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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 Apr 2019 to Apr 2024
TIDMSIGB
RNS Number : 1270X
Sherborne Investors (Guernsey)B Ltd
08 August 2018
Sherborne Investors (Guernsey) B Limited
Interim Report and Unaudited Condensed Consolidated Financial Statements
For the period from 1 January 2018 to 30 June 2018
Company Summary
Hot Features
Premium
The Company Sherborne Investors (Guernsey) B Limited (the
"Company") is a Guernsey domiciled limited liability
company and its shares are admitted to trading
on the London Stock Exchange Specialist Fund
Segment ("SFS"). The Company was incorporated
on 8 November 2012. The Company commenced dealings
on the SFS on 7 May 2013.
Investment Objective 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.
Investment Policy
To invest through its investment in the Investment
Partnership in a company which is publicly quoted,
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 2018, the net asset value attributable to shareholders of the Company was GBP80.1 million (December 2017: GBP82.4 million) or 25.48 pence per share (December 2017: 26.20 pence per share). The Company's net asset value was based on the closing price of 920 pence as at 30 June 2018 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 statement.
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 2017, 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 2017.
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.
On 24 May 2018 Electra announced that its NAV at 31 March 2018 was 1,109 pence per share, of which 254 pence represented cash and liquidity funds.
Electra also announced that it was commencing the third and final stage of its strategic review ("Phase 3"), which included entering a formal sale process under the City Code on Takeovers and Mergers. Electra expected to communicate the outcome of Phase 3 to the market no later than September 2018.
On 28 June 2018 Electra paid a dividend of 25 pence per share, representing GBP2.9 million of proceeds to the Company. Following receipt of Electra's dividend and subsequent to the period end, the Company paid a dividend of 0.7 pence per share on 13 July 2018 to shareholders of record on 15 June 2018.
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'; and
-- 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 2018 to 30 June 2018 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 2018 to 30 June 2018 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.
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 2018, 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 2018 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 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 six months ended 30 June 2018 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 2018 to 30 June 2018
1 January 2018 1 January 2017 1 January 2017
to to to
30 June 2018 30 June 2017 31 December
2017
(audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ----------- ---------------- ------------ -------------- ---- ----------------
Income 1(e)
Unrealised loss
on investments
held
at fair value
through 1(d),
profit or loss 5 (1,774,144) (345,302,047) (439,102,721)
Dividend income 7 2,861,522 402,883,792 507,501,018
Bank interest
income 11,240 13,032 18,152
----------------- ------ ----------- ---------------- ------------ -------------- ---- ----------------
1,098,618 57,594,777 68,416,449
----------------- ------ ----------- ---------------- ------------ -------------- ---- ----------------
Expenses 1(f)
Professional
fees 47,841 109,270 229,841
Trading and
custodian
fees - 2,861 2,861
Administrative
fees 133,554 132,899 268,000
Other fees 95,489 87,488 138,926
Management fees 15 513,115 2,593,165 3,679,993
Finance costs 1(g) - 278,221 278,221
Directors' fees 2, 15 62,500 58,750 121,250
(852,499) (3,262,654) (4,719,092)
----------------- ------ ----------- ---------------- ------------ -------------- ---- --------------
Consolidated
comprehensive
income for the
period/year 246,119 54,332,123 63,697,357
----------------- ------ ----------- ---------------- ------------ -------------- ---- --------------
(Loss)/income
attributable
to:
Shareholders (61,143) 39,986,810 46,263,064
Non-controlling 1(b),
interest 15 307,262 14,345,313 17,434,293
----------------- ------ ----------- ---------------- ------------ -------------- ---- --------------
Weighted average
number of
shares
outstanding 4 314,547,259 314,547,259 314,547,259
Basic and
diluted
earnings per
share
attributable to
