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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sherborne Investors (guernsey) C Limited | LSE:SIGC | London | Ordinary Share | GG00BZ3C3B94 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.75 | -1.29% | 57.25 | 56.00 | 58.50 | 0.00 | 16:35:10 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | -42.37M | -47.55M | -0.0679 | -8.54 | 406M |
From Apr 2019 to Apr 2024
TIDMSIGC
RNS Number : 6368W
Sherborne Investors (Guernsey)C Ltd
20 August 2020
SHERBORNE INVESTORS (GUERNSEY) C LIMITED
Interim Report and Unaudited Condensed Consolidated Financial Statements
For the period from 1 January 2020 to 30 June 2020
Hot Features
Premium
Company Summary
The Company Sherborne Investors (Guernsey) C Limited (the
"Company") is a Guernsey domiciled limited company
and its shares are admitted to trading on the
London Stock Exchange's Specialist Fund Segment
("SFS"). The Company was incorporated on 25 May
2017. The Company commenced dealings on the SFS
on 12 July 2017.
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 SIGC, LP
(Incorporated) (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 2020
Dear Shareholder,
I am pleased to present the Interim Report of Sherborne Investors (Guernsey) C Limited (the "Company") for the period 1 January 2020 to 30 June 2020.
During the period the Company continued to pursue its investment strategy through its shareholding in Barclays PLC ("Barclays"). SIGC, LP (Incorporated) co-invests in Barclays with other third-party investors through funds (the "Funds") managed by affiliates of Sherborne Investors Management (Guernsey) LLC (the "Investment Manager"). Following recent purchases with cash on hand these Funds currently own an interest of 5.9%, making them the largest shareholder in Barclays.
As at 30 June 2020, the net asset value ("NAV") attributable to shareholders of the Company was GBP351.0 million (30 June 2019: GBP469.9 million and 31 December 2019: GBP546.3 million) or 50.15 pence per share (30 June 2019: 67.13 pence per share and 31 December 2019: 78.04 pence per share) (see Note 9).
The Investment Manager has advised the Board that it believes that addressing the issues it has discussed with Barclays' board could increase Barclays' financial strength and its long-term competitive position, leading to an increase in shareholder value in line with the Investment Manager's customary return objectives. The Investment Manager's present intention is to continue its dialogue with Barclays for as long as it appears to be appropriate to do so.
The principal risks and uncertainties of the Company are in relation to performance risk, market risk, relationship risk and operational risk. These are unchanged from 31 December 2019, 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 2019. 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.
Details of related party transactions during the period are included in Note 10 of the Condensed Consolidated Financial Statements.
The Company intends to continue to pursue its strategy as set out in its prospectus.
During the period, the coronavirus ("COVID-19") outbreak has caused extensive disruptions to businesses and economic activities globally. The uncertainties over the emergence and spread of COVID-19 have caused market volatility on a global scale. Due to current market conditions, since 31 December 2019 the Barclays share price has declined approximately 36% to 30 June 2020. As announced on 31 March 2020, the Barclays board cancelled the payment of the full year 2019 dividend and any potential interim 2020 dividends at the request of the UK regulator as a prudent measure given the current environment. Currently, no definitive guidance has been provided by either Barclays or the regulator with respect to future dividends. The cancelled dividend has, however, helped improve Barclays' capital position which at 30 June 2020 was stated to be above its targeted range. The situation is constantly evolving as governments and businesses continue to combat the impact of the pandemic. As an investment company, for day to day operations the Company is ultimately dependent on the Investment Manager, Administrator and Company Secretary all of whom have robust business continuity plans in place to ensure that they can continue to service the Company. These business continuity plans have been in place and have been proven effective over the period.
We are grateful for your continued support and will keep you informed of the status of our investment as it develops.
Statement of Directors' Responsibility
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 in 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
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.
During the period, the COVID-19 outbreak has caused extensive disruptions to businesses and economic activities globally. The uncertainties over the emergence and spread of COVID-19 have caused market volatility on a global scale. For further details on the COVID-19 related impact to the Company refer to the Chairman's Statement.
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) C Limited
We have been engaged by Sherborne Investors (Guernsey) C Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 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 Group 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 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 to 30 June 2020 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.
