TIDMSIGB
RNS Number : 2449J
Sherborne Investors (Guernsey)B Ltd
20 August 2021
SHERBORNE INVESTORS (GUERNSEY) B LIMITED
Interim Report and Unaudited Condensed Consolidated Financial
Statements
For the period from 1 January 2021 to 30 June 2021
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. As disclosed on 18
June 2021, following the distribution in specie,
the Company intends to commence liquidation proceedings
which will culminate in a final distribution
to shareholders of any residual assets, the delisting
of the Company's shares and the dissolution of
the Company.
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 Sherborne Investors (Guernsey) GP, LLC (the "General
Partner") and the Investment Partnership have
appointed Sherborne Investors Management (Guernsey)
LLC (the "Investment Manager") to provide investment
management services to the Investment Partnership.
Chairman's Statement
For the period ended 30 June 2021
Dear Shareholder,
I am pleased to present the Interim Report of Sherborne
Investors (Guernsey) B Limited (the "Company") for the period 1
January 2021 to 30 June 2021. During the period the Company pursued
its investment strategy through its shareholding in Electra Private
Equity PLC ("Electra").
On 21 May 2021 Electra reconfirmed its intention to complete the
realisation of its remaining investments by the end of 2021 by way
of a demerger of its largest asset, TGI Fridays, and the
reclassification of Electra into an operating company substantially
comprised of its second largest asset, Hotter Shoes.
On 21 June 2021 the Company declared a dividend in specie of
8,250,575 shares of Electra payable on 30 June 2021 to shareholders
on record as at 24 June 2021. As a result, at the period end the
Company held no shares in Electra.
In accordance with the Company's policy upon the disposition of
a "Turnaround Investment", the Company has commenced liquidation
proceedings which will culminate in a final distribution to
shareholders of any residual assets, the delisting of the Company's
shares, and the dissolution of the Company.
As at 30 June 2021, the net asset value ("NAV") attributable to
shareholders of the Company was GBP0.76 million (30 June 2020:
GBP17.5 million and 31 December 2020: GBP24.6 million) or 0.24
pence per share (30 June 2020: 5.56 pence per share and 31 December
2020: 7.81 pence per share). The Company's NAV at 30 June 2021 does
not include remaining wind-down or liquidation costs unless
contracted at 30 June 2021. Any residual NAV, which is expected to
be de minimis, will be distributed to shareholders.
Since 1 October 2016 Electra has distributed cumulative
dividends of approximately GBP2.0 billion. Following these
dividends, Electra's remaining market capitalisation is
approximately GBP230 million.
I am very pleased to report that the Company's investment in
Electra produced a gross return exceeding 2.0x, equal to an
approximately 24% IRR. Electra represents the fifth consecutive
investment in the United Kingdom for which the Investment Manager
has doubled investors' capital when engaged in an active turnaround
investment.
The Company has decided to continue preparing the financial
statements for the period ended 30 June 2021 on a basis other than
that of a going concern, consistent with the financial statements
for the year ended 31 December 2020. This adoption has no bearing
on the financial condition or operations of the Company, but more
accurately reflects that the Company will soon be dissolved, in
line with the Company's strategy.
The Company is presently in the process of preparing for a
voluntary liquidation, delisting, and dissolution and will update
the market as events require. It is presently expected that a
General Meeting of shareholders will occur in September for
shareholders to vote on the winding up of the Company.
The Company's principal risks and uncertainties have
historically related to the Company's investment activities which
includes performance risk, market risk, relationship risk and
operational risk. Considering the Company's decision to enter
voluntary liquidation after the disposal of the investment in
Electra, the remaining principal risks and uncertainties faced by
the Company are only relationship risk and operational risk. The
nature of these risks remains unchanged 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 2020. The Directors will continue to
assess the principal risks and uncertainties relating to the
Company for the duration of the wind up period which are expected
to remain unchanged.
Details of related party transactions during the period are
included in Note 10 of the Condensed Consolidated Financial
Statements.
