TIDMLSAA
RNS Number : 7357N
Life Settlement Assets PLC
27 September 2023
LIFE SETTLEMENT ASSETS PLC
LEI: 2138003OL2VBXWG1BZ27
(the "Company" or "LSA")
Half-Year Announcement
LSA, a closed-ended investment company which manages portfolios
of whole and fractional interests in life settlement policies
issued by life insurance companies operating predominantly in the
United States, is pleased to announce its unaudited half-year
results for the period ended 30 June 2023.
Highlights
-- Total maturities during the period were USD $14.2 million (H1 2022 USD $16.3 million)
-- Estimated AE ratio ("actual to expected ratio") of HIV
segment of 80%, and of non-HIV segment of 147%, aggregating to
119%
-- The Company's Net Asset Value ("NAV") as at 30 June 2023 was $USD 2.16 per share
-- Cost reductions continue to be a strategic priority.
Michael Baines, Chairman, commented:
"While these results cover a period when market fears of
stagflation are accompanied by inflation and rising interest rates,
the non-correlation of our performance with financial markets works
in favour of our investment case. It is worth noting the
outperformance of the portfolio when measured against other long
duration fixed income assets over the last two years.
The non-HIV policy component of the portfolio has experienced a
high level of maturities, while the HIV policy component had
somewhat less. On an aggregated basis, this has meant higher than
expected cash receipts, but with maturities closely reflecting
their book values, NAV has not been materially affected.
With the completion of the acquisition and the current
assimilation of the acquired policies into the portfolio, the Board
remains focussed on assessing the mortality risk in the Company's
portfolio. Alongside continuing to make further distributions when
maturities occur, controlling costs against the background of the
inflationary environment remains a core priority for the
Board."
Enquiries
For further information, please visit https://www.lsaplc.com/ ,
or contact:
Acheron Capital Limited (Investment Manager)
Jean-Michel Paul
020 7258 5990
Shore Capital (Financial Adviser and Broker)
Robert Finlay
020 7408 4080
ISCA Administration Services Limited
Company Secretary
Tel: 01392 487056
Company performance
Performance analysis is provided in the tables below:
A Share Class
As at As at Percentage
30 June 31 December Change
2023 2022 (%)
Net assets attributable to
Shareholders (USD '000) 107,776 109,913 (1.9)
-------------- -------------- -------------
Shares in issue 49,826,784 49,826,784 -
-------------- -------------- -------------
NAV per share (USD) 2.16 2.21 (1.9)
-------------- -------------- -------------
Closing share price (USD) 1.56 1.37 13.9
-------------- -------------- -------------
(Discount) to NAV (%) (27.9) (38.0) 10.1
-------------- -------------- -------------
Period ended Period ended Percentage
30 June 30 June Change
2023 2022 (%)
-------------- -------------- -----------
Total maturities (USD '000) 14,190 16,266 (12.8)
-------------- -------------- -----------
Net income from portfolio
(USD '000) 5,446 4,892 11.3
-------------- -------------- -----------
Profit for the period (USD
'000) 864 101 7.6
-------------- -------------- -----------
Chairman's Statement
On behalf of the Board, I am pleased to present the Company's
half year results for the period ended 30 June 2023.
These results cover a period when market fears of stagflation
are accompanied by inflation and rising interest rates. Positively
for the Company, the non-correlation of our performance with
financial markets works in favour of our investment case. In this
context it is worth noting the outperformance of the portfolio when
measured against other long duration fixed income assets over the
last two years.
Investment overview
The financial highlights above show the results for the half
year to 30 June 2023. As investors are aware, in the first half of
2023 the acquisition of the MBC portfolio of insurance policies in
the MBC Trust was completed. However, the Company still awaits
confirmation of the final distribution by MBC to its investors,
including APT. Confirmation of the value of the portfolio was
conducted by the Company's external actuary, and this value has
been incorporated into the estimated NAV as at 30 June 2023.
The Company's portfolio has experienced a number of sizeable
maturities in the period, with an aggregate value of USD 14.2
million arising from a total of 51 policies.
