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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Life Settlement Assets Plc | LSE:LSAA | London | Ordinary Share | GB00BF1Q4B05 | ORD SHS USD0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.70 | 1.55 | 1.85 | 1.70 | 1.70 | 1.70 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 8.85M | 599k | 0.0120 | 141.67 | 84.71M |
From May 2021 to May 2024
TIDMLSAA
RNS Number : 9745M
Life Settlement Assets PLC
27 September 2021
LIFE SETTLEMENT ASSETS PLC
LEI: 2138003OL2VBXWG1BZ27
(the "Company" or "LSA")
Half-Year Announcement
LSA, a closed-ended investment company which manages portfolios of whole and fractional interests in life settlement policies issued by life insurance companies operating predominantly in the United States, is pleased to announce its unaudited half-year results for the period ended 30 June 2021.
Highlights:
-- Total maturities during the period were USD $25.8 million (H1 2020 USD $12.2 million)
-- Estimated AE ratio ("actual to expected ratio") of HIV segment of 106%, and of non-HIV segment of 219%, aggregating to 182%
Hot Features
Premium
-- Completion of the merger of the B Shares into the A Shares on 31 May 2021
-- Distribution of 17.813 capital US cents per B Share as part of the share class merger
-- The Company's Net Asset Value ("NAV") as at 30 June 2021 increased by 5.7%
-- Successful acquisition of small portfolios of fractional policies increasing the number of wholly owned policies by 13, with a face value of USD $2 million
-- Successful conclusion of one litigation resulting in an improvement in the underlying quality of the portfolio
Michael Baines, Chairman, commented:
"The Life Settlement Market has been largely unaffected by the Covid-19 pandemic, and we have been encouraged by the first half results, which reflect a continuation of long-term trends in maturities. The strengthening of our portfolio through successful acquisitions of portfolios of fractional policies, and through protecting our interests where appropriate, have resulted in a continued improvement in the breadth and quality of our asset base. The completion of the share class merger also marks the final stage in the simplification of the share capital structure of the Company, positioning the business well for the second half of the financial year."
Enquiries:
For further information, please visit https://www.lsaplc.com/ , or contact:
Acheron Capital Limited (Investment Manager)
Jean-Michel Paul
020 7258 5990
Shore Capital (Financial Adviser and Broker)
Robert Finlay
020 7408 4080
ISCA Administration Services Limited
Company Secretary
Tel: 01392 487056
Company performance
Performance analysis by Share Class is provided in the tables below:
A Share Class
As at As at Percentage
30 June 31 December Change
2021 2020* (%)
Net assets attributable
to Shareholders (USD '000) 105,930 100,200 5.7
----------- ------------- -----------
Shares in issue ** 49,826,784 49,826,784 -
----------- ------------- -----------
NAV per share (USD) 2.13 2.01 5.7
----------- ------------- -----------
Closing share price (USD)
*** 1.60 1.90 (15.8)
----------- ------------- -----------
(Discount) to NAV (%) (24.7) (5.5) (19.2)
----------- ------------- -----------
*To aid comparison these figures have been restated to include the Class B share figures at 31 December 2020.
** As at 31 December 2020, there were 58,320,157 total shares in issue within Classes A and B. To aid comparison the post-merger shares in issue of 49,826,784 has been used for 31 December 2020.
*** The 31 December 2020 closing price reflects the share price for Class A only.
As at/period As at/period Percentage
to to Change
30 June 30 June (%)
2021 2020
Total maturities (USD '000) 25,787 12,202 111.3
------------- ------------- -----------
Net income from portfolio
(USD '000) 14,630 1,053 1,289.4
------------- ------------- -----------
Profit/(loss)for the period
(USD '000) * 8,553 (2,855) 399.6
------------- ------------- -----------
*This includes a contribution of USD 2,355,000 in respect of the B Share Class profit in the period before the merger.
Chairman's Statement
On behalf of the Board, I am pleased to present the Company's half year results for the period ended 30 June 2021. This year's statement is written against a somewhat brighter background than this time last year, although I suspect it is still somewhat premature to be making predictions on how world economies might settle down and normality resume.
Investment Overview
The financial highlights above show the results for the half year to 30 June 2021. Following completion of the merger of the B shares into A shares, the Company's reports now relate to the results for A shares, which in turn reflect the performance of all assets held by the Company.
This single remaining share class is listed on the Specialist Fund Segment of the London Stock Exchange, and the Company is the sole beneficiary of the Acheron Portfolio Trust which holds the portfolio.
Over the period the NAV of the Company increased by 5.7%, reflecting a higher level of maturities than anticipated. There were no distributions to holders of A shares, while there was a distribution of 17.813 US cents per B share as part of the share class merger arrangements. Further details on dividends paid is set out under the paragraph headed "Distributions" below.
The Company has continued with its declared policy of retaining a significant proportion of cash to provide funds for future investment opportunities, and to cover the costs of any legal expenses which may be required. The Board continues to monitor cash reserves carefully and reviews its cash retention decisions with its Investment Manager on a regular basis.