We are grateful for your continued support over the life of this
investment.
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
In addition to making enquiries of the Investment Manager and
Administrator, the Directors have undertaken a rigorous review of
the Company's cash flows and the level of cash balances as at the
reporting date as well as taking forecasts of future cash flows and
the fact that the Company will soon liquidate, in line with the
Company's strategy.
The Company commenced liquidation proceedings which will
culminate in a final distribution to shareholders of any residual
assets, the delisting of the Company's shares and the dissolution
of the Company. Accordingly, and consistent with the 31 December
2020 financial statements, the Condensed Consolidated Financial
Statements for the period ended 30 June 2021 have been prepared on
a basis other than that of a going concern. This has no impact on
the reported results for the year and there have been no changes to
the basis of recognition.
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 2021 which comprises the Condensed Consolidated Statement of
Comprehensive Income, the Condensed Consolidated Statement of
Financial Position, the Condensed Consolidated Statement of Changes
in Equity, the Condensed Consolidated Statement of Cash Flows and
related notes 1 to 13. We have read the other information contained
in the interim financial report and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Company are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly 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 2021 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.
Emphasis of Matter - financial statements prepared other than on
a going concern basis
We draw attention to Note 1 in the condensed consolidated
financial statements, which indicates that the financial statements
have been prepared on a basis other than that of a going concern.
Our conclusion is not modified in respect of this matter.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company, for our review
work, for this report, or for the conclusions we have formed.
Condensed Consolidated Statement of Comprehensive Income
(Unaudited)
For the period from 1 January 2021 to 30 June 2021
1 January 2021 1 January 2020 1 January 2020
to to to
30 June 2021 30 June 2020 31 December
2020
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- --------- --------- ----------------------- --------- ------------- ---- --------------
Income 1(e)
Movement in
unrealised
gain/(loss) on
financial
assets at fair
value
through profit
or 1(d),
loss 5 289,844,214 (22,920,788) (12,647,925)
Realised loss on (250,575,209) - -
financial assets
at fair value
through
profit or loss
Bank interest
income 7 281 281
----------------- --------- --------- ----------------------- --------- ------------- ---- --------------
Total
income/(loss) 39,269,012 (22,920,507) (12,647,644)
----------------- --------- --------- ----------------------- --------- ------------- ---- --------------
Expenses 1(f)
Management fees 10 229,165 157,544 269,908
Administrative
fees 63,226 73,038 141,808
Directors' fees 2,10 62,500 62,500 125,000
Other fees 43,674 66,223 109,955
Professional
fees 40,433 47,240 71,594
--------------
Total operating
expenses 438,998 406,545 718,265
----------------- --------- --------- ------------ -------------------- ------------- ---- --------------
Total comprehensive
income/(loss) 38,830,014 (23,327,052) (13,365,909)
---------------------------- --------- ------------ -------------------- ------------- ---- --------------
Total
comprehensive
income/(loss)
attributable
to:
Equity
Shareholders 27,512,898 (16,829,218) (9,757,957)
Non-controlling
interest (NCI) 1(b) 11,317,116 (6,497,834) (3,607,952)
----------------- --------- --------- ------------ -------------------- ------------- ---- --------------
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
(excluding
NCI) 4 8.75p (5.35)p (3.10)p
----------------- --------- --------- ------------ -------------------- ------------- ---- --------------
All revenue and expenses are derived from discontinued
operations.
Although not required by IAS 34 - 'Interim Financial Reporting',
the comparative figures for the preceding year and the related
notes have been included on a voluntary basis.
