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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 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMSIGB
RNS Number : 2449J
Sherborne Investors (Guernsey)B Ltd
20 August 2021
SHERBORNE INVESTORS (GUERNSEY) B LIMITED
Interim Report and Unaudited Condensed Consolidated Financial Statements
For the period from 1 January 2021 to 30 June 2021
Company Summary
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's Specialist Fund Segment ("SFS"). The Company was incorporated on 8 November 2012. The Company commenced dealings on the SFS on 7 May 2013. As disclosed on 18 June 2021, following the distribution in specie, the Company intends to commence liquidation proceedings which will culminate in a final distribution to shareholders of any residual assets, the delisting of the Company's shares and the dissolution of the Company. 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 SIGB, LP (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 Sherborne Investors (Guernsey) GP, LLC (the "General Partner") and the Investment Partnership have appointed Sherborne Investors Management (Guernsey) LLC (the "Investment Manager") to provide investment management services to the Investment Partnership.
Chairman's Statement
For the period ended 30 June 2021
Dear Shareholder,
I am pleased to present the Interim Report of Sherborne Investors (Guernsey) B Limited (the "Company") for the period 1 January 2021 to 30 June 2021. During the period the Company pursued its investment strategy through its shareholding in Electra Private Equity PLC ("Electra").
On 21 May 2021 Electra reconfirmed its intention to complete the realisation of its remaining investments by the end of 2021 by way of a demerger of its largest asset, TGI Fridays, and the reclassification of Electra into an operating company substantially comprised of its second largest asset, Hotter Shoes.
On 21 June 2021 the Company declared a dividend in specie of 8,250,575 shares of Electra payable on 30 June 2021 to shareholders on record as at 24 June 2021. As a result, at the period end the Company held no shares in Electra.
In accordance with the Company's policy upon the disposition of a "Turnaround Investment", the Company has commenced liquidation proceedings which will culminate in a final distribution to shareholders of any residual assets, the delisting of the Company's shares, and the dissolution of the Company.
As at 30 June 2021, the net asset value ("NAV") attributable to shareholders of the Company was GBP0.76 million (30 June 2020: GBP17.5 million and 31 December 2020: GBP24.6 million) or 0.24 pence per share (30 June 2020: 5.56 pence per share and 31 December 2020: 7.81 pence per share). The Company's NAV at 30 June 2021 does not include remaining wind-down or liquidation costs unless contracted at 30 June 2021. Any residual NAV, which is expected to be de minimis, will be distributed to shareholders.
Since 1 October 2016 Electra has distributed cumulative dividends of approximately GBP2.0 billion. Following these dividends, Electra's remaining market capitalisation is approximately GBP230 million.
I am very pleased to report that the Company's investment in Electra produced a gross return exceeding 2.0x, equal to an approximately 24% IRR. Electra represents the fifth consecutive investment in the United Kingdom for which the Investment Manager has doubled investors' capital when engaged in an active turnaround investment.
The Company has decided to continue preparing the financial statements for the period ended 30 June 2021 on a basis other than that of a going concern, consistent with the financial statements for the year ended 31 December 2020. This adoption has no bearing on the financial condition or operations of the Company, but more accurately reflects that the Company will soon be dissolved, in line with the Company's strategy.
The Company is presently in the process of preparing for a voluntary liquidation, delisting, and dissolution and will update the market as events require. It is presently expected that a General Meeting of shareholders will occur in September for shareholders to vote on the winding up of the Company.
The Company's principal risks and uncertainties have historically related to the Company's investment activities which includes performance risk, market risk, relationship risk and operational risk. Considering the Company's decision to enter voluntary liquidation after the disposal of the investment in Electra, the remaining principal risks and uncertainties faced by the Company are only relationship risk and operational risk. The nature of these risks remains unchanged and further details may be found in the Directors' Strategic Report within the Annual Report and Audited Consolidated Financial Statements of the Company for the year ended 31 December 2020. The Directors will continue to assess the principal risks and uncertainties relating to the Company for the duration of the wind up period which are expected to remain unchanged.
