icg-longbow senior secured uk property debt investments .../media/files/i/... · 02 icg-longbow...

AICG-Longbow Senior Secured UK Property Debt Investments LimitedAnnual Report And Consolidated Financial Statements

Company Number: 55917

ICG-Longbow Senior Secured UK Property Debt Investments Limited

Interim Report and Unaudited Condensed Consolidated Interim Financial Statements

For the six months ended 31 July 2019

CONTENTS

Overview

01 FinancialHighlights

02 CorporateSummary

03 Chairman’sStatement

05 InvestmentAdviser’sReport

Governance

15 Directors’ResponsibilitiesStatement

Financial Statements

16 CondensedConsolidatedStatementofComprehensiveIncome

17 CondensedConsolidatedStatementofFinancialPosition

18 CondensedConsolidatedStatementofChangesInEquity

19 CondensedConsolidatedStatementofCashFlows

20 NotestotheUnauditedCondensedConsolidatedInterimFinancialStatements

Other Information

26 GlossaryofCapitalisedDefinedTerms

28 DirectorsandGeneralInformation

AllcapitalisedtermsaredefinedintheGlossaryofCapitalisedDefinedTermsonpages26to27unlessseparatelydefined.

Cover picture: Spectrum Building, Bristol

01ICG-Longbow Senior Secured UK Property Debt Investments LimitedInterim Report and Unaudited Condensed Consolidated Interim Financial Statements

Overview

Governance


Other Inform

ation

FINANCIAL HIGHLIGHTS

KEY DEVELOPMENTS AS AT 26 SEPTEMBER 2019O Fulldividendcoveragerestored.

O Portfoliotransitioncompletewithcirca£59millionofnewinvestmentssince31January2019.

O Strongrisk-adjustedreturnswithaverageIRRonnewinvestmentsof9.4%.

O Significantincreasetounexpiredloanterm,nowat2.1years.

PERFORMANCE

O NAVof£119.38millionasat31July2019(31January2019:£120.28million).

O Profitaftertaxof2.73millionforthesixmonthsended31July2019(31July2018:£2.70million).

O Earningspersharefortheperiodof2.25pence(31July2018:2.25pence).

O TotalNAVreturns(dividendsreinvested)achievedsinceinception,5February2013,5.5%pa..

DIVIDENDO Totaldividendspaidordeclaredfortheperiodended31July2019of3pencepershare(31July2018:3pencepershare),madeupasfollows:

– Interimdividendof1.5pencepersharepaidinrespectofquarterended30April2019.

– Interimdividendof1.5pencepershareapprovedinrespectofquarterended31July2019.

INVESTMENT PORTFOLIO O Asat31July2019,theGroup’sinvestmentportfoliocomprisedeightloanswithanaggregateprincipalbalanceof£92.28million,representing77.30%oftheshareholders’equity(31January2019:nineloanswithaggregateprincipalbalanceof£107.22million,representing89.14%oftheshareholders’equity).

O Asat26September2019,theGroup’sinvestmentportfoliohadincreasedtotenloanswithanaggregateprincipalbalanceof£117.85millionandtotalcapitalcommittedof£129.32million.

O Theportfoliocontinuestoperforminlinewithexpectations.

02 ICG-Longbow Senior Secured UK Property Debt Investments LimitedInterim Report and Unaudited Condensed Consolidated Interim Financial Statements

CORPORATE SUMMARY

INVESTMENT OBJECTIVETheinvestmentobjectiveoftheGroup,asapprovedbytheshareholdersoftheCompany,istoconstructaportfolioofUKrealestatedebtrelatedinvestmentspredominantlycomprisingloanssecuredbyfirstrankingfixedchargesagainstcommercialpropertyinvestments,withtheaimofprovidingshareholderswithattractive,quarterlydividends,capitalpreservationand,overthelongerterm,adegreeofcapitalappreciation.

STRUCTURETheCompanyisanon-cellularcompanylimitedbysharesincorporatedinGuernseyon29November2012undertheCompaniesLaw.TheCompany’sregistrationnumberis55917,andithasbeenregisteredwiththeGFSCasaregisteredclosed-endedcollectiveinvestmentscheme.TheCompany’sordinaryshareswereadmittedtothepremiumsegmentoftheUKListingAuthority’sOfficialListandtotradingontheMainMarketoftheLondonStockExchangeaspartofitsIPO,whichcompletedon5February2013.TheissuedcapitalcomprisestheCompany’sordinarysharesdenominatedinPoundsSterling.TheCompanyisaninternallymanagednon-EUdomiciledalternativeinvestmentfundandmakesinvestmentsinitsportfoliothroughICG-LongbowSeniorDebtS.A.,theCompany’swhollyownedsubsidiary.

INVESTMENT ADVISERTheInvestmentAdviser(IntermediateCapitalManagersLimited),whichtradesunderthenameofICG-Longbow,isauthorisedandregulatedbytheFCA.TheBoardmanagestheassetsoftheGroupafterreceivingadvicefromtheInvestmentAdviserunderthetermsofthenon-discretionaryInvestmentAdvisoryAgreement.


Overview

Governance


Other Inform

ation

CHAIRMAN’S STATEMENT

JACK PERRY CHAIRMAN

INTRODUCTIONOnbehalfoftheBoard,IampleasedtopresenttheInterimFinancialStatementsfortheGroupforthesixmonthsended31July2019.InthemostrecentAnnualReporttheBoardoutlineditsambitionfortheGroup,embracingthetransitionoftheinvestmentportfolio;restorationofdividendcover;andlayingthefoundationsforgrowth.Iampleasedtoadvisethatwehaveachievedallthreeobjectives.Theportfoliotransitionisnowcomplete,withfournewtransactions,totalling£59.3million,completinginAugustandSeptember2019,aftertheendofthereportingperiod.Thesenewtransactions,alongwiththerepaymentoflower-yieldinglegacyloans,meanthat,onceagain,theCompany’sdividendwillbefullycovered.

WidereconomicconditionscontinuetobeaffectedbytheongoingpoliticaluncertaintyarisingfromtheUK’sprospectiveexitfromtheEuropeanUnion.Whilegrowthincertainsectorsmaybeweakening,thereremainsomepositivesignsfortheUK.Inparticular,thelabourmarkethasremainedresilientwiththeresultantstrongincometaxreceiptscontributingtothehealthiestpublicfinancesforoveradecade.ThereremainsampleheadroomforbothfiscalandmonetarypolicyresponsestoanydisruptioncausedbyBrexit.

TheBoardconsidersthattheCompany’sdefensiveinvestmentportfolioremainsresilientinthisperiodofuncertainty,withseniorsecuredloanexposureataweightedaverageLTVof59.4%asat31July2019(26September2019:63.2%)supportedbyadiverseregionalportfolioacrossallkeypropertysectors,butwithlittleweightinginthetroubledretailmarket.

PORTFOLIODuringthereportingperiod,anew£15.0millionloancommitmentwasprovidedtotheBlissHotelGrouptoassistwiththerefinancingofahotelandadjoiningleisureblockinSouthport,Merseyside.ThepropertyprovidesstableincomefortheCompanywiththeopportunityforvaluegrowththroughimplementationofarefurbishment-ledbusinessplan.

Alsoduringtheperiod,a£0.5millionincreasewasprovidedtotheBorroweroftheAffinityloan,insupportoftheongoingbusinessplan,withshort-termloanextensionsonenhancedtermsagreedonthe£22.4millionCommercialRegionalSpaceportfolio(whichwassubsequentlyrepaid)andthe£15.9millionBMOPartnersloan.Theseextensionsgeneratedfurtherreturnsforshareholdersonwhatwerepreviouslylower-yieldingloanassets.

TheperiodsawrepaymentsofthelowyieldingCommercialRegionalportfolio(£22.4million)andtheRamadaGatesheadloan(£8.0million).TheGroup

benefitedfrominterestandexitfeesontheserepaymentstotalling£0.5millioninaggregate.Theserepaymentproceedshavesubsequentlybeeninvestedinthefollowingnewtransactions:

O A£24.6millioncommitmenttoanaffiliateofRoyaleLife,insupportoftherefinancingofaportfolioof10assetsintheresidentialbungalowhomessector.TheloancarriesaninitialLTVratioof78.9%andoffersahighlyaccretiveopportunityfortheGroupwitharobustbusinessplaninplacefromtheborrower;

O A£12.5millioncommitmenttotheNorthlandsgroup,refinancingtheCompany’sexistingloanonrefreshedterms,andfinancingthenextphaseofthebusinessplan.TheloancarriesaninitialLTVratioof55.3%;

O A£6.5millioncommitmenttoafundmanagedbyLBSProperties,insupportofitsacquisitionofanofficepropertyinFarringdon,London.TheloancarriesaninitialLTVratioof69.0%.

InadditiontosubstantiallyutilisingGroupcash,theabovetransactionshavebeenfinancedthroughdrawdownstotalling£10.0millionontheCompany’sworkingcapitalfacility.

Followingcompletionofthesetransactions,proformaLTVatthedateoftheseaccountsis63.2%,ataweightedaveragecouponof7.08%,withtheCompany’sreturnssupplementedbycontractualarrangementandexitfees.Inaggregate,theexpectedgrossIRRoftheportfolioisinexcessof8.25%whichnowlaysthefoundationsforfutureNAVpersharegrowthontopofthefullycovereddividend.Importantly,theweightedaverageloanmaturityhasalsoimprovedto2.1years,withallnewloansbenefitingfromattractivecouponprotectionperiodsorminimumearningsmultiples.ThisremovestheconcentratedmaturityprofileofthelegacyloanportfolioandallowstheBoardandtheInvestmentAdvisertoimplementplansforgrowthoverthecomingtwelvemonths,giventhestrengthofopportunitiestodeployfurthercapitalatattractivereturns.

REVENUE AND PROFITABILITY Incomefromtheloanportfolioforthesix-monthperiodof£3.44million(31July2018:£3.60million),wasinlinewithexpectationsreflectingthebroadstabilityofloanbalancesovertheperiod.Totalexpensesfellintheperiod,largelyowingtoareductioninlegalandprofessionalfeesastheCompanyelectednottoincurthesignificantcostofissuingaplacingprogrammeprospectuswhilstthedividendremaineduncovered.Asaresult,posttaxearningsweremarginallyimprovedat£2.73million(31July2018:£2.70million).

n Fulldividendcovern Portfoliotransaction

completen Stronggrowth

opportunities


CHAIRMAN’S STATEMENT(CONTINUED)

Earningspersharefortheperiodwereconsistentat2.25pence(31July2018:2.25pence).

DIVIDEND PERFORMANCEAsIoutlinedinour31January2019AnnualReport,duringthetransitionperiodofitsloanportfoliotheCompanyhascontinuedtousepriorperiodretainedearnings,andmorerecentlyshareholdercapital,tosupplementincomeandmaintainthedividendatthecurrentlevelof6.0pencepershare.However,followingcompletionofthefournewtransactionsoutlinedabove,theGrouphasreturnedtofulldividendcover,withtheprospectofsomemodestNAVgrowthinthemediumterm,inlinewiththeCompany’sstatedinvestmentobjective.

