TIDMSIAG
RNS Number : 2235B
Sherborne Investors (Guernsey) A
02 April 2013
2 April 2013
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
Annual Report and Consolidated Financial Statements
For the year ended 31 December 2012
CHAIRMAN'S STATEMENT
We continue to hold our investment in F&C Asset Management
plc ("F&C"). The price of F&C's shares improved materially
during 2012 from 65.45p as at 30 December 2011 to 102.20p at 31
December 2012 following the review of strategy announced in October
2011 and May 2012.
At 31 December 2012, we held an economic interest relating to
117,543,771 ordinary shares, or 21.17% of the outstanding shares in
F&C, through a holding of 19.79% in ordinary shares and the
balance in total return equity swaps. As at 31 December 2012 our
investment cost basis, net of dividends received from F&C and
gross gains realised on contracts for difference in prior periods,
was GBP69,523,485, or 59.15 pence per share. As at the date of this
letter our economic exposure to F&C remains substantially
unchanged.
During 2012 the Company's investment partnership, SIGA, LP, also
made purchases of shares in the Company. The shares were trading at
a material discount to the market value of their net assets, which
consisted substantially of cash and shares in F&C. As at 31
December 2012 SIGA, LP held 7,764,903 ordinary shares, or 7.40% of
the outstanding shares in the Company. The shares remain
outstanding and available for sale by SIGA, LP. However, for
accounting purposes these shares are reflected as treasury shares
in the Company's consolidated financial statements.
Dividend
On 26 October 2012, F&C paid a dividend of 1.0 pence per
share to shareholders on the register at 5 October 2012, of which
the Company was one. The Company's Board declared a dividend of 9.5
pence per share which was paid on 12 December 2012 to shareholders
on the register at 9 November 2012. Approximately 1.1 pence per
share related to the pass-through of dividends received from the
Company's investment in F&C, with the balance of 8.4 pence per
share relating to a return of excess cash.
Including the dividend of 1.9 pence per share paid in July 2012,
total dividends paid during the year were 11.4 pence per share. For
the year, approximately 3.0 pence per share related to the
pass-through of dividends received from the Company's investment in
F&C, with the balance of 8.4 pence per share relating to a
return of excess cash.
Net Asset Value
At 31 December 2012, the net asset value attributable to
shareholders of the Company was GBP121,628,411 or 125.09 pence per
share. The Company's net asset value was based on the closing price
of 102.20 pence as at 31 December 2012 for the shares of
F&C.
We look forward to updating you on further developments at the
time of the interim results.
Ian Brindle, Chairman
28 March 2013
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
DIRECTORS' REPORT
The Directors present their Annual Report on the affairs of the
Company and its subsidiary (together, the Group), together with the
financial statements and auditor's report, for the year ended 31
December 2012.
Principal activities and investing policy
Sherborne Investors (Guernsey) A Limited (the Company) is a
Guernsey domiciled company incorporated on 18 January 2010 with
limited liability. The Company's shares were admitted to trading on
AIM on 9 March 2010.
The Company is a limited partner in SIGA, LP (the Investment
Partnership), a limited partnership registered in Guernsey on 19
January 2010, holding a 99.98% capital interest. The Company aims
to provide investors with capital growth through its investment in
the Investment Partnership to which it has committed GBP100
million, representing substantially all of the Company's net
proceeds from its initial public offering. The Company has effected
and will continue to effect its investment policy indirectly
through the Investment Partnership, which will seek to acquire a
significant minority (less than 29.9 per cent) equity investment in
a Selected Target Company. The Group intends that the holding in
the Selected Target Company shall not reach such a level as to
require the Group to make a bid for the entire Selected Target
Company and, therefore, the Group will not have control over the
Selected Target Company.
The Group's investment policy is to invest in one target company
at a time Therefore, the Group will not seek to reduce risk through
diversification. If, after acquiring a shareholding, the share
price of the Selected Target Company 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,
rather than seeking to join the board of directors or otherwise to
engage with the company.
In these circumstances, the Company intends to distribute any
realised net profits received from the Investment Partnership to
the Shareholders. In such event, an amount equal to the Company's
capital contribution for the initial Selected Target Company (less
any losses on the sale) may be recalled by the Investment
Partnership and invested into a new target (a New Target Company).
This process may be repeated until a Turnaround has been
effected.
The holding period for the investment in the Selected Target
Company is neither fixed nor predictable, but the Company expects
that a typical holding period would be greater than one year.
