TIDMSIAG
RNS Number : 8772O
Sherborne Investors (Guernsey) A
26 September 2011
26 September 2011
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
Half-Yearly Report and Consolidated Financial Statements
For the period from 1 January 2011 to 30 June 2011
CHAIRMAN'S STATEMENT
Our investment in F&C Asset Management plc ("F&C")
continues to progress following the general meeting of shareholders
held on 3 February 2011. The results of the review undertaken by
F&C's newly constituted board are anticipated to be announced
during the month of October.
At 30 June 2011, SIGA, LP held 101,166,500 ordinary shares, or
19.0% of the outstanding shares, in F&C. As at the date of this
letter, SIGA, LP holds 105,283,433 ordinary shares, or 19.8% of the
outstanding shares in F&C, at a cost of GBP65,048,788, or 61.78
pence per share, net of dividends received from F&C and gross
gains realised on contracts for difference disposed of during
fiscal year 2010.
Dividend
On 27 May 2011, F&C paid a dividend of 2.0 pence per share
to shareholders on the register at 1 April 2011, of which the
Company was one. The Company's Board, in turn, declared a dividend
of 1.7 pence per share which was paid on 27 July 2011 to
shareholders on the register at 17 June 2011.
Net Asset Value
At 30 June 2011, the net asset value attributable to
shareholders of the Company was GBP110,022,546 or 104.78 pence per
share. The Company's net asset value was based on the closing price
of 74.95 pence at 30 June 2011 for the shares of F&C.
We look forward to updating you on further developments at the
time of the annual results.
Ian Brindle,
Chairman
Sherborne Investors (Guernsey) A Limited
20 September 2011
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
DIRECTORS' REPORT
The Directors present their half-yearly report on the affairs of
the Company and its subsidiary (together, the "Group"), together
with the financial statements and auditor's independent review
report, for the period from 1 January 2011 to 30 June 2011.
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 will 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 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. 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 the prior period, the Board of Directors of the Company
approved a Selected Target Company, F&C Asset Management plc
("F&C"). At 30 June 2011, the Investment Partnership held 19.0%
of the Selected Target Company's outstanding shares.
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' REPORTcontinued
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 a dividend on 27 May 2011 and a dividend was paid
to Shareholders on 27 July 2011, following the above policy.
Business review
A review of the Company's business during the period 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:
Number of % of issued
Ordinary share
Shareholder Shares capital
--------------------------------- ----------- ------------
Aviva plc 20,500,000 19.5%
Sherborne Investors GP,
LLC 20,000,000 19.0%
Ameriprise Financial,
Inc. 16,181,489 15.4%
AEGON UK Group of Companies 12,500,000 11.9%
Lloyds Banking Group plc 5,418,035 5.2%
Artemis Investment Management
Ltd 5,000,000 4.8%
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 interim financial statements.
Dividend
An interim dividend payment in the amount of GBP1,785,000
(equating to 1.7 pence per share) has been made in respect of the
period ended 31 December 2011 and was paid on 27 July 2011.
Independent Auditor
Deloitte LLP was reappointed as auditor to the Company at the
Annual General Meeting on 28 April 2011.
