 
  based on the probability of default. Credits are then individually 
  assigned an expected loss given default ("LGD"). Inputs include specific 
  data describing the characteristics and attributes of each loan. 
  Certain of those loan characteristics will be used to generate the 
  Probability of Default ("PD") and the LGD. This provides a firm basis 
  for comparisons across borrowers and collateral types. 
 
 
 KKVIM Probability of Default Grades: 
  Grade                        KKV PD (%) 
  1: Virtually no risk               0.01 
                              ----------- 
  2: Low risk                        0.10 
                              ----------- 
  3. Moderate risk                   0.50 
                              ----------- 
  4. Average risk                    1.50 
                              ----------- 
  5. Acceptable risk                    4 
                              ----------- 
  6. Borderline Risk                   10 
                              ----------- 
  7. High Risk                         20 
                              ----------- 
  8. Extremely High Risk               40 
                              ----------- 
  9. Doubtful                          60 
                              ----------- 
  10. Loss                            100 
                              ----------- 
 
 
 
 Loans secured by realisable assets have an expected loss quantum 
  based on the underwriting criteria for the respective collateral 
  type. Loans that are more than 90 days in arrears will typically 
  become Stage 2 assets unless this is for exceptional circumstances. 
  Loans are categorised as in default, and hence Stage 3, when they 
  are over 180 days in arrears and have no credible plan to catch up. 
 
 For LGD purposes if the assets supporting the loan are not easily 
  realisable e.g., fixed plant, we assume on default that the business 
  has failed and therefore the recovery will be equivalent to an unsecured 
  loan. 
 
 
 KKVIM LGD (Loss Given Default) Approach: 
 Category             LGD Approach 
 Easily Realisable    Asset value less 10% haircut discounted at 10% IRR for 12 months to recovery 
                     ------------------------------------------------------------------------------------------- 
 Realisable           Asset value less 20% discounted at 20% IRR for 2 years to recovery 
                     ------------------------------------------------------------------------------------------- 
 Highly Specialised   70% LGD 
                       (Equivalent to unsecured) 
                     ------------------------------------------------------------------------------------------- 
 Subordinated Debt    100% LGD 
 
                       Where an external 3(rd) party valuation is available this is used to create a bespoke LGD 
                       for that asset in priority to the Highly Specialised and Subordinated Debt categories. 
                     ------------------------------------------------------------------------------------------- 
 
 
 The percentage provision under IFRS 9 for a facility is this LGD 
  multiplied by the credit rating Probability of Default as allocated 
  above. 
 
 At the time of writing, the economic effects of the pandemic seem 
  likely to continue for some time and we will therefore keep these 
  provisions under regular review. Having observed some improvement 
  in debt service on our Stage 1 loans from June 2020 onwards, we have 
  not identified any marked increase in overall volatility as the second 
  wave of the pandemic began in Q4, 2020. However, we continue to monitor 
  the portfolio carefully and it would be unwise for us to ignore the 
  elevated risk that this uncertainty represents to our borrowers and 
  to not flag the possibility of further loan loss provisions we may 
  have to apply in the future as the global economy braces itself for 
  further economic contraction. 
 
 Outlook 
 The reporting period has been a relatively quiet one in relation 
  to credit events and we are confident that we will be able to return 
  capital to Shareholders under the plan presented to the Board at 
  the time of the EGM. In some circumstances, this timetable will be 
  shortened by our careful management of relationships and encouragement 
  to refinance. 
 
 All things considered, the loan book has held up very well and we 
  have made good progress in returning capital to our Shareholders 
  in an efficient and expeditious manner. 
 
 We would like to thank Shareholders for their support and look forward 
  to sharing further updates on the progress made on wind down in future 
  months. 
 
 Dawn Kendall 
 KKV Investment Management Ltd 
 23 March 2021 
 
 
                      Principal Risks and Uncertainties 
 
 Risk is inherent in the Company's activities, but it is managed through 
  an ongoing process of identifying and assessing risks and ensuring 
  that appropriate controls are in place. The key risks faced by the 
  Company, are set out below: 
 
   *    macroeconomic risk; 
 
 
   *    credit risk; 
 
 
   *    platform risk; 
 
 
   *    regulatory risk; and 
 
 
   *    reputational risk. 
 Further details of each of these risks and how they are mitigated 
  are discussed in the Principal Risks and Uncertainties section of 
  the Strategic Report within the Company's Annual Report for the year 
  ended 30 June 2020. The Board believes that these risks are applicable 
  to the six month period ended 31 December 2020 and the remaining 
  six months of the current financial year. 
 
  Covid-19 
  The Covid-19 pandemic is a risk to the global economy. Details of 
  the macroeconomic impact, as it may affect the Company, are provided 
  in the Chairman's Statement and Investment Manager's Report. The 
  Investment Manager and Administrator invoked their business continuity 
  plans to help ensure the safety and well-being of their staff thereby 
  retaining the ability to maintain business operations. These actions 
  helped to ensure business resilience. 
 
  The situation is changing so rapidly that the full impact cannot 
  yet be understood, but future cashflows and valuations are more uncertain 
  at the current time, and may be more volatile than in recent years. 
  Indeed, the level of estimation uncertainty and judgement for the 
  calculation of expected credit losses has increased as a result of 
  the economic effects of the Covid-19 pandemic. However, the impact 
  of defaults that might occur in future under different economic scenarios 
  has been reflected in various models to enable the Board to evaluate 
  the Company's viability, and the Directors believe that the Company 
  is well placed to survive the impact of the Covid-19 pandemic , thereby 
  enabling the Company to realise its assets in an orderly manner. 
 
 On behalf of the Board. 
 
 David Stevenson 
  Chairman 
 23 March 2021 
 
                                 Governance 
                  Statement of Directors' Responsibilities 
 
 The Directors are responsible for preparing the half-yearly report 
  and condensed financial statements, which have not been audited or 
  reviewed by an independent auditor, and are required to: 
 
        *    prepare the condensed half-yearly financial 
             statements in accordance with International 
             Accounting Standard 34: Interim Financial Reporting, 
             as adopted by the European Union, which give a true 
             and fair view of the assets, liabilities, financial 
             position and profit for the period of the Company, as 
             required by Disclosure and Transparency Rules ("DTR") 
             4.2.4 R; 
 
 
        *    include a fair review of the information required by 
             DTR 4.2.7 R, being important events that have 
             occurred during the period and their impact on the 
             half-yearly report and condensed financial statements 
             and a description of the principal risks and 
             uncertainties for the remaining six months of the 
             financial year ; and 
 
 
        *    include a fair review of information required by DTR 
             4.2.8 R, being related party transactions that have 
             taken place during the period which have had a 
             material effect on the financial position or 
             performance of the Company. 
 
   The Directors confirm that the half-yearly report and condensed financial 
   statements comply with the above requirements. 
 
 On behalf of the Board. 
 
 David Stevenson 
  Chairman 
 23 March 2021 
 
 
                      Unaudited Condensed Statement of Comprehensive Income 
                            for the six months ended 31 December 2020 
 
                                                                                        Year ended 
                                                       Period from      Period from 
                                                       1 July 2020      1 July 2019 
                                                    to 31 December   to 31 December 
                                                              2020             2019   30 June 2020 
                                             Note      (unaudited)      (unaudited)      (audited) 
                                                           GBP'000          GBP'000        GBP'000 
Income 
Investment income                                            2,346            2,468          4,315 
                                                      ------------     ------------   ------------ 
Total revenue                                                2,346            2,468          4,315 
                                                      ------------     ------------   ------------ 
Operating expenses 
Management fees                               7a             (190)            (250)          (483) 
Other expenses                                10              (68)             (91)          (164) 
Administration fees                           7b              (57)             (57)          (117) 
Directors' remuneration                       8               (56)             (48)           (94) 
Broker fees                                                   (37)             (69)          (197) 
Transaction fees                              7a              (24)            (107)          (147) 
Legal and professional fees                                    (8)             (48)           (97) 
                                                      ------------     ------------   ------------ 
Total operating expenses                                     (440)            (670)        (1,299) 
                                                      ------------     ------------   ------------ 
Investment gains and losses 
Movement in unrealised gains and 
 losses on loans due to movement 
 in foreign exchange on non-Sterling 
 loans                                        13             (977)            (490)            410 
Impairment losses on financial assets 
 (or loans)                                   13             1,020            (875)        (3,299) 
Movement in unrealised gain on investments 
 at fair value through profit or 
 loss                                         14                 4               12             19 
Movement in unrealised gain on derivative 
 financial instruments                        16                 6              522            345 
Realised loss on disposal of loans                         (1,410)            (443)          (536) 
Realised gain/(loss) on derivative 
 financial instruments                        16               269            (112)          (852) 
                                                      ------------     ------------   ------------ 
Total investment gains and losses                          (1,088)          (1,386)        (3,913) 
                                                      ------------     ------------   ------------ 
Net profit/(loss) from operating 
 activities before gain/(loss) on 
 foreign currency exchange                                     818              412          (897) 
 
Net foreign exchange gain/(loss)                                 2             (13)           (16) 
                                                      ------------     ------------   ------------ 
Profit/(loss) and total comprehensive 
 income for the period/year attributable 
 to the owners of the Company                                  820              399          (913) 
                                                      ------------     ------------   ------------ 
Earnings/(loss) per Ordinary Share 
 (basic and diluted)                          12             1.56p            0.76p        (1.73)p 
                                                      ------------     ------------   ------------ 
All of the items in the above statement are derived from continuing 
 operations. 
 There were no other comprehensive income items in the period/year. 
 Except for unrealised investment gains and losses, all of the Company's 
 profit and loss items are distributable. 
 The accompanying notes form an integral part of the unaudited condensed 
 half-yearly financial statements . 
 
 
                  Unaudited Condensed Statement of Changes in Equity 
                       for the six months ended 31 December 2020 
 
                                     Called         Special        Profit 
                                   up share   distributable      and loss 
  Unaudited             Note        capital         reserve       account         Total 
                                    GBP'000         GBP'000       GBP'000       GBP'000 
At 1 July 2020                          577          48,181       (3,226)        45,532 
Profit for the period    21               -               -           820           820 
 
Transactions with Owners in their capacity as owners: 
Dividends paid          5, 21             -         (4,323)         (767)       (5,090) 
                               ------------    ------------  ------------  ------------ 
At 31 December 2020                     577          43,858       (3,173)        41,262 
                               ------------    ------------  ------------  ------------ 
 
                  Unaudited Condensed Statement of Changes in Equity 
                       for the six months ended 31 December 2019 
 
                                     Called         Special        Profit 
                                   up share   distributable      and loss 
  Unaudited             Note        capital         reserve       account         Total 
                                    GBP'000         GBP'000       GBP'000       GBP'000 
At 1 July 2019                          577          50,253         (701)        50,129 
Profit for the period    21               -               -           399           399 
 
Transactions with Owners in their capacity as owners: 
Dividends paid          5, 21             -           (612)       (1,230)       (1,842) 
                               ------------    ------------  ------------  ------------ 
At 31 December 2019                     577          49,641       (1,532)        48,686 
                               ------------    ------------  ------------  ------------ 
 
                        Audited Statement of Changes in Equity 
                            for the year ended 30 June 2020 
 
                                     Called         Special        Profit 
                                   up share   distributable      and loss 
  Audited               Note        capital         reserve       account         Total 
                                    GBP'000         GBP'000       GBP'000       GBP'000 
At 1 July 2019                          577          50,253         (701)        50,129 
Loss for the year        21               -               -         (913)         (913) 
 
Transactions with Owners in their capacity as owners: 
Dividends paid          5, 21             -         (2,072)       (1,612)       (3,684) 
                               ------------    ------------  ------------  ------------ 
At 30 June 2020                         577          48,181       (3,226)        45,532 
                               ------------    ------------  ------------  ------------ 
 
There were no other comprehensive income items in the period/year. 
 The above amounts are all attributable to the owners of the Company. 
 The accompanying notes form an integral part of the unaudited condensed 
 half-yearly financial statements . 
 
