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Greenwich Loan Income Fund: Interim Results 2012

ByEdison
Published 09/16/2012, 05:40 AM
Updated 07/09/2023, 06:31 AM
LEND
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Look through the accounting

GLIF has announced its statutory results for H112. We believe the accounting does not help investors, who should instead focus on a couple of business messages. Firstly, interest and dividend revenue was £7.4m (up from £5.9m), while expenses fell from £4.4m to £3.1m and finance costs from £1.3m to £1.2m. The surplus (£3.1m) exceeds shareholder dividends (£2.2m yield 9.6%) by nearly half. Secondly, the group is in ‘active discussions’ about ‘value-accretive transactions.’
Income Fund
The statutory accounts for GLIF are distorted by marking to market accounting. On the asset side, GLIFs objective is to identify assets where the market price is wrong and often holds them to maturity. As a going concern it will repay its debts in full, so that market price is also meaningless. We believe investors should look through the consolidated (capital and income) EPS loss in H112 of 11p to the business messages.

Revenue exceeded administration and finance costs, with c two thirds of this surplus distributed to shareholders. The current annualised yield is c 9.6% and is more than covered by this measure.

We expect the group to be active in acquisitions following the value-accretion from the AMIC deal. In this statement, we believe it has flagged that that it is close to doing a deal. While negotiations may falter, we believe the reiteration of intent is clear.

While the MTM of assets fell 6%, the credit quality improved, with only 1% (down from 2%) of the portfolio expected to show any loss of principal.

The already-announced accounting NAV at end-June was 47.9p. We prefer our franchise valuation approach, which is 52.9p.

To Read the Entire Report Please Click on the pdf File Below.

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