The accompanying notes form an integral part of these Condensed
Consolidated Financial Statements
Condensed Consolidated Statement of Financial Position
(Unaudited)
As at 30 June 20 21
30 June 2021 30 June 20 20 31 December 2020
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ------------------ ---- ---------- ----------- --------------- -----------
Non-Current
Assets
------------------
Financial assets
at fair value
through profit 1(d),
or loss 5 - 21,890,639 32,163,502
----------------- ------ -------------- ---- ---------- ----------- --------------- -----------
- 21,890,639 32,163,502
----------------- ------ ------------------ ---- ---------- ----------- --------------- -----------
Current Assets
Prepaid expenses 24,588 16,931 30,485
Cash and cash
equivalents 1(h) 830,967 1,003,800 654,010
855,555 1,020,731 684,495
----------------- ------ ------------------ ---- ---------- ----------- --------------- -----------
Current
Liabilities
Trade and other
payables 6 63,143 93,981 69,467
63,143 93,981 69,467
Net Current
Assets 792,412 926,750 615,030
----------------- ------ -------------------- ----------------------- ---------------
Net Assets 792,412 22,817,389 32,778,532
----------------- ------ -------------------- ----------------------- ---------------
Capital and
Reserves
Called up share
capital and
share premium 7 302,696,145 302,696,145 302,696,145
Retained
reserves (301,936,905) (285,202,655) (278,131,394)
----------------- ------ -------------------- ----------------------- ---------------
Equity
attributable
to the Company 759,240 17,493,490 24,564,751
----------------- ------ -------------------- ----------------------- ---------------
Non-controlling 1(b),
interest (NCI) 10 33,172 5,323,899 8,213,781
----------------- ------ -------------------- ----------------------- ---------------
Total Equity 792,412 22,817,389 32,778,532
----------------- ------ -------------------- ----------------------- ---------------
NAV Per Share
(excluding NCI) 8 0.24p 5.56p 7.81p
----------------- ------ -------------------- ----------------------- ---------------
The Condensed Consolidated Financial Statements were approved by
the Board of Directors for issue on 19 August 2021.
Although not required by IAS 34 - 'Interim Financial Reporting',
the comparative figures for the interim period and the related
notes have been included on a voluntary basis.
The accompanying notes form an integral part of these Condensed
Consolidated Financial Statements.
Condensed Consolidated Statement of Changes in Equity
(Unaudited)
For the period from 1 January 20 21 to 30 June 2021
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
------------------------- -------- -------------- -------------- ------------- -------------
Balance at 1 January
2021 302,696,145 (278,131,394) 8,213,781 32,778,532
------------------------- -------- -------------- -------------- ------------- -------------
Comprehensive income - 37,064,887 1,765,127 38,830,014
Incentive allocation 1(l),10 - (9,551,989) 9,551,989 -
Distribution 9 - - (19,497,725) (19,497,725)
Dividend in specie 9 - (51,318,409) - (51,318,409)
Balance at 30 June 2021 302,696,145 (301,936,905) 33,172 792,412
------------------------- -------- -------------- -------------- ------------- -------------
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
------------------------- -------- -------------- -------------- ------------- -------------
Balance at 1 January
2020 302,696,145 (268,373,437) 12,626,696 46,949,404
------------------------- -------- -------------- -------------- ------------- -------------
Comprehensive loss - (22,296,360) (1,030,692) (23,327,052)
Incentive allocation 1(l),10 - 5,467,142 (5,467,142) -
Distribution 9 - - (804,963) (804,963)
Balance at 30 June 2020 302,696,145 (285,202,655) 5,323,899 22,817,389
------------------------- -------- -------------- -------------- ------------- -------------
Share Capital Non-
and Share Retained Controlling Total
Premium Reserves Interest Equity
Notes GBP GBP GBP GBP
--------------------------- --------- -------------- -------------- ------------- -------------
Balance at 1 January 2020 302,696,145 (268,373,437) 12,626,696 46,949,404
--------------------------- --------- -------------- -------------- ------------- -------------
Comprehensive loss - (12,784,701) (581,208) (13,365,909)
Incentive allocation 1(l),10 - 3,026,744 (3,026,744) -
Distribution 9 - - (804,963) (804,963)
Balance at 31 December
2020 (audited) 302,696,145 (278,131,394) 8,213,781 32,778,532
--------------------------- --------- -------------- -------------- ------------- -------------
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 2021 to 30 June 2021
1 January