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 2020 to 30 June 2020
1 January 2020 1 January 2019 1 January 2019
to to to
30 June 2020 30 June 2019 31 December
201 9
(audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ------------ -------------------- -------- -------------- ---------- -------------
Income 1(e)
Unrealised
gain/(loss)
on financial
assets
at fair value
through 1(d),
profit or loss 5 (192,993,896) 1,184,206 77,433,561
Dividend income 6 - 3,488,732 6,105,282
Interest income 1,194 24,550 62,870
----------------- ------ ------------ -------------------- -------- -------------- ---------- -------------
Total
income/(loss) (192,992,702) 4,697,488 83,601,713
----------------- ------ ------------ -------------------- -------- -------------- ---------- -------------
Expenses 1(f)
Management fees 10 2,014,455 2,117,179 4,211,140
Professional
fees 120,433 1,079,496 1,314,395
Directors' fees 2, 10 80,000 80,000 160,000
Administrative
fees 73,866 77,878 151,290
Other fees 1,161 152,074 193,688
-------------
Total operating
expenses 2,289,915 3,506,627 6,030,513
----------------- ------ ------- ------------------------- -------- ------------------ -----------------
Comprehensive
income/(loss) (195,282,617) 1,190,861 77,571,200
----------------- ------ ------- ------------------------- -------- ------------------ -----------------
Comprehensive
income/(loss)
attributable to:
Equity
Shareholders (195,244,021) 1,190,147 77,554,752
Non-controlling
interest (NCI) 1(b) (38,596) 714 16,448
----------------- ------ ------- ------------------------- -------- ------------------ -----------------
Weighted average
number of
shares
outstanding 4 700,000,000 700,000,000 700,000,000
Basic and
diluted
earnings per
share
attributable to
shareholders
(excluding
NCI) 4 (27.89)p 0.17p 11.08p
----------------- ------ ------- ------------------------- -------- ------------------ -----------------
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 20 20
30 June 2020 30 June 20 19 31 December 2019
(audited)
Notes GBP GBP GBP GBP GBP GBP
-------------------- ------ ---------- -------------- -------------- -------------- ---------- --------------
Non-Current
Assets
Financial assets
at fair value
through profit 1(d),
or loss 5 346,926,656 441,571,407 537,820,762
-------------------- ------ ---------- -------------- -------------- -------------- ---------- --------------
346,926,656 441,571,407 537,820,762
-------------------- ------ ---------- -------------- -------------- -------------- ---------- --------------
Current Assets
Cash and cash 1(h),
equivalents 11 4,248,227 8,545,306 8,688,050
Treasury gilts 1(m) - 20,011,139 -
Prepaid expenses 44,162 38,220 17,224
-------------------- ------ ---------- -------------- -------------- -------------- ---------- --------------
4,292,389 28,594,665 8,705,274
-------------------- ------ ---------- -------------- -------------- -------------- ---------- --------------
Current Liabilities
Trade and other 1(i),
payables 7 106,339 151,688 131,313
----------------
106,339 151,688 131,313
-------------------- ------ ---------- -------------- -------------- -------------- ---------- ----------------
Net Current
Assets 4,186,050 28,442,977 8,573,961
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
Net Assets 351,112,706 470,014,384 546,394,723
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
Capital and
Reserves
Called up share
capital and
share premium 8 688,939,403 688,939,403 688,939,403
Retained reserves (337,898,824) (219,019,408) (142,654,803)
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
Equity attributable
to the Company 351,040,579 469,919,995 546,284,600
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
Non-controlling
interest (NCI) 1(b) 72,127 94,389 110,123
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
Total Equity 351,112,706 470,014,384 546,394,723
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
NAV Per Share
(excluding NCI) 9 50.15p 67.13p 78.04p
-------------------- ------ ---------- -------------- ---------- ------------------ ---------- ----------------
The Condensed Consolidated Financial Statements were approved by the Board of Directors for issue on 19 August 2020.
