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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sherborne Investors (guernsey) B Limited | LSE:SIGB | London | Ordinary Share | GG00B883XC99 | A ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.2525 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMSIGB
RNS Number : 4529N
Sherborne Investors (Guernsey)B Ltd
09 August 2017
Sherborne Investors (Guernsey) B Limited
Interim Report and Unaudited Condensed Consolidated Financial Statements
For the period from 1 January 2017 to 30 June 2017
Company Summary
Hot Features
Premium
The Company Sherborne Investors (Guernsey) B
Limited (the "Company") is a Guernsey
domiciled limited company and its
shares are admitted to trading on
the London Stock Exchange's Specialist
Fund Segment ("SFS"). The Company
was incorporated on 8 November 2012.
The Company commenced dealings on
SFS on 7 May 2013.
Investment Objective The Company's investment objective,
and Policy through its investment in the Investment
Partnership, is to realise capital
growth from investment in a target
company identified by the Investment
Manager, with the aim of generating
a significant capital return for
Shareholders.
The Company's investment policy is
to invest through its investment
in a company which is publicly quoted,
most likely on a UK stock exchange,
which it considers to be undervalued
as a result of operational deficiencies
and which it believes can be rectified
by the Investment Manager's active
involvement, thereby increasing the
value of the investment. The Company
will only invest in one target company
at a time.
Investment Manager The General Partner and the Investment
Partnership have appointed Sherborne
Investors Management (Guernsey) LLC
to provide investment management
services to the Investment Partnership.
Chairman's Statement
During the period the Company continued to pursue its investment strategy through its shareholding in Electra Private Equity PLC ("Electra").
As at 30 June 2017, the net asset value attributable to shareholders of the Company was GBP159.5 million (December 2016: GBP487.5 million) or 50.70 pence per share (December 2016: 154.99 pence per share) (see note 12). The Company's net asset value was based on the closing price of 1,755 pence as at 30 June 2017 for the shares of Electra. As at the period end SIGB, LP held approximately 29.90% of Electra through ordinary shares. The ownership level remains the same at the date of this letter.
The principal risks and uncertainties of the Company are in relation to performance risk, market risk, and relationship risk. These are unchanged from 31 December 2016, and further details may be found in the Directors' Strategic Report within the Annual Report and Consolidated Financial Statements of the Company for the year ended 31 December 2016. The Directors will continue to assess the principal risks and uncertainties relating to the Company for the remaining six months of the year but expect these to remain unchanged.
Electra has realised a significant number of its investments during the past 12 months, resulting in the accumulation of excess cash balances. Electra distributed GBP1.35 billion of this excess to shareholders through dividends in May and July 2017. Following receipt of the distributions from Electra, the Company paid two dividends to its shareholders. The first dividend of 87.00 pence per share was paid on 19 May 2017 to shareholders of record on 18 April 2017 and the second of 30.00 pence per share, was paid on 28 July 2017 to shareholders of record on 23 June 2017. I am pleased to report that these two dividends represent a return of GBP368 million to shareholders during 2017.
On 27 February 2017, there was a GBP5 million partial repayment of the revolving loan facility with HSBC Bank plc (the "Facility"). Following receipt of the initial Electra dividend, on 11 May 2017 the Company repaid the remaining GBP15 million balance and cancelled the Facility.
On 1 June 2017 Electra's internal executive management assumed responsibilities from the former outsourced investment manager. Electra confirmed that Phase II of the Strategic Review would commence and would be announced in the fourth quarter of 2017. Electra noted that, giving effect to the two dividends paid, Electra's net asset value per share was 2,009 pence, of which 1,009 pence was in net cash balances.
Pursuant to its existing authority, the Investment Manager may sell, short or otherwise dispose of all or a part of such shares held in Electra or purchase additional securities at any time.
Details of Related Party Transactions are contained in Note 15 of the Notes to the Condensed Consolidated Financial Statements for the period ended 30 June 2017.
The Company intends to continue to pursue its strategy as set out in its prospectus.
We are grateful for your continued support and will keep you informed of the status of our investment as it develops.
Responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
-- The Interim Report, comprising the Chairman's Statement, meets the requirements of an interim management report and includes a fair review of information required by:
o DTR 4.2.7R of the UK Disclosure and Transparency Rules, being an indication of important events that have occurred during the period from 1 January 2017 to 30 June 2017 and their impact on the Condensed Consolidated Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
o DTR 4.2.8R of the UK Disclosure and Transparency Rules, being related party transactions that have taken place in the period from 1 January 2017 to 30 June 2017 and that have materially affected the financial position or performance of the Company during that period, and any material changes in the related party transactions disclosed in the last Annual Report; and
-- The Condensed Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and result of the Company as required by DTR 4.2.4R of the UK Disclosure.
Going Concern
Under the UK Corporate Governance Code and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern.
The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration.
Based on the sufficient cash reserves as at 30 June 2017 and the Facility being repaid, the Directors are of the opinion that the Group has adequate resources to continue its operational activities for the foreseeable future.
After making enquiries of the Investment Manager and the Administrator, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these unaudited Condensed Consolidated Financial Statements.