During 2010, the Board of Directors of the Company approved a
Selected Target Company, F&C Asset Management plc (F&C). At
31 December 2012, the Investment Partnership held an economic
interest relating to 117,543,771 ordinary shares, or 21.17% of the
outstanding shares in F&C, through a holding of 19.79% in
ordinary shares and the balance in total return equity swaps. The
investment in the Selected Target Company may be in shares but can
also be in warrants, convertibles, derivatives and any other
equity, debt or other securities.
During the Annual General Meeting on 27 April 2012, the
Company's members authorised the Board of Directors to purchase the
Company's own issued shares up to a maximum of 14.99%. As at 31
December 2012, the Group holds 7,764,903 treasury shares in issue,
representing 7.40% of the Company's issued share capital.
Dividend policy
The Company's dividend policy, subject to the discretion of the
Directors who reserve the right to retain amounts for working
capital, is to pay dividends to Shareholders following receipt of
any distributions from the Investment Partnership. This will be
dependent on the frequency with which the Selected Target Company
pays dividends to its shareholders (of which the Investment
Partnership will be one).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
DIRECTORS' REPORT continued
If dividends are received from the Selected Target Company, the
Investment Partnership intends to distribute to its limited
partners substantially all of the dividend proceeds after allowing
for the Investment Partnership's expenses. The Company, in turn,
intends promptly to distribute to Shareholders substantially all of
the dividend proceeds after allowing for the Company's
expenses.
F&C paid dividends in May and October of 2012 and a dividend
was subsequently paid to the Company shareholders in July and
December 2012, following the above policy.
Business review
A review of the Company's business during the year and an
indication of likely future developments are contained in the
Chairman's Statement.
Capital
Details of the Company's capital are provided in note 9 to the
consolidated financial statements. All shares carry equal voting
rights.
Substantial interests
As of the date of this report the Company had received
notification of the following material shareholdings:
Shareholder Number of Ordinary Shares % of issued share
capital
Sherborne Investors GP, LLC 27,764,903 26.4%
Aviva plc 20,983,592 20.0%
Ameriprise Financial, Inc 16,181,489 15.4%
Kames Capital 11,413,867 10.9%
Lloyds Banking Group plc 5,418,035 5.2%
Ritchie European Multi-Strategy Trading, Ltd 5,000,000 4.8%
BlackRock UK Emerging Companies Hedge Fund 3,400,000 3.2%
Post balance sheet events
Details of events that have occurred after the date of the
consolidated statement of financial position are provided in note
12 to the consolidated financial statements.
Dividend - Note 11
Distributions to shareholders in the amount of GBP11,087,841
have been made in respect of the year ended 31 December 2012 of
which GBP8,167,748 (2011: GBPnil) was a return of capital and
GBP2,920,093 (2011: GBP2,730,000) was pass through of dividends
received from F&C Asset Management plc.
Independent Auditor
Deloitte LLP have indicated their willingness to continue as
auditor.
By order of the Board of Directors
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the consolidated financial statements for each period in
accordance with applicable law and regulations, which give a true
and fair view of the state of affairs of the Group as at the end of
the financial period.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the Directors
must not approve the accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period. In
preparing these consolidated financial statements, International
Accounting Standard 1 requires that directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Group's ability to continue as a going concern.
The Directors confirm that they have complied with the above
requirements in preparing the consolidated financial
statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Group, and to enable them to ensure that
the financial statements comply with The Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Guernsey and the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Independent auditor and disclosure of information to auditor
Each of the persons who is a Director at the date of approval of
the financial statements confirms that:
-- So far as the Director is aware, there is no relevant audit
information of which the Company's auditor
are unaware; and
-- The Director has taken all the steps that they ought to have
taken as a Director in order to make
himself aware of any relevant audit information and to establish
that the Company's auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 249 of The Companies
(Guernsey) Law, 2008.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
For the year ended 31 December 2012
1 January 2012 to 18 January 2010 to
31 December 2012 31 December 2011
Notes GBP GBP GBP GBP
------------------------------------ --------------------- ------------------------
Income 1(e)
Unrealised gain on investment held
at
fair value through profit or loss
5
Realised gain on investment 42,461,738 23,616
Dividend income 3,366,893 3,007,634
Bank interest income 178,398 297,917
------------------------------------ -------- ----------- ---------- ------------
46,007,029 3,329,167
------------------------------------ -------- ----------- ---------- ------------
Expenses 1(f)
Unrealised loss on investment held
at
fair value through profit or loss
5 18,596,596
Professional Fees 203,803 569,836
Trading and custodian fees 55,437 116,233
Administrative fees 335,691 413,085
Other fees 35,416 45,184
Management fees 13 969,229 761,169
Directors' fees 110,000 110,202
Tax services 10,812 14,613
------------------------------------ -------- ----------- ---------- ------------
(1,720,388) (20,626,918)
------------------------------------ -------- ----------- ---------- ------------
Consolidated profit / (loss) and
other comprehensive
income / (deficit) for the year 44,286,641 (17,297,751)
------------------------------------ -------- ----------- ---------- ------------
Income / (deficit) attributable
to: 44,277,120 (17,294,318)
Shareholders 9,521 (3,433)
Non-controlling interest 13
------------------------------------ -------- ----------- ---------- ------------
Weighted average number of shares
outstanding 99,177,094 105,000,000
Basic and diluted gain / (loss)
per share (pence) 4 44.64 (16.47)
All revenue and expenses are derived from continuing
operations.