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 20 to 30 June 2020
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
GBP GBP GBP GBP
------------------------- -------------- -------------- ------------- --------------
Balance at 1 January
2020 688,939,403 (142,654,803) 110,123 546,394,723
-------------------------- -------------- -------------- ------------- --------------
Comprehensive loss - (195,244,021) (38,596) (195,282,617)
Contributions - - 600 600
Balance at 30 June 2020 688,939,403 (337,898,824) 72,127 351,112,706
-------------------------- -------------- -------------- ------------- --------------
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
GBP GBP GBP GBP
------------------------- -------------- -------------- ------------- ------------
Balance at 1 January
2019 688,939,403 (220,209,555) 93,675 468,823,523
-------------------------- -------------- -------------- ------------- ------------
Comprehensive income - 1,190,147 714 1,190,861
Balance at 30 June 2019 688,939,403 (219,019,408) 94,389 470,014,384
-------------------------- -------------- -------------- ------------- ------------
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
GBP GBP GBP GBP
------------------------ -------------- -------------- ------------- ------------
Balance at 1 January
2019 688,939,403 (220,209,555) 93,675 468,823,523
------------------------- -------------- -------------- ------------- ------------
Comprehensive income - 77,554,752 16,448 77,571,200
Balance at 31 December
2019 (audited) 688,939,403 (142,654,803) 110,123 546,394,723
------------------------- -------------- -------------- ------------- ------------
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 2020 to 30 June 2020
1 January 1 January
1 January 201 9 2019 to
2020 to 30 to 30 June 31 December
June 2020 201 9 201 9
(audited)
Notes GBP GBP GBP
------------------------------------ ---------- -------------- ------------- --------------
Net cash flow from/(used in) operating
activities See below (2,341,827) 10,577 103,860
------------------------------------------------ -------------- ------------- --------------
Investing activities
Capital contributions 5 (4,849,515) - (20,000,000)
Purchase of Treasury gilts 1(m) - (20,001,441) -
Interest income 1,194 14,850 62,870
Capital distributions 5 2,749,725 - -
Net cash flow used in investing
activities (2,098,596) (19,986,591) (19,937,130)
------------------------------------------------ -------------- ------------- --------------
Financing activities
Contributions from non-controlling 600 - -
interest
Net cash flow from financing activities 600 - -
------------------------------------------------ -------------- ------------- --------------
Net movement in cash and cash
equivalents (4,439,823) (19,976,014) (19,833,270)
Opening cash and cash equivalents 8,688,050 28,521,320 28,521,320
------------------------------------------------ -------------- ------------- --------------
Closing cash and cash equivalents 4,248,227 8,545,306 8,688,050
------------------------------------------------ -------------- ------------- --------------
Net cash flow from/(used in)
operating activities
------------------------------------------------ -------------- ------------- --------------
Comprehensive income/(loss) (195,282,617) 1,190,861 77,571,200
Unrealised (gain)/loss on
financial assets at fair
value through profit or loss 5 192,993,896 (1,184,206) (77,433,561)
Movement in prepaid expenses (26,938) (16,450) 4,544
Movement in trade and other
payables 7 (24,974) 44,922 24,547
Interest income (1,194) (24,550) (62,870)
---------------------------------------- ------ -------------- ------------- --------------
Net cash flow from/(used in) operating
activities (2,341,827) 10,577 103,860
------------------------------------------------ -------------- ------------- --------------
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
1. Summary of significant accounting policies
Reporting entity
Sherborne Investors (Guernsey) C 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 25 May 2017. The Company commenced dealings on the London Stock Exchange's Specialist Fund Segment on 12 July 2017. 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 subsidiaries, SIGC, LP (the "Investment Partnership") and SIGC Midco Limited.
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 2019, 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 2019: their report was unqualified; did not draw attention to any matters 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
The Directors have undertaken a rigorous review of the Group's ability to continue as a going concern including reviewing the ongoing cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration.
During the period, the coronavirus ("COVID-19") outbreak has caused extensive disruptions to businesses and economic activities globally. The uncertainties over the emergence and spread of COVID-19 have caused market volatility on a global scale. The specific impact on the Company's performance attributable to the pandemic is difficult to quantify. The situation is constantly evolving as governments and businesses continue to combat the impact of the pandemic. As stated in the Chairman's Statement, the Funds are the current largest shareholder of Barclays. The Company, via the Funds, has sufficient liquid assets to meet expected costs despite Barclays having cancelled dividend payments through 2020. Sherborne Investors Management (Guernsey) LLC (the "Investment Manager"), affiliates of which are also the investment manager of the Funds has the full intent and authority to provide the Investment Partnership with funds as and if required.