Independent Auditor's Review Report to the Members of Sherborne Investors (Guernsey) B Limited
We have been engaged by Sherborne Investors (Guernsey) B Limited ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and related notes 1 to 16. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the period ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the period from 1 January 2017 to 30 June 2017
1 January 1 January 1 January
2017 to 2016 to 2016 to
30 June 2017 30 June 2016 31 December
2016
(audited)
Notes GBP GBP GBP GBP GBP GBP
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
Income 1(e)
Unrealised
(loss)/gain
on investments
held at fair
value through 1(d),
profit or loss 5 (345,302,046) (12,298,863) 116,586,481
Dividend income 7 402,883,792 13,868,201 26,436,895
Bank interest
income 13,032 9,148 13,455
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
57,594,778 1,578,486 143,036,831
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
Expenses 1(f)
Professional
fees 109,270 150,137 760,511
Trading
and custodian
fees 2,861 56,146 56,445
Administrative
fees 132,899 135,468 271,316
Other fees 87,489 146,661 141,363
Management
fees 15 2,593,165 2,029,387 4,368,592
Finance
costs 1(g) 278,221 1,116,295 1,887,638
Directors' 2,
fees 15 58,750 55,000 110,000
------------
(3,262,655) (3,689,094) (7,595,865)
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
Consolidated
comprehensive
income/(loss)
for the
period/year 54,332,123 (2,110,608) 135,440,966
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
Income/(loss)
attributable
to:
Shareholders 39,986,810 (2,054,023) 105,904,742
Non-controlling 1(b),
interest 15 14,345,313 (56,585) 29,536,224
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
Weighted average
number of shares
outstanding 4 314,547,259 314,547,259 314,547,259
Basic and diluted
earnings per
share (pence)
attributable
to shareholders 4 12.71 (0.65) 33.67
------------------ ------- ------------ -------------- ---------- ------------- ------------ ------------
All revenue and expenses are derived
from continuing operations.
Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.
The accompanying notes form an integral part of these consolidated financial statements.
Condensed Consolidated Statement of Financial Position (Unaudited)
As at 30 June 2017
30 June 2017 30 June 2016 31 December
2016
(audited)
Notes GBP GBP GBP GBP GBP GBP
---------------------- ------ ------------ ------------ ------------- ------------ ----------- ------------
Non-current
Assets
Financial
assets at
fair value
through profit 1(d),
or loss 5 200,878,809 416,901,826 545,824,128
---------------------- ------ ------------ ------------ ------------- ------------ ----------- ------------
200,878,809 416,901,826 545,824,128
---------------------- ------ ------------ ------------ ------------- ------------ ----------- ------------
Current Assets
Prepaid expenses 6 34,355 62,185 27,534
Dividend
receivable 7 104,434,426 - 12,568,695
Cash and 1(i),
cash equivalents 8 5,612,798 10,918,336 4,852,217
---------------------- ------ ------------ ------------ ------------- ------------ ----------- ------------
110,081,579 10,980,521 17,448,446
---------------------- ------ ------------ ------------ ------------- ------------ ----------- ------------
Current Liabilities
Trade and
other payables 9 (124,217) (207,621) (405,377)
Dividend
payable 13 (94,364,178) - -
Loan payable 10 - (20,000,000) -
---------------------- ------ -------------------------- ------------- ------------ ----------- --------------
(94,488,395) (20,207,621) (405,377)
Net Current
Assets/(Liabilities) 15,593,184 (9,227,100) 17,043,069
---------------------- ------ -------------------------- --------------------------- -------------------------
Non-Current
Liabilities
Loan payable 10 - - (20,000,000)
---------------------- ------ -------------------------- --------------------------- -------------------------
Net Assets 216,471,993 407,674,726 542,867,197
---------------------- ------ -------------------------- --------------------------- -------------------------
Capital and
Reserves
Called up
share capital
and share
premium 11 302,696,145 302,696,145 302,696,145
Retained
reserves (143,208,378) 79,225,441 184,825,104
---------------------- ------ -------------------------- --------------------------- -------------------------
Equity attributable
to the Company 159,487,767 381,921,586 487,521,249
---------------------- ------ -------------------------- --------------------------- -------------------------
Non-controlling 1(b),
interest 15 56,984,226 25,753,140 55,345,948
---------------------- ------ -------------------------- --------------------------- -------------------------
Total Equity 216,471,993 407,674,726 542,867,197
---------------------- ------ -------------------------- --------------------------- ------------------------- NAV Per Share attributable to the Company 12 50.70p 121.42p 154.99p ---------------------- ------ -------------------------- --------------------------- -------------------------
The Condensed Consolidated Financial Statements were approved by the Board of Directors for issue on 8 August 2017.
Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.
