TIDMSIGC
RNS Number : 5417J
Sherborne Investors (Guernsey)C Ltd
20 August 2019
SHERBORNE INVESTORS (GUERNSEY) C LIMITED
Interim Report and Unaudited Condensed Consolidated Financial
Statements
For the period from 1 January 2019 to 30 June 2019
Company Summary
The Company Sherborne Investors (Guernsey) C Limited (the
"Company") is a Guernsey domiciled limited liability
company and its shares are admitted to trading
on the London Stock Exchange's Specialist Fund
Segment ("SFS"). The Company was incorporated
on 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 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
During the period the Company continued to pursue its investment
strategy through its shareholding in Barclays PLC ("Barclays").
Three funds (the "Funds") managed by affiliates of Sherborne
Investors Management (Guernsey) LLC (the "Investment Manager"), of
which SIGC, LP (Incorporated) is one, most recently disclosed on 10
May 2019 an ownership interest of 5.48% of the voting rights of
Barclays.
As at 30 June 2019, the net asset value ("NAV") attributable to
shareholders of the Company was GBP469.9 million (31 December 2018:
GBP468.7 million) or 67.13 pence per share (31 December 2018: 66.96
pence per share) based on the closing price of 149.80 pence for
Barclays' shares. As at 16 August 2019 Barclays' share price
declined to 139.82 pence and therefore NAV per share attributable
to shareholders of the Company is now approximately 64.4 pence per
share.
During the period we began reporting estimated month end NAV and
NAV per share of the Company which we will continue for the
duration of the Barclays investment.
On 4 February 2019 the Funds submitted a resolution to Barclays
to elect Edward Bramson, a partner in Sherborne Investors
Management LP, to the board of Barclays at its Annual General
Meeting on 2 May 2019. The resolution was voted on by shareholders
at the meeting and was not passed.
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 2018, 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 2018. 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 12 of the Condensed Consolidated Financial
Statements.
The Company intends to continue to pursue its strategy as set
out in its prospectus.
We are grateful for your continued support and will keep you
informed of the status of our investment as it develops.
Responsibility statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting' 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
Under the UK Corporate Governance Code and applicable
regulations, the Directors are required to satisfy themselves that
it is reasonable to assume that the Company is a going concern.
The Directors have undertaken a rigorous review of the Company's
ability to continue as a going concern including reviewing the
on-going cash flows and the level of cash balances as of the
reporting date as well as taking forecasts of future cash flows
into consideration.
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 2019 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 15. We have read the other information contained
in the interim financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the 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.
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
2019 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
For the period from 1 January 2019 to 30 June 2019
1 January 2019 1 January 2018 1 January 2018
to to to
30 June 2019 30 June 2018 31 December
2018
(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 1,184,206 (71,335,064) (208,982,908)
Realised loss on
investments 5 - (13,818,011) (13,818,011)
Dividend income 6 3,488,732 1,727,848 3,908,306
Interest income 24,550 294,064 309,399
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
4,697,488 (83,131,163) (218,583,214)
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
Expenses 1(f)
Management fees 12 2,117,179 2,625,201 5,077,000
Professional fees 1,079,496 399,227 927,028
Directors' fees 2, 12 80,000 80,000 160,000
Administrative
fees 77,878 133,640 210,878
Trading and
custodian
fees - 2,060,765 2,060,765
Other fees 152,074 163,251 188,363
----------------
(3,506,627) (5,462,084) (8,624,034)
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
Comprehensive
income/(loss) 1,190,861 (88,593,247) (227,207,248)