After making enquiries of the Investment Manager and Apex Fund and Corporate Services (Guernsey) Limited (the "Administrator"), the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these 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.
i) Critical accounting judgement: Incentive allocation
As more fully described in Note 10, the Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to partners of the Investment Partnership exceed a certain level. The basis of the incentive calculation differs depending on how the investment in the Selected Target Company ("STC") is ultimately characterised (i.e. as a Turnaround or Stake Building Investment). The incentive allocation has been computed on a Stake Building Investment basis, as it does not meet the criteria of a Turnaround investment.
ii) Critical accounting judgement: Consolidation of entities
As described further in Note 5, as of 30 June 2020 the Group holds a non-controlling interest in Whistle Investors III LLC ("Whistle III"). Whilst the Group holds a majority interest in Whistle III and holds access to the rewards and benefits, it does not exercise control over the day to day operations nor does it have the ability to remove the controlling party. As such, Whistle III is not considered a subsidiary and is not consolidated but held at fair value through profit or loss.
iii) Source of estimation uncertainty: Investments at fair value through profit or loss
The Group's investments are measured at fair value for financial reporting purposes. Fair value of financial assets are based on the net asset value ("NAV") of the investment. The main contribution to their NAV is the quoted closing price of the underlying investment on the London Stock Exchange at 30 June 2020. Please see Note 5 for further details.
Adoption of new and revised standards
(i) New standards adopted as at 1 January 2020:
All new standards effective from 1 January 2020 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 amendment 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 two entities controlled by the Company (its subsidiaries). 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. Investments where a majority interest is held but control is not achieved are held at fair value through profit or loss.
Non-controlling interests in the net assets of the consolidated subsidiaries 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 subsidiaries 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, via SIGC Midco Limited, a 100% owned subsidiary, owns 99.98% 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 the ability to approve the proposed investment of the Investment Partnership and to remove the general partner. Hence, the Company has consolidated the Investment Partnerhsip and SIGC Midco Limited in its financial statements.
b. Non-controlling interest
The interest of non-controlling parties in the subsidiary is measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.
c. Functional currency
Items included in the Condensed Consolidated Financial Statements of the Group are measured using the currency of the primary economic environment in which the entity operates. The 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, including equity investments in associates, 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. Under International Accounting Standard 28 'Investments in Associates', the fund can hold its investments 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 and derivative contracts 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 and derivative contracts are taken directly to the Condensed Consolidated Statement of Comprehensive Income.
The Group's investments are measured at fair value for financial reporting purposes as described earlier in Note 1 under critical accounting judgements and key sources of estimation uncertainty.
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 Group's investments are summarised by Level in Note 5. On disposal of shares, 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.
Investment income and interest receivable from short-term deposits and Treasury gilts 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, re-measured 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, 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. Financial instruments
Financial assets and 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.
k. Segmental reporting
As the Group invests 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'.
l. Incentive allocation
The incentive allocation is accounted for on an accruals basis and the calculation is disclosed in Note 10. 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.
m. Treasury gilts
Treasury gilts are initially recognised at fair value and subsequently, re-measured at amortised cost using the effective interest method. As at 30 June 2020, no treasury guilts were held (period ended 30 June 2019: GBP20,011,139 and year ended 31 December 2019: GBPNil).
2. Comprehensive income/(loss)
The comprehensive income/(loss) has been arrived at after charging:
1 January 1 January 1 January 2019
2020 to 30 2019 to 30 to 31 December
June 20 20 June 201 9 2019
GBP GBP GBP
-------------------------- ------------ ------------ ----------------
Directors' fees 80,000 80,000 160,000
Auditor's remuneration -
Audit 17,021 16,166 34,230
Auditor's remuneration -
Interim review 21,900 21,801 21,900
In addition to the audit and half-yearly review related remuneration above, a further GBP15,702 was due to the Auditor in relation to tax compliance services (period ended 30 June 2019: GBP14,600 and year ended 31 December 2019: GBP29,662).