20 21 1 January 1 January
to 30 June 202 0 20 20 to 31
20 21 to 30 June December 20
2020 20 (audited)
Notes GBP GBP GBP
---------------------------------------- -------------- ------------- -------------------
Net cash flow from/(used in)
operating activities See below (439,423) 3,156,176 2,806,386
----------------------------------------- -------------- ------------- -------------------
Investing activities
Disposal of investment 616,373 - -
Bank interest income 7 281 281
Net cash flow from investing
activities 616,380 281 281
----------------------------------------- -------------- ------------- -------------------
Financing activities
9,
Dividend paid 12 - (2,044,557) (2,044,557)
Distributions to Non-controlling 9,
interest 12 - (804,963) (804,963)
Net cash flow used in financing
activities - (2,849,520) (2,849,520)
----------------------------------------- -------------- ------------- -------------------
Net movement in cash and cash
equivalents 176,957 306,937 (42,853)
Opening cash and cash equivalents 654,010 696,863 696,863
Closing cash and cash equivalents 830,967 1,003,800 654,010
----------------------------------------- -------------- ------------- -------------------
Net cash flow from/(used
in) operating activities
----------------------------------- ---- -------------- ------------- -------------------
Comprehensive income/(loss) 38,830,014 (23,327,052) (13,365,909)
Realised loss on financial 250,575,209 - -
assets at fair value through
profit or loss
Unrealised (gain)/loss on
financial assets at fair
value through profit or
loss 5 (289,844,214) 22,920,788 12,647,925
Movement in prepaid expenses 5,897 5,869 (7,685)
Movement in trade and other
payables 6 (6,322) 8,565 (15,951)
Bank interest income (7) (281) (281)
Dividend receipt - 3,548,287 3,548,287
Net cash flow from/(used in)
operating activities (439,423) 3,156,176 2,806,386
----------------------------------------- -------------- ------------- -------------------
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 2021 to 30 June 2021
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, Channel Islands, GY1 2HL. The "Group" is
defined as the Company and its subsidiary, SIGB, LP (the
"Investment Partnership").
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 2020, 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 2020: their report was
unqualified; drew attention to going concern by way of emphasis;
and did not contain a statement under Section 263(2) or 263(3) of
the Companies (Guernsey) Law, 2008 (as amended).
The Condensed Consolidated Financial Statements of the Group
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' ("IAS 34") as adopted in
the European Union, together with applicable legal and regulatory
requirements of Guernsey Law. The Directors of the Company have
taken the exemption in Section 244 of the Companies (Guernsey) Law,
2008 (as amended) and have therefore elected to only prepare
Condensed Consolidated Financial Statements for the period.
These Condensed Consolidated Financial Statements have been
prepared on the historical cost basis, as modified by the
measurement at fair value of investments. The accounting policies
adopted are consistent with those of the previous financial year
and corresponding interim period.
Going concern
During the period the Group disposed of its investment in
Electra Private Equity plc ("Electra") and at the period end the
Group held no shares of Electra. The Company commenced liquidation
proceedings which will culminate in a final distribution to
shareholders of any residual assets, the delisting of the Company's
shares and the dissolution of the Company. Accordingly and
consistent with the 31 December 2020 financial statements, the
Condensed Consolidated Financial Statements for the period ended 30
June 2021 have been prepared on a basis other than that of a going
concern. This has no impact on the reported results for the year
and there have been no changes to the basis of recognition.
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 20 21 due to the
nature of the activities that have occurred in this period,
together with the sole investment held by the Group in previous
periods prior to the distribution in specie (see note 9), 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 the respective period end.
Adoption of new and revised standards
(i) New standards adopted as at 1 January 2021:
All new standards effective from 1 January 2021 have been
adopted and do not have a material impact on the financial
statements.
(ii) Standards, amendments and interpretations early adopted by
the Group:
There were no standards, amendments and interpretations early
adopted by the Group.