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
Comprehensive
income/(loss)
attributable to:
Shareholders 1,190,147 (88,564,712) (227,151,537)
Non-controlling
interest (NCI) 1(b) 714 (28,535) (55,711)
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
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) 0.17p (12.65)p (32.45)p
------------------ ------ --------- ---------------------- ---------- ----------------- ---- ----------------
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 2019
30 June 2019 30 June 2018 31 December 2018
(audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ----------- ---------------- ------------- -------------- ----------- -------------
Non-Current
Assets
Financial assets
at fair value
through profit
or loss 5 441,571,407 578,035,045 440,387,201
----------------- ------ ----------- ---------------- ------------- -------------- ----------- -------------
441,571,407 578,035,045 440,387,201
----------------- ------ ----------- ---------------- ------------- -------------- ----------- -------------
Current Assets
Cash and cash 1(h),
equivalents 8 8,545,306 29,432,960 28,521,320
Treasury gilts 1(m) 20,011,139 - -
Prepaid expenses 7 38,220 67,142 21,768
----------------- ------ ----------- ---------------- ------------- -------------- ----------- -------------
28,594,665 29,500,102 28,543,088
----------------- ------ ----------- ---------------- ------------- -------------- ----------- -------------
Current
Liabilities
Trade and other
payables 9 (151,688) (97,623) (106,766)
----------------
(151,688) (97,623) (106,766)
----------------- ------ ----------- ---------------- ------------- -------------- ----------- ----------------
Net Current
Assets 28,442,977 29,402,479 28,436,322
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
Net Assets 470,014,384 607,437,524 468,823,523
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
Capital and
Reserves
Called up share
capital and
share premium 10 688,939,403 688,939,403 688,939,403
Retained
reserves (219,019,408) (81,622,730) (220,209,555)
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
Equity
attributable
to the Company 469,919,995 607,316,673 468,729,848
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
Non-controlling
interest (NCI) 1(b) 94,389 120,851 93,675
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
Total Equity 470,014,384 607,437,524 468,823,523
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
NAV Per Share
(excluding NCI) 11 67.13p 86.76p 66.96p
----------------- ------ ----------- ---------------- --------- ------------------ ----------- ----------------
The Condensed Consolidated Financial Statements were approved by
the Board of Directors for issue on 19 August 2019.
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 2019 to 30 June 2019
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes 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
Notes GBP GBP GBP GBP
------------------------------- -------- -------------- ------------- ------------- -------------
Balance at 1 January 2018 688,939,403 6,941,982 91,386 695,972,771
------------------------------- -------- -------------- ------------- ------------- -------------
Contributions - - 58,000 58,000
Comprehensive loss - (88,576,077) (17,170) (88,593,247)
Incentive allocation reversal 1(l),12 - 11,365 (11,365) -
Balance at 30 June 2018 688,939,403 (81,622,730) 120,851 607,437,524
------------------------------- -------- -------------- ------------- ------------- -------------
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
------------------------------- -------- -------------- -------------- ------------- --------------
Balance at 1 January 2018 688,939,403 6,941,982 91,386 695,972,771
------------------------------- -------- -------------- -------------- ------------- --------------
Contributions - - 58,000 58,000
Comprehensive loss - (227,162,902) (44,346) (227,207,248)
Incentive allocation reversal 1(l),12 - 11,365 (11,365) -
Balance at 31 December
2018 (audited) 688,939,403 (220,209,555) 93,675 468,823,523
------------------------------- -------- -------------- -------------- ------------- --------------
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.
Condensed Consolidated Statement of Cash Flows (Unaudited)
The accompanying notes form an integral part of these Condensed
Consolidated Financial Statements.
