TIDMSIAG
RNS Number : 0195Z
Sherborne Investors (Guernsey) A
09 March 2012
9 March 2012
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
Annual Report and Consolidated Financial Statements
For the year ended 31 December 2011
CHAIRMAN'S STATEMENT
Our investment in F&C Asset Management plc ("F&C")
continues to progress following the announcement of the results of
F&C's first phase of the strategic review on 25 October 2011.
The results of the second phase of the review are anticipated to be
announced during the month of May.
At 31 December 2011, we held an economic interest relating to
110,081,130 ordinary shares, or 20.69% of the outstanding shares in
F&C, through a holding of 19.99% in ordinary shares and the
balance in total return equity swaps. Our investment cost as at 31
December 2011 was GBP76,770,664. Our investment cost basis, net of
dividends received from F&C and gross gains realised on
contracts for difference disposed of during fiscal year 2010 was
GBP67,270,587 or 61.11 pence per share. As at the date of this
letter our economic exposure to F&C remains unchanged.
Dividend
On 28 October 2011, F&C paid a dividend of 1.0 pence per
share to shareholders on the register at 7 October 2011, of which
the Company was one. The Company's Board, in turn, declared a
dividend of 0.9 pence per share which was paid on 19 December 2011
to shareholders on the register at 18 November 2011.
Including the dividend of 1.7 pence per share paid in July 2011,
total dividends paid during the year were 2.6 pence per share.
Net Asset Value
At 31 December 2011, the net asset value attributable to
shareholders of the Company was GBP100,356,620 or 95.58 pence per
share. The Company's net asset value was based on the closing price
of 65.45 pence as at 30 December 2011 for the shares of F&C. On
7 March 2012, F&C's shares closed at 71.00 pence.
We look forward to updating you on further developments at the
time of the interim results.
Ian Brindle,
Chairman
Sherborne Investors (Guernsey) A Limited
8 March 2012
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
DIRECTORS' REPORT
The Directors present their annual report on the affairs of the
Company and its subsidiary (together, the "Group"), together with
the financial statements and auditor's report, for the year ended
31 December 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 has effected
and will continue to effect its investment policy indirectly
through the Investment Partnership, which will seek to acquire a
significant minority (less than 29.9 per cent) equity investment in
a "Selected Target Company". The Group intends that the holding in
the Selected Target Company shall not reach such a level as to
require the Group to make a bid for the entire Selected Target
Company and, therefore, the Group will not have control over the
Selected Target Company.
The Group's investment policy is to invest in one target company
at a time. Therefore, the Group will not seek to reduce risk
through diversification. If, after acquiring a shareholding, the
share price of the Selected Target Company rises to a level at
which further investment and the effort of a Turnaround is, in the
Investment Manager's opinion, no longer justified or otherwise no
longer presents a viable Turnaround opportunity, the Investment
Partnership intends to sell (and distribute the proceeds to the
Company) or distribute in kind the holding to the limited partners,
rather than seeking to join the board of directors or otherwise to
engage with the company. In these circumstances, the Company
intends to distribute any realised net profits received from the
Investment Partnership to the Shareholders. In such event, an
amount equal to the Company's capital contribution for the initial
Selected Target Company (less any losses on the sale) may be
recalled by the Investment Partnership and invested into a new
target (a "New Target Company"). This process may be repeated until
a Turnaround has been effected.
The holding period for the investment in the Selected Target
Company is neither fixed nor predictable, but the Company expects
that a typical holding period would be greater than one year.
During 2010, the Board of Directors of the Company approved a
Selected Target Company, F&C Asset Management plc ("F&C").
At 31 December 2011, the Investment Partnership held an economic
interest relating to 110,081,130 ordinary shares, or 20.69% of the
outstanding shares in F&C, through a holding of 19.99% in
ordinary shares and the balance in total return equity swaps. The
investment in the Selected Target Company may be in shares but can
also be in warrants, convertibles, derivatives and any other
equity, debt or other securities.