As previously reported in the Annual Report, the Company had been engaged in litigation with external trustees of fractional interests in policies in which the Company has an interest. One has been successfully concluded in the period resulting in an improvement in the underlying quality of the portfolio. The second remains ongoing but should be resolved in the near to medium-term.
The Life Settlement Market
The Life Settlement Market has been largely unaffected by the coronavirus ("COVID-19") pandemic. After some initial increase in mortality, particularly among patients in nursing homes, the insured lives underlying the policies in which the Company has an interest would appear not to have been significantly affected - as these insured lives were generally better protected from the crisis, benefitting at least initially from increased public health measures, less activity due to lockdowns, and restricted or controlled access to nursing homes.
In terms of correlation to broader financial markets, the secondary market did experience some requirement for liquidity and redemptions from open-end funds. In contrast, supply was reduced at the beginning of the pandemic as potential sellers waited to determine the effect of the pandemic on the market. These factors primarily resulted in increased volatility rather than steep losses which is evidenced by both the current steady market activity, and the continued performance of closed-end funds which are not prone to liquidity pressures and forced selling.
Structural Changes
The proposals to merge the B shares with the A shares as set out in the Circular published by the Company on 30 April 2021 were approved by Shareholders at the class meetings held on 26 May 2021, and the merger was completed on 31 May 2021. As a result of this final step in the simplification of the Company's share capital, the 14,596,098 B shares were re-designated as 6,102,725 A shares, which is now the only continuing class of shares.
Portfolio
The overall asset portfolio is subdivided into portfolios exposed to either HIV-positive policy holders or non-HIV positive policy holders. The following table provides information on the Company's policies, shown by exposure to HIV and non-HIV positive insureds as at 30 June 2021.
HIV and Non-HIV Exposed Policies (all values in USD)
HIV Non-HIV Total
Number of policies 4 221 182 4 403
------ -------- ------
Total face value
(USD million) 368.6 107.9 476.5
------ -------- ------
Valuation (USD
million) 59.6 25.5 85.1
------ -------- ------
Percentage of
face 16.2% 23.6% 17.9%
------ -------- ------
In the first half of 2021 small portfolios of fractional policies to which the trusts were already materially exposed were acquired, resulting in the number of wholly owned policies held by the Acheron Portfolio Trust increasing by 13, with a face value of USD2.0 million. The increase in HIV valuation as a percentage of face value 16.2% (December 2020: 13.1%) is due to unique features of the ABC portfolio, which as referred to above, has now been aggregated, rather than as a result of any increase in mortality, which has been steady.
Maturities in the period to 30 June 2021 can be seen in the table below.
A Shares B Shares*
HIV Maturities 4.5 N/A
(USD million)
--------- ----------
Non-HIV Maturities
(USD million) 17.6 3.7
--------- ----------
Total Maturities
(USD million) 22.1 3.7
--------- ----------
* Maturities until April 2021 in B shares
In the period under review, the HIV segment of the portfolio has an estimated AE ratio ("Actual to Expected" ratio) of 106%. The Non-HIV elderly segment of the portfolio experienced high levels of maturities, resulting in an estimated AE ratio of 219% in the period, reflecting a return to long term trends, as well as the inherent volatility within the smaller overall group.
AE* All classes
HIV 106%
------------
Non-HIV 219%
------------
Total 182%
------------
* in maturity dollar amounts, estimated until June 2021
As at 30 June 2021, the A shares reported a NAV of USD2.1260 per share, the NAV performance history being shown in the table below.
A Shares Year Jan Feb Mar April May Jun YTD
Total NAV
Return 2021 2.47% 4.23% 0.12% -0.36% -0.02% 0.31% 6.86%
------ ------ ------ ------ ------- ------- ------ ------
The NAV performance of the B shares up to the time of the merger of the share classes is also shown in the table below.
B Shares Year Jan Feb Mar April May Jun YTD
Total NAV
Return 2021 11.91% 5.29% -0.76% 2.66% N/A N/A N/A
------ ------- ------ ------- ------ ---- ---- ----
The increase in the NAV on an overall Company basis is 5.7% as shown in the Company performance above.
Portfolio Composition
Further information on the composition of the portfolio underlying the A shares as at 30 June 2021 can be found on our website https://www.lsaplc.com/investor-relations/
Distributions
No distributions were made to holders of A shares in the period.
Following the approval of the merger between A shares and B shares, as set out in the circular to Shareholders dated 30 April 2021, a special dividend of 17.813 US cents per share (totalling USD 2.6 million) was paid to holders of B shares.
Outlook
The mortality of the insureds which underly the policies held in the portfolio will continue to be the most significant factor that affects the financial results of the Company. Accordingly, we continue to follow the recent research on mortality in general, and especially on long term HIV trends, and this is reflected in our actuarial valuations. Alongside this, the Board is implementing an active risk management strategy to protect and, where possible, improve the quality of the investment portfolio. The Board continues to believe that the investment opportunity offered by LSA, and its specialist engagement with the life settlement market in the USA, will continue to offer value to Shareholders.