By order of the Board of Directors
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the period from 1 January 2011 to 30 June 2011
1 January 18 January 18 January
2011 to 2010 to 2010 to
31 December
30 June 2011 30 June 2010 2010
(unaudited) (audited) (audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ -------- ------------ -------- ------------ -------- ------------
Income 1(e)
Unrealised
(loss)/gain
on investment
held at fair
value through
profit or 1(d),
loss 5 (8,917,104) (471,153) 13,874,032
Realised gain
on investment 23,616 - 5,654,240
Dividend income 1,954,800 - 838,305
Bank interest
income 142,132 202,263 444,178
----------------- ------ -------- ------------ -------- ------------ -------- ------------
(6,796,556) (268,890) 20,810,755
----------------- ------ -------- ------------ -------- ------------ -------- ------------
Expenses 1(f)
Professional
fees 426,616 394,517 427,035
Trading and
custodian
fees 78,343 - 579,674
Administrative
fees 226,817 88,645 444,750
Other fees 113,317 112,918 224,547
Management
Fees 394,982 2,000 203,236
Non recurring
expenses - - 202,520
Directors'
Fees 2 55,202 49,5000 104,500
----------------- ------ -------- ------------ -------- ------------ -------- ------------
(1,295,277) (647,580) (2,186,262)
----------------- ------ -------- ------------ -------- ------------ -------- ------------
Less: Finance
costs - - (151,445)
----------------- ------ -------- ------------ -------- ------------ -------- ------------
Consolidated
comprehensive
(loss) / income
for the period (8,091,833) (916,470) 18,473,048
----------------- ------ -------- ------------ -------- ------------ -------- ------------
(Loss)/Income
attributable
to:
Shareholders (7,274,079) (916,314) 17,170,000
Non-controlling 1(k),
interest 13 (817,754) (156) 1,303,048
----------------- ------ -------- ------------ -------- ------------ -------- ------------
Weighted average
number of
shares
outstanding 105,000,000 105,000,000 105,000,000
Basic and
diluted (loss)
/ gain per
share (pence) 4 (6.93) (0.87) 16.35
----------------- ------ -------- ------------ -------- ------------ -------- ------------
All revenue and expenses are derived
from continuing operations
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the period from 1 January 2011 to 30 June 2011
30 June 2011 30 June 2011 31 December
(unaudited) (audited) 2010 (audited)
Notes GBP GBP GBP GBP GBP GBP
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Non-current
Assets
Financial
assets at
fair value
through
profit or
loss 5 75,824,292 7,098,267 76,288,433
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
75,824,292 7,098,267 76,288,433
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Current
Assets
Prepaid
expenses 6 25,087 42,972 7,954
Cash and cash
equivalents 7 36,575,258 94,769,242 44,596,224
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
36,600,345 94,812,214 44,604,178
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Current
Liabilities
Trade and
other payables 8 (1,903,797) (186,326) (496,138)
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Net Current
Assets 34,696,548 94,625,888 44,108,040
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Net Assets GBP 110,520,840 GBP 101,724,155 GBP 120,396,473
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Capital
and Reserves
Called up
share capital
and share
premium 9 102,646,625 102,636,625 102,646,625
Retained
earnings 7,375,921 (916,314) 16,435,000
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Equity
attributable to
the Company 110,022,546 101,720,311 119,081,625
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Non-controlling 1(k),
interest 13 498,294 3,844 1,314,848
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
Total Equity GBP 110,520,840 GBP 101,724,155 GBP 120,396,473
----------------- ------ ------------ ------------ ----------- ------------ ----------- ------------
The consolidated financial statements were approved by the Board
of Directors for issue on 20 September 2011.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period from 1 January 2011 to 30 June 2011
(unaudited)
Share
Capital Non-
and Share Retained Controlling Total
Premium Earnings Interest Equity
Notes GBP GBP GBP GBP
----------------- ------ ------------ ------------ ------------ ------------
Balance at 1
January 2011 102,646,625 16,435,000 1,314,848 120,396,473
----------------- ------ ------------ ------------ ------------ ------------
Total
comprehensive
(loss) / income
for the period - (8,090,215) (1,618) (8,091,833)
Incentive
allocation 13 - 816,136 (816,136) -
Dividends 11 - (1,785,000) - (1,785,000)
Investment by
non-controlling
interest 1(b) - - 1,200 1,200