Policy administration costs are a key component in determining
the future returns available on the Company's portfolio and
Acheron, continues its review of the policy administration cost
base. Whilst the Company's portfolio structure has been somewhat
simplified following the MBC acquisition, the overall cost of
holding life settlements has, nevertheless, been increasing due to
inflationary pressures on all market participants.
The Life Settlement Market
The secondary market in life settlements continues to be active,
with the decorrelation of the asset class (especially in US
dollars) attracting investors in search of a safe haven.
Portfolio
The overall portfolio is subdivided into portfolios exposed to
either HIV-positive policy holders or non-HIV positive policy
holders. The following table provides information on the Company's
policies by exposure to HIV and non-HIV positive insureds as at 30
June 2023.
Share Class A HIV Non-HIV Total
Number of policies 4 214 129 4 343
------------ ----------- ------------
Total gross face
value 413 951 446 83 568 597 497 520 043
------------ ----------- ------------
Valuation 51 338 880 22 081 700 73 420 580
------------ ----------- ------------
Percentage of
face 12.4% 26.4% 14.8%
------------ ----------- ------------
The non-HIV policy component of the portfolio has experienced a
high level of maturities, while the HIV policy component had
somewhat less. On an aggregated basis, this has meant higher than
expected cash receipts, but with maturities closely reflecting
their book values, NAV has not been materially affected.
Maturities in the period up to 30 June 2023 are shown in the
table below.
Class A
HIV Maturities
(USD) 4 014 946
-----------
Non-HIV Maturities
(USD) 10 175 040
-----------
Total Maturities
(USD) 14 189 986
-----------
In the period under review the non-HIV segment of the portfolio
experienced an estimated AE ("Actual to Expected") ratio of 147%.
However, the HIV segment of the portfolio had an estimated AE ratio
of 80%. While the Non-HIV portfolio has performed well above
expectations, the HIV portfolio has underperformed against
expectation during the first half year.
AE* All classes
HIV 80%
------------
Non-HIV 147%
------------
Total 119%
------------
* in maturity dollar amounts, estimated until June 2023.
The Board believes results over the long term are the best
indicator of underlying performance, and it will continue to
monitor performance in the second half to ascertain whether model
assumptions remain accurate.
On 30 June 2023, Share Class A had a NAV of USD 2.1630 per share
with the NAV performance history shown in the table below.
Class A Year Jan Feb Mar April May Jun YTD
Total NAV
Return 2023 3.87% -0.85% -1.19% 1.33% -1.01% -1.33% 0.78%
------ ------ ------- ------- ------ ------- ------- ------
Portfolio Composition
Further information on the composition of the portfolio as at 30
June 2023 can be found in the Factsheet on our website
https://www.lsaplc.com/investor-relations/announcements/ .
Distributions
On 3 February 2023 the Company declared a special dividend of
6.0209 cents per share totalling approximately USD3.0 million,
which was paid on 24 February 2023 to Shareholders on the register
on 10 February 2023. The Board anticipates being in a position to
make further distributions following receipt of the MBC proceeds,
and, in the meantime, Acheron will be evaluating the future
potential cashflows from the portfolio in the light of its work on
reviewing administration costs.
Outlook
With the completion of the acquisition and the current
assimilation of the acquired policies into the portfolio, the Board
remains focussed on assessing the mortality risk in the Company's
portfolio. Alongside continuing to make further distributions when
maturities occur, controlling costs against the background of the
inflationary environment remains a core priority for the Board. At
the same time the Board will continue to promote awareness of the
relative benefits to investors of the Company ' s investment
case.
Michael Baines
Chairman
26 September 2023
Key Performance Indicators (KPIs)
The Board monitors success in implementing the Company's
strategy against a range of key performance indicators (KPIs),
which are viewed as significant measures of success over the longer
term. These key indicators are those provided in the performance
tables above. Although performance relative to the KPIs is
monitored over quarterly periods, it is success over the long-term
that is viewed as more important. This is particularly important
given the inherent volatility of maturities and short-term
investment returns.
The Board has adopted the following KPIs:
-- Share Price - a key measure for Shareholders to show the most
likely realisable value of this investment if it was sold. Changes
in the share price are closely monitored by the Board.