shareholders 4 (0.02)p 12.71p 14.71p
----------------- ------ ----------- ---------------- ------------ -------------- ---- --------------
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 Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Financial Position (Unaudited)
As at 30 June 2018
30 June 2018 30 June 2017 31 December 2017
(audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ---------- ------------ ------------- ------------ ---------- ------------
Non-current
Assets
Financial assets
at fair value
through profit 1(d),
or loss 5 105,303,991 200,878,809 107,078,135
----------------- ------ ---------- ------------ ------------- ------------ ---------- ------------
105,303,991 200,878,809 107,078,135
----------------- ------ ---------- ------------ ------------- ------------ ---------- ------------
Current Assets
Prepaid expenses 6 25,409 34,355 28,391
Dividend - 104,434,426 -
receivable
Cash and cash 1(i),
equivalents 8 3,609,872 5,612,798 2,531,740
----------------- ------ ---------- ------------ ------------- ------------ ---------- ------------
3,635,281 110,081,579 2,560,131
----------------- ------ ---------- ------------ ------------- ------------ ---------- ------------
Current
Liabilities
Trade and other
payables 9 (110,084) (124,217) (126,638)
Dividend payable 13 (2,201,831) (94,364,178) -
(2,311,915) (94,488,395) (126,638)
Net Current
Assets 1,323,366 15,593,184 2,433,493
----------------- ------ ------------------------ --------------------------- ------------------------
Net Assets 106,627,357 216,471,993 109,511,628
----------------- ------ ------------------------ --------------------------- ------------------------
Capital and
Reserves
Called up share
capital and
share premium 11 302,696,145 302,696,145 302,696,145
Retained
reserves (222,550,122) (143,208,378) (220,287,148)
----------------- ------ ------------------------ --------------------------- ------------------------
Equity
attributable
to the Company 80,146,023 159,487,767 82,408,997
----------------- ------ ------------------------ --------------------------- ------------------------
Non-controlling 1(b),
interest (NCI) 15 26,481,334 56,984,226 27,102,631
----------------- ------ ------------------------ --------------------------- ------------------------
Total Equity 106,627,357 216,471,993 109,511,628
----------------- ------ ------------------------ --------------------------- ------------------------
NAV Per Share
(excluding NCI) 12 25.48p 50.70p 26.20p
----------------- ------ ------------------------ --------------------------- ------------------------
The Condensed Consolidated Financial Statements were approved by the Board of Directors for issue on 7 August 2018.
Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the interim period and the related notes have been included on a voluntary basis.
The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Changes in Equity (Unaudited)
For the period from 1 January 2018 to 30 June 2018
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
---------------------------- ------ -------------- -------------- ------------- ------------
Balance at 1 January 2018 302,696,145 (220,287,148) 27,102,631 109,511,628
---------------------------- ------ -------------- -------------- ------------- ------------
Total comprehensive income
for the period - 225,504 20,615 246,119
15,
Incentive allocation 1(m) - (286,647) 286,647 -
Dividends paid and accrued 13 - (2,201,831) - (2,201,831)
Distribution - - (928,559) (928,559)
Balance at 30 June 2018 302,696,145 (222,550,122) 26,481,334 106,627,357
---------------------------- ------ -------------- -------------- ------------- ------------
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 the period - 51,903,345 2,428,778 54,332,123
15,
Incentive allocation 1(m) - (11,916,535) 11,916,535 -
Dividends paid - (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 2017 302,696,145 184,825,104 55,345,948 542,867,197
---------------------------- ------ -------------- -------------- ------------- --------------
Total comprehensive income
for the year - 60,841,975 2,855,382 63,697,357
15,
Incentive allocation 1(m) - (14,578,911) 14,578,911 -
Dividends paid - (451,375,316) - (451,375,316)
Distribution - - (45,677,610) (45,677,610)
Balance at 31 December
2017 302,696,145 (220,287,148) 27,102,631 109,511,628
---------------------------- ------ -------------- -------------- ------------- --------------
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 Condensed Consolidated Financial Statements.