The total number of shares outstanding is 97,235,097 as at 31
December 2012 (2011: 105,000,000).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As at 31 December 2012
31 December 2012 31 December 2011
Notes GBP GBP GBP GBP
----------------------------- ----- ------------------------------------------- --------------------------------------------
Non-current Assets
Financial assets at
fair value
through profit or loss 5 120,129,734 72,048,100
----------------------------- ----- ------------------------------------------- --------------------------------------------
120,129,734 72,048,100
----------------------------- ----- ------------------------------------------- --------------------------------------------
Current Assets 6
Trade and other receivables 7 216,373 31,628
Cash and cash equivalents 7,204,307 28,482,761
----------------------------- ----- ------------------------------------------- --------------------------------------------
7,420,680 28,514,389
----------------------------- ----- ------------------------------------------- --------------------------------------------
Current Liabilities
Trade and other payables 8 (185,969) (191,867)
----------------------------- ----- ------------------------------------------- --------------------------------------------
Net Current Assets 7,234,711 28,322,522
----------------------------- ----- ------------------------------------------- --------------------------------------------
Net Assets 127,364,445 100,370,622
----------------------------- ----- ------------------------------------------- --------------------------------------------
Capital and Reserves 9 94,478,877 102,646,625
Called up share capital
and share 33,356,181 (2,290,005)
premium (6,206,647)
Retained earnings /
(deficit)
Treasury shares
----------------------------- ----- ------------------------------------------- --------------------------------------------
Equity attributable
to the Company 121,628,411 100,356,620
----------------------------- ----- ------------------------------------------- --------------------------------------------
Non-controlling interest 5,736,034 14,002
----------------------------- ----- ------------------------------------------- --------------------------------------------
Total Equity 127,364,445 100,370,622
----------------------------- ----- ------------------------------------------- --------------------------------------------
The consolidated financial statements were approved by the Board
of Directors and authorised for issue on 28 March 2013.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the year ended 31 December 2012
Share Capital Retained Shares Non-- Total
and Share Earnings held in Controlling Equity
Premium GBP Treasury Interest GBP
Notes GBP GBP GBP
------------------------------ ------------- ----------- ----------- ------------ ------------
Balance at 1 January
2012 102,646,625 (2,290,005) 14,002 100,370,622
------------------------------ ------------- ----------- ----------- ------------ ------------
Total comprehensive
income
for the year - 44,277,120 9,521 44,286,641
Incentive allocation
13 - (5,710,841) 5,710,841
Repurchase of shares - (6,206,647) (6,206,647)
Dividends 11 (8,167,748) (2,920,093) (11,087,841)
Investment by non-controlling
interest 1(b) 1,670 1,670
------------------------------ ------------- ----------- ----------- ------------ ------------
Balance at 31 December
2012 94,478,877 33,356,181 (6,206,647) 5,736,034 127,364,445
------------------------------ ------------- ----------- ----------- ------------ ------------
Share Capital Shares Non--
and Share Retained held in Controlling Total
Premium Earnings Treasury Interest Equity
Notes GBP GBP GBP GBP GBP
------------------------------ ------------- ------------------------ ------------ ------------
Balance at 1 January
2011 102,646,625 16,435,000 1,314,848 120,396,473
------------------------------ ------------- ------------------------ ------------ ------------
Total comprehensive
deficit
for the year (17,294,318) (3,433) (17,297,751)
Incentive allocation
13 1,299,313 (1,299,313)
Dividends 11 (2,730,000) (2,730,000)
Investment by non-controlling
interest 1(b) 1,900 1,900
------------------------------ ------------- ------------------------ ------------ ------------
Balance at 31 December
2011 102,646,625 (2,290,005) 14,002 100,370,622
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2012
1 January 2012 to 1 January 2011
31 December 2012 to
GBP 31 December
2011
GBP
Net cash flow used in operating activities Notes (1,732,633) (2,060,350)
-------------------------------------------- ----- ------------ --------------
Investing activities
Purchase of investments 5 (2,813,867) (11,882,903)
Purchase of investment under equity
swaps and CFD's 5 (2,806,029) (2,473,360)
Realised gain on investment 23,616
Dividend income 3,366,893 3,007,634
-------------------------------------------- ----- ------------ --------------