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 700,000,000 weighted average number of shares in issue during the period (30 June 2019: 700,000,000 and 31 December 2019: 700,000,000). The earnings per share for the period ended 30 June 2020 amounted to a deficit of 27.89 pence per share (period ended 30 June 2019: a surplus of 0.17 pence per share and year ended 31 December 2019: surplus of 11.08 pence per share).
Days in Weighted Average
Date Shares issue Shares
1 January
2020 700,000,000 700,000,000
30 June 2020 700,000,000 181 700,000,000
5. Financial assets at fair value through profit or loss
As at 30 As at 31 December
As at 30 June 2019
June 2020 2019
GBP GBP GBP
------------------------------------- -------------- ------------ ------------------
Opening fair value 537,820,762 440,387,201 440,387,201
Capital contributions 4,849,515 - 20,000,000
Capital distributions (2,749,725) - -
Unrealised gain/(loss) on financial
assets at fair value through
profit or loss (192,993,896) 1,184,206 77,433,561
Closing fair value 346,926,656 441,571,407 537,820,762
------------------------------------- -------------- ------------ ------------------
5. Financial assets at fair value through profit or loss (continued)
The following tables summarise by level within the fair value hierarchy the Group's financial assets and liabilities at fair value as follows:
Level I Level II Level III Total
30 June 2020 GBP GBP GBP GBP
-------------------------------- ------------ ----------- ------------ ------------
Financial assets at fair value
through profit and loss - - 346,926,656 346,926,656
Level I Level II Level III Total
30 June 2019 GBP GBP GBP GBP
-------------------------------- ------------ ----------- ------------ ------------
Financial assets at fair value
through profit and loss 130,653,027 80,859,350 230,059,030 441,571,407
Level I Level II Level III Total
31 December 2019 GBP GBP GBP GBP
-------------------------------- ------------ ----------- ------------ ------------
Financial assets at fair value
through profit and loss - - 537,820,762 537,820,762
The Board of Directors approved Barclays PLC ("Barclays"), a London Stock Exchange listed bank holding company, as the STC in 2018. During 2019, the Group contributed its direct holding of Barclays shares and its interest in Whistle Investors LLC ("Whistle I") and Whistle Investors II LLC ("Whistle II") to Whistle Investors III LLC ("Whistle III") at fair value.
As at 30 June 2020, the Group's investments consist solely of a non-controlling interest in Whistle III which was organised to invest in the STC. Furthermore, the Level III investments disclosed in the financial statements are solely comprised of the Group's non-controlling interest in Whistle III. As at the period end, Whistle III's investment consisted of a direct investment in Barclays as well as a non-controlling interest in Whistle I and Whistle II. The value of those investments equated to the Group's maximum exposure to loss from the Whistle I, Whistle II and Whistle III entities.
A reconciliation of fair value measurements in Level III is set out in the following table:
As at 30 June As at 30 June As at 31 December
2020 2019 2019
GBP GBP GBP
---------------------------- -------------- -------------- ------------------
Opening fair value 537,820,762 222,817,957 222,817,957
Contribution to Whistle
III - - 236,387,018
Capital contributions 4,849,515 6,774,352 20,000,000
Capital distributions (2,749,725) - -
Unrealised gain/(loss)
on financial assets at
fair value through profit
or loss (192,993,896) 466,721 58,615,787
---------------------------- -------------- -------------- ------------------
Closing fair value 346,926,656 230,059,030 537,820,762
---------------------------- -------------- -------------- ------------------
The key unobservable inputs in the valuation of the Level 3 investment is the value of Whistle III's non-controlling interests in Whistle I and Whistle II which is impacted by the Barclays share price. Further information can be found in the Annual Report and Audited Consolidated Financial Statements of the Company for the year ended 31 December 2019.
6. Dividend income
As announced on 31 March 2020, the Barclays board cancelled the payment of the full year 2019 dividend and any potential 2020 dividends at the request of the UK regulator as a prudent measure given the current environment. The Group did not receive any cash dividends during the period (period ended 30 June 2019: GBP3,488,732 and year ended 31 December 2019: GBP6,105,282).