TheCompanypaidafirstinterimdividendof1.50pencepershareinrespectofthequarterended30April2019on26July2019,andon26September2019declaredasecondinterimdividendinrespectofthequarterended31July2019of1.50pencepershare.

NAV AND SHARE PRICE PERFORMANCETheGroup’sNAVreducedby£0.90million,to£119.38millionasat31July2019(31January2019:£120.28million).ThereductionwascausedbytheBoard’sdecisiontoutilisecapitaltosupportthequarterlydividend.Basedonthecurrentportfolio,thispositionwillreverseandtheBoardanticipatesconsistent,modestgrowthintheNAVpersharehenceforth.

TheCompany’ssharestradedinarangeof96.5pencepershareto101.0pencepershare,finishingthequartertradingataslightpremiumtotheNAV,reflectingthevalueshareholdersplaceuponthestableandpredictablenatureofourunderlyinghighyieldincomestreaminalowyieldinterestrateenvironment.

PRINCIPAL RISKS AND UNCERTAINTIESTheCompany,throughitssubsidiary,investsprimarilyinUKcommercial

realestateloansofafixedratenature;assuch,itisexposedtotheperformanceoftheborrower,andunderlyingpropertyonwhichitsloansaresecured.TheCompany’skeyrisksarediscussedbelow.Inthisstatement,referencestotheCompanyalsoapplytotheGroupasawhole.

TheDirectorshaveidentifiedthefollowingasthekeyrisksfacedbytheCompany:

O realestateloansmadebytheCompanymay,afterfunding,becomenon-performing;

O valuationsofpropertyareinherentlysubjectiveandassetssecuringtheCompany’sloansmaybeworthlessthananticipated;

O achangeinmarketconditionsaffectingtheperformanceoftheCompanyanditsunderlyinginvestments;and

O achangeinregulatoryortaxlegislation.

TheprincipalrisksanduncertaintiesoftheCompanywereidentifiedinfurtherdetailintheAnnualReportandFinancialStatementsfortheyearended31January2019.TherehavebeennochangestotheCompany’sprincipalrisksanduncertaintiesforthesixmonthsended31July2019,andnochangesareanticipatedinthesecondhalfoftheyear.TheCompany’sprincipalriskfactorsarefullydiscussedintheCompany’sProspectus,availableontheCompany’swebsite(www.lbow.co.uk)andshouldbereviewedbyshareholders.

OUTLOOKIampleasedtoreportthattheencouragingmomentumgeneratedbytherecentnewtransactionsthatIoutlinedaboveiscontinuing.TermshavebeenagreedforanextensionoftheCompany’s£21.5millionMeadowsloan,followingthegrantofplanningpermissionatthepropertyforalarge-scaleresidential-ledredevelopment.Moreimportantly,

however,theInvestmentAdviserisseeingcontinuingdemandfromprospectiveborrowersforcapitalattermsthatareattractivetotheCompany.Thislaysthefoundationsnowforprogressive,consistentgrowthintheCompany.TheBoardandtheInvestmentAdviserarekeentoprogressthisgrowthoverthecomingtwelvemonths,basedonthepositivefeedbackreceivedinrecentmonthsfromawiderangeofcurrentandprospectiveshareholders.Thisgrowthwouldaddtodiversification,enhanceliquidityinthetradingoftheCompany’ssharesandreducetheexpenseratio.

TheBoardanticipatesexecutingthisstrategybydrawingandthenrepayingtheworkingcapitalfacilitywhichwillensurethatfreshequitycapitaldoesnotcauseanycashdragonthewiderCompanyandwillgiveinvestorsconfidenceandvisibilityaroundtheprospectsfortheportfolio.

Ofparamountimportancethoughisthequalityoftheexistingportfolio.Wefaceaperiodofuncertaintyinpoliticsandtheeconomyandtherobust,defensivecharacteristicsoftheexistingloanportfoliomeanthattheBoardissatisfiedthattheCompanyiswellplacedtoweatheranyturbulence.Further,with10-yeargiltyieldsnowyieldinglessthan0.6%perannum,theattractionoftheCompany’sfullycovered6.0penceannualdividendis,intheBoard’sview,evenmorecompelling.

JACK PERRYChairman

26September2019

Bliss Hotel, Southport


Overview

Governance


Other Inform

ation

INVESTMENT ADVISER’SREPORT

Fund facts

Fundlaunch: 5February2013 Fundtype: Closedendedinvestmentcompany

InvestmentAdviser: ICG-Longbow Domicile: Guernsey

Basecurrency: GBP Listing: LondonStockExchange

Issuedshares: 121.3million ISINcode: GG00B8C23S81

Investmentadvisoryfee: 1.0% LSEcode: LBOW

Website: www.lbow.co.uk

Share price & NAV at 31 July 2019 Key portfolio statistics at 31 July 2019

Shareprice(pencepershare): 98.5 Numberofinvestments: 8

NAV(pencepershare): 98.41 Percentagecapitalinvested(2): 77.2%

Premium: 0.09% Weightedavg.investmentcoupon: 6.91%

Approveddividend(pencepershare)(1): 1.50 Weightedavg.LTV: 59.4%

Dividendpaymentdate(1): 8November2019

(1) For the Quarter ended 31 July 2019. Ex-Dividend Date is 10 October 2019.(2) Loans advanced at amortised cost/Total equity attributable to the owners of the Company.

SHARE PRICE TOTAL RETURN V NAV TOTAL RETURN (FROM IPO TO 31 JULY 2019)

Shareholder Total ReturnNAV Total Return

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Mar

-13

Jul-

13

Nov

-13

Mar

-14

Jul-

14

Nov

-14

Mar

-15

Jul-

15

Nov

-15

Mar

-16

Jul-

16

Nov

-16

Mar

-17

Jul-

17

Nov

-17

Mar

-18

Jul-

18

Nov

-18

Mar

-19

Jul-

19


INVESTMENT ADVISER’SREPORT(CONTINUED)

SUMMARYAt31July2019theinvestmentportfoliocomprisedeightloans,followingadvanceofanew£15.0millionloancommitmentsecuredbyahotelandleisurecomplexinSouthport,Merseyside,andlatterlytherepaymentofthelowyieldingCommercialRegionalSpaceloan(£22.4million)andthematuringRamadaGatesheadloan(£8.0million).

Thesechangestothecompositionoftheloanportfolioimprovedtheweightedaverageinterestcouponto6.91%asat31July2019(31January2019:6.23%),withportfolioLTVnow59.4%(31January2019:62.2%).

Activitysubsequenttotheperiodend,whichisdiscussedbelow,hasfurtherenhancedthesemetrics.

GROUP PERFORMANCETheGroup’sloanportfoliosawafairdegreeofactivityduringtheperiod,butamoremeaningfullevelofchangeaftertheperiodendwhentheGroupconcludedasignificantnumberofnewinvestments.

Inadditiontothenew£15.0millionSouthportloan,a£0.5millionincreasewascommittedtotheborroweroftheAffinityloaninsupportofitsongoingbusinessplan.TheAffinityloanisnowfullydrawnat£16.7millionfollowingthecompletionofrenovationworksattheunderlyingsecurityproperty.InMay2019the£22.4millionCommercialRegionalSpaceloanrepaid,togetherwithinterestandfeesofapproximately£0.3million.InJuly2019the£8.0millionRamadaGatesheadloanrepaid,withinterestandfeesofapproximately£0.2million.

TheGroup’sportfoliosawsomevaluationimprovementsduringtheperiod,notablytheMeadowsloanwhereLTVfellfrom

70.3%to45.9%followingtheLondonMayor’sdecisiontograntplanningpermissionforamajorresidentialdevelopmentonthesite.Followingthispositivecreditmigration,theCompanyhasagreedtermstoextendthematurityoftheloanthroughtoJuly2020astheSponsorcontinuestoprogressitsbusinessplan.

SUBSEQUENT ACTIVITYInAugust2019theCompanyrefinanceditsstrongly-performingNorthlandsloan,providinganew£12.5millioncommitmentsecuredbythediversemixeduse,multi-letportfolio.Theloancarriesaninitial55.3%LTVratio.

InSeptember2019,theGroupprovidedanew£24.6million,four-yearloancommitmenttoanaffiliateofRoyaleLife,torefinanceaportfolioof10assetsintheresidentialbungalowhomessector.AlsoinSeptember2019theGroupcommittedanewthree-year,£6.5millionloantoafundadvisedbyLBSProperties,insupportofitsacquisitionofamulti-letofficepropertyinFarringdon,London.

Followingcommitmentofthesenewtransactions,withtotalnetnewinvestmentof£36.9million,theCompany’sweightedaverageinterestcouponimprovedfurther,to7.08%asatthedateofthisreport.Thetotalcommittedloanportfolionowtotals£129.32million,withaweightedaverageportfolioLTVof63.2%.Allnewinvestmentsbenefitfromcontractualarrangementandexitfees,withtheweightedaverageIRRoftheCompany’snewinvestmentsforecastat9.4%.

Thecashbalanceheldat31July2019hasnowbeenfullyutilisedandtheCompany’srevolvingcreditfacilitypartiallydrawninordertofinancetheaboveinvestmentactivity.

PORTFOLIO

Portfolio statistics 31 July 2019 31 January 2019

Numberofloaninvestments 8 9

Aggregateprincipaladvanced £92,277,958 £107,221,546

WeightedaverageLTV 59.4% 62.2%

Weightedaverageinterestcouponp.a. 6.91% 6.23%

Weightedaverageunexpiredloanterm 1.36years 0.96years

Weightedaverageunexpiredinterestincomeprotection 0.80years 0.42years

Cashheld £27,200,525 £12,370,129


Overview

Governance


Other Inform

ation


INVE

STM

ENT

PO

RTF

OLI

O A

S AT

31

JULY

201

9

Pro

ject

Reg

ion

Sect

orTe

rm s

tart

Une

xpte

rm (yrs

)

Day

1

bala

nce

(£m

)

Day

1

LTV (%

)

Bal

ance

ou

tsta

ndin

g(£

m)(2

)

Curr

ent

LTV

(%)

Mea

dow

Lond

onR

esid

entia

l(1)

Sep-

130.

5118

.07

65.0

21.5

045

.9

Nor

thla

nds

Lond

onM

ixed

use

(3)

Nov

-13

0.00

7.20

61.7

8.50

53.5

Hal

cyon

N

atio

nal

Indu

stri

al/d

istr

ibut

ion

Dec

-13

0.35

8.60

64.8

6.42

65.2

Car

rara

Yo

rks/

Hum

bers

ide

Reg

iona

lOffi

ceD

ec-1

30.

351.

3065

.01.

