M&G Credit Income Investment Trust plc (MGCI) 2022 Interim
Results 23-Sep-2022 / 07:00 GMT/BST Dissemination of a Regulatory
Announcement, transmitted by EQS Group. The issuer is solely
responsible for the content of this announcement.
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LEI: 549300E9W63X1E5A3N24
M&G Credit Income Investment Trust plc
Half Year Report and unaudited Condensed Financial
Statements for the six months ended 30 June 2022
Copies of the Half Year Report can be obtained from the
following website:
www.mandg.co.uk/creditincomeinvestmenttrust
The Directors present the results of the Company for the period
ended 30 June 2022.
Financial highlights
As at As at
Key data 30 June 2022 31 December 2021
(unaudited) (audited)
Net assets (GBP'000) 136,679 143,759
Net asset value (NAV) per Ordinary Share 95.49p 101.44p
Ordinary Share price (mid-market) 98.0p 99.5p
Premium/(Discount) to NAV[a] 2.6% (1.9)%
Ongoing charges figure[a] 1.20% 1.10%
Six months ended Year ended
Return and dividends per Ordinary Share 30 June 2022 31 December 2021
(unaudited) (audited)
Capital return (5.2)p 1.5p
Revenue return 1.8p 2.7p
NAV total return[a] (3.4)% 4.3%
Share price total return[a] 1.1% 13.0%
Total dividends declared 1.78p 4.04p
[a] Alternative performance measure.
Investment objective and policy
Investment objective
The Company aims to generate a regular and attractive level of
income with low asset value volatility.
Investment policy
The Company seeks to achieve its investment objective by
investing in a diversified portfolio of public and private debt and
debt-like instruments ("Debt Instruments"). Over the longer term,
it is expected that the Company will be mainly invested in private
Debt Instruments, which are those instruments not quoted on a stock
exchange.
The Company operates an unconstrained investment approach and
investments may include, but are not limited to:
Asset-backed securities, backed by a pool of loans secured on, amongst other things, residential and
. commercial mortgages, credit card receivables, auto loans, student loans, commercial loans and corporate
loans;
. Commercial mortgages;
. Direct lending to small and mid-sized companies, including lease finance and receivables financing;
. Distressed debt opportunities to companies going through a balance sheet restructuring;
. Infrastructure-related debt assets;
. Leveraged loans to private equity owned companies;
. Public Debt Instruments issued by a corporate or sovereign entity which may be liquid or illiquid;
. Private placement debt securities issued by both public and private organisations; and
. Structured credit, including bank regulatory capital trades.
The Company invests primarily in Sterling denominated Debt
Instruments. Where the Company invests in assets not denominated in
Sterling, it is generally the case that these assets are hedged
back to Sterling.
Investment restrictions
There are no restrictions, either maximum or minimum, on the
Company's exposure to sectors, asset classes or geography. The
Company, however, achieves diversification and a spread of risk by
adhering to the limits and restrictions set out below.
The Company's portfolio comprises a minimum of 50
investments.
The Company may invest up to 30% of Gross Assets in below
investment grade Debt Instruments, which are those instruments
rated below BBB- by S&P or Fitch or Baa3 by Moody's or, in the
case of unrated Debt Instruments, which have an internal M&G
rating below BBB-.
The following restrictions will also apply at the individual
Debt Instrument level which, for the avoidance of doubt, does not
apply to investments to which the Company is exposed through
collective investment vehicles:
Secured Debt Instruments Unsecured Debt Instruments
Rating (% of Gross Assets) [a] (% of Gross Assets)
AAA 5% 5%[b]
AA/A 4% 3%
BBB 3% 2%
Below investment grade 2% 1%
[a] Secured Debt Instruments are secured by a first or secondary
fixed and/or floating charge.
[b] This limit excludes investments in G7 Sovereign
Instruments.
For the purposes of the above investment restrictions, the
credit rating of a Debt Instrument is taken to be the rating
assigned by S&P, Fitch or Moody's or, in the case of unrated
Debt Instruments, an internal rating by M&G. In the case of
split ratings by recognised rating agencies, the second highest
rating will be used.
The Company typically invests directly, but it also invests
indirectly through collective investment vehicles which are managed
by an M&G Entity. The Company may not invest more than 20% of
Gross Assets in any one collective investment vehicle and not more
than 40% of Gross Assets in collective investment vehicles in
aggregate. No more than 10% of Gross Assets may be invested in
other investment companies which are listed on the Official
List.
Unless otherwise stated, the above investment restrictions are
to be applied at the time of investment.
Borrowings
The Company is managed primarily on an ungeared basis although
the Company may, from time to time, be geared tactically through
the use of borrowings. Borrowings will principally be used for
investment purposes, but may also be used to manage the Company's
working capital requirements or to fund market purchases of Shares.
Gearing represented by borrowing will not exceed 30% of the
Company's Net Asset Value, calculated at the time of draw down, but
is typically not expected to exceed 20% of the Company's Net Asset
Value.
Hedging and derivatives
The Company will not employ derivatives for investment purposes.
Derivatives may however be used for efficient portfolio management,
including for currency hedging.
Cash management
The Company may hold cash on deposit and may invest in cash
equivalent investments, which may include short-term investments in
money market-type funds ('Cash and Cash Equivalents').
There is no restriction on the amount of Cash and Cash
Equivalents that the Company may hold and there may be times when
it is appropriate for the Company to have a significant Cash and
Cash Equivalents position. For the avoidance of doubt, the
restrictions set out above in relation to investing in collective
investment vehicles do not apply to money market type funds.
Changes to the investment policy
Any material change to the Company's investment policy set out
above will require the approval of Shareholders by way of an
ordinary resolution at a general meeting and the approval of the
Financial Conduct Authority (FCA).
Investment strategy
The Company seeks to achieve its investment objective by
investing in a diversified portfolio of public and private debt and
debt-like instruments of which at least 70% is investment grade.
The Company is mainly invested in private debt instruments. This
part of the portfolio generally includes debt instruments which are
nominally quoted but are generally illiquid. Most of these will be
floating rate instruments, purchased at inception and with the
intention to be held to maturity or until prepaid by issuers;
shareholders can expect their returns from these instruments to
come primarily from the interest paid by the issuers.
The remainder of the Company's portfolio is invested in cash,
cash equivalents and quoted debt instruments, which are more
readily available and which can generally be sold at market prices
when suitable opportunities arise. These instruments may also be
traded to take advantage of market conditions. Fixed rate
instruments will often be hedged in order to protect the portfolio
from adverse changes in interest rates. Shareholders can expect
their returns from this part of the portfolio to come from a
combination of interest income and capital movements.
