Sherborne Investors (Guernsey)B Ltd Half-year Report

Data : 20/08/2019 @ 08:00
Fonte : UK Regulatory (RNS & others)
Titolo : Sherborne Investors (guernsey) B Limited (SIGB)
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Sherborne Investors (Guernsey)B Ltd Half-year Report

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RNS Number : 5421J

Sherborne Investors (Guernsey)B Ltd

20 August 2019

SHERBORNE INVESTORS (GUERNSEY) B 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) B Limited (the 
                        "Company") is a Guernsey domiciled limited liability 
                        company and its shares are admitted to trading 
                        on the London Stock Exchange's Specialist Fund 
                        Segment ("SFS"). The Company was incorporated 
                        on 8 November 2012. The Company commenced dealings 
                        on the SFS on 7 May 2013. 
 
 
 
 
 Investment Objective   To realise capital growth from investment in 
                         a target company identified by the Investment 
                         Manager, with the aim of generating a significant 
                         capital return for Shareholders. 
 
  Investment Policy 
                         To invest through its investment in SIGB, LP 
                         (the "Investment Partnership") in a company which 
                         is publicly quoted, which it considers to be 
                         undervalued as a result of operational deficiencies 
                         and which it believes can be rectified by the 
                         Investment Manager's active involvement, thereby 
                         increasing the value of the investment. The Company 
                         will only invest in one target company at a time. 
 
 
 
 
 
 
 
 Investment Manager     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 Electra Private Equity PLC ("Electra").

As at 30 June 2019, the net asset value ("NAV") attributable to shareholders of the Company was GBP30.9 million (31 December 2018: GBP35.8 million) or 9.83 pence per share (31 December 2018: 11.40 pence per share). The Company's NAV was based on the closing price of 351.00 pence as at 30 June 2019 for the shares of Electra. As at the period end SIGB, LP held approximately 29.90% of Electra through ordinary shares. The ownership level remains the same at the date of this statement.

On 12 April 2019 Electra paid a dividend of 54 pence per share, representing GBP6.2 million of proceeds to the Company. Following receipt of Electra's dividend, the Company paid a dividend of 1.5 pence per share on 26 April 2019 to shareholders of record at 29 March 2019.

On 16 May 2019 Electra announced that its NAV at 31 March 2019 was 509 pence per share, of which 56 pence represented cash and liquidity funds after giving effect to Electra's dividend paid on 12 April 2019.

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 13 of the Condensed Consolidated Financial Statements.

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 by the European Union;

-- The interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and their impact on the condensed financial statements and description of principal risks and uncertainties for the remaining six months of the year);

-- The interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein); and

-- The condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.10R.

Going Concern

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) B Limited

We have been engaged by Sherborne Investors (Guernsey) B Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 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 ended 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 loss 
  on financial assets 
  at fair value through      1(d), 
  profit or loss               5                   (5,837,504)            (1,774,144)           (61,064,869) 
 Dividend income               6                     6,180,886              2,861,522             44,639,735 
 Bank interest income                                    1,186                 11,240                 11,458 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
                                                       344,568              1,098,618           (16,413,676) 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
  Expenses                   1(f) 
 Management fees                13   213,285            513,115                   1,011,237 
 Administrative fees                  74,224            133,554                     208,573 
 Professional fees                    57,269             47,841                     116,364 
 Directors' fees             2, 13    62,500             62,500                     125,000 
 Other fees                           61,010             95,489                     152,011 
                                                                                             --------------- 
                                                     (468,288)              (852,499)            (1,613,185) 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
 
   Comprehensive 
   income/(loss)                                     (123,720)                246,119           (18,026,861) 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
 Comprehensive 
 income/(loss) 
 attributable to: 
 Shareholders                                        (211,269)               (61,143)           (13,378,569) 
 Non-controlling 
  interest                   1(b)                       87,549                307,262            (4,648,292) 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
 Weighted average 
  number of shares 
  outstanding                  4                   314,547,259            314,547,259            314,547,259 
 Basic and diluted 
  earnings per share 
  attributable to 
  shareholders                                         (0.07)p                (0.02)p                (4.25p) 
--------------------------  ------  --------  ----------------  -------  ------------  ----  --------------- 
 