3065

.0

BM

O

Nat

iona

lM

ixed

use

Ja

n-17

0.21

16.0

055

.415

.79

51.5

Qua

ttro

Sout

hEa

stM

ixed

use

Oct

-17

1.46

9.00

83.7

9.00

80.6

Affin

itySo

uth

Wes

tO

ffice

Mar

-18

2.79

14.2

067

.316

.70

70.8

Sout

hpor

tHot

elN

orth

Wes

tH

otel

Feb-

193.

7112

.50

59.5

13.0

662

.2

Tota

l/w

eigh

ted

aver

age

1.36

89.5

764

.392

.28

59.4

(1)

The

Mea

dow

s si

te w

as p

revi

ousl

y cl

assi

fied

as R

etai

l, bu

t dur

ing

the

peri

od r

ecei

ved

plan

ning

con

sent

for

resi

dent

ial r

edev

elop

men

t.

(2)

Amou

nts

may

var

y du

e to

rou

ndin

g.

(3)

Follo

win

g qu

arte

r en

d, th

e N

orth

land

s lo

an w

as r

enew

ed a

nd e

xten

ded

on a

new

thre

e-ye

ar te

rm.

Seni

or L

oans

Cas

h

77%

23%

Ass

et T

ype

Res

iden

tial

Indu

stri

al/D

istr

ibut

ion

Mix

ed U

se

Hot

el

Offi

ce14

%

7%

20%

23%

Sect

or D

istr

ibut

ion

by L

oan

Am

ount

36%

33%

14%

10%

24%

Lond

on

Sout

h Ea

st

Nor

th W

est

Nat

iona

l

Reg

iona

l Dis

trib

utio

n by

Loa

n A

mou

nt

York

s/H

umbe

rsid

e

18%

Sout

h W

est

1%



ECONOMY AND FINANCIAL MARKET UPDATETheUKeconomyhadastrongerthanexpectedstarttotheperiod,withGDPrisingby0.5%inQ12019,albeitthispartiallyreversedwithafallof0.2%inQ22019,thefirstsuchfallinsixandahalfyears.Whilstservicesectorgrowth(whichcomprisescirca80%oftheeconomy)wasnominallypositiveat0.1%,thiswasinsufficienttooffsetweaknessinproductionandmanufacturing,whichcontractedby1.4%astheBrexitstockpilingseenduringQ1wasessentiallyreversed.WiththenewBorisJohnson-ledGovernmentexplicitlycommittedtoleavingtheEUwithorwithoutadealon31October2019;theprospectofweakergrowthhasbeenreflectedininterestrateswherethebenchmark10-yeargiltfellmarkedlyduringAugust,inparticular,andatonepointstoodbelow0.5%beforerecovering.

Morepositively,thelabourmarketcontinuestogofromstrengthtostrengthwiththeemploymentrateof76.1%asofJune2019atarecordhigh,accordingtotheONS.Wagegrowthat4%incashtermsisatadecadehigh,andrealwagegrowthofover2%isthehighestinfouryears.Thepublicfinancesarealsoenteringthisperiodofuncertaintyfromapositionofrelativehealth,withthebudgetdeficitmodestatcirca1.2%ofGDPandthedebt-to-GDPratiobelowallotheradvancedeconomiessaveforGermany.ThenewChancellor,SajidJavid,haspubliclystatedthatheislookingattakingadvantageoflowborrowingratestofundinvestment,andthatintheeventofano-dealBrexit,aGovernment-led“significanteconomicpackage”wouldbethelikelyresponse.

OCCUPATIONAL DEMAND/SUPPLYTheoccupationalmarketshavefaredrelativelywelldespitetheongoingeconomicuncertainty.InCentralLondon,H1takeupof5.8millionsq.ft.wasdown9%onH12018,accordingtoCBRE.ThiswaslargelyafunctionofaslowQ1,withapick-upinactivityinQ2reducingmarketvacancyratesmodestlyto4.2%.Spaceunderoffer,at4.1millionsq.ft.,isaheadofthe10-yearaveragewhichpointstoarobuststarttoH2.

Take-uphasbeenstrongacrossthe‘BigNine’regionalofficemarkets.Q2activitywas10%uponthelong-termaverage,bringingthehalfyeartotalto4.3millionsq.ft.Activitywasledbyseverallargecitycentredeals,combinedwithrecordlevelsofactivityintheflexibleworkspacesector.Q2alonesawover600,000sq.ft.offlexibleworkspacedeals,whichisalreadyinlinewithannualtotalsfromtheprevioustwoyears.

Onthesupplyside,Bristol,CardiffandEdinburghallhavevacancyratesbelow6%,accordingtoCushman&Wakefield,withrelativelylimitedsupplypipelinessuggestiveofrentalgrowthprospects.BycontrastBirmingham,ManchesterandGlasgoweachhaveover1millionsq.ft.underconstruction,andthelattertwoalreadyhavereasonableavailabilityofsupply,withvacancyratesof8.9%and10.6%respectively.

Industrialtake-uptotalled16.1millionsq.ft.forH12019,up28%onthelong-termaverage.Althoughvacancyrateshaveincreasedslightlyfrom5.3%to6.6%thisisinlinewithasupplyincreasefrom31.4millionsq.ft.to34.1millionsq.ft.,ratherthanareductionindemand,whichishighlydrivenbye-commerce,manufacturingandlogisticscompanies.Overall,themarketremainsresilientwithaverageindustrialrentalvaluesincreasingby3.3%inthe12monthstoJune,accordingtotheMSCIMonthlyIndex.Inourview,thisnewsupplytogetherwithongoinglevelsofspeculativedevelopmentislikelytomoderaterentalgrowthinthemediumterm.

Retail(inwhichtheGrouphasminimalexposure)continuestostruggleasprimerentsinQ22019fellby1.1%compoundingonthefallof1.0%inQ12019.FurtherCVAsduringtheperiod,

mostnotablythecontroversialArcadiagrouparrangement,haveaddedtopressureontowncentres.AccordingtoresearchfromPwCandtheLocalDataCompany,anet1,234storesclosedduringH12019.Despitethis,consumerconfidencehasrisentoaneight-monthhigh,thelabourmarketremainsingoodshapeandrealwagesarerisingstrongly,hencewedonotexpectretailsalestocollapse.Despitethesepositiveindicators,Brexituncertaintycombinedwithstructuralchangesresultingfromtheriseofe-commerce,businessratesandrisingwagesareallcontinuingtonegativelyimpactthesector.

PROPERTY INVESTMENT MARKETWeakeningeconomicsentimentandpoliticaluncertaintycontributedtoaslowdowninrealestatetransactionsduringthelasttwoquarters.Investmentvolumeswerecirca£19billionduringH12019,down32%comparedtoH12018.Thenegativesentimenttowardstheretailinvestmentmarkethasdeepenedwithannualtransactionsdowncirca50%onthefive-yearaverage.

All-propertyequivalentyieldshavebeguntodriftupwards–to5.9%inJune2019,comparedto5.8%ayearago.Averageyieldshaveincreasedthemostintheretailsector,byover0.3%accordingtotheMSCIMonthlyIndex.Annualisedaveragecapitalvaluegrowthforall-propertyalsoturnednegative(-1.2%)intheyeartoJune2019.Thisispredominantlydrivenbythesharpfallsintheretailsector(-9.5%)asgrowthremainspositivefortheindustrialandofficesectorsat5.8%and1%respectively.Lookingforward,thelatestAugust2019IPFconsensusforecastssuggestcapitalvaluefallsof3.6%in2019calendaryear,andafurther1.8%in2020,againlargelydrivenbyretail.

WithBrexitriskslooming,wedonotanticipateanyrecoveryininvestmentvolumesinthesecondhalf,butequallywedonotforeseeanyheavysellingofpropertyinvestmentsfollowingOctober,eveninadisruptiveno-dealscenario,withawait-and-seeapproachmorelikely.Giventhestronglabourmarketfundamentalsunderpinningoccupationalmarkets,arelativelackofsupply,andthestrongyieldpremiumcurrentlyovergilts,thechallengeforrealestatewilllikelybedealingwiththintransactionvolumesandconsequentlyadegreeofvaluationuncertainty.

FINANCE MARKETSInthefinancemarkets,CassBusinessSchoolpublisheditsannualreviewofUKpropertymarketlendingconditionsforY/E2018duringtheperiod,basedonasurveyof74lenderswithloanbookstotallingcirca£195billion.ThedatashowCRElendingvolumesof£49.6billionduringtheyear(a12%increasefrom2017)buttotalloanbooksuponly5%,reflectingwhatCassdescribeasaperiodofextraordinarystabilityinbothloanvolumesandmarketstructuresince2014.Thisreflectsourownexperiencewhere,outsideofretail,thereisreasonableliquidityinthedebtmarketsformostLTVsandassetclasses,butwithoutthedepthofcompetitionseenpriortotheGFCwhichpushedpricingandlendingcovenantstononsensicallevels.Inourview,lendersingeneralarecontinuingtoinvestprudently.

TheperiodwasalsonotableforthefirstUKloanpricedusingtheSONIAreferenceinterestrate,asanalternativetoSterlingLIBOR.IssuedbyNatWesttoNationalExpress,weexpecttoseesimilarloansintroducedintotherealestatelendingmarketinthemediumterm,priortotheeventualphasingoutofLIBORin2021.WhilstthisshouldnotaffectthemarketforornatureofthefixedrateloansofferedbytheCompany,wewillcontinuetomonitordevelopmentsinthisareaforanypotentialopportunitieswhichmayemerge.


Overview

Governance


Other Inform

ation


PORTFOLIO PROFILE AND ACTIVITY TheGroup’sinvestmentportfoliohasbeenrelativelyactiveoverthereportingperiod,withonenewadvanceandtherepaymentoftwolegacyloans.Inparticular,theredemptionofthelow-yieldingCommercialRegionalSpaceloan–anditsreplacementafterperiod-endbythehigher-returningRoyaleloan–hasallowedtheCompanytoachieveanimprovementintheweightedaveragecouponrate.

FollowingthenewinvestmentactivityconcludedinAugustandSeptember2019,theCompany’sweightedaverageLTVisnow63.2%,withaweightedaverageunexpiredloantermof2.1years,consistentwithourexpectationsforamatureportfolio.Theweightedaverageinterestcouponof7.08%,supplementedbyarrangementfeespaidatclosingandcontractualexitfees,hasnowrestoredfulldividendcover.

TheGroup’sinvestmentshavecontinuedtoperformtobusinessplan,andtheperiodhasseenthelong-awaitedgrantofresidentialplanningpermissiononthesitesecuringtheMeadowsloan,togetherwithcompletionofrefurbishmentworksattheAffinityloanassetandcommencementofaroomupgradeprogrammeattheSouthporthotel.WecontinuetomonitortheQuattroloanclosely,followingtheabortivesaleofoneofthesecurityproperties,howeverthelargestassetsawamodestincreaseinvalueandhasseenongoingcapitalexpenditureinadditiontoanewplanningpermissionallowingforancillaryretailuse.

TheInvestmentAdvisercontinuestobelievetheGroup’sloanportfolioremainssatisfactorilysecured,withsenior-rankingmortgagesandaweightedaverageLTVof59.4%attheendoftheperiod.Riskremainswelldiversified,withinteresttypicallycoveredthroughmulti-tenantedpropertyandwhereappropriatesupplementedbyfundedcashreserves.

