The Company uses the average daily three-month LIBOR as its reference for the purposes of its targeted dividend rate . LIBOR is in the process of being phased out by 31 December 2021 in favour of a new measure called Sterling Overnight Index Average (SONIA). Your Board will announce in due course the way in which SONIA will be substituted for LIBOR for the purpose of guidance on future dividends as well as for benchmarking the Company's investment performance.

Environmental, Social and Governance (ESG) issues and UK exit from the European Union

The information regarding ESG issues and the UK exit from the European Union can be found below.

Portfolio Manager

In May the Company announced that Adam English had been appointed as Portfolio Manager following Jeremy Richards's retirement from full time employment. Robert Whitten and Yiu-Wai Cheung have been named as Deputy Fund Managers. The Board has worked closely with Adam and the wider investment team since the launch of the Company and they have our full confidence.

Changes to the Articles of Association

The Board is proposing to make amendments to the Company's Articles of Association (the "Articles") to enable the Company to hold general meetings wholly or partially by electronic means and to give additional powers in respect of postponing or adjourning meetings in appropriate circumstances. The amendments are being sought to introduce flexibility to respond to challenges such as those posed by government restrictions on social interactions as a result of the COVID-19 pandemic, which have made it practically impossible at times for shareholders to attend general meetings in person.

The principal changes proposed to the Articles, and their effect, are set out in more detail on pages 40 to 41 of the full Annual Report and Accounts.

Annual General Meeting Arrangements

The Company's Annual General Meeting will be held at 12:00 noon on Wednesday, 9 June 2021 at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London, EC2A 2EG.

As at the date of this report, restrictions on gatherings and social distancing measures remain in place and, given the ongoing uncertainty and visibility on the level of Government guidelines in early June, the Board has again decided to proceed with this year's AGM, with the minimum quorum requirements of two members only present in person. Voting will be conducted by way of a poll. In the unlikely event of the situation changing, the Company will update shareholders through an announcement to the London Stock Exchange and on the Company's website.

The Board strongly advises that no shareholders attend the AGM in person. However, shareholders can be represented by the chairman of the meeting acting as their proxy. The Board therefore urges you to lodge your votes in respect of the meeting in advance, by completing your proxy forms this will ensure that your votes are registered. Shareholders are also invited to address any questions to the company secretary via email to mandgcredit@linkgroup.co.uk. The Board is aware that many shareholders welcome the views of the Investment Manager and a presentation from the Investment Manager will be uploaded to the Company's website on the day of the AGM for shareholders to view.

Outlook

Your Company's portfolio is now approaching a good balance between higher-yielding private assets and the more liquid public assets which allow us to take advantage of market volatility and future opportunities. It is defensively positioned and it benefits from the flexibility provided by our currently undrawn GBP25 million revolving credit facility: together these should enable us to weather any future market shocks while having the firepower to purchase suitable assets as they arise.

Our Investment Manager believes that an annual total return, and thus ultimately a dividend yield, of LIBOR plus 4% will continue to be achievable in the future although there can be no guarantee that this will occur in any individual year.

The first quarter of the current year has started very well, with a NAV total return of over 2%, and our Investment Manager remains confident that it will continue to find attractive opportunities, particularly in private assets.

David Simpson

Chairman

27 April 2021

Investment manager's report

We are pleased to provide commentary on the factors that have impacted our investment approach over the last year, with particular reference to the performance and shape of the portfolio as we have sought to build it in accordance with the mandate agreed at IPO.

During 2020, we saw significant levels of volatility across financial markets. The broad recovery across asset classes has been remarkable, aided by swift and significant policy responses from governments and central banks. In March, the significant re-pricing across corporate bond markets presented attractive medium-term opportunities for investors with patient capital and the extensive resources required to evaluate individual opportunities.

The Investment Manager was able to use the initial period of market dislocation to increase credit exposure and yield in the portfolio. Asset valuations recovered in the second half of 2020, resulting in the NAV of 101.40p per Ordinary Share as at 31 December 2020 being above the NAV at launch.

For the year ended 31 December 2020, the Company declared dividends of 4.28p per Ordinary Share (of which 0.85p per Ordinary Share was paid in May 2020, 0.77p per Ordinary Share was paid in August 2020, 0.71p per Ordinary Share was paid in November 2020 and 1.95p per Ordinary Share paid in February 2021).

The portfolio is 79% invested in investment grade assets, with a weighted average credit rating across the whole portfolio of BBB. The annualised dividend yield in respect of last year was equivalent to an annual rate of 4% over LIBOR on the opening NAV (adjusted for the final interim dividend in respect of the period ended 31 December 2019). The NAV total return for the same period was 3.7%.

Portfolio activity and positioning

The Company entered 2020 cautiously positioned. Attractively priced assets were hard to find as a result of tight spreads on corporate credit and low government bond yields, so we remained defensively positioned with allocations to high grade asset-backed securities (ABS) and covered bonds. The outbreak of COVID-19 in Europe led to a fast and dramatic repricing across all risk assets. The speed and severity of the spread widening across all sectors, regardless of credit quality or duration, was extraordinary. As a result, the NAV of the Company declined. However, this dislocation presented attractive opportunities in the public markets. We were able to use existing cash holdings alongside proceeds from the sale of ABS and covered bonds to redeploy into mispriced, longer dated, fixed rate investment grade and high yield corporate bonds. Private transactions were put on hold, with almost all lenders and borrowers awaiting some semblance of market stabilisation and the establishment of a "new normal" before re-engaging.

As a result of the fiscal and monetary policy measures implemented by governments and central banks around the world, investor confidence started to return by the end of the second quarter. As liquidity in the ABS market improved, we were able to continue adding credit risk to the portfolio and increase the yield by switching into longer dated, fixed rate bonds. The Company was able to add attractively priced new issues as companies sought to improve balance sheets and liquidity alongside bonds from the secondary market where valuations had become misaligned relative to the underlying credit fundamentals.

Towards the end of the second quarter, we saw the reopening of the private credit markets with a significant number of borrowers seeking finance. Those private transactions that came to market in the second half of the year were very attractive; improved covenants, more conservative structures and better pricing than prior to the start of the pandemic . The Company committed to a number of private deals in the second half of the year across a variety of sectors, including the first direct investment into the social housing/infrastructure sector. This project relates to the maintenance of residential dwellings in the London borough of Lambeth and the provision of green spaces; a community centre; and a district heating network. As at 31 December 2020, the private asset portion of the portfolio, including irrevocable commitments, had increased to 49.25% (versus 27.41% at 31 December 2019) with an additional investment of approximately 10% in illiquid publicly listed assets, which are intended to be held to maturity. There continues to be a strong pipeline of private lending opportunities. The Company increased it's holding in the M&G European Loan Fund ('ELF') in the second half of the year (11.98% as at 31 December 2020) as it offered good relative value to public high yield bonds. This loan portfolio was not immune from the fall in asset prices at the end of March and, whilst that NAV recovered in 2020, the loans market lagged the recovery seen in the public high yield market. This is a long-term holding intended to provide a steady and attractive stream of income.

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April 28, 2021 02:01 ET (06:01 GMT)