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Secured Income Fund’s post 2017 loans performing as expected

Secured Income Fund (SSIF) has announced its annual results for the year ended 30 June 2020, during which it says that all loans underwritten since April 2017 are performing as expected. However, the impact of Covid-19 has meant that SSIF has needed to relax some covenants, defer interest and extend the maturity of some loans.

For the reporting period ended 30 June 2020, SSIF generated a net loss of £0.9 million (2019: profit of £2.2 million), a loss per Ordinary Share of 1.73p (2019: profit per Ordinary Share of 4.25p). The Company’s NAV at 30 June 2020 was £45.5 million (86.37p (cum income) per Ordinary Share) compared to £50.1 million (95.10p per Ordinary Share) as at 30 June 2019. The total return for the reporting period was a loss of 1.8% (2019: total return of 4.4%).

Reducing the legacy third party exposure

The manager has continued to seek to limit SSIF’s legacy third party exposure and, as at 30 June 2020, this portion of the overall portfolio had been reduced to £9.8 million (including accrued interest) from £15.2 million at 30 June 2019. The board comments that progress in reducing peer to peer loan exposure has slowed as we approach the residual of this segment and aged positions have now been impaired.

Manager novation

As QuotedData has previously reported, SSIF’s management contract was novated to the KKV Investment Management Limited on 5 June 2020, but the existing management team was retained. This provides continuity of management and allows for the opportunity for a smooth run-off of the portfolio.

Wind up approved in June 2020

Upon the recommendation of the board, in June 2020, Shareholders voted to wind up SSIF.  This decision was made after the company was unable to raise new capital and meet its original goal to increase shareholder capital to £250 million by December 2019. The board and manager have begun work on an orderly wind-down of the business and hope to return capital to investors expeditiously, avoiding capital erosion. In anticipation of the wind-down vote, SSIF’s board instructed the manager to cease all new underwriting commitments from January 2020 and only one commitment of €1.4 million to an existing counterparty, an Irish SME and Leasing Fund, remains in place (although negotiation is to take place to consider withdrawing from this further investment).

Management fee reduction

Given that SSIF is winding down, steps are being taken to reduce costs, which includes a mutually agreed reduction in investment management fees to 0.75% for 12 months from 18 September 2020, and thereafter to 0.55%. The board says that advisor and PR costs have also been reduced post year-end to allow for better value for money for Shareholders. The amendment date from which these changes will take effect is 17 September 2020.


SSIF has maintained its dividend of 7.00p for the reporting period. However, dividend cover has fluctuated due to specific transaction flows, impairment of peer to peer and venture debt positions and the decision not to apply leverage until more platform and peer to peer investments had been removed from the portfolio. Now that SSIF is in wind-down, the board has reviewed the dividend policy going forward and has decided to cease paying monthly dividends and intends to pay quarterly dividends as well as returning excess capital as and when SSIF has excess cash reserves available for distribution.

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