7. Trade and other payables
As at 30 June As at 30 June As at 31 December
2020 201 9 201 9
GBP GBP GBP
----------------------------- -------------- ---------------- --------------------
Professional fees payable 24,635 76,426 74,110
Administration fees payable 36,782 37,295 36,663
Audit fees payable 44,922 37,967 20,540
----------------------------- -------------- ---------------- --------------------
Total 106,339 151,688 131,313
----------------------------- -------------- ---------------- --------------------
8. Consolidated share capital and share premium
As at 30 June As at 30 June As at 31 December
2020 2019 2019
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 700,000,000 700,000,000 700,000,000
-------------------------- -------------- -------------- ------------------
As at 30 June As at 30 June As at 31 December
2020 2019 2019
Share premium account GBP GBP GBP
Share premium account
upon issue 700,000,000 700,000,000 700,000,000
Less: Costs of issue (11,060,597) (11,060,597) (11,060,597)
Closing balance 688,939,403 688,939,403 688,939,403
----------------------- -------------- -------------- ------------------
9. Net asset value per share attributable to the Company
No. of Shares Pence per Share
-------------------- -------------- ----------------
30 June 2020 700,000,000 50.15
30 June 2019 700,000,000 67.13
31 December 201 9 700,000,000 78.04
10. Related party transactions
The Investment Partnership and its General Partner, 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 net asset value of the Investment Partnership, less cash and cash equivalents and certain other adjustments. During the period, management fees of GBP2,014,455 (period ended 30 June 2019: GBP2,117,179 and year ended 31 December 2019: GBP4,211,140) had been paid by the Investment Partnership. No balance was outstanding at the period end (period ended 30 June 2019: GBPNil and year ended 31 December 2019: GBPNil).
The Special Limited Partner interest is held by Sherborne Investors Limited, a wholly owned subsidiary of Sherborne Investors LP (Sherborne Investors (Guernsey) GP, LLC and Sherborne Investors Limited are the Non-controlling interests). 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.
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. An investment is considered a Turnaround investment when a member of the General Partner is appointed chairman of, or accepts an executive role at, the STC.
If, after acquiring a shareholding, the share price of the STC 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 the STC (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 30 June 2020, the incentive allocation has been computed based on a Stake Building Investment basis and amounts to GBPNil (30 June 2019: GBPNil and December 2019: GBPNil) in relation to the investment held by the Investment Partnership.
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 20 20 (30 June 2019: Nil and 31 December 2019: 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 GBP70,000 per annum for the use of the licenced 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 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. The listed investment in the STC could be partially redeemed relatively quickly (within 3 months) should the Group need to meet obligations or ongoing expenses as and when they fall due.
For the period from 1 January 2020 to 30 June 2020
The following table details the liquidity analysis for financial liabilities at the date of the Condensed Consolidated Statement of Financial Position:
Less than
As at 30 June 2020 1 month 1 - 12 months Total
GBP GBP GBP
-------------------------- ---------- -------------- --------
Trade and other payables 36,782 69,557 106,339
-------------------------- ---------- -------------- --------
36,782 69,557 106,339
-------------------------- ---------- -------------- --------
Less than
As at 30 June 2019 1 month 1 - 12 months Total
GBP GBP GBP
-------------------------- ---------- -------------- --------
Trade and other payables 40,445 111,243 151,688
-------------------------- ---------- -------------- --------
40,445 111,243 151,688
-------------------------- ---------- -------------- --------
Less than
As at 31 December 2019 1 month 1 - 12 months Total
GBP GBP GBP
-------------------------- ---------- -------------- --------
Trade and other payables 38,198 93,115 131,313
-------------------------- ---------- -------------- --------
38,198 93,115 131,313
-------------------------- ---------- -------------- --------
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. and HSBC Holdings PLC currently have a stand alone credit rating of A- with Standard & Poor's (30 June 2019: A- with Standard & Poor's and 31 December 2019: A- with Standard & Poor's), whilst Barclays Bank PLC has a standalone credit rating of A with Standard & Poor's (30 June 2019: A with Standard & Poor's and 31 December 2019: A with Standard & Poor's). The Group considers these ratings to be acceptable.