Details of related party transactions during the period are included in Note 10 of the Condensed Consolidated Financial Statements.
We are grateful for your continued support over the life of this investment.
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' as adopted by the European Union;
-- The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the condensed financial statements and description of principal risks and uncertainties for the remaining six months of the year);
-- The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein); and
-- The condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.10R.
Going Concern
In addition to making enquiries of the Investment Manager and Administrator, the Directors have undertaken a rigorous review of the Company's cash flows and the level of cash balances as at the reporting date as well as taking forecasts of future cash flows and the fact that the Company will soon liquidate, in line with the Company's strategy.
The Company commenced liquidation proceedings which will culminate in a final distribution to shareholders of any residual assets, the delisting of the Company's shares and the dissolution of the Company. Accordingly, and consistent with the 31 December 2020 financial statements, the Condensed Consolidated Financial Statements for the period ended 30 June 2021 have been prepared on a basis other than that of a going concern. This has no impact on the reported results for the year and there have been no changes to the basis of recognition.
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 2021 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 13. 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.
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 half-yearly 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 Financial Reporting Council 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 2021 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.
Emphasis of Matter - financial statements prepared other than on a going concern basis
We draw attention to Note 1 in the condensed consolidated financial statements, which indicates that the financial statements have been prepared on a basis other than that of a going concern. Our conclusion is not modified in respect of this matter.
Use of our report
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 Financial Reporting Council. 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.
Condensed Consolidated Statement of Comprehensive Income (Unaudited)
For the period from 1 January 2021 to 30 June 2021
1 January 2021 1 January 2020 1 January 2020 to to to 30 June 2021 30 June 2020 31 December 2020 (unaudited) (unaudited) (audited) Notes GBP GBP GBP GBP GBP GBP ----------------- --------- --------- ----------------------- --------- ------------- ---- -------------- Income 1(e) Movement in unrealised gain/(loss) on financial assets at fair value through profit or 1(d), loss 5 289,844,214 (22,920,788) (12,647,925) Realised loss on (250,575,209) - - financial assets at fair value through profit or loss Bank interest income 7 281 281 ----------------- --------- --------- ----------------------- --------- ------------- ---- -------------- Total income/(loss) 39,269,012 (22,920,507) (12,647,644) ----------------- --------- --------- ----------------------- --------- ------------- ---- -------------- Expenses 1(f) Management fees 10 229,165 157,544 269,908 Administrative fees 63,226 73,038 141,808 Directors' fees 2,10 62,500 62,500 125,000 Other fees 43,674 66,223 109,955 Professional fees 40,433 47,240 71,594 -------------- Total operating expenses 438,998 406,545 718,265 ----------------- --------- --------- ------------ -------------------- ------------- ---- -------------- Total comprehensive income/(loss) 38,830,014 (23,327,052) (13,365,909) ---------------------------- --------- ------------ -------------------- ------------- ---- -------------- Total comprehensive income/(loss) attributable to: Equity Shareholders 27,512,898 (16,829,218) (9,757,957) Non-controlling interest (NCI) 1(b) 11,317,116 (6,497,834) (3,607,952) ----------------- --------- --------- ------------ -------------------- ------------- ---- -------------- 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 (excluding NCI) 4 8.75p (5.35)p (3.10)p ----------------- --------- --------- ------------ -------------------- ------------- ---- -------------- All revenue and expenses are derived from discontinued 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 20 21