 
                    Unaudited Condensed Statement of Financial Position 
                                  as at 31 December 2020 
 
                                                 31 December    31 December        30 June 
                                                        2020           2019           2020 
                                        Note     (unaudited)    (unaudited)      (audited) 
                                                     GBP'000        GBP'000        GBP'000 
 Non-current assets 
 Loans at amortised cost                 13           23,149         41,025         31,942 
 Investments at fair value through 
  profit or loss                       14, 15            255            244            251 
                                                ------------   ------------   ------------ 
 Total non-current assets                             23,404         41,269         32,193 
                                                ------------   ------------   ------------ 
 Current assets 
 Loans at amortised cost                 13           14,927          3,305         10,691 
 Cash held on client accounts with 
  platforms                              13                -             25              - 
 Derivative financial instruments      15, 16              -            171              - 
 Other receivables and prepayments       17              574          1,528          1,625 
 Cash and cash equivalents                             2,500          2,502          1,193 
                                                ------------   ------------   ------------ 
 Total current assets                                 18,001          7,531         13,509 
                                                ------------   ------------   ------------ 
 
 Total assets                                         41,405         48,800         45,702 
                                                ------------   ------------   ------------ 
 Current liabilities 
 Other payables and accruals             18            (143)          (114)          (164) 
 Derivative financial instruments      15, 16              -              -            (6) 
                                                ------------   ------------   ------------ 
 Total liabilities                                     (143)          (114)          (170) 
                                                ------------   ------------   ------------ 
 
                                                ------------   ------------   ------------ 
 Net assets                                           41,262         48,686         45,532 
                                                ------------   ------------   ------------ 
 Capital and reserves attributable to owners of the Company 
 Called up share capital                 20              577            577            577 
 Other reserves                          21           40,685         48,109         44,955 
                                                ------------   ------------   ------------ 
 Equity attributable to the owners 
  of the Company                                      41,262         48,686         45,532 
                                                ------------   ------------   ------------ 
 
 Net asset value per Ordinary Share      22           78.26p         92.36p         86.37p 
                                                ------------   ------------   ------------ 
 
 These unaudited condensed half-yearly financial statements of Secured 
  Income Fund plc (registered number 09682883) were approved by the 
  Board of Directors on 23 March 2021 and were signed on its behalf 
  by: 
 
   David Stevenson                       Gaynor Coley 
   Chairman                              Director 
   23 March 2021                         23 March 2021 
 
 The accompanying notes form an integral part of the unaudited condensed 
  half-yearly financial statements . 
 
 
 
                               Unaudited Condensed Statement of Cash Flows 
                                for the six months ended 31 December 2020 
 
                                                         Period from       Period from 
                                                         1 July 2020       1 July 2019 
                                                      to 31 December    to 31 December        Year ended 
                                                                2020              2019           30 June 
                                                         (unaudited)       (unaudited)    2020 (audited) 
                                                             GBP'000           GBP'000           GBP'000 
 Cash flows from operating activities 
 Net profit/(loss) before taxation                               820               399             (913) 
 Adjustments for: 
  Movement in unrealised gains and losses 
   on loans due to movement in foreign exchange 
   on non-Sterling loans                                         977               490             (410) 
  Impairment losses on financial assets (or 
   loans)                                                    (1,020)               875             3,299 
  Movement in unrealised gain on investments 
   at fair value through profit or loss                          (4)              (12)              (19) 
  Movement in unrealised gain on derivative 
   financial instruments                                         (6)             (522)             (345) 
  Realised loss on disposal of loans                           1,410               443               536 
  Realised (gain)/loss on derivative financial 
   instruments                                                 (269)               112               852 
  Amortisation of transaction fees                                24               107               147 
  Interest received and reinvested by platforms                  (1)              (43)              (50) 
  Capitalised interest                                         (748)             (735)           (1,486) 
 Decrease in investments                                       4,184             1,700             1,783 
                                                        ------------      ------------      ------------ 
 Net cash inflow from operating activities 
  before working capital changes                               5,367             2,814             3,394 
 Decrease/(increase) in other receivables 
  and prepayments                                              1,051             (387)             (484) 
 Decrease in other payables and accruals                        (21)              (70)              (20) 
                                                        ------------      ------------      ------------ 
 Net cash inflow from operating activities                     6,397             2,357             2,890 
 
 Cash flows from financing activities 
 Dividends paid                                              (5,090)           (1,842)           (3,684) 
                                                        ------------      ------------      ------------ 
 Net cash outflow from financing activities                  (5,090)           (1,842)           (3,684) 
 
                                                        ------------      ------------      ------------ 
 Increase/(decrease) in cash and cash equivalents 
  in the period/year                                           1,307               515             (794) 
 Cash and cash equivalents at the beginning 
  of the period/year                                           1,193             1,987             1,987 
                                                        ------------      ------------      ------------ 
 Cash and cash equivalents at 31 December 
  2020                                                         2,500             2,502             1,193 
                                                        ------------      ------------      ------------ 
 
 Supplemental cash flow information 
 Non-cash transaction - interest income                          749               778             1,536 
 
 The accompanying notes form an integral part of the unaudited condensed 
  half-yearly financial statements . 
 
 
       Notes to the Unaudited Condensed Half-Yearly Financial Statements 
                    for the six months ended 31 December 2020 
1. General information 
The Company is a public company (limited by shares) and was incorporated 
 and registered in England and Wales under the Companies Act 2006 on 
 13 July 2015 with registered number 09682883. The Company's shares 
 were admitted to trading on the London Stock Exchange Specialist Fund 
 Segment on 23 September 2015 ("Admission"). The Company is domiciled 
 in England and Wales. 
 
 The Company is an investment company as defined in s833 of the Companies 
 Act 2006. 
 
 Change of name 
 On 18 July 2020, the Company changed its name from SQN Secured Income 
 Fund plc to Secured Income Fund plc. 
 
 Investment objective and policy 
 On 17 September 2020, the Shareholders approved the adoption of a 
 new investment objective and policy of the Company, as follows: 
The Company will be managed with the intention of realising all remaining 
 assets in the Portfolio in a prudent manner consistent with the principles 
 of good investment management and with a view to returning cash to 
 Shareholders in an orderly manner. 
 
 The Company will pursue its investment objective by effecting an orderly 
 realisation of its assets in a manner that seeks to achieve a balance 
 between maximising the value received from those assets and making 
 timely returns of capital to Shareholders. This process might include 
 sales of individual assets, mainly structured as loans, or running 
 off the Portfolio in accordance with the existing terms of the assets, 
 or a combination of both. 
 
As part of the realisation process, the Company may also exchange 
 existing debt instruments for equity securities where, in the opinion 
 of the Board, the Company is unlikely to be able to otherwise realise 
 such debt instruments or will only be able to realise them at a material 
 discount to the outstanding principal balance of that debt instrument. 
 
 The Company will cease to make any new investments or to undertake 
 capital expenditure except where, in the opinion of both the Board 
 and the Investment Manager (or, where relevant, the Investment Manager's 
 successors): 
 
        *    the investment is a follow-on investment made in 
             connection with an existing asset in order to comply 
             with the Company's pre-existing obligations; or 
 
 
        *    failure to make the follow-on investment may result 
             in a breach of contract or applicable law or 
             regulation by the Company; or 
 
 
        *    the investment is considered necessary to protect or 
             enhance the value of any existing investments or to 
             facilitate orderly disposals. 
 
 
 
       Any cash received by the Company as part of the realisation process 
       prior to its distribution to Shareholders will be held by the Company 
       as cash on deposit and/or as cash equivalents. 
 
       The Company will not undertake new borrowing. 
 
       Any material change to the investment policy would require Shareholder 
       approval. 
            Prior to 17 September 2020, the investment objective and policy was 
             as follows: 
 
            Investment objective - prior to 17 September 2020 
            The investment objective of the Company was to provide Shareholders 
             with attractive risk adjusted returns, principally in the form of 
             regular, sustainable dividends, through investment predominantly in 
             a range of secured loans and other secured loan-based instruments 
             originated through a variety of channels and diversified by way of 
             asset class, geography and duration. 
 
 
            Investment policy - prior to 17 September 2020 
            The Company achieved its investment objective by investing in a range 
             of secured loan assets mainly through wholesale secured lending opportunities, 
             secured trade and receivable finance and other collateralised lending 
             opportunities. Loan assets included both direct loans as well as other 
             instruments with loan-based investment characteristics (for example, 
             but not limited to, bonds, loan participations, syndicated loans, 
             structured notes, collateralised obligations or hybrid securities) 
             and may have included (subject to the limit set out below) other types 
             of investment (for example, equity or revenue- or profit-linked instruments). 
             The Company may have made investments through alternative lending 
             platforms that presented suitable investment opportunities identified 
             by the Investment Manager. 
 
2. Statement of compliance 
a) Basis of preparation 
 These unaudited condensed half-yearly financial statements present 
 the results of the Company for the six months ended 31 December 2020. 
 These unaudited condensed half-yearly financial statements have been 
 prepared in accordance with International Accounting Standard ("IAS") 
 34: Interim Financial Reporting, as adopted by the European Union. 
 
 The unaudited condensed half-yearly financial statements for the period 
 ended 31 December 2020 have not been audited or reviewed by the Company's 
 auditors and do not constitute statutory financial statements, as 
 defined in s434 of the Companies Act 2006. The unaudited condensed 
 half-yearly financial statements have been prepared on the same basis 
 as the Company's annual financial statements. 
 
            Non-Going Concern 
             On 19 June 2020, the Company held a continuation vote (the "Continuation 
             Vote") that, in line with the Directors' recommendation, did not pass. 
             This vote was required under the Articles as the Company did not have 
             a Net Asset Value of at least GBP250 million as at 31 December 2019. 
             As this vote did not pass, the Directors (as required under the Articles) 
             convened a further general meeting of the Company on 17 September 
             2020 at which a special resolution approved the managed wind-down 
             of the Company and the adoption of the new investment policy of the 
             Company to carry out an orderly realisation of the Company's portfolio 
             of assets and distribution of cash to Shareholders . 
 
This has had no significant impact on the accounting policies, judgements 
 or carrying value of assets and liabilities within the financial statements 
 as the loans are included net of their expected credit loss provision 
 ("ECL") and are expected to be realised in an orderly manner, and 
 the estimated costs of winding up the Company are immaterial . 
 
The Covid-19 pandemic is a risk to the global economy. Details of 
 the macroeconomic impact and the impact on credit risk are provided 
 in the Chairman's Statement and the Investment Manager's Report. The 
 Investment Manager and Administrator invoked their business continuity 
 plans to help ensure the safety and well-being of their staff thereby 
 retaining the ability to maintain business operations. These actions 
 helped to ensure business resilience. The situation is changing so 
 rapidly that the full impact cannot yet be understood, but the Company 
 will continue to monitor the situation closely. 
 
b) Basis of measurement 
 The unaudited condensed half-yearly financial statements have been 
 prepared on a historical cost basis, except for investments at fair 
 value through profit or loss and derivative instruments, which are 
 measured at fair value through profit or loss. 
 
 Given the Company's investment policy to carry out an orderly realisation 
 of the Company's portfolio of assets and distribution of cash to Shareholders, 
 the financial statements have been prepared on a non-going concern 
 basis. 
 
             c) Segmental reporting 
              The Directors are of the opinion that the Company is engaged in a 
              single economic segment of business, being investment in a range of 
              SME loan assets. 
 
d) Use of estimates and judgements 
            The preparation of unaudited condensed half-yearly financial statements 
             in conformity with International Financial Reporting Standards ("IFRS") 
             requires management to make judgements, estimates and assumptions 
             that affect the application of policies and the reported amounts of 
             assets and liabilities, income and expenses. The estimates and associated 
             assumptions are based on historical experience and various other factors 
             that are believed to be reasonable under the circumstances, the results 
             of which form the basis of making the judgements about carrying values 
             of assets and liabilities that are not readily apparent from other 
             sources. Actual results may differ from these estimates. 
 
             The estimates and underlying assumptions are reviewed on an ongoing 
             basis. Revisions to accounting estimates are recognised in the period 
             in which the estimate is revised, if the revision affects only that 
             period, or in the period of the revision and future periods, if the 
             revision affects both current and future periods. 
 
             Judgements made by management in the application of IFRS that have 
             a significant effect on the unaudited condensed half-yearly financial 
             statements and estimates with a significant risk of material adjustment 
             in the next year are discussed in note 4. 
 
 
3. Significant accounting policies 
a) Foreign currency 
 Foreign currency transactions are translated into Sterling using the 
 exchange rates prevailing at the dates of the transactions. Foreign 
 exchange gains and losses resulting from the settlement of such transactions 
 and from the translation at period-end exchange rates of monetary 
 assets and liabilities denominated in foreign currencies are recognised 
 in the Unaudited Condensed Statement of Comprehensive Income. Translation 
 differences on non-monetary financial assets and liabilities are recognised 
 in the Unaudited Condensed Statement of Comprehensive Income. 
 
            b) Financial assets and liabilities 
             The financial assets and liabilities of the Company are defined as 
             loans, bonds with loan type characteristics, investments at fair value 
             through profit or loss, cash and cash equivalents, other receivables, 
             derivative instruments and other payables. 
 
             Classification 
             IFRS 9 requires the classification of financial assets to be determined 
             on both the business model used for managing the financial assets 
             and the contractual cash flow characteristics of the financial assets. 
             Loans have been classified at amortised cost as: 
              *    they are held within a "hold to collect" business 
                   model with the objective to hold the assets to 
                   collect contractual cash flows; and 
 
 
              *    the contractual terms of the loans give rise on 
                   specified dates to cash flows that are solely 
                   payments of principal and interest on the principal 
                   amount outstanding. 
 
 
 
             The Company's unquoted investments have been classified as held at 
             fair value through profit or loss as they are held to realise cash 
             flows from the sale of the investments. 
            Recognition 
             The Company recognises a financial asset or a financial liability 
             when, and only when, it becomes a party to the contractual provisions 
             of the instrument. Purchases and sales of financial assets that require 
             delivery of assets within the time frame generally established by 
             regulation or convention in the marketplace are recognised on the 
             trade date, i.e. the date that the Company commits to purchase or 
             sell the asset. 
 