(iii) Standards, amendments and interpretations in issue but not
yet effective:
Unless stated otherwise, the Directors do not consider the
adoption of any new and revised accounting standards and
interpretations to have a material impact as the new standards or
amendments are not relevant to the operations of the Group.
a. Basis of consolidation
The Condensed Consolidated Financial Statements incorporate the
financial statements of the Company and an entity controlled by the
Company, SIGB, LP (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 95.55% (2020: 95.55%) of the capital interest
in the Investment Partnership. Whilst the General Partner of the
Investment Partnership, a company registered in Delaware, USA, is
responsible for directing the day to day operations of the
Investment Partnership, the Company, through its majority interest
in the Investment Partnership, has control and therefore the
ability to approve the proposed investment of the Investment
Partnership and to remove the general partner. Hence, the Company
has consolidated the Investment Partnership 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
"functional currency"). 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 are designated as fair value through profit or loss
in accordance with IFRS 9 'Financial Instruments', as the Group's
business model is to invest in financial assets with a view to
profiting from their total return in the form of interest and
changes in fair value. Despite the large holding, under
International Accounting Standard 28 'Investments in Associates',
the fund held the investment in Electra shares at fair value
through profit or loss rather than as an associate as the
Investment Partnership is a closed-ended fund.
Investments in voting shares are initially recognised at cost
and are subsequently re-measured at fair value, as determined by
the Directors. Unrealised gains or losses arising from the
revaluation of investments in voting shares 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 during the period were
classified as meeting the definition of Level I (period ended 30
June 2020: Level I and year ended 31 December 2020: Level I). On
disposal of shares, cost of investments are allocated on a first
in, first out basis. There are no investments held by the Group at
the period end.
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 Condensed Consolidated Statement of
Comprehensive Income in the period in which they occur.
g. Prepaid expenses and trade receivables
Trade and other receivables are initially recognised at fair
value and subsequently, where necessary, remeasured 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 which are subject
to insignificant risk of changes in value. This definition is also
used for the Condensed Consolidated Statement of Cash Flows. The
carrying amount of these assets approximate their fair value,
unless otherwise stated.
i. Trade and other payables
Trade and other payables are initially recognised at fair value
and subsequently, where necessary, re-measured at amortised cost
using the effective interest method.
j. Segmental reporting
As the Group invested in one investee company, there is no
segregation between industry, currency or geographical location and
therefore no further disclosures are required in conjunction with
IFRS 8 'Operating Segments'.
k. Incentive allocation
The incentive allocation is accounted for on an accruals basis
and the calculation is disclosed in Note 11. The incentive
allocation is payable to the non-controlling interest and therefore
recognised in the Condensed Consolidated Statement of Changes in
Equity rather than recognised as an expense in the Condensed
Consolidated Statement of Comprehensive Income.
l. Dividends to shareholders
Dividends are recognised in the Group's Condensed Consolidated
Financial Statements in the period in which they are declared and
approved by the Board of Directors.
2. Comprehensive income/(loss)
The comprehensive income/(loss) has been arrived at after
charging:
1 January
1 January 2021 1 January 2020 to 31
to 30 June 2020 to 30 December 20
2021 June 20 20 20
GBP GBP GBP
-------------------------- --------------- ------------ -------------
Directors' fees 62,500 62,500 125,000
Auditor's remuneration -
Audit - 15,977 33,740
Auditor's remuneration -
Interim Review 15,330 14,600 15,330
-------------------------- --------------- ------------ -------------
In addition to the audit and half-yearly review related
remuneration above a further GBPNil was due to the Auditor in
relation to tax compliance services (period ended 30 June 2020:
GBP15,089 and year ended 31 December 2020: GBP18,805).
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 2020: 314,547,259 and 31 December 2020:
314,547,259) weighted average number of shares in issue. The
earnings per share for the period ended 30 June 2021 amounted to
8.75 pence per share (period ended 30 June 2020: a deficit of 5.35
pence per share and year ended 31 December 2020: a deficit of 3.10
pence per share).