Dividend policy
The Company's dividend policy, subject to the discretion of the
Directors who reserve the right to retain amounts for working
capital, is to pay dividends to Shareholders following receipt of
any distributions from the Investment Partnership. This will be
dependent on the frequency with which the Selected Target Company
pays dividends to its shareholders (of which the Investment
Partnership will be one).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
DIRECTORS' REPORT continued
If dividends are received from the Selected Target Company, the
Investment Partnership intends to distribute to its limited
partners substantially all of the dividend proceeds after allowing
for the Investment Partnership's expenses. The Company, in turn,
intends promptly to distribute to Shareholders substantially all of
the dividend proceeds after allowing for the Company's
expenses.
F&C paid dividends in May and November of 2011 and a
dividend was subsequently paid to the Company shareholders in July
and December 2011, following the above policy.
Business review
A review of the Company's business during the year and an
indication of likely future developments are contained in the
Chairman's Statement.
Capital
Details of the Company's capital are provided in note 9 to the
consolidated financial statements. All shares carry equal voting
rights.
Substantial interests
As of the date of this report the Company had received
notification of the following material shareholdings:
% of issued
Number of Ordinary share
Shareholder Shares capital
--------------------------------- ------------------- ------------
Aviva plc 20,783,592 19.8%
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%
Ritchie European Multi-Strategy
Trading, Ltd. 5,000,000 4.8%
BlackRock UK Emerging Companies
Hedge Fund 3,400,000 3.2%
--------------------------------- ------------------- ------------
Post balance sheet events
Details of events that have occurred after the date of the
consolidated Statement of Financial Position are provided in note
12 to the consolidated financial statements.
Dividend - Note 11
Dividend payments in the amounts of GBP1,785,000 (equating to
1.7 pence per share) and GBP945,000 (equating to 0.9 pence per
share) have been made in respect of the year ended 31 December 2011
(2010: GBP735,000).
Independent Auditor
Deloitte LLP have indicated their willingness to continue as
auditor.
By order of the Board of Directors
Date: 8 March 2012
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the annual report
and the consolidated financial statements for each period in
accordance with applicable law and regulations, which give a true
and fair view of the state of affairs of the Group as at the end of
the financial period.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
are required to prepare the group financial statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. Under company law the directors
must not approve the accounts unless they are satisfied that they
give a true and fair view of the state of affairs of the company
and of the profit or loss of the company for that period. In
preparing these consolidated financial statements, International
Accounting Standard 1 requires that directors:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Group's ability to continue as a going concern.
The Directors confirm that they have complied with the above
requirements in preparing the consolidated financial
statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Group, and to enable them to ensure that
the financial statements comply with The Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Independent auditor and disclosure of information to auditor
Each of the persons who is a Director at the date of approval of
the financial statements confirms that:
-- So far as the Director is aware, there is no relevant audit
information of which the Company's auditor are unaware; and
-- The Director has taken all the steps that they ought to have
taken as a Director in order to make himself aware of any relevant
audit information and to establish that the Company's auditor is
aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 249 of The Companies
(Guernsey) Law, 2008.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2011
1 January 2011 18 January 2010
to to
31 December 2011 31 December 2010
Notes GBP GBP GBP GBP
Income 1(e)
Unrealised gain on investment
held at
fair value through profit
or loss 5 - 13,874,032
Realised gain on investment 23,616 5,654,240
Dividend income 3,007,634 838,305
Bank interest income 297,917 444,178
3,329,167 20,810,755
Expenses 1(f)
Unrealised (loss) on investment
held
at fair value through
profit or loss 5 18,596,596 -
Professional Fees 569,836 427,035
Trading and custodian
fees 116,233 579,674
Administrative fees 413,085 444,750
Other fees 45,184 224,547
Management fees 13 761,169 203,236
Non recurring expenses - 202,520
Directors'
fees 110,202 104,500
Tax services 14,613 -
(20,626,918) (2,186,262)
Less: Finance costs - (151,445)