 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    1(d), 
  or loss             5                       40,175,762                   105,303,991                     46,013,266 
-----------------  ------  --------------  -------------  ------------  --------------  --------------  ------------- 
                                              40,175,762                   105,303,991                     46,013,266 
-----------------  ------  --------------  -------------  ------------  --------------  --------------  ------------- 
 Current Assets 
 Cash and cash      1(h), 
  equivalents         8         1,156,000                    3,609,872                       1,643,156 
 Prepaid expenses     7            21,540                       25,409                          21,540 
                                1,177,540                    3,635,281                       1,664,696 
-----------------  ------  --------------  -------------  ------------  --------------  --------------  ------------- 
 Current 
 Liabilities 
 Trade and other 
  payables            9         (116,293)                    (110,084)                        (90,123) 
 Dividend payable     12                -                  (2,201,831)                               - 
                                (116,293)                  (2,311,915)                        (90,123) 
 Net Current 
  Assets                                       1,061,247                     1,323,366                 1,574,573 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 Net Assets                                   41,237,009                   106,627,357                47,587,839 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 Capital and 
  Reserves 
 Called up share 
  capital and 
  share premium      10                      302,696,145                   302,696,145               302,696,145 
 Retained 
  reserves                                 (271,779,930)                 (222,550,122)             (266,850,453) 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 Equity 
  attributable 
  to the Company                              30,916,215                    80,146,023                35,845,692 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 Non-controlling    1(b), 
  interest (NCI)      13                      10,320,794                    26,481,334                11,742,147 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 Total Equity                                 41,237,009                   106,627,357                47,587,839 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 
 NAV Per Share 
  (excluding NCI)    11                            9.83p                        25.48p                    11.40p 
-----------------  ------  -------  --------------------  -------  -------------------  ------  ---------------- 
 
 

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                                      302,696,145   (266,850,453)     11,742,147    47,587,839 
-----------------------------  --------  --------------  --------------  -------------  ------------ 
 
 Comprehensive income/(loss)                          -       (125,979)          2,259     (123,720) 
 Incentive allocation           1(l),13               -        (85,290)         85,290             - 
 Dividends paid                   12                  -     (4,718,208)              -   (4,718,208) 
 Distribution                     12                  -               -    (1,508,902)   (1,508,902) 
 Balance at 30 June 2019                    302,696,145   (271,779,930)     10,320,794    41,237,009 
-----------------------------  --------  --------------  --------------  -------------  ------------ 
 
 
 
                                      Share Capital                       Non- 
                                        and Share       Retained       Controlling      Total 
                                         Premium         Reserves       Interest        Equity 
                             Notes         GBP             GBP            GBP            GBP 
-------------------------  --------  --------------  --------------  -------------  ------------ 
 Balance at 1 January 
  2018                                  302,696,145   (220,287,148)     27,102,631   109,511,628 
-------------------------  --------  --------------  --------------  -------------  ------------ 
 
 Comprehensive income                             -         225,504         20,615       246,119 
 Incentive allocation       1(l),13               -       (286,647)        286,647             - 
 Dividends paid                                   -     (2,201,831)              -   (2,201,831) 
 Distribution                                     -               -      (928,559)     (928,559) 
 Balance at 30 June 2018                302,696,145   (222,550,122)     26,481,334   106,627,357 
-------------------------  --------  --------------  --------------  -------------  ------------ 
 
 
 