5. Financial assets at fair value through profit or loss
As at 30 As at 31 December
As at 30 June 2020
June 2021 2020
GBP GBP GBP
------------------------------------ -------------- ------------- ------------------
Opening fair value 32,163,502 44,811,427 44,811,427
Movement in unrealised gain/(loss)
on financial assets at fair value
through profit or loss 289,844,214 (22,920,788) (12,647,925)
Disposal of financial assets at
fair value through profit or loss (322,007,716) - -
Closing fair value - 21,890,639 32,163,502
------------------------------------ -------------- ------------- ------------------
Percentage holding of Electra - 29.90% 29.90%
------------------------------------ -------------- ------------- ------------------
During the period the Group disposed of its investment in
Electra and as at 30 June 2021 the Group did not hold any shares of
Electra (30 June 2020: 11,446,086 and 31 December 2020: 11,446,086)
which is a London Stock Exchange listed investment trust focused on
private equity investments.
6. Trade and other payables
As at 30 As at 30 As at 31 December
June 20 21 June 20 20 20 20
GBP GBP GBP
--------------------------- ------------ ------------- --------------------
Professional fees payable 16,207 26,845 17,346
Other payables 46,936 67,136 52,121
--------------------------- ------------ ------------- --------------------
Total 63,143 93,981 69,467
--------------------------- ------------ ------------- --------------------
7 . Consolidated share capital and share premium
As at 30 June As at 30 June As at 31 December
2021 2020 2020
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
2021 2020 2020
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
----------------------- -------------- -------------- ------------------
Each Ordinary Share has no par value with no right to fixed
income.
8. Net asset value per share attributable to the Company
Pence per
No. of Shares Share
------------------- -------------- ----------
30 June 2021 314,547,259 0.24
30 June 20 20 314,547,259 5.56
31 December 20 20 314,547,259 7.81
9. Dividends and distributions
On 21 June 2021, a dividend in specie of 8,250,575 Electra
shares was declared by the Company and paid on 30 June 2021 (less a
nominal amount of fractional shares) to shareholders on record on
23 June 2021 which equated to GBP51,318,409 (period ended 30 June
2020: GBPNil and year ended 31 December 2020: GBPNil).
Total distributions paid by the Group to non-controlling
interests during the period were GBP19,497,725 (period ended 30
June 2020: GBP804,963 and year ended 31 December 2020: GBP804,963).
Distributions to non-controlling interests are made at the
discretion of the general partner to the Investment
Partnership.
10. Related party transactions
The Investment Partnership and its General Partner, Sherborne
Investors (Guernsey) GP, LLC, have engaged Sherborne Investors
Management (Guernsey) LLC to serve as Investment Manager who is
responsible for identifying the STC, subject to approval by the
Board of Directors of the Company, as well as day to day management
activities of the Investment Partnership. The Investment Manager is
entitled to receive from the Investment Partnership a monthly
management fee equal to one-twelfth of 1% of the NAV of the
Investment Partnership, less cash and cash equivalents and certain
other adjustments. During the period, management fees of GBP229,165
(period ended 30 June 2020: GBP157,544 and year ended 31 December
2020: GBP269,908) had been paid by the Partnership. No balance was
outstanding at the period end (period ended 30 June 2020: GBPNil
and year ended 31 December 2020: 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 in the Investment Partnership. 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 GBP26,652 (30 June
2020: GBP4,521,989 and 31 December 2020: GBP7,053,188) of which
GBP949 (30 June 2020: GBP200,435 31 December 2020: GBP291,236)
relates to SSFD. The amount paid in specie in the period was
GBP16,932,668 (period ended 30 June 2020: GBP697,924 and year ended
31 December 2020: GBP697,924) of which GBP644,430 relates to SSFD
(period ended 30 June 2020: GBP30,936 and year ended 31 December
2020: GBP30,936).