The accompanying notes form an integral part of these consolidated financial statements.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
For the period from 1 January 2017 to 30 June 2017
Share
Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
---------------------- ------ ------------ -------------- ------------- --------------
Balance at 1 January
2017 302,696,145 184,825,104 55,345,948 542,867,197
---------------------- ------ ------------ -------------- ------------- --------------
Total comprehensive
income for period - 51,903,345 2,428,778 54,332,123
15,
Incentive allocation 1(m) - (11,916,535) 11,916,535 -
Dividends paid and
accrued 13 - (368,020,292) - (368,020,292)
Distribution - - (12,707,035) (12,707,035)
Balance at 30 June
2017 302,696,145 (143,208,378) 56,984,226 216,471,993
---------------------- ------ ------------ -------------- ------------- --------------
Share
Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
---------------------- ------ ------------ ------------ ------------- ------------
Balance at 1 January
2016 302,696,145 85,997,672 26,076,772 414,770,589
---------------------- ------ ------------ ------------ ------------- ------------
Total comprehensive
loss for the period - (2,025,096) (85,512) (2,110,608)
15,
Incentive allocation 1(m) - (28,927) 28,927 -
Dividends paid - (4,718,208) - (4,718,208)
Distribution - - (267,047) (267,047)
Balance at 30 June
2016 302,696,145 79,225,441 25,753,140 407,674,726
---------------------- ------ ------------ ------------ ------------- ------------
Share
Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
------------------------ ------ ------------ ------------- ------------- ------------
Balance at 1 January
2016 302,696,145 85,997,672 26,076,772 414,770,589
------------------------ ------ ------------ ------------- ------------- ------------
Total comprehensive
income for the period - 129,393,684 6,047,282 135,440,966
15,
Incentive allocation 1(m) - (23,488,942) 23,488,942 -
Dividends paid - (7,077,310) - (7,077,310)
Distribution - - (267,048) (267,048)
Balance at 31 December
2016 302,696,145 184,825,104 55,345,948 542,867,197
------------------------ ------ ------------ ------------- ------------- ------------
Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.
The accompanying notes form an integral part of these consolidated financial statements.
Condensed Consolidated Statement of Cash Flows (Unaudited)
For the period from 1 January 2017 to 30 June 2017
1 January 1 January 1 January
2017 2016 2016 to
to 30 June to 30 June 31 December
2017 2016 2016
Notes GBP GBP GBP (audited)
----------------------------------- -------------- -------------
Net cash flow from operating
activities 402,109,824 10,460,622 7,557,600
------------------------------------ -------------- ------------- ----------------
Investing activities
Purchase of investments 5 (356,727) (2,405,001) (2,441,959)
Bank interest income 13,032 9,148 13,455
Net cash flows used in
investing activities (343,695) (2,395,853) (2,428,504)
------------------------------------ -------------- ------------- ----------------
Financing activities
Dividends paid 13 (368,020,292) (4,718,208) (7,077,310)
Loan repayments 10 (20,000,000) - -
(Distributions)/Commitments
to/from non-controlling
interest 15 (12,707,035) (267,047) (267,048)
Finance costs (278,221) (1,095,828) (1,867,171)
------------------------------- --- -------------- ------------- ----------------
Net cash flows used in
financing activities (401,005,548) (6,081,083) (9,211,529)
------------------------------------ -------------- ------------- ----------------
Net movement in cash
and cash equivalents 760,581 1,983,686 (4,082,433)
Cash and cash equivalents
at beginning of period/year 4,852,217 8,934,650 8,934,650
------------------------------------ -------------- ------------- ----------------
Cash and cash equivalents
at period/year end 5,612,798 10,918,336 4,852,217
------------------------------------ -------------- ------------- ----------------
Net cash flow from
operating activities
------------------------------- --- -------------- ------------- ----------------
Total consolidated
comprehensive income/(loss)
for the period/year 54,332,123 (2,110,608) 135,440,966
Fair value movement
on financial assets 5 345,302,046 12,298,863 (116,586,481)
Movement in prepaid expenses
and
income receivable (91,872,552) (30,295) (12,564,339)
Movement in trade
and other payables 94,083,018 (804,485) (606,729)
Bank interest income (13,032) (9,148) (13,455)
Finance costs 278,221 1,116,295 1,887,638
------------------------------- --- -------------- ------------- ----------------
Net cash flow from operating
activities 402,109,824 10,460,622 7,557,600
------------------------------------ -------------- ------------- ----------------
Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.
The accompanying notes form an integral part of these consolidated financial statements.
Notes to the Condensed Consolidated Financial Statements
For the period from 1 January 2017 to 30 June 2017
1. Summary of significant accounting policies
Reporting entity
Sherborne Investors (Guernsey) B Limited (the "Company") is a closed-ended investment company with limited liability formed under The Companies (Guernsey) Law, 2008. The Company was incorporated and registered in Guernsey on 8 November 2012. The Company deals on the London Stock Exchange's Specialist Fund Segment ("SFS"). The Company's registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL. The "Group" is defined as the Company and its subsidiary, SIGB, LP.
Basis of preparation
The Unaudited Condensed Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and in accordance with International Accounting Standard 34, 'Interim Financial Reporting' ('IAS 34'), together with applicable legal and regulatory requirements of Guernsey law. The same accounting policies have been applied as in the last audited accounts. The Directors have taken the exemption in Section 244 of The Companies (Guernsey) Law, 2008 (as amended) and have therefore elected to only prepare Consolidated Financial Statements for the period.
These Condensed Consolidated Financial Statements have been prepared on the historical cost basis, as modified by the measurement at fair value of investments.