For the period from 1 January 2019 to 30 June 2019
1 January 2018
to 31 December
2018
1 January 2018 (audited)
1 January to 30 June GBP
2019 to 30 2018
June 2019
Notes GBP GBP
------------------------------------ ---------- --------------- ---------------- -----------------
Net cash flow from/(used in) operating
activities See below 10,577 (5,560,319) (6,487,294)
------------------------------------------------ --------------- ---------------- -----------------
Investing activities
Purchase of investments 5 - (877,074,819) (953,804,267)
Purchase of Treasury gilts 1(m) (20,001,441) - -
Interest income 14,850 294,064 309,399
Proceeds from disposal
of investments 5 - 499,118,015 575,847,463
Net cash flows used in investing
activities (19,986,591) (377,662,740) (377,647,405)
------------------------------------------------ --------------- ---------------- -----------------
Financing activities
Contributions from non-controlling
interest - 58,000 58,000
Net cash flows from financing
activities - 58,000 58,000
------------------------------------------------ --------------- ---------------- -----------------
Net movement in cash and cash
equivalents (19,976,014) (383,165,059) (384,076,699)
Opening cash and cash equivalents 28,521,320 412,598,019 412,598,019
------------------------------------------------ --------------- ---------------- -----------------
Closing cash and cash equivalents 8,545,306 29,432,960 28,521,320
------------------------------------------------ --------------- ---------------- -----------------
Net cash flow from/(used
in) operating activities
---------------------------------------- ------ --------------- ---------------- -----------------
Comprehensive income/(loss) 1,190,861 (88,593,247) (227,207,248)
Realised loss on investments 5 - 13,818,011 13,818,011
Unrealised (gain)/loss on
financial assets at fair
value through profit or loss 5 (1,184,206) 71,335,064 208,982,908
Scrip dividend 5 - (1,727,848) (1,727,848)
Movement in prepaid expenses 7 (16,450) (23,932) 21,442
Movement in trade and other
payables 9 44,922 (74,303) (65,160)
Interest income (24,550) (294,064) (309,399)
---------------------------------------- ------ --------------- ---------------- -----------------
Net cash flow from/(used) in operating
activities 10,577 (5,560,319) (6,487,294)
------------------------------------------------ --------------- ---------------- -----------------
Although not required by IAS 34 - 'Interim Financial Reporting',
the comparative figures for the preceding year and the related
notes have been included on a voluntary basis.
The accompanying notes form an integral part of these Condensed
Consolidated Financial Statements.
Notes to the Condensed Consolidated Financial Statements
For the period from 1 January 2019 to 30 June 2019
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 ("SFS") on 12 July 2017. The Company's registered office is
1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL. The
"Group" is defined as the Company and its subsidiaries, SIGC, LP
(Incorporated) 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 2018, 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 2018: 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 unaudited 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, with the exception of note 1(m)
following the acquisition of Treasury gilts in the period ended 30
June 2019.
Going concern
Under the UK Corporate Governance Code and applicable
regulations, the Directors are required to satisfy themselves that
it is reasonable to assume that the Company is a going concern.
The Directors have undertaken a rigorous review of the 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 and are of the opinion that the Group has
adequate resources to continue its operational activities for the
foreseeable future.
After making enquiries of the Investment Manager and the
Administrator, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt a
going concern basis in preparing these unaudited Condensed
Consolidated Financial Statements.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the Group's Condensed Consolidated Financial
Statements requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities and
contingencies at the date of the Group's Condensed Consolidated
Financial Statements and revenue and expenses during the reported
period. Actual results could differ from those estimated.
i) 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 quoted on the
London Stock Exchange are based on the quoted closing price at 30
June 2019. The fair value of other financial assets are based on
the net asset value ("NAV") of the investment. The main
contribution to their NAV is the quoted closing price on the London
Stock Exchange at 30 June 2019.
ii) Critical accounting judgement: Incentive allocation
As more fully described in note 12, 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).
iii) Critical accounting judgement: Consolidation of
entities
The Group holds majority interest in other financial assets, as
described in note 5, however does not have the ability to exercise
control over these assets. They are therefore not consolidated and
are held at fair value through profit or loss.
Adoption of new and revised standards
(i) New standards adopted as at 1 January 2019:
All new standards effective from 1 January 2019 have been
adopted and do not have a material impact on the financial
statements.
(ii) Standards, amendments and interpretations early adopted by
the Company:
There were no standards, amendments and interpretations adopted
early by the Company.
(iii) Standards, amendments and interpretations that are in
issue but not yet effective:
New standards Effective date
---------------------------------------------- -----------------
IFRS Insurance Contracts 1 January
17 2021
The future adoption of this standard is not expected to have a
material impact on the financial statements.
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 SIGC, LP (Incorporated).
