TIDMFCIF
RNS Number : 0227P
Funding Circle SME Income Fund Ltd
11 November 2016
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, IN OR INTO THE UNITED STATES OR TO US PERSONS.
Guernsey, 11 November 2016
Funding Circle SME Income Fund Limited
Publication of the 2016 Interim Report
Funding Circle SME Income Fund Limited (the "Company") has
published its results for the semi-annual period from 1 April 2016
to 30 September 2016. The Interim Report and Accounts are attached
to this release and are also available on the Company's website
(www.fcincomefund.com).
CONTACTS
Richard Boleat, Chairman
+44 (0) 1534 615 656
Richard.Boleat@fcincomefund.com
Secretary and Administrator
Sanne Group (Guernsey) Limited
+44 (0) 1481 739810
FundingCircle@sannegroup.com
Media Contact
David de Koning
Natasha Jones
+44 (0) 20 3667 2245
press@fundingcircle.com
Corporate Brokers
Goldman Sachs International
Daniel Martin
Chris Emmerson
+44 (0) 20 7774 1000
daniel.martin@gs.com
Numis Securities
Nathan Brown
+44 (0) 20 7260 1000
n.brown@numis.com
Website
www.fcincomefund.com
ABOUT FUNDING CIRCLE SME INCOME FUND
The Company is a registered closed-ended collective investment
scheme registered pursuant to the Protection of Investors
(Bailiwick of Guernsey) Law, 1987, as amended and the Registered
Collective Investment Scheme Rules 2015 issued by the Guernsey
Financial Services Commission ("GFSC").
The Company's investment objective is to provide shareholders
with a sustainable and attractive level of dividend income,
primarily by way of investment in Credit Assets as defined in the
Company's Prospectus.
IMPORTANT NOTICES
This announcement contains "forward-looking" statements, beliefs
or opinions. These forward-looking statements involve known and
unknown risks and uncertainties, many of which are beyond the
control of the Company and all of which are based on its directors'
current beliefs and expectations about future events.
Forward-looking statements are sometimes identified by the use of
forward-looking terminology such as "believes", "expects", "may",
"will", "could", "should", "shall", "risk", "intends", "estimates",
"aims", "plans", "predicts", "projects", "continues", "assumes",
"positioned" or "anticipates" or the negative thereof, other
variations thereon or comparable terminology, or by discussions of
strategy, plans, objectives, goals, future events, assumptions or
intentions. These forward-looking statements include all matters
that are not historical facts. Forward-looking statements may and
often do differ materially from actual results. They appear in a
number of places throughout this announcement and include
statements regarding the intentions, beliefs or current
expectations of the Board or the Company with respect to future
events and are subject to risks relating to future events and other
risks, uncertainties and assumptions relating to the Company's
business concerning, amongst other things, the financial
performance, liquidity, prospects, growth and strategies of the
Company. These forward-looking statements and other statements
contained in this announcement regarding matters that are not
historical facts involve predictions. No assurance can be given
that such future results will be achieved; actual events or results
may differ materially as a result of risks and uncertainties facing
the Company. Such risks and uncertainties could cause actual
results to vary materially from the future results indicated,
expressed or implied in such forward-looking statements. The
forward-looking statements contained in this announcement speak
only as of the date of this announcement. Nothing in this
announcement is, or should be relied on as, a promise or
representation as to the future. The Company disclaims any
obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained in this
announcement to reflect any change in its expectations or any
change in events, conditions or circumstances on which such
statements are based unless required to do so by applicable law,
the Prospectus Rules, the Listing Rules or the Disclosure Rules and
Transparency Rules of the FCA. No statement in this announcement is
intended as a forecast or profit estimate.
Neither this announcement nor any copy of it may be made or
transmitted into the United States of America (including its
territories or possessions, any state of the United States of
America and the District of Columbia) (the "United States"), or
distributed, directly or indirectly, in the United States or to US
Persons (as such term is defined in Regulation S under the US
Securities Act of 1933, as amended (the "Securities Act"). Neither
this announcement nor any copy of it may be taken or transmitted
directly or indirectly into Australia, Canada, Japan or South
Africa or to any persons in any of those jurisdictions, except in
compliance with applicable securities laws. Any failure to comply
with this restriction may constitute a violation of United States,
Australian, Canadian, Japanese or South African securities laws.
The distribution of this announcement in other jurisdictions may be
restricted by law and persons into whose possession this
announcement comes should inform themselves about, and observe, any
such restrictions. This announcement does not constitute or form
part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for securities
in the United States, Australia, Canada, Japan or South Africa or
in any jurisdiction to whom or in which such offer or solicitation
is unlawful.
Any securities mentioned in this announcement have not been and
will not registered under the Securities Act, and may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act.
This announcement has been issued by and is the sole
responsibility of the Company. Each of Goldman Sachs International
("Goldman Sachs") and Numis Securities Limited ("Numis") (together
the "Brokers") and their respective affiliates expressly disclaim
any obligation or undertaking to update, review or revise any
forward-looking statements contained in this announcement whether
as a result of new information, future developments or
otherwise.
Apart from the responsibilities and liabilities, if any, which
may be imposed on the Brokers under a regulatory regime of any
jurisdiction and where exclusion of liability under the relevant
regulatory regime would be illegal, void or unenforceable, none of
the Brokers or any of their respective affiliates accepts any
responsibility whatsoever for, or makes any representation or
warranty, express or implied, as to the contents of this
announcement or for any other statement made or purported to be
made by it, or on its behalf, in connection with the Company or any
issue of securities mentioned in this announcement, nothing in this
announcement will be relied upon as a promise or representation in
this respect, whether or not to the past or future. Each of the
Brokers and their respective affiliates accordingly disclaims all
and any responsibility or liability, whether arising in tort,
contract or otherwise (save as referred to above) in respect of
this announcement or any such statement.
FUNDING CIRCLE SME INCOME FUND Limited
HALF-YEARLY FINANCIAL REPORT AND UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 April 2016 to 30 September 2016
FORWARD-LOOKING STATEMENTS
This report includes statements that are, or may be considered,
"forward-looking statements". The forward-looking statements can be
identified by the use of forward-looking terminology, including the
terms "believes", "estimates", "anticipates", "expects", "intends",
"may", "will" or "should" or, in each case, their negative, or
other variations or comparable terminology. These statements are
made by the Directors in good faith based on the information
available to them up to the time of their approval of this report
and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information.
SUMMARY INFORMATION
About the Company
Funding Circle SME Income Fund Limited (the "Company" or the
"Fund") is a closed-ended investment company incorporated with
liability limited by shares in Guernsey under The Companies
(Guernsey) Law, 2008 (as amended), on 22 July 2015.
In November 2015, the Company issued 150 million Ordinary Shares
of no par value at an issue price of GBP1 per Ordinary Share. On 30
November 2015, these shares were admitted to the Premium Segment of
the Official List of the UK Financial Conduct Authority and to
trading on the London Stock Exchange's main market (the "IPO").
On 20 July 2016, the Company issued a further 14,285,000
Ordinary Shares at a price of GBP1.0153 per Ordinary Share raising
net proceeds of GBP14,213,490 after direct issue costs of
GBP290,071. The Ordinary Shares were admitted to the Premium
Segment of the Official List of the UK Financial Conduct Authority
and to trading on the London Stock Exchange's main market on 25
July 2016.
The investment objective of the Company is to provide
shareholders with a sustainable and attractive level of dividend
income by lending, both directly and indirectly, to small
businesses through Funding Circle's Marketplaces. The Board
believes that lending platforms with established infrastructure and
scale of origination volumes are well placed to compete for loan
originations against traditional financial institutions. The
Company has identified Funding Circle, which operates various
Marketplaces, as a leader in the growing industry of alternative
lending to small and medium entities ("SMEs").
In accordance with the Company's investment policy, the Company
holds a number of its investments in loans through special purpose
vehicles. This half-yearly financial report for the period ended 30
September 2016 (the "Half-yearly Financial Report") includes the
results of Basinghall Lending Designated Activity Company
("Basinghall") and Tallis Lending Designated Activity Company
("Tallis"). The Company, Basinghall and Tallis are collectively
referred to in this report as the "Group".
Financial Highlights as at 30 September 2016
Description Performance
---------------------------- ------------
Cum Income Net Asset Value
per Ordinary Share 99.64p
---------------------------- ------------
Ex Income Net Asset Value
per Ordinary Share 96.37p
---------------------------- ------------
Ordinary Share Price 102.50p
---------------------------- ------------
Premium to Net Asset Value
per Ordinary Share 2.87%
---------------------------- ------------
Market Capitalisation GBP168.4mil
---------------------------- ------------
-- The Company has successfully deployed GBP151.9 million of its
total capital of GBP161.2 million (including the issue proceeds
received in July 2016)
-- The Company committed GBP25 million to a GBP125 million
structured finance transaction with the European Investment Bank
("EIB") in June 2016.
-- 4.3% total NAV return has been achieved since the Company started operations
CHAIRMAN'S STATEMENT
Dear Shareholder,
Introduction
I am pleased to report a solid period of progress. Since I last
wrote to you on 23 June 2016, the Company has achieved the
following milestones:
-- Completion of an additional capital raise of approximately
GBP15 million under the tap programme;
-- Completion of the structured finance transaction with the
European Investment Bank, which was announced to the market on 17
June 2016; and
-- Payment of two quarterly dividends amounting to 1 pence and
1.625 pence per share, the latter of which was at a rate consistent
with full investment and in accordance with the full investment
target yield specified in the Company's IPO prospectus.