Going concern
Under the UK Corporate Governance Code and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern.
The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration and are of the opinion that the Group has adequate resources to continue its operational activities for the foreseeable future.
After making enquiries of the Investment Manager and the Administrator, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these unaudited Condensed Consolidated Financial Statements.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the Group's Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's Condensed Consolidated Financial Statements and revenue and expenses during the reported period. Actual results could differ from those estimated.
As more fully described in Note 15, "Related Party Transactions", the Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to Partners of the Investment Partnership exceed a certain level. The basis of the incentive calculation differs depending on how the investment in the Selected Target Company is ultimately characterized (i.e, as a Turnaround or Stake Building Investment). Otherwise there are no significant estimates utilised for the preparation of the Group's Condensed Consolidated Financial Statements as at 30 June 2017 due to the nature of the activities that have occurred in this period, together with the sole investment held by the Group being quoted on the London Stock Exchange.
Adoption of new and revised standards
(i) Amendments early adopted by the Company:
There were no standards, amendments and interpretations adopted early by the Company.
(ii) Standards, amendments and interpretations endorsed by the European Union ('EU') that are in issue but not yet effective:
New standards Effective
date
---------------- ----------------------------------------------------
IFRS Financial Instruments - Classifications 1 January
9 and Measurement 2018
IFRS Revenue from Contracts with Customers 1 January
15 2018
Revised and amended standards Effective
date
-------------------------------- ----------------------------------------------------
IFRS Mandatory Effective Date and Transition 1 January
7/9 Disclosure (amended) 2018
Unless stated otherwise, the Directors do not consider the adoption of new and revised Accounting Standards and Interpretations to have a material impact.
a. Basis of consolidation
The Condensed Consolidated Financial Statements incorporate the Financial Statements of the Company and an entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
Non-controlling interests in the net assets of the consolidated subsidiary are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling entities' share of changes in equity since the date of the combination. Losses applicable to the non-controlling entities in excess of their interest in the subsidiary's equity are allocated against their interests to the extent that this would create a negative balance.
Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by the Group.
All intra-group transactions, balances and expenses are eliminated on consolidation.
The Company owns approximately 95.55% (2016: 95.55%) of the capital interest in SIGB, LP. Whilst the General Partner of SIGB, LP, Sherborne Investors (Guernsey) GP, LLC, a company registered in Delaware, USA, is responsible for directing the day to day operations of SIGB, LP, the Company, through its majority interest in SIGB, LP, has the ability to approve the proposed investment of SIGB, LP and to remove the General Partner. Hence, the Company has consolidated SIGB, LP in its financial statements.
b. Non-controlling interest
The interest of non-controlling parties in the subsidiary is measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.
c. Functional currency
Items included in the Condensed Consolidated Financial Statements of the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The Consolidated Financial Statements are presented in Pound Sterling (GBP), which is the Group's functional and presentational currency. Transactions in currencies other than GBP are translated at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the date of the Consolidated Statement of Financial position are retranslated into GBP at the rate of exchange ruling at that date. Exchange differences are reported in the Consolidated Statement of Comprehensive Income.
d. Financial assets at fair value through profit or loss
Investments, including equity and loan investments in associates, are designated as fair value through profit or loss in accordance with International Accounting Standard 39 ("IAS 39") "Financial Instruments: Recognition and Measurement", as the Company is an investment company whose business is investing in financial assets with a view to profiting from their total return in the form of interest and changes in fair value. Despite the large holding, under International Accounting Standard 28 ("IAS 28") "Investments in Associates", the fund can hold the investment in Electra shares at fair value through profit or loss rather than as an associate as SIGB, LP is a closed-ended fund.
Investments in voting shares and derivative contracts are initially recognised at fair value. The investments in voting shares and derivative contracts are subsequently re-measured at fair value, as determined by the Directors. Unrealised gains or losses arising from the revaluation of investments in voting shares and derivative contracts are taken directly to the Consolidated Statement of Comprehensive Income.
In determining fair value in accordance with IFRS 13 "Fair value Measurement" ("IFRS 13"), investments measured and reported at fair value are classified and disclosed in one of the following categories within the fair value hierarchy:
Level I - An unadjusted quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. As required by IFRS 13, the Group will not adjust the quoted price for these investments, even in situations where it holds a large position and a sale could reasonably impact the quoted price.
Level II - Inputs are other than unadjusted quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.
The investments held by the Group at the period end are classified as meeting the definition of Level I (2016: Level I). On disposal of shares or conversion of bonds, cost of investments are allocated on a FIFO basis.
e. Revenue recognition
Dividend income is recognised when the Group's right to receive payment has been established. Tax suffered on dividend income for which no relief is available is treated as an expense.