Investment process
The investment process for the Company consists principally of
three stages: the decision to invest, monitoring and ongoing
engagement and finally divestment.
Investment decision-making is undertaken by the Investment
Manager, based on extensive research and credit analysis by the
Investment Manager's large and experienced teams of 135 in-house
analysts who specialise in public and private debt markets. This
rigorous in depth analysis is fundamental to understanding the risk
and return profile of potential investments.
Regular monitoring is carried out to ensure that continued
holding of an investment remains appropriate. This includes
monitoring the performance of investments by fund managers,
analysts and internal control and governance processes. The
Investment Manager engages with relevant stakeholders on any issues
which may, potentially, affect an investment's ability to deliver
sustainable performance in line with those expectations.
At some point, the Investment Manager may decide to divest from
an investment (or the investment may complete in line with agreed
terms, including pre- payment), although typically, private
investments are held to their full maturity. Divestment can occur
for a variety of reasons including; the investment being no longer
suitable for the investment mandate, the outcome of engagement
being unsatisfactory or as a result of the investment team's
valuation assessment. Investment decision making is only undertaken
by the fund managers designated by the Investment Manager.
As part of the investment process, full consideration is given
to sustainability risks, which are set out in more detail on pages
35 to 36 of the Annual Report and audited financial statements for
the year ended 31 December 2021.
Chairman's statement
Performance
Your Company performed robustly through a very difficult period
for bond and equity markets. It was the worst first half of the
year for developed market equities in over fifty years, whilst
sovereign and corporate U.S. and European bonds experienced record
losses. The Company's NAV total return for the half year to 30 June
2022 was -3.4% which compared favourably to the performance of
fixed income indices such as the ICE BofA Sterling and
Collateralised Index (-14.17%) and the ICE BofA European Currency
Non-Financial High Yield 2% Constrained Index (-15.25%).
The beginning of 2022 had already been dominated by sharply
higher inflation in developed economies prior to the Russian
invasion of Ukraine. However, the invasion greatly compounded the
global inflation problem given the economic importance of both
countries in food and energy supply chains. A combination of the
conflict, inflation and higher official rates drove government bond
yields higher and saw credit spreads move wider over the first
quarter. Our Investment Manager continued to hedge interest rate
risk and maintain low duration which negated the effect of rising
risk-free rates. That said, the wider credit spreads lead to
modestly negative portfolio returns.
The second quarter saw market sentiment vary between growth and
inflation concerns. The combination of growth concerns and an
uncertain path for monetary policy saw both investment grade and
high yield credit spreads continue to sell off notably as the
quarter progressed, which impacted valuations and saw most
government and credit indices end the period with sharply negative
year-to-date returns. The low duration and investment grade credit
quality of your Company's portfolio contributed to its significant
outperformance of the relevant indices.
Share buybacks and discount management
Your board remains committed to seek to ensure that the Ordinary
Shares trade close to NAV in normal market conditions through
buybacks and issuance of Ordinary Shares. Since the start of the
year, the Company has undertaken a number of share buybacks and
share issuances pursuant to the 'zero discount' policy initially
announced on 30 April 2021. The first quarter saw the share price
trade at a discount to NAV although it moved to trade at a premium
from mid-April until the period end. The Company issued a net
1,415,000 shares from treasury in order to satisfy demand in the
market. The Company's Ordinary Share price traded at an average
discount to NAV of 0.5% during the period ended 30 June 2022. On 30
June 2022 the Ordinary Share price was 98p, representing a 2.6%
premium to NAV as at that date. As at 30 June 2022, 1,607,749
shares were held in treasury with an additional net 650,000 shares
repurchased since the period end.
Dividends
Your Company is currently paying three, quarterly interim
dividends at an annual rate of SONIA plus 3%, calculated by
reference to the adjusted opening NAV as at 1 January 2022. In
addition your Company will pay a variable, fourth interim dividend
to be determined after the year end, which will take into account
the net income over the whole financial year and, if appropriate,
any capital gains, together with the board's view of the ability of
the portfolio to deliver our longer-term objectives. The Company
paid dividends of 0.82p and 0.96p per Ordinary Share in respect of
the quarters to 31 March 2022 and 30 June 2022 respectively.
Your Company's Investment Manager continues to believe that an
annual total return, and thus ultimately a dividend yield, of SONIA
plus 4% will continue to be achievable although there can be no
guarantee that this will occur in any individual year.
Outlook
Even though the Company's year-to-date NAV total return has been
affected by the volatility in credit markets, our Investment
Manager believes that current market conditions provide a good
opportunity to position the portfolio to deliver increased yield
over the longer term. Your board notes that this was also achieved
with great success after the market setback in 2020.
Your Company's portfolio (including irrevocable commitments) is
now 62% invested in private (not listed) assets, with an additional
investment of some 12% in illiquid publicly listed assets which are
intended to be held to maturity. Whilst our Investment Manager will
continue to grow the private asset portion of the portfolio in line
with the Company's longer term strategy, it currently sees
opportunity to add public bonds into the portfolio at yields that
are attractive, relative to the target return of the Company. The
Investment Manager recently drew GBP4 million of the Company's
available GBP25 million revolving credit facility in order to take
advantage of the pronounced volatility and enhanced returns
available in the public bond market. Subsequently, a further GBP1
million was drawn down.
Your board believes that the Company remains well positioned to
achieve its return and dividend objectives, as set out above in the
section entitled 'Dividends'.
David Simpson
Chairman
22 September 2022
Investment manager's report
We are pleased to provide commentary on the factors that have
impacted our investment approach since the start of the year,
looking in particular at the performance and composition of the
portfolio built in accordance with the Company's investment
policy.
So far 2022 has been one of the worst years on record for bond
markets. In fact, financial markets ended the first half of the
year with nearly all asset classes (public bonds, sovereign bonds,
equities) suffering material losses. The market narrative thus far
and one set to extend through the remainder of the year can best be
characterised in one word- inflation. 2021 saw extraordinary demand
for goods and services as countries emerged from winter lockdowns
with record levels of household savings accumulated during 2020 as
consumers stockpiled spending firepower. At the same time, ongoing
measures to contain the spread of the Covid-19 virus had caused
disruption to global supply chains which resulted in a shortage of
available goods and commodities. These simultaneous supply and
demand shocks created considerable upwards inflationary pressure.