Incentive Allocation movement SIGB Ltd SSFD Total
GBP GBP GBP
Movement to 30 June 2021 9,551,989 354,143 9,906,132
Movement to 30 June 2020 (5,467,142) (203,443) (5,670,585)
Movement to 31 December
2020 (3,026,744) (112,642) (3,139,386)
Sherborne Investors LP, SSFD and the General Partner also earned
their share of the Total Comprehensive Income for the period of
GBP1,765,127 (period ended 30 June 2020: Total Comprehensive Loss
of GBP1,030,692 and year ended 31 December 2019: Total
Comprehensive Loss of GBP581,208).
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 20 21 (30 June 2020: Nil and
31 December 2020: 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 GBP10,000 (2020: GBP10,000 ) per annum for the use of the
licensed name.
11. Financial risk factors
The Group's investment objective is to realise capital growth
from investment in the STC, identified by the Investment Manager
with the aim of generating significant capital return for
Shareholders. Consistent with that objective, the Group's financial
instruments mainly comprise 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 and are sufficient
to cover the Group's obligations.
The following table details the liquidity analysis for financial
assets and liabilities at the date of the Condensed Consolidated
Statement of Financial Position:
Less than
As at 30 June 2021 1 month 1 - 12 months 1 - 2 years Total
GBP GBP GBP GBP
-------------------------- ---------- -------------- -------------- ---------
Trade and other payables (31,606) (31,537) - (63,143)
-------------------------- ---------- -------------- -------------- ---------
(31,606) (31,537) - (63,143)
-------------------------- ---------- -------------- -------------- ---------
Less than
As at 30 June 2020 1 month 1 - 12 months 1 - 2 years Total
GBP GBP GBP GBP
-------------------------- ---------- -------------- -------------- ---------
Trade and other payables (36,559) (57,422) - (93,981)
(36,559) (57,422) - (93,981)
-------------------------- ---------- -------------- -------------- ---------
Less than 1 - 2
As at 31 December 2020 1 month 1 - 12 months years Total
GBP GBP GBP GBP
-------------------------- ---------- -------------- -------- ---------
Trade and other payables (31,880) (37,587) - (69,467)
(31,880) (37,587) - (69,467)
-------------------------- ---------- -------------- -------- ---------
Credit risk
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is mitigated
through the Group depositing cash and cash equivalents across
several banks. The Group is exposed to credit risk in respect of
its trade receivables and other receivable balances with a maximum
exposure equal to the carrying value of those assets. UBS Financial
Services Inc. & HSBC Holdings PLC currently have a standalone
credit rating of A-, whilst Barclays Bank PLC has a standalone
credit rating of A with Standard & Poor's (30 June 2020: UBS
Financial Services Inc. & HSBC Holdings PLC A- whilst Barclays
Bank PLC A with Standard & Poor's and 31 December 2020: UBS
Financial Services Inc. & HSBC Holdings PLC A- whilst Barclays
Bank PLC 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. During the period the Group disposed of its investment in the
STC and so at the period end has no market price risk exposure.
Foreign exchange risk
Foreign currency risk arises as the value of future
transactions, recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign
exchange rates. The Investment Manager monitors the Group's
monetary and non-monetary foreign exchange exposure on a regular
basis. The Group has limited foreign exchange risk exposure.
