9th Oct 2020 12:55
(Alliance News) - Secured Income Fund PLC on Friday said its net asset value declined in its most recently ended financial year as legacy impairments hindered performance.
At the end of its financial year, June 30, the investment trust's NAV per share stood at 86.37 pence, down from 95.10p the year before as "impairments to aged legacy peer to peer positions dampened NAV performance".
The secured loan assets investor said: "All loans underwritten since April 2017 are performing in line with expectations however, the impact of Covid-19 has meant a requirement to relax some covenants, with deferral of interest and the maturity of some loans.
"The Investment Manager has continued to strive to limit legacy third party exposure and as at June 30 this portion of the overall portfolio had been reduced to GBP9.8 million (including accrued interest) from GBP15.2 million at June 30, 2019. It is noted that progress in reducing peer to peer loan exposure has slowed as we approach the residual of this segment and aged positions have now been impaired."
Secured Income Fund maintained its dividend per share declared for the year at 7.00p per share. It has decided to cease paying monthly dividends, planning to pay out quarterly dividends along with returning excess capital when available for distribution.
In July 2020, the firm changed its name to Secured Income Fund PLC from SQN Secured Income Fund PLC. Then, in September, shareholder approved a new investment objective and policy under which Secured Income will be managed with the goal of realising all remaining portfolio assets and returning cash to shareholders.
Secured Income is seeking to effect an orderly realisation of assets.
Chair David Stevenson said: "Market conditions have been very challenging. The Investment Manager has worked with borrowers to ensure that their businesses remain 'alive' since the onset of the pandemic and so far, no impairment provisions have been considered necessary for this element of the portfolio. These decisions have been taken after careful consideration of PRA guidance and IFRS 9 treatment of such loans. Specific Covid-19 guidance has been issued by the PRA, details of which are outlined further within the Investment Manager's Report.
"However, the investment manager considers that the most challenging period is ahead of us, as various furlough and bounce back assistance is withdrawn from the economy with Q4 2020 and Q1 2021 presenting a risk to our borrowers. We will keep investors informed of any developments as they occur, in the months to come."
Shares in Secured Income were down 2.3% at 65.00p in London on Friday.
By Anna Farley; [email protected]
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