                                         Share Capital                       Non- 
                                           and Share       Retained       Controlling      Total 
                                            Premium         Reserves       Interest        Equity 
                              Notes           GBP             GBP            GBP            GBP 
---------------------------  ---------  --------------  --------------  -------------  ------------- 
 Balance at 1 January 2018                 302,696,145   (220,287,148)     27,102,631    109,511,628 
---------------------------  ---------  --------------  --------------  -------------  ------------- 
 
 Comprehensive loss                                  -    (17,242,317)      (784,544)   (18,026,861) 
 Incentive allocation          1(l),13               -       3,863,748    (3,863,748)              - 
 Dividends paid                                      -    (33,184,736)              -   (33,184,736) 
 Distribution                                        -               -   (10,712,192)   (10,712,192) 
 Balance at 31 December 
  2018 (audited)                           302,696,145   (266,850,453)     11,742,147     47,587,839 
---------------------------  ---------  --------------  --------------  -------------  ------------- 
 
 
 

Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.

Condensed Consolidated Statement of Cash Flows (Unaudited)

For the period from 1 January 2019 to 30 June 2019

 
 
                                                  1 January                             1 January 
                                                     2019         1 January 2018       2018 to 31 
                                                  to 30 June        to 30 June        December 2018 
                                                     2019            2018 GBP           (audited) 
                                   Notes             GBP                                   GBP 
--------------------------------  ----------  ---------------  -----------------  ------------------ 
 Net cash flow from operating 
  activities See below                              5,738,768          1,995,451          42,996,886 
--------------------------------------------  ---------------  -----------------  ------------------ 
 
 Investing activities 
 Bank interest income                                   1,186             11,240              11,458 
 Net cash flows from investing 
  activities                                            1,186             11,240              11,458 
--------------------------------------------  ---------------  -----------------  ------------------ 
 
 Financing activities 
 Dividends paid                         12        (4,718,208)                  -        (33,184,736) 
 Distributions to non-controlling 
  interest                              12        (1,508,902)          (928,559)        (10,712,192) 
 Net cash flows used in financing 
  activities                                      (6,227,110)          (928,559)        (43,896,928) 
--------------------------------------------  ---------------  -----------------  ------------------ 
 Net movement in cash and cash 
  equivalents                                       (487,156)          1,078,132           (888,584) 
 Opening cash and cash equivalents                  1,643,156          2,531,740           2,531,740 
--------------------------------------------  ---------------  -----------------  ------------------ 
 Closing cash and cash equivalents                  1,156,000          3,609,872           1,643,156 
--------------------------------------------  ---------------  -----------------  ------------------ 
 
 
 
 Net cash flow from operating 
  activities 
-------------------------------------  -----  ---------------  ---------------------  -------------- 
 Comprehensive income/(loss)                        (123,720)                246,119    (18,026,861) 
 Unrealised loss on financial 
  assets held at fair value 
  through profit or loss                 5          5,837,504              1,774,144      61,064,869 
 Movement in prepaid expenses                               -                  2,982           6,851 
 Movement in trade and other 
  payables                                             26,170               (16,554)        (36,515) 
 Bank interest income                                 (1,186)               (11,240)        (11,458) 
 Net cash flow from operating 
  activities                                        5,738,768              1,995,451      42,996,886 
--------------------------------------------  ---------------  ---------------------  -------------- 
 
 

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) B Limited (the "Company") is a closed-ended investment company with limited liability formed under The Companies (Guernsey) Law, 2008 (as amended). The Company was incorporated and registered in Guernsey on 8 November 2012. The Company commenced dealings on the London Stock Exchange's AIM market on 29 November 2012 and moved from AIM to the London Stock Exchange's Specialist Fund Segment ("SFS") on 7 May 2013. The Company's registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey, GY1 2HL. The "Group" is defined as the Company and its subsidiary, SIGB, LP (the "Investment Partnership" or "SIGB, LP").

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.

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 Board is of the opinion that the going concern basis should be adopted in the preparation of the Condensed Consolidated Financial Statements.