            Derecognition 
             A financial asset (or, where applicable, a part of a financial asset 
             or part of a group of similar assets) is derecognised where: 
              *    The rights to receive cash flows from the asset have 
                   expired; or 
 
 
              *    The Company has transferred its rights to receive 
                   cash flows from the asset or has assumed an 
                   obligation to pay the received cash flows in full 
                   without material delay to a third party under a 
                   "pass-through" arrangement; and 
 
 
              *    Either (a) the Company has transferred substantially 
                   all the risks and rewards of the asset, or (b) the 
                   Company has neither transferred nor retained 
                   substantially all the risks and rewards of the asset, 
                   but has transferred control of the asset. 
 
 
 
             When the Company has transferred its rights to receive cash flows 
             from an asset (or has entered into a pass-through arrangement) and 
             has neither transferred nor retained substantially all the risks and 
             rewards of the asset nor transferred control of the asset, the asset 
             is recognised to the extent of the Company's continuing involvement 
             in the asset. 
 
             The Company derecognises a financial liability when the obligation 
             under the liability is discharged, cancelled or expires. 
Initial measurement 
 Financial assets and financial liabilities at fair value through profit 
 or loss are recorded in the Unaudited Condensed Statement of Financial 
 Position at fair value. All transaction costs for such instruments 
 are recognised directly in profit or loss. 
 
 Financial assets and financial liabilities not designated as at fair 
 value through profit or loss, such as loans, are initially recognised 
 at fair value, being the amount issued less transaction costs. 
 
Subsequent measurement 
 After initial measurement, the Company measures financial assets and 
 financial liabilities not designated as at fair value through profit 
 or loss, at amortised cost using the effective interest rate method, 
 less impairment allowance. Gains and losses are recognised in the 
 Unaudited Condensed Statement of Comprehensive Income when the asset 
 or liability is derecognised or impaired. Interest earned on these 
 instruments is recorded separately as investment income. 
 
 After initial measurement, the Company measures financial instruments 
 which are classified at fair value through profit or loss at fair 
 value. Subsequent changes in the fair value of those financial instruments 
 are recorded in net gain or loss on financial assets and liabilities 
 at fair value through profit or loss. 
 
 The carrying value of cash and cash equivalents and other receivables 
 and payables equals fair value due to their short-term nature. 
 
Impairment 
      A financial asset is credit-impaired when one or more events that 
       have occurred have a significant impact on the expected future cash 
       flows of the financial asset. It includes observable data that has 
       come to the attention of the holder of a financial asset about the 
       following events: 
        *    Significant financial difficulty of the issuer or 
             borrower; 
 
 
        *    A breach of contract, such as a default or past-due 
             event; 
 
 
        *    The lenders for economic or contractual reasons 
             relating to the borrower's financial difficulty 
             granted the borrower a concession that would not 
             otherwise be considered; 
 
 
        *    It becoming probable that the borrower will enter 
             bankruptcy or other financial reorganisation; 
 
 
        *    The disappearance of an active market for the 
             financial asset because of financial difficulties; or 
 
 
        *    The purchase or origination of a financial asset at a 
             deep discount that reflects incurred credit losses. 
 
Each direct loan is assessed on a continuous basis by the Investment 
 Manager's own underwriting team with peer review occurring on a regular 
 basis. 
 
 Each platform loan is monitored via the company originally deployed 
 to conduct underwriting and management of the borrower relationship. 
 When a potential impairment is identified, the Investment Manager 
 requests data and management information from the platform. The Investment 
 Manager will then actively pursue collections, giving guidance to 
 the platforms on acceptable levels of impairment. In some cases, the 
 Investment Manager will proactively take control of the process. 
 
 
Impairment of financial assets is recognised on a loan-by-loan basis 
 in stages: 
Stage  As soon as a financial instrument is originated or purchased, 
 1:     12-month expected credit losses are recognised in profit or loss 
        and a loss allowance is established. This serves as a proxy for 
        the initial expectations of credit losses. For financial assets, 
        interest revenue is calculated on the gross carrying amount (i.e. 
        without deduction for expected credit losses). 
 
Stage  If the credit risk increases significantly and is not considered 
 2:     low, full lifetime expected credit losses are recognised in profit 
        or loss. The calculation of interest revenue is the same as for 
        Stage 1. This stage is triggered by scrutiny of management accounts 
        and information gathered from regular updates from the borrower 
        by way of email exchange or face-to-face meetings. The Investment 
        Manager extends specific queries to borrowers if they acquire 
        market intelligence or channel-check the data received. A covenant 
        breach may be a temporary circumstance due to a one-off event 
        and will not trigger an immediate escalation in risk profile 
        to stage 2. 
 
        At all times, the Investment Manager considers the risk of impairment 
        relative to the cash flows and general trading conditions of 
        the company and the industry in which the borrower resides. 
 
Stage  If the credit risk of a financial asset increases to the point 
 3:     that it is considered credit-impaired, interest revenue is calculated 
        based on the amortised cost (i.e. the gross carrying amount less 
        the loss allowance). Financial assets in this stage will generally 
        be assessed individually. Lifetime expected credit losses are 
        recognised on these financial assets. This stage is triggered 
        by a marked deterioration in the management information received 
        from the borrower and a view taken on the overall credit conditions 
        for the sector in which the company resides. A permanent breach 
        of covenants and a deterioration in the valuation of security 
        would also merit a move to stage 3. 
 
        The Investment Manager also takes into account the level of security 
        to support each loan and the ease with which this security can 
        be monetised. This has a meaningful impact of the way in which 
        impairments are assessed, particularly as the Investment Manager 
        has a very strong track record in managing write-downs and reclaim 
        of assets. 
For more details in relation to judgements, estimates and uncertainty 
 see note 4, and the Investment Manager's Report for details of the 
 Investment Manager's credit model that was implemented during the 
 period. 
 
 
b) Cash and cash equivalents 
 Cash and cash equivalents are defined as cash in hand, demand deposits 
 and short-term, highly liquid investments readily convertible to known 
 amounts of cash and subject to insignificant risk of changes in value. 
 
 The carrying values of cash and cash equivalents are deemed to be 
 a reasonable approximation of their fair values. 
 
c) Receivables and prepayments 
 Receivables are carried at the original invoice amount, less impairments, 
 as discussed above. 
 
 The carrying values of the accrued interest and other receivables 
 are deemed to be reasonable approximations of their fair values. 
 
d) Transaction costs 
 Transaction costs incurred on the acquisition of loans are capitalised 
 upon recognition of the financial asset and amortised over the term 
 of the respective loan. 
 
e) Income and expenses 
 Interest income and bank interest are recognised on a time-proportionate 
 basis using the effective interest rate method. 
 
 Dividend income is recognised when the right to receive payment is 
 established. 
 
 All expenses are recognised on an accruals basis. All of the Company's 
 expenses (with the exception of share issue costs, which are charged 
 directly to the distributable reserve) are charged through the Unaudited 
 Condensed Statement of Comprehensive Income in the period in which 
 they are incurred. 
 
f) Taxation 
 The Company is exempt from UK corporation tax on its chargeable gains 
 as it satisfies the conditions for approval as an investment trust. 
 The Company is, however, liable to UK corporation tax on its income. 
 However, the Company has elected to take advantage of modified UK 
 tax treatment in respect of its "qualifying interest income" in order 
 to deduct all, or part, of the amount it distributes to Shareholders 
 as dividends as an "interest distribution". 
 
 
g) Changes in accounting policy and disclosures 
New and amended standards and interpretations 
 The accounting policies adopted are consistent with those of the previous 
 financial year, except as outlined below. The Company adopted the 
 following new and amended relevant IFRS in the period: 
IFRS 7  Financial Instruments: Disclosures - amendments regarding pre-replacement 
         issues in the context of the IBOR reform 
IFRS 9  Financial Instruments - amendments regarding pre-replacement 
         issues in the context of the IBOR reform 
IAS 1   Presentation of Financial Statements - amendments regarding 
         the definition of materiality 
IAS 8   Accounting Policies, Changes in Accounting Estimates and Errors 
         - amendments regarding the definition of materiality 
 
The adoption of these accounting standards did not have any impact 
 on the Company's Unaudited Condensed Statement of Comprehensive Income, 
 Unaudited Condensed Statement of Financial Position or equity. 
 
 
i) Accounting standards issued but not yet effective 
The International Accounting Standards Board ("IASB") has issued/revised 
 a number of relevant standards with an effective date after the date 
 of these unaudited condensed half-yearly financial statements. Any 
 standards that are not deemed relevant to the operations of the Company 
 have been excluded. The Directors have chosen not to early adopt these 
 standards and interpretations and they do not anticipate that they 
 would have a material impact on the Company's financial statements 
 in the period of initial application. 
                                                                                                      Effective date 
            IFRS 7              Financial Instruments: Disclosures - amendments 
                                 regarding replacement issues in the context of                       1 January 2021 
                                 the IBOR reform 
            IFRS 9              Financial Instruments - Amendments regarding 
                                replacement                                                           1 January 2021 
                                issues in the context of the IBOR reform 
            IFRS 9              Financial Instruments - Amendments resulting from 
                                 Annual Improvements to IFRS Standards 2018-2020 
                                 (fees in the "10 per cent" test for derecognition                    1 January 2022 
                                 of financial liabilities) 
            IAS 1               Presentation of Financial Statements - amendments 
                                 regarding the classification of liabilities                          1 January 2023 
            IAS 37              Provisions, Contingent Liabilities and Contingent 
                                 Assets - Amendments regarding the costs to include                   1 January 2022 
                                 when assessing whether a contract is onerous 
 
 
4. Use of Judgements and estimates 
The preparation of the Company's unaudited condensed half-yearly financial 
 statements requires the Directors to make judgements, estimates and 
 assumptions that affect the reported amounts recognised in the unaudited 
 condensed half-yearly financial statements . However, uncertainty 
 about these assumptions and estimates could result in outcomes that 
 could require a material adjustment to the carrying amount of the 
 asset or liability in future periods. 
Judgements 
In the process of applying the Company's accounting policies, management 
 made the following judgement, which has had a significant effect on 
 the amounts recognised in the unaudited condensed half-yearly financial 
 statements: 
 
 Covid-19 
 The Covid-19 pandemic is impacting virtually all businesses and the 
 Board expects that it will continue to impact economies over the coming 
 months. The Board and Investment Manager are monitoring any impact 
 this may have on the Company, its investments and income. The situation 
 continues to change rapidly so the full impact cannot yet be understood, 
 a result of which is that future cashflows and valuations are more 
 uncertain at the current time, and may be more volatile than in recent 
 years. Indeed, the level of estimation uncertainty and judgement for 
 the calculation of expected credit losses has increased as a result 
 of the economic effects of the Covid-19 pandemic. However, the impact 
 of defaults that might occur in future under different economic scenarios 
 has been reflected in various models to enable the Board to evaluate 
 the Company's viability, and the Directors believe that the Company 
 is well placed to survive the impact of the Covid-19 pandemic, thereby 
 enabling the Company to realise its assets in an orderly manner. 
 
Estimates and assumptions 
 The Company based its assumptions and estimates on parameters available 
 when the unaudited condensed half-yearly financial statements were 
 approved. However, existing circumstances and assumptions about future 
 developments may change due to market changes or circumstances arising 
 beyond the control of the Company. Such changes are reflected in the 
 assumptions when they occur. 
 
The current economic uncertainty (and the frequent changes in outlook 
 for different economic sectors) has created increased volatility and 
 uncertainty (as mentioned above and in the Investment Manager's Report). 
 In such circumstances the level of estimation uncertainty and judgement 
 of expected credit losses has increased. As noted in the Investment 
 Manager's Report, there are uncertainties about the need for future 
 provisions that may need to be made against individual loans and receivables. 
 Notwithstanding the best endeavours of management to obtain full repayment 
 there is a material uncertainty in relation to the level of provisioning 
 made in these unaudited condensed half-yearly financial statements. 
 Due to this material uncertainty the Directors are unable to update 
 the expected credit loss assessment (as set out in note 3b) to reflect 
 the likely impact on the Company's loan portfolio. 
 
      i) Recoverability of loans and other receivables 
       In accordance with IFRS 9, the impairment of loans and other receivables 
       has been assessed as described in note 3b. When assessing the credit 
       loss on a loan, and the stage of impairment of that loan, the Company 
       considers whether t here is an indicator of credit risk for a loan 
       when the borrower has failed to make a payment, either capital or 
       interest, when contractually due and upon assessment. The Company 
       assesses at each reporting date (and at least on a monthly basis) 
       whether there is objective evidence that a loan classified as a loan 
       at amortised cost is credit-impaired and whether a loan's credit risk 
       or the expected loss rate has changed significantly. As part of this 
       process: 
        *    Platforms are contacted to determine default and 
             delinquency levels of individual loans; and 
 
 
        *    Recovery rates are estimated. 
 
      The analysis of credit risk is based on a number of factors and a 
       degree of uncertainty is inherent in the estimation process . As mentioned 
       above, due to the Covid-19 pandemic future cashflows and valuations 
       are more uncertain at the current time, and may be more volatile than 
       in recent years. Indeed, the level of estimation uncertainty and judgement 
       for the calculation of expected credit losses has increased as a result 
       of the economic effects of the Covid-19 pandemic. 
 