30 June 2021 30 June 20 20 31 December 2020 (unaudited) (unaudited) (audited) Notes GBP GBP GBP GBP GBP GBP ----------------- ------ ------------------ ---- ---------- ----------- --------------- ----------- Non-Current Assets ------------------ Financial assets at fair value through profit 1(d), or loss 5 - 21,890,639 32,163,502 ----------------- ------ -------------- ---- ---------- ----------- --------------- ----------- - 21,890,639 32,163,502 ----------------- ------ ------------------ ---- ---------- ----------- --------------- ----------- Current Assets Prepaid expenses 24,588 16,931 30,485 Cash and cash equivalents 1(h) 830,967 1,003,800 654,010 855,555 1,020,731 684,495 ----------------- ------ ------------------ ---- ---------- ----------- --------------- ----------- Current Liabilities Trade and other payables 6 63,143 93,981 69,467 63,143 93,981 69,467 Net Current Assets 792,412 926,750 615,030 ----------------- ------ -------------------- ----------------------- --------------- Net Assets 792,412 22,817,389 32,778,532 ----------------- ------ -------------------- ----------------------- --------------- Capital and Reserves Called up share capital and share premium 7 302,696,145 302,696,145 302,696,145 Retained reserves (301,936,905) (285,202,655) (278,131,394) ----------------- ------ -------------------- ----------------------- --------------- Equity attributable to the Company 759,240 17,493,490 24,564,751 ----------------- ------ -------------------- ----------------------- --------------- Non-controlling 1(b), interest (NCI) 10 33,172 5,323,899 8,213,781 ----------------- ------ -------------------- ----------------------- --------------- Total Equity 792,412 22,817,389 32,778,532 ----------------- ------ -------------------- ----------------------- --------------- NAV Per Share (excluding NCI) 8 0.24p 5.56p 7.81p ----------------- ------ -------------------- ----------------------- ---------------
The Condensed Consolidated Financial Statements were approved by the Board of Directors for issue on 19 August 2021.
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 20 21 to 30 June 2021
Share Capital Non- and Share Retained Controlling Total Premium Reserves Interest Equity Notes GBP GBP GBP GBP ------------------------- -------- -------------- -------------- ------------- ------------- Balance at 1 January 2021 302,696,145 (278,131,394) 8,213,781 32,778,532 ------------------------- -------- -------------- -------------- ------------- ------------- Comprehensive income - 37,064,887 1,765,127 38,830,014 Incentive allocation 1(l),10 - (9,551,989) 9,551,989 - Distribution 9 - - (19,497,725) (19,497,725) Dividend in specie 9 - (51,318,409) - (51,318,409) Balance at 30 June 2021 302,696,145 (301,936,905) 33,172 792,412 ------------------------- -------- -------------- -------------- ------------- ------------- Share Capital Non- and Share Retained Controlling Total Premium Reserves Interest Equity Notes GBP GBP GBP GBP ------------------------- -------- -------------- -------------- ------------- ------------- Balance at 1 January 2020 302,696,145 (268,373,437) 12,626,696 46,949,404 ------------------------- -------- -------------- -------------- ------------- ------------- Comprehensive loss - (22,296,360) (1,030,692) (23,327,052) Incentive allocation 1(l),10 - 5,467,142 (5,467,142) - Distribution 9 - - (804,963) (804,963) Balance at 30 June 2020 302,696,145 (285,202,655) 5,323,899 22,817,389 ------------------------- -------- -------------- -------------- ------------- ------------- Share Capital Non- and Share Retained Controlling Total Premium Reserves Interest Equity Notes GBP GBP GBP GBP --------------------------- --------- -------------- -------------- ------------- ------------- Balance at 1 January 2020 302,696,145 (268,373,437) 12,626,696 46,949,404 --------------------------- --------- -------------- -------------- ------------- ------------- Comprehensive loss - (12,784,701) (581,208) (13,365,909) Incentive allocation 1(l),10 - 3,026,744 (3,026,744) - Distribution 9 - - (804,963) (804,963) Balance at 31 December 2020 (audited) 302,696,145 (278,131,394) 8,213,781 32,778,532 --------------------------- --------- -------------- -------------- ------------- -------------
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 2021 to 30 June 2021