PORTFOLIO OUTLOOKThepositivemomentumgeneratedfollowingthecompletionofkeynewinvestmentshascontinued,andtheGroupiscurrentlydocumentingacirca£15.3millioncommitmentsecuredbyaregionalhotelportfolio.ThetransactionisexpectedtocompleteinthecomingweeksbywhichstagetheCompanywillhavefullycommitteditsavailablecapitalandsubstantiallydrawnitsrevolvingcreditfacility.

Includingthepipelinehoteltransaction,thecirca£70millionofgrossnewinvestmentcompletedsincetheGroup’syearendcarriesaprojectedweightedaverageIRRofover9.0%,withanaverageinitialLTVofapproximately69.3%andaverageloantermofover3.5years.ThisreinforcestheCompany’scapabilitytodeploycapitalatlevelsaccretivetoshareholders,whilstextendingtheaverageloantermofitsportfolio.

WiththeCompanyprogressingaprospectivenewinvestmenttoimmediatelyreplacethematuringBMOPartnersloan,thereisclearlineofsighttoaperiodoffullinvestmentandstability.Assuchwecannowbefullyfocusedongrowth,andcontinuetoseeanattractivepipelineofopportunitiesinsupportofourambitiontoincreasethesizeoftheCompanyandfurtherdiversifytheinvestmentportfolio.



LOAN PORTFOLIOAssetoutabove,asat31July2019,theGroup’sportfoliocomprisedofeightloanswithanaggregatebalanceoutstandingof£92.28million.

Asummaryofeachoftheindividualloansasat31July2019issetoutbelow:

Meadow

Originallyan£18.07millionseniorloanfacilityusedtoassistfinancinganestablishedandwellsupportedinternationalrealestatefundintheacquisitionofahighlyprominentretailparkinNorthLondon.TheborrowerisanSPVownedbyMeadowRealEstateFundIILPandismanagedbyMeadowPartners,aninternationalrealestateinvestorandassetmanager.

Theestateisnowvacant,saveforsometemporaryoccupancyofpartofthesite,anddebtservicecontinuestobemetfromapre-fundedreserveaccount(toppedupquarterly)whichprovidesinterestcoverthroughtoloanmaturity.Theloanremainscompliantwithallcovenantsandissatisfactorilysecured.

TheloanmaturesinJanuary2020,howeverfollowingperiodendtermshavebeenagreedforanextensionthroughtoJuly2020,followingthesuccessfulexecutionofthekeyelementoftheborrower’sbusinessplanwiththeLondonMayorgrantingplanningconsentforamajorresidential-ledredevelopmentofthesite.

Property profile Debt profile

Numberofproperties 1 Dayonedebt £18,070,000

Propertyvalue(£) £46,850,000 Debtoutstanding £21,500,000

Propertyvalue(£/sq.ft.) £504 Originalterm 4.3years

Propertyarea(sq.ft.) 92,882 Maturity January2020

Numberoftenants n/a CurrentLTV 45.9%

Weightedleaselength n/a Loanexposurepersq.ft. £231.48

Northlands

Originallya£7.20millionseniorloanfacilityusedtorefinanceexistingseniordebtsecuredonamixed-useportfolioofhighstreetretail,officeandtenantedresidentialunitslocatedpredominantlyinLondonandtheSouthEast.TheborrowerisNorthlandsHoldingsandgroupaffiliatesonacross-collateralisedbasis.

Thesecurityportfolioishighlydiverseacrossitspropertyandtenantbase,principallybeinglettoconvenienceretailandresidentialoccupiers.Followingcertainchangestotheunderlyingpropertysecuritypoolandadditionaladvances,theloanbalanceisnow£8.50million,reflecting53.5%LTV.

Giventhestrongperformanceofthisportfoliooveranumberofyears,theCompanyenteredintoafullrefinancingofthefacilityfollowingperiodend,onattractiverisk-adjustedterms.Thenewloancommitmentis£12.5million,includingacapitalexpenditurefacilitytosupportthenextphaseofthesponsor’sbusinessplan.

Asat26SeptemberthematuritydatehasbeenextendedtoOctober2022.




Propertyvalue(£/sq.ft.) £131.91 Originalterm 5.0years

Propertyarea(sq.ft.) 121,285 Maturity February2019

Numberoftenants 122 CurrentLTV 53.5%

Weightedleaselength 1.9years Loanexposurepersq.ft. £70.08


Overview

Governance


Other Inform

ation


LOAN PORTFOLIO (CONTINUED)

Halcyon

Originallya£8.60millionseniorloanfacilityutilisedtorefinanceaportfoliooffreeholdgroundrents.

Withtheloanbeingsecuredbyaportfolioofdefensivefreeholdgroundrentinvestments,thesecuritypositionisconsideredstrongdespiteanICRbelowtheaverageoftheGroup’sinvestments.

Arepaymentofthefacilityisexpectedinadvanceofthescheduledloanmaturity.





Propertyarea(sq.ft.) 263,545 Maturity December2019



Carrara

A£1.30millionseniorloanfacilitywasusedtorefinanceanindividualgroundrentinvestment.

TheCarrarasecuritycomprisesasinglevirtualfreeholdgroundrentinvestmentlocatedinLeedswithanunexpiredleasetermof82years,subjecttoagroundrentof25%ofmarketrent.ThepropertyisamodernofficebuildingonanestablishedbusinessparkaccessedfromtheM1motorway.GiventheGroup’sseniorpositioninthecapitalstructureagainstthesuperiorfreeholdinterestintheasset,thesecuritypositionremainsverystrong.

Arepaymentofthefacilityisexpectedinadvanceofthescheduledloanmaturity.





Propertyarea(sq.ft.) 24,470 Maturity December2019






BMO

TheGroupadvancedanew£16.00millionloantoclientsofBMORealEstatePartners,withaninitialLTVratioof55.4%andamaturitydateinApril2019.Theloanwasoriginallysecuredbyfirstchargesagainstaportfolioof17propertieslocatedacrosstheUK,principallyinthehighstreetretailandindustrialsectors,andprovidesadiversifiedincomestream.

Arepaymentofthefacilityisexpectedinthesecondhalfoftheyear.




Propertyvalue(£/sq.ft.) £96.50 Originalterm 2years

Propertyarea(sq.ft.) 318,036 Maturity October2019



Quattro

On17October2017,theGroupadvancedanew£9.00millionloantoaprivatepropertycompany,securedbythreemixeduseassetsinandaroundtheLondonBoroughofKingston.TheGroupinitiallyfinanceda£6.00millionparticipationintheloansubsequentlyacquiringtheminority£3.00millionpositionfromICGfollowinganequityissuanceunderthe2017PlacingProgramme.

TheloancarriedaninitialLTVratioof83.7%,atthetopendoftheGroup’sinvestmentparameters,howeverowingtoavaluationincreasethecurrentLTVis80.6%.

Theloanisstructuredwithaprofitparticipationcomponent,allowingtheGrouptobenefitfromanyfuturevaluegrowthintheportfoliowhilstretainingthesecurityofaseniorfirstmortgageposition.Novalueiscurrentlyascribedtotheprofitparticipation.




Propertyvalue(£/sq.ft.) £294 Originalterm 3.2years

Propertyarea(sq.ft.) 38,038 Maturity January2021




Overview

Governance


Other Inform

ation



Affinity

On28February2018,anew£16.20millioncommitmentwasmade,ofwhich£14.20millionwasadvanced,torefinanceamulti-letofficepropertyinBristol,andtoprovidea£2.00millioncapitalexpenditurefacilitytofundarefurbishmentprogramme.Theloanissecuredbyafive-storeyofficeblockcomprising114,364sq.ft.lettotentenantswithacontractedrentof£1.24millionperannumandaninitialweightedunexpiredleasetermatloanclosingof4.9years.

Duringtheperiod,theloanwasincreasedto£16.70millioninsupportoftheborrower’sbusinessplan,andavaluationincreasewasobservedduringtheperiodasthisbusinessplanprogressedandrefurbishmentworksatthepropertycontinued.





Propertyarea(sq.ft.) 114,364 Maturity May2022



Southport Hotel

A£15.0millionloancommitment,ofwhich£13.06millionhasbeendrawn,securedbyahotelandleisurecomplexinSouthport,Merseyside.Theinitialloantovalueratiois59.5%.

Thehotelhasademonstrabletradinghistorywithabusinessplanfocusedoninvestinginimprovingtheasset,renovatingthebedroomsandthereafterdrivingroomrates.Duringtheperiod,thehotelhasbeenrebrandedas‘Bliss’andaroomsrenovationprogrammeisnowunderway.




Propertyvalue(£/bedroom) £157,895 Originalterm 4years

Propertyvalue(£/sq.ft.) £462.25 Maturity April2023

Bedrooms 133 CurrentLTV 62.2%

Propertyarea(sq.ft.) 45,430 Loanexposureperbedroom £98,203



LOAN PORTFOLIO (CONTINUED)Followingyearend,thefollowingloanswereaddedtotheportfolio:

Royale

On5September2019theCompanyenteredintoa£24.6millioncommitmentwithanaffiliateofRoyaleLife,theUK’sleadingproviderofbungalowhomes,securedbyaportfolioof10assetsintheresidentialbungalowhomessector.

Thefacilityformspartofalarger£142.7millionloanoriginatedbytheInvestmentAdviser,andtheCompanyisparticipatingalongsidetwootherfundsmanagedbytheInvestmentAdviser.

Theloancarriesafour-yeartermwithaninitialLTVratioof78.9%.Theinitialloandrawndownis£20.3million,withthebalancecomprisingacapitalexpenditurecommitmentinsupportoftheborrower’sbusinessplan.



Propertyvalue(£)* £25,695,180 Debtoutstanding £20,267,119

Numberoftenants n/a Originalterm 4years

Weightedleaselength n/a Maturity October2023

CurrentLTV 78.9%*proratabasedonCompany’sshareoftotalloan

LBS Properties

On23September2019,theCompanyenteredintoa£6.5millionloancommitmentwithafundadvisedbyLBSProperties,securedbyamulti-letofficepropertyinFarringdon,London.

TheloancarriesaninitialLTVratioof69.0%,andincludesacapitalexpenditurecommitmentinsupportoftheborrower’sbusinessplan.




Propertyvalue(£/sq.ft.) £726 Originalterm 3years

Propertyarea(sq.ft.) 9,780 Maturity October2022


Weightedleaselength 0.5years Loanexposurepersq.ft. £503

SUBSEQUENT EVENTS SignificantsubsequenteventshavebeendisclosedinNote11totheFinancialStatementsonpage25.