----------------- ------ ------------ ------------ ------------ ------------
Balance at 30
June 2011 102,646,625 7,375,921 498,294 110,520,840
----------------- ------ ------------ ------------ ------------ ------------
For the period from incorporation on 18 January 2010 to 31
December 2010 (audited)
Share
Capital Non-
and Share Retained Controlling Total
Premium Earnings Interest Equity
Notes GBP GBP GBP GBP
------------------ ------ ------------ ------------ ------------ ------------
Balance at 18
January 2010 - - - -
------------------ ------ ------------ ------------ ------------ ------------
Share issue 9 105,000,000 - - 105,000,000
Cost of share
issue 9 (2,353,375) - - (2,353,375)
Total
comprehensive
income for the
period - 18,469,313 3,735 18,473,048
Incentive
allocation 13 - (1,299,313) 1,299,313 -
Dividends 11 - (735,000) - (735,000)
Investment by
non-controlling
interest 1(b) - - 11,800 11,800
------------------ ------ ------------ ------------ ------------ ------------
Balance at 31
December 2010 102,646,625 16,435,000 1,314,848 120,396,473
------------------ ------ ------------ ------------ ------------ ------------
For the period from incorporation 18 January
2010 to 30 June 2010 (audited)
Share
Capital Non-
and Share Retained Controlling Total
Premium Earnings Interest Equity
Notes GBP GBP GBP GBP
------------------ ------ ------------ ------------ ------------ ------------
Balance at 18
January 2010 - - - -
------------------ ------ ------------ ------------ ------------ ------------
Share issue 9 105,000,000 - - 105,000,000
Cost of share
issue 9 (2,363,375) - - (2,363,375)
Total
comprehensive
loss for the
period - (916,314) 3,844 (912,470)
------------------ ------ ------------ ------------ ------------ ------------
Balance at 30
June 2010 102,636,625 (916,314) 3,844 101,724,155
------------------ ------ ------------ ------------ ------------ ------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from 1 January 2011 to 30 June 2011
18 January
1 January 18 January 2010 to
2011 to 2010 to 30 31 December
30 June June 2010 2010
2011 (unaudited) (audited) (audited)
GBP GBP GBP
----------------------------- ------------------ ------------ -------------
Net cash flow from operating
activities 237,381 (301,963) (1,253,900)
----------------------------- ------------------ ------------ -------------
Investing activities
Purchase of investments (8,452,963) (7,569,420) (62,414,401)
Purchase of contracts
for difference - - (46,386,149)
Proceeds from termination
of contracts for difference 23,616 - 52,040,389
Dividend income 1,954,800 - 838,305
----------------------------- ------------------ ------------ -------------
Net cash flows used
in investing activities (6,474,547) (7,569,420) (55,921,856)
----------------------------- ------------------ ------------ -------------
Financing activities
Share issue - 105,000,000 105,000,000
Cost of share issue - (2,363,375) (2,353,375)
Commitments from
non-controlling interest 1,200 4,000 11,800
Dividends remittance (1,785,000) - (735,000)
Finance costs - - (151,445)
----------------------------- ------------------ ------------ -------------
Net cash flows from
financing activities (1,783,800) 102,640,625 101,771,980
----------------------------- ------------------ ------------ -------------
Net (decrease)/increase in
cash and cash equivalents (8,020,966) 94,769,242 44,596,224
Cash and cash equivalents
at beginning of period 44,596,224 - -
----------------------------- ------------------ ------------ -------------
Cash and cash equivalents
at period end 36,575,258 94,769,242 44,596,224
----------------------------- ------------------ ------------ -------------
Cash flow from operating
activities
----------------------------- ------------------ ------------ -------------
Total consolidated
comprehensive (loss) /
income for the period (8,091,833) (916,470) 18,473,048
Dividend income (1,954,800) - (838,305)
Finance costs - - 151,445
Realised gain on investment (23,616) - (5,654,240)
Fair value loss/(gain)
on financial assets 8,917,104 471,153 (13,874,032)
Income in prepaid expenses (17,133) (42,972) (7,954)
Increase in amounts
payable 1,407,659 186,326 496,138
----------------------------- ------------------ ------------ -------------
Net cash flow from operating
activities 237,381 (301,963) (1,253,900)
----------------------------- ------------------ ------------ -------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
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, and the
listing rules of the UK Listing Authority. The consolidated set
including the Half-Yearly Report and Consolidated Financial
Statements have been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting".