       The determination of whether a specific factor is relevant and its 
       weight compared with other factors depends on the type of product, 
       the characteristics of the financial instrument and the borrower, 
       and the geographical region. It is not possible to provide a single 
       set of criteria that will determine what is considered to be a significant 
       increase in credit risk. Events that the Company will assess when 
       deciding if a financial asset is credit impaired include: 
        *    significant financial difficulty of the borrower; 
 
 
        *    a breach of contract, such as a default or past-due 
             event; and 
 
 
        *    it becoming probable that the borrower will enter 
             bankruptcy or other financial reorganisation. 
 
 
 
       Although it may not always be the case (e.g. if discussions with a 
       borrower are ongoing), generally a loan is deemed to be in default 
       if the borrower has missed a payment of principal or interest by more 
       than 180 days, unless the Company has good reason not to apply this 
       rule. If the Company has evidence to the contrary, it may make an 
       exception to the 180 day rule to deem that a borrower is, or is not, 
       in default. Therefore, the definitions of credit impaired and default 
       are aligned as far as possible so that stage 3 represents all loans 
       that are considered defaulted or otherwise credit impaired. 
 
At present no direct loans to SMEs fall within Stage 2 or Stage 3. 
 However, if a situation were to arise where a direct loan to an SME 
 were reclassified as Stage 2 or Stage 3, the probability of default 
 and lifetime expected credit loss would be assessed on a case by case 
 basis and would be pertinent to the probability of recovery. 
 
      IFRS 9 confirms that a Probability of Default ("PD") must never be 
       zero as everything is deemed to have a risk of default; this has been 
       incorporated by the Company. All PDs will be assessed against historic 
       data as well as the prevailing economic conditions at the reporting 
       date, adjusted to account for estimates of future economic conditions 
       that are likely to impact the risk of default. 
 
       Since November 2020, 12-month PD has been calculated based on the 
       Investment Manager's 10 level grading system, where: 
        *    levels 1 to 6 fall into Stage 1, with 12-month PD 
             ranging from 0.01% to 10%; 
 
 
        *    levels 7 to 9 fall into Stage 2, with 12-month PD 
             ranging from 20% to 60%, and 
 
 
        *    level 10 falls into Stage 3, with a 12-month PD of 
             100%. 
 
 
 
       Prior to November 2020, 12-month PD was applied across the collective 
       as a cumulative in Stage 1, set at 2% in line with the Investment 
       Manager's historic performance data, market knowledge, and credit 
       enhancements (that was equivalent to there being 1 default for an 
       average portfolio of 50 unique borrowers). Once an investment moved 
       to Stage 2 then PD was calculated on an individual basis (and adjusted 
       for Stage 3 if appropriate). 
 
       All assessment is based on reasonable and supportive information available 
       at the time. 
 
Since November 2020, 12-month ECL has been calculated based on the 
 Investment Manager's categorisation, as follows: 
 
 
Category                      KKV LGD approach 
Easily Realisable             Asset value less 10% haircut discounted at 10% 
                               IRR for 12 months to recovery 
Realisable                    Asset value less 20% discounted at 20% IRR for 
                               2 years to recovery 
Highly Specialised/Unsecured  70% LGD 
Subordinated Debt             100% LGD 
 
 
Prior to November 2020, 12-month ECL was applied across the collective 
 as a cumulative in Stage 1, split according to the investment's classification. 
 For direct loan investments this was calculated as 2% of the individual 
 investment's Contracted Cash Flows ("CCF"), and 2% of the investment's 
 CCF for platform investments. Those Stage 1 12-month ECL amounts were 
 taken to be the investments' floor amounts - the Lifetime ECL for 
 any investment could never be less than its floor amount. Once an 
 investment moved to Stage 2, Lifetime ECL was calculated on an individual 
 basis. 
 
 Lifetime ECL is reviewed at each reporting date based on reasonable 
 and supportive information available at the time. 
The following borrower information should be read in conjunction with 
 the current economic environment and, in particular, the impact of 
 Covid-19. 
 
US Peer to Peer business (Borrower 18) impairment 
 The Company's largest peer to peer investment is a junior position 
 and represents a risk of write-down. In March 2019, SQN Asset Management 
 Limited ("SQN UK" or the "Former Investment Manager") met with the 
 owner/founder and agreed an incentive plan to expedite collections 
 of the underlying portfolio and agreed a three month period to show 
 improvement. They informed the Company that they had written down 
 a large proportion of this portfolio in their accounts due to a sales 
 process underway at the time. They were advised that if no improvement 
 was forthcoming, the Former Investment Manager would take over collections 
 and it was explained that the Former Investment Manager had a good 
 track record, together with its partners, in achieving better recoveries. 
 
In June 2019, having observed slow progress, the Former Investment 
 Manager began a series of meetings to agree interaction mooted in 
 the previous quarter. Two executives from the Former Investment Manager 
 visited Borrower 18 in New York in July 2019 and August 2019, to agree 
 a process for the way forward and to have an update on the sale of 
 the business. At the time, they were in the middle of a two stage 
 due diligence, which caused delays to the provision of information. 
 With effect from 30 June 2020, the Company has impaired this platform 
 exposure by 100% with a 100% expectation of write-down for this part 
 of the portfolio. This is a pre-emptive move and takes into account 
 a best estimate of loans that are now being managed out by attorneys. 
 The decision to use a 100% impairment rate is based upon the Investment 
 Manager's past experience of platform performance. 
 
Whilst a 100% impairment is based on past experience, the amount finally 
 received may be higher than this. A 10% decrease in the impairment 
 on this loan would result in a GBP210,000 increase in the net asset 
 value of the Company. 
 
UK Venture Debt (Borrower 12) impairment 
 In September 2019, this platform made the Company aware that a loan 
 was to be sold at a discount to the price originally expected, due 
 to a series of potential acquirers falling away. This resulted in 
 an impairment provision in the previous year. After the turbulence 
 of two of the three principals leaving the company and triggering 
 a clause in the Loan Note agreement that allowed us to take closer 
 control of the process of managing the portfolio, the business has 
 stabilised and made very good progress in winding down the portfolio. 
 
The previous largest position in the portfolio, a broadband company, 
 was restructured and removed from the portfolio. The reorganisation 
 of the business has progressed well and a new CEO employed. Its order 
 book has increased and it has been able to operate throughout the 
 current pandemic crisis. The Investment Manager, therefore, expects 
 some improvement in recovery. 
 
 
Small Company Bond Platform (Borrower 15) impairment 
 The only outstanding debt from this platform had undergone a protracted 
 recovery process through the courts. In Q1 2020, the Investment Manager 
 took the decision to fully impair the loan due to slow progress and 
 the increased risk that fees and expenses would erode any repayment 
 to the Company. 
 
Further details of the judgements applied in assessing the recoverability 
 of loans can be found in the Investment Manager's Report. 
 
Collateral 
 While the presence of collateral is not a key element in the assessment 
 of whether there has been a significant increase in credit risk, it 
 is of great importance in the measurement of ECL. IFRS 9 states that 
 estimates of cash shortfalls reflect the cash flows expected from 
 collateral and other credit enhancements that are integral to the 
 contractual terms. Due to the business nature of the Investment Manager, 
 this is a key component of its ECL measurement and interpretation 
 of IFRS 9, as any investment would include elements of (if not all): 
 a fully collateralised position, fixed and floating charges, a corporate 
 guarantee, a personal guarantee, coverage ratios between 130% to 150%, 
 and an average LTV of 85%. 
Loans written off 
 Financial assets (and the related impairment allowances) are normally 
 written off, either partially or in full, when there is no realistic 
 prospect of recovery. Where loans are secured, this is generally after 
 receipt of any proceeds from the realisation of security. In circumstances 
 where the net realisable value of any collateral has been determined 
 and there is no reasonable expectation of further recovery, write-off 
 may be earlier. Platform loans of GBP1,410,000 were written off in 
 the period (31 December 2019: GBP179,000; 30 June 2020: GBP268,000). 
Renegotiated loans 
 A loan is classed as renegotiated when the contractual payment terms 
 of the loan are modified because the Company has significant concerns 
 about a borrower's ability to meet payments when due. On renegotiation, 
 the loan will also be classified as credit impaired, if it is not 
 already. Renegotiated loans will continue to be considered to be credit 
 impaired until there is sufficient evidence to demonstrate a significant 
 reduction in the risk of non-payment of future payments. 
 
All data calculated for IFRS 9 purposes is consistent with the overall 
 methodology employed by KKV and its parent company, Kvika Securities 
 Ltd, across all of their UK public funds. In addition to the methodology 
 used, the Company has taken impairment data from Platforms for the 
 assessment of loans with third party exposure. Again, this is consistent 
 with the approach KKV would expect to take in these circumstances. 
 
There were no new assets originated during the period that were credit-impaired 
 at the point of initial recognition. There were no financial assets 
 that have been modified since initial recognition at a time when the 
 loss allowance was measured at an amount equal to lifetime expected 
 credit losses and for which the loss allowance changed during the 
 period to an amount equal to 12-month expected credit losses. 
 
 There were no financial assets for which cash flows were modified 
 in the period while they had a loss allowance measured at an amount 
 equal to the lifetime expected credit loss. 
 
Please see note 3b, note 13 and note 23 for further information on 
 the loans at amortised cost and credit risk. 
 
 
5. Dividends 
The Company distributes at least 85% of its distributable income earned 
 in each financial year by way of dividends. 
 
 T he Company elected to designate all of the dividends for the period 
 ended 31 December 2020 as interest distributions to its Shareholders. 
 In doing so, the Company took advantage of UK tax treatment by "streaming" 
 income from interest-bearing investments into dividends that will 
 be taxed in the hands of Shareholders as interest income. 
 
 
To date, the Company has declared the following dividends in respect 
 of earnings for the period ended 31 December 2020: 
 
 
                                                 Total dividend 
                                            declared in respect 
                                                 of earnings in       Amount per 
Announcement date     Pay date                       the period   Ordinary Share 
                                                        GBP'000 
26 August 2020        25 September 2020                   1,843            3.50p 
26 November 2020      23 December 2020                    2,633            5.00p 
                                                   ------------     ------------ 
Dividends declared (to date) for the 
 period                                                   4,476            8.50p 
Less, dividends paid after the period                         -                - 
 end 
Add, dividends paid in the period in 
 respect of the prior year                                  614            1.17p 
                                                   ------------     ------------ 
Dividends paid in 
 the period                                               5,090            9.67p 
                                                   ------------     ------------ 
 
 
In accordance with IFRS, dividends are only provided for when they 
 become a contractual liability of the Company. Therefore, during the 
 period a total of GBP5,090,000 (31 December 2019: GBP1,842,000, 30 
 June 2020: GBP3,684,000) was incurred in respect of dividends, none 
 of which was outstanding at the reporting date (31 December 2019 and 
 30 June 2020: none). 
 
All dividends in the period were paid out of revenue (and not capital) 
 profits. 
 
Mechanics for returning cash to Shareholders 
The Board carefully considered the potential mechanics for returning 
 cash to Shareholders and the Company's ability to do so. The Board 
 believes it is in the best interests of Shareholders as a whole to 
 make distributions to Shareholders without a significant delay following 
 realisations of a material part of the Portfolio (whether in a single 
 transaction or through multiple, smaller transactions concluded on 
 similar timing), whether by dividend or other method. 
 
 After careful consideration and discussions with a number of Shareholders, 
 the Board believes that one of the fairest and most cost-efficient 
 ways of returning substantial amounts of cash to Shareholders is by 
 adopting a B Share Scheme, whereby the Company will be able to issue 
 redeemable B Shares to Shareholders. These are then redeemed on a 
 Redemption Date without further action being required by Shareholders. 
 
Notice of a General Meeting of Shareholders was published on 26 February 
 2021 and these arrangements were accepted by Shareholders. 
 
The Board also intends to make quarterly dividend payments, where 
 possible, in accordance with the Company's dividend policy and to 
 maintain investment trust status for so long as the Company remains 
 listed. 
 
 
6. Related parties 
As a matter of best practice and good corporate governance, the Company 
 has adopted a related party policy which applies to any transaction 
 which it may enter into with any Director, the Investment Manager, 
 or any of their affiliates which would constitute a "related party 
 transaction" as defined in, and to which would apply, Chapter 11 of 
 the Listing Rules. In accordance with its related party policy, the 
 Company obtained: (i) the approval of a majority of the Directors; 
 and (ii) a third-party valuation in respect of these transactions 
 from an appropriately qualified independent adviser. 
 
Loan to Medical Equipment Solutions Limited ("MESL") 
In June 2017, the Company loaned GBP1,380,000 to MESL, whose Chairman 
 was Neil Roberts, who was chairman of SQN Capital Management, LLC 
 at that time. The loan bore interest at 10.0% per annum and was for 
 a period of five years from the date of drawdown. The loan was to 
 be repaid via 60 monthly payments. The loan was repaid early in March 
 2020. 
 
 No loan interest was earned in the period (31 December 2019: GBP43,000, 
 30 June 2020: GBP57,000), and no loan interest was outstanding at 
 31 December 2020 (31 December 2019: GBP2,000, 30 June 2020: GBPnil). 
 