Consolidated comprehensive
(loss) / income for the
year / period (17,297,751) 18,473,048
Income attributable
to:
Shareholders (17,294,318) 17,170,000
Non-controlling interest 13 (3,433) 1,303,048
Weighted average number
of shares outstanding 105,000,000 105,000,000
Basic and diluted (loss)
/ gain per share (pence) 4 (16.47) 16.35
All revenue and expenses are derived from continuing
operations.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2011
31 December 2011 31 December 2010
Notes GBP GBP GBP GBP
Non-current Assets
Financial assets at
fair value
through profit or loss 5 72,048,100 76,288,433
72,048,100 76,288,433
Current Assets
Trade and other receivables 6 31,628 7,954
Cash and cash equivalents 7 28,482,761 44,596,224
28,514,389 44,604,178
Current Liabilities
Trade and other payables 8 (191,867) (496,138)
Net Current Assets 28,322,522 44,108,040
Net Assets GBP 100,370,622 GBP 120,396,473
Capital and Reserves
Called up share capital
and share premium 9 102,646,625 102,646,625
Retained earnings (2,290,005) 16,435,000
Equity attributable
to the Company 100,365,620 119,081,625
Non-controlling interest 14,002 1,314,848
Total Equity GBP 100,370,622 GBP 120,396,473
The consolidated financial statements were approved by the Board
of Directors and authorised for issue on 8 March 2012.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2011
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
income for the year - (17,294,318) (3,433) (17,297,751)
Incentive allocation 13 - 1,299,313 (1,299,313) -
Dividends 11 - (2,730,000) - (2,730,000)
Investment by non-controlling
interest 1(b) - - 1,900 1,900
Balance at 31 December
2011 102,646,625 (2,290,005) 14,002 100,370,622
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
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2011
1 January 2011 18 January 2010
to to
31 December 31 December
2011 2010
Notes GBP GBP
Net cash flow from operating
activities (2,060,350) (1,253,900)
Investing activities
Purchase of investments 5 (11,882,903) (62,414,401)
Purchase of investment under
equity swaps and CFD's (2,473,360) (46,386,149)
Proceeds from termination of
CFD's 23,616 52,040,389
Dividend income 3,007,634 838,305
Net cash flows used in investing
activities (11,325,013) (55,921,856)
Financing activities
Share issue - 105,000,000
Cost of share issue - (2,353,375)
Commitments from non-controlling
interest 1,900 11,800
Dividends paid (2,730,000) (735,000)
Finance costs - (151,445)
Net cash flows from financing
activities 2,728,100 101,771,980
Net (decrease) / increase
in cash and cash equivalents (16,113,463) 44,596,224
Cash and cash equivalents
at beginning of year / period 44,596,224 -
Cash and cash equivalents at
year / period end 28,482,761 44,596,224
Cash flow from operating activities
Total consolidated comprehensive
(deficit) / income for the year
/ period (17,297,751) 18,473,048
Dividend income (3,007,634) (838,305)
Finance costs - 151,445
Realised gain on investment (23,616) (5,654,240)
Fair value loss / (gain) on financial
assets 18,596,596 (13,874,032)
Increase in amounts receivable (23,674) (7,954)
(Decrease) / increase in amounts
payable (304,271) 496,138
Net cash flow from operating
activities (2,060,350) (1,253,900)
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 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, which comprise
standards and interpretations approved by the International
Accounting Standards Board (the "IASB") and International
Accounting Standards and Standing Interpretations Committee
interpretations approved by the International Accounting Standards
Committee (the "IASC") that remain in effect, together with
applicable legal and regulatory requirements of Guernsey law.
These consolidated financial statements have been prepared on
the historical cost basis, as modified by the measurement at fair
value of investments and financial instruments and derivatives.
Going concern
The consolidated financial statements have been prepared on the
going concern basis. The Group currently holds significant cash
balances. After making enquiries, and on the strength of its
consolidated statement of financial position, the Directors are of
the opinion that the Group has adequate resources to continue its
operational activities for the foreseeable future. The Board is
therefore of the opinion that the going concern basis should be
adopted in the preparation of the consolidated financial
statements.
Critical accounting judgments and key sources of estimation
uncertainty
The preparation of the Group's consolidated financial statements
requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities and contingencies at
the date of the Group's consolidated financial statements and
revenue and expenses during the reported period. Actual results
could differ from those estimated. There are no significant
estimates utilised for the preparation of the Group's consolidated
financial statements as at 31 December 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 31
December 2011.