Additionally, the post-pandemic reaction of central banks was to
allow inflation temporarily to overshoot their well-established
long term target of 2% in order to boost economic growth and reduce
unemployment. This confluence of factors saw 2022 begin with
inflation across developed economies already at multi-year highs,
albeit with a path of interest rate hikes plotted to bring this
supposedly "transitory" inflation under control. However, inflation
has proved more entrenched and persistent than anticipated,
confirming the fears of many market participants - that central
banks had fallen behind the curve (i.e. not raising interest rates
at a pace fast enough to keep up with inflation). The situation was
greatly exacerbated following Russia's shocking invasion of
neighbouring Ukraine in February. Economic damage from the war in
Ukraine has been a significant factor in the slowdown in global
growth in 2022 and has greatly compounded the global inflation
problem. Fuel and food prices have increased rapidly, hitting
vulnerable populations in low-income countries hardest. The end
result is an inflation problem far starker than previously forecast
and populations facing a cost of living crisis that has crushed
consumer confidence and seen companies slash profit guidance for
2022.
Against this backdrop, central banks have been forced to embark
on more aggressive paths of monetary policy normalisation despite
the risk of leading economies into stagflation or recession. Market
expectations of future official interest rate increases have
changed substantially since the start of the year both in the
magnitude and timing of the expected rate rises, with multiple
increases now anticipated across major markets throughout the
remainder of the year, alongside a faster run-down of asset
purchase programmes. Market sentiment has become split between
growth and inflation concerns, driving volatility in government
bond markets as investors grapple with constantly changing forward
guidance and an uncertain outlook. The combination of growth
concerns and an uncertain path for monetary policy has seen both
investment grade and high yield credit spreads sell off (widen)
notably in the first half of the year, significantly decreasing
bond valuations.
Portfolio positioning
We entered the year with the Company's portfolio relatively
defensively positioned, as credit spreads remained at levels where,
in our opinion, investors were not being compensated adequately for
taking on risk. Simply put, bond valuations looked expensive in the
context of the prevailing economic headwinds and heightened
macroeconomic uncertainty. In light of this, portfolio activity in
the early part of the year saw us sell down BBB and BB bonds that
offered very little spread over risk free rates. We redeployed
proceeds into a handful of credit specific public opportunities as
well as adding further private exposure via a senior secured term
loan to the UK's leading and only full-service provider of
temporary traffic lights and related products. Investor concerns
over inflation had already caused credit spreads to widen notably
prior to Russia's invasion of Ukraine, and the economic
implications of the invasion accelerated the sell off. With bond
returns beginning to look attractive again, we reduced holdings in
AAA cash proxy ABS and redeployed proceeds into higher yielding,
BBB-rated public bonds with good credit fundamentals. We were able
to purchase these bonds at valuations which appeared attractive
relative to historical levels. In our opinion, the most compelling
risk-adjusted returns were to be found in Real Estate Investment
Trusts, banking and insurance subordinated debt and hybrid bonds.
Our flexibility in being able to invest across different markets
and fixed income asset classes saw us add selectively in investment
grade dollar credit which, given the more aggressive path of
interest rate hikes signalled by the Federal Reserve, looked cheap
on a relative value basis (vs sterling credit). We hedged our US
rate exposure using 30 year Treasury futures, in accordance with
the wider portfolio strategy of running with low interest rate
sensitivity (duration). In line with the Company's core investment
objective we have continued to increase the portfolio's allocation
to private assets over the period. These assets are not immune to
the headwinds faced by public bonds but typically provide greater
stability of capital via stronger structural protections,
particularly during times of market stress. Private debt can also
be an important diversifier to returns available in public fixed
income markets. GBP5.6m (c.3% of NAV) was invested into a diverse
range of private opportunities during the first half of the year,
including a facility for a leading provider of high end audio
systems; a bilateral real estate loan for the acquisition and
refurbishment of an office block in London Victoria; and the
mezzanine tranche in a regulatory capital transaction backed by a
diversified portfolio of UK small and medium enterprise business
loans.
Outlook
It is now clear that inflation is more embedded and broad-based
than previously forecast and can no longer be considered
transitory. We believe contributors such as rent and wage growth
along with structural factors in the economy are supportive of
persistently higher inflation for the foreseeable future. In the
UK, the fastest rate of real wage destruction since 1997 has
contributed to political and worker unrest, with forecasts
predicting the fall in mean disposable income will be the worst for
at least a century. Soaring energy prices are creating
unprecedented challenges for businesses already facing a
convergence of input cost pressures, whilst simultaneously
impairing household finances, affecting both sides of the
supply-demand dynamic. Businesses will need to adapt to a new
operating environment where margins are squeezed by higher input
costs and consumer demand is lower as inflation diminishes
household purchasing power.
At a global level, geopolitical developments remain central to
the economic outlook given the inextricable link with the path of
inflation. The economic implications of the ongoing Russia-Ukraine
war are widespread, whilst tensions between China and the U.S. over
Taiwan continue to escalate. The consequences of both situations
should see an acceleration in the trend toward deglobalisation,
which will only serve to create additional inflationary pressure.
There is also a risk of EU political fragmentation on issues such
as the relationship with Russia, particularly given the uneven
distribution of economic vulnerability amongst member states, which
could create dissent within the bloc and complicate the path of
future policy.
Central banks continue to ramp up their hawkish rhetoric, with
policy makers from Europe and the U.S. unequivocal in their message
that fighting inflation is the primary mandate and they will do
what is required to bring it under control. Uncertainty being the
nemesis of markets means the lack of clarity over future monetary
policy should see volatility in both sovereign and corporate bond
markets continue for some time whilst seeking to achieve that goal.
In the short to medium term it is difficult to foresee a return to
the type of ultra-loose monetary policy that has underpinned the
financial system in developed markets over the past decade or so.
Undoubtedly, a prolonged period of higher all-in bond yields and
wider credit spreads would be attractive for income investors,
albeit selectivity and detailed credit analysis will remain
key.
Although credit spreads have widened out notably since the start
of the year, in our opinion the market isn't fully pricing in the
toxic cocktail of restrictive financing conditions, lower corporate
profitability, and an extended period of low or no growth. In the
current environment we favour going up in credit quality rather
than reaching for yield. We have been opportunistically purchasing
recent public new issues which were attractively priced to
secondary curves, with some issuers paying up to meet financing
needs and to manage future debt profiles.
The predominantly floating rate nature of our underlying
portfolio and low modified duration means the Company is well
positioned for a rising interest rate environment, or one in which
rates remain elevated. We expect current market conditions to
provide attractive opportunities to deploy capital as we continue
to be both patient and selective in our approach.