 At 31 December 2020, the balance of the loan was GBPnil (31 December 
 2019: GBP775,000; 30 June 2020 GBPnil). 
 
7. Key contracts 
a) Investment Manager 
On 5 June 2020, the Company novated the contract to manage the portfolio 
 to KKV Investment Management Limited, following the management team 
 into their new entity from the Former Investment Manager (SQN UK). 
 
      The Investment Manager has responsibility for managing the Company's 
       portfolio. For their services, until 16 September 2020, the Investment 
       Manager was entitled to a management fee (on the same terms as the 
       Former Investment Manager) at a rate equivalent to the following schedule 
       (expressed as a percentage of NAV per annum, before deduction of accruals 
       for unpaid management fees for the current month): 
        *    1.0% per annum for NAV lower than or equal to GBP250 
             million; 
 
 
        *    0.9% per annum for NAV greater than GBP250 million 
             and lower than or equal to GBP500 million; and 
 
 
        *    0.8% per annum for NAV greater than GBP500 million. 
 
      From 17 September 2020, the 1.0% per annum base management fee was 
       reduced as follows: 
        *    for 12 months from 17 September 2020 to 16 September 
             2021, to 0.75% per annum of the Company's NAV; and 
 
 
        *    from 17 September 2021, to 0.55% of the Company's 
             NAV. 
 
The management fee is payable monthly in arrears on the last calendar 
 day of each month. 
 
 During the period, a total of GBP190,000 (all to KKV) (31 December 
 2019: GBP250,000 (all to SQN UK), 30 June 2020: GBP483,000 (SQN UK, 
 GBP452,000 and KKV, GBP31,000)) was incurred in respect of management 
 fees, of which GBP53,000 was payable at the reporting date (31 December 
 2019: GBP41,000, 30 June 2020: GBP37,000). 
 
Performance fee 
 From 17 September 2020, the Investment Manager is entitled to a performance 
 fee. The performance fee will be calculated using the most recent 
 NAV prior to the Company failing the June 2020 Continuation Vote (being 
 the NAV as at 31 May 2020) as the benchmark NAV (the "Benchmark NAV"). 
 If 99% of the Benchmark NAV is returned to Shareholders by way of 
 dividend, share buy backs or other methods of return of capital within 
 12 months from 17 September 2020 then a performance fee of 0.6% of 
 the value returned to Shareholders would be payable to KKV. This will 
 be reduced by 0.1% for every 1% less than 99% of Benchmark NAV that 
 is returned to Shareholders. 
 
Should the time taken to realise the Portfolio exceed 12 months from 
 17 September 2020, then for the period from 17 September 2021 to 17 
 September 2022, the incentive fee would reduce by 33% (so that, for 
 example if 99% of Benchmark NAV is returned by month 17, the performance 
 fee would be two-thirds of 0.6%). 
 
The introduction of an outperformance fee, under the terms of the 
 amended Investment Management Agreement, states that KKV will be entitled 
 to 10% of all funds returned to Shareholders in excess of the Benchmark 
 NAV within 12 months from 17 September 2020, reducing to 5% within 
 12-24 months. 
 
Effective from 17 September 2021, the notice period applicable to 
 termination of the Investment Management Agreement by either party 
 will reduce from 12 months to 4 months. 
 
During the period, no performance fee was paid, or payable, to the 
 Investment Manager. 
 
Transaction costs 
 Prior to the change in the investment policy, the Company incurred 
 transaction costs for the purposes of structuring investments for 
 the Company. These costs formed part of the overall transaction costs 
 that were capitalised at the point of recognition and were taken into 
 account by the Former Investment Manager when pricing a transaction. 
 When structuring services were provided by the Former Investment Manager 
 or an affiliate of them, they were entitled to charge an additional 
 fee to the Company equal to up to 1.0% of the cost of acquiring the 
 investment (ignoring gearing and transaction expenses). This cost 
 was not charged in respect of assets acquired from the Former Investment 
 Manager, the funds they managed or where they or their affiliates 
 did not provide such structuring advice. 
 
The Former Investment Manager agreed to bear all the broken and abortive 
 transaction costs and expenses incurred on behalf of the Company. 
 Accordingly, the Company agreed that the Former Investment Manager 
 may retain any commitment commissions received by the Former Investment 
 Manager in respect of investments made by the Company, save that if 
 such commission on any transaction were to exceed 1.0% of the transaction 
 value, the excess would be paid to the Company. 
 
During the period, transaction costs of GBP24,000 (31 December 2019: 
 GBP107,000; 30 June 2020 GBP147,000) were amortised. 
 
b) Administration fees 
Elysium Fund Management Limited ("Elysium") is entitled to an administration 
 fee of GBP100,000 per annum in respect of the services provided in 
 relation to the administration of the Company, together with time 
 based fees in relation to work on investment transactions. During 
 the period, a total of GBP57,000 (31 December 2019: GBP57,000, 30 
 June 2020: GBP117,000) was incurred in respect of administration fees, 
 of which GBP28,000 (31 December 2019: GBP29,000, 30 June 2020: GBP28,000) 
 was payable at the reporting date. 
 
 
8. Directors' remuneration 
The Directors are paid such remuneration for their services as determined 
 by the Remuneration and Nomination Committee, which comprises all 
 of the Directors of the Company and is chaired by Gaynor Coley. Under 
 the terms of their appointments, with effect from 17 September 2020, 
 the Chairman of the Company receives GBP45,000 (prior to 17 September 
 2020: GBP37,500) per annum, the chairman of the Audit and Valuation 
 Committee receives GBP40,000 (prior to 17 September 2020: GBP31,250) 
 per annum, and other non-executive Directors receive GBP40,000 (prior 
 to 17 September 2020: GBP27,500) per annum. 
 
During the period, a total of GBP56,000 (31 December 2019: GBP48,000, 
 30 June 2020: GBP94,000) was incurred in respect of Directors' remuneration, 
 none of which was payable at the reporting date (31 December 2019 
 and 30 June 2020: none). No bonus or pension contributions were paid 
 or payable on behalf of the Directors. 
 
9. Key management and employees 
The Company had no employees during the period (31 December 2019 and 
 30 June 2020: none). Therefore, there were no key management (except 
 for the Directors) or employees during the period (31 December 2019 
 and 30 June 2020: none). 
 
The following dividends were paid to the Directors during the period 
 by virtue of their holdings of Ordinary Shares (these dividends were 
 not additional remuneration): 
 
 
David Stevenson              GBP1,958 (31 December 2019: GBP709; 30 
                              June 2020: GBP1,417) 
Gaynor Coley                 GBP206 (31 December 2019: GBP70; 30 June 
                              2020: GBP143) 
Ken Hillen (resigned 26 May  GBP0 (31 December 2019: GBP175; 30 June 
 2020)                        2020: GBP291) 
 
 
10. Other expenses 
                                    Period from 
                                    1 July 2020        Period from 
                                 to 31 December        1 July 2019     Year ended 
                                           2020     to 31 December   30 June 2020 
                                    (unaudited)   2019 (unaudited)      (audited) 
                                        GBP'000            GBP'000        GBP'000 
Audit fees                                   20                 20             40 
Registrar fees                               17                 13             36 
Other expenses                               11                 20             33 
Listing fees                                 10                  7             18 
Directors' national insurance                 7                 23             26 
Accountancy and taxation fees                 3                  8             11 
                                   ------------       ------------   ------------ 
                                             68                 91            164 
                                   ------------       ------------   ------------ 
 
 
11. Taxation 
The Company has received confirmation from HMRC that it satisfied 
 the conditions for approval as an investment trust, subject to the 
 Company continuing to meet the eligibility conditions in s.1158 of 
 the Corporation Tax Act 2010 and the ongoing requirements for approved 
 investment trust companies in Chapter 3 of Part 2 of the Investment 
 Trust (approved Company) Tax Regulations 2011 (Statutory Instrument 
 2011.2999). The Company intends to retain this approval and self-assesses 
 compliance with the relevant conditions and requirements. 
 
As an investment trust the Company is exempt from UK corporation tax 
 on its chargeable gains. The Company is, however, liable to UK corporation 
 tax on its income. However, the Company has elected to take advantage 
 of modified UK tax treatment in respect of its "qualifying interest 
 income" in order to deduct all, or part, of the amount it distributes 
 to Shareholders as dividends as an "interest distribution". 
 
 
                                                           Period from      Period from 
                                                           1 July 2020      1 July 2019 
                                                        to 31 December   to 31 December                     Year ended 
                                                                  2020             2019                   30 June 2020 
                                                           (unaudited)      (unaudited)                      (audited) 
                                                               GBP'000          GBP'000                        GBP'000 
Reconciliation of tax charge: 
Profit/(loss) before taxation                                      820              399                          (913) 
                                                          ------------     ------------                   ------------ 
Tax at the standard UK corporation tax 
 rate of 19%                                                       156               76                          (173) 
Effects of: 
 
        *    Non-taxable investment gains and losses               207              263                            743 
 
        *    Interest distributions                               (51)            (339)                          (570) 
                                                          ------------     ------------                   ------------ 
Total tax expense                                                    -                -                              - 
                                                          ------------     ------------                   ------------ 
 
 
Domestic corporation tax rates in the jurisdictions in which the Company 
 operated were as follows: 
 
 
                     Period from 
                     1 July 2020        Period from 
                  to 31 December        1 July 2019     Year ended 
                            2020     to 31 December   30 June 2020 
                     (unaudited)   2019 (unaudited)      (audited) 
United Kingdom               19%                19%            19% 
Guernsey                     nil                nil            nil 
 
 
Due to the Company's status as an investment trust and the intention 
 to continue to meet the required conditions, the Company has not provided 
 for deferred tax on any capital gains and losses. 
 
12. Earnings/(loss) per Ordinary Share 
The earnings/(loss) per Ordinary Share of 1.56p (31 December 2019: 
 0.76p, 30 June 2020: loss of (1.73)p) is based on a profit/(loss) 
 attributable to the owners of the Company of GBP820,000 (31 December 
 2019: GBP399,000, 30 June 2020: GBP(913,000)) and on a weighted average 
 number of 52,660,350 (31 December 2019 and 30 June 2020: 52,660,350) 
 Ordinary Shares in issue since Admission . There is no difference 
 between the basic and diluted earnings per share. 
 
 
13. Loans at amortised cost 
                                                  31 December    31 December 
                                                         2020           2019  30 June 2020 
                                                  (unaudited)    (unaudited)     (audited) 
                                                      GBP'000        GBP'000       GBP'000 
Loans                                                  41,344         46,142        45,944 
Unrealised loss*                                      (3,268)        (1,787)       (3,311) 
                                                 ------------   ------------  ------------ 
Balance at period/year end                             38,076         44,355        42,633 
                                                 ------------   ------------  ------------ 
Loans:             Non-current                         23,149         41,025        31,942 
 Current                                               14,927          3,305        10,691 
Cash held on client accounts with platforms                 -             25             - 
                                                 ------------   ------------  ------------ 
Loans at amortised cost and cash held 
 on client accounts with platforms                     38,076         44,355        42,633 
                                                 ------------   ------------  ------------ 
*Unrealised loss: 
Foreign exchange on non-Sterling loans                    148            225         1,125 
Impairments of financial assets                       (3,416)        (2,012)       (4,436) 
                                                 ------------   ------------  ------------ 
Unrealised loss                                       (3,268)        (1,787)       (3,311) 
                                                 ------------   ------------  ------------ 
 
 
The movement in unrealised gain/loss on loans comprises: 
                                                31 December    31 December 
                                                       2020           2019  30 June 2020 
                                                (unaudited)    (unaudited)     (audited) 
                                                    GBP'000        GBP'000       GBP'000 
Movement in foreign exchange on non-Sterling 
 loans                                                (977)          (490)           410 
Movement in impairments                               1,020          (875)       (3,299) 
                                               ------------   ------------  ------------ 
Movement in unrealised gains and losses 
 on loans                                                43        (1,365)       (2,889) 
                                               ------------   ------------  ------------ 
 
 
The weighted average interest rate of the direct loans as at 31 December 
 2020 was 10.55% (31 December 2019: 9.67%, 30 June 2020: 10.44%). 
 
 
The table below details expected credit loss provision ("ECL") of 
 financial assets in each stage at 31 December 2020: 
 
 
                                      Stage 1           Stage 2           Stage 3            Total 
                                      GBP'000           GBP'000           GBP'000          GBP'000 
31 December 2020 
Direct loans ([1])                     32,956                 -                 -           32,956 
ECL on direct loans                     (233)                 -                 -            (233) 
                                 ------------      ------------      ------------     ------------ 
Direct loans net of the 
 ECL                                   32,723                 -                 -           32,723 
                                 ------------      ------------      ------------     ------------ 
 
Platform loans ([1])                    5,128                 -             3,342            8,470 
ECL on platform loans                    (48)                 -           (3,135)          (3,183) 
                                 ------------      ------------      ------------     ------------ 
Platform loans net of the 
 ECL                                    5,080                 -               207            5,287 
                                 ------------      ------------      ------------     ------------ 
 
Accrued interest                          547                 -                 -              547 
                                 ------------      ------------      ------------     ------------ 
 
Total loans ([1])                      38,084                 -             3,342           41,426 
Total ECL                               (281)                 -           (3,135)          (3,416) 
                                 ------------      ------------      ------------     ------------ 
Total net of the ECL                   37,803                 -               207           38,010 
                                 ------------      ------------      ------------     ------------ 
 
([1])                       These are the principal amounts outstanding at 31 December 2020 
                             and do not include the capitalised transaction fees, which are 
                             not subject to credit risk. At 31 December 2020, the amortised 
                             cost of the capitalised transaction fees totalled GBP66,000. 
 