Michael Baines
Chairman
24 September 2021
Key Performance Indicators (KPIs)
The Board monitors success in implementing the Company's strategy against a range of key performance indicators (KPIs), which are viewed as significant measures of success over the longer term. These key indicators are those provided in the performance tables above. Although performance relative to the KPIs is monitored over quarterly periods, it is success over the long-term that is viewed as more important. This is particularly important given the inherent volatility of maturities and short-term investment returns.
The Board has adopted the following KPIs:
-- Share Price - a key measure for Shareholders to show the most likely realisable value of this investment if it was sold. Changes in the share price are closely monitored by the Board.
-- NAV per share - as this is the primary indicator of the underlying value attributable to each share.
-- Premium/(discount) to NAV - as this measure can be used to monitor the difference between the underlying Net Asset Value and share price.
-- Total maturities (USD) - the value of the total maturities in USD provides an indicator of the underlying cash flow that the Company receives from its main source of income - policy maturities. There are factors which could impact the outcome of this performance measure including: average life expectancy and the age of the underlying policy holders.
Please note that the Actual to Expected ("A/E") ratio, which is closely linked to the total maturities KPI, is a key method by which the Board monitors the level of maturities. The A/E ratio measures the declared maturities compared to the projected maturities based on the actuarial models. A ratio close to 100% indicates maturities correspond exactly to the model. A percentage greater than 100% means the maturities are more than anticipated by the models and less than 100% the opposite is the case.
-- Profit/(loss) for the period - this is a key measure of financial performance used to assess the fortunes of the Company over each financial period.
Please Note: The Company regularly uses alternative performance measures to present its financial performance. These measures may not be comparable to similar measures used by other companies, nor do they correspond to IFRS standards or other accounting principles.
Directors' Statement of Principal Risks and Uncertainties
The important events that have occurred during the period under review and the key factors influencing the financial statements are set out in the Chairman's Statement above.
In accordance with DTR 4.2.7, the Directors consider that the principal risks and uncertainties facing the Company have not materially changed since the publication of the Annual Report and Accounts for the year ended 31 December 2020.
The principal risks faced by the Company include, but are not limited to:
-- Mortality risk -- Premium management risk -- Volatility risk -- Fractional premium risk -- Fractional ownership risk -- Advance age mortality risk -- Discount rate risk -- Modelling risk -- Tax -- Breach of applicable legislative obligations -- Counterparty risk
A more detailed explanation of these risks and the way in which they are managed can be found in the Strategic Report on pages 22 to 25 and in Note 4 to the Financial Statements on pages 65 to 67 of the 2020 Annual Report and Accounts - copies can be found via the Company's website, www.lsaplc.com .
There have been no significant changes in the related party disclosures set out in the Annual Report.
Directors' Statement of Responsibilities in Respect of the Financial Statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10 Michael Baines (Chairman), Christopher Casey (Audit Committee Chairman) and Guner Turkmen, the Directors, confirm that to the best of their knowledge:
-- The condensed set of financial statements contained within this Half-Yearly financial report have been prepared in accordance with International Accounting Standard ("IAS") 34 'Interim Financial Reporting' as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit of the Company; and
-- The Half-Yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.7R being disclosure of important events that have occurred during the first six months of the financial year, their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the year; and
-- The Half Yearly financial report includes a fair review of the information required by the FCA's Disclosure and Transparency Rule 4.2.8R being disclosure of related party transactions during the first six months of the financial year, how they have materially affected the financial position of the Company during the period and any changes therein.
This Half-Yearly Report was approved by the Board of Directors on 24 September 2021 and the above responsibility statement was signed on its behalf by:
Michael Baines
Chairman
24 September 2021
Condensed Statement of Comprehensive Income
for the six months ended 30 June 2021
_____________________________________________
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Income
Gains from life
settlement
portfolios 3
Maturities - 25,787 25,787 - 12,202 12,202 - 22,735 22,735
Acquisition cost
of maturities
and fair value
movement - (4,751) (4,751) - (3,309) (3,309) - (6,361) (6,361)
-------- ---------- ---------- -------- ---------- ---------- -------- ----------- -----------
Sub total - 21,036 21,036 - 8,893 8,893 - 16,374 16,374
Incurred premiums
paid in period
on all policies - (7,770) (7,770) - (9,667) (9,667) - (18,421) (18,421)
Unrealised gains
Fair value
adjustments - 955 955 - 1,329 1,329 - 1,091 1,091
Income from life
settlement
portfolios 313 - 313 450 - 450 809 - 809
Other income 102 - 102 56 - 56 58 - 58
Net foreign exchange
loss (6) - (6) (6) - (6) (12) - (12)
______ ______ ______ ______ ______ ______ _______ _______ ______
Total
income/(expense) 409 14,221 14,630 500 555 1,055 855 (956) (101)
Operating expenses
Investment management
fees 4 (758) (1,250) (2,008) (855) 647 (208) (1,674) 1,847 173
Other expenses (3,578) - (3,578) (3,101) - (3,101) (5,873) - (5,873)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit
before finance
costs and taxation (3,927) 12,971 9,044 (3,456) 1,202 (2,254) (6,692) 891 (5,801)
Finance costs
Interest payable (389) - (389) (617) - (617) (964) - (964)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit/before
taxation (4,316) 12,971 8,655 (4,073) 1,202 (2,871) (7,656) 891 (6,765)
Taxation (102) - (102) 16 - 16 16 - 16
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit
for the period (4,418) 12,971 8,553 (4,057) 1,202 (2,855) (7,640) 891 (6,749)
====== ===== ====== ====== ===== ====== ======= ====== =====
Return per class
A share USD 6 (0.099) 0.291 0.192 (0.092) 0.048 (0.044) (0.164) 0.044 (0.120)
Return per class
B share USD 6 - - - (0.019) (0.054) (0.073) (0.047) (0.066) (0.113)
All revenue and capital items in the above statement derive from continuing operations of the Company.