Net cash flows used in investing
activities (2,253,003) (11,325,013)
-------------------------------------------- ----- ------------ --------------
Financing activities
Purchase of treasury shares (6,206,647)
Commitments from non-controlling
interest 1,670 1,900
Distributions and dividends paid
to shareholders (11,087,841) (2,730,000)
-------------------------------------------- ----- ------------ --------------
Net cash flows used in financing
activities (17,292,818) (2,728,100)
-------------------------------------------- ----- ------------ --------------
Net (decrease) in cash and cash equivalents (21,278,454) (16,113,463)
Cash and cash equivalents at beginning
of year 28,482,761 44,596,224
-------------------------------------------- ----- ------------ --------------
Cash and cash equivalents at year 7,204,307 28,482,761
-------------------------------------------- ----- ------------ --------------
Cash flow from operating activities
-------------------------------------------- ----- ------------ --------------
Total consolidated comprehensive
income/(deficit)
for the
year 44,286,641 (17,297,751)
Dividend income (3,366,893) (3,007,634)
Realised gain on investment (23,616)
Fair value (gain) / loss on financial
assets (42,461,738) 18,596,596
Increase in amounts receivable (184,745) (23,674)
Decrease in amounts payable (5,898) (304,271)
-------------------------------------------- ----- ------------ --------------
Net cash flow used in operating activities (1,732,633) (2,060,350)
-------------------------------------------- ----- ------------ --------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies
Reporting entity
Sherborne Investors (Guernsey) A Limited (the Company) is a
closed-ended investment company with limited liability formed under
The Companies (Guernsey) Law, 2008. The Company was incorporated
and registered in Guernsey on 18 January 2010 and its shares were
admitted to trading on the London Stock Exchange's AIM market on 9
March 2010. The Company's registered office is Ogier House, St
Julian's Avenue, St Peter Port, Guernsey. The Group is defined as
the Company and its subsidiary, SIGA, LP.
Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union, which comprise
standards and interpretations approved by the International
Accounting Standards Board (the IASB) and International Accounting
Standards and Standing Interpretations Committee interpretations
approved by the International Accounting Standards Committee (the
IASC) that remain in effect, together with applicable legal and
regulatory requirements of Guernsey law.
These consolidated financial statements have been prepared on
the historical cost basis, as modified by the measurement at fair
value of investments and financial instruments and derivatives.
Going concern
The consolidated financial statements have been prepared on the
going concern basis. The Group currently holds significant cash
balances. After making enquiries, and on the strength of its
consolidated statement of financial position, the Directors are of
the opinion that the Group has adequate resources to continue its
operational activities for the foreseeable future. The Board is
therefore of the opinion that the going concern basis should be
adopted in the preparation of the consolidated financial
statements.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the Group's 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 consolidated financial statements and
revenue and expenses during the reported period. Actual results
could differ from those estimated. There are no significant
estimates utilised for the preparation of the Group's consolidated
financial statements as at 31 December 2012 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 bid price at 31 December
2012.
Adoption of new and revised standards
(i). Amendments early adopted by the Company:
There were no standards, amendments and interpretations adopted
early by the Company.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies (continued)
(ii). Standards, amendments and interpretations effective and
Relevant to the Company's operations:
IAS 1 Presentation of Items of Other Comprehensive Income
(Amendments)
Under the amendments, the statement of comprehensive income is
renamed as a statement of profit or loss and other comprehensive
income. All items that could be subsequently reclassified to profit
or loss (for example, actuarial gains and losses on defined benefit
plans and revaluation of land and buildings) would be presented
separately from items that would never be reclassified (for
example, net gain on hedge of net investments, exchange differences
on translation of foreign operations, net movement on cash flow
hedges and net loss or gain on available for sale financial
assets). The amendment affects presentation only and has no impact
on the Company's financial position or performance.