M&G Alternatives Investment Management Limited
22 September 2022
Portfolio analysis
Top 20 holdings
Percentage of portfolio of investments
(including cash on deposit and derivatives)
As at 30 June 2022
M&G European Loan Fund 11.92
Delamare Finance FRN 2.5112% 19 Feb 2029 1.73
Westbourne 2016 1 WR Senior Var. Rate 30 Sep 2023 1.69
Hall & Woodhouse Var. Rate 30 Dec 2023 1.63
Lewisham Var. Rate 12 Feb 2023 1.56
PE Fund Finance III Var. Rate 16 Dec 2022 1.51
RIN II FRN 3.3377% 10 Sep 2030 1.50
Millshaw SAMS No. 1 Var. Rate 15 Jun 2054 1.49
Hammond Var. Rate 28 Oct 2025 1.41
Atlas 2020 1 Trust Var. Rate 30 Sep 2050 1.38
Finance for Residential Social Housing 8.569% 4 Oct 2058 1.38
Income Contingent Student Loans 1 2002-2006 FRN 2.76% 24 Jul 2056 1.36
Regenter Myatt Field North Var. Rate 31 Mar 2036 1.35
Signet Excipients Var. Rate 20 Oct 2025 1.32
Luminis 4.9268% 23 Sep 2025 1.21
Gongga 5.6849% 2 Aug 2025 1.20
CIFC European Funding Var. Rate 23 Nov 2034 1.20
Citibank FRN 0.01% 25 Dec 2029 1.19
Pumpkin Finance Var. Rate 15 Dec 2031 1.17
Dragon Finance FRN 1.8303% 13 Jul 2023 1.13
Total 38.33
Source: State Street.
Geographical exposure
Percentage of portfolio of investments
As at 30 June 2022
(excluding cash on deposit and derivatives)
United Kingdom 54.85%
United States 9.39%
European Union 7.51%
Australia 2.59%
France 2.45%
Other 23.21%
Source: M&G and State Street as at 30 June 2022
Portfolio overview
As at 30 June 2022 %
Public 40.86
Asset-backed securities 19.72
Bonds 21.14
Private 59.35
Asset-backed securities 7.38
Bonds 2.11
Investment funds 11.92
Loans 23.82
Private placements 2.21
Other 11.91
Derivatives (0.21)
Debt derivatives 0.25
Forwards (0.46)
Total 100.00
Source: State Street.
Credit rating breakdown
As at 30 June 2022 %
Unrated (0.21)
Derivatives (0.21)
Cash and investment grade 74.12
AAA 5.70
AA+ 0.17
AA 3.54
AA- 0.97
A+ 1.61
A 1.78
A- 2.69
BBB+ 8.89
BBB 18.21
BBB- 21.26
M&G European Loan Fund (ELF) (see note) 9.30
Sub-investment grade 26.09
BB+ 3.73
BB 4.05
BB- 3.24
B+ 5.20
B 4.40
B- 1.68
CCC+ 0.47
CCC- 0.45
D 0.25
M&G European Loan Fund (ELF) (see note) 2.62
Total 100.00
Source: State Street.
Note: ELF is an open-ended fund managed by M&G that invests
in leveraged loans issued by, generally, substantial private
companies located in the UK and Continental Europe. ELF is not
rated and the Investment Manager has determined an implied rating
for this investment, utilising rating methodologies typically
attributable to collateralised loan obligations. On this basis, 78%
of the Company's investment in ELF has been ascribed as being
investment grade, and 22% has been ascribed as being sub-investment
grade. These percentages have been utilised on a consistent basis
for the purposes of determination of the Company's adherence to its
obligation to hold no more than 30% of its assets in below
investment grade securities.
Top 20 holdings %
Company description
as at 30 June 2022
Open-ended fund managed by M&G which invests in leveraged loans issued by, generally,
M&G European Loan Fund substantial private companies located in the UK and Continental Europe. The fund's objective
is to create attractive levels of current income for investors while maintaining relatively
11.92% low volatility of NAV. (Private)
Delamare Finance FRN Floating-rate, senior tranche of a CMBS secured by the sale and leaseback of 33 Tesco
2.5112% 19 Feb 2029 superstores and 2 distribution centres. (Public)
1.73%
Westbourne 2016 1 WR Westbourne provides working capital finance to SMEs in the UK. The company is focused on
Senior Var. Rate 30 Sep small borrowers and has employed an advanced technology platform for the application,
2023 underwriting and monitoring of loans. (Private)
1.69%
Hall & Woodhouse Var. Rate
30 Dec 2023 Bilateral loan to a regional UK brewer that manages a portfolio of 219 freehold and
leasehold pubs. (Private)
1.63%
Lewisham Var. Rate 12 Feb Senior secured, fixed-rate term loan funding the costs of acquiring and developing a site in
2023 Lewisham to provide 758-bed purpose-built student accommodation and 67 affordable housing
units. (Private)
1.56%
PE Fund Finance III Var.
Rate 16 Dec 2022 Senior secured commitment providing NAV facility financing to a private equity firm
investing in debt and equity special situations across Europe. (Private)
1.51%
RIN II FRN 3.3377% 10 Sep
2030 Mixed CLO (AAA). Consists primarily of senior secured infrastructure finance loans managed
by RREEF America L.L.C. (Public)
1.50%
Millshaw SAMS No. 1 Var. Floating-rate, single tranche of an RMBS backed by shared-appreciation mortgages. (Public)
Rate 15 Jun 2054
1.49%
Hammond Var. Rate 28 Oct Secured, bilateral real estate development loan backed by a combined portfolio of 2 office
2025 assets leased to an underlying roster of global corporate tenants. (Private)
1.41%
Atlas 2020 1 Trust Var. Floating-rate, senior tranche of a bilateral RMBS transaction backed by a pool of Australian
Rate 30 Sep 2050 equity release mortgages. (Private)
1.38%
Finance for Residential
Social Housing 8.569% 4 High grade (AA/Aa3), fixed-rate bond backed by cash flows from housing association loans.