1 January 20 21 1 January 1 January to 30 June 202 0 20 20 to 31 20 21 to 30 June December 20 2020 20 (audited) Notes GBP GBP GBP ---------------------------------------- -------------- ------------- ------------------- Net cash flow from/(used in) operating activities See below (439,423) 3,156,176 2,806,386 ----------------------------------------- -------------- ------------- ------------------- Investing activities Disposal of investment 616,373 - - Bank interest income 7 281 281 Net cash flow from investing activities 616,380 281 281 ----------------------------------------- -------------- ------------- ------------------- Financing activities 9, Dividend paid 12 - (2,044,557) (2,044,557) Distributions to Non-controlling 9, interest 12 - (804,963) (804,963) Net cash flow used in financing activities - (2,849,520) (2,849,520) ----------------------------------------- -------------- ------------- ------------------- Net movement in cash and cash equivalents 176,957 306,937 (42,853) Opening cash and cash equivalents 654,010 696,863 696,863 Closing cash and cash equivalents 830,967 1,003,800 654,010 ----------------------------------------- -------------- ------------- ------------------- Net cash flow from/(used in) operating activities ----------------------------------- ---- -------------- ------------- ------------------- Comprehensive income/(loss) 38,830,014 (23,327,052) (13,365,909) Realised loss on financial 250,575,209 - - assets at fair value through profit or loss Unrealised (gain)/loss on financial assets at fair value through profit or loss 5 (289,844,214) 22,920,788 12,647,925 Movement in prepaid expenses 5,897 5,869 (7,685) Movement in trade and other payables 6 (6,322) 8,565 (15,951) Bank interest income (7) (281) (281) Dividend receipt - 3,548,287 3,548,287 Net cash flow from/(used in) operating activities (439,423) 3,156,176 2,806,386 ----------------------------------------- -------------- ------------- -------------------
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 2021 to 30 June 2021
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 (as amended). The Company was incorporated and registered in Guernsey on 8 November 2012. The Company commenced dealings on the London Stock Exchange's AIM market on 29 November 2012 and moved from AIM to the London Stock Exchange's Specialist Fund Segment ("SFS") on 7 May 2013. The Company's registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, Channel Islands, GY1 2HL. The "Group" is defined as the Company and its subsidiary, SIGB, LP (the "Investment Partnership").
Basis of preparation
The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted in the European Union. The financial information for the year ended 31 December 2020, as included in this Interim Report, is derived from the financial statements delivered to the Listing Authority and does not constitute statutory accounts as defined by the Companies (Guernsey) Law, 2008 (as amended). The Auditor reported in the statutory financial statements for the year ended 31 December 2020: their report was unqualified; drew attention to going concern by way of emphasis; and did not contain a statement under Section 263(2) or 263(3) of the Companies (Guernsey) Law, 2008 (as amended).
The Condensed Consolidated Financial Statements of the Group have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' ("IAS 34") as adopted in the European Union, together with applicable legal and regulatory requirements of Guernsey Law. The Directors of the Company 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. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim period.
Going concern
During the period the Group disposed of its investment in Electra Private Equity plc ("Electra") and at the period end the Group held no shares of Electra. The Company commenced liquidation proceedings which will culminate in a final distribution to shareholders of any residual assets, the delisting of the Company's shares and the dissolution of the Company. Accordingly and consistent with the 31 December 2020 financial statements, the Condensed Consolidated Financial Statements for the period ended 30 June 2021 have been prepared on a basis other than that of a going concern. This has no impact on the reported results for the year and there have been no changes to the basis of recognition.
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 critical accounting judgements or significant estimates utilised for the preparation of the Group's Condensed Consolidated Financial Statements as at 30 June 20 21 due to the nature of the activities that have occurred in this period, together with the sole investment held by the Group in previous periods prior to the distribution in specie (see note 9), being quoted on the London Stock Exchange. Fair value of financial assets held through profit or loss is therefore based on the quoted closing bid price at the respective period end.