Interest receivable from short-term deposits and investment income are recognised on an accruals basis. Where receipt of investment income is not likely until the maturity or realisation of an investment the investment income is accounted for as an increase in the fair value of the investment.
f. Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the Condensed Consolidated Statement of Comprehensive Income.
g. Finance costs
Finance costs include interest on bank loans and amortised transaction costs. Finance costs are recognised using the effective interest method.
h. Prepaid expenses and trade receivables
Trade and other receivables are initially recognised at fair value. A provision for impairment of trade receivables is established when there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivables.
i. Cash and cash equivalents
Cash and cash equivalents comprises cash in hand as well as call and current balances with banks and similar institutions, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. This definition is also used for the Condensed Consolidated Statement of Cash Flows.
j. Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently, where necessary, re-measured at amortised cost using the effective interest method.
k. Financial instruments
Financial instruments and financial liabilities are recognised in the Group's Condensed Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.
l. Segmental reporting
As the Group invests in one investee company, there is no segregation between industry, currency or geographical location. No further disclosures have been made in conjunction with IFRS 8 Operating Segments as it is deemed not to be applicable.
m. Incentive allocation
The incentive allocation is accounted for on an accruals basis and the calculation is disclosed in Note 15. The incentive is payable to Non-Controlling Interests and therefore recognised in the Condensed Consolidated Statement of Changes in Equity rather than recognised as an expense in the Condensed Consolidated Statement of Comprehensive Income.
2. Comprehensive income
The consolidated comprehensive income has been arrived at after charging:
1 January 1 January 1 January
2017 2016 to 2016 to
to 30 June 30 June 31 December
2017 2016 2016
GBP GBP GBP
------------------------ ------------ ---------- -------------
Directors' fees 58,750 55,000 110,000
Auditor's remuneration
- Audit 13,379 13,175 28,200
Auditor's remuneration
- interim review 14,600 14,600 14,600
------------------------ ------------ ---------- -------------
In addition to the audit and half-yearly review related remuneration above a further GBP13,742 was due to the Auditor in relation to Tax compliance services (31 December 2016: GBP27,748).
3. Tax on ordinary activities
The Company has been granted exemption from income tax in Guernsey under the Income Tax (Exempt Bodies) (Bailiwick of Guernsey) Ordinance 1989, and is liable to pay an annual fee (currently GBP1,200) under the provisions of the Ordinance. As such it will not be liable to income tax in Guernsey other than on Guernsey source income (excluding deposit interest on funds deposited with a Guernsey bank). No withholding tax is applicable to distributions to Shareholders by the Company.
The Investment Partnership will not itself be subject to taxation in Guernsey. No withholding tax is applicable to distributions to partners of the Investment Partnership.
Income which is wholly derived from the business operations conducted on behalf of the Investment Partnership with, and investments made in, persons or companies who are not resident in Guernsey will not be regarded as Guernsey source income. Such income will not therefore be liable to Guernsey tax in the hands of non-Guernsey resident limited partners.
Dividend income is shown gross of any withholding tax.
4. Earnings per share
The calculation of basic and diluted gain per share is based on the return on ordinary activities less total comprehensive income attributable to the Non-Controlling Interest and on there being 314,547,259 weighted average shares in issue. The earnings per share as at 30 June 2017 amounted to a surplus of 12.71 pence (as at 30 June 2016: a deficit of 0.65 pence and as at 31 December 2016: 33.67 pence profit).
Days Weighted
Date Shares in issue Average Shares
01/01/2017 314,547,259 181 314,547,259
--------------------- -------------------
314,547,259 314,547,259
Date of Days Weighted
issue Shares in issue Average Shares
01/01/2016 314,547,259 366 314,547,259
314,547,259 314,547,259
5. Financial assets at fair value through profit or loss
As at As at 30 As at 31
30 June June December
2017 2016 2016
GBP GBP GBP
----------------------------------- -------------- ------------- ------------
Opening fair value at
the beginning of the period/year 545,824,128 426,795,688 426,795,688
Purchases at cost of ordinary
shares 356,727 2,405,001 2,441,959
Fair value adjustments (345,302,046) (12,298,863) 116,586,481
----------------------------------- -------------- ------------- ------------
Closing fair value at
the end of the period/year 200,878,809 416,901,826 545,824,128
----------------------------------- -------------- ------------- ------------
Percentage holding of
Electra 29.90% 28.37% 29.85%
----------------------------------- -------------- ------------- ------------
The Board of Directors approved an investment in Electra Private Equity plc ("Electra") which was proposed by SIGB, LP's Investment Manager, Sherborne Investors Management (Guernsey) LLC in December 2013. Electra is a London Stock Exchange listed investment trust focused on private equity investments.
As at 31 December 2016, the Group held 11,426,086 shares of Electra. During 2016, the group held no convertible bonds in Electra and received no interest.
As at 30 June 2017, the Company held 11,446,086 shares of Electra. In accordance with the Company's investment policy, the Investment Manager does not intend to effect a purchase of shares such that it would be required to make a mandatory bid for the entire share capital of Electra.
6. Prepaid Expenses
As at 30 As at 30 As at 31 December
June 2017 June 2016 2016
GBP GBP GBP
------------------------- ----------- ----------- ------------------
Prepaid directors
and officers insurance 7,233 27,500 10,384
Other prepaid expenses 27,122 34,685 17,150
------------------------- ----------- ----------- ------------------
34,355 62,185 27,534
------------------------- ----------- ----------- ------------------
7. Dividend Income
On 19 January 2017 a dividend from Electra was received for GBP12,568,695 which was declared on 9 December 2016 payable to shareholders of record on 16 December 2016.
