SSIF.L Regulatory News (SSIF)

30 July 2020  

Secured Income Fund plc

Monthly Net Asset Value, Dividend and Fact Sheet

Secured Income Fund plc (LSE: SSIF) (the "Company"), a specialist secured lending income investment trust, listed in the UK, is pleased to provide its monthly net asset value ("NAV") and dividend update in addition to its monthly fact sheet.

Net Asset Value

The Company announces that, as at 30 June 2020, the unaudited estimated NAV per ordinary share (cum-income) was 86.37 pence.

The NAV total return in June 2020 was -0.81%.

The global economy is still gripped by the uncertainty of the Covid-19 pandemic and in the UK the approaching Brexit deadline has created additional volatility. Despite this backdrop, KKV originated loans continue to perform and we have had no defaults. Two of our businesses representing 11.7% of the overall portfolio have outperformed versus budget during this time; they are an Irish SME loan manager with an exposure to technology businesses specialising in educational software and another impaired loan, that is now emerging from pre-pack administration with a healthy order book, again focussed on technology. Even our loan to a US medical services provider has maintained loan service despite offering ancillary services in a sector that we had expected to be challenged.

In line with guidance provided by the PRA on IFRS 9 provisioning, we have adopted a pragmatic approach to maturity and amortisation for two of our counterparties who have requested forbearance during this challenging time, by extending maturity of their loans by twelve months, representing a carrying value of 27.5% of the portfolio. No impairment has been necessary and this measure has extended the weighted average life of the portfolio from 2.58 years to 2.89 years. Our approach to IFRS provisioning has been consistent since adopting these new principles in July 2018 and was audited during 2019. The Board acknowledges the rapidly changing circumstances over the wider alternative debt sector and will review the approach taken during the current audit process.

Over the last four months, we have impaired our exposure to a US Peer to Peer manager by a further 75% (of which GBP 571,130.97 was impaired during June 2020) as the impact of Covid-19 and the time taken to recover capital on impaired loans has been unsuccessful, we consider this position to now be classified as a full default. This resulted in an impairment amounting to 5.7% of the NAV and leaves the Company with no further expectation of recovery for this loan. The NAV adjustment also includes reversal of accrued interest associated with this loan. Despite this measure, our overall level of default since inception stands at 8.88% with all impairments and defaults generated from inherited assets. In addition, we have given a loan extension of six months from 31 July 2020 to the same company on a promissory note held against the operating company. Again, Covid-19 has impacted their business and we await the introduction of a new product line planned for the autumn to give the company an opportunity to make whole on its debt obligation.

Following the vote to wind down the Company by shareholders in June, KKV is committed to managing this process in an expeditious timeframe without damaging shareholder value or borrower needs. The Company has ample cash to maintain a dividend and some loan capital is expected to be returned earlier than scheduled by our venture debt and fund investments.

Dividend

The Company is pleased to announce the twelfth monthly dividend for the year ending 30 June 2020:

The Company has elected to designate all of the dividends for the period ended 30 June 2020 as interest distributions to its shareholders. In doing so, the Company is taking advantage of UK tax treatment by "streaming" income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income.

Fact Sheet

The Company announces that it has today published its monthly fact sheet to the end of June 2020 which is available to download from the Company's website.

(https://kkvim.com/secured-income-fund/)

For further information please contact:

Notes to Editor

The Company aims to provide shareholders with attractive risk-adjusted returns, principally in the form of regular, sustainable dividends, through investment predominantly in a range of secured loans and other secured loan-based instruments originated through a variety of channels and diversified by way of asset class, geography and duration.

The Company's Investment Manager is KKV Investment Management Ltd. The principal responsible for managing the portfolio is Dawn Kendall.