Condensed Consolidated Statement of Cash Flows (Unaudited)
For the period from 1 January 2018 to 30 June 2018
1 January 1 January
2018 1 January 2017 2017 to 31
to 30 June to 30 June December 2017
2018 2017 GBP (audited)
Notes GBP GBP
--------------------------------------- ------------ ----------------- ----------------
Net cash flow from operating
activities 1,995,451 402,109,825 515,349,246
---------------------------------------- ------------ ----------------- ----------------
Investing activities
Purchase of investments 5 - (356,728) (356,728)
Bank interest income 11,240 13,032 18,152
Net cash flows from/(used in)
investing activities 11,240 (343,696) (338,576)
---------------------------------------- ------------ ----------------- ----------------
Financing activities
Dividends paid 13 - (368,020,292) (451,375,316)
Loan repayments 10 - (20,000,000) (20,000,000)
Distributions to non-controlling
interest 15 (928,559) (12,707,035) (45,677,610)
Finance costs - (278,221) (278,221)
----------------------------------- --- ------------ ----------------- ----------------
Net cash flows used in financing
activities (928,559) (401,005,548) (517,331,147)
---------------------------------------- ------------ ----------------- ----------------
Net movement in cash and cash
equivalents 1,078,132 760,581 (2,320,477)
Cash and cash equivalents at
beginning of period/year 2,531,740 4,852,217 4,852,217
---------------------------------------- ------------ ----------------- ----------------
Cash and cash equivalents at
period/year end 3,609,872 5,612,798 2,531,740
---------------------------------------- ------------ ----------------- ----------------
Net cash flow from operating
activities
----------------------------------- --- ------------ ----------------- ----------------
Total consolidated comprehensive
income for the period/year 246,119 54,332,123 63,697,357
Fair value movement on financial
assets 5 1,774,144 345,302,047 439,102,721
Movement in prepaid expenses
and
income receivable 2,982 (91,872,552) 12,567,838
Movement in trade and other
payables (16,554) 94,083,018 (278,739)
Bank interest income (11,240) (13,032) (18,152)
Finance costs - 278,221 278,221
----------------------------------- --- ------------ ----------------- ----------------
Net cash flow from operating
activities 1,995,451 402,109,825 515,349,246
---------------------------------------- ------------ ----------------- ----------------
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 Condensed Consolidated Financial Statements.
Notes to the Condensed Consolidated Financial Statements
For the period from 1 January 2018 to 30 June 2018
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 Condensed 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.
There are no significant estimates utilised for the preparation of the Group's Condensed Consolidated Financial Statements as at 30 June 2018 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. Fair value of financial assets held through profit or loss is therefore based on the quoted closing price at 30 June 2018.
Adoption of new and revised standards
i) New standards adopted as at 1 January 2018:
The Company has adopted the new accounting pronouncements which have become effective this year, and are as follows:
IFRS 9 'Financial Instruments - Classification and Measurement' ("IFRS 9") replaces IAS 39 'Financial Instruments: Recognition and Measurement'. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an 'expected credit loss' model for the impairment of financial assets. Under IFRS 9, the classification of assets is driven by the business model in which the financial asset is managed and the contractual nature of the cash flows arising from the investment. The Company invests in financial assets with a view to profiting from their total return in the form of interest and changes in fair value, and so these investments are classified as fair value through profit or loss.
IFRS 15 'Revenue from Contracts with Customers' ("IFRS 15") replaces IAS 18 'Revenue' and several revenue-related Interpretations. There are no changes to the recognition of income by the Company as a result of the new Standard.
(ii) Amendments early adopted by the Company:
There were no standards, amendments and interpretations adopted early by the Company.
(iii) Standards, amendments and interpretations endorsed by the European Union ("EU") that are in issue but not yet effective:
New standards Effective date ---------------- -------------------------------- IFRS Leases 1 January 16 2019 IFRS Insurance Contracts 1 January 17 2021
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% (2017: 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 their 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 Condensed Consolidated 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 Condensed Consolidated Statement of Financial Position are retranslated into GBP at the rate of exchange ruling at that date. Exchange differences are reported in the Condensed 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 IFRS 9, 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 'Investments in Associates' ("IAS 28"), 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 and convertibles are taken directly to the Condensed 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 (2017: Level I). On disposal of shares or conversion of bonds, cost of investments are allocated on a first in, first out 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 2018 1 January 2017 1 January 2017
to 30 June to 30 June to 31 December
2018 2017 2017
GBP GBP GBP
-------------------------- --------------- --------------- ----------------
Directors' fees 62,500 58,750 121,250
Auditor's remuneration -
Audit 16,743 13,379 29,610
Auditor's remuneration -
interim review 15,530 14,600 14,600
-------------------------- --------------- --------------- ----------------
In addition to the audit and half-yearly review related remuneration above a further GBP13,114 was due to the Auditor in relation to Tax compliance services (30 June 2017: GBP13,742).
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 2018 amounted to a deficit of 0.02 pence (as at 31 December 2017: a surplus of 14.71 pence and as at 30 June 2017: a surplus of 12.71 pence).