ICG-LONGBOW 26September2019


Overview

Governance


Other Inform

ation

DIRECTORS’ RESPONSIBILITIESSTATEMENT

TheDirectorsareresponsibleforpreparingthisInterimFinancialReportinaccordancewithapplicablelawandregulations.TheDirectorsconfirmthattothebestoftheirknowledge:

O TheUnauditedCondensedConsolidatedInterimFinancialStatementshavebeenpreparedinaccordancewithIAS34InterimFinancialReportingasadoptedbytheEU;and

O TheChairman’sStatementandInvestmentAdviser’sReportincludeafairreviewoftheinformationrequiredby:

(i) DTR4.2.7RoftheDisclosureGuidanceandTransparencyRules,beinganindicationofimportanteventsthathaveoccurredduringthefirstsixmonthsofthefinancialyearandtheirimpactontheUnauditedCondensedConsolidatedInterimFinancialStatements;andadescriptionoftheprincipalrisksanduncertaintiesfortheremainingsixmonthsoftheyear;and

(ii) DTR4.2.8RoftheDisclosureGuidanceandTransparencyRules,beingrelatedpartytransactionsthathavetakenplaceinthefirstsixmonthsofthefinancialyearandthathavemateriallyaffectedthefinancialpositionandperformanceoftheentityduringthatperiod;andanychangesintherelatedpartytransactionsdescribedinthelastAnnualReportandFinancialStatementsthatcoulddoso.

OnbehalfoftheBoard

JACK PERRYChairman

26September2019


CONDENSEDCONSOLIDATEDSTATEMENTOFCOMPREHENSIVE INCOMEForthesixmonthperiodto31July2019

Notes

1 February 2019 to 31 July 2019

£ (Unaudited)


£(Unaudited)

1 February 2018 to 31 January 2019

£ (Audited)

Income

Incomefromloans 3,441,940 3,595,754 7,196,384

Otherfeeincomefromloans 354,301 392,331 439,207

Incomefromcashandcashequivalents 4,551 2,754 6,657

Total income 3,800,792 3,990,839 7,642,248

Expenses

Investmentadvisoryfees 10 597,932 609,293 1,211,925

Administrationfees 94,967 85,000 163,333

Directors’remuneration 10 98,750 98,125 196,875

Luxcooperatingexpenses 69,371 74,398 169,559

FinanceCost 42,670 – –

Brokerfees 24,517 27,501 52,501

AuditfeesfortheCompany 32,500 20,000 40,000

AuditfeesfortheSubsidiary 9,024 9,024 12,953

Regulatoryfees 10,478 9,651 22,679

Listingfees 5,446 4,352 10,325

Legalandprofessionalfees 5 617 306,436 413,221

Otherexpenses 84,506 44,503 87,827

Total expenses 1,070,778 1,288,283 2,381,198

Profit for the period before tax 2,730,014 2,702,556 5,261,050

Taxation(credit)/charge (1,989) – 2,803

Profit for the period after tax 2,732,003 2,702,556 5,258,247

Total comprehensive income for the period 2,732,003 2,702,556 5,258,247

Basic and diluted Earnings per share (pence) 6 2.25 2.25 4.36

Allitemswithintheabovestatementhavebeenderivedfromcontinuingactivities.

TheaccompanyingnotesformanintegralpartoftheseInterimFinancialStatements.


Other Inform

ationFinancial Statem

entsG

overnanceO

verview

CONDENSEDCONSOLIDATEDSTATEMENTOF FINANCIAL POSITIONAsat31July2019


Notes

31 July 2019 £

(Unaudited)

31 January 2019 £

(Audited)

31 July 2018 £

(Unaudited)

Assets

Cashandcashequivalents 27,200,525 12,370,129 8,937,259

Tradeandotherreceivables 691,182 126,654 38,116

Loansadvancedatamortisedcost 4 93,326,731 108,561,477 113,437,717

Total assets 121,218,438 121,058,260 122,413,092

Liabilities

Interestreserve – – 358,387

Otherpayablesandaccruedexpenses 1,841,130 773,871 696,924

Total liabilities 1,841,130 773,871 1,055,311

Net assets 119,377,308 120,284,389 121,357,781

Equity

Sharecapital 119,115,310 119,115,310 119,105,310

Retainedearnings 261,998 1,169,079 2,252,471

Total equity attributable to the owners of the Company 119,377,308 120,284,389 121,357,781

Number of ordinary shares in issue at period/year end 7 121,302,779 121,302,779 121,302,779

Net Asset Value per ordinary share (pence) 6 98.41 99.16 100.05

TheInterimFinancialStatementswereapprovedbytheBoardofDirectorson26September2019andsignedontheirbehalfby:

JACK PERRY PATRICK FIRTHChairman Director

26September2019 26September2019


CONDENSEDCONSOLIDATEDSTATEMENTOFCHANGES IN EQUITYForthesixmonthperiodto31July2019


NotesNumber

of shares

Sharecapital

£(Unaudited)

Retainedearnings

£(Unaudited)

Total£

(Unaudited)

As at 1 February 2019 121,302,779 119,115,310 1,169,079 120,284,389

Profitfortheperiod – – 2,732,003 2,732,003

Dividendspaid 8 – – (3,639,084) (3,639,084)

As at 31 July 2019 131,302,779 119,115,310 261,998 119,377,308

Forthesixmonthperiodto31July2018

NotesNumber

of shares

Sharecapital

£(Unaudited)

Retainedearnings

£(Unaudited)

Total£

(Unaudited)

As at 1 February 2018 117,042,779 114,857,090 3,125,099 117,982,189

Sharesissued 4,260,000 4,302,600 – 4,302,600

Shareissuecosts – (54,380) – (54,380)

Profitfortheperiod – – 2,702,556 2,702,556

Dividendspaid 8 – – (3,575,184) (3,575,184)

As at 31 July 2018 121,302,779 119,105,310 2,252,471 121,357,781

ICG-Longbow Senior Secured UK Property Debt Investments LimitedInterim Report and Unaudited Condensed Consolidated Interim Financial Statements 19

CONDENSEDCONSOLIDATEDSTATEMENTOF CASH FLOWSForthesixmonthperiodto31July2019


Notes


£ (Unaudited)


£ (Unaudited)


£ (Audited)

Cash flows generated from operating activities

Profitfortheperiod 2,732,003 2,702,556 5,258,247

Adjustmentsfornon-cashitems:

Movementinotherreceivables (564,528) 522,453 75,528

Movementinotherpayablesandaccruedexpenses 1,061,517 (317,278) (242,282)

Movementintaxpayable 5,742 (23,607) (21,656)

Loanamortisation (904,679) (668,450) (750,171)

2,330,055 2,215,674 4,319,666

Loansadvancedlessarrangementfees (14,740,749) (14,985,050) (16,592,089)

Loansrepaid 4 30,880,174 14,547,449 21,112,449

Netloansadvancedlessarrangementfees 16,139,425 (437,601) 4,520,360

Net cash generated from operating activities 18,469,480 1,778,073 8,840,026

Cash flows (used in)/generated from financing activities

Proceedsfromissueofshares – 4,302,600 4,302,600

Issuecostspaid – (54,380) (44,380)

Dividendspaid 8 (3,639,084) (3,575,184) (7,214,267)

Net cash (used in)/generated from financing activities (3,639,084) 673,036 (2,956,047)

Netmovementincashandcashequivalents 14,830,396 2,451,109 5,883,979

Cashandcashequivalentsatthestartoftheperiod 12,370,129 6,486,150 6,486,150

Cash and cash equivalents at the end of the period 27,200,525 8,937,259 12,370,129

Other Inform


entsG

overnanceO

verview


NOTESTOTHEUNAUDITEDCONDENSEDCONSOLIDATEDINTERIMFINANCIAL STATEMENTSFortheyearended31January2019

1. GENERAL INFORMATIONICG-LongbowSeniorSecuredUKPropertyDebtInvestmentsLimitedisanon-cellularcompanylimitedbysharesandwasincorporatedinGuernseyundertheCompaniesLawon29November2012withregisterednumber55917asaclosed-endedinvestmentcompany.TheregisteredofficeandprincipalplaceofbusinessoftheCompanyisPOBox286,Floor2,TrafalgarCourt,LesBanques,StPortPeter,Guernsey,GY14LY,ChannelIslands.

TheCompany’sshareswereadmittedtothePremiumSegmentoftheOfficialListsandtotradingontheMainMarketoftheLondonStockExchangeon5February2013.

TheunauditedcondensedconsolidatedfinancialstatementscomprisethefinancialstatementsoftheGroupasat31July2019.

TheinvestmentobjectiveoftheGroup,asapprovedbytheshareholdersoftheCompany,istoconstructaportfolioofUKrealestatedebtrelatedinvestmentspredominantlycomprisingloanssecuredbyfirstrankingfixedchargesagainstcommercialpropertyinvestments,withtheaimofprovidingshareholderswithattractivequarterlyreturns,capitalpreservationand,overthelongerterm,adegreeofcapitalappreciation.

TheInvestmentAdviser,whichtradesunderthenameofICG-Longbow,isauthorisedandregulatedbytheFCA.TheassetsoftheGrouparemanagedbytheBoardundertheadviceoftheInvestmentAdviserunderthetermsoftheInvestmentAdvisoryAgreement.

2. ACCOUNTING POLICIESa) Basis of preparationTheInterimFinancialStatementsincludedinthisInterimReport,havebeenpreparedinaccordancewithIAS34‘InterimFinancialReporting’,asadoptedbytheEU,andtheDisclosureandTransparencyRulesoftheFCA.

TheInterimFinancialStatementshavenotbeenauditedorreviewedbytheCompany’sAuditor.

TheInterimFinancialStatementsdonotincludealltheinformationanddisclosuresrequiredintheAnnualReportandFinancialStatementsandshouldbereadinconjunctionwiththeCompany’sAnnualReportandFinancialStatementsfortheyearended31January2019,whichareavailableontheCompany’swebsite(www.lbow.co.uk).TheAnnualReportandFinancialStatementshavebeenpreparedinaccordancewithIFRSasadoptedbytheEU.

ThesameaccountingpoliciesandmethodsofcomputationhavebeenfollowedinthepreparationoftheseInterimFinancialStatementsasintheAnnualReportandFinancialStatementsfortheyearended31January2019.

Inthepreviousyear,theGrouphasappliedIFRS9FinancialInstruments(asrevisedinJuly2014)andtherelatedconsequentialamendmentstootherIFRSStandardsthatareeffectiveforanannualperiodthatbeginsonorafter1January2018andwasadoptedbytheGroupfortheyearended31January2019.TheadoptionofIFRS9hasnothadanymaterialimpactontheGroup’sConsolidatedFinancialStatements.