-- NAV per share - as this is the primary indicator of the
underlying value attributable to each share.
-- Premium/(discount) to NAV - as this measure can be used to
monitor the difference between the underlying Net Asset Value and
share price.
-- Total maturities (USD) - the value of the total maturities in
USD provides an indicator of the underlying cash flow that the
Company receives from its main source of income - policy
maturities. There are factors which could impact the outcome of
this performance measure including: average life expectancy and the
age of the underlying policy holders. Please note that the Actual
to Expected ("A/E") ratio, which is closely linked to the total
maturities KPI, is a key method by which the Board monitors the
level of maturities. The A/E ratio measures the declared maturities
compared to the projected maturities based on the actuarial models.
A ratio close to 100% indicates maturities correspond exactly to
the model. A percentage greater than 100% means the maturities are
more than anticipated by the models and less than 100% the opposite
is the case.
-- Earnings per share - this is a key measure of financial
performance used to assess the fortunes of the Company over each
financial period.
-- Profit/(loss) for the period - this is a key measure of
financial performance used to assess the fortunes of the Company
over each financial period.
-- Running costs - The Ongoing Charges of the Company for the
financial period under review represented 5.0% (year to 31 December
2022: 7.1%) of average net assets. Excluding the servicing and
legal costs the ratio would be 2.5%.
Shareholders should note that this ratio has been calculated in
accordance with the Association of Investment Companies' ("AIC")
recommended methodology, published in May 2012. This figure
indicates the annual percentage reduction in Shareholder returns as
a result of recurring operational expenses. Although the Ongoing
Charges figure is based on historic information, it does provide
Shareholders with a guide to the level of costs that may be
incurred by the Company in the future.
Please Note: The Company regularly uses alternative performance
measures to present its financial performance. These measures may
not be comparable to similar measures used by other companies, nor
do they correspond to IFRS standards or other accounting
principles.
Directors' Statement of Principal Risks and Uncertainties
The important events that have occurred during the period under
review and the key factors influencing the financial statements are
set out in the Chairman's Statement above.
In accordance with DTR 4.2.7, the Directors consider that the
principal risks and uncertainties facing the Company have not
materially changed since the publication of the Annual Report and
Accounts for the year ended 31 December 2022.
The principal risks faced by the Company include, but are not
limited to:
-- HIV Mortality risk
-- Premium management risk
-- Volatility risk
-- Fractional premium risk
-- Fractional ownership risk
-- Advance age mortality risk
-- Discount rate risk
-- Modelling risk
-- Tax
-- Breach of applicable legislative obligations
-- Counterparty risk
A more detailed explanation of these risks and the way in which
they are managed can be found in the Strategic Report on pages 21
to 23 and in Note 4 to the Financial Statements on pages 63 to 66
of the 2022 Annual Report and Accounts - copies can be found via
the Company's website, www.lsaplc.com .
There have been no significant changes in the related party
disclosures set out in the Annual Report.
Directors' Statement of Responsibilities in Respect of the
Financial Statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10
Michael Baines (Chairman), Christopher Casey (Audit Committee
Chairman) and Guner Turkmen, the Directors, confirm that to the
best of their knowledge:
-- The condensed set of financial statements contained within
this Half-Yearly financial report have been prepared in accordance
with International Accounting Standard ("IAS") 34 as adopted in the
UK and gives a true and fair view of the assets, liabilities,
financial position and profit of the Company; and
-- The Half-Yearly financial report includes a fair review of
the information required by the FCA's Disclosure and Transparency
Rule 4.2.7R being disclosure of important events that have occurred
during the first six months of the financial year, their impact on
the condensed set of financial statements and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
-- The Half Yearly financial report includes a fair review of
the information required by the FCA's Disclosure and Transparency
Rule 4.2.8R being disclosure of related party transactions during
the first six months of the financial year, how they have
materially affected the financial position of the Company during
the period and any changes therein.