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.
There have been no material changes in accounting policies
during the period.
The information for the period ended 31 December 2010 does not
constitute statutory accounts as defined in section 244 of The
Companies (Guernsey) Law, 2008. The auditor's report on those
accounts was not modified and did not include a reference to any
matters which the auditor drew attention by way of emphasis without
modifying the report.
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 30 June 2011 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 30 June
2011.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
1 Summary of significant accounting policies continued
Adoption of new and revised standards
(i) Standards, amendments and interpretations effective but not
relevant:
IFRS 1 (amendment), 'First-time Adoption of International
Financial Reporting Standards';
(ii) Standards, amendments and interpretations in issue but not
yet effective:
IFRS 10 (amendment), 'Consolidated Financial Statements';
IFRS 11, 'Joint Arrangements';
IFRS 12, 'Disclosure of Interest of Other Entities';
IFRS 13, 'Fair Value Measurements'
The Directors anticipate that the adoption of these Standards
and Interpretations in future periods will have no material impact
on the consolidated financial statements of the Group.
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.
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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
1 Summary of significant accounting policies continued
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 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 INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
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. Investments 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 comprehensive
income.
Fair Value is determined as follows:
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 International Accounting
Standard 39 ("IAS 39"), the Directors 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.
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 investment held by the Group at the period end is classified
as meeting the definition of Level I.
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 comprehensive
income.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
1 Summary of significant accounting policies continued
g. 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.
h. 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.
i. 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.
j. 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.
k. Incentive allocation
The incentive allocation is accounted for on an accruals basis,
the calculation is disclosed in Note 13. The allocation was
calculated as GBP1,299,313 at 31 December 2010 and at 30 June 2011
it has been calculated as GBP483,177. This is a movement of
GBP816,136 which is recognised in the Consolidated Statement of
Changes in Equity on page 13.
2 Comprehensive (loss) / income
The consolidated comprehensive (loss) / income has been arrived
at after charging:
18 January
1 January 18 January 2011 to 31
2011 to 30 2011 to 30 December
June 2011 June 2011 2011
GBP GBP GBP
------------------------ ------------ ------------ ------------
Directors' fees 55,202 49,500 104,500
Auditor's remuneration 19,250 43,500 59,358
------------------------ ------------ ------------ ------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
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 per share
The calculation of basic and diluted (loss)/gain per share is
based on the return on ordinary activities less income attributable
to the Non-Controlling Interest (including the incentive
allocation) and on there being 105 million shares in issue.
5 Financial assets at fair value through profit or loss
As at 31
As at 30 As at 30 December
June 2011 June 2010 2010
GBP GBP GBP
--------------------------- ------------ ----------- -----------
Opening fair value
at the beginning of
the period 76,288,433 - -
Purchases at cost 8,452,963 7,569,420 62,414,401
Fair value adjustments (8,917,104) (471,153) 13,874,032
--------------------------- ------------ ----------- -----------
Closing fair value
at the end of the period 75,824,292 7,098,267 76,288,433
--------------------------- ------------ ----------- -----------
Percentage holding
of F&C 19.00% 2.60% 17.08%
--------------------------- ------------ ----------- -----------
6 Prepaid Expenses
As at 31
As at 30 As at 30 December
June 2011 June 2010 2010
GBP GBP GBP
-------------------------- ----------- ----------- ----------
Bank interest receivable - - 3,825
Prepaid directors and
officers insurance 15,472 27,500 4,129
Prepaid nominal advisor
fee 9,615 15,472 -
-------------------------- ----------- ----------- ----------
25,087 42,972 7,954
-------------------------- ----------- ----------- ----------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
7 Cash and cash equivalents
Cash and cash equivalents comprises cash held by the Group and
short term deposits held with Ogier Treasury (Guernsey) Limited
which are invested with underlying banks. The carrying amount of
these assets approximates their fair value.