On 24 March 2017 Electra declared a Special dividend of 2,612 pence per share, paid on 5 May 2017 to shareholders of record on 7 April 2017 which equates to GBP298,449,366.
On 25 May 2017 Electra declared a second Special dividend of 914 pence per share, paid on 14 July 2017 to shareholders of record on 9 June 2017 which equates to GBP104,434,426.
8. Cash and cash equivalents
Cash and cash equivalents comprises cash held by the Group and short term deposits held with various banking institutions. The carrying amount of these assets approximates their fair value.
9. Trade and other payables
As at 30 As at 30 As at 31 December
June 2017 June 2016 2016
GBP GBP GBP
----------------------- ----------- ------------ --------------------
Professional fees
payable - - 27,177
Loan interest payable - 92,787 89,021
Loan commitment
fee payable - 11,098 685
Other payables 124,217 103,736 288,494
----------------------- ----------- ------------ --------------------
124,217 207,621 405,377
----------------------- ----------- ------------ --------------------
10. Loan payable
As at 30 As at 30 As at 31 December
June 2017 June 2016 2016
GBP GBP GBP
---------------------- ------------- ----------- ------------------
Balance at 1 January 20,000,000 19,979,533 19,979,533
Loan Repayment (20,000,000) - -
Amortisation of
transaction costs - 20,467 20,467
---------------------- ------------- ----------- ------------------
- 20,000,000 20,000,000
---------------------- ------------- ----------- ------------------
The Facility Agreement had the following main covenants:
i. Any dividend received from Electra shall be applied in prepayment of the Loan and accrued interest up to the amount of the dividend.
ii. Any disposal proceeds from the sale of Electra shares, debt instruments or relevant derivatives shall be applied in the prepayment of the Loan and accrued interest up to the amount of the disposal proceeds.
iii. Any partnership capital injections in SIGB, LP shall be applied in the prepayment of the Loan and accrued interest up to the amount of the capital injections.
iv. SIGB, LP is also required to maintain a Loan to Value (LTV) ratio below 50%. An LTV ratio of 50% or higher would entitle the bank to require full or partial prepayment to restore the required LTV ratio. The LTV ratio is the percentage of the Loan, any accrued interest and fees to the value of SIGB, LP's investment in Electra.
The Loan to Value ratio was regularly monitored by the Board to ensure that covenants were maintained in accordance with the Facility Agreement. The outstanding borrowings were repaid on 27 February 2017 (GBP5 million), 11 May 2017 (GBP15 million) and then the Facility was cancelled.
11. Share capital and share premium
As at 30 As at 30 As at 31 December
June 2017 June 2016 2016
Consolidated Consolidated Consolidated
------------------ ------------- ------------- ------------------
Authorised share
capital No. No. No.
Ordinary Shares
of no par value Unlimited Unlimited Unlimited
------------------ ------------- ------------- ------------------
Issued and fully No.
paid No. No.
Ordinary Shares
of no par value 314,547,259 314,547,259 314,547,259
------------------ ------------- ------------- ------------------
As at 30 As at 30 As at 31 December
June 2017 June 2016 2016
Consolidated Consolidated Consolidated
----------------------- ------------- ------------- ------------------
Share premium account GBP GBP GBP
Share premium account
upon issue 302,696,145 302,696,145 302,696,145
Balance at the end
of the period/year 302,696,145 302,696,145 302,696,145
----------------------- ------------- ------------- ------------------
12. Net asset value per share attributable to the Company
No. of Shares Consolidated
Pence per
Share
------------------- -------------- -------------
30 June 2017
Ordinary Shares
Basic and diluted 314,547,259 50.70
30 June 2016
Ordinary Shares
Basic and diluted 314,547,259 121.42
31 December 2016
Ordinary Shares
Basic and diluted 314,547,259 154.99
13. Dividends
On 5 April 2017 a dividend of 87.0 pence per share was declared by the Company and was paid on 19 May 2017 to shareholders of record on 18 April 2017 which equated to GBP273,656,114.
On 5 June 2017 the Company declared a dividend of 30.0 pence per share paid on 28 July 2017 to shareholders of record on 23 June 2017 which equates to GBP94,364,178.
14. Subsequent events
Since 30 June 2017, the share price of Electra has decreased from 1,755 pence to 1,690 pence as at 7 August 2017. If this share price was used to value the Electra shares at 30 June 2017, it would have resulted in a decrease in the closing fair value from GBP200,878,809 to GBP193,438,853.
15. Related party transactions
The Investment Partnership and its General Partner, Sherborne Investors (Guernsey) GP, LLC, have engaged Sherborne Investors Management (Guernsey) LLC to serve as Investment Manager who is responsible for identifying the Selected Target Company, subject to approval by the Board of Directors of the Company, as well as day to day management activities of the Investment Partnership. The Investment Manager is entitled to receive from the Investment Partnership a monthly management fee equal to one-twelfth of 1% of the net asset value of the Investment Partnership, less cash and cash equivalents and certain other adjustments. At the period end, management fees of GBP2,593,165 (30 June 2016: GBP2,029,387) had been paid by the Partnership. No balance was outstanding at the period end.