The Company does not have any income or expense that is not included in the profit for the period and therefore the profit for the period is also the total comprehensive income for the period.
The total column of this statement is the Statement of Total Comprehensive Income of the Company. The supplementary revenue and capital columns are prepared in accordance with the Statement of Recommended Practice ("SORP") issued by the Association of Investment Companies ("AIC") in October 2019.
The notes form part of these financial statements.
Condensed Statement of Financial Position
as at 30 June 2021
As at As at As at
30 June 30 June 31 December
2021 2020
(unaudited) 2020 (audited)
Note (unaudited)
USD'000 USD'000 USD'000
Non-current assets
Financial assets at fair value through
profit or loss:
- Life settlement investments 8 85,095 80,718 77,643
_______ _______ _______
85,095 80,718 77,643
Current assets
Maturities receivable 8,739 11,110 9,278
Trade and other receivables 348 600 451
Premiums paid in advance 7,301 9,552 8,354
Cash and cash equivalents 15,716 14,421 5,825
_______ _______ _______
32,104 35,683 23,908
_______ _______ _______
Total assets 117,199 116,401 101,551
_______ _______ _______
Current liabilities
Other payables (9,680) (5,555) (1,012)
Provision for performance
fees (1,589) (4,407) (339)
_______ _______ _______
Total liabilities (11,269) (9,962) (1,351)
_______ _______ _______
Net assets 105,930 106,439 100,200
====== ====== ======
Represented by
Capital and reserves
Share capital 9 498 583 583
Special reserve 10 96,791 101,959 99,614
Capital redemption reserve 213 128 128
Capital reserve 35,372 22,712 22,401
Revenue reserve (26,944) (18,943) (22,526)
_______ _______ _______
Total equity attributable
to ordinary Shareholders of 105,930 106,439 100,200
the Company ====== ====== ======
Net Asset Value per share
basic and diluted
Class A shares USD 11 2.126 2.119 1.99
Class B shares USD 11 n/a 0.945 0.91
Registered in England and Wales with Company Registration number: 10918785
The notes form part of these financial statements.
Condensed Statement of Changes in Equity
for the six months ended 30 June 2021
________________________________________________________
Capital
Share Special redemption Capital Revenue
capital reserve reserve reserve reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Six months ended 30 June
2021
Balance as at 31 December
2020 583 99,614 128 22,401 (22,526) 100,200
Comprehensive income for
the period - - - 12,971 (4,418) 8,553
Contributions by and distributions
to owners
Conversion of B shares
to A shares (85) - 85 - - -
Costs of A & B share merger - (223) - - - (223)
Dividends paid in the period - (2,600) - - - (2,600)
____ _______ _______ ______ _______ _______
Balance as at 30 June
2021 498 96,791 213 35,372 (26,944) 105,930
===== ======= ======= ====== ======= =======
Of which:
Realised gains 33,628
Unrealised gains 1,744
Six months to 30 June 2020
Balance as at 31 December
2019 648 107,458 63 21,510 (14,886) 114,793
Comprehensive loss for
the period - - - 1,202 (4,057) (2,855)
Contributions by and distributions
to owners
Merger of D & E share classes (65) - 65 - - -
Dividends paid in year - (5,499) - - - (5,499)
____ _______ _______ ______ _______ _______
Balance as at 30 June 2020 583 101,959 128 22,712 (18,943) 106,439
==== ====== ======= ===== ====== ======
Of which:
Realised gains 17,492
Unrealised gains 5,220
Year ended 31 December
2020
Balance as at 31 December
2019 648 107,458 63 21,510 (14,886) 114,793
Comprehensive loss for
the year - - - 891 (7,640) (6,749)
Contributions by and distributions
to owners
Merger of D & E share classes (65) - 65 - - -
Costs of D & E share class
merger - (345) - - - (345)
Dividends paid in year - (7,499) - - - (7,499)
_____ _______ _______ ______ _______ ______
Balance as at 31 December
2020 583 99,614 128 22,401 (22,526) 100,200
===== ====== ======= ====== ====== ======
Of which:
Realised gains 20,901
Unrealised gains 1,500
The Special reserve was created as a result of the cancellation of the Share premium account following a court order issued on 18 June 2019. The Special reserve is distributable and may be used to fund purchases of the Company's own shares and to make distributions to Shareholders.