The Directors have undertaken a rigorous review of the Group's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration and are of the opinion that the Group has adequate resources to continue its operational activities for the foreseeable future.

After making enquiries of the Investment Manager and the Administrator, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these unaudited Condensed Consolidated Financial Statements.

Critical accounting judgments and key sources of estimation uncertainty

The preparation of the Group's Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's Condensed Consolidated Financial Statements and revenue and expenses during the reported period. Actual results could differ from those estimated.

There are no critical accounting judgements or significant estimates utilised for the preparation of the Group's Condensed Consolidated Financial Statements as at 30 June 2019 due to the nature of the activities that have occurred in this period, together with the sole investment held by the Group being quoted on the London Stock Exchange. Fair value of financial assets held through profit or loss is therefore based on the quoted closing price at 30 June 2019.

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 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 an entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Non-controlling interests in the net assets of the consolidated subsidiary are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling entities' share of changes in equity since the date of the combination. Losses applicable to the non-controlling entities in excess of their interest in the subsidiary's equity are allocated against their interests to the extent that this would create a negative balance.

Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances and expenses are eliminated on consolidation.

The Company owns approximately 95.55% (2018: 95.55%) of the capital interest in SIGB, LP. Whilst the general partner of SIGB, LP, Sherborne Investors (Guernsey) GP, LLC, a company registered in Delaware, USA, is responsible for directing the day to day operations of SIGB, LP, the Company, through its majority interest in SIGB, LP, has the ability to approve the proposed investment of SIGB, LP and to remove the general partner. Hence, the Company has consolidated SIGB, LP in its financial statements.

b. Non-controlling interest

The interest of non-controlling parties in the subsidiary is measured at their proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

c. Functional currency

Items included in the Condensed Consolidated Financial Statements of the Group are measured using the currency of the primary economic environment in which the entity operates. The Condensed Consolidated Financial Statements are presented in Pound Sterling ("GBP"), which is the Group's functional and presentational currency. Transactions in currencies other than GBP are translated at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the date of the Condensed Consolidated Statement of Financial Position are retranslated into GBP at the rate of exchange ruling at that date. Exchange differences are reported in the Condensed Consolidated Statement of Comprehensive Income.

d. Financial assets at fair value through profit or loss

Investments, including equity 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 the investment in Electra Private Equity plc ("Electra") shares at fair value through profit or loss rather than as an associate as SIGB, LP is a closed-ended fund.

Investments in voting shares, 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.

In determining fair value in accordance with IFRS 13 'Fair Value Measurement' ("IFRS 13"), investments measured and reported at fair value are classified and disclosed in one of the following categories within the fair value hierarchy:

Level I - An unadjusted quoted price for identical assets and liabilities in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. As required by IFRS 13, the Group will not adjust the quoted price for these investments, even in situations where it holds a large position and a sale could reasonably impact the quoted price.

Level II - Inputs are other than unadjusted quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Level III - Inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgement or estimation.

The investments held by the Group at the period end are classified as meeting the definition of Level I (period ended 30 June 2018: Level I and year ended 31 December 2018: Level I). On disposal of shares or conversion of bonds, cost of investments are allocated on a first in, first out basis.

e. Revenue recognition

Dividend income is recognised when the Group's right to receive payment has been established. Tax suffered on dividend income for which no relief is available is treated as an expense.

Interest receivable from short-term deposits and investment income are recognised on an accruals basis. Where receipt of investment income is not likely until the maturity or realisation of an investment 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 comprise cash in hand as well as call and current balances with banks and similar institutions, which are readily convertible to known amounts of cash and 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 assets 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 13. The incentive allocation is payable to the non-controlling interests and therefore recognised in the Condensed Consolidated Statement of Changes in Equity rather than recognised as an expense in the Condensed Consolidated Statement of Comprehensive Income.

