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Portfolio concentration and duration rising at SQN Secured Income

Portfolio concentration and duration rising at SQN Secured Income – SQN Secured Income says that, for the year ended 30 June 2017, it generated a net profit of GBP2.4 million and earnings per Ordinary Share of 4.63p. The company’s NAV at 30 June 2017 was GBP52.0 million and NAV per ordinary share 98.74p (cum income) compared with GBP53.4 million and 101.31p as at 30 June 2016. The total return for the reporting period was 4.6%. Dividends declared in respect of the reporting period were 6.375p. The statement says that the company expects to achieve its annual dividend target of 6.25p, rising to at least 7.00p from July 2018, and a total return target of at least 8.0%.

SQN took on the management of the fund on 1 April 2017. Following its appointment in April 2017 SQN completed a thorough strategic review of the Company’s platform investments, resulting in a rationalisation of platform-originated or related investments. Cash of 31% was deployed, the number of platforms cut, working capital loans to platforms ceased.

Dawn Kendall’s MD’s statement says that, in addition to targeting higher average yields, the investments made since the change of manager have also been of a longer duration. keeping capital at work and reducing reinvestment risk and drag. As at July 2017, a little more than 35% of the portfolio positions had investment terms of three years or longer with just under 20% between one and two years. The current average term is less than two years but is targeted to increase now that the restrictive provisions in the operating documents have been revised and now allow for concentrations of more than 2.5% for any single exposure. the fund believes, given the high-touch nature of direct investments and the extensive due diligence performed, appropriate diversification can be achieved with an average transaction size of circa 5% of the value of the company.

SSIF : Portfolio concentration and duration rising at SQN Secured Income

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