This Half-Yearly Report was approved by the Board of Directors
on 26 September 2023 and the above responsibility statement was
signed on its behalf by:
Michael Baines
Chairman
26 September 2023
Condensed Statement of Comprehensive Income
for the six months ended 30 June 2023
______________________________________________
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Income
Gains from life
settlement
portfolios 3
Maturities - 14,190 14,190 - 16,266 16,266 - 27,197 27,197
Acquisition cost
of maturities
and fair value
movement - (4,213) (4,213) - (3,644) (3,644) - (10,220) (10,220)
-------- ---------- ---------- -------- ---------- ---------- -------- ----------- -----------
Sub total - 9,977 9,977 - 12,622 12,622 - 16,977 16,977
Incurred premiums
paid in period
on all policies - (9,415) (9,415) - (7,944) (7,944) - (15,551) (15,551)
Unrealised gains
Fair value
adjustments - 4,554 4,554 - (89) (89) - 6,795 6,795
Income from life
settlement
portfolios 307 - 307 301 - 301 623 - 623
Other income 23 - 23 6 - 6 9 - 9
Net foreign exchange
loss (1) - (1) (4) - (4) - - -
______ ______ ______ ______ ______ ______ _______ _______ ______
Total income 329 5,116 5,445 303 4,589 4,892 632 8,221 8,853
Operating expenses
Investment management
fees 4 (810) (743) (1,553) (820) 267 (553) (1,640) 409 (1,231)
Other expenses (1,927) - (1,927) (3,832) - (3,832) (6,051) - (6,051)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit
before finance
costs and taxation (2,408) 4,373 1,965 (4,349) 4,856 507 (7,059) 8,630 1,571
Finance costs
Interest payable (1,102) - (1,102) (406) - (406) (972) - (972)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit/before
taxation (3,510) 4,373 863 (4,755) 4,856 101 (8,031) 8,630 599
Taxation - - - - - - - - -
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit
for the period (3,510) 4,373 863 (4,755) 4,856 101 (8,031) 8,630 599
====== ===== ====== ====== ===== ====== ======= ====== =====
Return per class
A share USD 6 (0.070) 0.087 0.017 (0.095) 0.097 0.002 (0.161) 0.173 0.012
All revenue and capital items in the above statement derive from
continuing operations of the Company.
The Company does not have any income or expense that is not
included in the profit for the period and therefore the profit for
the period is also the total comprehensive income for the
period.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company. The supplementary revenue and
capital columns are prepared in accordance with the Statement of
Recommended Practice ("SORP") issued by the Association of
Investment Companies ("AIC") in July 2022.
The notes form part of these financial statements.
Condensed Statement of Financial Position
as at 30 June 2023
As at As at As at
30 June 30 June 31 December
2023 2022
(unaudited) 2022 (audited)
Note (unaudited)
USD'000 USD'000 USD'000
Non-current assets
Financial assets at fair value through
profit or loss:
- Life settlement investments 8 73,421 65,902 62,742
_______ _______ _______
73,421 65,902 62,742
Current assets
Maturities receivable 7,518 15,454 7,410
Trade and other receivables 12,180 17 2,051
Premiums paid in advance 4,488 6,277 5,264
Cash and cash equivalents 13,908 25,902 35,907
_______ _______ _______
38,094 47,650 50,632
_______ _______ _______
Total assets 111,515 113,552 113,374
_______ _______ _______
Current liabilities
Other payables (1,557) (1,556) (1,522)
Provision for performance fees 9 (2,182) (2,581) (1,939)
_______ _______ _______
Total liabilities (3,739) (4,137) (3,461)
_______ _______ _______
Net assets 107,776 109,415 109,913
====== ====== ======
Represented by
Capital and reserves
Share capital 10 498 498 498
Special reserve 11 91,290 94,290 94,290
Capital redemption reserve 213 213 213
Capital reserve 57,727 49,580 53,354
Revenue reserve (41,952) (35,166) (38,442)
_______ _______ _______
Total equity attributable to ordinary
Shareholders of the Company 107,776 109,415 109,913
======= ======= =======
Net Asset Value per share basic
and diluted
Class A shares USD 12 2.16 2.20 2.21
Registered in England and Wales with Company Registration
number: 10918785
The notes form part of these financial statements.