(iii). Standards, amendments and interpretations that are in
issue but not yet effective:
IAS 19 Employee Benefits (Revised) 01-Jan-13
IAS 27 Separate Financial Statements (as revised in 2011)
01-Jan-13
IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)
01-Jan-13
IAS 32 Offsetting Financial Assets and Financial Liabilities (Amendments)
01-Jan-14
IFRS 1 Government Loans (Amendments) 01-Jan-13
IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure 01-Jan-13
Requirements (Amendments)
IFRS 9 Financial Instruments - classification and measurement
01-Jan-15
IFRS 10 Consolidated financial statements 01-Jan-13
IFRS 11 Joint Arrangements 01-Jan-13
IFRS 12 Disclosure of interests in other entities 01-Jan-13
IFRS 13 Fair value measurement 01-Jan-13
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
01-Jan-13
Annual Improvements May 2012 01-Jan-13
IAS 27 Separate Financial Statements & IFRS 10 Consolidated
Financial Statements
IFRS 10 replaces the portion of IAS 27 that addresses the
accounting for consolidated financial statements and the issues
raised in SIC 12 Consolidation - Special Purpose Entities. IFRS 10
establishes a single control model that applies to all entities
including special purpose entities. The changes introduced will
require management to exercise significant judgment to determine
which entities are controlled and therefore are required to be
consolidated by a parent.
IFRS 9 Financial Instruments: Classification and Measurement
IFRS 9 as issued, reflects the first phase of the IASB's work on
the replacement of IAS 39 and applies to classification and
measurement of financial assets and financial liabilities as
defined in IAS 39. In subsequent phases, the IASB will address
hedge accounting and impairment of financial assets. The adoption
of the first phase of IFRS 9 will have an effect on the
classification and measurement of the Company's financial assets
but not on the financial liabilities.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies (continued)
(iii). Standards, amendments and interpretations that are in
issue but not yet effective: continued
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13
Jointly Controlled Entities - Non-Monetary Contributions by
Venturers. IFRS 11 removes the option to account for jointly
controlled entities (JCEs) using proportionate consolidation.
Instead, JCEs that meet the definition of a joint venture must be
accounted for using the equity method.
IFRS 12 Disclosures of Interests in Other Entities
IFRS 12 is a disclosure standard and is applicable to entities
that have interests in subsidiaries, joint arrangement, associates
or unconsolidated structured entities. IFRS 12 establishes
disclosure objectives and specifies minimum disclosures that
entities must provide to meet those objectives. The objective of
IFRS 12 is that an entity should disclose information that helps
users of financial statements evaluate the nature of, and risks
associated with, its interests in other entities and the effects of
those interests on its financial statements.
IFRS 13 Fair Value Measurement
IFRS 13 establishes a single source of guidance under IFRS for
all fair value measurements. IFRS 13 does not change when tan
entity is required to use fair value, but rather provides guidance
on how to measure fair value under IFRS when fair value is
permitted or required. In general, the disclosure requirements in
IFRS 13 are more extensive than those required by current
standards.
(iii) New standards, amendments to standards and interpretations
effective but not relevant:
IFRS 1 Amendments Severe Hyperinflation & Removal of Fixed
Dates for First
Time Adopters 01-Jul-11
IFRS 7 Amendments Disclosures - Transfers of Financial Assets
01-Jul-11
IAS 12 Deferred Tax: Recovery of Underlying Assets 01-Jan-12
The Directors continue to assess the impact of the adoption of
these Accounting Standards and Interpretations will have on the
operations of the Company in future periods.
a. Basis of consolidation
The 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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies (continued)
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 99.98% of the capital interest in SIGA, LP.
Whilst the general partner of SIGA, LP, Sherborne Investors
(Guernsey) GP, LLC, a company registered in Delaware, USA, is
responsible for directing the day to day operations of SIGA, LP,
the Company, through its majority interest in SIGA, LP, has the
ability to approve the proposed investment of SIGA, LP and to
remove the General Partner. Hence, the Company has consolidated
SIGA, LP in its financial statements.
b. Business combinations
On 4 March 2010, the Company subscribed to commit GBP100 million
(one hundred million pounds) to SIGA, LP (the Investment
Partnership), a Guernsey limited partnership. This commitment
constitutes 99.98% of overall commitments to the Investment
Partnership.