Oct 2058 (Public)
1.38%
Income Contingent Student
Loans 1 2002-2006 FRN Floating-rate, mezzanine tranche of a portfolio comprising of income- contingent repayment
2.76% 24 Jul 2056 student loans originally advanced by the UK Secretary of State for Education. (Public)
1.36%
Regenter Myatt Field North PFI (Private Finance Initiative) floating-rate, amortising term loan relating to the already
Var. Rate 31 Mar 2036 completed refurbishment and ongoing maintenance of residential dwellings and communal
infrastructure in the London borough of Lambeth. (Private)
1.35%
Signet Excipients Var. Fixed-rate loan secured against 2 large commercial premises in London, currently leased to 2
Rate 20 Oct 2025 FTSE listed UK corporations. (Public)
1.32%
Luminis 4.9268% 23 Sep
2025 Floating-rate, mezzanine tranche of a regulatory capital transaction backed by a portfolio
of predominantly revolving facilities extended to blue chip corporates in the Americas and
1.21% EMEA. (Private)
Gongga 5.6849% 2 Aug 2025 Structured Credit trade by Standard Chartered referencing a USUSD2bn portfolio of loans to
companies domiciled in 36 countries. (Private)
1.20%
CIFC European Funding Var.
Rate 23 Nov 2034 Mixed CLO (AAA) backed by a portfolio of senior loan obligations, mezzanine loan obligations
and high yield bonds managed by CIFC Asset Management Europe Ltd. (Public)
1.20%
Citibank FRN 0.01% 25 Dec Floating-rate, mezzanine tranche of a regulatory capital transaction backed by a portfolio
2029 of loans to large global corporates, predominantly in North America. (Private)
1.19%
Pumpkin Finance Var. Rate Senior secured, floating rate facility granted within the context of the UK Government's
15 Dec 2031 CBILS scheme to support UK small businesses through the COVID pandemic. (Private)
1.17%
Dragon Finance FRN 1.8303% Floating-rate, subordinated tranche of a securitisation of the sale and leaseback of 10
13 Jul 2023 supermarket sites sponsored by J Sainsbury plc ("Sainsbury's"). (Public)
1.13%
Interim management report and statement of directors'
responsibilities
Interim management report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal factors that could impact the remaining six months of
the financial period are set out in the Chairman's statement and
the Investment Manager's report.
Principal risks
The principal risks faced by the Company during the remaining
six months of the year can be divided into various areas as
follows:
. Market risk;
. Credit risk;
. Investment management performance risk;
. Liquidity risk;
. Dividend policy risk;
. Operational risk;
. Regulatory, legal and statutory risk: changes in laws, government policy or regulations;
. Sustainability risk; and
. Russia - Ukraine risk.
These are consistent with the principal risks described in more
detail in the Company's Annual Report and Financial Statements for
the year ended 31 December 2021, which can be found in the
Strategic Report on pages 18 to 24 and in note 13 on pages 97 to
101 and which are available on the website at:
www.mandg.co.uk/creditincomeinvestmenttrust
Since the writing of the Annual Report and Financial Statements,
the geo-political and macro-economic environment has been impacted
by commodity price inflation in Europe, influenced by tactical
constraints in flows of natural gas from Russia. The key mitigants
and controls remain in place for the Company.
Going concern In accordance with the latest guidance issued by
the Financial Reporting Council, the Directors have undertaken and
documented a rigorous assessment of whether the Company is a going
concern. The Directors considered all available information when
undertaking the assessment.
The Directors believe that the Company has appropriate financial
resources to enable it to meet its day-to-day working capital
requirements and the Directors believe that the Company is well
placed to continue to manage its business risks.
In assessing the going concern basis of accounting, the
Directors have also considered the Russian invasion of Ukraine and
the impact this may have on the Company's investments and the
Company's NAV.
The Directors consider that the Company has adequate resources
to continue in operational existence for the next 12 months. For
this reason they continue to adopt the going concern basis of
accounting in preparing these condensed financial statements.
Related party disclosure and transactions with the Investment
Manager M&G Alternatives Investment Management Limited, as
Investment Manager, is a related party to the Company. The
management fee due to the Investment Manager for the period is
disclosed in the condensed income statement and in note 3, and
amounts outstanding at the period end are shown in note 8. The
Company holds an investment in M&G European Loan Fund which is
managed by M&G Investment Management Limited. At the period end
this was valued at GBP16,101,058 and represented 11.92% of the
Company's investment portfolio.
The Directors of the Company are related parties. The Chairman
receives an annual fee of GBP43,000, the Chairman of the Audit
Committee receives an annual fee of GBP37,500 and each
non-executive Director receives an annual fee of GBP32,250.
There are certain situations where the Company undertakes
purchase and sale transactions with other M&G managed funds.
All such transactions are subject to the provisions of M&G's
fixed income dealing procedures and prior approval by senior fixed
income managers authorised by M&G to approve such trades.
Trades are conducted on liquidity and pricing terms which at the
relevant time are no worse than those available to the Company from
dealing with independent third parties.
Statement of directors' responsibilities
The Directors confirm that to the best of their knowledge:
the condensed set of financial statements has been prepared in accordance with Financial Reporting
Standard 104 (Interim Financial Reporting) and give a true and fair view of the assets, liabilities,
. financial position and profit or loss of the Company; and
this Interim management report, together with the Chairman's statement, Investment Manager's report and
. the condensed set of financial statements include a fair review of the information required by:
DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events
that have occurred during the six months ended 30 June 2022 and their impact on the condensed set of
a. financial statements; and a description of the principal risks for the remaining six months of the
period; and
DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that
b. have taken place during the six months ended 30 June 2022 and that have materially affected the
financial position or performance of the Company during that period; and any changes in the related
party transactions that could do so.
The Half Year Report and unaudited condensed set of financial
statements were approved by the Board of Directors on 22 September
2022 and the above responsibility statement was signed on its
behalf by:
David Simpson
Chairman
22 September 2022
Condensed financial statements (unaudited)
Condensed income statement
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net (losses)/gains on 7 - (5,875) (5,875) - 541 541 - (545)
investments (545)
Net (losses)/gains on 7 - (1,164) (1,164) 2,428 - 2,837 2,837
derivatives 2,428
Net currency gains/ 216 (278) (62) (140) (176) (51) (145) (196)
(losses) (36)
Income 3 3,174 - 3,174 2,735 - 2,735 5,565 - 5,565
Investment management (487) - (487) (451) - (451) (965) - (965)
fee
Other expenses (351) - (351) (254) - (254) (548) - (548)
Net return on ordinary
activities before 2,552 (7,317) (4,765) 1,994 2,829 4,823 4,001 2,147 6,148
finance costs and
taxation
Finance costs 5 (57) - (57) (61) - (61) (122) - (122)
Net return on ordinary
activities before 2,495 (7,317) (4,822) 1,933 2,829 4,762 3,879 2,147 6,026
taxation
Taxation on ordinary - - - - - - - - -
activities
Net return attributable
to Ordinary Shareholders 2,495 (7,317) (4,822) 1,933 2,829 4,762 3,879 2,147 6,026
after taxation
Net return per Ordinary
Share (basic and 2 1.77p (5.19)p (3.42)p 1.34p 1.96p 3.30p 2.70p 1.49p 4.19p
diluted)
The total column of this statement represents the Company's
profit and loss account. The 'Revenue' and 'Capital' columns
represent supplementary information provided under guidance issued
by the Association of Investment Companies.