Adoption of new and revised standards
(i) Standards, amendments and interpretations effective but not
relevant:
IAS 24, 'Related party disclosures';
IAS 32 (amendment), 'Classification of rights issues';
IFRIC 14 (amendment), 'Prepayments of a minimum funding
requirement';
IFRIC 19, 'Extinguishing financial liabilities with equity
instruments';
IFRS 1 (amendment), 'Limited exemption from comparative IFRS 7
disclosures'.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
1 Summary of significant accounting policies (continued)
(ii) Standards, amendments and interpretations in issue but not
yet effective:
At the date of authorisation of these consolidated financial
statements, the following Standards and Interpretations which have
not been applied in these consolidated financial statements, were
in issue but not yet effective:
IAS 1, 'Financial Statement presentation - presentation of items
of other comprehensive income';
IAS 19 (amendment), 'Employee benefits';
IAS 27 (as revised in 2011), 'Separate financial
statements';
IAS 28 (as revised in 2011), 'Investments in associates and
joint ventures';
IFRS 7, 'Financial instruments: Disclosures - enhanced
derecognition disclosure requirements';
IFRS 9, 'Financial instruments - classification and
measurement';
IFRS 10, 'Consolidated financial statements';
IFRS 11, 'Joint arrangements';
IFRS 12, 'Disclosure of involvement with other entities';
IFRS 13, 'Fair value measurement'.
The Directors are considering the adoption of these Standards
and Interpretations in future periods and do not expect these to
have a 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.
The results of the subsidiary acquired during the year are
included in the consolidated statement of comprehensive income from
the effective date of acquisition.
Where necessary, adjustments are made to the financial
statements of the subsidiary to bring the accounting policies used
into line with those used by the Group.
All intra-group transactions, balances and expenses are
eliminated on consolidation.
The Company owns 99.98% of the capital interest in SIGA, LP.
Whilst the general partner of SIGA, LP, Sherborne Investors
(Guernsey) GP, LLC, a company registered in Delaware, USA, is
responsible for directing the day to day operations of SIGA, LP,
the Company, through its majority interest in SIGA, LP, has the
ability to approve the proposed investment of SIGA, LP and to
remove the general partner. Hence, the Company has consolidated
SIGA, LP in its financial statements.
b. Business combinations
On 4 March 2010, the Company subscribed to commit GBP100 million
(one hundred million pounds) to SIGA, LP (the "Investment
Partnership"), a Guernsey limited partnership. This commitment
constitutes 99.98% of overall commitments to the Investment
Partnership.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
1 b. Business combinations (continued)
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.
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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
1 d. Financial assets at fair value through profit or loss
(continued)
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.
g. Trade and other receivables
Trade and other receivables are initially recognised at fair
value. A provision for impairment of trade receivables is
established when there is objective evidence the Group will not be
able to collect all amounts due according to the original terms of
the receivables.
h. Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, call and
current balances with banks and similar institutions, which are
readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value. This definition is also
used for the consolidated statement of cash flows.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
1 i. Trade and other payables
Trade and other payables are initially recognised at fair value
and subsequently, where necessary, re-measured at amortised cost
using the effective interest method.
j. Financial instruments
Financial instruments and financial liabilities are recognised
in the Group's consolidated statement of financial position when
the Group becomes a party to the contractual provisions of the
instrument.
k. Segmental reporting
As the Group invests in one investee company, there is no
segregation between industry, currency or geographical location. No
further disclosures have been made in conjunction with IFRS 8
Operating Segments as it is deemed not to be applicable.
l. Incentive allocation
The incentive allocation is accounted for on an accruals basis,
the calculation is disclosed in Note 13. The allocation as at 31
December 2011 is accounted for in the Statement of Changes in
Equity.
2 Gain on ordinary activities
The gain on ordinary activities has been arrived at after
charging:
1 January 2011 18 January 2010
to to
31 December 31 December
2011 2010
GBP GBP
---------------------------------- --------------- ----------------
Directors' fees 110,202 104,500
Auditor's remuneration* 40,340 59,358
Auditor's non-audit remuneration 14,613 -
165,155 163,858
* An additional GBP90,000 was paid during the period ended 31
December 2010 to the Auditor for services provided in relation to
the Company being listed on AIM. This has been included in share
issue costs (see note 9).