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. Further information can be found in the Annual Report and Audited Consolidated Financial Statements of the Company for the year ended 31 December 2019.
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. The Investment Manager considers the foreign exchange exposure of Whistle III to be a component of market price risk not foreign currency risk.
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
2020 Interest bearing
---------------------------------
1 month 3 months
Less than to to Non- interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
------------------- ---------- ---------- --------- -------------- ------------
Assets
Cash and cash
equivalents 4,248,227 - - - 4,248,227
Financial assets
at fair value
through profit
or loss - - - 346,926,656 346,926,656
Prepaid expenses - - - 44,162 44,162
------------------- ---------- ---------- --------- -------------- ------------
Total Assets 4,248,227 - - 346,970,818 351,219,045
------------------- ---------- ---------- --------- -------------- ------------
Liabilities
Other payables - - - 106,339 106,339
------------------- ---------- ---------- --------- -------------- ------------
Total Liabilities - - - 106,339 106,339
------------------- ---------- ---------- --------- -------------- ------------
As at 30 June
2019 Interest bearing
----------------------------------
1 month 3 months
Less than to to Non- interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
------------------- ----------- ---------- --------- -------------- ------------
Assets
Cash and cash
equivalents 8,545,306 - - - 8,545,306
Financial assets
at fair value
through profit
or loss - - - 441,571,407 441,571,407
Treasury gilts 9,928,349 9,888,592 - 194,198 20,001,139
Prepaid expenses - - - 38,220 38,220
------------------- ----------- ---------- --------- -------------- ------------
Total Assets 18,473,655 9,888,592 - 441,803,825 470,166,072
------------------- ----------- ---------- --------- -------------- ------------
Liabilities
Other payables - - - 151,688 151,688
------------------- ----------- ---------- --------- -------------- ------------
Total Liabilities - - - 151,688 151,688
------------------- ----------- ---------- --------- -------------- ------------
Interest rate risk
(continued)
As at 31 December
2019 Interest bearing
---------------------------------
1 month 3 months
Less than to to Non- interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
--------------------------- ---------- ---------- --------- -------------- ------------
Assets
Cash and cash equivalents 8,688,050 - - - 8,688,050
Financial assets
at fair value through
profit or loss - - - 537,820,762 537,820,762
Prepaid expenses - - - 17,224 17,224
--------------------------- ---------- ---------- --------- -------------- ------------
Total Assets 8,688,050 - - 537,837,986 546,526,036
--------------------------- ---------- ---------- --------- -------------- ------------
Liabilities
Other payables - - - 131,313 131,313
--------------------------- ---------- ---------- --------- -------------- ------------
Total Liabilities - - - 131,313 131,313
--------------------------- ---------- ---------- --------- -------------- ------------
As at 30 June 2020, the total interest sensitivity gap for interest bearing items was a surplus of GBP4,248,227 (30 June 2019: surplus of GBP28,362,247 and 31 December 2019: surplus of GBP8,688,050).
As at 30 June 20 20, interest rates reported by the Bank of England were 0.1% (period ended 30 June 2019: 0.75% and year ended 31 December 2019: 0.75%) which would equate to income of GBP4,248 (period ended 30 June 2019: GBP212,717 and year ended 31 December 2019: GBP65,160) per annum if interest bearing assets remained constant. If interest rates were to fluctuate by 50 basis points (period ended 30 June 2019: 25 basis points and year ended 31 December 2019: 50 basis points), this would have a positive effect of GBP21,241 or negative effect of GBP4,248 (period ended 30 June 2019: GBP70,906 and year ended 31 December 2019: GBP43,440) 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 20, 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. Distributions
No distributions were paid by the Group to non-controlling interests during the period (period ended 30 June 2019: GBPNil and year ended 31 December 2019: GBPNil).
13. Subsequent events
Since 30 June 2020, the share price of Barclays has decreased from 114.42 pence to 107.94 pence as at 17 August 2020. If this share price was used to value the investment at 30 June 2020, it would have resulted in a decrease in the closing fair value from GBP346.9 million to GBP330.0 million.
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 KKLFFBVLFBBK
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