TheCompanyapplied,forthefirsttime,certainstandardsandamendments,whichareeffectiveforannualperiodsbeginningonorafter1January2019.Thenewstandardsoramendmentstoexistingstandardsandinterpretations,effectivefrom1January2019,didnothaveamaterialimpactontheCompany’sinterimcondensedfinancialstatements.Itisnotanticipatedthatanystandardwhichisnotyeteffective,willhaveamaterialimpactontheCompany’sfinancialpositionorontheperformanceoftheCompany’sstatements.

b) Going concernTheGroupissubstantiallyinvestedwithloansadvancedatamortisedcostrepresenting78.18%ofthetotalequityattributabletotheownersoftheCompanyandexpectsthattheloanportfoliowillgenerateenoughcashflowstopayon-goingexpensesandreturnstoshareholders.TheDirectorshaveconsideredthecashposition,performancesofcurrentinvestmentsandactivitysubsequenttotheperiodendbytheGroupandhaveconcludedthatitisappropriatetoadoptthegoingconcernbasisofaccountinginpreparingtheInterimFinancialStatements.

TheDirectorstherefore,atthetimeofapprovingtheInterimFinancialStatements,haveareasonableexpectationthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefutureanddonotconsidertheretobeanythreattothegoingconcernstatusoftheGroup.

Thefirstcontinuationvotewasheldon1March2017andpassedbytheshareholders.Therequirementforsubsequentfollow-oncontinuationresolutionsshallbeputtoshareholderseveryfiveyears.

c) Segmental reportingOperatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedtothechiefoperatingdecision-maker.Thechiefoperatingdecision-maker,whoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments,hasbeenidentifiedastheBoardofDirectors,asawhole.ThekeymeasureofperformanceusedbytheBoardtoassesstheCompany’sperformanceandtoallocateresourcesisthetotalreturnontheGroup’sNetAssetValue,ascalculatedunderIFRS,andthereforenoreconciliationisrequiredbetweenthemeasureofprofitorlossusedbytheBoardandthatcontainedintheInterimFinancialStatements.

Formanagementpurposes,theGroupisorganisedintoonemainoperatingsegment,beingtheprovisionofadiversifiedportfolioofUKcommercialpropertybackedseniordebtinvestments.

ThemajorityoftheGroup’sincomeisderivedfromloanssecuredoncommercialandresidentialpropertyintheUnitedKingdom.

DuetotheGroup’snature,ithasnoemployees.

TheGroup’sresultsdonotvarysignificantlyduringreportingperiodsasaresultofseasonalactivity.


NOTESTOTHEUNAUDITEDCONDENSEDCONSOLIDATEDINTERIMFINANCIAL STATEMENTS(CONTINUED)

3. CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING THE GROUP’S ACCOUNTING POLICIESThepreparationoftheInterimFinancialStatementsunderIFRSrequiresmanagementtomakejudgements,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassetsandliabilities,incomeandexpenses.Theestimatesandassociatedassumptionsarebasedonhistoricalexperienceandotherfactorsthatarebelievedtobereasonableunderthecircumstances,theresultsofwhichformthebasisofmakingjudgementsaboutcarryingvaluesofassetsandliabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimates.

Theestimatesandunderlyingassumptionsarereviewedonanon-goingbasis.Revisionstoaccountingestimatesarerecognisedintheperiodinwhichtheestimateisrevisediftherevisionaffectsonlythatperiodorintheperiodoftherevisionandfutureperiodiftherevisionaffectsbothcurrentandfutureperiods.

Critical judgementsInassessingExpectedCreditLosses(ECL),theBoardhavemadecriticaljudgementsinrelationtothestagingoftheloansandassessmentswhichimpactthelossgivendefault.InassessingwhethertheloanshaveincurredasignificantincreaseincreditrisktheInvestmentAdviser,onbehalfoftheBoard,assessesthecreditriskattachingtoeachoftheloans.TheGrouphasadoptedtheInvestmentAdviser’sinternalcreditratingmethodologyandhasuseditslossexperiencetobenchmarkinvestmentperformanceandpotentialimpairmentforbothStage1andStage2loansunderIFRS9consideringbothprobabilityofdefaultandexpectedcreditlosses.ThejudgementappliedinallocatingeachinvestmenttoStage1,2or3iskeyindecidingwhetherlossesareconsideredforthenext12monthsoroverthelifeoftheloan.TheBoardhasestimatedthattwoloanshaveshownevidenceofsignificantcreditriskinrelationtoreductioninLTVandICR.InassessingtheultimateECLinrelationtotheseloans,theBoardhasmadeassumptionsregardingthecollateralvalueandheadroomovertheprincipalloanamounts.

ThemeasurementofboththeinitialandongoingECLallowanceforloanreceivablesmeasuredatamortisedcostisanareathatrequirestheuseofsignificantassumptionsaboutcreditbehavioursuchaslikelihoodofborrowersdefaultingandtheresultinglosses.InassessingtheprobabilityofdefaulttheBoardhastakennoteoftheexperienceandlosshistoryoftheInvestmentAdviserwhichmaynotbeindicativeoffuturelosses.ThedefaultprobabilitiesarebasedonLTVheadroomwhichtheInvestmentAdviserbelievestobeagoodpredictoroftheprobabilityofdefault,inaccordancewithrecentmarketstudiesofEuropeancommercialrealestateloans.TheDirectorsconsiderthelossgivendefaulttobeclosetozeroastheloansarethesubjectofverydetailedduediligenceproceduresoninceptionand,inaddition,thereissignificantLTVheadroom.Asaresult,nolossallowancehasbeenrecognisedbasedon12-monthECLsforthoseinstage1andorlifetimelossesforthoseinstage2,asanysuchimpairmentwouldbewhollyinsignificanttotheGroup.

RevenuerecognitionisconsideredasignificantaccountingjudgementandestimatethattheDirectorsmakeintheprocessofapplyingtheGroup’saccountingpolicies.

TheDirectorsconsiderjudgementsandestimationsindeterminingthefairvalueofprepaymentoptionsembeddedwithinthecontractsforloansadvanced.Thekeyfactorsconsideredinthevaluationofprepaymentoptionsincludetheexerciseprice,theinterestrateofthehostloancontract,differentialtocurrentmarketinterestrates,theriskfreerateofinterest,contractualtermsoftheprepaymentoption,andtheexpectedtermoftheoption.

4. LOANS ADVANCED(i) Loans advanced

31 July 2019Principal advanced

£

31 July 2019 At amortised

cost £

31 January 2019 Principal advanced

£

31 January 2019 At amortised

cost £

Meadow 21,500,000 21,963,330 21,500,000 21,941,471

Northlands 8,500,000 8,725,789 8,500,000 8,692,447

Halcyon 6,423,280 6,567,935 6,423,280 6,570,708

Carrara 1,300,000 1,337,237 1,300,000 1,331,708

Ramada – – 7,982,500 8,151,125

CommercialRegionalSpace – – 22,400,000 22,620,181

BMO 15,793,727 15,758,948 15,793,727 15,807,533

Quattro 9,000,000 9,034,912 9,000,000 9,007,986

Affinity 16,700,000 16,889,668 14,322,039 14,438,318

Bliss 13,060,951 13,048,912 – –

92,277,958 93,326,731 107,221,546 108,561,477

Other Inform


entsG

overnanceO

verview



4. LOANS ADVANCED (CONTINUED)(ii) Valuation considerationsTheDirectorsconsiderthatthecarryingvalueamountsoftheloans,recordedatamortisedcostintheInterimFinancialStatements,areapproximatelyequaltotheirfairvalue.Noelementoftheloansispastdueorimpaired,andallinvestmentsaresecuredbywayofafullyregisteredfirstlegalchargeovertheproperty,andthereisnosubordinateddebtorsecondarychargesregistered.

Amortisedcostiscalculatedusingtheeffectiveinterestratemethod,whichtakesintoaccountallcontractualterms(includingarrangementandexitfees)thatareanintegralpartoftheloanagreement.Asthesefeesaretakenintoaccountwhendetermininginitialnetcarryingvalue,theirrecognitioninprofitorlossiseffectivelyspreadoverthelifeoftheloan.

TheGroup’sinvestmentsareintheformofbilateralloans,andassuchareilliquidinvestmentswithnoreadilyavailablesecondarymarket.Whilstthetermsofeachloanincludesrepaymentandprepaymentfees,intheabsenceofaliquidsecondarymarket,theDirectorsdonotbelieveawillingbuyerwouldpayapremiumtotheparvalueoftheloanstorecognisesuchtermsandassuchtheamortisedcostisconsideredrepresentativeofthefairvalueoftheloans.

Eachpropertyonwhichinvestmentsaresecuredwassubjecttoanindependent,thirdpartyvaluationatthetimetheinvestmentwasenteredinto.Allinvestmentsaremadeonaholdtomaturitybasis.Eachinvestmentismonitoredonaquarterlybasis,inlinewiththeunderlyingpropertyrentalcycle,includingareviewoftheperformanceoftheunderlyingpropertysecurity.Nomarketorothereventshavebeenidentifiedthroughthisreviewprocess,whichwouldresultinafairvalueoftheinvestmentssignificantlydifferenttothecarryingvalue.

Whilsttheloansareperformingandthebalanceoutstandingineachcaseisatasubstantialdiscounttothevalueoftheunderlyingrealestateonwhichtheyaresecured,theDirectorsdonotconsidertheloanstobeimpaired,orfortheretobeariskofnotachievingfullrecovery.

(iii) IFRS 9 – Impairment of Financial Assets Theinternalcreditratingofeachloanasat31July2019hasbeenreviewed.Oneloanshowedasmalldeteriorationincreditratingsince31January2019,followingthedrawdownonacapitalexpenditurefacility.Therelatedrefurbishmentworksarenowcomplete,andtherefurbishedfloorsarebeinglaunchedfornewlettings.GiventheunderlyingcreditratingremainsacceptableanddemandcharacteristicsofthelocalmarkettogetherwithamodestincreaseinpropertyvaluetheDirectors,underadvicefromtheInvestmentAdviser,believethedeteriorationistemporaryandassuchtheloancontinuestobetreatedasastage1loan.

As at 31 July 2019

Stage 1 Stage 2 Stage 3 Total

Principaladvanced 83,277,958 9,000,000 - 92,277,958

Grosscarryingvalue 84,291,819 9,034,912 - 93,326,731

LessECLallowance - - - -

84,291,819 9,034,912 - 93,326,731

As at 31 January 2019

Stage 1 Stage 2 Stage 3 Total

Principaladvanced 76,721,546 30,500,000 - 107,221,546

Grosscarryingvalue 77,612,020 30,949,457 - 108,561,477

LessECLallowance - - -

77,612,020 30,949,457 - 108,561,477

OfthetwoStage2loansat31Januaryone,Meadow,hasseenamaterialimprovementinunderlyingpropertyvalueasaresultofsecuringplanningconsentandshowedanimprovedcreditratingasaresultmovingittoaStage1asset.

TheStage2loan,Quattro,wasidentifiedasaStage2assetat31January2019,followingadeteriorationincreditratingasaresultofareductionininterestcoverastheinterestreservewasutilised.Thesponsorcontinuestoprogresshisassetlevelbusinessplansandisnowseekingtoselland/orrefinancetheunderlyingproperties.Theprobabilityofdefaultovertheremainingtermwasconsideredtobelow.TheInvestmentAdvisercontinuestomonitorthisassetcloselyforanyfurtherdeterioration.