Risk
The Company's status as a "pure" SME lender avoids a number of
risks to which other parties involved in the peer to peer lending
environment are exposed, including in particular the risk
associated with investing on a multi-platform basis where standards
of risk management, origination, underwriting, allocation and
servicing can be variable. Our origination and servicing
counterparty, Funding Circle, has taken significant steps in 2016
to bring their risk management and credit underwriting processes to
a point where the Company's risk committee has been able to
conclude that the standards applied throughout are at least as good
as those historically applied by market standards when considering
SME loans. For investors, this is evidenced by the fact that, to
date, the Company's delinquency profile falls within the range
modelled at IPO.
Macroeconomic conditions in the UK and the US, being the
Company's key geographical exposures, remain reasonably benign, and
we see no likelihood of a material change in monetary policy or
economic conditions in the short term, consistent with the views of
other commentators and analysts. This stable environment is
supportive of the Company's prospects. Nevertheless, the results of
ongoing portfolio stress testing continue to support the
expectation that the Company will be able to continue to deliver
returns substantially in excess of the risk free rate in the face
of a reasonably conceivable and historically experienced economic
downturn.
At the time of writing, the Board does not see the impact of
either the Republican victory in the US presidential election or a
"hard Brexit", being the two key geopolitical risks applicable to
our key markets, as being likely to have a material short term
effect on our return performance or credit risk.
We fully hedge foreign currency exposures back to Sterling by
virtue of a third party managed currency hedging programme and have
no plans to change this very effective arrangement.
Future Prospects
As noted earlier, the Company has now substantially invested the
funds raised from the equity market. As a result, we are focussed
on delivering controlled and consistent risk adjusted performance
and dividend flows to investors from our current loan portfolio,
which stood at over 1,500 discrete borrower parties as at 30
September 2016, alongside continuing to oversee, test and challenge
the processes operated by Funding Circle to manage risk. Beyond
that, we are working to renew the Company's placing programme
prospectus, which expires on 11 November 2016, and we expect to be
open to new equity issuance with effect from the end of January
2017, in both ordinary and C share form. Further announcements will
be made in that regard as appropriate.
Conclusion
I would like to express my thanks to the management of Funding
Circle for the level of engagement, professionalism, transparency
and support provided to the Company, which has greatly assisted the
Board in carrying out its supervisory duties effectively. In
addition, thanks go to our brokers and advisors, Goldman Sachs and
Numis, and our administrative, legal and audit support functions,
and of course to my fellow Board members.
RICHARD BOLÉAT
Chairman of the Board of Directors
11 November 2016
INTERIM REPORT
IN RESPECT OF THE FINANCIAL STATEMENTS
Incorporation
The Company is a limited liability company registered in
Guernsey under The Companies (Guernsey) Law, 2008 (as amended) with
registered number 60680.
Activities
The Company is registered as a closed-ended collective
investment scheme in Guernsey pursuant to the Protection of
Investors (Bailiwick of Guernsey) Law, 1987, as amended. The
primary activity of the Company is investment in loans to generate
attractive returns to investors.
Strategy and Business Model
The Company has been established to provide shareholders with a
sustainable and attractive level of dividend income, primarily by
way of investment in loans both directly through the Marketplaces
operated by Funding Circle and indirectly, in each case as detailed
within the investment policy. The Company has identified Funding
Circle as a leader in the growing marketplace lending space with
its established infrastructure, scale of origination volumes and
expertise in accurately assessing loan applications.
Investment Policy
The Company intends to achieve its investment objective by
investing in a diversified portfolio of Credit Assets, both
directly and indirectly. The Company intends to hold loans through
to maturity (subject to the making of indirect investments as
described below).
Direct Investments
The Company acquires and holds US loans directly.
Indirect Investments
Indirect investments in loans shall be made at such times and in
such manner as the Board may determine, having regard at all times
to the investment policy and any Portfolio Limits. Indirect
investments may involve participation in securitisation structures,
which may involve the securitisation of loans previously acquired
by the Company (or an investing company) or the acquisition or
participation by the Company in interests in loans which have not
previously been funded or held by the Company (or by an investing
company). In either case, such investments may involve the
acquisition, alongside one or more third parties, of debt or equity
securities of whatever type or class (including in junior tranches)
issued by special purpose vehicles or issuers established by any
person.
The Company holds loans originated in the UK, Germany, Spain and
the Netherlands indirectly through investments in special purpose
vehicles.
Results and dividends
The total comprehensive income for the period, determined under
International Financial Reporting Standards ("IFRS"), amounted to
GBP5.37 million (period ended 31 March 2016: GBP1.28 million).
The Directors consider the declaration of a dividend on a
quarterly basis. The payment of any dividend by the Company is
subject to the satisfaction of a solvency test as required by The
Companies (Guernsey) Law, 2008 (as amended).
On 17 June 2016, the Directors declared the payment of an
interim dividend of 1 pence per Ordinary Share to those
shareholders on the register on 1 July 2016.
On 14 September 2016, the Directors declared a dividend of 1.625
pence per Ordinary Share payable on 31 October 2016 to shareholders
on the register as at the close of business on 30 September 2016.
The Board decided to offer shareholders a choice to receive
dividends in cash or in shares via scrip dividend. The number of
shares to be issued was determined using a Reference Share Price
determined as the higher of (i) the prevailing average of the
middle market quotations of the shares derived from the Daily
Official List of the London Stock Exchange for the ex dividend date
of 29 September 2016 and the four subsequent dealing days and (ii)
the prevailing net asset value per share. The Reference Share Price
for the scrip dividend was 103.45 pence per Ordinary Share. The
Company issued 75,698 Ordinary Shares in relation to the scrip
dividend option.
Business review
The Company commenced trading on 30 November 2015 after
successfully completing the admission of 150 million Ordinary
Shares to the Premium Segment of the Official List of the UK
Financial Conduct Authority and to trading on the London Stock
Exchange plc's Main Market. On 20 July 2016, the Company issued a
further 14,285,000 Ordinary Shares at a price of GBP1.0153 per
Ordinary Share raising net proceeds of GBP14,213,490 after direct
issue costs of GBP290,071. As at 30 September 2016, the Company has
deployed over 90% of the total funds raised by lending directly to
SMEs in the US and indirectly to SMEs in the UK and Continental
Europe ("CE").
In June 2016, the Company participated in a structured finance
transaction with the EIB. The transaction involved the set up of an
Irish company called Finch Lending Designated Activity Company
("Finch"). The Company invested GBP25 million into the Class B Note
issued by Finch whilst the EIB has committed to invest up to GBP100
million in a senior loan to Finch.
Going concern
The Directors have considered the financial performance of the
Group and the impact of the market conditions at the financial
period-end date and subsequently. During the financial period the
Group's NAV rose by GBP5.37 million as a result of operating
activities. The Company's current cash holdings and projected cash
flows are sufficient to cover current liabilities and projected
liabilities. The Directors are therefore of the opinion that the
Company and Group are a going concern and the financial statements
have been prepared on this basis.
Principal risks and uncertainties
An overview of the principal risks that the Board considers to
be the main uncertainties currently faced by the Group together
with the mitigating actions being taken are provided in the Annual
Report for the period ended 31 March 2016. The following is a
summary of those risks and mitigation:
Principal risk Mitigation and update Company's financial
of risk assessment KPI affected
by risk
------------------------ ---------------------------- --------------------
Default risk
The Board has set Capital deployed
Borrowers' ability portfolio limits Net return target
to comply with their and monitors information Share price vs
payment obligations provided by the NAV per share
in respect of loans Administrator and Realised loss
may deteriorate Funding Circle on rate
due to adverse changes a regular basis.
to macro-economic
factors. The Board believes
that result of the
UK-EU referendum
has increased the
default risk particularly
on the UK borrowers
although the full
effect cannot be
accurately determined
yet.
------------------------ ---------------------------- --------------------
Insufficient loans
originated The Board monitors
deployment on a Capital deployed
The Group may not regular basis and Net return target
achieve its target is in close dialogue
return due to lack with Funding Circle.
of or reduction
to loans available The risk remains
for the Group to unchanged during
invest in. the period.
------------------------ ---------------------------- --------------------
There has not been any change to the principal risks and
uncertainties and the measures in place to manage those risks as at
the date of this report. The Directors have considered and
reassessed the principal risks and deem them to still be relevant
and applicable. The Directors expect this assessment to be the same
for the remainder of the financial year.
Directors
The Directors who held office during the financial period and up
to the date of approval of this report were:
Richard Boléat
Jonathan Bridel
Richard Burwood
Samir Desai
Frederic Hervouet
The biographies of the Directors are included at the end of the
report.
Related party transactions
The related parties of the Group, the transactions with those
parties during the period and the outstanding balances as at 30
September 2016 are disclosed in note 15 to the financial
statements.