2. Comprehensive income/(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                 62,500           62,500           125,000 
 Auditor's remuneration - 
  Audit                          15,174           16,743           33,255 
 Auditor's remuneration - 
  interim review                 14,600           15,530           14,600 
--------------------------  ---------------  ---------------  ---------------- 
 

In addition to the audit and half-yearly review related remuneration above a further GBP14,600 was due to the Auditor in relation to Tax compliance services (period ended 30 June 2018: GBP13,114 and year eneded 31 December 2018: GBP19,873).

3. Tax on ordinary activities

The Company has been granted exemption from income tax in Guernsey under the Income Tax (Exempt Bodies) (Bailiwick of Guernsey) Ordinance 1989, and is liable to pay an annual fee (currently GBP1,200) under the provisions of the Ordinance. As such it will not be liable to income tax in Guernsey other than on Guernsey source income (excluding deposit interest on funds deposited with a Guernsey bank). No withholding tax is applicable to distributions to Shareholders by the Company.

The Investment Partnership will not itself be subject to taxation in Guernsey. No withholding tax is applicable to distributions to partners of the Investment Partnership.

Income which is wholly derived from the business operations conducted on behalf of the Investment Partnership with, and investments made in, persons or companies who are not resident in Guernsey will not be regarded as Guernsey source income. Such income will not therefore be liable to Guernsey tax in the hands of non-Guernsey resident limited partners.

Dividend income is shown gross of any withholding tax.

4. Earnings per share

The calculation of basic and diluted earnings per share is based on the return on ordinary activities less total comprehensive income attributable to the non-controlling interest and on there being 314,547,259 (30 June 2018: 314,547,259 and 31 December 2018: 314,547,259) weighted average shares in issue. The earnings per share for the period ended 30 June 2019 amounted to a deficit of 0.07 pence per share (period ended 30 June 2018: a deficit of 0.02 pence per share and year ended 31 December 2018: a deficit of 4.25 pence per share).

 
                                          Days in   Weighted Average 
           Date                  Shares     issue             Shares 
       1 January 
            2019            314,547,259                  314,547,259 
    30 June 2019            314,547,259       181        314,547,259 
 
 

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                      46,013,266   107,078,135         107,078,135 
 Purchase of investments                          -             -                   - 
 Unrealised loss on financial assets 
  at fair value through profit or 
  loss                                  (5,837,504)   (1,774,144)        (61,064,869) 
 Closing fair value                      40,175,762   105,303,991          46,013,266 
-------------------------------------  ------------  ------------  ------------------ 
 Percentage holding of Electra               29.90%        29.90%              29.90% 
-------------------------------------  ------------  ------------  ------------------ 
 
 

The Board of Directors approved an investment in Electra which was proposed by SIGB, LP's Investment Manager, Sherborne Investors Management (Guernsey) LLC, in December 2013. Electra is a London Stock Exchange listed investment trust focused on private equity investments.

As at 30 June 2019, the Company held 11,446,086 shares of Electra (30 June 2018: 11,446,086 and 31 December 2018: 11,446,086). In accordance with the Company's investment policy, the Investment Manager does not intend to effect a purchase of shares such that it would be required to make a mandatory bid for the entire share capital of Electra.

6. Dividend income

On 27 February 2019, Electra declared a special dividend of 54 pence per share, paid on 12 April 2019 to shareholders of record on 15 March 2019 which equates to GBP6,180,886 attributable to the Group (period ended 30 June 2018: GBP2,861,522 and year ended 31 December 2018: GBP44,639,735).