All revenue and capital items in the above statement derive from
continuing operations.
The Company has no other comprehensive income and therefore the
net return on ordinary activities after taxation is also the total
comprehensive income for the period.
The accompanying notes form an integral part of these condensed
financial statements.
Condensed statement of financial position
As at 30 June As at 30 June 2021 As at 31
2022 December
(unaudited) (unaudited) 2021 (audited)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair value through profit or loss 7 135,398 139,439 139,501
Current assets
Derivative financial assets held at fair value through 7 - - 631
profit or loss
Receivables 8 1,534 1,798 1,241
Cash and cash equivalents 8 4,221 3,473
6,944
5,755 8,742 5,345
Current liabilities
Derivative financial liabilities held at fair value 7 (293) (408) -
through profit or loss
Payables 8 (4,181) (1,476) (1,087)
(4,474) (1,884) (1,087)
Net current assets 1,281 6,858 4,258
Net assets 136,679 146,297 143,759
Capital and reserves
Called up share capital 9 1,447 1,447 1,447
Share premium 42,257 42,217 42,217
Special distributable reserve 97,027 97,296 95,670
Capital reserve 9 (5,473) 4,313 3,473
Revenue reserve 1,421 1,024 952
Total shareholders' funds 136,679 146,297 143,759
Net Asset Value per Ordinary Share (basic and diluted) 2 95.49p 102.04p 101.44p
The accompanying notes form an integral part of these condensed
financial statements.
Approved and authorised for issue by the Board of Directors on
22 September 2022 and signed on its behalf by:
David Simpson
Chairman
Company registration number: 11469317
22 September 2022
Condensed statement of changes in equity
Called up Special
Six months ended 30 June 2022 Ordinary Share Share distributable Capital Revenue Total
(unaudited) premium reserve reserve reserve
capital
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2021 1,447 42,217 95,670 3,473 952 143,759
Ordinary Shares issued from - 40 2,681 - - 2,721
treasury
Purchase of Ordinary Shares to be - - (1,324) - - (1,324)
held in treasury
Net return attributable to - - - (7,317) 2,495 (4,822)
shareholders
Dividends paid 6 - - - (1,629) (2,026) (3,655)
Balance at 30 June 2022 1,447 42,257 97,027 (5,473) 1,421 136,679
Called up Special
Six months ended 30 June 2021 Ordinary Share Share distributable Capital Revenue Total
(unaudited) premium reserve reserve reserve
capital
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2020 1,447 42,217 98,499 3,349 1,116 146,628
Purchase of Ordinary Shares to be (1,203) - - (1,203)
held in treasury
Net return attributable to - - - 2,829 1,933 4,762
shareholders
Dividends paid 6 - - (1,865) (2,025) (3,890)
Balance at 30 June 2021 1,447 42,217 97,296 4,313 1,024 146,297
Called up Special
Year ended 31 December 2021 Note Ordinary Share Share distributable Capital Revenue Total
(audited) premium reserve reserve reserve
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2020 1,447 42,217 98,499 3,349 1,116 146,628
Purchase of Ordinary Shares to be - - (2,829) - - (2,829)
held in treasury
Net return attributable to - - - 2,147 3,879 6,026
shareholders
Dividends paid 6 - - - (4,043) (6,066)
(2,023)
Balance at 31 December 2021 1,447 42,217 95,670 3,473 143,759
952
The accompanying notes form an integral part of these condensed
financial statements.
Condensed cash flow statement
Note Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows
from operating
activities
Net (loss)/
profit before (4,765) 4,823 6,148
finance costs
and taxation
Adjustments
for:
Net losses/
(gains) on 7 5,875 (541) 545
investments
Net losses/
(gains) on 7 1,164 (2,428) (2,837)
derivatives
(Increase)/
decrease in (293) 133 104
receivables
Increase/
(decrease) in 517 (165) 130
payables
Purchases of 7 (21,608) (19,439) (42,088)
investments[a]
Sales of 7 22,173 22,437 43,210
investments[a]
Net cash
inflow/
(outflow) from 3,063 4,820 5,212
operating
activities
Financing
activities
Finance costs 5 (57) (61) (122)
Ordinary
Shares issued 2,721 - -
from treasury
Purchase of
Ordinary
Shares to be (1,324) (1,203) (2,829)
held in
treasury
Dividend paid 6 (3,655) (3,890) (6,066)
Net cash
(outflow)/
inflow from (2,315) (5,154) (9,017)
financing
activities
Increase/
(decrease) in 748 (334) (3,805)
cash and cash
equivalents
Cash and cash
equivalents at
the start of 3,473 7,278 7,278
the period/
year
Increase/
(decrease) in
cash and cash 748 (334) (3,805)
equivalents as
above
Cash and cash
equivalents at 8 4,221 6,944 3,473
the end of the
period/year
[a] Receipts from the sale of, and payments to acquire,
investment securities have been classified as components of cash
flows from operating activities because they form part of the
Company's dealing operations.
The accompanying notes form an integral part of these condensed
financial statements.
Notes to the condensed financial statements
1 Accounting policies
The condensed financial statements have been prepared on a going
concern basis under the historical cost convention, modified to
include certain items at fair value, and in accordance with United
Kingdom Accounting Standards, including Financial Reporting
Standard 104 (FRS 104) Interim Financial Reporting issued by the
Financial Reporting Council and the Statement of Recommended
Practice (SORP) issued by the Association of Investment Companies
(AIC) in July 2022 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts'.
The annual Financial Statements have been prepared in accordance
with the Financial Reporting Standard 102 (FRS 102) and the AIC
SORP.
The accounting policies applied to this condensed set of
financial statements are consistent with those applied in the
Annual Report and Financial Statements for the year ended 31
December 2021.
In the current period the Company has started reissuing shares
held in Treasury. Where Ordinary Shares held in Treasury shares are
subsequently reissued, the sales proceeds up to the purchase price
of the shares will be transferred to the special distributable
reserve or capital reserve and the excess of the sales proceeds
over the purchase price will be transferred to the share
premium.
The functional and presentational currency of the Company is
pounds sterling because that is the currency of the primary
economic environment in which the Company operates.