Whilst the general partner of SIGC, LP (Incorporated), Sherborne
Investors (Guernsey) GP, LLC, a company registered in Delaware,
USA, is responsible for directing the day to day operations of
SIGC, LP (Incorporated), the Company, through its majority interest
in SIGC, LP (Incorporated), has the ability to approve the proposed
investment of SIGC, LP (Incorporated) and to remove the general
partner. Hence, the Company has consolidated SIGC, LP
(Incorporated) 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 sterling at the rate of
exchange ruling at that date. Exchange differences are reported in
the Condensed Consolidated Statement of Comprehensive Income.
d. Financial assets at fair value through profit or loss
Investments, including equity and loan investments in
associates, are designated as fair value through profit or loss in
accordance with IFRS 9, as the Company is an investment company
whose business is investing in financial assets with a view to
profiting from their total return in the form of interest and
changes in fair value. Under International Accounting Standard 28
'Investments in Associates' ("IAS 28"), the fund can hold its
investments at fair value through profit or loss rather than as an
associate as SIGC, LP (Incorporated) is a closed-ended fund.
Investments in voting shares, convertible bonds and derivative
contracts are initially recognised at cost. The investments in
voting shares, convertible bonds and derivative contracts are
subsequently re-measured at fair value, as determined by the
Directors. Unrealised gains or losses arising from the revaluation
of investments in voting shares, convertible bonds 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. Fair value of financial assets quoted on the
London Stock Exchange are based on the quoted closing price at 30
June 2019. The fair value of other financial assets are based on
the net asset value of the investment. The other investments invest
in financial assets quoted on the London Stock Exchange as well as
through derivative instruments and so the main contribution to
their net asset value is the quoted closing price at 30 June
2019.
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 or conversion of bonds, cost of investments are
allocated on a first in, first out basis.
e. Revenue recognition
Dividend income is recognised when the Group's right to receive
payment has been established. Tax suffered on dividend income for
which no relief is available is treated as an expense.
Investment income and interest receivable from short-term
deposits and Treasury gilts are recognised on an accrual 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 accrual basis. Expenses are
charged through the Condensed Consolidated Statement of
Comprehensive Income.
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 comprises 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.
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 instruments and financial liabilities are recognised
in the Group's Condensed Consolidated Statement of Financial
Position when the Group becomes a party to the contractual
provisions of the instrument.
k. Segmental reporting
As the Group invests in one investee company, there is no
segregation between industry, currency or geographical location. No
further disclosures have been made in conjunction with IFRS 8
'Operating Segments' as it is deemed not to be applicable.
l. Incentive allocation
The incentive allocation is accounted for on an accrual basis
and the calculation is disclosed in note 12. 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.
2. Comprehensive income/(loss)
The comprehensive income/(loss) has been arrived at after
charging:
1 January 2019 1 January 2018 1 January 2018
to 30 June to 30 June to 31 December
2019 2018 2018
GBP GBP GBP
--------------------------- --------------- --------------- ----------------
Directors' fees 80,000 80,000 160,000
Auditor's remuneration -
Audit 16,166 10,535 24,291
Auditors' remuneration -
Interim review 21,801 - 16,300
In addition to the audit related remuneration above, a further
GBP14,600 was due to the Auditor in relation to tax compliance
services (period ended 30 June 2018: GBP12,610 and year ended 31
December 2018: GBP28,019).
3. Tax on ordinary activities
The Company has been granted exemption from income tax in
Guernsey under the Income Tax (Exempt Bodies) (Bailiwick of
Guernsey) Ordinance 1989, and is liable to pay an annual fee
(currently GBP1,200) under the provisions of the Ordinance. As such
it will not be liable to income tax in Guernsey other than on
Guernsey source income (excluding deposit interest on funds
deposited with a Guernsey bank). No withholding tax is applicable
to distributions to Shareholders by the Company.
The Investment Partnership will not itself be subject to
taxation in Guernsey. No withholding tax is applicable to
distributions to partners of the Investment Partnership.
Income which is wholly derived from the business operations
conducted on behalf of the Investment Partnership with, and
investments made in, persons or companies who are not resident in
Guernsey will not be regarded as Guernsey source income. Such
income will not therefore be liable to Guernsey tax in the hands of
non-Guernsey resident limited partners.