 
 
The table below details the movements in the period of the principal 
 amounts outstanding and the ECL on those loans: 
 
 
                                        Non-credit impaired                         Credit impaired 
                                Stage 1                     Stage 2                     Stage 3                      Total 
                          Principal                   Principal                   Principal                   Principal 
                        outstanding     Allowance   outstanding     Allowance   outstanding     Allowance   outstanding     Allowance 
                              ([1])       for ECL         ([1])       for ECL         ([1])       for ECL         ([1])       for ECL 
                            GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
At 1 July 2020               41,633          (24)             -             -         5,346       (4,412)        46,979       (4,436) 
Net new and further 
 lending/repayments, 
 and foreign exchange 
 movements                  (3,549)         (257)             -             -         (594)         (133)       (4,143)         (390) 
Loans written-off 
 in the period                    -             -             -             -       (1,410)         1,410       (1,410)         1,410 
                       ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
At 31 December 
 2020                        38,084         (281)             -             -         3,342       (3,135)        41,426       (3,416) 
                       ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
([1])                 These are the principal amounts outstanding at 31 December 2020 
                       and do not include the capitalised transaction fees, which are 
                       not subject to credit risk. At 31 December 2020, the amortised 
                       cost of the capitalised transaction fees totalled GBP66,000. 
 
 
 
The table below details expected credit loss provision ("ECL") of 
 financial assets in each stage at 31 December 2019: 
 
 
                                      Stage 1           Stage 2           Stage 3            Total 
                                      GBP'000           GBP'000           GBP'000          GBP'000 
31 December 2019 
Direct loans ([1])                     33,554                 -                 -           33,554 
ECL on direct loans                      (16)                 -                 -             (16) 
                                 ------------      ------------      ------------     ------------ 
Direct loans net of the 
 ECL                                   33,538                 -                 -           33,538 
                                 ------------      ------------      ------------     ------------ 
 
Platform loans ([1])                    7,579             3,018             2,060           12,657 
ECL on platform loans                     (8)             (711)           (1,277)          (1,996) 
                                 ------------      ------------      ------------     ------------ 
Platform loans net of the 
 ECL                                    7,571             2,307               783           10,661 
                                 ------------      ------------      ------------     ------------ 
 
Accrued interest                        1,095               290               113            1,498 
                                 ------------      ------------      ------------     ------------ 
 
Total loans ([1])                      41,133             3,018             2,060           46,211 
Total ECL                                (24)             (711)           (1,277)          (2,012) 
                                 ------------      ------------      ------------     ------------ 
Total net of the ECL                   41,109             2,307               783           44,199 
                                 ------------      ------------      ------------     ------------ 
 
([1])                       These are the principal amounts outstanding at 31 December 2019 
                             and do not include the capitalised transaction fees, which are 
                             not subject to credit risk. At 31 December 2019, the amortised 
                             cost of the capitalised transaction fees totalled GBP131,000. 
 
 
 
The table below details the movements in the period of the principal 
 amounts outstanding and the ECL on those loans: 
 
 
                                               Non-credit impaired                         Credit impaired 
                                       Stage 1                     Stage 2                     Stage 3                      Total 
                                 Principal                   Principal                   Principal                   Principal 
                               outstanding     Allowance   outstanding     Allowance   outstanding     Allowance   outstanding     Allowance 
                                     ([1])       for ECL         ([1])       for ECL         ([1])       for ECL         ([1])       for ECL 
                                   GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
At 1 July 2019                      44,617          (28)         3,117         (735)           426         (374)        48,160       (1,137) 
  Transfers from: 
    *    stage 1 to stage 3        (1,846)           (2)             -             -         1,846             2             -             - 
Net re-measurement 
 of ECL arising 
 from transfer 
 of stage                                -             -             -             -             -       (1,074)             -       (1,074) 
Net new and further 
 lending/repayments, 
 and foreign exchange 
 movements                         (1,638)             6          (99)            24          (37)           (6)       (1,774)            24 
Loans written-off 
 in the period                           -             -             -             -         (175)           175         (175)           175 
                              ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
At 31 December 
 2019                               41,133          (24)         3,018         (711)         2,060       (1,277)        46,211       (2,012) 
                              ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
([1])                        These are the principal amounts outstanding at 31 December 2019 
                              and do not include the capitalised transaction fees, which are 
                              not subject to credit risk. At 31 December 2019, the amortised 
                              cost of the capitalised transaction fees totalled GBP131,000. 
 
 
 
The table below details expected credit loss provision ("ECL") of 
 financial assets in each stage at 30 June 2020: 
 
 
                                      Stage 1           Stage 2           Stage 3            Total 
                                      GBP'000           GBP'000           GBP'000          GBP'000 
30 June 2020 
Direct loans ([1])                     34,419                 -                 -           34,419 
ECL on direct loans                      (17)                 -                 -             (17) 
                                 ------------      ------------      ------------     ------------ 
Direct loans net of the 
 ECL                                   34,402                 -                 -           34,402 
                                 ------------      ------------      ------------     ------------ 
 
Platform loans ([1])                    7,214                 -             5,346           12,560 
ECL on platform loans                     (7)                 -           (4,412)          (4,419) 
                                 ------------      ------------      ------------     ------------ 
Platform loans net of the 
 ECL                                    7,207                 -               934            8,141 
                                 ------------      ------------      ------------     ------------ 
 
Accrued interest                        1,585                 -                 -            1,585 
                                 ------------      ------------      ------------     ------------ 
 
Total loans ([1])                      41,633                 -             5,346           46,979 
Total ECL                                (24)                 -           (4,412)          (4,436) 
                                 ------------      ------------      ------------     ------------ 
Total net of the ECL                   41,609                 -               934           42,543 
                                 ------------      ------------      ------------     ------------ 
 
([1])                       These are the principal amounts outstanding at 30 June 2020 and 
                             do not include the capitalised transaction fees, which are not 
                             subject to credit risk. At 30 June 2020, the amortised cost of 
                             the capitalised transaction fees totalled GBP90,000. 
 
 
 
The table below details the movements in the year of the principal 
 amounts outstanding and the ECL on those loans: 
 
 
                                               Non-credit impaired                         Credit impaired 
                                       Stage 1                     Stage 2                     Stage 3                      Total 
                                 Principal                   Principal                   Principal                   Principal 
                               outstanding     Allowance   outstanding     Allowance   outstanding     Allowance   outstanding     Allowance 
                                     ([1])       for ECL         ([1])       for ECL         ([1])       for ECL         ([1])       for ECL 
                                   GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
At 1 July 2019                      44,617          (28)         3,117         (735)           426         (374)        48,160       (1,137) 
  Transfers from: 
    *    stage 1 to stage 3        (2,066)             2             -             -         2,066           (2)             -             - 
 
    *    stage 2 to stage 3              -             -       (3,117)           735         3,117         (735)             -             - 
Net re-measurement 
 of ECL arising 
 from transfer 
 of stage                                -             -             -             -             -       (3,584)             -       (3,584) 
Net new and further 
 lending/repayments, 
 and foreign exchange 
 movements                           (918)             2             -             -             5            15         (913)            17 
Loans written-off 
 in the year                             -             -             -             -         (268)           268         (268)           268 
                              ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
At 30 June 2020                     41,633          (24)             -             -         5,346       (4,412)        46,979       (4,436) 
                              ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
([1])                        These are the principal amounts outstanding at 30 June 2020 and 
                              do not include the capitalised transaction fees, which are not 
                              subject to credit risk. At 30 June 2020, the amortised cost of 
                              the capitalised transaction fees totalled GBP90,000. 
 
 
 
An increase of 1% of total gross exposure into stage 2 (from stage 
 1) would result in an increase in ECL impairment allowance of GBP43,000 
 ( 31 December 2019: GBP96,000; 30 June 2020: GBP11,000 ) based on 
 applying the difference in average impairment coverage ratios to the 
 movement in gross exposure. 
 
At 31 December 2020, the Board considered GBP3,416,000 (31 December 
 2019: GBP2,012,000; 30 June 2020: GBP4,436,000) of loans to be impaired: 
                                  31 December       31 December 
                                         2020              2019     30 June 2020 
                                  (unaudited)       (unaudited)        (audited) 
                                      GBP'000           GBP'000          GBP'000 
Borrowers 14 and 18                     2,118               542            2,318 
Borrower 15                               416                15              416 
Borrower 17                               341                71              345 
Borrower 16                               277               292              280 
Direct SME loans                          233                17               17 
Other                                      20                 1                - 
Borrower 12                                11             1,074            1,060 
                                 ------------      ------------     ------------ 
Total impairment                        3,416             2,012            4,436 
                                 ------------      ------------     ------------ 
 
 
During the period, GBP1,410,000 (31 December 2019: GBP175,000, 30 
 June 2020: GBP268,000) of loans were written off and included within 
 realised (loss)/gain on disposal of loans in the Unaudited Condensed 
 Statement of Comprehensive Income. 
 
See note 3b and note 4i regarding the process of assessment of loan 
 impairment. 
 
The carrying values of the loans at amortised cost (excluding capitalised 
 transaction costs) are deemed to be a reasonable approximation of 
 their fair values. 
 
 
14. Investments at fair value through profit or loss 
                                                 Period from 
                                                 1 July 2020        Period from 
                                              to 31 December        1 July 2019     Year ended 
                                                        2020     to 31 December   30 June 2020 
                                                 (unaudited)   2019 (unaudited)      (audited) 
                                                     GBP'000            GBP'000        GBP'000 
Balance brought forward                                  251                232            232 
Movement in unrealised gain on investments 
 at fair value through profit or loss                      4                 12             19 
                                                ------------       ------------   ------------ 
Balance at period/year end                               255                244            251 
                                                ------------       ------------   ------------ 
 
Cost at period/year end                                  159                159            159 
                                                ------------       ------------   ------------ 
 
 
The GBP255,000 (31 December 2019: GBP244,000, 30 June 2020: GBP251,000) 
 investment at fair value through profit or loss relates to an investment 
 in a Luxembourg fund. For further information on the investments at 
 fair value through profit or loss, see note 15. 
 
 
15. Fair value of financial instruments 
      The following table shows financial instruments recognised at fair 
       value, analysed between those whose fair value is based on: 
        *    Quoted prices in active markets for identical assets 
             or liabilities (Level 1); 
 
 
        *    Those involving 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) (Level 2); and 
 
 
        *    Those with inputs for the asset or liability that are 
             not based on observable market data (unobservable 
             inputs) (Level 3). 
 
 
Financial assets and liabilities designated as at fair value through 
 profit or loss 
At 31 December 2020, the financial instruments designated at fair 
 value through profit or loss were as follows: 
 
 
                                                                31 December 2020 (unaudited) 
                                                          Level         Level         Level         Total 
                                                              1             2             3 
Financial assets                                        GBP'000       GBP'000       GBP'000       GBP'000 
Unlisted equity shares                                        -             -           255           255 
                                                   ------------  ------------  ------------  ------------ 
Total financial assets designated as at fair 
 value through profit or loss                                 -             -           255           255 
                                                   ------------  ------------  ------------  ------------ 
 
 At 31 December 2019, the financial instruments designated at fair 
  value through profit or loss were as follows: 
                                                                31 December 2019 (unaudited) 
                                                          Level         Level         Level         Total 
                                                              1             2             3 
Financial assets                                        GBP'000       GBP'000       GBP'000       GBP'000 
Unlisted equity shares                                        -             -           244           244 
Derivative financial instruments (note 16)                    -           171             -           171 
                                                   ------------  ------------  ------------  ------------ 
Total financial assets designated as at fair 
 value through profit or loss                                 -           171           244           415 
                                                   ------------  ------------  ------------  ------------ 
 
 At 30 June 2020, the financial instruments designated at fair value 
  through profit or loss were as follows: 
                                                                   30 June 2020 (audited) 
                                                          Level         Level         Level         Total 
                                                              1             2             3 
Financial assets/(liabilities)                          GBP'000       GBP'000       GBP'000       GBP'000 
Unlisted equity shares                                        -             -           251           251 
Derivative financial instruments (note 16)                    -           (6)             -           (6) 
                                                   ------------  ------------  ------------  ------------ 
Total financial assets/(liabilities) designated 
as at fair value through profit or loss                       -           (6)           251           245 
                                                   ------------  ------------  ------------  ------------ 
 
Level 2 financial instruments include foreign currency forward contracts. 
 They are valued using observable inputs (in this case foreign currency 
 spot rates). 
Level 3 financial instruments include unlisted equity shares. Net 
 asset value is considered to be an appropriate approximation of fair 
 value as, if the Company were to dispose of these holdings, it would 
 expect to do so at, or around, net asset value. 
Transfers between levels 
 There were no transfers between levels in the period (31 December 
 2019 and 30 June 2020: none). 
 