8 Trade and other payables
As at 31
As at 30 As at 30 December
June 2011 June 2010 2010
GBP GBP GBP
---------------- ----------- ----------- ----------
Other payables 1,903,797 186,326 496,138
---------------- ----------- ----------- ----------
1,903,797 186,326 496,138
---------------- ----------- ----------- ----------
9 Share capital and share premium
As at 31
As at 30 As at 30 December
June 2011 June 2010 2010
Consolidated Consolidated Consolidated
------------------ ------------- ------------- -------------
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 105,000,000 105,000,000 105,000,000
------------------ ------------- ------------- -------------
As at 31
As at 30 As at 30 December
June 2011 June 2010 2010
Consolidated Consolidated Consolidated
-------------------- ------------- ------------- -------------
Share premium
account GBP GBP GBP
Balance at the
beginning of the
period 102,646,625 - -
Share premium
account issue - 105,000,000 105,000,000
Less: Costs of
issue - (2,363,375) (2,353,375)
-------------------- ------------- ------------- -------------
Balance at the
end of the period 102,646,625 102,636,625 102,646,625
-------------------- ------------- ------------- -------------
On 9 March 2010 the Company completed its initial public
offering and its shares were admitted to trading on AIM. The share
issue of 105,000,000 shares at GBP1 each raised gross cash proceeds
of GBP105,000,000. Costs associated with the issue were
GBP2,353,375, which are deductible against the share premium
reserve. This equates to a cost of GBP0.022 per share.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
10 Net asset value per share
Consolidated
No. of Pence per
Shares Share
------------------- ------------ -------------
30 June 2011
Ordinary shares
Basic and diluted 105,000,000 104.78
30 June 2010
Ordinary shares
Basic and diluted 105,000,000 96.88
31 December 2010
Ordinary shares
Basic and diluted 105,000,000 113.41
------------------- ------------ -------------
11 Dividend
A dividend payment for the amount of GBP1,785,000 (2010:
GBP735,000) has been declared, as of 30 June 2011.
12 Events after the balance sheet date
The interim dividend declared was paid on 27 July 2011.
Since 30 June 2011, the F&C share price has dropped from
74.95 pence to 65.15 pence as at the date of signing these
consolidated interim financial statements. If this share price was
used to value the F&C shares at 30 June 2011 it would have
resulted in a decrease in closing fair value from GBP75,824,292 to
GBP65,909,975.
Subsequent to 30 June 2011, the Investment Partnership purchased
additional shares of F&C such that at 20 September 2011 it
holds a total of 105,283,433 shares or 19.8% of the outstanding
shares.
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 period
end the accrued incentive allocation is GBP483,177. 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%. As this represents a potential
distribution to the Special Limited Partner, a Limited Partner of
SIGA, LP, any accrued allocation would be allocated to the
non-controlling interest.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
13 Related party transactions continued
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 30 June 2011.
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.
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 (Guernsey) Limited.
The following table details the liquidity analysis for financial
liabilities at the date of the consolidated statement of financial
position:
As at 30 June 2011 Less than 1 - 3
Consolidated 1 month months Total
GBP GBP GBP
-------------------------- ---------- -------- ----------
Trade and other payables 1,810,128 93,669 1,903,797
-------------------------- ---------- -------- ----------
1,810,128 93,669 1,903,797
-------------------------- ---------- -------- ----------
As at 30 June 2010 Less than 1 - 3
Consolidated 1 month months Total
GBP GBP GBP
-------------------------- ---------- -------- ----------
Prepaid expenses 130,826 55,500 186,326
-------------------------- ---------- -------- ----------
130,826 55,500 186,326
-------------------------- ---------- -------- ----------
As at 31 December 2010 Less than 1 - 3
Consolidated 1 month months Total
GBP GBP GBP
-------------------------- ---------- -------- ----------
Trade and other payables 298,895 197,243 496,138
-------------------------- ---------- -------- ----------
298,895 197,243 496,138
-------------------------- ---------- -------- ----------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
14 Financial risk factors continued
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 (Guernsey) Limited. Ogier
Treasury (Guernsey) 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.