Adoption of new and revised standards
(i) New standards adopted as at 1 January 2021:
All new standards effective from 1 January 2021 have been adopted and do not have a material impact on the financial statements.
(ii) Standards, amendments and interpretations early adopted by the Group:
There were no standards, amendments and interpretations early adopted by the Group.
(iii) Standards, amendments and interpretations in issue but not yet effective:
Unless stated otherwise, the Directors do not consider the adoption of any new and revised accounting standards and interpretations to have a material impact as the new standards or amendments are not relevant to the operations of the Group.
a. Basis of consolidation
The Condensed Consolidated Financial Statements incorporate the financial statements of the Company and an entity controlled by the Company, SIGB, LP (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 95.55% (2020: 95.55%) of the capital interest in the Investment Partnership. Whilst the General Partner of the Investment Partnership, a company registered in Delaware, USA, is responsible for directing the day to day operations of the Investment Partnership, the Company, through its majority interest in the Investment Partnership, has control and therefore the ability to approve the proposed investment of the Investment Partnership and to remove the general partner. Hence, the Company has consolidated the Investment Partnership 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 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 are designated as fair value through profit or loss in accordance with IFRS 9 'Financial Instruments', as the Group's business model is to invest 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', the fund held the investment in Electra shares at fair value through profit or loss rather than as an associate as the Investment Partnership is a closed-ended fund.
Investments in voting shares are initially recognised at cost and 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 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 for identical assets and liabilities 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 judgement or estimation.
The investments held by the Group during the period were classified as meeting the definition of Level I (period ended 30 June 2020: Level I and year ended 31 December 2020: Level I). On disposal of shares, cost of investments are allocated on a first in, first out basis. There are no investments held by the Group at the period end.
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 then 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 in the period in which they occur.
g. Prepaid expenses and trade receivables
Trade and other receivables are initially recognised at fair value and subsequently, where necessary, remeasured at amortised cost using the effective interest method. 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. The Group only holds trade receivables with no financing component and which have maturities of less than 12 months at amortised cost and has therefore applied the simplified approach to expected credit loss.
h. Cash and cash equivalents
Cash and cash equivalents comprise 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 which are subject to insignificant risk of changes in value. This definition is also used for the Condensed Consolidated Statement of Cash Flows. The carrying amount of these assets approximate their fair value, unless otherwise stated.
i. 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.
j. Segmental reporting
As the Group invested in one investee company, there is no segregation between industry, currency or geographical location and therefore no further disclosures are required in conjunction with IFRS 8 'Operating Segments'.
k. Incentive allocation
The incentive allocation is accounted for on an accruals basis and the calculation is disclosed in Note 11. The incentive allocation is payable to the non-controlling interest 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.
l. Dividends to shareholders
Dividends are recognised in the Group's Condensed Consolidated Financial Statements in the period in which they are declared and approved by the Board of Directors.
2. Comprehensive income/(loss)
The comprehensive income/(loss) has been arrived at after charging:
1 January 1 January 2021 1 January 2020 to 31 to 30 June 2020 to 30 December 20 2021 June 20 20 20 GBP GBP GBP -------------------------- --------------- ------------ ------------- Directors' fees 62,500 62,500 125,000 Auditor's remuneration - Audit - 15,977 33,740 Auditor's remuneration - Interim Review 15,330 14,600 15,330 -------------------------- --------------- ------------ -------------
In addition to the audit and half-yearly review related remuneration above a further GBPNil was due to the Auditor in relation to tax compliance services (period ended 30 June 2020: GBP15,089 and year ended 31 December 2020: GBP18,805).
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 earnings 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 (30 June 2020: 314,547,259 and 31 December 2020: 314,547,259) weighted average number of shares in issue. The earnings per share for the period ended 30 June 2021 amounted to 8.75 pence per share (period ended 30 June 2020: a deficit of 5.35 pence per share and year ended 31 December 2020: a deficit of 3.10 pence per share).