The revenue and realised capital reserves are also distributable reserves.
The notes form part of these financial statements.
Condensed Cash Flow Statement
for the six months ended 30 June 2021
____________________________________________________
Six Six
months ended months ended Year ended
30 June 2021 30 June 2020 31 December
2020
(unaudited) (unaudited) (audited)
USD'000 USD'000 USD'000
Cash flows from/(used in)/operating
activities
Profit(loss)/ for the period 8,553 (2,855) (6,749)
Non-cash adjustment
* movement on portfolios 3,796 1,980 5,269
Investment in life settlement
portfolios (11,199) (58) (118)
Movements in "policy advances" (49) (4,599) (4,753)
Changes in operating assets
and liabilities
Changes in maturities receivables 539 (7,243) (5,411)
Changes in trade and other receivables 103 97 246
Changes in premiums paid in
advance 1,053 (321) 877
Changes in other payables 8,668 4,574 31
Changes in performance fee provision 1,250 (647) (4,715)
______ ______ ______
Net cash from/(used in) operating
activities 12,714 (9,072) (15,323)
Cash flow used in financing
activities
Dividends paid (2,600) (5,499) (7,499)
Costs of share class mergers (223) - (345)
_____ _____ ______
Net cash flows used in financing
activities (2,823) (5,499) (7,844)
______ ______ ______
Net changes in cash and cash
equivalents 9,891 (14,571) (23,167)
Cash balance at the beginning
of the period 5,825 28,992 28,992
______ ______ ______
Cash balance at the end of the
period 15,716 14,421 5,825
====== ====== ======
The notes form part of these financial statements.
Notes to the Condensed Financial Statements
for the six months ended 30 June 2021
Note 1 General information
Life Settlement Assets ("Life Settlement Assets" or the "Company") is a public company limited by shares and an investment company under section 833 of the Companies Act 2006. It was incorporated in England and Wales on 16 August 2017 with a registration number of 10918785. The registered office of the Company is 115 Park Street, 4th Floor, London W1K 7AP.
The principal activity of Life Settlement Assets is to manage investments in whole and partial interests in life settlement policies issued by life insurance companies operating predominantly in the United States.
In May 2018, the Company received confirmation from HM Revenue & Customs of its approval as an investment trust for tax accounting periods commencing on or after 26 March 2018, subject to the Company continuing to meet the eligibility conditions contained in section 1158 of the Corporation Tax Act 2010 and the ongoing requirements in Chapter 3 of Part 2 of the Investment Trust (Approved Company) (Tax) Regulations 2011(Statutory Instrument 2011/2999).
The Company currently has one class of Ordinary Shares in issue, namely the A shares which principally participates in a separate portfolio of life settlement assets and associated liabilities, which were acquired from Acheron Portfolio Corporation (Luxembourg) SA ("APC" or the "Predecessor Company") on 26 March 2018.
The Ordinary B Share class was cancelled following the merger of Ordinary Share Classes A and B on 31 May 2021.
The Ordinary Share classes D and E were cancelled following the merger of Ordinary Share Classes A, D and E on 30 April 2020.
Note 2 IFRS accounting policies
2.1 Basis of preparation
These condensed interim financial statements have been prepared using the same accounting policies and methods of computation as in the 2020 annual financial statements.
The condensed financial statements, which comprise the unaudited results of the Company have been prepared in accordance with International Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), as adopted by the European Union. They have also been prepared in accordance with the SORP for investment companies issued by the AIC in October 2019, except to the extent that it conflicts with IFRS. The accounting policies are as set out in the Report and Accounts for the period ended 31 December 2020.
The half-year financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting".
The financial information contained in this Half-Yearly financial report does not constitute statutory accounts as defined by the Companies Act 2006.The financial information for the periods ended 30 June 2021 and 30 June 2020 have not been audited or reviewed by the Company's Auditor. The figures and financial information for the year ended 31 December 2020 are an extract from the latest published audited statements and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and include a report of the Auditor, which was unqualified and did not contain a statement under either Section 498(2) or 498(3) of the Companies Act 2006.
2.2 Changes in accounting policy and disclosures
Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Company
The following new standard has been published but is not effective for the Company's accounting period beginning on 1 January 2021. The Directors do not expect the adoption of the following new standard to have a significant impact on the financial statements of the Company in future periods.
IFRS 17 "Insurance contracts" applies to insurance contracts, including reinsurance contracts issued by an entity; reinsurance contracts held by an entity; and investment contracts with discretionary participation features issued by an entity that issues insurance contracts. IFRS 17 will be effective for reporting periods beginning on or after 1 January 2023. As IFRS 17 is not relevant to the life settlement market, it is expected that it will have no impact on the Company's financial statements.
Going concern
The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future (being a period of 12 months from the date these financial statements were approved). Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt upon the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, liabilities from its assets and the ongoing charges, including annual premiums. Therefore, the financial statements have been prepared on the going concern basis and on the basis that approval as an investment trust will continue to be met.
Note 3 Gains from life settlement portfolios
When a maturity is declared, a realised capital gain or loss is recognised on the investment in the policy, calculated by deducting from the value of the maturity the initial acquisition cost and the previously unrealised fair value adjustments.