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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
3 Tax on ordinary activities (continued)
Dividend income is shown gross of any withholding tax.
4 Loss / gain per share
The calculation of basic and diluted gain per share is based on
the return on ordinary activities less income attributable to the
Non-Controlling Interest (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 December As at 31 December
2011 2010
GBP GBP
------------------------------------- ------------------ ------------------
Opening fair value at the beginning
of the year / period 76,288,433 -
Purchases at cost 14,356,263 62,414,401
Fair value adjustments (18,596,596) 13,874,032
Closing fair value at the end of
the year / period 72,048,100 76,288,433
------------------------------------- ------------------ ------------------
6 Trade and other receivables
As at 31 December As at 31 December
2011 2010
GBP GBP
-------------------------------- ------------------ ------------------
Bank interest receivable - 3,825
Prepaid directors and officers
insurance 31,628 4,129
31,628 7,954
-------------------------------- ------------------ ------------------
7 Cash and cash equivalents
Cash and cash equivalents comprises cash held by the Group and
short term deposits held with Ogier Treasury Services Limited which
are invested with underlying banks. The carrying amount of these
assets approximates their fair value.
8 Trade and other payables
As at 31 December As at 31 December
2011 2010
GBP GBP
---------------- ------------------ ------------------
Other payables 191,867 496,138
191,867 496,138
---------------- ------------------ ------------------
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
9 Share capital and share premium
2011 Consolidated 2010 Consolidated
--------------------------------- ------------------ ------------------
Authorised share capital No. No.
Ordinary Shares of no par value Unlimited Unlimited
--------------------------------- ------------------ ------------------
Issued and fully paid No. No.
Ordinary Shares of no par value 105,000,000 105,000,000
--------------------------------- ------------------ ------------------
2011 2010
Consolidated Consolidated
----------------------------------------- ------------- -------------
Share premium account GBP GBP
Balance at the beginning of the year
/ period 102,646,625 -
Share premium account upon issue - 105,000,000
Less: Costs of issue - (2,353,375)
----------------------------------------- ------------- -------------
Balance at the end of the year / period 102,646,625 102,646,625
----------------------------------------- ------------- -------------
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 were deductible against the share premium
reserve. This equated to a cost of GBP0.022 per share.
10 Net asset value per share
No. of Consolidated
Shares Pence per Share
------------------- ------------ -----------------
31 December 2010
Ordinary shares
Basic and diluted 105,000,000 113.41
31 December 2011
Ordinary shares
Basic and diluted 105,000,000 95.58
------------------- ------------ -----------------
11 Dividend
Dividend payments totalling an amount of GBP2,730,000 have been
made in respect of the year ended 31 December 2011.
12 Events after the balance sheet date
There were no events after the date of the statement of
financial position requiring disclosure in or adjustment to the
financial statements as at the date of the Board of Directors
signing the financial statements.
13 Related party transactions
The Investment Partnership and its General Partner, Sherborne
Investors (Guernsey) GP, LLC, have engaged Sherborne Investors
Management (Guernsey) LLC to serve as Investment Manager who is
responsible for identifying the Selected Target Company, subject to
approval by the Board of Directors of the Company, as well as day
to day management activities of the Investment Partnership.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
13 Related party transactions (continued)
The Investment Manager is entitled to receive from the
Investment Partnership a monthly management fee equal to
one-twelfth of 1% of the net asset value of the Investment
Partnership, less cash and cash equivalents and certain other
adjustments.
The sole member of Sherborne Investors (Guernsey) GP, LLC is
Sherborne Investors LP (the non-controlling interest), which also
serves as the Special Limited Partner of the Investment
Partnership. The Special Limited Partner is entitled to receive an
incentive allocation once aggregate distributions to partners of
the Investment Partnership, of which one is the Company, equal 110%
of capital contributions to the Investment Partnership, excluding
amounts contributed attributable to management fees. At the year
end the accrued incentive allocation amounts to GBP nil (2010:
GBP1,299,313). 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 is allocated
to the non-controlling interest.