5. Financial assets at fair value through profit or loss
As at 30 As at 31 December As at 30 June 2020 June 2021 2020 GBP GBP GBP ------------------------------------ -------------- ------------- ------------------ Opening fair value 32,163,502 44,811,427 44,811,427 Movement in unrealised gain/(loss) on financial assets at fair value through profit or loss 289,844,214 (22,920,788) (12,647,925) Disposal of financial assets at fair value through profit or loss (322,007,716) - - Closing fair value - 21,890,639 32,163,502 ------------------------------------ -------------- ------------- ------------------ Percentage holding of Electra - 29.90% 29.90% ------------------------------------ -------------- ------------- ------------------
During the period the Group disposed of its investment in Electra and as at 30 June 2021 the Group did not hold any shares of Electra (30 June 2020: 11,446,086 and 31 December 2020: 11,446,086) which is a London Stock Exchange listed investment trust focused on private equity investments.
6. Trade and other payables
As at 30 As at 30 As at 31 December June 20 21 June 20 20 20 20 GBP GBP GBP --------------------------- ------------ ------------- -------------------- Professional fees payable 16,207 26,845 17,346 Other payables 46,936 67,136 52,121 --------------------------- ------------ ------------- -------------------- Total 63,143 93,981 69,467 --------------------------- ------------ ------------- --------------------
7 . Consolidated share capital and share premium
As at 30 June As at 30 June As at 31 December 2021 2020 2020 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 2021 2020 2020 Share premium account GBP GBP GBP Share premium account upon issue 302,696,145 302,696,145 302,696,145 Closing balance 302,696,145 302,696,145 302,696,145 ----------------------- -------------- -------------- ------------------
Each Ordinary Share has no par value with no right to fixed income.
8. Net asset value per share attributable to the Company
Pence per No. of Shares Share ------------------- -------------- ---------- 30 June 2021 314,547,259 0.24 30 June 20 20 314,547,259 5.56 31 December 20 20 314,547,259 7.81
9. Dividends and distributions
On 21 June 2021, a dividend in specie of 8,250,575 Electra shares was declared by the Company and paid on 30 June 2021 (less a nominal amount of fractional shares) to shareholders on record on 23 June 2021 which equated to GBP51,318,409 (period ended 30 June 2020: GBPNil and year ended 31 December 2020: GBPNil).
Total distributions paid by the Group to non-controlling interests during the period were GBP19,497,725 (period ended 30 June 2020: GBP804,963 and year ended 31 December 2020: GBP804,963). Distributions to non-controlling interests are made at the discretion of the general partner to the Investment Partnership.
10. 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 STC, 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 NAV of the Investment Partnership, less cash and cash equivalents and certain other adjustments. During the period, management fees of GBP229,165 (period ended 30 June 2020: GBP157,544 and year ended 31 December 2020: GBP269,908) had been paid by the Partnership. No balance was outstanding at the period end (period ended 30 June 2020: GBPNil and year ended 31 December 2020: GBPNil).
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, holds a 4.43% capital interest in the Investment Partnership. Management and incentive fees are assessed based on the capital interest of SSFD's interest.
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.
At the period end, the incentive allocation has been computed based on a Turnaround investment and amounts to GBP26,652 (30 June 2020: GBP4,521,989 and 31 December 2020: GBP7,053,188) of which GBP949 (30 June 2020: GBP200,435 31 December 2020: GBP291,236) relates to SSFD. The amount paid in specie in the period was GBP16,932,668 (period ended 30 June 2020: GBP697,924 and year ended 31 December 2020: GBP697,924) of which GBP644,430 relates to SSFD (period ended 30 June 2020: GBP30,936 and year ended 31 December 2020: GBP30,936).