One member of Sherborne Investors (Guernsey) GP, LLC is Sherborne Investors LP (part of the non-controlling interest), which also serves as the Special Limited Partner of the Investment Partnership. The Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to Partners of the Investment Partnership, of which one is the Company, exceed a certain level of capital contributions to the Investment Partnership, excluding amounts contributed attributable to management fees.
Sherborne Strategic Fund D, LLC ("SSFD"), an affiliate of the General Partner to the Investment Partnership, subscribed as a limited partner for GBP15 million of SIGB, LP on 20 May 2015, thereby acquiring a 4.43% capital interest. As at that date the interest was acquired at the net asset value ("NAV") of SIGB, LP on 20 May 2015. Management and incentive fees have been accrued based on the capital interest of the new limited partner since the date of its admission. For Turnaround investments, the incentive allocation is computed at 10% of the distributions to all Partners in excess of 110%, increasing to 20% of the distributions to all Partners in excess of 150% and increasing to 25% of the distributions to all Partners in excess of 200% of capital contributions, excluding amounts contributed attributable to management fees.
If after acquiring a shareholding, the share price of the Selected Target Company rises to a level at which further investment and the effort of a Turnaround is, in the Investment Manager's opinion, no longer justified or otherwise no longer presents a viable Turnaround opportunity, the Investment Partnership intends to sell (and distribute the proceeds to the Company) or distribute in kind the holding to the limited partners (in each case after deductions for any costs and expenses and for the Investment Partnership's Minimum Capital Requirements and subject to applicable law and regulation), rather than seeking to join the Board of Directors or otherwise engage with Selected Target company (a "Stake Building Investment").
For Stake Building Investments, the incentive allocation is computed at 20% of net returns on the investment of the Investment Partnership, such amount to be payable after each partner in the Investment Partnership has had distributed to it an amount equal to its aggregate capital contribution to the Investment Partnership in respect to the Stake Building Investment (excluding any capital contributions attributable to Management Fees). The Special Limited Partner may waive or defer all or any part of any incentive allocation otherwise due.
At the period end, the incentive allocation has been computed based on a Turnaround Investment and amounts to GBP44,750,727 (30 June 2016: GBP8,025,112) of which GBP1,529,081 (30 June 2016: GBP180,016) relates to SSFD.
Each of the Directors (other than the Chairman) receives a fee payable by the Company currently at a rate of GBP35,000 per annum. The Chairman of the Audit Committee receives GBP5,000 per annum in addition to such fee. The Chairman receives a fee payable by the Company currently at the rate of GBP50,000 per annum. Individually and collectively, the Directors of the Company hold no shares of the Company as at 30 June 2017 (31 December 2016: Nil).
Sherborne Investors GP, LLC has granted to the Company a non-exclusive licence to use the name "Sherborne Investors" in the UK and the Channel Islands in the corporate name of the Company and in connection with the conduct of the Company's business affairs. The Company may not sub-licence or assign its rights under the Trademark Licence Agreement. Sherborne Investors GP, LLC receives a fee of GBP20,000 per annum for the use of the licensed name.
16. Financial risk factors
The Group's investment objective is to realise capital growth from investment in the Selected Target Company, identified by the Investment Manager with the aim of generating significant capital return for Shareholders. Consistent with that objective, the Group's financial instruments mainly comprise of an investment in a Selected Target Company. In addition, the Group holds cash and cash equivalents as well as having trade and other receivables and trade and other payables that arise directly from its operations.
Liquidity risk
The Group's cash and cash equivalents are placed in demand deposits and short-term money market instruments with a range of financial institutions. The listed investment in Electra could be partially redeemed relatively quickly (within 3 months) should the Group need to meet obligations or pay ongoing expenses as and when they fall due. The following table details the liquidity analysis for financial liabilities at the date of the Condensed Consolidated Statement of Financial Position:
As at 30 June 2017 Less than 1 - 12
Consolidated 1 month months 1 -2 years Total
GBP GBP GBP GBP
-------------------- ----------- -------- ------------- --------
Trade and other
payables - 124,217 - 124,217
- 124,217 - 124,217
-------------------------------- -------- ------------- --------
As at 30 June 2016 Less than 1 - 12
Consolidated 1 month months 1 -2 years Total
GBP GBP GBP GBP
-------------------- ----------- ----------- ------------- -----------
Trade and other
payables - 207,621 - 207,621
Loan payable - 20,000,000 - 20,000,000
-------------------- ----------- ----------- ------------- -----------
- 20,207,621 - 20,207,621
-------------------------------- ----------- ------------- -----------
As at 31 December
2016 Less than 1 - 12 1 -2 years
Consolidated 1 month months Total
GBP GBP GBP GBP
------------------- ---------- -------- ------------- -----------
Trade and other
payables 316,356 89,021 - 405,377
Loan payable - - 20,000,000 20,000,000
------------------- ---------- -------- ------------- -----------
316,356 89,021 20,000,000 20,405,377
------------------- ---------- -------- ------------- -----------
Credit risk
The Company is exposed to credit risk in respect of its cash and cash equivalents, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The Group is exposed to credit risk in respect of its trade receivables and other receivable balances with a maximum exposure equal to the carrying value of those assets. UBS Financial Services Inc. currently has a stand alone credit rating of A- with Standard & Poor's (2016: A- with Standard & Poor's).