The objective of this business combination is for the Investment
Partnership to realise capital growth from investment in a selected
target company identified by the Investment Manager with the aim of
generating a significant capital return for Shareholders.
The acquisition of the subsidiary is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Company in exchange for control of the acquiree. The
acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under
International Financial Reporting Standard 3 are recognised at
their fair value at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and
initially measured at cost, being the excess of the cost of the
business combination over the Group's interest in net fair value of
the identifiable assets, liabilities and contingent liabilities
recognised. If, after reassessment, the Group's interest in the net
fair value of the acquiree's identifiable assets, liabilities and
contingent liabilities exceeds cost of the business combination,
the excess is recognised immediately in profit or loss. Goodwill is
reviewed for impairments annually.
The interest of non-controlling parties in the acquiree is
initially 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 consolidated financial statements of the
Group are measured using the currency of the primary economic
environment in which the entity operates (the functional currency).
The consolidated financial statements are presented in GBP(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 consolidated statement of financial position are
retranslated into sterling at the rate of exchange ruling at that
date.
Foreign exchange differences arising on retranslation are
recognised in the consolidated statement of profit or loss and
other comprehensive income. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency
are translated using the rate of exchange at the date of the
transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are retranslated
into GBP at foreign exchange rates ruling at the dates the fair
value was determined.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies (continued)
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 International Accounting Standard 39 (IAS 39)
Financial Instruments: Recognition and Measurement, 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. Investment in voting shares
and contracts for difference are initially recognised at cost. The
investments in voting shares and contracts for difference are
subsequently re-measured at fair value, as determined by the
Directors. Unrealised gains or losses arising from the revaluation
of investments in voting shares and contracts for difference are
taken directly to the consolidated statement of profit or loss and
other comprehensive income.
Fair Value is determined as follows:
Investments measured and reported at fair value are classified
and disclosed in one of the following categories:
Level I - An unadjusted quoted price 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 7, 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 judgment or estimation.
The ordinary shares investment held by the Group at the year end
is classified as meeting the definition of Level I and the
investment in total return equity swaps is classified as meeting
the definition of Level II.
e. Revenue recognition
Dividend income is recognised when the Group's right to receive
payment has been established. Tax suffered on dividend income for
which no relief is available is treated as an expense.
Interest receivable from short-term deposits and investment
income are recognised on an accruals basis. Where receipt of
investment income is not likely until the maturity or realisation
of an investment then the investment income is accounted for as an
increase in the fair value of the investment.
f. Expenses
All expenses are accounted for on an accruals basis. Expenses
are charged through the consolidated statement of profit or loss
and other comprehensive income.
g. Trade and other receivables
Trade and other receivables are initially recognised at fair
value. 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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
1. Summary of significant accounting policies (continued)
h. Cash and cash equivalents
Cash and cash equivalents comprises cash on 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 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 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 accruals basis,
the calculation is disclosed in Note 13. The allocation as at 31
December 2012 is accounted for in the statement of changes in
equity.
m. Treasury shares
Treasury shares held by the Group are deducted from the
Company's equity and disclosed separately on the consolidated
statement of financial position. Gains or losses on sale are not
recognised in the consolidated statement of profit or loss and
other comprehensive income.
2. Gain on ordinary activities
The gain on ordinary activities has been arrived at after
charging:
1 January 2012 to 1 January 2011 to
31 December 2012 31 December 2011
GBP GBP
--------------------------------- --------------------------------------- -------
Directors' fees 110,000 110,202
Auditor's remuneration 31,670 40,340
Auditor's non-audit remuneration 10,812 14,613
--------------------------------- --------------------------------------- -------
152,482 165,155
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
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 GBP600) 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. Gain / loss per share
The calculation of basic and diluted gain per share is based on
the return on ordinary activities less income attributable to the
Non-Controlling Interest (excluding the incentive allocation) and
on there being 99,177,094 (2011: 105,000,000) weighted average
number of shares outstanding.
5. Financial assets at fair value through profit or loss
As at 31 December 2012 As at 31 December 2011
GBP GBP
Opening fair value at the beginning of the year 72,048,100
76,288,433
Purchases at cost 5,619,896 14,356,263
Fair value adjustments 42,461,738 (18,596,596)
Closing fair value at the end of the year 120,129,734
72,048,100
6. Trade and other receivables
As at 31 December 2012 As at 31 December 2011
GBP GBP
Dividends due from total return equity swaps 150,280 -
Prepaid directors and officers insurance 27,500 31,628
Other prepayments 38,593 -
216,373 31,628
The Group is entitled to receive dividends of GBP150,280 upon
maturity of its total return equity swaps in 2013.
