SQN Asset Finance Income’s operational focus supports performance – SQN Asset Finance Income Fund (SQN) has published its annual report for the year ending 30 June 2018.
Performance of NAV
The company’s NAV total return per share was +6.2%. For the 2016 C shares, the total return was +1.9%. The portfolio is performing well, with some notable detractors
Dividends
The dividend yield for the ordinary shares for the twelve months based on the share price as at 30 June 2018 was 8.0% and 2.1% for the 2016 C share
The company targets an annual dividend of 7.25 pence per ordinary share. During the year, a dividend of 7.25p was paid on the ordinary shares and 0.6042p was accrued, reflecting the timing of the ex-dividend dates during the year. The 2016 C shares paid a gradually increasing dividend during the year as the portfolio became invested.
Problems in the portfolio reported in 2017 are gradually being resolved
Click here to read the QuotedData‘s highlights of the company’s annual report in 2017, when SQN reported that most investments were running to plan except for Suniva, the U.S. based solar cell and module manufacturer which had defaulted and 5 others.
In SQN’s 2018 report, the company’s chairman confirmed that the portfolio continues to deliver NAV growth and dividends and stated that “four out of six “Past Due not Impaired” accounts have been resolved satisfactorily and no new material delinquencies have materialised”
The four investments mentioned in the 2017 report have been satisfactorily restructured and the company remains optimistic for a positive outcome for the remaining two investments. One is a relatively small investment in the portfolio in telecommunication towers which is now close to resolution. The other is Suniva, where the board continues to anticipate a positive outcome but where some uncertainty exists around the timing of any recovery. SQN continues to pursue a recovery on two fronts; the SQN has initiated legal action against the guarantor for full payment of the outstanding amounts and at the same time, the investment managers of the Fund remain in talks with multiple parties regarding a sale, merger, or joint venture which will result in cash proceeds to SQN.
In addition, the 2016 C Share performance also struggled as a result of the slower than expected deployment of cash. In June 2018, the Group returned £40,385,704 to investors, which included all fees paid to the investment managers related to that capital.
Assurances from the chairman
Against a background of positive returns (held back in part by issues mentioned above) and attractive income yield, the chairman, Peter Nivan writes in the conclusion to his statement that he wants shareholders to be assured that “the Investment Managers and the board continue to work to ensure the objectives of the group are fully met; the dividend continues to be paid and the dividend cover enhanced”.
SQN : SQN Asset Finance Income’s operational focus supports performance