Market price risk
Market price risk arises as a result of the Group's exposure to the future values of the share price of the Selected Target Company. It represents the potential loss that the Group may suffer through investing in the Selected Target Company.
As at 30 June 2017 a +/-20% change in the price of Electra Ordinary Shares would positively or negatively affect the Group's net assets, income and consolidated comprehensive expense for the period, by GBP40,175,762 (31 December 2016: GBP109,164,826).
Interest rate risk
The Group is subject to risks associated with changes in interest rates in respect of interest earned on its cash and cash equivalents. The Group seeks to mitigate this risk by monitoring the placement of cash balances on an ongoing basis in order to maximize the interest rates obtained.
As at 30 June
2017 Interest bearing
--------------------------------------------
Less 1 month 3 months Non-
than to to Over interest
1 month 3 months 1 year 1 year bearing Total
GBP GBP GBP GBP GBP GBP
--------------------- ---------- ---------- --------- --------- ------------- -------------
Assets
Cash and cash
equivalents 5,612,798 - - - - 5,612,798
Investments
held at fair
value through
profit or loss - - - - 200,878,809 200,878,809
Dividend receivable - - - - 104,434,426 104,434,426
Prepaid expenses - - - - 34,355 34,355
--------------------- ---------- ---------- --------- --------- ------------- -------------
Total Assets 5,612,798 - - - 305,347,590 310,960,388
--------------------- ---------- ---------- --------- --------- ------------- -------------
Liabilities
Other payables - - - - (124,217) (124,217)
Dividend payable - - - - (94,364,178) (94,364,178)
--------------------- ---------- ---------- --------- --------- ------------- -------------
Total Liabilities - - - - (94,488,395) (94,488,395)
--------------------- ---------- ---------- --------- --------- ------------- -------------
As at 30 June
2016 Interest bearing
-------------------------------------------------
Less 1 month 3 months Non-
than to to Over interest
1 month 3 months 1 year 1 year bearing Total
GBP GBP GBP GBP GBP GBP
------------------- ----------- ---------- ------------- --------- ------------ -------------
Assets
Cash and cash
equivalents 10,918,336 - - - - 10,918,336
Investments
held at fair
value through
profit or loss - - - - 416,901,826 416,901,826
Prepaid expenses - - - - 62,185 62,185
------------------- ----------- ---------- ------------- --------- ------------ -------------
Total Assets 10,918,336 - - - 416,964,011 427,882,347
------------------- ----------- ---------- ------------- --------- ------------ -------------
Liabilities
Loan payable - - (20,000,000) - - (20,000,000)
Other payables - - - - (207,621) (207,621)
------------------- ----------- ---------- ------------- --------- ------------ -------------
Total Liabilities - - (20,000,000) - (207,621) (20,207,621)
------------------- ----------- ---------- ------------- --------- ------------ -------------
As at 31 December
2016 Interest bearing
------------------------------------------------
Less 1 month 3 months Non-
than to to Over interest
1 month 3 months 1 year 1 year bearing Total
GBP GBP GBP GBP GBP GBP
--------------------- ---------- ---------- --------- ------------- ------------ -------------
Assets
Cash and cash
equivalents 4,852,217 - - - - 4,852,217
Dividend receivable - - - - 12,568,695 12,568,695
Investments
held at fair
value through
profit or loss - - - - 545,824,128 545,824,128
Prepaid expenses - - - 27,534 27,534
--------------------- ---------- ---------- --------- ------------- ------------ -------------
Total Assets 4,852,217 - - - 558,420,357 563,272,574
--------------------- ---------- ---------- --------- ------------- ------------ -------------
Liabilities
Loan payable - - - (20,000,000) - (20,000,000)
Other payables - - - - (405,377) (405,377)
--------------------- ---------- ---------- --------- ------------- ------------ -------------
Total Liabilities - - - (20,000,000) (405,377) (20,405,377)
--------------------- ---------- ---------- --------- ------------- ------------ -------------
As at 30 June 2017, the total interest sensitivity gap for interest bearing items was a surplus of GBP5,612,798 (30 June 2016: deficit of GBP9,081,664).
As at 30 June 2017, interest rates reported by the Bank of England were 0.25% which would equate to income of GBP14,032 (30 June 2016: expense of GBP22,704) per annum if interest bearing assets remained constant. If interest rates were to fluctuate by 0.25%, this would have a positive or negative effect of GBP14,032 (30 June 2016: GBP22,704) on the Group's annual income.
Capital risk management
The capital structure of the Company consists of proceeds raised from the issue of Ordinary Shares. As at 30 June 2017, the Group is not subject to any external capital requirement.
The Board of Directors believe that at the date of the Condensed Consolidated Statement of Financial Position there were no material risks associated with the management of the Company's capital.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QVLFBDVFLBBF
(END) Dow Jones Newswires
August 09, 2017 02:00 ET (06:00 GMT)
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