Days in Weighted Average
Date Shares issue Shares
01/01/2018 314,547,259 314,547,259
30/06/2018 314,547,259 181 314,547,259
5. Financial assets at fair value through profit or loss
As at 30 As at 30 June As at 31 December
June 2018 2017 2017
GBP GBP GBP
------------------------------------- ------------ -------------- ------------------
Opening fair value at the beginning
of the period/year 107,078,135 545,824,128 545,824,128
Purchases at cost of ordinary
shares - 356,728 356,728
Fair value adjustments (1,774,144) (345,302,047) (439,102,721)
------------------------------------- ------------ -------------- ------------------
Closing fair value at the end
of the period/year 105,303,991 200,878,809 107,078,135
------------------------------------- ------------ -------------- ------------------
Percentage holding of Electra 29.90% 29.90% 29.90%
------------------------------------- ------------ -------------- ------------------
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 30 June 2018, the Company held 11,446,086 shares of Electra (31 December 2017: 11,446,086). 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 June As at 30 June As at 31 December
2018 2017 2017
GBP GBP GBP
------------------------ -------------- -------------- ------------------
Prepaid directors and
officers insurance 7,178 7,233 17,349
Other prepaid expenses 18,231 27,122 11,042
------------------------ -------------- -------------- ------------------
25,409 34,355 28,391
------------------------ -------------- -------------- ------------------
7. Dividend Income
On 23 May 2018, Electra declared a Special dividend of 25 pence per share, paid on 28 June 2018 to shareholders of record on 7 June 2018 which equates to GBP2,861,522.
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 June As at 30 June As at 31 December
2018 2017 2017
GBP GBP GBP
--------------------------- -------------- ---------------- --------------------
Professional fees payable 13,114 - 42,890
Other payables 96,970 124,217 83,748
--------------------------- -------------- ---------------- --------------------
110,084 124,217 126,638
--------------------------- -------------- ---------------- --------------------
10. Loan payable
As at 30 June As at 30 June As at 31 December
2018 2017 2017
GBP GBP GBP
---------------------- --------------- -------------- ------------------
Balance at 1 January - 20,000,000 20,000,000
Loan Repayment - (20,000,000) (20,000,000)
---------------------- --------------- -------------- ------------------
- - -
-------------------------------------- -------------- ------------------
During 2017, the loan was repaid and the Facility was cancelled.
11. Share capital and share premium
As at 30 June As at 30 June As at 31 December
2018 2017 2017
Consolidated Consolidated Consolidated
-------------------------- -------------- -------------- ------------------
Authorised share capital No. No. No.
Ordinary Shares of no
par value Unlimited Unlimited Unlimited
-------------------------- -------------- -------------- ------------------
Issued and fully paid No. No. No.
Ordinary Shares of no
par value 314,547,259 314,547,259 314,547,259
-------------------------- -------------- -------------- ------------------
As at 30 June As at 30 June As at 31 December
2018 2017 2017
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 2018
Ordinary Shares
Basic and diluted 314,547,259 25.48
30 June 2017
Ordinary Shares
Basic and diluted 314,547,259 50.70
31 December 2017
Ordinary Shares
Basic and diluted 314,547,259 26.20
13. Dividends
On 4 June 2018, the Company declared a dividend of 0.7 pence per share paid on 13 July 2018 to shareholders of record on 15 June 2018 which equates to GBP2,201,831.
14. Subsequent events
Since 30 June 2018, the share price of Electra has decreased from 920 pence to 905 pence as at 6 August 2018. If this share price was used to value the Electra shares at 30 June 2018, it would have resulted in a decrease in the closing fair value from GBP105,303,991 to GBP103,587,078.
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 GBP513,115 (30 June 2017: GBP2,593,165) had been paid by the Partnership. No balance was outstanding at the period end.
The sole member of Sherborne Investors (Guernsey) GP, LLC is Sherborne Investors LP (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 GBP22,696,682 (31 December 2017: GBP23,213,316 and 30 June 2017: GBP44,750,727) of which GBP940,491 (31 December 2017 GBP966,541 and 30 June 2017: GBP1,529,081) relates to SSFD. The amount paid in the period was GBP813,280 (31 December 2017: GBP24,297,226 and 30 June 2017: GBPNil) of which GBP36,049 relates to SSFD (31 December 2017: GBP659,979 and 30 June 2017: GBPNil).
Incentive Allocation movement SIGB Ltd SSFD Total
GBP GBP GBP
Movement for the period 286,647 9,999 296,646
Sherborne Investors LP and SSFD also earned their share of the Total Comprehensive Income for the year of GBP20,615 (30 June 2017: GBP2,428,778).