The amount of premiums incurred during the period is reflected as a deduction of income from life settlement portfolios. The amount of premiums paid in advance as at 30 June 2021 amounted to USD 7,301,000 (30 June 2020: USD 9,552,000, 31 December 2020: USD 8,354,000).
Note 4 Management fees and performance fees
30 June 30 June 31 December
2021 2020 2020
USD'000 USD'000 USD'000
Acheron Capital management
fees 758 855 1,674
Performance fees 1,250 (647) (1,847)
______ ______ _____
2,008 208 (173)
===== ===== =====
Under an agreement dated 26 March 2018, the Investment Manager is entitled to a management fee payable by the Trust at an annual rate of no more than 1.5% of the Net Asset Value for class A. Previously, until the merger of classes A, D and E on 30 April 2020 and the A and B on 31 May 2021 an annual rate of no more than 1.5% of the Net Asset Value was payable in respect of class A, B and D and 2% in respect of class E. Management fees paid in the period amounted to USD 758,000 (30 June 2020: USD 855,000, 31 December 2019: USD 1,674,000).
The Performance fee in respect of the Trust shall be an amount equal to 25% of the sum of the distributions made to the holders of the Shares in the Company corresponding to the Trust, in excess of the Performance Hurdle (assessed at the time of each distribution).
The "Performance Hurdle" is met when (from time to time) the aggregate distributions (in excess of the Catch-Up Amount) made to the holders of the corresponding Ordinary Shares compounded at 3% per annum for classes A and B, and prior to 30 April 2020, 5% for classes D and E (from the date of each distribution) equal the aggregate investment made by the Ordinary Shares in the Company (from time to time) compounded at 3% and 5% respectively.
The "Catch-Up Amount" is an amount equal to the distributions that would have been required to be made to the Predecessor Company's shareholders of the corresponding share class in order for the Accrued Performance Distributions (less, where applicable, any clawback of such Accrued Performance Distributions) to be paid (determined as at 30 June 2021), reduced by an amount equal to any distributions paid to the Predecessor Company's shareholders of the relevant share class prior to the Acquisition.
Note 5 Taxation
The Company has an effective UK tax rate of 0% for the year ending 31 December 2021. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an investment trust and there is expected to be an excess of management expenses over taxable income.
The Company suffers US withholding tax on income received dividends and interest. The tax charge for the period amounted to USD 102,000.
Withholding tax on matured policies
In accordance with the taxation treaty between the United States of America and the United Kingdom, withholding tax on matured policies is not due if at least 6% of the average capital stock of the main class of Shares is traded during the previous year on a recognised stock exchange. The Board believes that in the period ended 31 December 2020 the Company has fulfilled this requirement.
Note 6 Return per share
As stated in Note 9, the share capital of the Company comprises 49,826,784 A shares. The B shares were cancelled following the merger of share classes A and B on 31 May 2021 and Share Classes D and E were cancelled following the merger of Share Classes A, D and E on 30 April 2020. All Shares are fully paid. Neither unpaid shares nor any kind of option are outstanding, so the basic profit/(loss) per share is also the diluted profit/(loss) per share.
As the different classes of Shares had specific rights in relation to their investments, the net profit/(loss) per share is given for each Share Class:
Six months ended 30 Class A Class June 2021 B Earnings per share: Revenue return (USD'000) (4,418) - Capital return (USD'000) 12,971 - Total return (USD'000) 8,553 - Weighted average number of shares in the period 44,634,411 - Income return per share (0.099) - (USD) Capital return per share 0.291 - (USD) Basic and diluted total earnings per share (USD) 0.192 - Six months ended 30 Class A Class June 2020 B Earnings per share: Revenue return (USD'000) (3,776) (283) Capital return (USD'000) 1,984 (780) Total return (USD'000) (1,792) (1,063) Weighted average number of shares in the period 41,070,674 14,596,098 Income return per share (USD) (0.092) (0.019) Capital return per share (USD) 0.048 (0.054) Basic and diluted total earnings per share (USD) (0.044) (0.073) Year ended 31 December Class A Class 2020 B Earnings per share: Revenue return (USD'000) (6,960) (680) Capital return (USD'000) 1,863 (972) Total return (USD'000) (5,097) (1,652) Weighted average number of shares in the year 42,404,616 14,596,098 Income return per share (USD) (0.164) (0.047) Capital return per share (USD) 0.044 (0.066) Basic and diluted total earnings per share (USD) (0.120) (0.113) Note 7 Financial instruments measured at fair value
The life settlement portfolios have been classified as financial assets held at fair value through profit or loss as their performance is evaluated on a fair value basis.
The fair value hierarchy set out in IFRS 13 groups financial assets and liabilities into three levels based on the significant inputs used in measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
- level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e as prices) or indirectly (i.e. derived from prices); and
- level 3: inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The life settlement portfolios of USD 85,095,000 (30 June 2020: USD 80,718,000, 31 December 2020: USD 77,643,000) are all classified as level 3.