AllotherloansshowednodeteriorationandwereconsideredasStage1assetswithnoECLoveratwelvemonthperiod.

AreconciliationoftheECLallowancewasnotpresentedastheallowancerecognisedatperiodendwas£nil.

IFRS 9 Impairment – Sensitivity AnalysisAsdiscussedabove,theGroup’sECLisafunctionoftheprobabilityofdefault(“PD”)andlossgivendefault(“LGD”),wherePDisbenchmarkedagainstICG-Longbow’sinternalcreditratingmodelandLGDisbasedonICG-Longbow’strackrecordofover£3.0billionofseniorandwholeloanswhichwouldsatisfytheCompany’sinvestmentparameters.



4. LOANS ADVANCED (CONTINUED)(iii) IFRS 9 – Impairment of Financial Assets (continued)IFRS 9 Impairment – Sensitivity Analysis (continued)TheCompanyhasperformedsensitivityanalysisonitsexpectedcreditlossbyconsideringtheimpactofaonegradedeteriorationinthecreditratingofeachloan(PD)andaonegradeincreaseinloss(LGD)asaconsequence.Aonegradedeteriorationincreditrating(e.g.BBBtoBB)isbroadlyequivalenttoa5%increaseinLTVratioor20%reductioninICR.

GiventhelowweightedaverageLTVandrelativelystrongICRoftheportfolioasawholetheone-gradestressapplieddoesnotresultinanincreasetotheexpectedcreditlosswhichremains£nil.AtwogradedecreaseincreditqualityofeachloanwouldresultinatotalportfolioECLof£39,600(0.04%ofthetotalcapitaladvance).

Reasonable possible shift 31 July 2019

LTV +5%£nil

ICR -10%

LTV +10%£39,600

ICR -20%

HavingconsideredbothStage1andStage2loans,theBoardconsiderthattheExpectedCreditLosswithintheportfoliois£nil,andnoprovisionforimpairmentisrequiredunderIFRS9.

(iv) Portfolio movementsOn25February2019,theGrouparrangedanewloancommitmentof£15.0milliontoanaffiliateofBlissHotelsgroup,withaninitialadvanceof£12.5million.TheGroupadvancedfurthera£560,951commitmentonBlissHotelsgroupinthefirsthalfoftheyear.

On11March2019,theGroupadvanced£1,549,877totheborroweroftheAffinityloanandon24July2019afurther£328,084hasbeenadvancedbytheGroup.

On14May2019,theGroupreceivedarepaymentof£22,400,000ontheCommercialRegionalSpaceloan.Aspartofthisrepayment,theGroupreceivedatotalof£322,278ininterestandexitandprepaymentfeesinaccordancewiththetermsoftheloanagreement.

On17June2019theGroupmadeanadditionalloancommitmentof£500,000totheborroweroftheAffinityloan.

On17June2019,theCompanyagreedanextensionofitsfacilitytotheborroweroftheBMOloan,atahigherrateofinterest.

On24July2019,theGroupreceivedarepaymentof£7,982,500ontheRamadaloan.Aspartofthisrepayment,theGroupreceivedatotalof£175,396ininterestandexitandprepaymentfeesinaccordancewiththetermsoftheloanagreement.

5. LEGAL AND PROFESSIONAL FEES


£


£

CostsinrespectofCircularandpublicationofProspectus 18,435 301,763

Otherlegalandprofessionalfees (17,818) 4,673

617 306,436

6. EARNINGS PER SHARE AND NET ASSET VALUE PER SHAREEarnings per share



Profitfortheperiod(£) 2,732,003 2,702,556

Weightedaveragenumberofordinarysharesinissue 121,302,779 120,008,304

BasicanddilutedEPS(pence) 2.25 2.25

AdjustedbasicanddilutedEPS(pence) 1.96 1.93

ThecalculationofbasicanddilutedEarningspershareisbasedontheprofitfortheperiodandontheweightedaveragenumberofordinarysharesinissueduringtheperiod.

ThecalculationofadjustedbasicanddilutedEarningspershareisbasedontheprofitfortheperiod,adjustedforone-offotherfeeincomeduringtheperiodtotalling£354,301(31July2018:£392,331).

Therearenodilutivesharesat31July2019.

Other Inform


entsG

overnanceO

verview



6. EARNINGS PER SHARE AND NET ASSET VALUE PER SHARE (CONTINUED)Net Asset Value per share

31 July 2019 31 January 2019

NAV(£) 119,377,308 120,284,389

Numberofordinarysharesinissue 121,302,779 121,302,779

NAVpershare(pence) 98.41 99.16

ThecalculationofNAVpershareisbasedonNetAssetValueandthenumberofordinarysharesinissueattheperiod/yearend.

7. SHARE CAPITALAsat31July2019,theCompanyhad121,302,779(31January2019:121,302,779)issuedandfullypaidordinarysharesofnoparvalue.

8. DIVIDENDS Dividends paid


Dividend per share

Pence

Total dividend

£

Interimdividendinrespectofquarterended31January2019 1.50 1,819,542

Interimdividendinrespectofquarterended30April2019 1.50 1,819,542

3.00 3,639,084


Dividend per share

Pence

Total dividend

£

Interimdividendinrespectofquarterended31January2018 1.50 1,755,641

Interimdividendinrespectofquarterended30April2018 1.50 1,819,542

Interimdividendinrespectofquarterended31July2018 1.50 1,819,542

Interimdividendinrespectofquarterended31October2018 1.50 1,819,542

6.00 7,214,267

9. FINANCIAL RISK MANAGEMENT TheGroupthroughitsinvestmentinseniorloansisexposedtoavarietyoffinancialrisks.ThemainrisksarisingfromtheGroup’sfinancialinstrumentsare:marketrisk(includingcurrencyriskandinterestraterisk),creditriskandliquidityriskandarefullydisclosedonpages58to62oftheAnnualReportandFinancialStatementsfor31January2019.

TheCompany’sprincipalriskfactorsarefullydiscussedintheCompany’sProspectus,availableontheCompany’swebsite(www.lbow.co.uk)andshouldbereviewedbyshareholders.

10. RELATED PARTY TRANSACTIONS AND DIRECTORS’ REMUNERATIONPartiesareconsideredtoberelatedifonepartyhastheabilitytocontroltheotherpartyorexercisesignificantinfluenceoverthepartyinmakingfinancialoroperationaldecisions.

IntheopinionoftheDirectors,onthebasisofshareholdingsadvisedtothem,theCompanyhasnoimmediateorultimatecontrollingparty.

DirectorsTheunpaidconsultancyagreementwhichMrHuntleyhadwiththeAdministratorhasbeenterminatedbymutualconsentduringtheperiod.Noconsultancyserviceshavebeenprovidedsincetheendofthefirstquarter2018.

TheCompanyDirectors’feesfortheperiodamountedto£98,750(31July2018:£98,125)withoutstandingfeesof£49,375(31January2019:£49,375)duetotheDirectorsat31July2019.

Investment AdviserInvestmentadvisoryfeesfortheperiodamountedto£597,932(31July2018:£609,293)ofwhich£900,054(31January2019:£302,122)wasoutstandingattheperiod/yearend.


11. SUBSEQUENT EVENTSInAugust2019theCompanyarrangedarefinancingofitsNorthlandsloan,providinganew£12.5millioncommitmentsecuredbythediversemixeduse,multi-letportfolio.

InSeptember2019,theGroupprovidedanew£24.6million,four-yearloancommitmenttoanaffiliateofRoyaleLife,torefinanceaportfolioof10assetsintheresidentialbungalowhomessector.

InSeptember2019theGroupcommittedanewthree-year,£6.5millionloantoafundadvisedbyLBSProperties,insupportofitsacquisitionofamulti-letofficepropertyinFarringdon,London.

On26September2019,theCompanydeclaredadividendof1.5penceperordinaryshareinrespectofthequarterended31July2019,payableon8November2019.


Other Inform


entsG

overnanceO

verview


GLOSSARY OFCAPITALISED DEFINED TERMS

“Administrator”meansEsteraInternationalFundManagers(Guernsey)Limited;

“Admission”meanstheadmissionofthesharestothepremium-listingsegmentoftheOfficialListandtotradingontheLondonStockExchange;

“AEOI”meansAutomaticExchangeofInformation;

“Affinity”meansAffinityGlobalRealEstate;

“Annual Report and Financial Statements”meanstheannualpublicationoftheGroupprovidedtotheshareholderstodescribetheiroperationsandfinancialconditions,togetherwiththeirConsolidatedFinancialStatements;

“Audit Committee”meanstheAuditandOperationalRiskManagementCommittee,aformalcommitteeoftheBoardwithdefinedtermsofreference;

“BMO”meansBMORealEstatePartners;

“Board”or“Directors”or“Board of Directors”meansthedirectorsoftheCompanyfromtimetotime;

“Brexit”meansthepotentialdepartureoftheUKfromtheEU;

“Carrara”meansCarraraGroundRents;

“CBI”meanstheConfederationofBritishIndustry;

“Circular”meanstheCircularoftheCompanydated11January2017regardingproposalsforachangeininvestmentobjectiveandpolicy,aplacingprogrammefor40millionsharesandthecontinuationvote;

“Commercial Regional Space”meansCommercialRegionalSpaceLimited;

“Companies Law”meanstheCompanies(Guernsey)Law,2008,(asamended);

“Company”meansICG-LongbowSeniorSecuredUKPropertyDebtInvestmentsLimited;

“CVA”meansCompanyVoluntaryArrangement;

“Disclosure Guidance and Transparency Rules”or“DTRs”meansthedisclosureguidancepublishedbytheFCAandthetransparencyrulesmadebytheFCAundersection73AofFSMA;

“ECL”meansexpectedcreditlosses;

“EGM”meanstheExtraordinaryGeneralMeetingoftheCompanyheldon1March2017;

“EPS”or“Earningspershare”meansEarningsperordinaryshareoftheCompanyandisexpressedinPoundsSterling;

“ERV”meansEstimatedRentalValue;

“EU”meanstheEuropeanUnion;

“Euros”or“€”meansEuros;

“FCA”meanstheUKFinancialConductAuthority;

“Financial Statements”or“Consolidated Financial Statements”meanstheauditedconsolidatedfinancialstatementsoftheGroup,includingtheConsolidatedStatementofComprehensiveIncome,theConsolidatedStatementofFinancialPosition,theConsolidatedStatementofChangesinEquity,theConsolidatedStatementofCashFlows,andassociatednotes;

“GDP”meansgrossdomesticproduct;

“GFSC”meanstheGuernseyFinancialServicesCommission;

“GIIN”meansGlobalIntermediaryIdentificationNumber;

“Group”meanstheCompany,ICGLongbowSeniorSecuredUKPropertyDebtInvestmentsLimitedtogetherwithitswhollyownedsubsidiary,ICGLongbowSeniorDebtS.A(Luxco);

“Halcyon”meansHalcyonGroundRents;

“IAS”meansinternationalaccountingstandardsasissuedbytheBoardoftheInternationalAccountingStandardsCommittee;