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 2018 (31 December 2017: 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 2018 Less than
Consolidated 1 month 1 - 12 months 1 - 2 years Total
GBP GBP GBP GBP
-------------------------- ---------- -------------- -------------- ----------
Trade and other payables (67,351) (42,733) - (110,084)
-------------------------- ---------- -------------- -------------- ----------
(67,351) (42,733) - (110,084)
-------------------------- ---------- -------------- -------------- ----------
As at 30 June 2017 Less than
Consolidated 1 month 1 - 12 months 1 - 2 years Total
GBP GBP GBP GBP
-------------------------- ----------- -------------- -------------- ----------
Trade and other payables - (124,217) - (124,217)
- (124,217) - (124,217)
-------------------------------------- -------------- -------------- ----------
As at 31 December 2017 Less than
Consolidated 1 month 1 - 12 months 1 - 2 years Total
GBP GBP GBP GBP
-------------------------- ---------- -------------- -------------- ----------
Trade and other payables (126,638) - - (126,638)
(126,638) - - (126,638)
-------------------------- ---------- -------------- -------------- ----------
Credit risk
The Company is exposed to credit risk in respect of its cash and cash equivalents and derivative contracts, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The credit risk on liquid funds is mitigated through the Group depositing cash and cash equivalents across several banks. The credit risk associated with derivative contracts is monitored by reviewing the credit rating for the counter party. 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 (31 December 2017: 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 2018, a +/-20% change in the price of Electra Ordinary Shares would positively or negatively affect the Group's net assets, income and consolidated comprehensive income for the period, by GBP21,060,798 (31 December 2017: GBP21,415,627).
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
2018 Interest bearing
--------------------------------------------
1 month 3 months
Less than to to Over 1 Non- interest
1 month 3 months 1 year year bearing Total
GBP GBP GBP GBP GBP GBP
------------------- ---------- ---------- --------- --------- -------------- ------------
Assets
Cash and cash
equivalents 3,609,872 - - - - 3,609,872
Investments held
at fair value
through profit
or loss - - - - 105,303,991 105,303,991
Prepaid expenses - - - - 25,409 25,409
------------------- ---------- ---------- --------- --------- -------------- ------------
Total Assets 3,609,872 - - - 105,329,400 108,939,272
------------------- ---------- ---------- --------- --------- -------------- ------------
Liabilities
Other payables - - - - (110,084) (110,084)
Dividend payable - - - - (2,201,831) (2,201,831)
------------------- ---------- ---------- --------- --------- -------------- ------------
Total Liabilities - - - - (2,311,915) (2,311,915)
------------------- ---------- ---------- --------- --------- -------------- ------------
As at 30 June
2017 Interest bearing
--------------------------------------------
1 month 3 months
Less than to to Over 1 Non- interest
1 month 3 months 1 year 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 31 December
2017 Interest bearing
--------------------------------------------
1 month 3 months
Less than to to Over 1 Non- interest
1 month 3 months 1 year year bearing Total
GBP GBP GBP GBP GBP GBP
------------------- ---------- ---------- --------- --------- -------------- ------------
Assets
Cash and cash
equivalents 2,531,740 - - - - 2,531,740
Investments held
at fair value
through profit
or loss - - - - 107,078,135 107,078,135
Prepaid expenses - - - - 28,391 28,391
------------------- ---------- ---------- --------- --------- -------------- ------------
Total Assets 2,531,740 - - - 107,106,526 109,638,266
------------------- ---------- ---------- --------- --------- -------------- ------------
Liabilities
Other payables - - - - (126,368) (126,368)
------------------- ---------- ---------- --------- --------- -------------- ------------
Total Liabilities - - - - (126,368) (126,368)
------------------- ---------- ---------- --------- --------- -------------- ------------
As at 30 June 2018, the total interest sensitivity gap for interest bearing items was a surplus of GBP3,609,872 (30 June 2017: surplus of GBP5,612,798).
As at 30 June 2018, interest rates reported by the Bank of England were 0.5% which would equate to income of GBP18,049 (30 June 2017: interest rates were 0.25% which would equate to income of GBP14,032) per annum if interest bearing assets remained constant. If interest rates were to fluctuate by 25 basis points, this would have a positive or negative effect of GBP9,025 (30 June 2017: GBP14,032) 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 2018, 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR FDLLBVVFEBBE
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August 08, 2018 02:01 ET (06:01 GMT)
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