Note 8 Financial assets held at fair value through profit or loss: Life Settlement Portfolios
As at 30 As at 30 As at 31
June June December
2021 2020 2020
USD'000 USD'000 USD'000
Movements for the period are
as follows:
Opening valuation 77,643 78,041 78,041
Acquisitions during the period 11,199 58 118
Proceeds from matured policies (25,787) (12,202) (22,735)
Net realised gains on policies 21,036 8,893 16,375
Movements in cash from policy
advances 49 4,599 4,753
Movements in unrealised valuation 955 1,329 1,091
_______ _______ ______
Closing valuation 85,095 80,718 77,643
======= ======= ======
Details at period end: USD'000 USD'000 USD'000
Acquisition value 97,764 90,113 90,604
Unrealised capital gains 1,744 5,220 1,500
Policy advances (14,413) (14,615) (14,461)
_______ _______ _______
Closing valuation 85,095 80,718 77,643
====== ====== =======
Distribution of the portfolio by class of Shares and by type of risk:
30 June 2021 Class Class B Total
A
USD'000 USD'000 USD'000
Elderly life insurance
(non-HIV) portfolio 25,441 - 25,441
HIV portfolio 59,654 - 59,654
(________) (________) (________)
Balance as at
30 June 2021 85,095 - 85,095
===== ===== =====
Fair market value reflects the view of Acheron Capital Limited, the Investment Manager of the trust in which the policies of Class A are kept.
Class A Class Total
30 June 2020 B
USD'000 USD'000 USD'000
Elderly life insurance
(non-HIV) portfolio 19,996 10,722 30,718
HIV portfolio 50,000 - 50,000
(________) (________) (________)
Balance as at
30 June 2020 69,996 10,722 80,718
===== ===== =====
31 December 2020 Class A Class Total
B
USD'000 USD'000 USD'000
Elderly life insurance
(non-HIV) portfolio 18,168 9,823 27,991
HIV portfolio 49,652 - 49,652
(_________) (________) (_________)
Balance as at
31 December 2020 67,820 9,823 77,643
====== ===== ======
Note 9 Share Capital
At the 30 June 2021, (the Company's share capital amounts to USD 498,267 (30 June 2020: USD 583,202, 31 December 2020: 583,202) and is represented by 49,826,784 Ordinary A shares of USD 0.01 each. Share class B was cancelled following the merger of Share classes A and B on 31 May 2021 and Share Classes D and E were cancelled following the merger of Share Classes A, D and E on 30 April 2020.
Class Class Class Class Total
A B D E
USD'000 USD'000 USD'000 USD'000 USD'000
Balance as at
31 December 2019 399 146 88 15 648
Share class merger 38 - (88) (15) (65)
_____ _____ _____ _____ _____
Balance as at
31 December 2020 437 146 - - 583
Share class merger 61 (146) - - (85)
(________) (________) (________) (_______) (_______)
Balance as at
30 June 2021 498 - - - 498
_____ _____ _____ ____ _____
The issued and fully paid share capital at 30 June 2021 is comprised of 49,826,784 Class A shares.
Class A shares relate to specific investments determined by the Board of Directors or as the case may be, by a general meeting of Shareholders. Each investment is undertaken for the exclusive benefit and risk of the relevant class of shares. All shares have equal voting rights.
As announced on 4 May 2020, the Company undertook a capital reorganisation whereby the shares of Classes D and E were merged into class A shares. A total of 8,792,561 D shares and 1,566,603 E shares were redesignated as 3,832,668 A shares. The remaining 6,526,496 D and E shares were designated as Deferred Shares and subsequently cancelled.
As announced on 2 June 2021, the Company undertook a Capital Reorganisation whereby the shares of Class B were merged into Class A shares. A total of 14,596,098 B shares were redesignated as 6,102,725 A shares.
Note 10 Special reserve
The Special reserve was created as a result of the cancellation of the Share premium account following a court order issued on 18 June 2019. The Special reserve is distributable and may be used to fund purchases of the Company's own shares and to make distributions to Shareholders.
Note 11 Net assets and net asset value per Share Class
The Net Asset Value (NAV) for each Share Class is shown below.
30 June 2021 Class Class Total
A B
Net assets (USD'000) 105,930 - 105,930
Number of shares 49,826,784 - 49,826,784
NAV per share
(USD) 2.126 - 2.126
30 June 2020 Class A Class B Total
Net assets (USD'000) 92,639 13,800 106,439
Number of shares 43,724,059 14,596,098 58,320,157
NAV per share
(USD) 2.119 0.945
31 December 2020 Class A Class B Total
Net assets (USD'000) 86,989 13,211 100,200
Number of shares 43,724.059 14,596,098 58,320,157
NAV per share
(USD) 1.99 0.91
Note 12 Related party transactions
Related parties to the Company are the members of the Board of Directors of the Company, Compagnie Européenne de Révision S.à r.l. as Administrator who previously had a member on the Board of Directors and the Trustee of the US trust who was also previously a member of the Board of Directors.