Dividend income is shown gross of any withholding tax.
4. Earnings per share
The calculation of basic and diluted gain per share is based on
the return on ordinary activities less total comprehensive income
attributable to the non-controlling interest and on there being
700,000,000 weighted average shares in issue during the period (30
June 2018: 700,000,000 and 31 December 2018: 700,000,000). The
earnings per share for the period ended 30 June 2019 amounted to a
surplus of 0.17 pence per share (period ended 30 June 2018: a
deficit of 12.65 pence per share and year ended 31 December 2018:
deficit of 32.45 pence per share).
Days in Weighted Average
Date Shares issue Shares
1 January
2019 700,000,000 700,000,000
30 June 2019 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 2018
June 2019 2018
GBP GBP GBP
-------------------------------------- ------------ -------------- ------------------
Opening fair value 440,387,201 307,930,107 307,930,107
Purchases of investments - 852,648,180 965,538,700
Scrip dividend - 1,727,848 1,727,848
Disposal of investments - (499,118,015) (612,008,535)
Unrealised gain/(loss) on financial
assets at fair value through profit
or loss 1,184,206 (71,335,064) (208,982,908)
Realised loss on investments - (13,818,011) (13,818,011)
-------------------------------------- ------------ -------------- ------------------
Closing fair value 441,571,407 578,035,045 440,387,201
-------------------------------------- ------------ -------------- ------------------
The Board of Directors approved Barclays PLC ("Barclays"), a
London Stock Exchange listed bank holding company, as the STC in
2018 and as at 30 June 2019, the Group held 87,218,309 shares of
Barclays. The investment in Barclays is classified as meeting the
definition of Level I in the fair value hierarchy.
The Group also holds non-controlling interests in Whistle
Investors LLC and Whistle Investors II LLC (together the "Whistle
entities"). The Whistle entities were organised to invest in the
STC. Whistle Investors II LLC invests directly into Barclays.
Whistle Investors LLC's investment into Barclays includes
derivatives valued using unobservable inputs derived from the
underlying investment. The Level II and Level III investments
disclosed in the financial statements are solely comprised of the
Groups interest in Whistle Investors II LLC and Whistle Investors
LLC, respectively. The value of those investments equates to the
Group's maximum exposure to loss from the Whistle entities.
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 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
30 June 2018 GBP GBP GBP GBP
-------------------------------- ------------ ------------ ------------ ------------
Financial assets at fair value
through profit and loss 164,842,604 223,108,082 190,084,359 578,035,045
Level I Level II Level III Total
31 December 2018 GBP GBP GBP GBP
-------------------------------- ------------ ----------- ------------ ------------
Financial assets at fair value
through profit and loss 131,280,999 86,288,245 222,817,957 440,387,201
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
2019 2018 2018
GBP GBP GBP
------------------------ -------------- -------------- ------------------
Opening fair value 222,817,957 - -
Purchases at cost 6,774,352 279,260,269 392,150,789
Proceeds from disposal - (29,146,450) (29,146,450)
Movement in fair value 466,721 (60,029,460) (140,186,382)
------------------------ -------------- -------------- ------------------
Closing fair value 230,059,030 190,084,359 222,817,957
------------------------ -------------- -------------- ------------------
6. Dividend income
On 21 February 2019, Barclays declared a dividend of 4.0 pence
per share, paid on 5 April 2019 to shareholders of record on 1
March 2019. The Group received a cash dividend of GBP3,488,732
(period ended 30 June 2018: GBP1,727,848 and year ended 31 December
2018: GBP3,908,306).
7. Prepaid expenses
As at 30 June As at 30 June As at 31 December
2019 2018 2018
GBP GBP GBP
------------------------ -------------- -------------- ------------------
Other prepaid expenses 38,220 67,142 21,768
------------------------ -------------- -------------- ------------------
38,220 67,142 21,768
------------------------ -------------- -------------- ------------------
8. Cash and cash equivalents
Cash and cash equivalents comprises cash held by the Group and
short term deposits held with various banking institutions. The
carrying amount of these assets approximates their fair value.