Company Secretary
The Company Secretary is Sanne Group (Guernsey) Limited of Third
Floor, La Plaiderie Chambers, La Plaiderie, St Peter Port, Guernsey
GY1 1WG, Channel Islands.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
To the best of the their knowledge, the Directors confirm
that:
-- the Unaudited Condensed Consolidated Financial Statements
have been prepared in accordance with IAS 34, "Interim Financial
Reporting"; and
-- the Half-Yearly Financial Report, comprising the Summary
Information, the Chairman's Statement and the Interim Report, meets
the requirements of an interim management report and includes a
fair review of information required by DTR 4.2.4 R;
o DTR 4.2.7R of the UK Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months and their impact on the Unaudited Condensed
Consolidated Financial Statements, and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
o DTR 4.2.8R of the UK Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months and that have materially affected the financial position or
performance of the Group during that period, and any material
changes in the related party transactions disclosed in the last
annual report.
Richard Boléat Jonathan Bridel
Chairman Chairman of the Audit Committee
11 November 2016 11 November 2016
INDEPENT REVIEW REPORT
TO FUNDING CIRCLE SME INCOME FUND LIMITED
Introduction
We have been engaged by Funding Circle SME Income Fund Limited
("the Company") to review the Unaudited Condensed Consolidated
Financial Statements in the Half-Yearly Financial Report for the
six months ended 30 September 2016, which comprises the Unaudited
Condensed Consolidated Statement of Comprehensive Income, the
Unaudited Condensed Consolidated Statement of Financial Position,
the Unaudited Condensed Consolidated Statement of Changes in
Equity, the Unaudited Condensed Consolidated Statement of Cash
Flows, and related notes. We have read the other information
contained in the Half-Yearly Financial Report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the Unaudited Condensed
Consolidated Financial Statements
Directors' responsibilities
The Half-Yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the Annual Financial Statements of the
Company are prepared in accordance with International Financial
Reporting Standards. The Unaudited Condensed Consolidated Financial
Statements included in this Half-Yearly Financial Report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the Unaudited Condensed Consolidated Financial Statements included
in the Half-Yearly Financial Report based on our review. This
report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency
Rules of the Financial Conduct Authority and for no other purpose.
We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the Unaudited Condensed Consolidated
Financial Statements included in the Half-Yearly Financial Report
for the six months ended 30 September 2016 are not prepared, in all
material respects, in accordance with International Accounting
Standard 34 and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
11 November 2016
Publication of Interim Financial Report
The maintenance and integrity of the Funding Circle SME Income
Fund Limited website is the responsibility of the Directors; the
work carried out by the auditors does not involve consideration of
these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the
Half-Yearly Financial Report and Unaudited Condensed Consolidated
Financial Statements since they were initially presented on the
website.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE PERIODED 30 SEPTEMBER 2016
(Unaudited) (Audited)
1 April 22 July
2016 to 2015 to
31 March
2016
30 September
2016
Notes GBP GBP
---------------------------------------- ------ -------------- ------------
Operating income
Interest income on loans advanced 3 7,883,098 1,864,930
Unrealised foreign exchange
gain 4,449,589 863,421
Bank interest income 10,758 120,701
---------------------------------------- ------ -------------- ------------
12,343,445 2,849,052
---------------------------------------- ------ -------------- ------------
Operating expenditure
Realised loss on currency derivatives 3,513,471 882,189
Impairment of loans 3 1,114,256 30,192
Unrealised fair value movement
on currency derivatives 960,305 2,432
Loan servicing fees 15 568,212 170,381
Legal fees 251,368 99,820
Directors' remuneration and
expenses 12 128,109 103,239
Company administration and secretarial
fees 110,332 92,767
Audit and audit-related fees 107,648 110,315
Corporate service fees 54,583 -
Regulatory fees 44,754 13,157
Corporate broker services 33,861 12,326
Other operating expenses 84,048 55,617
---------------------------------------- ------ -------------- ------------
6,970,947 1,572,435
---------------------------------------- ------ -------------- ------------
Operating profit for the period
before taxation 5,372,498 1,276,617
Taxation 9 - -
---------------------------------------- ------ -------------- ------------
Total comprehensive income for
the period 5,372,498 1,276,617
---------------------------------------- ------ -------------- ------------
Earnings per share
Basic and diluted 10 3.461p 0.851p
Number
of shares
---------------------------------------- ------ -------------- ------------
Weighted average number of shares
outstanding
Basic and diluted 10 155,230,027 150,000,000
---------------------------------------- ------ -------------- ------------
Other comprehensive income
There were no items of other comprehensive income in the current
or the prior period.
The notes form part of these financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 SEPTEMBER 2016
Notes (Unaudited) (Audited)
30 September 31 March 2016
2016
GBP GBP
-------------------------------- ------ -------------- ---------------
ASSETS
Cash and cash equivalents 5 15,626,361 56,757,244
Margin account held with
bank 6 270,000 610,000
Other receivables and
prepayments 21,021 225,683
Loans advanced 3 151,903,794 94,764,065
TOTAL ASSETS 167,821,176 152,356,992
-------------------------------- ------ -------------- ---------------
EQUITY AND LIABILITIES
Capital and reserves
Share capital 8 161,213,490 147,000,000
Retained earnings 2,479,484 1,276,617
-------------------------------- ------ -------------- ---------------
TOTAL SHAREHOLDERS' EQUITY 163,692,974 148,276,617
-------------------------------- ------ -------------- ---------------
LIABILITIES
Fair value of currency
derivatives 6 962,737 2,432
Accrued expenses and other
liabilities 7 3,165,465 4,077,943
-------------------------------- ------ -------------- ---------------
TOTAL LIABILITIES 4,128,202 4,080,375
-------------------------------- ------ -------------- ---------------
TOTAL EQUITY AND LIABILITIES 167,821,176 152,356,992
-------------------------------- ------ -------------- ---------------
NAV per share
Basic and diluted 105.45p 98.85p
-------------------------------- ------ -------------- ---------------
The financial statements were approved and authorised for issue
by the Board of Directors on 11 November 2016 and were signed on
its behalf by:
Richard Boléat Jonathan Bridel
Chairman Chairman of the Audit Committee
The notes form part of these financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE PERIODED 30 SEPTEMBER 2016
Share Retained
capital earnings Total
Notes GBP GBP GBP
------------------------- ------ ------------ ------------ ------------
Balance at 31 March
2016 147,000,000 1,276,617 148,276,617
Issue of Ordinary
Shares 8 14,503,561 - 14,503,561
Ordinary Shares issue
costs 8 (290,071) - (290,071)
Dividends declared - (4,169,631) (4,169,631)
Total comprehensive
income for the period - 5,372,498 5,372,498
Balance at 30 September
2016 (Unaudited) 161,213,490 2,479,484 163,692,974
------------------------- ------ ------------ ------------ ------------
Share Retained
capital earnings Total
Notes GBP GBP GBP
------------------------ ------ ------------ ---------- ------------
Balance at 22 July - - -
2015
Issue of Ordinary
Shares 8 150,000,000 - 150,000,000
Ordinary Shares issue
costs 8 (3,000,000) - (3,000,000)
Total comprehensive
income for the period - 1,276,617 1,276,617
Balance at 31 March
2016 (Audited) 147,000,000 1,276,617 148,276,617
------------------------ ------ ------------ ---------- ------------
The notes form part of these financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 SEPTEMBER 2016
(Unaudited) (Audited)
1 April 22 July
2016 to 2015 to
30 September 31 March
2016 2016
Notes GBP GBP
------------------------------------ ------ ------------- -------------
Operating activities
Total comprehensive income
for the period 5,372,498 1,276,617
Adjustments for:
Foreign exchange gain (4,449,589) -
Interest income on loans advanced (7,883,098) (1,864,930)
Impairment of loans 3 1,114,256 30,192
Fair value movement of currency
derivatives 960,305 2,432
------------------------------------ ------ ------------- -------------
Operating cash flows before
movements in working capital (4,885,628) (555,689)
Loans advanced 3 (96,214,774) (95,380,470)
Principal and interest collections
on loans advanced 3 49,464,078 6,236,746
Decrease/(increase) in other
receivables and prepayments 204,662 (225,683)
(Decrease)/increase in accrued
expense and other liabilities (3,582,109) 292,340
Decrease/(increase) in collateral
for currency derivative 6 340,000 (610,000)
Net cash used in operating
activities (54,673,771) (90,242,756)
------------------------------------ ------ ------------- -------------
Financing activities
Proceeds from issue of Ordinary
Shares 8 14,213,490 147,450,000
Initial costs of issue of Ordinary
Shares 8 - (450,000)
Dividend paid (1,500,000) -
Net cash from financing activities 12,713,490 147,000,000
------------------------------------ ------ ------------- -------------
Net (decrease)/increase in
cash and cash equivalents (41,960,281) 56,757,244
Cash and cash equivalents at 56,757,244 -
the beginning of the period
Exchange gain on cash and cash 829,398 -
equivalents
------------------------------------ ------ ------------- -------------
Cash and cash equivalents at
the end of the period 5 15,626,361 56,757,244
------------------------------------ ------ ------------- -------------
The notes form part of these financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE PERIODED 30 SEPTEMBER 2016
1. General Information
The Company is a closed-ended limited liability company
registered under The Companies (Guernsey) Law, 2008 (as amended)
with registered number 60680. The Company is an registered
collective investment scheme in Guernsey, pursuant to The
Protection of Investors (Bailiwick of Guernsey) Law, 1987 and its
Ordinary Shares are admitted to the Premium Segment of the Official
List of the UK Financial Conduct Authority and to trading on the
London Stock Exchange's main market. The Company's home member
state for the purposes of the EU Transparency Directive is the
United Kingdom. As such, the Company is subject to regulation and
supervision by the Financial Conduct Authority, being the financial
markets supervisor in the United Kingdom. The registered office of
the Company is Third Floor, La Plaiderie Chambers, La Plaiderie, St
Peter Port, Guernsey GY1 1WG, Channel Islands.