Condensed Statement of Changes in Equity
for the six months ended 30 June 2023
Capital
Share Special redemption Capital Revenue
capital reserve reserve reserve reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Six months ended 30 June
2023
Balance as at 31 December
2022 498 94,290 213 53,354 (38,442) 109,913
Comprehensive income/(loss)
for the period - - - 4,373 (3,510) 863
Contributions by and distributions
to owners
Dividends paid in period - (3,000) - - - (3,000)
____ _______ _______ ______ _______ _______
Balance as at 30 June 2023 498 91,290 213 57,727 (41,952) 107,776
===== ======= ======= ====== ======= =======
Of which:
Realised gains 39,813
Unrealised gains 17,914
Six months to 30 June
2022
Balance as at 31 December
2021 498 94,290 213 44,724 (30,411) 109,314
Comprehensive income/(loss)
for the period - - - 4,856 (4,755) 101
____ _______ _______ ______ _______ _______
Balance as at 30 June 2022 498 94,290 213 49,580 (35,166) 109,415
==== ====== ======= ===== ====== ======
Of which:
Realised gains 39,752
Unrealised gains 9,828
Year ended 31 December
2022
Balance as at 31 December
2021 498 94,290 213 44,724 (30,411) 109,314
Comprehensive income/(loss)
for the year - - - 8,630 (8,031) 599
_____ _______ _______ ______ _______ ______
Balance as at 31 December
2022 498 94,290 213 53,354 (38,442) 109,913
===== ====== ======= ====== ====== ======
Of which:
Realised gains 40,500
Unrealised gains 12,854
The Special reserve was created as a result of the cancellation
of the Share premium account following a court order issued on 18
June 2019. The Special reserve is distributable and may be used to
fund purchases of the Company's own shares and to make
distributions to Shareholders.
The revenue and realised capital reserves are also distributable
reserves.
The notes form part of these financial statements.
Condensed Cash Flow Statement
for the six months ended 30 June 2023
Six Six Year ended
months ended months ended 31 December
2022
30 June 2023 30 June (audited)
2022
(unaudited) (unaudited)
USD'000 USD'000 USD'000
Cash flows generated from operating
activities
Profit for the period 863 101 599
Non-cash adjustment
* movement on portfolios (341) 3,958 3,650
Investment in life settlement
portfolios (11,904) (53) (132)
Movements in "policy advances" 1,566 18,217 21,764
Interest paid 1,102 406 972
Changes in operating assets
and liabilities
Changes in maturities receivables (108) (9,249) (1,205)
Changes in trade and other receivables (10,129) 313 (1,721)
Changes in premiums paid in advance 776 248 1,261
Changes in other payables 35 608 574
Changes in performance fee provision 243 (267) (909)
______ ______ ______
Net cash (outflows)/inflows
from operating activities (17,897) 14,282 24,853
Cash flow used in financing
activities
Dividends paid (3,000) - -
Interest paid (1,102) (406) (972)
_____ _____ ______
Net cash flows used in financing
activities (4,102) (406) (972)
______ ______ ______
Net changes in cash and cash
equivalents (21,999) 13,876 23,881
Cash balance at the beginning
of the period 35,907 12,026 12,026
______ ______ ______
Cash balance at the end of the
period 13,908 25,902 35,907
====== ====== ======
The notes form part of these financial statements.
Notes to the Condensed Financial Statements
for the six months ended 30 June 2023
Note 1 General information
Life Settlement Assets ("Life Settlement Assets" or the
"Company") is a public company limited by shares and an investment
company under section 833 of the Companies Act 2006. It was
incorporated in England and Wales on 16 August 2017 with a
registration number of 10918785. The registered office of the
Company is 115 Park Street, 4th Floor, London W1K 7AP.
The principal activity of Life Settlement Assets is to manage
investments in whole and partial interests in life settlement
policies issued by life insurance companies operating predominantly
in the United States.
In May 2018, the Company received confirmation from HM Revenue
& Customs of its approval as an investment trust for tax
accounting periods commencing on or after 26 March 2018, subject to
the Company continuing to meet the eligibility conditions contained
in section 1158 of the Corporation Tax Act 2010 and the ongoing
requirements in Chapter 3 of Part 2 of the Investment Trust
(Approved Company) (Tax) Regulations 2011(Statutory Instrument
2011/2999).