All values are recorded to nearest thousands, unless otherwise
stated.
2 Returns and net asset value (NAV)
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
Revenue return
Revenue return attributable to Ordinary Shareholders (GBP'000) 2,495 1,933 3,879
Weighted average number of shares in issue during the period/year 141,027,443 144,490,744 143,757,774
Revenue return per Ordinary Share (basic and diluted) 1.77p 1.34p 2.70p
Capital return
Capital return attributable to Ordinary Shareholders (GBP'000) (7,317) 2,829 2,147
Weighted average number of shares in issue during the period/year 141,027,443 144,490,744 143,757,774
Capital return per Ordinary Share (basic and diluted) (5.19)p 1.96p 1.49p
Net return
Net return per Ordinary Share (basic and diluted) (3.42)p 3.30p 4.19p
NAV per Ordinary Share
Net assets attributable to Ordinary Shareholders (GBP'000) 136,679 146,297 143,759
Number of shares in issue at period/year end 143,138,022 143,367,771 141,723,022
NAV per Ordinary Share 95.49p 102.04p 101.44p
3 Income
Six months Six months ended Year ended
ended
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Income from investments
Interest income from Debt 2,809 2,421 4,936
Instruments
Distributions from investment funds 306 260 521
Management fee rebate 51 51 105
3,166 2,732 5,562
Other income
Interest from cash and cash 8
equivalents 3 3
3,174 2,735 5,565
4 Expenses
There were no Non-audit fees payable to the auditor as of 30
June 2022. Non-audit fees (including VAT) payable to the auditor in
respect of the agreed upon procedures on the Half Year Report as of
30 June 2021 were GBP12,600. The agreed upon procedures did not
constitute an audit engagement or a review of the Half Year
Report.
5 Finance costs
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Commitment fee 37 37 75
Arrangement fees 6 6 13
Legal fees 14 18 34
57 61 122
On 19 October 2020 the Company entered into a GBP25 million
revolving credit facility agreement with State Street Bank
International GmbH. On 18 October 2021 the Company renewed the
credit facility on the existing terms, with the new credit facility
expiring on 17 October 2022. As at 30 June 2022 no amounts were
drawn down.
Subsequent to the period end on 6 July 2022, GBP4 million was
drawn down from the revolving credit facility agreement, and a
further GBP1 million was drawn down on 13 September 2022. Both were
at a daily rate of SONIA plus a spread of 1.25%.
6 Dividends
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Revenue
2020 fourth interim interest distribution of 0.77p - 1,114 1,114
2021 first interim interest distribution of 0.63p - 911 911
2021 second interim interest distribution of 0.71p - - 1,017
2021 third interim interest distribution of 0.70p - - 1,001
2021 fourth interim interest distribution of 0.67p 941 - -
2022 first interim interest distribution of 0.77p 1,085 - -
2,026 2,025 4,043
Capital
2020 fourth interim dividend of 1.18p - 1,706 1,706
2021 first interim dividend of 0.11p - 159 159
2021 second interim dividend of 0.05p - - 72
2021 third interim dividend of 0.06p - - 86
2021 fourth interim dividend of 1.11p 1,558 - -
2022 first interim dividend of 0.05p 71 - -
1,629 1,865 2,023
On 26 July 2022 the Board declared a second interim dividend of
0.96p per Ordinary Share for the year ended 31 December 2022, which
was paid on 26 August 2022 to Ordinary Shareholders on the register
on 5 August 2022. The ex-dividend date was 4 August 2022.
In accordance with FRS 102, Section 32, 'Events After the End of
the Reporting Period', the 2022 second interim dividend has not
been included as a liability in this condensed set of financial
statements.
7 Investments held at fair value through profit or loss
(FVTPL)
As at As at As at
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Opening valuation 140,132 140,316 140,316
Analysis of transactions made during the period/year
Purchases at cost 24,185 18,769 40,734
Sale proceeds (22,173) (23,023) (43,210)
(Losses)/gains on investments (7,039) 2,969 2,292
Closing valuation 135,105 139,031 140,132
Closing cost 141,583 138,251 139,848
Closing investment holding (losses)/gains (6,478) 780 284
Closing valuation 135,105 139,031 140,132
The Company received GBP22,173,000 from investments sold in the
six month period ended 30 June 2022 (six months ended 30 June 2021:
GBP23,023,000). The book cost of these investments when they were
purchased was GBP22,209,000 (six months ended 30 June 2021:
GBP21,836,000). These investments have been revalued over time and
until they were sold any unrealised gains/losses were included in
the fair value of the investments.
As at As at As at
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Gains on investments
Net (losses)/gains on investments (5,875) 541 (545)
Net (losses)/gains on derivatives (1,164) 2,428 2,837
Net (losses)/gains on investments (7,039) 2,969 2,292
As at As at As at
30 June 2022 30 June 2021 31 December
2021
GBP'000 GBP'000 GBP'000
Closing valuation
Investments at fair value through profit or loss 135,398 139,439 139,501
Derivative financial (liabilities)/assets held at fair value through profit or (293) (408) 631
loss
Closing valuation 135,105 139,031 140,132
8 Receivables, Cash and cash equivalents and Payables
As at As at As at
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Receivables
Sales for future settlement - 586 -
Accrued income 1,380 1,128 1,108
Prepaid expenses 23 33 53
Management fee rebate 131 51 80
Total receivables 1,534 1,798 1,241
Cash and cash equivalents
Cash at bank 3,670 1,302 2,526
Amounts held at futures clearing houses 551 1,041 345
Cash on deposit - 4,601 602
Total cash and cash equivalents 4,221 6,944 3,473
Payables
Purchases for future settlement 2,577 684 -
Expenses payable and deferred income 344 351 314
Management fee payable 1,258 438 771
Other payables 2 3 2
Total payables 4,181 1,476 1,087
9 Called up share capital
As at 30 June 2022 As at 30 June 2021 As at 31 December 2021
Number of shares Nominal value GBP'000 Number of shares Nominal value Number of shares Nominal value
GBP'000 GBP'000
Ordinary
Shares of 1p
Ordinary
Shares in
issue at the 141,723,022 1,417 144,605,771 1,446 144,605,771 1,446
beginning of
the period/
year
Ordinary
Shares issued --
during the 2,765,000 28 - - -
period/ year
Purchase of
Ordinary (1,350,000) (14) (1,238,000) (12) (2,882,749) (29)
Shares held
in treasury
Ordinary
Shares in
issue at the 143,138,022 1,431 143,367,771 1,434 141,723,022 1,417
end of the
period/year
Treasury
Shares
(Ordinary
Shares of 1p)
Treasury
Shares at the
beginning of 3,022,749 30 140,000 1 140,000 1
the period/
year
Ordinary
Shares issued
from treasury (2,765,000) (28) - - - -
during the
period/year
Purchase of
Ordinary 1,350,000 14 1,238,000 12 2,882,749 29
Shares held
in treasury
Treasury
Shares at the 1,607,749 16 1,378,000 13 3,022,749 30
end of the
period/year
Total
Ordinary
Shares in
issue and in 144,745,771 1,447 144,745,771 1,447 144,745,771 1,447
treasury at
the end of
the period/
year
The analysis of the capital reserve is as follows:
Six months ended 30 June 2022 Six months ended 30 June 2021 Year ended 31 December 2021
Realised Investment Total Realised Investment Total Realised Investment Total
capital holding capital capital holding capital capital holding capital
reserve (losses) reserve reserve (losses) reserve reserve (losses) reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Capital reserve at
the beginning of the 3,189 284 3,473 1,290 2,059 3,349 1,290 2,059 3,349
period/year
(Losses)/gains on
realisation of (277) - (277) 4,248 - 4,248 4,067 - 4,067
investments at fair
value
Realised currency
losses during the (278) - (278) (140) - (140) (145) - (145)
period/year
Movement in - (6,762) (6,762) - (1,279) (1,279) - (1,775) (1,775)
unrealised losses
Dividends paid (1,629) - (1,629) (1,865) - (1,865) (2,023) - (2,023)
Capital reserve at
the end of the 1,005 (6,478) (5,473) 3,533 780 4,313 3,189 284 3,473
period/year
The above split in capital reserve is shown in accordance with
provisions of the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts', 2022.