Incentive Allocation movement SIGB Ltd SSFD Total GBP GBP GBP Movement to 30 June 2021 9,551,989 354,143 9,906,132 Movement to 30 June 2020 (5,467,142) (203,443) (5,670,585) Movement to 31 December 2020 (3,026,744) (112,642) (3,139,386)
Sherborne Investors LP, SSFD and the General Partner also earned their share of the Total Comprehensive Income for the period of GBP1,765,127 (period ended 30 June 2020: Total Comprehensive Loss of GBP1,030,692 and year ended 31 December 2019: Total Comprehensive Loss of GBP581,208).
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 in the Company as at 30 June 20 21 (30 June 2020: Nil and 31 December 2020: 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 GBP10,000 (2020: GBP10,000 ) per annum for the use of the licensed name.
11. Financial risk factors
The Group's investment objective is to realise capital growth from investment in the STC, 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 STC. 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 with a range of financial institutions and are sufficient to cover the Group's obligations.
The following table details the liquidity analysis for financial assets and liabilities at the date of the Condensed Consolidated Statement of Financial Position:
Less than As at 30 June 2021 1 month 1 - 12 months 1 - 2 years Total GBP GBP GBP GBP -------------------------- ---------- -------------- -------------- --------- Trade and other payables (31,606) (31,537) - (63,143) -------------------------- ---------- -------------- -------------- --------- (31,606) (31,537) - (63,143) -------------------------- ---------- -------------- -------------- --------- Less than As at 30 June 2020 1 month 1 - 12 months 1 - 2 years Total GBP GBP GBP GBP -------------------------- ---------- -------------- -------------- --------- Trade and other payables (36,559) (57,422) - (93,981) (36,559) (57,422) - (93,981) -------------------------- ---------- -------------- -------------- --------- Less than 1 - 2 As at 31 December 2020 1 month 1 - 12 months years Total GBP GBP GBP GBP -------------------------- ---------- -------------- -------- --------- Trade and other payables (31,880) (37,587) - (69,467) (31,880) (37,587) - (69,467) -------------------------- ---------- -------------- -------- ---------
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 credit risk on liquid funds is mitigated through the Group depositing cash and cash equivalents across several banks. 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. & HSBC Holdings PLC currently have a standalone credit rating of A-, whilst Barclays Bank PLC has a standalone credit rating of A with Standard & Poor's (30 June 2020: UBS Financial Services Inc. & HSBC Holdings PLC A- whilst Barclays Bank PLC A with Standard & Poor's and 31 December 2020: UBS Financial Services Inc. & HSBC Holdings PLC A- whilst Barclays Bank PLC 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 STC. It represents the potential loss that the Group may suffer through investing in the STC. During the period the Group disposed of its investment in the STC and so at the period end has no market price risk exposure.
Foreign exchange risk
Foreign currency risk arises as the value of future transactions, recognised monetary assets and monetary liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates. The Investment Manager monitors the Group's monetary and non-monetary foreign exchange exposure on a regular basis. The Group has limited foreign exchange risk exposure.
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 maximise the interest rates obtained.