7. Prepaid expenses

 
 
                                      As at 30      As at 30      As at 31 December 
                                      June 2019     June 2018           2018 
                                        GBP           GBP               GBP 
----------------------------------  -----------  ------------  -------------------- 
 
   Prepaid directors and officers 
   insurance                              7,178         7,178                17,096 
 Other prepaid expenses                  14,362        18,231                 4,444 
----------------------------------  -----------  ------------  -------------------- 
                                         21,540        25,409                21,540 
----------------------------------  -----------  ------------  -------------------- 
 

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      As at 30      As at 31 December 
                               June 2019     June 2018           2018 
                                 GBP           GBP               GBP 
---------------------------  -----------  ------------  -------------------- 
 Professional fees payable        49,086        13,114                28,919 
 Other payables                   67,207        96,970                61,204 
---------------------------  -----------  ------------  -------------------- 
                                 116,293       110,084                90,123 
---------------------------  -----------  ------------  -------------------- 
 

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                   314,547,259     314,547,259       314,547,259 
--------------------------  --------------  --------------  ------------------ 
 
 
                          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               302,696,145     302,696,145       302,696,145 
 Closing balance           302,696,145     302,696,145       302,696,145 
-----------------------  --------------  --------------  ------------------ 
 

11. Net asset value per share attributable to the Company

Basic and diluted

 
                                     Pence per 
                     No. of Shares     Share 
------------------  --------------  ---------- 
 30 June 2019         314,547,259      9.83 
 30 June 2018         314,547,259      25.48 
 31 December 2018     314,547,259      11.40 
 
 

12. Dividends and distributions

On 6 March 2019, the Company declared a dividend of 1.5 pence per share paid on 26 April 2019 to shareholders of record on 29 March 2019 which equates to GBP4,718,208 (period ended 30 June 2018: GBP2,201,831 and year ended 31 December 2018: GBP33,184,736). Dividends are paid subject to the discretion of the Directors following the receipt of any distributions from the Investment Partnership. This will be dependent on the frequency with which the STC pays dividends to its shareholders.

Total distributions paid by the Group to non-controlling interests during the period were GBP1,508,902 (period ended 30 June 2018: GBP928,559 and year ended 31 December 2018: GBP10,712,192). Distributions to non-controlling interests are made at the discretion of the general partner to the Investment Partnership following the receipt of any distributions from the STC. Distributions are therefore dependent on the frequency with which the STC pays dividends to its shareholders.

13. Related party transactions

The Investment Partnership and its General Partner, Sherborne Investors (Guernsey) GP, LLC, have engaged Sherborne Investors Management (Guernsey) LLC to serve as Investment Manager who is responsible for identifying the Selected Target Company ("STC"), subject to approval by the Board of Directors of the Company, as well as day to day management activities of the Investment Partnership. The Investment Manager is entitled to receive from the Investment Partnership a monthly management fee equal to one-twelfth of 1% of the NAV of the Investment Partnership, less cash and cash equivalents and certain other adjustments. During the period, management fees of GBP213,285 (period ended 30 June 2018: GBP513,115 and year ended 31 December 2018: GBP1,011,237) had been paid by the Partnership. No balance was outstanding at the period end (period ended 30 June 2018: GBPnil and year ended 31 December 2018: GBPnil).

The sole member of Sherborne Investors (Guernsey) GP, LLC is Sherborne Investors LP (the non-controlling interest), which also serves as the Special Limited Partner of the Investment Partnership. The Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to Partners of the Investment Partnership, of which one is the Company, exceed a certain level of capital contributions to the Investment Partnership, excluding amounts contributed attributable to management fees.

Sherborne Strategic Fund D, LLC ("SSFD"), an affiliate of the General Partner to the Investment Partnership, holds a 4.43% capital interest. Management and incentive fees are assessed based on the capital interest of SSFD's interest.

For Turnaround investments, the incentive allocation is computed at 10% of the distributions to all Partners in excess of 110%, increasing to 20% of the distributions to all Partners in excess of 150% and increasing to 25% of the distributions to all Partners in excess of 200% of capital contributions, excluding amounts contributed attributable to management fees.