The carrying values of the loans at amortised cost (excluding capitalised 
 transaction costs) are deemed to be a reasonable approximation of 
 their fair values. The carrying values of all other assets and liabilities 
 not designated as at fair value through profit or loss are deemed 
 to be a reasonable approximation of their fair values due to their 
 short duration. 
 
 
 
16. Derivative financial instruments 
During the period, the Company entered into foreign currency forward 
 contracts to hedge against foreign exchange fluctuations. The Company 
 realised a gain of GBP269,000 (31 December 2019: loss of GBP112,000, 
 30 June 2020: loss of GBP852,000) on forward foreign exchange contracts 
 that settled during the period. 
 
 As at 31 December 2020, there were no open forward foreign exchange 
 contracts (31 December 2019: GBP171,000, 30 June 2020: GBP(6,000)). 
 
 
17. Other receivables and prepayments 
                     31 December   31 December 
                            2020          2019  30 June 2020 
                     (unaudited)   (unaudited)     (audited) 
                         GBP'000       GBP'000       GBP'000 
Accrued interest             547         1,498         1,585 
Other receivables             16             -            13 
Prepayments                   11            30            27 
                    ------------  ------------  ------------ 
                             574         1,528         1,625 
                    ------------  ------------  ------------ 
 
 
The carrying values of the accrued interest and other receivables 
 are deemed to be reasonable approximations of their fair values. 
 
 
18. Other payables and accruals 
                                 31 December   31 December 
                                        2020          2019  30 June 2020 
                                 (unaudited)   (unaudited)     (audited) 
                                     GBP'000       GBP'000       GBP'000 
Management fee                            53            41            37 
Audit fee                                 36            20            40 
Administration fee                        28            29            28 
Accountancy and taxation fees             10            10             - 
Other payables and accruals               10             7            21 
Directors' national insurance              6             5             2 
Broker fee                                 -             2             - 
Legal fees                                 -             -            36 
                                ------------  ------------  ------------ 
                                         143           114           164 
                                ------------  ------------  ------------ 
 
 
The carrying values of the other payables and accruals are deemed 
 to be reasonable approximations of their fair values. 
 
 
19. Reconciliation of liabilities arising from financing activities 
IAS 7 requires the Company to detail the changes in liabilities arising 
 from financing activities, including both cash and non-cash changes. 
 Liabilities arising from financing activities are those for which 
 cash flows were, or future cash flows will be, classified in the Company's 
 statement of cash flows as cash flows from financing activities. 
 
 As at 31 December 2020, the Company had no liabilities that would 
 give rise to cash flows from financing activities (31 December 2019 
 and 30 June 2020: none). 
 
 
 20 . Share capital 
                                           31 December    31 December        30 June 
                                                  2020           2019           2020 
                                           (unaudited)    (unaudited)      (audited) 
                                               GBP'000        GBP'000        GBP'000 
 Authorised share capital: 
 Unlimited number of Ordinary Shares                 -              -              - 
  of 1 pence each 
 Unlimited C Shares of 10 pence each                 -              -              - 
 Unlimited Deferred Shares of 1 pence                -              -              - 
  each 
 50,000 Management Shares of GBP1 each              50             50             50 
                                          ------------   ------------   ------------ 
 
 
 Called up share capital: 
 52,660,350 Ordinary Shares of 1 pence 
  each                                             527            527            527 
 50,000 Management Shares of GBP1 each              50             50             50 
                                          ------------   ------------   ------------ 
                                                   577            577            577 
                                          ------------   ------------   ------------ 
 
 
 The Management Shares are entitled (in priority to any payment of 
  dividend of any other class of share) to a fixed cumulative preferential 
  dividend of 0.01% per annum on the nominal amount of the Management 
  Shares. 
 
  The Management Shares do not carry any right to receive notice of, 
  nor to attend or vote at, any general meeting of the Company unless 
  no other shares are in issue at that time. The Management Shares 
  do not confer the right to participate in any surplus of assets of 
  the Company on winding-up, other than the repayment of the nominal 
  amount of capital. 
 
 
 21. Other reserves 
                                                                  Profit and loss account 
                                                                            ([2]) 
                                                   Special 
                                             distributable                     Non-distributable 
                                                   reserve    Distributable                              Total 
                                                     ([1]) 
                                                   GBP'000          GBP'000              GBP'000       GBP'000 
Period ended 31 December 2020 (unaudited) 
At 30 June 2020                                     48,181                -              (3,226)        44,955 
Realised revenue profit                                  -            1,908                    -         1,908 
Realised investment gains and losses                     -          (1,141)                    -       (1,141) 
Unrealised investment gains and 
 losses                                                  -                -                   53            53 
Dividends paid                                     (4,323)            (767)                    -       (5,090) 
                                              ------------     ------------         ------------  ------------ 
At 31 December 2020                                 43,858                -              (3,173)        40,685 
                                              ------------     ------------         ------------  ------------ 
 
 
                                                                Profit and loss account 
                                                                          ([2]) 
                                            Special 
                                      distributable 
                                            reserve 
                                              ([1])         Distributable         Non-distributable            Total 
                                            GBP'000               GBP'000                   GBP'000          GBP'000 
Period ended 31 December 2019 
(unaudited) 
At 30 June 2019                              50,253                     -                     (701)           49,552 
Realised revenue profit                           -                 1,785                         -            1,785 
Realised investment gains and 
 losses                                           -                 (555)                         -            (555) 
Unrealised investment gains 
 and 
 losses                                           -                     -                     (831)            (831) 
Dividends paid                                (612)               (1,230)                         -          (1,842) 
                                       ------------          ------------              ------------     ------------ 
At 31 December 2019                          49,641                     -                   (1,532)           48,109 
                                       ------------          ------------              ------------     ------------ 
 
                                                                Profit and loss account 
                                                                          ([2]) 
                                            Special 
                                      distributable                               Non-distributable 
                                            reserve         Distributable                                      Total 
                                              ([1]) 
                                            GBP'000               GBP'000                   GBP'000          GBP'000 
Year ended 30 June 2019 
(audited) 
At 30 June 2019                              50,253                     -                     (701)           49,552 
Realised revenue profit                           -                 3,000                         -            3,000 
Realised investment gains and 
 losses                                           -               (1,388)                         -          (1,388) 
Unrealised investment gains 
 and 
 losses                                           -                     -                   (2,525)          (2,525) 
Dividends paid                              (2,072)               (1,612)                         -          (3,684) 
                                       ------------          ------------              ------------     ------------ 
At 30 June 2020                              48,181                     -                   (3,226)           44,955 
                                       ------------          ------------              ------------     ------------ 
 
([1])                          During the period ended 30 June 2016, and following the approval 
                                of the Court, the Company cancelled the share premium account and 
                                transferred GBP51,143,000 to a special distributable reserve, being 
                                premium on issue of shares of GBP52,133,000 less share issue costs 
                                of GBP990,000. The special distributable reserve is available for 
                                distribution to Shareholders. 
([2])                          The profit and loss account comprises both distributable and non-distributable 
                                elements, as defined by Company Law. Realised elements of the Company's 
                                profit and loss account are classified as "distributable", whilst 
                                unrealised investment gains and losses are classified as "non-distributable". 
 
With the exception of investment gains and losses, all of the Company's 
 profit and loss items are of a revenue nature as it does not allocate 
 any expenses to capital. 
 
 
 
22. Net asset value per Ordinary Share 
The net asset value per Ordinary Share is based on the net assets 
 attributable to the owners of the Company of GBP41,262,000 (31 December 
 2019: GBP48,686,000, 30 June 2020: GBP45,532,000), less GBP50,000 
 (31 December 2019 and 30 June 2020: GBP50,000), being amounts owed 
 in respect of Management Shares, and on 52,660,350 (31 December 2019 
 and 30 June 2020: 52,660,350) Ordinary Shares in issue at the period 
 end. 
 
 
23. Financial Instruments and Risk Management 
The Investment Manager manages the Company's portfolio to provide 
 Shareholders with attractive risk adjusted returns, principally in 
 the form of regular, sustainable dividends, through investment predominantly 
 in a range of secured loans and other secured loan-based instruments 
 originated through a variety of channels and diversified by way of 
 asset class, geography and duration. 
 Prior to the change in investment policy on 17 September 2020, the 
 Company sought to ensure that diversification of its portfolio was 
 maintained, with the aim of spreading investment risk. 
 
Risk is inherent in the Company's activities, but it is managed through 
 a process of ongoing identification, measurement and monitoring. The 
 Company is exposed to market risk (which includes currency risk, interest 
 rate risk and price risk), credit risk and liquidity risk from the 
 financial instruments it holds. Risk management procedures are in 
 place to minimise the Company's exposure to these financial risks, 
 in order to create and protect Shareholder value. 
 
 
Risk management structure 
 The Investment Manager is responsible for identifying and controlling 
 risks. The Board of Directors supervises the Investment Manager and 
 is ultimately responsible for the overall risk management approach 
 within the Company. 
 
 The Company has no employees and is reliant on the performance of 
 third party service providers. Failure by the Investment Manager, 
 Administrator, Broker, Registrar or any other third party service 
 provider to perform in accordance with the terms of its appointment 
 could have a significant detrimental impact on the operation of the 
 Company. 
 
 The market in which the Company participates is competitive and rapidly 
 changing. The risks have not changed from those detailed on pages 
 20 to 30 in the Company's Prospectus, which is available on the Company's 
 website , and as updated in the circular of 20 August 2020 . 
 
Risk concentration 
Concentration indicates the relative sensitivity of the Company's 
 performance to developments affecting a particular industry or geographical 
 location. Concentrations of risk arise when a number of financial 
 instruments or contracts are entered into with the same counterparty, 
 or where a number of counterparties are engaged in similar business 
 activities, or activities in the same geographic region, or have similar 
 economic features that would cause their ability to meet contractual 
 obligations to be similarly affected by changes in economic, political 
 or other conditions. Concentrations of liquidity risk may arise from 
 the repayment terms of financial liabilities, sources of borrowing 
 facilities or reliance on a particular market in which to realise 
 liquid assets. Concentrations of foreign exchange risk may arise if 
 the Company has a significant net open position in a single foreign 
 currency, or aggregate net open positions in several currencies that 
 tend to move together. 
 
 In a Managed Wind-Down, the value of the Portfolio will be reduced 
 as investments are realised and concentrated in fewer holdings, and 
 the mix of asset exposure will be affected accordingly. 
 
 With the aim of maintaining a diversified investment portfolio, and 
 thus mitigating concentration risks, the Company had established (prior 
 to the change in the investment policy on 17 September 2020) the following 
 investment restrictions in respect of the general deployment of assets: 
 
 
 Investment Restriction                                                                          Investment Policy 
   Geography 
     *    Exposure to UK loan assets 
 
                                                                                                  Minimum of 60% 
     *    Minimum exposure to non-UK loan assets                                                         20% 
   Duration to maturity 
     *    Minimum exposure to loan assets with duration of less 
          than 6 months 
 
 
     *    Maximum exposure to loan assets with duration of 6 - 
          18 months and 18 - 36 months 
 
                                                                                                        None 
     *    Maximum exposure to loan assets with duration of more                                         None 
          than 36 months                                                                                50% 
 Maximum single investment                                                                              10% 
 Maximum exposure to single borrower or group                                                           10% 
 Maximum exposure to loan assets sourced through single alternative lending platform or other 
  third party originator                                                                                25% 
 Maximum exposure to any individual wholesale loan arrangement                                          25% 
 Maximum exposure to loan assets which are neither sterling-denominated nor hedged back to 
  sterling                                                                                              15% 
 Maximum exposure to unsecured loan assets                                                              25% 
 Maximum exposure to assets (excluding cash and cash-equivalent investments) which are not 
  loans or investments with loan-based investment characteristics                                       10% 
 
 
The Company complied with the investment restrictions throughout the 
 period and up to the change in investment policy on 17 September 2020, 
 except that, on 9 September 2020, in preparation for the upcoming 
 change in investment policy, additional foreign currency forward contracts 
 were entered into in order to equally and oppositely match the open 
 contracts at that date. 
 
 
Market risk 
 (i) Price risk 
 Price risk exposure arises from the uncertainty about future prices 
 of financial instruments held. It represents the potential loss that 
 the Company may suffer through holding market positions in the face 
 of price movements. The investments at fair value through profit or 
 loss (see notes 14 and 15) are exposed to price risk and it is not 
 the intention to mitigate the price risk. 
 
 At 31 December 2020, if the valuation of the investments at fair value 
 through profit or loss had moved by 5% with all other variables remaining 
 constant, the change in net assets and profit/(loss) would amount 
 to approximately +/- GBP13,000 (31 December 2019: +/- GBP12,000, 30 
 June 2020: +/- GBP13,000). The maximum price risk resulting from financial 
 instruments is equal to the GBP255,000 carrying value of the investments 
 at fair value through profit or loss (31 December 2019: GBP244,000, 
 30 June 2020: GBP251,000). 
 
