RM Secured says on track to cover dividend – RM Secured Direct Lending’s results for the year ended 31 December 2018 show that the NAV fell from 98.2p to 96.96p over the year (the share price was unchanged). Factoring in the 6.5p dividend, the total return on NAV was 5.5%, much better than last year’s 2.8%. Revenue profits of 6.83p per share were offset by capital losses of 1.85p per share.
The company has said that next year’s dividend will be covered by earnings, the intention is to maintain it at 6.5p.
Norman Crighton, chairman, said: “The board is pleased to report another year of growth for RMDL. This is reflected in our increased average portfolio yield of over 8% and total dividend of 6.5p. During the period we successfully raised new capital, which has successfully deployed by the investment manager, with a further fund raise post year end. Since our IPO in 2016, the fund has continued to grow, with 35 investments across 14 sectors and we are pleased with both the rate at which we have allocated our capital and the pipeline of opportunities identified. In the current volatile market, our direct lending strategy offers shareholders capacity to preserve capital, guard against inflation and rising rates, while generating attractive risk-adjusted returns. The board remains confident in the long-term future of RMDL and believes the foundations are firmly in place for the portfolio to deliver strong and sustainable performance for our shareholders.”
Looking at the portfolio, the weighted average interest rate on the portfolio has increased to 8.55% from 8.23%. Almost 60% of the loans have interest rates based on Libor (so they would adjust as central bank rates change). The company is trying to reduce its ongoing charges ratio – any reduction in expenses translates into higher profits. The largest loan, made to Exterion Media, was repaid during the final quarter of 2018. Nevertheless, the overall loan book grew, fuelled in part by the proceeds of RM secured’s 2018 fundraise.
RMDL : RM Secured says on track to cover dividend