“ICG”meansIntermediateCapitalGroupplc;

“ICG Private Funds”meansprivaterealestatedebtfundsmanagedoradvisedbytheInvestmentAdviseroritsassociates;

“IFRS”meanstheInternationalFinancialReportingStandards,beingtheprinciples-basedaccountingstandards,interpretationsandtheframeworkbythatnameissuedbytheInternationalAccountingStandardsBoard,asadoptedbytheEU;

“Interest Cover Ratio”or“ICR”meansthedebt/profitabilityratiousedtodeterminehoweasilyacompanycanpayinterestonoutstandingdebt;

“Interim Financial Statements”meanstheunauditedinterimcondensedconsolidatedfinancialstatementsoftheGroup,includingtheCondensedConsolidatedStatementofComprehensiveIncome,theCondensedConsolidatedStatementofFinancialPosition,theCondensedConsolidatedStatementofChangesinEquity,theCondensedConsolidatedStatementofCashFlows,andassociatednotes;

“Interim Report”meanstheCompany’sinterimreportandunauditedinterimcondensedfinancialstatementsfortheperiodended31July;

“Investment Grade Tenant”meansatenantthatisratedAaatoBaa3byMISand/orAAAtoBBB-byS&P;

“Investment Adviser”or“ICG-Longbow”meansIntermediateCapitalManagersLimitedoritsAssociates;

“Investment Advisory Agreement”meansInvestmentAdvisoryAgreementdated31January2013betweentheCompanyandtheInvestmentAdviser,asamendedandrestatedon27April2017;

“Investment Risk Committee”meanstheInvestmentRiskCommittee,aformalcommitteeoftheBoardwithdefinedtermsofreference;


Governance


Other Inform

ationO

verview

GLOSSARYOFCAPITALISED DEFINED TERMS (CONTINUED)

“IPO”meanstheCompany’sinitialpublicofferingofsharestothepublic,whichcompletedon5February2013;

“ISIN”meansanInternationalSecuritiesIdentificationNumber;

“JLL”meansJonesLangLaSalleIncorporated;

“LGD”meanslossgivendefault;

“Listing Rules”meansthelistingrulesmadebytheUKListingAuthorityundersection73AFinancialServicesandMarketsAct2000;

“London Stock Exchange”or“LSE”meansLondonStockExchangeplc;

“LTV”meansLoantoValueratio;

“Luxco”meanstheCompany’swhollyownedsubsidiary,ICG-LongbowSeniorDebtS.A.;

“Luxembourg Administrator”meansOcorianServicesS.àr.l.beingtheadministratorofLuxco;

“Main Market”meansthemainsecuritiesmarketoftheLondonStockExchange;

“Management Engagement Committee”meansaformalcommitteeoftheBoardwithdefinedtermsofreference;

“Meadow”meansMeadowRealEstateFundII;

“MIS”meansMoody’sInvestorsServiceLtd,acreditratingagencyregisteredinaccordancewithRegulation(EC)No1060/2009witheffectfrom31October2011;

“MSCI”meansMorganStanleyCapitalIndex;

“NAV per share”meanstheNetAssetValuedividedbythenumberofSharesinissue(otherthansharesheldintreasury);

“Net Asset Value”or“NAV”meansthevalueoftheassetsoftheGrouplessitsliabilities,calculatedinaccordancewiththevaluationguidelineslaiddownbytheBoard,furtherdetailsofwhicharesetoutintheProspectus;

“Nomination Committee”meansaformalcommitteeoftheBoardwithdefinedtermsofreference;

“Northlands”meansNorthlandsPortfolio;

“NMPIs”meansNon-MainstreamPooledInvestments;

“OECD”meansTheOrganisationforEconomicCo-operationandDevelopment;

“Official List”isthePremiumSegmentoftheUKListingAuthority’sOfficialList;

“ONS”meansOfficeofNationalStatistics;

“IPO Prospectus”meanstheprospectuspublishedon31January2013bytheCompanyinconnectionwiththeIPOofordinaryshares;

“PD”meansprobabilityofdefault;

“Prospectus”meanstheprospectuspublishedinMay2018bytheCompanyinconnectionwiththeplacingprogramme;

“Quattro”meansCNMEstates(NewMalden)Limited,CNMEstates(EwellRoad)Limited,CNMEstates(CoombeRoad)LimitedandCNMEstates(CozLane)Limited;

“Ramada”meansRamadaGateshead;

“Registrar”LinkAssetServicesGuernseyLimited(formerly Capita Registrars (Guernsey) Limited);

“Registrar Agreement”meanstheRegistrarAgreementdated31January2013betweentheCompanyandtheRegistrar;

“RICS”meanstheRoyalInstitutionofCharteredSurveyors;

“S&P”meansStandard&Poor’sCreditMarketServicesEuropeLimited,acreditratingagencyregisteredinaccordancewithRegulation(EC)No1060/2009witheffectfrom31October2011;

“SONIA”meansSterlingOvernightInterbankAverageRate;

“SPV”meansspecialpurposevehicle;

“UK”or“United Kingdom”meanstheUnitedKingdomofGreatBritainandNorthernIreland;

“UK Listing Authority”or“UKLA”meanstheFinancialConductAuthority;

“US”or“United States”meanstheUnitedStatesofAmerica,itterritoriesandpossessions;and

“£”or“Pounds Sterling”or“Sterling”meansBritishpoundsterlingand“pence”meansBritishpence.


DIRECTORSAND GENERAL INFORMATION

Board of DirectorsJackPerry(Chairman) StuartBeevorPatrickFirthMarkHuntleyPaulMeader

Audit and Operational Risk CommitteePatrickFirth(Chairman)StuartBeevorPaulMeader

Investment Risk CommitteePaulMeader(Chairman)StuartBeevorJamesChristie(Retired7March2019)MarkHuntleyDavidMortimerPatrickFirth(Appointed7March2019)

Management Engagement CommitteeJackPerry(Chairman)PatrickFirthPaulMeader

Nomination CommitteeJackPerry(Chairman)StuartBeevorPatrickFirthMarkHuntleyPaulMeader

Registered officeEffective from 29 April 2019P.O.Box286Floor2TrafalgarCourtLesBanquesStPeterPortGuernseyGY14LY

Prior to 29 April 2019HeritageHallPOBox225LeMarchantStreetStPeterPortGuernseyGY14HY

IdentifiersGIIN: 6IG8VS.99999.SL.831ISIN: GG00B8C23S81Sedol: B8C23S8Ticker: LBOWWebsite: www.lbow.co.uk

Investment AdviserIntermediateCapitalManagersLimitedJuxonHouse100StPaul’sChurchyardLondonEC4M8BU

Independent AuditorDeloitteLLPCharteredAccountantsPOBox137RegencyCourtGlategnyEsplanadeSt.PeterPortGuernseyGY13HW

Guernsey Administrator and Company SecretaryEffective from 29 April 2019EsteraInternationalFundManagers(Guernsey)LimitedFloor2TrafalgarCourtLesBanquesStPeterPortGuernseyGY14LY

Prior to 29 April 2019EsteraInternationalFundManagers(Guernsey)LimitedHeritageHallLeMarchantStreetSt.PeterPortGuernseyGY14HY

Luxembourg AdministratorOcorianServices(Luxembourg)S.àr.l6cRueGabrielLippmannMunsbachLuxembourgL-5365

RegistrarLinkMarketServices(Guernsey)LimitedMontCreveltHouseBulwerAvenueStSampsonsGY24LHGuernsey

Corporate Broker and Financial AdviserCenkosSecuritiesplc6-8TokenhouseYardLondonUnitedKingdomEC2R7AS

English Solicitors to the CompanyGowlingsWLG(UK)LLP4MoreLondonRiversideLondonUnitedKingdomSE12AU

Guernsey Advocates to the CompanyCareyOlsenCareyHousePOBox98LesBanquesStPeterPortGuernseyGY14BZ

BankersButterfieldBank(Guernsey)LimitedPOBox253MartelloCourtAdmiralParkStPeterPortGuernseyGY13QJ

BarclaysBankplc6-8HighStreetStPeterPortGuernseyGY13BE

LloydsBankInternationalLimitedPOBox136SarniaHouseLeTruchotStPeterPortGuernseyGY14EN

TheRoyalBankofScotlandInternationalRoyalBankPlace1GlategnyEsplanadeStPeterPortGuernseyGY14BQ

OakNorthBankplc6thFloorNightingaleHouse3rdFloor57BroadwickStreetSohoLondonW1F9QS

CAUTIONARYSTATEMENT

TheChairman’sStatementandInvestmentAdviser’sReporthavebeenpreparedsolelytoprovideadditionalinformationforshareholderstoassesstheCompany’sstrategiesandthepotentialforthosestrategiestosucceed.Theseshouldnotbereliedonbyanyotherpartyorforanyotherpurpose.

TheChairman’sStatementandInvestmentAdviser’sReportmayincludestatementsthatare,ormaybedeemedtobe,“forward-lookingstatements”.Theseforward-lookingstatementscanbeidentifiedbytheuseofforward-lookingterminology,includingtheterms“believes”,“estimates”,“anticipates”,“expects”,“intends”,“may”,“will”or“should”or,ineachcase,theirnegativeorothervariationsorcomparableterminology.

Theseforward-lookingstatementsincludeallmattersthatarenothistoricalfacts.Theyappearinanumberofplacesthroughoutthisdocumentandincludestatementsregardingtheintentions,beliefsorcurrentexpectationsoftheDirectorsandtheInvestmentAdviser,concerning,amongstotherthings,theinvestmentobjectivesandinvestmentpolicy,financingstrategies,investmentperformance,resultsofoperations,financialcondition,liquidity,prospects,anddistributionpolicyoftheCompanyandthemarketsinwhichitinvests.

Bytheirnature,forward-lookingstatementsinvolverisksanduncertaintiesbecausetheyrelatetoeventsanddependoncircumstancesthatmayormaynotoccurinthefuture.Forward-lookingstatementsarenotguaranteesoffutureperformance.

TheCompany’sactualinvestmentperformance,resultsofoperations,financialcondition,liquidity,distributionpolicyandthedevelopmentofitsfinancingstrategiesmaydiffermateriallyfromtheimpressioncreatedbytheforward-lookingstatementscontainedinthisdocument.

Subjecttotheirlegalandregulatoryobligations,theDirectorsandtheInvestmentAdviserexpresslydisclaimanyobligationstoupdateorreviseanyforward-lookingstatementcontainedhereintoreflectanychangeinexpectationswithregardtheretooranychangeinevents,conditionsorcircumstancesonwhichanystatementisbased.

ICG-Longbow Senior Secured UK Property Debt Investments LimitedP.O.Box286Floor2,TrafalgarCourtLesBanques,StPeterPort,GuernseyGY14LY,ChannelIslands.

T+44(0)1481742742F+44(0)1481742698

Furtherinformationavailableonline:www.lbow.co.uk

icg-longbow senior secured uk property debt investments .../media/files/i/... · 02 icg-longbow...

Documents