7. Cash and cash equivalents
Cash and cash equivalents comprises cash held by the Group and
short term deposits held with Ogier Treasury Services Limited which
are invested with underlying banks. The carrying amount of these
assets approximates their fair value.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
8. Trade and other payables
As at 31 December 2012 As at 31 December 2011
GBP GBP
Other payables 185,969 191,867
185,969 191,867
9. Share capital and share premium
2012 2011
Consolidated Consolidated
Authorised share capital No. No.
Ordinary Shares of no par value Unlimited Unlimited
Issued and fully paid No. No.
Ordinary Shares of no par value 105,000,000 105,000,000
Repurchase of shares (7,764,903) -
Balance at the end of the year 97,235,097 105,000,000
2012 2011
Consolidated Consolidated
Share premium account GBP GBP
Balance at the beginning of the year 102,646,625 102,646,625
Return of capital (8,167,748)
Balance at the end of the year 94,478,877 102,646,625
In December 2012 the Company paid an interim dividend of 9.5
pence per share with approximately 8.4 pence per share of the
dividend relating to a return of excess cash.
As resolved in the minutes dated 27 April 2012 Sherborne
Investors (Guernsey) A Limited may purchase their own shares
(treasury shares) up to a maximum of 14.99% of the total shares in
issue. At the 31 December 2012, 7,764,903 (7.40%) treasury shares
were in issue.
10. Net asset value per share
No. of Consolidated
Shares Pence per Share
31 December 2011
Ordinary shares
Basic and diluted 105,000,000 95.58
31 December 2012
Ordinary shares
Basic and diluted 97,235,097 125.09
The number of shares is based on the total number of shares
outstanding at the year end.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
11. Dividend
Distributions to shareholders in the amount GBP11,087,841 have
been made in respect of the year ended 31 December 2012 of which
GBP8,167,748 (2011: GBPnil) was a return of capital and
GBP2,920,093 (2011: GBP2,730,000) was pass through of dividends
received from F&C Asset Management plc.
The amount distributed during the year is shown net of
distributions eliminated on consolidation. The Company paid a total
distribution of GBP11,970,000 for the year ended 31 December 2012
(2011: GBP2,730,000), of which GBP882,159 (2011: GBPnil) was
eliminated on consolidation.
12. Events after the balance sheet date
There were no events after the date of the statement of
financial position requiring disclosure in or adjustment to the
financial statements as at the date of the Board of Directors
signing the financial statements.
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, 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.
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, equal 110%
of capital contributions to the Investment Partnership, excluding
amounts contributed attributable to management fees. At the year
end the accrued incentive allocation amounts to GBP5,710,841 (2011:
GBPni1). The incentive allocation is computed at 10% of the
distributions to all partners in excess of 110% and increases to
20% of the distributions to all partners in excess of 150%. The
incentive fee is liable on distributions from all its investments
including gains on the treasury shares held by the Group. As this
represents a potential distribution to the Special Limited Partner,
a Limited Partner of SIGA, LP, any accrued allocation is allocated
to the non-controlling interest.
The Investment Manager and the Special Limited Partner are
related parties due to having common majority ownership of
themselves or their parent entities.
Each of the Directors (other than the Chairman) receives a fee
payable by the Company currently at a rate of GBP30,000 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 GBP45,000 per annum.
Individually and collectively, the Directors of the Company hold
no shares of the Company as at 31 December 2012.
14. Financial risk factors
The Group's investment objective is to realise capital growth
from investment in the Selected Target Company, 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
Selected Target Company. 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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
14. Financial risk factors continued
Liquidity risk
The Group has yet to invest some of the funds raised from the
listing of the Company, and as a result has a high level of cash
and cash equivalents at the date of the consolidated statement of
financial position. The Group's cash and cash equivalents are
placed with a range of financial institutions having utilised the
services of Ogier Treasury Services Limited.
The following tables detail the liquidity analysis for financial
liabilities at the date of the consolidated statement of financial
position for 2011 and 2012:
Less than More than
2012 1 month 1 month Total
Consolidated GBP GBP GBP
------------------------- --------- ------------ -------
Trade and other payables 148,398 37,571 185,969
------------------------- --------- ------------ -------
148,398 37,571 185,969
------------------------- --------- ------------ -------
Less than
2011 1 month 1 - 3 months Total
Consolidated GBP GBP GBP
------------------------- --------- ------------ -------
Trade and other payables 119,006 72,861 191,867
------------------------- --------- ------------ -------
119,006 72,861 191,867
------------------------- --------- ------------ -------
Credit Risk
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited through
the Group's utilisation of Ogier Treasury Services Limited. Ogier
Treasury Services Limited provides a service where it places cash
and cash equivalents with a range of counterparty banks with high
credit-ratings assigned by international credit-rating agencies.