The Company has been established to provide shareholders with
sustainable and attractive levels of dividend income, primarily by
way of investment in loans both directly through the Marketplaces
operated by Funding Circle and indirectly, in each case as detailed
in the investment policy. The Company has identified Funding Circle
as a leader in the growing marketplace lending space with its
established infrastructure, scale of origination volumes and
expertise in accurately assessing loan applications.
The Company publishes monthly net asset value statements.
2. Basis of preparation
The Company has prepared these Unaudited Condensed Consolidated
Financial Statements on a going concern basis in accordance with
the Disclosure and Transparency Rules of the United Kingdom
Financial Conduct Authority and prepared in accordance with
International Financial Reporting Standard ('IFRS') IAS 34 'Interim
Financial Reporting'. This Half-Yearly Financial Report does not
comprise statutory financial statements within the meaning of The
Companies (Guernsey) Law, 2008 (as amended) and should be read in
conjunction with the audited Consolidated Financial Statements of
the Group for the period ended 31 March 2016, which have been
prepared in accordance with International Financial Reporting
Standards. The statutory financial statements for the period ended
31 March 2016 were approved by the Board of Directors on 23 June
2016. The opinion of the auditors on those financial statements was
unqualified. The accounting policies adopted in this Half-Yearly
Financial Report are unchanged since 31 March 2016 except for the
change in the Operating Segments accounting policy as described in
note 2.1 below. This Half-Yearly Financial Report for the period
ended 30 September 2016 has been reviewed by the auditors but not
audited.
2.1 Segment reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses. In the financial statements for the period ended 31 March
2016, the Directors reported the Group as a single operating
segment engaged in the activity of making loans. During the period
from 1 April 2016 to 30 September 2016, the Directors increased
their use of financial information for each jurisdiction where the
loans were originated from. Although this has not resulted in a
change to the allocation limits as set out in the Company's
Prospectus, the Directors will continue to monitor financial
information for each jurisdiction and may decide to make decisions
of how to allocate the resources of the Group using this financial
information. Accordingly, the Directors have reconsidered the
business segments of the Group based on the jurisdiction where the
loans are originated from. The Directors decided to change the
accounting policy to reflect three operating segments: UK, US and
Continental Europe.
3. LOANS ADVANCED
(Unaudited) (Audited)
30 September 31 March
2016 2016
GBP GBP
--------------------------------------- -------------- ------------
Balance at the beginning of the 94,764,065 -
period
Advanced 96,214,774 99,166,073
Interest income 7,883,098 1,864,930
Principal and interest collections (49,464,078) (6,236,746)
Loans written-off (net of recoveries) (1,036,609) (20,194)
Impairment allowance (77,647) (9,998)
Foreign exchange gains 3,620,191 -
--------------------------------------- -------------- ------------
Balance at the end of the period 151,903,794 94,764,065
--------------------------------------- -------------- ------------
The Group predominantly makes unsecured loans. However as at 30
September 2016, the carrying value of loans secured by charges over
properties is GBP21,962,286 (31 March 2016: GBP12,072,105). Each
loan has contractual payment dates for payment of principal and
interest. The Group considers a loan as past due when the
borrower's repayment has not been received for at least 30 days
from the scheduled payment date. As at 30 September 2016, loan
principal and interest of GBP292,412 (31 March 2016: GBP43,970)
were past due.
The Group has no undrawn commitments on the loans advanced as at
30 September 2016 and 31 March 2016. The Group has committed to
purchase loans of GBP286,526 (31 March 2016: GBP414,238).
The agreed analysis of the past due receivables along with the
amount recognised as an impairment allowance as at the reporting
date was as follows. The loans included within 'Defaulted' in the
table below relate to loans written off due to the borrower
defaulting on payments.
30 September 2016 (Unaudited) (Unaudited)
Principal Impairment
and interest allowance
GBP GBP
-------------------------------------- -------------- ------------
Past due between 30 days and 60 days 246,074 56,598
Past due between 61 days to 90 days 46,338 31,047
Past due for over 90 days - -
Defaulted 1,056,803 1,056,803
1,349,215 1,144,448
-------------------------------------- -------------- ------------
31 March 2016 (Audited) (Audited)
Principal Impairment
and interest allowance
GBP GBP
-------------------------------------- -------------- ------------
Past due between 30 days and 60 days 43,970 9,998
Past due between 61 days to 90 days - -
Past due for over 90 days - -
Defaulted 20,194 20,194
64,164 30,192
-------------------------------------- -------------- ------------
The following table shows the movement in impairment allowance
during the period:
GBP
-------------------------------------- ------------
Impairment allowance as at beginning
of the period (audited) 30,192
Additional impairment allowance
(including effect of currency
translation) 1,114,256
--------------------------------------- ------------
Impairment allowance at
the end of the period (unaudited) 1,144,448
--------------------------------------- ------------
Finch Class B Note
In June 2016, the Company participated in a structured finance
transaction with the EIB. The transaction involved the set up of an
Irish company called Finch Lending Designated Activity Company
("Finch"). The Company invested GBP25 million into the Class B Note
("Finch Class B Note") issued by Finch whilst the EIB committed to
invest up to GBP100 million in a senior loan to Finch. The loan has
been accounted for as a held-to-maturity loan measured at amortised
cost using the effective interest rate basis.
The interest income earned on the Finch Class B Note during the
period was GBP1,621,696 which was included as a receivable as at 30
September 2016.
4. SEGMENT REPORTING
The Group operates in the UK, US, Germany, Spain and the
Netherlands. For financial reporting purposes, Germany, Spain and
the Netherlands combine to make up the Continental Europe operating
segment.
The measurement basis used for evaluating the performance of
each segment is consistent with the policies used for the Group as
a whole. Assets, liabilities, profits and losses for each
reportable segment are recognised and measured using the same
accounting policies as the Group. The gains and losses on
derivative financial instruments are allocated to specific segments
that benefit from the hedge.
The Group's investment into Finch generated interest income that
exceeds 10% of the Group's total income. Except for the loan to
Finch, all of the Group's investments are loans to Small and
Medium-sized Entities ("SMEs"). Each individual SME loan does not
generate income that exceeds 10% of the Group's total income. The
Company is domiciled in Guernsey and its subsidiaries are domiciled
in Ireland. However, none of the Group's investments are domiciled
in either Guernsey or Ireland. Consequently no investment income is
derived from the countries of domicile of the Group entities.
The Finch Class B Note and the corresponding income have been
reported under the 'UK' segment below. All items of income and
expenses not directly attributable to specific reportable segments
have been included in 'Other' segment.
Segment performance for the period ended 30 September 2016
UK US CE Other Consolidated
GBP GBP GBP GBP GBP
-------------------------- ---------- -------------- ------------ ---------- --------------
Interest income
on loans advanced 5,463,550 2,326,901 92,647 - 7,883,098
Bank interest
income - - - 10,758 10,758
Unrealised foreign
exchange gain - 3,741,370 714,758 - 4,456,128
Total revenue 5,463,550 6,068,271 807,405 10,758 12,349,984
Unrealised foreign
exchange loss (3,327) - (3,212) - (6,539)
Unrealised fair
value movement
on currency derivatives - (817,549) (142,756) - (960,305)
Realised loss
on currency derivatives - (2,938,581) (574,890) - (3,513,471)
Operating expenses (444,872) (175,000) (70,941) (692,102) (1,382,915)
Impairment of
loans (282,388) (820,642) (11,226) - (1,114,256)
-------------------------- ---------- -------------- ------------ ---------- --------------
Total expenses (730,587) (4,751,772) (803,025) (692,102) (6,977,486)
-------------------------- ---------- -------------- ------------ ---------- --------------
Profit/(loss)
before tax 4,732,963 1,316,499 4,380 (681,344) 5,372,498
-------------------------- ---------- -------------- ------------ ---------- --------------
Segment assets and liabilities as at 30 September 2016
UK US CE Other Consolidated
GBP GBP GBP GBP GBP
------------- ------------ ----------- ---------- ------------ -------------
Assets 111,195,118 43,054,609 5,462,128 8,109,321 167,821,176
Liabilities (279,534) (302,551) (45,040) (3,501,077) (4,128,202)
Segment performance for the period ended 31 March 2016
UK US CE Other Consolidated
GBP GBP GBP GBP GBP
-------------------- ---------- -------- ---- -------- -------------
Interest income
on loans advanced 1,159,668 705,262 - - 1,864,930
Bank interest
income - - - 120,701 120,701
Unrealised foreign
exchange gain 6 - 43 863,372 863,421
Total revenue 1,159,674 705,262 43 984,073 2,849,052
Unrealised fair
value movement
on currency derivatives - - - (2,432) (2,432)
Realised loss
on currency derivatives - - - (882,189) (882,189)
Operating expenses (176,004) (53,230) (48,123) (380,265) (657,622)
Impairment of
loans - (30,192) - - (30,192)
-------------------------- ---------- --------- --------- ------------ ------------
Total expenses (176,004) (83,422) (48,123) (1,264,886) (1,572,435)
-------------------------- ---------- --------- --------- ------------ ------------
Profit before
tax 983,670 621,840 (48,080) (280,813) 1,276,617
-------------------------- ---------- --------- --------- ------------ ------------
Segment assets and liabilities as at 31 March 2016
UK US CE Other Consolidated
GBP GBP GBP GBP GBP
------------- ------------ ----------- ---------- ----------- -------------
Assets 83,616,218 25,845,154 7,899,777 34,993,411 152,354,560
Liabilities (3,862,750) (11,452) (27,043) (176,698) (4,077,943)
5. cash and cash equivalents
(Unaudited) (Audited)
30 September 31 March
2016 2016
GBP GBP
--------------------------- -------------- -----------
Cash at bank 9,023,190 22,483,253
Cash equivalents 6,603,171 34,273,991
Balance at the end of the
period 15,626,361 56,757,244
--------------------------- -------------- -----------
Cash equivalents are term deposits held with different banks
with maturities between overnight and 90 days.
