29th Jun 2018 07:00
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014.
Guernsey, 29 June 2018
Funding Circle SME Income Fund Limited
(the "Company")
Market update
The Company invests in credit assets originated by Funding Circle's platforms across the UK, US, Germany and the Netherlands. The Company hedges substantially all of its currency exposure to Sterling. The Board has noted a material increase in the cost of hedging the Company's US Dollar-denominated assets back into Sterling, driven by divergent monetary policy and economic prospects in the US and UK, which has seen a significant widening of the GBP/USD interest rate differential over the past eighteen months. This phenomenon is now assessed as being structural as opposed to transient, with a not insignificant risk of further material divergence.
Additionally, the Company's look-through leverage currently stands at approximately 45% of NAV and will fall in the coming months as the European Investment Bank facility begins to amortise. The Board are taking steps to restore gearing to 50% of NAV, and expect to provide an update to the market in due course.
As a result of the foregoing, the Board has reappraised the anticipated currency hedged returns available from its SME loan portfolio over the next 12 months, and has assessed that such returns will enable the Company to pay a fully covered annual dividend of 5 to 6 pence per share, with effect from the quarter ended 30th September 2018.
Richard Boleat, Chairman, commented:
"Our geographical diversification means that we, in common with many other cross-border businesses, are and will continue to be exposed to divergent macroeconomic and monetary policy effects and this is the decisive factor that has led to today's revised guidance. I would like to emphasise that the credit performance of the Company's portfolio remains in line with expectations. The Board is considering a number of responses to changing macroeconomic conditions, including potential leverage transactions expected to enhance returns, and we will report to investors further in the near future."
The Company's annual report will be published in July 2018.
CONTACTS
Richard Boleat, Chairman
+44 (0) 1534 615 656
Secretary and Administrator
Sanne Group (Guernsey) Limited
+44 (0) 1481 739810
Media Contact
David de Koning
Natasha Jones
+44 (0) 20 3667 2245
Corporate Broker
Numis Securities Limited
Nathan Brown
+44 (0) 207 260 1426
Website
www.fcincomefund.com
Investor Relations
DEALING CODES
The ISIN number of the Ordinary Shares is GG00BYYJCZ96, the SEDOL code is BYYJCZ9 and the
TIDM is FCIF.
The LEI number of the Company is 549300ZQIYQVNIZGOW60
ABOUT FUNDING CIRCLE SME INCOME FUND
The Company is a registered closed-ended collective investment scheme registered pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and the Registered Collective Investment Scheme Rules 2015 issued by the Guernsey Financial Services Commission (''GFSC'').
The Company's investment objective is to provide shareholders with a sustainable and attractive level of dividend income, primarily by way of investment in Credit Assets as defined in the Company's Prospectus.
The information required to be disclosed by Article 23 of Directive 2011/61/EU on Alternative Investment Fund Managers (and any implementing legislation or regulations thereunder) can be found on the Company's website (http://fcincomefund.com/documents).
IMPORTANT NOTICES
The information in this announcement may include forward-looking statements, which are based on the current expectations and projections about future events and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereon) or other variations thereon or comparable terminology. These forward-looking statements, as well as those included in any related materials, are subject to risks, uncertainties and assumptions about the Company, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur.
Each of the Company, Funding Circle Limited and Numis Securities Limited and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
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