The Company currently has one class of Ordinary Shares in issue,
namely the A shares which principally participates in a portfolio
of life settlement assets and associated liabilities, which were
acquired from Acheron Portfolio Corporation (Luxembourg) SA ("APC"
or the "Predecessor Company") on 26 March 2018.
Note 2 IFRS accounting policies
2.1 Basis of preparation
These condensed interim financial statements have been prepared
using the same accounting policies and methods of computation as in
the 2022 annual financial statements.
The condensed financial statements, which comprise the unaudited
results of the Company have been prepared in accordance with UK
adopted International Reporting Standards ("IFRS") and with the
requirements of the Companies Act 2006. They have also been
prepared in accordance with the SORP for investment companies
issued by the AIC in July 2022, except to the extent that it
conflicts with IFRS. The accounting policies are as set out in the
Report and Accounts for the year ended 31 December 2022.
The half-year financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting".
The financial information contained in this Half-Yearly
financial report does not constitute statutory accounts as defined
by the Companies Act 2006.The financial information for the periods
ended 30 June 2023 and 30 June 2022 have not been audited or
reviewed by the Company's Auditor. The figures and financial
information for the year ended 31 December 2022 are an extract from
the latest published audited statements and do not constitute the
statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and include a report of the
Auditor, which was unqualified and did not contain a statement
under either Section 498(2) or 498(3) of the Companies Act
2006.
2.2 Going concern
The Directors have made an assessment of the Company's ability
to continue as a going concern and are satisfied that the Company
has adequate resources to continue in operational existence for the
foreseeable future (being a period of 12 months from the date these
financial statements were approved). Furthermore, the Directors are
not aware of any material uncertainties that may cast significant
doubt upon the Company's ability to continue as a going concern,
having taken into account the liquidity of the Company's investment
portfolio and the Company's financial position in respect of its
cash flows, liabilities from its assets and the ongoing charges,
including annual premiums. Therefore, the financial statements have
been prepared on the going concern basis and on the basis that
approval as an investment trust will continue to be met.
Note 3 Gains from life settlement portfolios
When a maturity is declared, a realised capital gain or loss is
recognised on the investment in the policy, calculated by deducting
from the value of the maturity the initial acquisition cost and the
previously unrealised fair value adjustments.
The amount of premiums incurred during the period is reflected
as a deduction of income from life settlement portfolios. The
amount of premiums paid in advance as at 30 June 2023 amounted to
USD 4,488,000 (30 June 2022: USD 6,277,000, 31 December 2022: USD
5,264,000).
Note 4 Management fees and performance fees
30 June 30 June 31 December
2023 2022 2022
USD'000 USD'000 USD'000
Acheron Capital management
fees 810 820 1,640
Performance fees 743 (267) (409)
______ ______ _____
1,553 553 1,231
===== ===== =====
Under an agreement dated 26 March 2018, the Investment Manager
is entitled to a management fee payable by the Trust at an annual
rate of no more than 1.5% of the Net Asset Value. Management fees
paid during the period amounted to USD 810,000 (30 June 2022: USD
820,000, 31 December 2022: USD 1,640,000).
Until 30 June 2022 the Performance fee in respect of the Trust
was an amount equal to 20% of the sum of the distributions made to
the holders of the Shares in the Company corresponding to the
Trust, in excess of the Performance Hurdle (assessed at the time of
each distribution).
The Performance Hurdle " was met when (from time to time) the
aggregate distributions (in excess of the Catch-Up Amount) made to
the holders of the corresponding Ordinary Shares compounded at 3%
per annum.
The"Catch-Up Amount"was an amount equal to the distributions
that would have been required to be made to the Predecessor Company
' s shareholders of the corresponding share class in order for the
Accrued Performance Distributions (less, where applicable, any
clawback of such Accrued Performance Distributions) to be paid
(determined as at 31 December 2021), reduced by an amount equal to
any distributions paid to the Predecessor Company's shareholders of
the relevant share class prior to the Acquisition.