6. Derivatives
Foreign exchange swaps are held to hedge the currency exposure
generated by US dollar assets and Euro assets held by the Group
(see Note 14). The hedges have been put in place taking into
account the fact that derivative positions, such as simple foreign
exchange swaps, could cause the Group to require cash to fund
margin calls on those positions. Foreign exchange derivatives are
entered into with Royal Bank of Scotland International ("RBSI").
During the period, the Group also entered into foreign exchange
derivative contracts with Goldman Sachs International with terms
similar to those entered into with RBSI. The contracts with Goldman
Sachs International are collateralised by cash deposit. During the
period, the Group renegotiated the terms of the contract with RBSI
such that no collateral is required to cover negative fair value
positions.
(a) Margin accounts held at bank
(Unaudited) (Audited)
Fair value Fair value
30 September 2016 31 March
2016
GBP GBP
------------------------------------ ------------------- ------------
Margin account held with
RBSI - 610,000
Margin account held with 270,000 -
GS
------------------------------------ ------------------- ------------
Fair value of currency derivatives 270,000 610,000
------------------------------------ ------------------- ------------
(b) Derivative liabilities
(Unaudited) (Audited)
Fair value Fair value
30 September 2016 31 March
2016
GBP GBP
------------------------------------ ------------------- ------------
Valuation of currency derivatives (962,737) (2,432)
Fair value of currency derivatives (962,737) (2,432)
------------------------------------ ------------------- ------------
(Unaudited) (Unaudited)
Fair value Nominal of outstanding
contracts
30 September 30 September 2016
2016
(GBP) (Currency)
------- -------------- ------------------------
Euro (142,756) 6,708,000
USD (819,981) 60,203,315
------- -------------- ------------------------
Total (962,737)
------- -------------- ------------------------
(Audited) (Audited)
Fair value Nominal of outstanding
contracts
31 March 31 March 2016
2016
(GBP) (Currency)
------------------------ ------------- -------------------------
Euro (179,235) 10,005,000
USD 176,803 43,647,000
------------------------ ------------- -------------------------
Fair value of currency
derivatives (2,432)
------------------------ ------------- -------------------------
7. ACCRUED EXPENSES and other LIABILITIES
(Unaudited) (Audited)
30 September 31 March
2016 2016
GBP GBP
--------------------------------- -------------- ----------
Dividends declared not yet paid 2,669,631 -
Payable for loans committed but
not yet funded 177,039 3,785,603
Service fees payable 104,707 65,635
Audit fees payable 118,744 110,315
Legal fees payable 56,478 95,165
Other liabilities 38,866 21,225
--------------------------------- -------------- ----------
3,165,465 4,077,943
--------------------------------- -------------- ----------
The amount payable for loans committed but not yet funded
represents funds not released to borrowers but for which fully
executed loan agreements are in place. The Group has acquired the
rights to principal and interest repayments for these loans and
these are therefore included in the loans advanced with a
corresponding liability recognised for funds to be released to the
borrowers.
8. Share capital
Authorised
Number
of shares
----------------- ------------
Ordinary Shares 164,285,000
Issued and
fully paid
(Unaudited) (Unaudited) (Audited) (Audited)
Amount Number Amount Number
30 September of shares 31 March of shares
2016 30 September 2016 31 March
2016 2016
GBP GBP
------------- -------------- -------------- ------------ ------------
Ordinary
Shares 164,503,561 164,285,000 150,000,000 150,000,000
Initial
costs of
issue (3,290,071) N/A (3,000,000) N/A
-------------- -------------- -------------- ------------ ------------
161,213,490 147,000,000
------------- -------------- -------------- ------------ ------------
On 20 July 2016, the Company issued 14,285,000 Ordinary Shares
at a price of GBP1.0153 per share raising net proceeds of
GBP14,213,490 after direct issue costs of GBP290,071.
Rights attaching to the shares
All shareholders have the same voting rights in respect of the
share capital of the Company. Every member who is present in person
or by a duly authorised representative or proxy shall have one vote
on a show of hands and on a poll every member present shall have
one vote for each share of which he is the holder, proxy or
representative. All shareholders are entitled to receive notice of
the Annual General Meeting and any other General meetings.
Each Ordinary Share will rank in full for all dividends and
distributions declared made or paid after their issue and otherwise
pari passu in all respects with each existing Ordinary Share and
will have the same rights (including voting and dividend rights and
rights on a return of capital) and restrictions as each existing
Ordinary Share.
9. taxation
(Unaudited) (Audited)
1 April 2016 22 July
2015
to 30 September to 31 March
2016 2016
GBP GBP
---------------------------------- ----------------- -------------
Operating profit before taxation 5,372,498 1,276,617
---------------------------------- ----------------- -------------
Tax at the standard Guernsey - -
income tax rate of 0%
Effects of tax rates in other - -
jurisdictions
Taxation expense - -
---------------------------------- ----------------- -------------
The Group may be subject to taxation under the tax rules of the
jurisdictions in which it invests. During the current and prior
periods, Basinghall and Tallis which are consolidated into the
Group's results, were subject to a corporation tax rate of 25% in
Ireland. There was no net profit subject to taxation in
Ireland.
10. Earnings per share ("EPS")
The calculation of the basic and diluted EPS is based on the
following information:
(Unaudited) (Audited)
30 September 31 March
2016 2016
Profit for the purposes of basic GBP5,372,498 GBP1,276,617
and diluted EPS
Weighted average number of Ordinary
Shares for the purposes of basic
and diluted EPS 155,230,027 150,000,000
Basic and diluted EPS 3.461p 0.851p
------------------------------------- -------------- -------------
11. Dividends
On 17 June 2016, the Board declared a dividend on the Ordinary
Shares of 1 pence per Ordinary Share at a total amount of
GBP1,500,000. This dividend was paid on 29 July 2016.
On 14 September 2016, the Directors declared a dividend of 1.625
pence per Ordinary Share payable on 31 October 2016 to shareholders
on the register as at the close of business on 30 September 2016 at
a total amount of GBP2,669,631. The Board offered shareholders a
choice to receive dividends in cash or in shares via a scrip
dividend.
The number of shares issued was determined using a Reference
Share Price determined as the higher of (i) the prevailing average
of the middle market quotations of the shares derived from the
Daily Official List of the London Stock Exchange for the ex
dividend date of 29 September 2016 and the four subsequent dealing
days and (ii) the prevailing net asset value per share. The
Reference Share Price for the scrip dividend was 103.45 pence per
Ordinary Share. The Company issued 75,698 Ordinary Shares in
relation to the scrip dividend option.
12. Directors' remuneration and expenses
(Unaudited) (Audited)
1 April 2016 22 July
2015
to 30 September to 31 March
2016 2016
GBP GBP
--------------------- ---------------- ------------
Directors' fees 122,500 100,590
Directors' expenses 5,609 2,649
--------------------- ---------------- ------------
128,109 103,239
--------------------- ---------------- ------------
None of the Directors have any personal financial interest in
any of the Group's investments other than indirectly through their
shareholding in the Group.
13. AUDIT AND AUDIT-RELATED SERVICES
Remuneration for all work carried out for the Group by the
statutory audit firm in each of the following categories of work is
disclosed below:
(Unaudited) (Audited)
1 April 2016 to 22 July 2015 to
30 September 2016 31 March 2016
---------------------- ----------------------
Type of service PwC CI PwC Ireland PwC CI PwC Ireland
GBP GBP GBP GBP
-------------------------- -------- ------------ -------- ------------
Audit of the financial
statements 50,422 14,962 60,000 28,515
Review of half-yearly 20,000 - - -
financial statements
Tax related services - 7,264 6,750 15,050
Other non-audit services 15,000 - 100,000 -
85,422 22,226 166,750 43,565
-------------------------- -------- ------------ -------- ------------
14. Financial risk management
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies are reviewed
regularly to reflect changes in market conditions and the Group's
activities. Below is a summary of the risks that the Group is
exposed to as a result of its use of financial instruments.
i) Operational risk
The Group is dependent on Funding Circle's resources and on the
ability and judgement of the employees of Funding Circle and its
professional advisers to originate and service the loans purchased
by the Group. Failure on Funding Circle's platform or inconsistent
operational effectiveness of the internal controls at Funding
Circle may result in financial losses to the Group.
The Board manages this risk by performing regular evaluation of
Funding Circle's performance against the terms and conditions of
the Group's agreements with Funding Circle.
ii) Market risk
Market risk is the risk of changes in market prices, such as
interest rates, foreign exchange rates and equity prices, affecting
the Group's income and/or the value of its holdings in financial
instruments.