10 Related party transactions
M&G Alternatives Investment Management Limited, as
investment manager is a related party to the Company. The
management fee payable to the Investment Manager for the period is
disclosed in the condensed income statement and in note 3, amounts
outstanding at the period end are shown in note 8.
The Company holds an investment in M&G European Loan Fund
which is managed by M&G Investment Management Limited. At the
period end this was valued at GBP16,101,058 (30 June 2021:
GBP17,458,741) and represented 11.92% (30 June 2021: 12.16%) of the
Company's investment portfolio.
The Directors of the Company are related parties. For further
details of the annual fees payable to the Directors, please refer
to the Related party disclosure and transactions with the
Investment Manager section above.
11 Fair value hierarchy
Under FRS 102 an entity is required to classify fair value
measurements using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. The
fair value hierarchy shall have the levels stated below.
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2: other significant observable inputs (including
quoted prices for similar investments, interest rates, prepayments,
credit risk, spread premium, credit ratings etc).
-- Level 3: significant unobservable inputs (including the
Company's own assumptions in determining the fair value of
investments, discounted cashflow model or single broker quote).
The financial assets measured at FVTPL are grouped into the fair
value hierarchy as follows:
As at 30 June 2022 As at 30 June 2021 As at 31 December 2021
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
at FVTPL
Debt Instruments - 47,723 71,574 119,297 - 60,039 61,941 121,980 - 54,382 67,599 121,981
Investment in - 16,101 - 16,101 - 17,459 - 17,459 - 17,520 - 17,520
funds
Derivatives 338 65 - 403 - 151 - 151 - 667 - 667
Financial
liabilities at
FVTPL
Derivatives - (696) - (696) (238) (321) - (559) (36) - - (36)
Net fair value 338 63,193 71,574 135,105 (238) 77,328 61,941 139,031 (36) 72,569 67,599 140,132
Valuation techniques for Level 3
The debt investments within the Company utilise a number of
valuation methodologies such as a discounted cash flow model, which
will use the relevant credit spread and underlying reference
instrument to calculate a discount rate. Unobservable inputs
typically include spread premiums and internal credit ratings.
Some debt instruments are valued at par and are monitored to
ensure this represents fair value for these instruments. On a
monthly basis these instruments are assessed to understand whether
there is any evidence of market price movements, including
impairment or any upcoming refinancing.
In addition, some are priced by a single broker quote, which is
typically the traded broker, who provides an indicative mark.
12 Capital commitments
There were outstanding unfunded investment commitments of
GBP2,812,000 (30 June 2021: GBP4,821,000) at the period/year
end.
As at As at As at
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
Bayswater RD Mercury Var. Rate 31 May 2024 1,293 2,235 1,862
Project Grey Var. Rate 30 Apr 2025 (Senior) 642 - -
Project Grey Var. Rate 30 Apr 2025 (Junior) 371 - -
Intu (SGS) Finco Limited Var. Rate 31 Mar 2024 229 - 229
Bayswater RD Mercury Var. Rate 1 May 2024 137 201 173
Kaveh Ventures LLC Var. Rate 22 Mar 2024 82 323 163
Jamshid Ventures Var. Rate 23 Jul 2023 58 328 125
Lewisham Var. Rate 12 Feb 2023 - 519 -
Greensky Var. Rate 11 Dec 2023 - 476 -
Harmoney Warehouse No 2 Var. Rate 31 Dec 2026 - 301 -
Sonovate Var. Rate 12 Apr 2022 - 280 -
Valentine Senior Var. Rate 7 Mar 2022 - 133 133
Alchemy Copyrights Var. Rate 16 Dec 2022 - - 109
Bread Holdings Var. Rate 1 Sep 2028 - - 72
Gate 1 Var. Rate 4 Jun 2022 (Junior) - 21 -
Gate 1 Var. Rate 4 Jun 2022 (Senior) - 4 -
2,812 4,821 2,866
13 Half Year Report
The financial information contained in this Half Year Report
does not constitute statutory accounts as defined in section 434 -
436 of the Companies Act 2006.
The financial information for the six months ended 30 June 2022
and 30 June 2021 has not been reviewed or audited by the Company's
auditors.
The figures and financial information for the year ended 31
December 2021 have been extracted from the latest published audited
financial statements, which have been filed with the Registrar of
Companies. The report of the Auditor on those accounts was
unqualified and did not contain a statement under sections 498(2)
or (3) of the Companies Act 2006.
-----------------------------------------------------------------------------------------------------------------------
ISIN: GB00BFYYL325, GB00BFYYT831
Category Code: IR
TIDM: MGCI
LEI Code: 549300E9W63X1E5A3N24
OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews
Sequence No.: 189995
EQS News ID: 1448725
End of Announcement EQS News Service
=------------------------------------------------------------------------------------
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