9. Trade and other payables
As at 30 June As at 30 June As at 31 December
2019 2018 2018
GBP GBP GBP
----------------------------- -------------- ---------------- --------------------
Professional fees payable 76,426 14,734 44,177
Administration fees payable 37,295 64,045 36,509
Audit fees payable 37,967 18,844 26,080
----------------------------- -------------- ---------------- --------------------
Total 151,688 97,623 106,766
----------------------------- -------------- ---------------- --------------------
10. Consolidated share capital and share premium
As at 30 June As at 30 June As at 31 December
2019 2018 2018
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
2019 2018 2018
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
----------------------- -------------- -------------- ------------------
11. Net asset value per share attributable to the Company
Basic and Diluted
No. of Shares Pence per Share
------------------- ---------------- ------------------
30 June 2019 700,000,000 67.13
30 June 2018 700,000,000 86.76
31 December 2018 700,000,000 66.96
12. Related party transactions
The Investment Partnership and its General Partner, Sherborne
Investors (Guernsey) GP, LLC, have engaged Sherborne Investors
Management (Guernsey) LLC to serve as Investment Manager who is
responsible for identifying the STC, subject to approval by the
Board of Directors of the Company, as well as day to day management
activities of the Investment Partnership. The Investment Manager is
entitled to receive from the Investment Partnership a monthly
management fee equal to one-twelfth of 1% of the net asset value of
the Investment Partnership, less cash and cash equivalents and
certain other adjustments. During the period, management fees of
GBP2,117,179 (period ended 30 June 2018: GBP2,625,201 and year
ended 31 December 2018: GBP5,077,000) had been paid by the
Investment Partnership. No balance was outstanding at the period
end (period ended 30 June 2018: GBPnil and year ended 31 December
2018: GBPnil).
Through to 26 December 2018, the sole member of Sherborne
Investors (Guernsey) GP, LLC was Sherborne Investors LP, who also
served as the Special Limited Partner of the Investment
Partnership. Effective on 27 December 2018 the Special Limited
Partner interest was transferred from Sherborne Investors LP to
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 2019, the incentive allocation has been computed
based on a Stake Building Investment basis and amounts to GBPnil
(30 June 2018: GBPnil and December 2018: GBPnil) in relation to the
investment in Barclays.
Each of the Directors (other than the Chairman) receives a fee
payable by the Company currently at a rate of GBP35,000 per annum.
The Chairman of the Audit Committee receives GBP5,000 per annum in
addition to such fee. The Chairman receives a fee payable by the
Company currently at the rate of GBP50,000 per annum.
Individually and collectively, the Directors of the Company hold
no shares in the Company as at 30 June 2019 (30 June 2018: nil and
31 December 2018: 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.
13. Financial risk factors
The Group's investment objective is to realise capital growth
from investment in the STC, identified by the Investment Manager
with the aim of generating significant capital return for
Shareholders. Consistent with that objective, the Group's financial
instruments mainly comprise of an investment in, or linked to, 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 Barclays could be redeemed relatively quickly (within
3 months) should the Group need to meet obligations or pay ongoing
expenses as and when they fall due. Treasury gilts held could also
be realised relatively quickly should additional cash resources be
required.
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 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 30 June 2018 1 month 1 - 12 months Total
GBP GBP GBP
-------------------------- ---------- -------------- ---------
Trade and other payables (64,734) (32,889) (97,623)
-------------------------- ---------- -------------- ---------
(64,734) (32,889) (97,623)
-------------------------- ---------- -------------- ---------
Less than
As at 31 December 2018 1 month 1 - 12 months Total
GBP GBP GBP
-------------------------- ---------- -------------- ----------
Trade and other payables (36,967) (69,799) (106,766)
-------------------------- ---------- -------------- ----------
(36,967) (69,799) (106,766)
-------------------------- ---------- -------------- ----------
Credit risk
The Company is exposed to credit risk in respect of its cash and
cash equivalents, Treasury gilts and derivative contracts, arising
from possible default of the relevant counterparty, with a maximum
exposure equal to the carrying value of those assets. The credit
risk on liquid funds is mitigated through the Group depositing cash
and cash equivalents across several banks. The credit risk
associated with Treasury gilts and derivative contracts is
monitored by reviewing the credit rating for the counterparty. The
Group is exposed to credit risk in respect of its trade receivables
and other receivable balances with a maximum exposure equal to the
carrying value of those assets. UBS Financial Services Inc.
currently has a stand alone credit rating of A- with Standard &
Poor's (30 June 2018: A- with Standard & Poor's and 31 December
2018: A- with Standard & Poor's).
