TIDMHONY
RNS Number : 0189H
Honeycomb Investment Trust PLC
01 December 2020
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, ANY MEMBER STATE OF THE
EUROPEAN ECONOMIC AREA (OTHER THAN THE UNITED KINGDOM), CANADA,
AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER
JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE
UNLAWFUL
1(st) December 2020
Honeycomb Investment Trust plc
Honeycomb Investment Trust plc (the "Company") announces that
the investment manager's monthly factsheet for October 2020 is now
available on its website at http://www.honeycombplc.com . The text
of the factsheet has been reproduced below.
October Factsheet
Honeycomb Investment Trust plc (the "Company" or "HONY")
delivered a NAV return of 0.58% for the month, which is equivalent
to 6.8% per annum.
Portfolio Performance and Leverage
The portfolio continues to perform well with stable performance
throughout the Covid period. This stability is driven by the
Company's focus on credit investments secured on loan portfolios of
non-bank lenders with strong downside protection from structural
seniority and junior cash equity provided by the borrower. This
first loss buffer provides a double layer of protection so that, on
top of robust performance in the underlying portfolios, HONY
returns are further insulated from defaults in the underlying loans
and receivables.
Cash collections in HONY have been consistent throughout 2020
with GBP153m collected over the past 6 months vs GBP141m in the
prior 6 months. The strong level of cash collection along with the
low levels of new investments during the Covid period has meant
that the investment portfolio has repaid down from GBP595m in
February 2020 to a low GBP509m in August. This increased to GBP553m
in October through drawdowns under existing investments and the
completion of three new investments. The income generated by the
Company is directly proportional to the size of the investment
portfolio with the full benefit of new investments not recognized
until the month after completion.
The Company has been careful in its deployment and is being
highly selective in the new investments it makes. The pipeline of
new opportunities is looking strong and the Company expects the
investment assets to build back towards the GBP600m level over the
coming months.
As mentioned in the September newsletter the Company extended
its debt facilities in September and October with the maturities
now falling in Q4 2022 and Q3 2023 meaning the Company has secured
its financing facilities over the medium term. In addition, in
November alongside increasing a senior facility secured on
Coronavirus Business Interruption Loan Scheme ("CBILS") loans, the
Company secured an attractively priced, term matched non-recourse
SPV financing against the investment.
The total committed financing under these facilities is GBP360m.
The total amounts drawn under these facilities at 31st October was
GBP230m with the Company having GBP37m in cash. The net debt to
equity was 53.3% and debt to equity was 63.6%. The Company's
intention is to remain within the net debt to equity target of
50%-75% with a proportion of the revolving TOPCO facility being
reserved as a liquidity buffer which is not forecast to be drawn.
Both of the SPV facilities repay monthly and therefore reduce in
size in line with the assets that support them.
The Company believes securing longer term larger facilities is a
prudent approach as it provides a liquidity buffer for unforeseen
circumstances, positions the company to take advantage of
exceptional opportunities and means leverage is already secured in
the event that the trust grows in the future without the need with
further re-financings.
Buybacks
The Board have put in place an active buyback program throughout
2020 with the Company repurchasing 3,980,178 or 11.2% of the share
capital. In October the Company repurchased 163,000 of its shares
at an average price of 926.8p. On the 11th November the Company
announced it had increased the size of this program with the Board
stating its intention to continue until the share price is less
than a 5% discount to NAV.
Portfolio Composition
The portfolio is well diversified with 40 different investments
across a variety of sectors and is well balanced across SME,
Consumer and Property.
The portfolio is performing well with 88% being structurally
secured with subordinated equity junior to the Company's position,
insulating the Company from volatility in the performance of the
underlying assets.
The remaining 12% consists of consumer direct unsecured loans
and the equity positions. The consumer direct position has been in
run off for the past 18+ months and the Manager accelerated the
return of capital by selling GBP44.6m in August at a small premium
to NAV. The loans are amortising and generating returns in line
with target and the remaining exposure is expected to run off
naturally in 12 months. The Manager is exploring options to
accelerate the return of capital and will redeploy the proceeds in
structurally secured loans.
The structurally secured portfolio is performing well with
strong income, conservative LTVs and over collateralization.
The Company has just completed a GBP16m (day 1 amount) new
investment supported by short term property loans where the Company
has acquired a carefully selected portfolio of 17 loans from a
development finance lender that are performing and seasoned. The
loans are expected to deliver a 9% return and have an LTV of
59%.
This document is made available for information purposes only
and does not contain any representations or constitute an offer to
sell or the solicitation of an offer to acquire or subscribe for
any securities of the Company. All investments are subject to risk.
Prospective investors are advised to seek expert legal, financial,
tax and other professional advice before making any investment
decision. The value of investments may fluctuate and past
performance is no guarantee of future results.
For further information about this announcement please
contact:
Pollen Street Capital - Investment Manager
Matthew Potter / Julian Dale: +44 (0)20 3728 6750
Liberum Capital Limited - Joint Broker
Chris Clarke / Louis Davies: +44 (0)20 3100 2000
Cenkos Securities plc - Joint Broker
Justin Zawoda-Martin / Rob Naylor: +44 (0)20 7397 8900
Link Company Matters Limited - Corporate Secretary
Paul Johnston: +44 (0)20 7954 9552
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