The Investment Manager and the Special Limited Partner are
related parties due to having common majority ownership of
themselves or their parent entities.
Each of the Directors (other than the Chairman) receives a fee
payable by the Company currently at a rate of GBP30,000 per annum.
The Chairman of the Audit Committee receives GBP5,000 per annum in
addition to such fee. The Chairman receives a fee payable by the
Company currently at the rate of GBP45,000 per annum.
Individually and collectively, the Directors of the Company hold
no shares of the Company as at 31 December 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.
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
14 Financial risk factors (continued)
Liquidity risk (continued)
The following tables detail the liquidity analysis for financial
liabilities at the date of the consolidated statement of financial
position for 2010 and 2011:
More
Less than than
2011 1 month 1 month Total
Consolidated GBP GBP GBP
-------------------------- ---------- --------- --------
Trade and other payables 119,006 72,861 191,867
-------------------------- ---------- --------- --------
119,006 72,861 191,867
-------------------------- ---------- --------- --------
Less than 1 - 3
2010 1 month months Total
Consolidated GBP GBP GBP
-------------------------- ---------- -------- --------
Trade and other payables 298,895 197,243 496,138
-------------------------- ---------- -------- --------
298,895 197,243 496,138
-------------------------- ---------- -------- --------
Credit risk
The Company is exposed to credit risk in respect of its cash and
cash equivalents, arising from possible default of the relevant
counterparty, with a maximum exposure equal to the carrying value
of those assets. The credit risk on liquid funds is limited through
the Group's utilisation of Ogier Treasury Services Limited. Ogier
Treasury Services Limited provides a service where it places cash
and cash equivalents with a range of counterparty banks with high
credit-ratings assigned by international credit-rating agencies.
The Company monitors the placement of cash balances on an ongoing
basis.
The Group is exposed to credit risk in respect of its trade
receivables and other receivable balances with a maximum exposure
equal to the carrying value of those assets.
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, possibly 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 GBP7,204,818 (2010: GBP7,628,843).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
14 Financial risk factors (continued)
Interest rate risk
The Group is subject to risks associated with changes in
interest rates in respect of interest earned on its cash and cash
equivalent balances. The Group seeks to mitigate this risk by
monitoring the placement of cash balances on an ongoing basis in
order to maximise the interest rates obtained. This risk is also
mitigated through the Company's use of Ogier Treasury Services
Limited which has negotiated varying preferential interest rates
with counterparties.
As at 31 December 2011
Interest bearing
----------------------------------
1 month 3 months Non-
Less than to to interest
1 month 3 months 1 year bearing Total
GBP GBP GBP GBP GBP
----------------------------- ----------- ---------- --------- --------------- ---------------
Assets
Cash and cash equivalents 28,482,761 - - - 28,482,761
Investments held
at fair value through
profit or loss - - - 72,048,100 72,048,100
Trade and other receivables - - - 31,628 31,628
----------------------------- ----------- ---------- --------- --------------- ---------------
Total Assets 28,482,761 - - 72,079,728 100,562,489
----------------------------- ----------- ---------- --------- --------------- ---------------
Trade and other payables - - - (191,867) (191,867)
----------------------------- ----------- ---------- --------- --------------- ---------------
Total Liabilities - - - (191,867) (191,867)
----------------------------- ----------- ---------- --------- --------------- ---------------
As at 31 December 2010
Interest bearing
----------------------------------
1 month 3 months Non-
Less 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
Trade and other receivables - - - 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 31 December 2011, the total interest sensitivity gap for
interest bearing items was GBP28,482,761 (2010: GBP44,596,224).
SHERBORNE INVESTORS (GUERNSEY) A LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
14 Financial risk factors (continued)
Interest rate risk (continued)
As at 31 December 2011, interest rates reported by the Bank of
England were 0.50% (2010: 0.50%), which would equate to income of
GBP142,414 (2010: GBP222,981) per annum if interest bearing assets
remained constant. If interest rates were to fluctuate by 0.25%,
this would have a positive or negative effect of GBP71,207 (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 31 December 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
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