The Board of Directors regularly reviews the investment
portfolio and industry developments to ensure that any events which
impact the Group are identified and considered in a timely
manner.
iii) Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair value of
financial instruments.
The Group is exposed to risks associated with the effect of
fluctuations in the prevailing levels of market interest rates on
its cash.
Loans are held by the Group at amortised cost and bear fixed
interest rates. The Board has not performed an interest rate
sensitivity analysis on these loans as they are intended to be held
until maturity. Financial instruments with floating interest rates
that reset as market rates change are exposed to cash flow interest
rate risk. As at 30 September 2016, the Group had GBP15.63 million
(31 March 2016: GBP56.76 million) of the total assets classified as
cash and cash equivalents with floating interest rates. At 30
September 2016, had interest rates increased or decreased by 25
basis points with all other variables held constant, the change in
the value of future expected cash flows of these assets would have
been GBP39,066 (31 March 2016: GBP141,893). The Board of Directors
believes that a change in interest rate of 25 basis points is a
reasonable measure of sensitivity in interest rates based on their
assessment of market interest rates at the period end.
iv) Currency risk
Currency risk is the risk that the value of the net assets will
fluctuate due to changes in foreign exchange rates.
The Group invests in loans denominated in US Dollars and Euro,
and may invest in loans denominated in other currencies.
Accordingly, the value of such assets may be affected favourably or
unfavourably by fluctuations in currency rates. The Board of
Directors monitors the fluctuations in foreign currency exchange
rates and uses forward foreign exchange contracts to hedge the
currency exposure of the Group on US Dollar and Euro denominated
investments.
The currency risk of the Group's non-GBP monetary financial
assets and liabilities as of 30 September 2016 and 31 March 2016
including the effect of a change in exchange rates is shown below.
The Directors believe that a change of 5% in currency exchange
rates is a reasonable measure of sensitivity based on available
data on currency rates at 30 September 2016 and 31 March 2016.
(Unaudited) (Unaudited) (Audited) (Audited)
Carrying Effect Carrying Effect
amount of a 5% amount of a 5%
as at change as at change
30 September in currency 31 March in currency
2016 rate 2016 rate
GBP GBP GBP GBP
----------- -------------- ------------- ----------- -------------
US Dollar 42,792,131 2,139,607 43,931,427 1,527,412
Euro 8,637,017 431,851 9,973,443 389,801
Total 51,429,148 2,571,458 53,904,870 1,917,213
----------- -------------- ------------- ----------- -------------
The Group's exposure has been calculated as at the period end
and may not be representative of the period as a whole.
v) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. Many of the assets
in which the Company invests are illiquid. Changes in market
sentiment may make significant portions of the Company's investment
portfolio rapidly more illiquid, particularly due to the types of
Group's assets where there is not a broad well-established trading
market.
The Board of Directors manages liquidity risk through active
monitoring of amortising cash flows and reviewing the cash flow
forecast on a regular basis. The Group may borrow up to 0.5 times
the then-current net asset value of the Group at the time of
borrowing.
Maturity profile
The following tables show the contractual maturity of the
financial assets and financial liabilities of the Group:
As at 30 September 2016 (unaudited)
Within one One to Over five Total
year five years years
GBP GBP GBP GBP
--------------------------- ----------- ------------ ---------- ------------
Financial assets
Cash and cash equivalents 15,626,361 - - 15,626,361
Loans at amortised
cost 16,900,565 132,661,958 2,341,271 151,903,794
Margin account
held with bank 270,000 - - 270,000
Trade and other
receivables 21,021 - - 21,021
32,817,947 132,661,958 2,341,271 167,821,176
--------------------------- ----------- ------------ ---------- ------------
Financial liabilities
Fair value of currency
derivatives 962,737 - - 962,737
Accrued expenses
and other liabilities 3,165,465 - - 3,165,465
--------------------------- ----------- ------------ ---------- ------------
4,054,303 - - 4,128,202
--------------------------- ----------- ------------ ---------- ------------
As at 31 March 2016 (audited)
Within One to five Over five Total
one year years years
GBP GBP GBP GBP
--------------------------- ----------- ------------ ---------- ------------
Financial assets
Cash and cash equivalents 56,757,244 - - 56,757,244
Loans at amortised
cost 30,068,969 64,695,096 - 94,764,065
Margin account held
with bank 610,000 - - 610,000
Trade and other
receivables 225,683 - - 225,683
--------------------------- ----------- ------------ ---------- ------------
87,661,896 64,695,096 - 152,356,992
--------------------------- ----------- ------------ ---------- ------------
Financial liabilities
Financial liabilities
Fair value of currency
derivatives 2,432 - - 2,432
Accrued expenses
and other liabilities 4,077,943 - - 4,077,943
--------------------------- ----------- ------------ ---------- ------------
4,080,375 - - 4,080,375
--------------------------- ----------- ------------ ---------- ------------
vi) Credit risk and counterparty risk
Credit risk is the risk of financial loss to the Group if the
counterparty to a financial instrument fails to meet its
contractual obligations. The carrying amounts of financial assets
best represent the maximum credit risk exposure at the reporting
date. Impairment recognised on the loans at amortised cost are
disclosed in note 3.
The Group's credit risks arise principally through exposures to
loans acquired by the Group, which are subject to the risk of
borrower default. As disclosed in note 3, the loans advanced by the
Group are predominantly unsecured, but the Group holds assets as
security for certain property-related loans. The ability of the
Group to earn revenue is completely dependent upon payments being
made by the borrower of the loan acquired by the Group.
Credit quality
The credit quality of loans is assessed through evaluation of
various factors, including credit scores, payment data and other
information. This information is subject to stress testing on a
regular basis.
Set out below is the analysis of the Group's loan investments by
grade:
(Unaudited) (Unaudited) (Audited) (Audited)
Carrying % of Carrying Carrying % of Carrying
value as value value as value
at 30 September as at at 31 March as at
2016 30 September 2016 31 March
2016
Internal grade GBP 2016 GBP
---------------- ------------------ --------------- -------------- ---------------
A+ 41,457,618 27.29 30,258,928 31.93
A 37,104,575 24.43 27,804,077 29.34
B 27,182,201 17.89 19,270,393 20.34
C 13,589,420 8.95 11,685,191 12.33
D 4,322,638 2.85 3,708,412 3.91
E 1,625,646 1.07 2,037,064 2.15
Not graded* 26,621,696 17.52 - -
151,903,794 100.00 94,764,065 100.00
---------------- ------------------ --------------- -------------- ---------------
* - This relates to the Finch Class B Note as described in note
3. Finch is an indirect investment into Credit Assets through a
structured finance transaction. The investments of Finch are loans
originated in the UK which are subject to the same internal grading
as per above.
The credit grade assigned to a borrower is determined by Funding
Circle using an internal rating process that uses a number of
factors including expected annualised loss rates.
The Board of Directors have put in place the following limits on
the portfolio to manage the concentration risk exposure of the
Group.
Allocation limits
The proportionate division between loans originated through the
various Marketplaces (as defined in the Prospectus) must fall
within the ranges set out below:
-- originated through the UK Marketplace - between 50 per cent
and 100 per cent. of the gross asset value of the Group
-- originated through the US Marketplace - between 0 per cent
and 50 per cent. of the gross asset value of the Group
-- originated through the other Marketplaces - between 0 per
cent and 15 per cent. of the gross asset value of the Group
Other limitations
In addition to the allocation limits described above, in no
circumstances will loans be acquired by the Group, nor will
indirect exposure to loans be acquired, if such acquisition or
exposure would result in:
-- in excess of 50 per cent of the gross asset value being
represented by loans in respect of which the relevant borrower is
located in the US; or
-- the amount of the relevant loan or borrowing represented by
any one loan exceeding, or resulting in the Group's exposure to a
single borrower exceeding (at the time such investment is made)
0.75 per cent of the net asset value.
The Group may invest cash held for working capital purposes and
pending investment or distribution in cash or cash equivalents,
government or public securities, money market instruments, bonds,
commercial paper or other debt obligations with banks or other
counterparties having a "BBB" (or equivalent) or higher credit
rating as determined by any internationally recognised rating
agency selected by the Board.
As at 30 September 2016 and 31 March 2016, the Group held cash
with the following financial institutions:
(Unaudited) (Audited) Short
Amount Amount term credit
as at 30 as at 31 rating
September March 2016 (S&P)
2016
GBP GBP
----------- ------------ ------------ -------------
HSBC 4,126,981 5,841,564 A-1+
Santander 4,500,000 19,100,000 A-1
Barclays 5,248,271 17,393,508 A-2
Lloyds 1,751,109 14,422,172 A-1
----------- ------------ ------------ -------------
The Group may use forward foreign currency transactions to
minimise the Group's exposure to changes in foreign exchange rates.
The Group is exposed to counterparty credit risk in respect of
these transactions. The Board of Directors employs various
techniques to limit actual counterparty credit risk, including the
requirement for cash margin payments or receipts for foreign
currency derivative transactions on a regular basis. As at the
financial period-end, the Group's derivative counterparties were
Royal Bank of Scotland International ("RBSI") and Goldman Sachs
International ("GSI"). The long term-credit rating as at 30
September 2016 assigned by Moody's to RBSI was Ba1 (31 March 2016:
Ba1) and to GSI was A1.