Market price risk
Market price risk arises as a result of the Group's exposure to
the future values of the share price of the STC Company. 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 2018.
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. The weighted average interest
rate on the Treasury gilts is 2.75%.
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
Trade and other
payables - - - (151,688) (151,688)
------------------- ----------- ---------- --------- -------------- ------------
Total Liabilities - - - (151,688) (151,688)
------------------- ----------- ---------- --------- -------------- ------------
As at 30 June
2018 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 29,432,960 - - - 29,432,960
Financial assets
at fair value
through profit
or loss - - - 578,035,045 578,035,045
Prepaid expenses - - - 67,142 67,142
------------------- ----------- ---------- --------- -------------- ------------
Total Assets 29,432,960 - - 578,102,187 601,535,147
------------------- ----------- ---------- --------- -------------- ------------
Liabilities
Trade and other
payables - - - (97,623) (97,623)
------------------- ----------- ---------- --------- -------------- ------------
Total Liabilities - - - (97,623) (97,623)
------------------- ----------- ---------- --------- -------------- ------------
As at 31 December
2018 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 28,521,320 - - - 28,521,320
Financial assets
at fair value through
profit or loss - - - 440,387,201 440,387,201
Prepaid expenses - - - 21,768 21,768
--------------------------- ----------- ---------- --------- -------------- ------------
Total Assets 28,521,320 - - 440,408,969 468,930,289
--------------------------- ----------- ---------- --------- -------------- ------------
Liabilities
Trade and other
payables - - - (106,766) (106,766)
--------------------------- ----------- ---------- --------- -------------- ------------
Total Liabilities - - - (106,766) (106,766)
--------------------------- ----------- ---------- --------- -------------- ------------
As at 30 June 2019, the total interest sensitivity gap for
interest bearing items was a surplus of GBP28,362,247 (30 June
2018: surplus of GBP29,432,960 and 31 December 2018: surplus of
GBP28,521,320).
As at 30 June 2019, interest rates reported by the Bank of
England were 0.75% which would equate to income of GBP212,717
(period ended 30 June 2018: GBP147,165 and year ended 31 December
2018: GBP213,910) per annum if interest bearing assets remained
constant. If interest rates were to fluctuate by 25 basis points,
this would have a positive or negative effect of GBP70,906 (period
ended 30 June 2018: GBP73,582 and year ended 31 December 2018:
GBP71,303) 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 2019, the Group is
not subject to any external capital requirement.
The Board of Directors believe that at the date of the Condensed
Consolidated Statement of Financial Position there were no material
risks associated with the management of the Company's capital.
14. Distributions
No distributions were paid by the Group to Non-controlling
interests during the period (period ended 30 June 2018: GBPnil and
year ended 31 December 2018: GBPnil).
15. Subsequent events
Since 30 June 2019, the share price of Barclays has decreased
from 149.80 pence to 139.82 pence as at 16 August 2019. If this
share price was used to value the investment at 30 June 2019, it
would have resulted in a decrease in the closing fair value from
GBP441.6 million to GBP416.5 million. The Investment Manager
advises the Company that the current estimated NAV is approximately
GBP450.8 million, or 64.4 pence per share.
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 EKLFFKVFZBBQ
(END) Dow Jones Newswires
August 20, 2019 02:00 ET (06:00 GMT)
Grafico Azioni Sherborne Investors (gue... (LSE:SIGC)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Sherborne Investors (gue... (LSE:SIGC)
Storico
Da Apr 2023 a Apr 2024