The Company monitors the placement of cash balances on an ongoing
basis.
The Group is exposed to credit risk in respect of its investment
in the F&C shares held through contracts for difference. The
maximum exposure is equal to the carrying value of those assets
upon the maturity of the contracts. The risk of a default on the
contracts for difference has been mitigated by investing through a
counterparty majority owned by the UK government which represents
48.09% of the shares (carrying value of GBP3,764,749) invested
through these contracts. As at 31 December 2012, the Group's
maximum exposure arising from a default on the shares held through
contracts for difference is the investment carrying value of
GBP7,828,549 and dividends receivable of GBP150.280.
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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
14. Financial risk factors continued
Market risk continued
Market price risk arises as a result of the Group's exposure to
the future values of the share price of F&C. It represents the
potential loss that the Group may suffer through investing in
F&C. At the date of the statement of financial position the
market risk was material due to the size of the current investment
in F&C. The Investment Manager has mitigated the risk by
obtaining board representation, in that Edward Bramson has been
elected the Executive Chairman of F&C. If there were to be a
10% movement in the quoted share price of F&C at the date of
the consolidated statement of financial position, this would have a
positive or negative effect on the net asset value and total
comprehensive income of GBP12.012.973 (2011: GBP7.204.810).
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
equivalent balances. 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. This risk is also
mitigated through the Company's use of Ogier Treasury Services
Limited which has negotiated varying preferential interest rates
with counterparties.
As at 31 December 2012
Interest bearing
------------
Less than 1 month 3 months Non-interest
1 month to 3 months to 1 year bearing Total
GBP GBP GBP GBP GBP
---------------------------- --------- ------------ ---------- ------------ -----------
Assets
Cash and cash equivalents 7,204,307 - - - 7,204,307
Investments held at
fair value
through profit or loss - - - 120,129,734 120,129,734
Trade and other receivables - - - 216,373 216,373
---------------------------- --------- ------------ ---------- ------------ -----------
Total Assets 7,204,307 - - 120,346,107 127,550,414
---------------------------- --------- ------------ ---------- ------------ -----------
Trade and other payables - - - (185,969) (185,969)
---------------------------- --------- ------------ ---------- ------------ -----------
Total Liabilities - - - (185,969) (185,969)
---------------------------- --------- ------------ ---------- ------------ -----------
As at 31 December 2011
Interest bearing
------------
Less than 1 month 3 months Non-interest
1 month to 3 months to 1 year bearing Total
GBP GBP GBP GBP GBP
---------------------------- ---------- ------------ ---------- ------------ -----------
Assets
Cash and cash equivalents 28,482,761 - - - 28,482,761
Investments held at
fair value
through profit or loss - - - 72,048,100 72,048,100
Trade and other receivables - - - 31,628 31,628
---------------------------- ---------- ------------ ---------- ------------ -----------
Total Assets 28,482,761 - - 72,079,728 100,562,489
---------------------------- ---------- ------------ ---------- ------------ -----------
Trade and other payables - - - (191,867) (191,867)
---------------------------- ---------- ------------ ---------- ------------ -----------
Total Liabilities - - - (191,867) (191,867)
---------------------------- ---------- ------------ ---------- ------------ -----------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2012
14. Financial risk factors continued
Interest rate risk continued
As at 31 December 2012, the total interest sensitivity gap for
interest bearing items was GBP7,204,307 (2011:
GBP28,482,761).
As at 31 December 2012, interest rates reported by the Bank of
England were 0.50% (2011: 0.50%), which would equate to income of
GBP36,022 (2011: GBP142,414) per annum if interest bearing assets
remained constant. If interest rates were to fluctuate by 0.25%,
this would have a positive or negative effect of GBP18,011 (2011:
GBP71,207) 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 and accumulated retained earnings
from its ordinary activities less amounts due to the
non-controlling interest.
As at 31 December 2012, the Group is not subject to any external
capital requirement.
The Board of Directors believe that at the date of the
consolidated statement of financial position there were no material
risks associated with the management of the Company's capital.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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