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
2021 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 830,967 - - - - 830,967
Prepaid expenses - - - - 24,588 24,588
------------------- ---------- ---------- --------- --------- -------------- --------
Total Assets 830,967 - - - 24,588 855,555
------------------- ---------- ---------- --------- --------- -------------- --------
Liabilities
Other payables - - - - 63,143 63,143
Total Liabilities - - - - 63,143 63,143
------------------- ---------- ---------- --------- --------- -------------- --------
As at 30 June
2020 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 1,003,800 - - - - 1,003,800
Financial assets
at fair value
through profit
or loss - - - - 21,890,639 21,890,639
Prepaid expenses - - - - 16,931 16,931
------------------- ---------- ---------- --------- --------- -------------- -----------
Total Assets 1,003,800 - - - 21,907,570 22,911,370
------------------- ---------- ---------- --------- --------- -------------- -----------
Liabilities
Other payables - - - - 93,981 93,981
Total Liabilities - - - - 93,981 93,981
------------------- ---------- ---------- --------- --------- -------------- -----------
Interest rate risk
As at 31 December
2020 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 654,010 - - - - 654,010
Financial assets
at fair value
through profit
or loss - - - - 32,163,502 32,163,502
Prepaid expenses - - - - 30,485 30,485
------------------- ---------- ---------- --------- --------- -------------- -----------
Total Assets 654,010 - - - 32,193,987 32,847,997
------------------- ---------- ---------- --------- --------- -------------- -----------
Liabilities
Trade and other
payables - - - - (69,467) (69,467)
------------------- ---------- ---------- --------- --------- -------------- -----------
Total Liabilities - - - - (69,467) (69,467)
------------------- ---------- ---------- --------- --------- -------------- -----------
As at 30 June 2021, the total interest sensitivity gap for
interest bearing items was a surplus of GBP 830,967 (30 June 2020:
surplus of GBP1,003,800 and 31 December 2020: surplus of
GBP654,010).
As at 30 June 20 21, interest rates reported by the Bank of
England were 0.10% which would equate to income of GBP831 (period
ended 30 June 2020: interest rates were 0.10% which would equate to
income of GBP1,004 and year ended 31 December 2020: interest rates
were 0.01% which would equate to net income of GBP654) per annum if
interest bearing assets remained constant. If interest rates were
to fluctuate by 50 basis points, this would have a positive effect
of GBP4,155 or negative effect of GBP831 (period ended 30 June
2020: positive effect of GBP5,019 or negative effect of GBP1,004
and year ended 31 December 2020: positive or negative effect of
GBP3,270) on the Group's annual income.
Capital risk management
The capital structure of the Company consists of proceeds raised
from the issue of Ordinary Shares. As at 30 June 20 21, the Group
is not subject to any external capital requirement.
The Directors believe that at the date of the Condensed
Consolidated Statement of Financial Position there were no other
material risks associated with the management of the Group's
capital.
12. Reconciliation of financing activities
Net income Non-cash
Opening Cash flows allocation flows Closing
GBP GBP GBP GBP GBP
------------------- -------------- ------------ ------------- ------------- --------------
1 January 2021
to 30 June 2021
Retained reserves (278,131,394) - 27,512,898 (51,318,409) (301,936,905)
Non-controlling
interest (NCI) 8,213,781 - 11,317,116 (19,497,725) 33,172
------------------- -------------- ------------ ------------- ------------- --------------
Total (269,917,613) - 38,830,014 (70,816,134) (301,903,733)
------------------- -------------- ------------ ------------- ------------- --------------
1 January 2020
to 30 June 2020
Retained reserves (268,373,437) (2,044,557) (16,829,218) 2,044,557 (285,202,655)
Non-controlling
interest (NCI) 12,626,696 (804,963) (6,497,834) - 5,323,899
------------------- -------------- ------------ ------------- ------------- --------------
Total (255,746,741) (2,849,520) (23,327,052) 2,044,557 (279,878,756)
------------------- -------------- ------------ ------------- ------------- --------------
1 January 2020
to 31 December
2020
Retained reserves (268,373,437) (2,044,557) (9,757,957) 2,044,557 (278,131,394)
Non-controlling
interest (NCI) 12,626,696 (804,963) (3,607,952) - 8,213,781
------------------- -------------- ------------ ------------- ------------- --------------
Total (255,746,741) (2,849,520) (13,365,909) 2,044,557 (269,917,613)
------------------- -------------- ------------ ------------- ------------- --------------
13. Subsequent events
There were no material subsequent events that require disclosure
in the condensed consolidated financial statements.
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