At the period end, the incentive allocation has been computed based on a Turnaround Investment and amounts to GBP8,864,101 (30 June 2018: GBP22,696,682 and 31 December 2018: GBP10,063,723) of which GBP362,548 (30 June 2018: GBP940,491 31 December 2018 GBP416,732) relates to SSFD. The amount paid in the period was GBP1,287,809 (period ended 30 June 2018: GBP813,280 and year ended 31 December 2018: GBP9,141,226 and) of which GBP57,083 relates to SSFD (period ended 30 June 2018: GBP36,049 and year ended 31 December 2018: GBP405,189).

 
 Incentive Allocation movement    SIGB Ltd   SSFD    Total 
                                    GBP       GBP     GBP 
 Movement for the period           85,290    2,897   88,187 
 

Sherborne Investors LP, SSFD and the General Partner also earned their share of the Total Comprehensive Income for the period of GBP2,259 (period ended 30 June 2018: GBP20,615 and year ended 31 December 2018: (GBP784,544)).

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 GBP20,000 per annum for the use of the licensed name.

14. Financial risk factors

The Group's investment objective is to realise capital growth from investment in the STC, identified by the Investment Manager with the aim of generating significant capital return for Shareholders. Consistent with that objective, the Group's financial instruments mainly comprise of an investment in a STC. In addition, the Group holds cash and cash equivalents as well as having trade and other receivables and trade and other payables that arise directly from its operations.

Liquidity risk

The Group's cash and cash equivalents are placed in demand deposits with a range of financial institutions. The listed investment in Electra could be partially redeemed relatively quickly (within 3 months) should the Group need to meet obligations or pay ongoing expenses as and when they fall due.

The following table details the liquidity analysis for financial liabilities at the date of the Condensed Consolidated Statement of Financial Position:

 
                             Less than 
 As at 30 June 2019           1 month    1 - 12 months     1 - 2 years     Total 
                                GBP           GBP             GBP           GBP 
--------------------------  ----------  --------------  --------------  ---------- 
 
 Trade and other payables    (40,583)      (75,710)             -        (116,293) 
--------------------------  ----------  --------------  --------------  ---------- 
 
                             (40,583)      (75,710)             -        (116,293) 
--------------------------  ----------  --------------  --------------  ---------- 
 
 
                             Less than 
 As at 30 June 2018           1 month    1 - 12 months     1 - 2 years     Total 
                                GBP           GBP             GBP           GBP 
--------------------------  ----------  --------------  --------------  ---------- 
 
 Trade and other payables    (67,351)      (42,733)             -        (110,084) 
 
                             (67,351)      (42,733)             -        (110,084) 
--------------------------  ----------  --------------  --------------  ---------- 
 
 
                             Less than 
 As at 31 December 2018       1 month    1 - 12 months     1 - 2 years    Total 
                                GBP           GBP             GBP          GBP 
--------------------------  ----------  --------------  --------------  --------- 
 
 Trade and other payables    (36,724)      (53,399)             -        (90,123) 
 
                             (36,724)      (53,399)             -        (90,123) 
--------------------------  ----------  --------------  --------------  --------- 
 

Credit risk

The Company is exposed to credit risk in respect of its cash and cash equivalents and derivative contracts, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The credit risk on liquid funds is mitigated through the Group depositing cash and cash equivalents across several banks. The credit risk associated with derivative contracts is monitored by reviewing the credit rating for the 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: UBS Financial Services Inc. A- with Standard & Poor's and 31 December 2018: UBS Financial Services Inc. A- with Standard & Poor's).

Market price risk

Market price risk arises as a result of the Group's exposure to the future values of the share price of the STC. It represents the potential loss that the Group may suffer through investing in the STC.

Interest rate risk

The Group is subject to risks associated with changes in interest rates in respect of interest earned on its cash and cash equivalents. The Group seeks to mitigate this risk by monitoring the placement of cash balances on an ongoing basis in order to maximise the interest rates obtained.