Fair value estimation
The Group classifies fair value measurements using a fair value
hierarchy that reflects the significance of the inputs used in
making the measurements. The fair value hierarchy has the following
levels:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities. Investments, whose values are
based on quoted market prices in active markets and are therefore
classified within Level 1, include active listed equities. The
quoted price for these instruments is not adjusted;
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices). Financial instruments that trade in markets that are not
considered to be active but are valued based on quoted market
prices, dealer quotations or alternative pricing sources supported
by observable inputs are classified within Level 2. As Level 2
investments include positions that are not traded in active markets
and/or are subject to transfer restrictions, valuations may be
adjusted to reflect illiquidity and/or non-transferability, which
are generally based on available market information; and
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (that is, unobservable inputs).
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. For this purpose, the
significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses
observable inputs that require significant adjustment based on
unobservable inputs, that measurement is a Level 3 measurement.
Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors
specific to the asset or liability. The determination of what
constitutes "observable" requires significant judgement by the
Group. The Group considers observable data to be that market data
that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary and provided by
independent sources that are actively involved in the relevant
market.
The Group's only financial instruments measured at fair value as
at 30 September 2016 and 31 March 2016 are its currency
derivatives. The fair values of the currency derivatives were
estimated by RBSI and Goldman Sachs based on the GBP-USD forward
exchange rate, the GBP-EUR forward exchange rate, the GBP-USD spot
rate and the GBP-EUR spot rate as at 30 September and 31 March
2016. The Board of Directors believe that the fair value of the
currency derivatives falls within level 2 in the fair value
hierarchy described above.
The following table presents the fair value of the Group's
assets and liabilities not measured at fair value as at 30
September 2016 and 31 March 2016 but for which fair value is
disclosed:
30 September 2016 (Unaudited)
-----------------------------------------------------
Level Level 2 Level 3 Total
1
GBP GBP GBP GBP
------------------------ ----------- ------------ ------------ ------------
Loans advanced - - 151,903,794 151,903,794
Cash and cash
equivalents 15,626,361 - - 15,626,361
Other receivables
and prepayments - 21,021 - 21,021
Accrued expenses
and other liabilities - (3,165,465) - (3,165,465)
------------------------ ----------- ------------ ------------ ------------
15,626,361 (3,144,444) 151,903,794 164,385,711
------------------------ ----------- ------------ ------------ ------------
31 March 2016 (Audited)
----------------------------------------------------
Level Level 2 Level 3 Total
1
GBP GBP GBP GBP
------------------------ ----------- ------------ ----------- ------------
Loans advanced - - 94,764,065 94,764,065
Cash and cash
equivalents 56,757,244 - - 56,757,244
Other receivables
and prepayments - 225,683 - 225,683
Accrued expenses
and other liabilities - (4,077,943) - (4,077,943)
------------------------ ----------- ------------ ----------- ------------
56,757,244 (3,852,260) 94,764,065 147,669,049
------------------------ ----------- ------------ ----------- ------------
The Board of Directors believe that the carrying values of the
above instruments approximate their fair values. The fair value of
loans advanced is estimated to be approximate to the carrying value
because the Directors believe that the effect of re-pricing between
origination date and the date of this report is not material. In
the case of cash and cash equivalents, other receivables and
prepayments, and accrued expenses and other liabilities the amount
estimated to be realised in cash are equal to their value shown in
the unaudited Condensed Consolidated Statement of Financial
Position due to their short term nature.
There were no transfers between levels during the period and the
prior period.
Capital risk management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the Group. The Group's capital is represented
by the Ordinary Shares and retained earnings. The capital of the
Group is managed in accordance with its investment policy, in
pursuit of its investment objectives.
The Group is not subject to externally imposed capital
requirements. However, certain calculations on the employment of
leverage are required under the Alternative Investment Manager
Directive ("AIFMD"). As at 30 September 2016 and 31 March 2016, the
Group had not employed any leverage.
15. Related party disclosure
The Directors, who are the key management personnel of the
Group, are remunerated per annum as follow:
GBP
-------------------------- --------
Chairman 50,000
Audit Committee Chairman 40,000
Risk Committee Chairman 35,000
Other directors 30,000
155,000
-------------------------- --------
Samir Desai who is a member of the Board of Directors has waived
his fees as a director of the Company. Samir Desai is a substantial
shareholder in, a director and employee of Funding Circle UK.
Richard Burwood is also a director of Basinghall and Tallis and is
entitled to receive GBP5,000 per annum as director's fees from each
of the companies.
The Directors held the following number of shares as at 30
September 2016 and 31 March 2016:
(Unaudited) (Audited)
As at 30 September As at 31 March
2016 2016
------------------------ ------------------------
Number % of total Number % of total
of shares shares of shares shares
in issue in issue
--------------------- ----------- ----------- ----------- -----------
Richard Boléat 5,000 0.0030 5,000 0.0033
Jonathan Bridel 5,000 0.0030 5,000 0.0033
Richard Burwood 5,000 0.0030 5,000 0.0033
Samir Desai 148,138 0.0902 148,138 0.0987
Frederic Hervouet 107,000 0.0651 5,000 0.0033
270,138 168,138
--------------------- ----------- ----------- ----------- -----------
The Group has no employees during the period or the prior
period.
The Directors may delegate certain functions to other parties.
In particular, the Directors have appointed Funding Circle UK,
Funding Circle US, Funding Circle Netherlands, Funding Circle Spain
and Funding Circle CE to originate and service the Group's
investments in loans. Notwithstanding these delegations, the
Directors have responsibility for exercising overall control and
supervision of the services provided by the Funding Circle
entities, for risk management of the Group and otherwise for the
Group's management and operations.
The transactions amounts incurred during the period and amounts
payable to each of Funding Circle UK, Funding Circle US and Funding
Circle CE are disclosed below.
(Unaudited) (Audited) (Audited)
Expense (Unaudited) Expense Payable
during Payable during as at
the period as at 30 the period 31 March
ended September ended 31 2016
31 September 2016 March 2016
2016
Transaction GBP GBP GBP GBP
------------ --------------- -------------- -------------- ------------ ----------
Funding Servicing
Circle UK fee 384,974 64,806 117,151 54,183
Corporate
Funding services
Circle UK fee 54,583 13,578 - -
Funding Reimbursement
Circle UK of expenses 6,768 839 - -
Funding Servicing
Circle US fee 175,000 34,005 53,230 11,452
Funding Servicing
Circle CE fee 8,238 6,877 - -
------------ --------------- -------------- -------------- ------------ ----------
During the period ended 31 March 2016, Funding Circle purchased
a loan from Basinghall with an outstanding principal and accrued
interest of GBP106,358 at par value. Funding Circle also purchased
a loan from Basinghall with an outstanding principal and accrued
interest of GBP454,167 at par value. The terms of these
transactions were approved by the respective Boards of the Company
and Basinghall. The proceeds from the sale of loans of GBP106,358
was outstanding as at 31 March 2016.
There were no loans purchased by Funding Circle during the
period from 1 April 2016 to 30 September 2016.
16. INVESTMENT IN SUBSIDIARIES
The Company had the following subsidiaries as at 30 September
2016 and 31 March 2016, whose results were fully consolidated
during those periods:
Country Principal Transactions (Unaudited) (Audited)
of incorporation activity Outstanding Outstanding
amount amount
at 30 September at 31
2016 March
GBP 2016
GBP
Basinghall
Lending Investing
Designated in Credit Subscription
Activity Assets originated of notes
Company Ireland in the UK issued 80,235,760 78,800,000
Investing
in Credit
Assets originated
Tallis Lending in Spain,
Designated Germany Subscription
Activity and the of notes
Company Ireland Netherlands issued 5,457,762 7,920,900
85,693,522 86,720,900
------------------------------------------------------------------------ ----------------- -------------
17. Subsequent events
On 27 October 2016, the Company issued 75,698 Ordinary Shares of
no par value in relation to the scrip dividend option provided to
shareholders in September. The shares were admitted to the Official
List of the UK Listing Authority and to trading on the London Stock
Exchange's main market.
Following the issue, the Company's issued share capital
comprised 164,360,698 Ordinary Shares.
BOARD OF DIRECTORS
Richard Boléat
Chairman, Remuneration and Nominations Committee Chairman,
Non-executive Director
Richard Boléat was born in Jersey in 1963. He is a Fellow of the
Institute of Chartered Accountants in England & Wales, having
trained with Coopers & Lybrand in Jersey and the United
Kingdom. After qualifying in 1986, he subsequently worked in the
Middle East, Africa and the UK for a number of commercial and
financial services groups before returning to Jersey in 1991. He
was formerly a Principal of Channel House Financial Services Group
from 1996 until its acquisition by Capita Group plc ("Capita") in
September 2005. Mr Boléat led Capita's financial services client
practice in Jersey until September 2007, when he left to establish
Governance Partners, L.P., an independent corporate governance
practice. He currently acts as Chairman of CVC Credit Partners
European Opportunities Limited, listed on the London Stock
Exchange, and Yatra Capital Limited, listed on Euronext, along with
a number of other substantial collective investment and investment
management entities established in Jersey, the Cayman Islands and
Luxembourg. He is regulated in his personal capacity by the Jersey
Financial Services Commission and is a member of AIMA.