On 30 June 2022 the Company announced that after discussions
with Acheron Capital Limited ("ACL " ) an agreement had been
reached with ACL that once the current litigation process with one
of the policy trustees has been resolved, the performance fee will
be reduced from 20% as described above to 10% over the existing
hurdle rate.
In consideration of this reduction the Board agreed to release
any accrued performance fees payable to ACL held by the Company in
excess of USD 1 million, as calculated at 31 January 2023, as a
one-off payment. In acknowledgement of the significant work that
ACL has had to perform with regard to the legal dispute over a long
period, the Directors of LSA agreed to make an advance to ACL on 30
June 2022, subject to an agreed clawback mechanism, of USD 0.5
million, which was credited against the amount to be paid under the
above arrangement, following the publication of the 2022 financial
results.
Note 5 Taxation
The Company has an effective UK tax rate of 0% for the year
ending 31 December 2023. The estimated effective tax rate is 0% as
investment gains are exempt from tax owing to the Company's status
as an investment trust and there is expected to be an excess of
management expenses over taxable income.
The company suffers US withholding tax on income received
dividends and interest. The tax charge for the period amounted to
USD nil.
5.1 Withholding tax on matured policies
In accordance with the taxation treaty between the United States
of America and the United Kingdom, withholding tax on matured
policies is not due if at least 6% of the average capital stock of
the main class of Shares is traded during the previous year on a
recognised stock exchange. The Board believes that in the period
ended 31 December 2022 the Company fulfilled this requirement.
Note 6 Return per share
As stated in Note 10, the share capital of the Company comprises
49,826,784 A shares. All Shares are fully paid. Neither unpaid
shares nor any kind of option are outstanding, so the basic
profit/(loss) per share is also the diluted profit/(loss) per
share.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
Earnings per share:
Revenue return (USD'000) (3,510) (4,755) (8,031)
Capital return (USD'000) 4,373 4,856 8,630
Total return (USD'000) 863 101 599
Weighted average number
of shares in the period 49,826,784 49,826,784 49,826,784
Income return per share
(USD) (0.070) (0.095) (0.161)
Capital return per share
(USD) 0.087 0.097 0.173
Basic and diluted total
earnings per share (USD) 0.017 0.002 0.012
Note 7 Financial instruments measured at fair value
The life settlement portfolios have been classified as financial
assets held at fair value through profit or loss as their
performance is evaluated on a fair value basis.
The fair value hierarchy set out in IFRS 13 groups financial
assets and liabilities into three levels based on the significant
inputs used in measuring the fair value of the financial assets and
liabilities.
The fair value hierarchy has the following levels:
- level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- level 2: inputs other than quoted prices included within Level
1 that are observable for the assets or liabilities, either
directly (i.e as prices) or indirectly (i.e. derived from prices);
and
- level 3: inputs for the assets or liabilities that are not
based on observable market data (unobservable inputs).
The life settlement portfolios of USD 73,421,000 (30 June 2022:
USD 65,902,000, 31 December 2022: USD 62,742,000) are all
classified as level 3.
Note 8 Financial assets held at fair value through profit or
loss: Life Settlement Portfolios
As at As at As at 31
30 June 30 June December
2023 2022 2022
USD'000 USD'000 USD'000
Movements for the period
are as follows:
Opening valuation 62,742 88,024 88,024
Acquisitions during the
period 11,904 53 132
Proceeds from matured policies (14,190) (16,266) (27,197)
Net realised gains on policies 9,978 12,622 16,977
Movements in cash from policy
advances (1,566) (18,217) (21,764)
Escrow rebate - (225) 6,795
Movements in unrealised
valuation 4,553 (89) (225)
_______ _______ ______
Closing valuation 73,421 65,902 62,742
======= ======= ======
Details at period end: USD'000 USD'000 USD'000
Acquisition value 95,955 91,409 88,770
Unrealised capital gains 17,914 9,828 12,854
Policy advances (40,448) (35,335) (38,882)
_______ _______ _______
Closing valuation 73,421 65,902 62,742
====== ====== =======
Distribution of the portfolio by class of Shares and by type of
risk:
30 June 30 June 31 December
2023 2022 2022
USD'000 USD'000 USD'000
Elderly life insurance
(non-HIV) portfolio 22,082 23,770 22,075
HIV portfolio 51,339 42,132 40,667
(________) (________) (_________)
Balance as at 30 June 2023 73,421 65,902 62,742
===== ===== ======
Fair market value reflects the view of Acheron Capital Limited,
the Investment Manager of the trust in which the policies of Class
A are kept.