30 June 2021
USD'000
Per income statement:
Trustee fees 74
Compagnie Européenne de Révision
S.à r.l. 100
Directors' fees 67
Amounts payable per balance sheet:
Compagnie Européenne de Révision
S.à r.l. 55
Directors' fees 27
=====
All transactions with related parties are
undertaken at arm's length.
Shares held by related parties (Directors and companies
under their control)
- Michael Baines 50,000 A shares
Note 13 Post balance sheet events
There are no post balance sheets events to disclose.
ADDITIONAL INFORMATION
Additional information of exhibits I and II do not form part of the condensed financial statements.
EXHIBIT I
Class A Shares
Statement of Comprehensive Income
for the six months ended 30 June 2021
Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
(unaudited) (unaudited) (audited)
USD'000 USD'000 USD'000
Income
Income from life settlement
portfolios 313 399 750
Gains/(losses) from
life settlement portfolios 11,660 605 (716)
Other income 102 6 9
Net foreign exchange
loss (6) (6) (12)
______ ______ ______
Total income 12,069 1,004 31
Operating expenses
Investment management
fees (1,971) 53 546
Other expenses (3,410) (2,758) (5,235)
______ ______ ______
Profit/(loss) before
finance costs and
taxation 6,688 (1,701) (4,658)
Finance costs
Interest payable (389) (615) (961)
______ ______ ______
Profit/(loss)/before
taxation 6,299 (2,316) (5,619)
Taxation (101) 16 16
______ ______ ______
Profit/(loss) for
the period 6,198 (2,300) (5,603)
Contribution from
merger of Share Class
B 2,355 508 506
______ ______ ______
Profit/(loss) for
the period 8,553 (1,792) (5,097)
====== ====== ======
EXHIBIT I
Class A Shares
Statement of Financial Position
as at 30 June 2021
As at As at As at 31
December
2020
30 June 30 June (audited)
2021 2020 USD'000
(unaudited) (unaudited)
USD'000 USD'000
ASSETS
Non-current assets
Financial assets at fair
value through profit or
loss:
- Life settlement investments 85,095 69,996 67,820
______ ______ ______
85,095 69,996 67,820
Current assets
Maturities receivables 8,739 10,569 6,713
Trade and other receivables 348 491 387
Premiums paid in advance 7,301 8,151 7,338
Cash and cash equivalents 15,716 13,096 3,269
Inter-class receivables - 208 2,640
______ ______ ______
32,104 32,515 20,347
______ ______ ______
Total assets 117,199 102,511 88,167
______ ______ ______
Current liabilities
Other payables (9,680) (5,465) (839)
Provision for performance
fees (1,589) (4,407) (339)
______ ______ ______
Total liabilities (11,269) (9,872) (1,178)
______ ______ ______
Net assets 105,930 92,639 86,989
====== ====== ======
Represented by
Capital and reserves
Share capital 498 437 437
Special reserve 96,791 83,501 81,156
Capital redemption reserve 213 128 128
Capital reserve 35,372 26,044 25,925
Revenue reserve (26,944) (17,471) (20,657)
______ ______ ______
Total equity attributable
to ordinary Shareholders 105,930 92,639 86,989
of the Company ====== ====== ======
EXHIBIT II
Class B Shares
Statement of Comprehensive Income
for the four months ended 30 April 2021
Four months Six months Year ended
ended ended 31 December
30 April 2021 30 June 2020 2020
(unaudited) (unaudited) (audited)
USD'000 USD'000 USD'000
Income
Income from life settlement
portfolios - 6 14
Gains/(losses) from
life settlement portfolios 2,560 (783) (972)
Other income - 49 49
______ ______ ______
Total income 2,560 (728) (909)
Operating expenses
Investment management
fees (37) (111) (223)
Other expenses (168) (223) (518)
______ ______ ______
Profit/(loss) before
finance costs and taxation 2,355 (1,062) (1,650)
Finance costs
Interest payable - (1) (2)
______ ______ ______
Profit/(loss) before
taxation 2,355 (1,063) (1,652)
Taxation - - -
______ ______ ______
Profit/(loss) for the
period 2,355 (1,063) (1,652)
===== =====
Transfer to A shares
on merger (2,355) - -
=====
COMPANY INFO RMATION
Directors
Michael Baines Chairman
Christopher Casey
Guner Turkmen
Registered Office
115 Park Street
4th Floor
London W1K 7AP
Auditors
BDO LLP
55 Baker Street
London
W1U 7EU
Trust's Investment Manager
Acheron Capital Limited
115 Park Street
4th Floor
London W1K 7AP
Registrars
The City Partnership (UK) Limited
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield
HD4 7BH
Brokers
Shore Capital
Cassini House
57 St James Street
London
SW1A 1LD
Company Secretary
ISCA Administration Services Limited
Suite 8,
Bridge House
Courtenay Street
Newton Abbot
TQ12 2QS
Email: lsa@iscaadmin.co.uk
Telephone: 01392 487056
LEI: 2138003OL2VBXWG1BZ27
Website - https://www.lsaplc.com
Registered in England and Wales with Company Registration number: 10918785
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of this announcement.
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END
IR USSBRAUUKUAR
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