Market risk
Market price risk arises as a result of the Group's exposure to
the future values of the share price of the Selected Target
Company. It represents the potential loss that the Group may suffer
through investing in the Selected Target Company. Given the Group's
exposure to a single investment there is no way of mitigating this
exposure. The Group is reliant on gaining sufficient interests in
the Selected Target Company which will allow the Investment Manager
to gain an element of control, including board representation. If
there were to be a 10% movement in the quoted share price of the
Selected Target Company 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
GBP7,582,429 (2009: GBP7,628,843).
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 (Guernsey)
Limited which has negotiated varying preferential interest rates
with counterparties.
As at 30 June 2011
Interest bearing
----------------------------------
Less 1 month 3 months Non-
than to to interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
-------------- ----------- ---------- --------- ------------ ------------
Assets
Cash and cash
equivalents 36,575,258 - - - 36,575,258
Investments
held at fair
value
through
profit or
loss - - - 75,824,292 75,824,292
Prepaid
expenses - - - 25,087 25,087
-------------- ----------- ---------- --------- ------------ ------------
Total Assets 36,575,258 - - 75,849,379 112,424,637
-------------- ----------- ---------- --------- ------------ ------------
Trade and
other
payables - - - (1,903,797) (1,903,797)
-------------- ----------- ---------- --------- ------------ ------------
Total
Liabilities - - - (1,903,797) (1,903,797)
-------------- ----------- ---------- --------- ------------ ------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
14 Financial risk factors continued
Interest rate risk continued
As at 30 June 2010
Interest bearing
----------------------------------
Less 1 month 3 months Non-
than to to interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
---------------- ----------- ---------- --------- ---------- ------------
Assets
Cash and cash
equivalents 94,769,242 - - - 94,769,242
Investments
held at fair
value through
profit or loss - - - 7,098,267 7,098,267
Prepaid
expenses - - - 42,972 42,972
---------------- ----------- ---------- --------- ---------- ------------
Total Assets 94,769,242 - - 7,141,239 101,910,481
---------------- ----------- ---------- --------- ---------- ------------
Trade and other
payables - - - (186,326) (186,326)
---------------- ----------- ---------- --------- ---------- ------------
Total
Liabilities - - - (186,326) (186,326)
---------------- ----------- ---------- --------- ---------- ------------
As at 31 December 2010
Interest bearing
----------------------------------
Less 1 month 3 months Non-
than to to interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
--------------- ----------- ---------- --------- ----------- ------------
Assets
Cash and cash
equivalents 44,596,224 - - - 44,596,224
Investments
held at fair
value through
profit or
loss - - - 76,288,433 76,288,433
Prepaid
expenses - - - 7,954 7,954
--------------- ----------- ---------- --------- ----------- ------------
Total Assets 44,596,224 - - 76,296,387 120,892,611
--------------- ----------- ---------- --------- ----------- ------------
Trade and
other
payables - - - (496,138) (496,138)
--------------- ----------- ---------- --------- ----------- ------------
Total
Liabilities - - - (496,138) (496,138)
--------------- ----------- ---------- --------- ----------- ------------
As at 30 June 2011, the total interest sensitivity gap for
interest bearing items was GBP36,575,258 (2010: GBP44,596,224).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the period from 1 January 2011 to 30 June 2011
14 Financial risk factors continued
Interest rate risk continued
As at 30 June 2011, interest rates reported by the Bank of
England were 0.5% which would equate to income of GBP182,876 per
annum (2010: GBP222,981) if interest bearing assets remained
constant. If interest rates were to fluctuate by 0.25%, this would
have a positive or negative effect of GBP91,438 (2010: GBP111,491)
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 2011, 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
IR FMGZLZFFGMZZ
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