(ii) Foreign currency risk 
Foreign currency risk is the risk that the value of a financial instrument 
 will fluctuate because of changes in foreign currency exchange rates. 
 Currency risk arises when future commercial transactions and recognised 
 assets and liabilities are denominated in a currency that is not the 
 Company's functional currency. The Company invests in securities and 
 other investments that are denominated in currencies other than Sterling. 
 Accordingly, the value of the Company's assets may be affected favourably 
 or unfavourably by fluctuations in currency rates and therefore the 
 Company will necessarily be subject to foreign exchange risks. 
 
As at 31 December 2020, a proportion of the net financial assets of 
 the Company, excluding the foreign currency forward contracts (where 
 applicable for 31 December 2019 and 30 June 2020), were denominated 
 in currencies other than Sterling as follows: 
 
 
              Investments                                                                              Foreign 
                  at fair                          Cash and   Other payables                          currency 
            value through        Loans and             cash     and accruals                           forward 
                profit or      receivables      equivalents                          Exposure        contracts     Net exposure 
                     loss 
                  GBP'000          GBP'000          GBP'000          GBP'000          GBP'000          GBP'000          GBP'000 
31 December 2020 
(unaudited) 
US 
 Dollars                -            6,825                -                -            6,825                -            6,825 
Euros                   -            4,600                -                -            4,600                -            4,600 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                        -           11,425                -                -           11,425                -           11,425 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
31 December 2019 
(unaudited) 
US 
 Dollars                -            8,850                -                -            8,850          (8,523)              327 
Euros                   -            4,376                -                -            4,376          (4,358)               18 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                        -           13,226                -                -           13,226         (12,881)              345 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
30 June 2020 (audited) 
US 
 Dollars                -            7,552                -                -            7,552          (7,531)               21 
Euros                   -            4,316                1                -            4,317          (4,121)              196 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                        -           11,868                1                -           11,869         (11,652)              217 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 
 
In order to limit the exposure to foreign currency risk, the Company 
 had previously entered into hedging contracts. However, in September 
 2020, the Company closed out its foreign currency forward contracts 
 and it is not intended to enter into foreign exchange hedging contracts 
 in the future. 
 
 At 31 December 2020, the Company held no open foreign currency forward 
 contracts (31 December 2019: foreign currency forward contracts to 
 sell US$11,330,000 and EUR5,120,000, 30 June 2020: foreign currency 
 forward contracts to sell US$9,340,000 and EUR4,550,000). 
 
 Other future foreign exchange hedging contracts may be employed, such 
 as currency swap agreements, futures contracts and options. There 
 can be no certainty as to the efficacy of any hedging transactions 
 . 
 
 At 31 December 2020, if the exchange rates for US Dollars and Euros 
 had strengthened/weakened by 5% against Sterling with all other variables 
 remaining constant, net assets at 31 December 2020 would have increased/(decreased) 
 by GBP601,000/GBP(544,000) (31 December 2019: GBP17,000/GBP(17,000), 
 30 June 2020: GBP11,000/GBP(10,000)), after accounting for the effects 
 of the hedging contracts mentioned above. 
 
 
(iii) Interest rate risk 
Interest rate risk arises from the possibility that changes in interest 
 rates will affect future cash flows or the fair values of financial 
 instruments. The Company is exposed to risks associated with the effects 
 of fluctuations in the prevailing levels of market interest rates 
 on its financial instruments and cash flow. However, due to the fixed 
 rate nature of the majority of the loans, cash and cash equivalents 
 of GBP2,500,000 (31 December 2019: GBP2,502,000, 30 June 2020: GBP1,193,000) 
 were the only interest bearing financial instruments subject to variable 
 interest rates at 31 December 2020. Therefore, if interest rates had 
 increased/decreased by 50 basis points, with all other variables held 
 constant, the change in value of interest cash flows of these assets 
 in the period would have been GBP13,000 (31 December 2019: GBP13,000, 
 30 June 2020: GBP6,000). 
 
 
                                                                       Non-interest 
  31 December 2020 (unaudited)      Fixed interest  Variable interest       bearing         Total 
                                           GBP'000            GBP'000       GBP'000       GBP'000 
Financial assets 
Loans ([1])                                 38,076                  -             -        38,076 
Investments at fair value through 
 profit or loss                                  -                  -           255           255 
Other receivables                                -                  -           563           563 
Cash and cash equivalents                        -              2,500             -         2,500 
                                      ------------       ------------  ------------  ------------ 
Total financial assets                      38,076              2,500           818        41,394 
                                      ------------       ------------  ------------  ------------ 
Financial liabilities 
Other payables                                   -                  -         (143)         (143) 
                                      ------------       ------------  ------------  ------------ 
Total financial liabilities                      -                  -         (143)         (143) 
                                      ------------       ------------  ------------  ------------ 
 
Total interest sensitivity 
 gap                                        38,076              2,500           675        41,251 
                                      ------------       ------------  ------------  ------------ 
 
 
                                                                                 Non-interest 
  31 December 2019 (unaudited)          Fixed interest      Variable interest         bearing           Total 
                                               GBP'000                GBP'000         GBP'000         GBP'000 
Financial assets 
Loans ([1])                                     44,330                      -               -          44,330 
Cash held on client accounts 
 with Platforms                                      -                      -              25              25 
Investments at fair value through 
 profit or loss                                      -                      -             244             244 
Derivative financial instruments                     -                      -             171             171 
Other receivables                                    -                      -           1,498           1,498 
Cash and cash equivalents                            -                  2,502               -           2,502 
                                          ------------           ------------    ------------    ------------ 
Total financial assets                          44,330                  2,502           1,938          48,770 
                                          ------------           ------------    ------------    ------------ 
Financial liabilities 
Other payables                                       -                      -           (114)           (114) 
                                          ------------           ------------    ------------    ------------ 
Total financial liabilities                          -                      -           (114)           (114) 
                                          ------------           ------------    ------------    ------------ 
 
Total interest sensitivity 
 gap                                            44,330                  2,502           1,824          48,656 
                                          ------------           ------------    ------------    ------------ 
 
                                                                                 Non-interest 
  30 June 2020 (audited)                Fixed interest      Variable interest         bearing           Total 
                                               GBP'000                GBP'000         GBP'000         GBP'000 
Financial assets 
Loans ([1])                                     42,633                      -               -          42,633 
Investments at fair value through 
 profit or loss                                      -                      -             251             251 
Other receivables                                    -                      -           1,598           1,598 
Cash and cash equivalents                            -                  1,193               -           1,193 
                                          ------------           ------------    ------------    ------------ 
Total financial assets                          42,633                  1,193           1,849          45,675 
                                          ------------           ------------    ------------    ------------ 
Financial liabilities 
Other payables                                       -                      -           (164)           (164) 
Derivative financial instruments                     -                      -             (6)             (6) 
                                          ------------           ------------    ------------    ------------ 
Total financial liabilities                          -                      -           (170)           (170) 
                                          ------------           ------------    ------------    ------------ 
 
Total interest sensitivity 
 gap                                            42,633                  1,193           1,679          45,505 
                                          ------------           ------------    ------------    ------------ 
 
                             ([1])  Of the loans of GBP38,076,000 (31 December 2019: GBP44,330,000, 
                                     30 June 2020: GBP42,633,000), two loans amounting to GBP8,072,000 
                                     (31 December 2019: GBP10,350,000, 30 June 2020: GBP10,527,000) 
                                     included both fixed elements and variable elements, based on the 
                                     performance of the borrowers' underlying portfolios of loans. 
 
 
 
The Investment Manager manages the Company's exposure to interest 
 rate risk, paying heed to prevailing interest rates and economic conditions, 
 market expectations and its own views as to likely moves in interest 
 rates. 
Although it has not done so to date, t he Company may implement hedging 
 and derivative strategies designed to protect investment performance 
 against material movements in interest rates. Such strategies may 
 include (but are not limited to) interest rate swaps and will only 
 be entered into when they are available in a timely manner and on 
 terms acceptable to the Company. The Company may also bear risks that 
 could otherwise be hedged where it is considered appropriate. There 
 can be no certainty as to the efficacy of any hedging transactions 
 . 
 
 
Credit risk 
Credit risk is the risk that a counterparty to a financial instrument 
 will fail to discharge an obligation or commitment that it has entered 
 into with the Company, resulting in a financial loss to the Company. 
 At 31 December 2020, credit risk arose principally from cash and cash 
 equivalents of GBP2,500,000 (31 December 2019: GBP2,502,000, 30 June 
 2020: GBP1,193,000) and balances due from the platforms and SMEs (including 
 accrued interest) of GBP38,623,000 (31 December 2019: GBP45,853,000, 
 30 June 2020: GBP44,218,000). The Company seeks to trade only with 
 reputable counterparties that the Investment Manager believes to be 
 creditworthy. 
 
The Company's credit risks principally arise through exposure to loans 
 provided by the Company, either directly or through platforms. These 
 loans are subject to the risk of borrower default. Where a loan has 
 been made by the Company through a platform, the Company will only 
 receive payments on those loans if the corresponding borrower through 
 that platform makes payments on that loan. The Investment Manager 
 has sought to reduce the credit risk by obtaining security on the 
 majority of the loans and by investing across various platforms, geographic 
 areas and asset classes, thereby ensuring diversification and seeking 
 to mitigate concentration risks, a s stated in the "risk concentration" 
 section earlier in this note. 
 
The cash pending investment or held on deposit under the terms of 
 an Investment Instrument may be held without limit with a financial 
 institution with a credit rating of "single A" (or equivalent) or 
 higher to protect against counterparty failure. 
 
 The Company may implement hedging and derivative strategies designed 
 to protect against credit risk. Such strategies may include (but are 
 not limited to) credit default swaps and will only be entered into 
 when they are available in a timely manner and on terms acceptable 
 to the Company. The Company may also bear risks that could otherwise 
 be hedged where it is considered appropriate. There can be no certainty 
 as to the efficacy of any hedging transactions . 
 Please see note 3b and note 4 for further information on credit risk 
 and note 13 for information on the loans at amortised cost. 
 
Liquidity risk 
 Liquidity risk is defined as the risk that the Company will encounter 
 difficulties in realising assets or otherwise raising funds to meet 
 financial commitments. The principal liquidity risk is contained in 
 unmatched liabilities. The liquidity risk at 31 December 2020 was 
 low since the ratio of cash and cash equivalents to unmatched liabilities 
 was 17:1 (31 December 2019: 22:1, 30 June 2020: 7:1). 
 
 
The Investment Manager manages the Company's liquidity risk by investing 
 primarily in a diverse portfolio of loans, in line with the Prospectus 
 and as stated in the "risk concentration" section earlier in this 
 note. The maturity profile of the portfolio is as follows: 
                                      31 December       31 December 
                                             2020              2019      30 June 2020 
                                      (unaudited)       (unaudited)         (audited) 
                                       Percentage        Percentage        Percentage 
0 to 6 months                                11.4              16.7               5.4 
6 months to 18 months                        28.9               5.0              30.1 
18 months to 3 years                         39.7              46.0              35.5 
Greater than 3 years                         20.0              32.3              29.0 
                                     ------------      ------------      ------------ 
                                            100.0             100.0             100.0 
                                     ------------      ------------      ------------ 
 
Capital management 
During the period, the Board's policy was to maintain a strong capital 
 base so as to maintain investor, creditor and market confidence and 
 to sustain future development of the Company. The Company's capital 
 comprises issued share capital, retained earnings and a distributable 
 reserve created from the cancellation of the Company's share premium 
 account. To maintain or adjust the capital structure, the Company 
 may issue new Ordinary and/or C Shares, buy back shares for cancellation 
 or buy back shares to be held in treasury. In addition, the Company 
 intends to return capital to Shareholders in future through the use 
 of a B Share Scheme, which was approved by Shareholders on 23 March 
 2021 (see note 5). 
 
 During the period ended 31 December 2020, the Company did not issue 
 any new Ordinary or C shares, nor did it buy back any shares for cancellation 
 or to be held in treasury (31 December 2019 and 30 June 2020: none). 
 
 The Company is subject to externally imposed capital requirements 
 in relation to its statutory requirement relating to dividend distributions 
 to Shareholders. The Company meets the requirement by ensuring it 
 distributes at least 85% of its distributable income by way of dividend. 
 
 
Following the Shareholders' approval of the change to investment policy 
 and the managed wind-down of the Company, the Board manages the Company's 
 capital to enable it to make quarterly dividend payments for the time 
 being (instead of the previous monthly dividends), although this will 
 be kept under review. The Company will also look to structure its 
 dividend payments to maintain investment trust status for so long 
 as it remains listed. 
 
24. Contingent assets and contingent liabilities 
There were no contingent assets or contingent liabilities in existence 
 at the period end (31 December 2019 and 30 June 2020: none). 
 
 
25. Events after the reporting period 
Notice of a General Meeting of Shareholders was published on 26 February 
 2021 proposing the adoption of a B Share Scheme and these arrangements 
 were accepted by Shareholders on 23 March 2021. 
 
 There were no other significant events after the reporting period. 
 
 
26. Parent and Ultimate Parent 
The Directors do not believe that the Company has an individual Parent 
 or Ultimate Parent. 
 

--- ENDS ---

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(END) Dow Jones Newswires

March 24, 2021 03:00 ET (07:00 GMT)