As at 30 June 2021 Interest bearing -------------------------------------------- 1 month 3 months Less than to to Over Non- interest 1 month 3 months 1 year 1 year bearing Total GBP GBP GBP GBP GBP GBP ------------------- ---------- ---------- --------- --------- -------------- -------- Assets Cash and cash equivalents 830,967 - - - - 830,967 Prepaid expenses - - - - 24,588 24,588 ------------------- ---------- ---------- --------- --------- -------------- -------- Total Assets 830,967 - - - 24,588 855,555 ------------------- ---------- ---------- --------- --------- -------------- -------- Liabilities Other payables - - - - 63,143 63,143 Total Liabilities - - - - 63,143 63,143 ------------------- ---------- ---------- --------- --------- -------------- -------- As at 30 June 2020 Interest bearing -------------------------------------------- 1 month 3 months Less than to to Over Non- interest 1 month 3 months 1 year 1 year bearing Total GBP GBP GBP GBP GBP GBP ------------------- ---------- ---------- --------- --------- -------------- ----------- Assets Cash and cash equivalents 1,003,800 - - - - 1,003,800 Financial assets at fair value through profit or loss - - - - 21,890,639 21,890,639 Prepaid expenses - - - - 16,931 16,931
------------------- ---------- ---------- --------- --------- -------------- ----------- Total Assets 1,003,800 - - - 21,907,570 22,911,370 ------------------- ---------- ---------- --------- --------- -------------- ----------- Liabilities Other payables - - - - 93,981 93,981 Total Liabilities - - - - 93,981 93,981 ------------------- ---------- ---------- --------- --------- -------------- -----------
Interest rate risk
As at 31 December 2020 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 654,010 - - - - 654,010 Financial assets at fair value through profit or loss - - - - 32,163,502 32,163,502 Prepaid expenses - - - - 30,485 30,485 ------------------- ---------- ---------- --------- --------- -------------- ----------- Total Assets 654,010 - - - 32,193,987 32,847,997 ------------------- ---------- ---------- --------- --------- -------------- ----------- Liabilities Trade and other payables - - - - (69,467) (69,467) ------------------- ---------- ---------- --------- --------- -------------- ----------- Total Liabilities - - - - (69,467) (69,467) ------------------- ---------- ---------- --------- --------- -------------- -----------
As at 30 June 2021, the total interest sensitivity gap for interest bearing items was a surplus of GBP 830,967 (30 June 2020: surplus of GBP1,003,800 and 31 December 2020: surplus of GBP654,010).
As at 30 June 20 21, interest rates reported by the Bank of England were 0.10% which would equate to income of GBP831 (period ended 30 June 2020: interest rates were 0.10% which would equate to income of GBP1,004 and year ended 31 December 2020: interest rates were 0.01% which would equate to net income of GBP654) per annum if interest bearing assets remained constant. If interest rates were to fluctuate by 50 basis points, this would have a positive effect of GBP4,155 or negative effect of GBP831 (period ended 30 June 2020: positive effect of GBP5,019 or negative effect of GBP1,004 and year ended 31 December 2020: positive or negative effect of GBP3,270) 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 20 21, the Group is not subject to any external capital requirement.
The Directors believe that at the date of the Condensed Consolidated Statement of Financial Position there were no other material risks associated with the management of the Group's capital.
12. Reconciliation of financing activities
Net income Non-cash Opening Cash flows allocation flows Closing GBP GBP GBP GBP GBP ------------------- -------------- ------------ ------------- ------------- -------------- 1 January 2021 to 30 June 2021 Retained reserves (278,131,394) - 27,512,898 (51,318,409) (301,936,905) Non-controlling interest (NCI) 8,213,781 - 11,317,116 (19,497,725) 33,172 ------------------- -------------- ------------ ------------- ------------- -------------- Total (269,917,613) - 38,830,014 (70,816,134) (301,903,733) ------------------- -------------- ------------ ------------- ------------- -------------- 1 January 2020 to 30 June 2020 Retained reserves (268,373,437) (2,044,557) (16,829,218) 2,044,557 (285,202,655) Non-controlling interest (NCI) 12,626,696 (804,963) (6,497,834) - 5,323,899 ------------------- -------------- ------------ ------------- ------------- -------------- Total (255,746,741) (2,849,520) (23,327,052) 2,044,557 (279,878,756) ------------------- -------------- ------------ ------------- ------------- -------------- 1 January 2020 to 31 December 2020 Retained reserves (268,373,437) (2,044,557) (9,757,957) 2,044,557 (278,131,394) Non-controlling interest (NCI) 12,626,696 (804,963) (3,607,952) - 8,213,781 ------------------- -------------- ------------ ------------- ------------- -------------- Total (255,746,741) (2,849,520) (13,365,909) 2,044,557 (269,917,613) ------------------- -------------- ------------ ------------- ------------- --------------
13. Subsequent events
There were no material subsequent events that require disclosure in the condensed consolidated financial statements.
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