Note 9 Provision for performance fees
30 June 30 June 31 December
2023 2022 2022
USD'000 USD'000 USD'000
Provision brought forward 1,939 2,848 2,848
Increase/(reduction) in provision
during the period (note 4) 743 (267) (409)
Performance fee paid in the
period (500) (-) (500)
(________) (________) (_________)
Balance as at 30 June 2023 2,182 2,581 1,939
===== ===== ======
The Performance fee does not have a fixed date for payment but
can become payable immediately in the event that:
a. a crystallisation event as set out in the Investment
Management Agreement occurs; or
b. distributions to Shareholders exceed the Performance
Hurdle.
As a result the Performance fee has been treated as a current
liability.
As described in Note 8 on page 67 of the 2022 Annual Report, an
advance of USD 500,000 was made on 30 June 2022 as a one-off
payment. A further payment of USD 500,000 was advanced during the
period as shown in the table above .
Note 10 Share Capital
At the 30 June 2023, (the Company's share capital amounts to USD
498,268 (30 June 2022: USD 498,268 31 December 2022: USD 498,268)
and is represented by 49,826,784 Ordinary A shares of USD 0.01
each.
The issued and fully paid share capital at 30 June 2023 is
comprised of 49,826,784 Class A shares.
Class A shares relate to specific investments determined by the
Board of Directors or as the case may be, by a general meeting of
Shareholders. Each investment is undertaken for the exclusive
benefit and risk of the relevant class of shares. All shares have
equal voting rights.
Note 11 Special reserve
The Special reserve was created as a result of the cancellation
of the Share premium account following a court order issued on 18
June 2019. The Special reserve is distributable and may be used to
fund purchases of the Company's own shares and to make
distributions to Shareholders.
Note 12 Net assets and net asset value per Share Class
The Net Asset Value (NAV) is shown below.
30 June 30 June 31 December
2023 2022 2022
Net assets (USD'000) 107,776 109,415 109,913
Number of shares 49,826,784 49,826,784 49,826,784
NAV per share (USD) 2.16 2.20 2.21
Note 13 Related party transactions
Related parties to the Company are the members of the Board of
Directors of the Company, Compagnie Européenne de Révision S.à r.l.
as Administrator who previously had a member on the Board of
Directors and the Trustee of the US trust who was also previously a
member of the Board of Directors.
30 June 2023
USD'000
Per income statement:
Trustee fees 74
Compagnie Européenne de Révision
S.à r.l. 65
Directors' fees 72
Amounts payable per balance sheet:
Compagnie Européenne de Révision
S.à r.l. 51
Directors' fees 14
All transactions with related parties are undertaken
at arm's length.
Shares held by related parties (Directors and companies
under their control)
- Michael Baines 50,000 A shares
Note 14 Post balance sheet events
There are no post balance sheets events to disclose.
COMPANY INFORMATION
Directors
Michael Baines - Chairman
Christopher Casey
Guner Turkmen
Registered Office
115 Park Street
4th Floor
London W1K 7AP
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Trust's Investment Manager
Acheron Capital Limited
115 Park Street
4th Floor
London W1K 7AP
Registrars
The City Partnership (UK) Limited
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield
HD4 7BH
Brokers
Shore Capital and Corporate Limited
Cassini House
57 St James Street
London
SW1A 1LD
Company Secretary
ISCA Administration Services Limited
Suite 8,
Bridge House
Courtenay Street
Newton Abbot
TQ12 2QS
Email: lsa@iscaadmin.co.uk
Telephone: 01392 487056
LEI: 2138003OL2VBXWG1BZ27
Website - https://www.lsaplc.com
Registered in England and Wales with Company Registration
number: 10918785
Neither the contents of the Company's website nor the contents
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END
IR UNANROVUKUAR
(END) Dow Jones Newswires
September 27, 2023 02:00 ET (06:00 GMT)
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