Richard Burwood
Management Engagement Committee Chairman, Non-executive
Director
Mr Burwood is a resident of Guernsey with 25 years' experience
in banking and investment management. During 18 years with Citibank
London Mr Burwood spent 4 years as a Treasury Dealer and 11 years
as a Fixed Income portfolio manager covering banks & finance
investments, corporate bonds and asset backed securities.
Mr Burwood moved to Guernsey in 2010, initially working as a
portfolio manager for EFG Financial Products (Guernsey) Ltd
managing the treasury department's ALCO Fixed Income portfolio.
From 2011 to 2013 Mr Burwood worked as the Business and Investment
manager for the Guernsey branch of Man Investments (CH) AG. This
role involved overseeing all aspects of the business including
operations and management of proprietary investments.
Mr Burwood serves as Non-Executive Director on the boards of
Roundshield Fund, Guernsey (a European asset backed special
opportunities fund providing finance to small and mid-cap
businesses) since January 2014 and TwentyFour Income Fund (a UK and
European asset backed investments) since January 2013.
Samir Desai
Executive Director
Mr Desai is Global CEO and co-founder of Funding Circle and
responsible for driving Funding Circle's strategy, overseeing its
finances and managing its day to day operations. Mr Desai has
worked extensively in the financial services sector. Before
co-founding Funding Circle, Mr Desai was an Executive at Olivant
Advisers Limited, a private equity investor in financial services
businesses in Europe, the Middle East and Asia. Prior to this, Mr
Desai was a management consultant at Boston Consulting Group
advising a number of major UK and global banks and insurers on
strategy, new product initiatives, and operational efficiency.
Jonathan (Jon) Bridel
Audit Committee Chairman, Non-executive Director
Mr Bridel is currently a non-executive Chairman or director of
various listed and unlisted investment funds and private equity
investment managers. Listings include The Renewables Infrastructure
Group Limited (FTSE 250), Alcentra European Floating Rate Income
Fund Limited, Starwood European Real Estate Finance Limited and
Sequoia Economic Infrastructure Income Fund Limited which are
listed on the premium segment of the London Stock Exchange. He is
also Chairman of DP Aircraft 1 Limited and a director of Fair Oaks
Income Fund Limited. He was until 2011 Managing Director of Royal
Bank of Canada's investment businesses in Guernsey and Jersey. This
role had a strong focus on corporate governance, oversight,
regulatory and technical matters and risk management. He is a
Chartered Accountant and has specialised in Corporate Finance and
Credit. After qualifying as a Chartered Accountant in 1987, Mr
Bridel worked with Price Waterhouse Corporate Finance in London and
subsequently served in a number of senior management positions in
Australia and Guernsey in corporate and offshore banking and
specialised in credit. This included heading up an SME Lending
business for a major bank in South Australia. He was also chief
financial officer of two private multi-national businesses, one of
which raised private equity. He holds qualifications from the
Institute of Chartered Accountants in England and Wales where he is
a Fellow, the Chartered Institute of Marketing and the Australian
Institute of Company Directors. He graduated with an MBA from
Durham University in 1988. Mr Bridel is a chartered marketer and a
member of the Chartered Institute of Marketing, the Institute of
Directors and is a chartered fellow of the Chartered Institute for
Securities and Investment.
Frederic Hervouet
Risk Committee Chairman, Non-executive Director
Mr. Hervouet is based in Guernsey and acts in a non-executive
directorship capacity for a number of hedge funds, private equity
& credit funds (including structured debt, distressed debt and
asset backed securities), for both listed (SFM on LSE, Euronext)
and unlisted vehicles.
Mr. Hervouet was Managing Director and Head of Commodity
Derivatives Asia for BNP Paribas including Trading, Structuring and
Sales. Mr. Hervouet has worked under different regulated financial
markets based in Singapore, Switzerland, United Kingdom and France.
Most recently, Mr. Hervouet was a member of BNP Paribas Commodity
Group Executive Committee and BNP Paribas Credit Executive
Committees on Structured Finance projects (structured debt and
trade finance). Mr. Hervouet holds a Master Degree (DESS 203) in
Financial Markets, Commodity Markets and Risk Management from
University Paris Dauphine and an MSc in Applied Mathematics and
International Finance. He is a member of the UK Institute of
Directors, a member of the Guernsey Chamber of Commerce and a
member of the Guernsey Investment Fund Association. Mr. Hervouet is
a resident of Guernsey.
AGENTS AND ADVISORS
Funding Circle
SME Income Fund
Limited
Company registration
number: 60680 (Guernsey,
Channel Islands)
Registered office Portfolio Administrator
Third Floor, La Funding Circle Ltd
Plaiderie Chambers 71 Queen Victoria
La Plaiderie Street
St Peter Port London EC4V 4AY
Guernsey GY1 1WG United Kingdom
Channel Islands
E-mail: ir@fcincomefund.com
Website: fcincomefund.com
Company Secretary Sole Global Co-ordinator,
and Administrator Bookrunner and Sponsor
Sanne Group (Guernsey) Goldman Sachs International
Limited Peterborough Court
Third Floor, La 133 Fleet Street
Plaiderie Chambers London EC4A 2BB
La Plaiderie United Kingdom
St Peter Port
Guernsey GY1 1WG
Channel Islands
Legal advisors Corporate broker
as to Guernsey and Co-Bookrunner
Law Numis Securities
Mourant Ozannes Limited
1 Le Marchant Street The London Stock
St Peter Port Exchange Building
Guernsey GY1 4HP 10 Paternoster
Channel Islands Square
London EC4M 7LT
United Kingdom
Legal advisors UK Transfer Agent
as to English Law and Receiving Agent
Simmons & Simmons Capita Registrars
LLP Limited (trading
CityPoint as Capita Asset
One Ropemaker Street Services)
London EC2Y 9SS The Registry
United Kingdom 34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Legal advisors Registrar
as to Irish Law Capita Registrars
Matheson (Guernsey) Limited
70 Sir John Rogerson's Mont Crevelt House
Quay Bulwer Avenue
Dublin 2 St Sampson
Ireland Guernsey GY2 4LH
Channel Islands
Independent Auditors
PricewaterhouseCoopers
CI LLP
Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey GY1 4ND
Channel Islands
GLOSSARY
Definitions and explanations of methodologies used:
"Administrator" Sanne Group (Guernsey) Limited
-------------------- ---------------------------------------------------------
"AGM" Annual General Meeting
-------------------- ---------------------------------------------------------
"AIC Code" the AIC Code of Corporate Governance
-------------------- ---------------------------------------------------------
"AIC" the Association of Investment Companies,
of which the Company is a member
-------------------- ---------------------------------------------------------
AIFM" Alternative Investment Fund Manager,
appointed in accordance with the AIFMD
-------------------- ---------------------------------------------------------
"AIFMD" the Alternative Investment Fund Managers
Directive
-------------------- ---------------------------------------------------------
"Available Cash" cash determined by the Board as being
available for investment by the Company
in accordance with the Investment Objective,
and, in respect of Basinghall and Tallis
cash determined by the Board of each
of Basinghall and Tallis Board (having
regard to the terms of the Origination
Agreement and the Note) to be available
for investment by Basinghall and Tallis
and excluding (without limitation) amounts
held as reserves or pending distribution
-------------------- ---------------------------------------------------------
"Company Secretary" Sanne Group (Guernsey) Limited
-------------------- ---------------------------------------------------------
"Credit Assets" loans or debt or credit instruments
of any type originated through any of
the Marketplaces
-------------------- ---------------------------------------------------------
"Cum Income Net asset value divided by the number
Net Asset Value of Ordinary Shares outstanding as at
per Ordinary the end of the period
Share"
-------------------- ---------------------------------------------------------
"Ex Income Net Net asset value excluding current period
Asset Value profit divided by the number of Ordinary
per Ordinary Shares outstanding as at the end of
Share" the period
-------------------- ---------------------------------------------------------
"Funding Circle" Funding Circle UK, Funding Circle US
or either of their respective Affiliates
(as defined in the Prospectus of the
Company), or any or all of them as the
context may require
-------------------- ---------------------------------------------------------
"Funding Circle Funding Circle CE GmbH and Funding Circle
CE" Deutschland GmbH
-------------------- ---------------------------------------------------------
"Funding Circle Funding Circle Nederlands B.V.
Netherlands"
-------------------- ---------------------------------------------------------
"Funding Circle Funding Circle Espa a SLU
Spain"
-------------------- ---------------------------------------------------------
"Funding Circle Funding Circle Limited
UK"
-------------------- ---------------------------------------------------------
"Funding Circle FC Marketplace, LLC
US"
-------------------- ---------------------------------------------------------
"Marketplaces" the marketplace platforms operated in
the UK and the US, respectively, by
Funding Circle, together with any similar
or equivalent marketplace platform established
or operated by Funding Circle in any
jurisdiction
-------------------- ---------------------------------------------------------
"NAV return" Increase net asset value per share from
the initial net asset value per share
-------------------- ---------------------------------------------------------
"Note" or "Profit notes issued by Basinghall Lending Designated
Participating Activity Company and Tallis Lending
Note" Designated Activity Company under their
separate note programmes
-------------------- ---------------------------------------------------------
"PwC" PricewaterhouseCoopers CI LLP and PricewaterhouseCoopers
Ireland
-------------------- ---------------------------------------------------------
"PwC CI" PricewaterhouseCoopers CI LLP
-------------------- ---------------------------------------------------------
"PwC Ireland" PricewaterhouseCoopers Ireland
-------------------- ---------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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