 
 As at 30 June 
  2019                             Interest bearing 
                     -------------------------------------------- 
                                   1 month    3 months 
                      Less than       to         to         Over    Non- interest 
                       1 month     3 months    1 year      1 year      bearing        Total 
                         GBP         GBP        GBP        GBP           GBP           GBP 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Assets 
 Cash and cash 
  equivalents         1,156,000           -          -          -               -    1,156,000 
 Financial assets 
  at fair value 
  through profit 
  or loss                     -           -          -          -      40,175,762   40,175,762 
 Prepaid expenses             -           -          -          -          21,540       21,540 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Total Assets         1,156,000           -          -          -      40,197,302   41,353,302 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Liabilities 
 Trade and other 
  payables                    -           -          -          -       (116,293)    (116,293) 
 Total Liabilities            -           -          -          -       (116,293)    (116,293) 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 
 
 As at 30 June 
  2018                             Interest bearing 
                     -------------------------------------------- 
                                   1 month    3 months 
                      Less than       to         to         Over    Non- interest 
                       1 month     3 months    1 year      1 year      bearing         Total 
                         GBP         GBP        GBP        GBP           GBP            GBP 
-------------------  ----------  ----------  ---------  ---------  --------------  ------------ 
 Assets 
 Cash and cash 
  equivalents         3,609,872           -          -          -               -     3,609,872 
 Financial assets 
  at fair value 
  through profit 
  or loss                     -           -          -          -     105,303,991   105,303,991 
 Prepaid expenses             -           -          -          -          25,409        25,409 
-------------------  ----------  ----------  ---------  ---------  --------------  ------------ 
 Total Assets         3,609,872           -          -          -     105,329,400   108,939,272 
-------------------  ----------  ----------  ---------  ---------  --------------  ------------ 
 Liabilities 
 Trade and other 
  payables                    -           -          -          -       (110,084)     (110,084) 
 Dividend payable             -           -          -          -     (2,201,831)   (2,201,831) 
-------------------  ----------  ----------  ---------  ---------  --------------  ------------ 
 Total Liabilities            -           -          -          -     (2,311,915)   (2,311,915) 
-------------------  ----------  ----------  ---------  ---------  --------------  ------------ 
 
 
 As at 31 December 
  2018                             Interest bearing 
                     -------------------------------------------- 
                                   1 month    3 months 
                      Less than       to         to        Over 1   Non- interest 
                       1 month     3 months    1 year       year       bearing        Total 
                         GBP         GBP        GBP        GBP           GBP           GBP 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Assets 
 Cash and cash 
  equivalents         1,643,156           -          -          -               -    1,643,156 
 Financial assets 
  at fair value 
  through profit 
  or loss                     -           -          -          -      46,013,266   46,013,266 
 Prepaid expenses             -           -          -          -          21,540       21,540 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Total Assets         1,643,156           -          -          -      46,034,806   47,677,962 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Liabilities 
 Trade and other 
  payables                    -           -          -          -        (90,123)     (90,123) 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 Total Liabilities            -           -          -          -        (90,123)     (90,123) 
-------------------  ----------  ----------  ---------  ---------  --------------  ----------- 
 

As at 30 June 2019, the total interest sensitivity gap for interest bearing items was a surplus of GBP1,156,000 (30 June 2018: surplus of GBP3,609,872 and 31 December 2018: surplus of GBP1,643,156).

As at 30 June 2019, interest rates reported by the Bank of England were 0.75% which would equate to income of GBP8,670 (period ended 30 June 2018: interest rates were 0.5% which would equate to income of GBP18,049 and year ended 31 December 2018: interest rates were 0.75% which would equate to net income of GBP12,323) 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 GBP2,890 (period ended 30 June 2018: GBP9,025 and year ended 31 December 2018: GBP4,108) 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.

15. Subsequent events

Since 30 June 2019, the share price of Electra has decreased from 351 pence to 340 pence as at 16 August 2019. If this share price was used to value the Electra shares at 30 June 2019, it would have resulted in a decrease in the closing fair value from GBP40,175,762 to GBP38,916,699.

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

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