REG - Sherborne Inv. C Ld - Annual Financial Report
23/04/2025 07:00
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RNS Number : 7549F Sherborne Investors (Guernsey)C Ltd 23 April 2025
SHERBORNE INVESTORS (GUERNSEY) C LIMITED
Annual Report and Audited Consolidated Financial Statements
For the year 1 January 2024 to 31 December 2024
Company Summary
The Company Sherborne Investors (Guernsey) C Limited (the "Company") is a Guernsey
domiciled limited company and its shares are admitted to trading on the London
Stock Exchange Specialist Fund Segment ("SFS"). The Company was incorporated
on 25 May 2017. The Company commenced dealings on the SFS on 12 July 2017.
Investment Objective To realise capital growth from investment in a target company identified by
the Investment Manager, with the aim of generating a significant return of
capital for Shareholders.
Investment Policy To invest in a company which is publicly quoted which it considers to be
undervalued as a result of operational deficiencies and which it believes can
be rectified by the Investment Manager's active involvement, thereby
increasing the value of the investment. The Company will only invest in one
target company at a time.
Investment Manager Sherborne Investors Management LP (including affiliates, the "Investment
Manager") provides investment management services to SIGC LLC and other funds
in which the Company is indirectly an investor (the "Funds"). See Note 1 and
Note 9 for details of changes in the year.
Chairman's Statement
For the year ended 31 December 2024
Dear Shareholder
I am pleased to present the Annual Report and Audited Financial Statements of
the Company for the year from 1 January 2024 to 31 December 2024.
At 31 December 2024, the net asset value ("NAV") attributable to shareholders
of the Company was £430.3 million (2023: £566.3 million) or 61.5 pence per
share (2023: 80.9 pence per share) (see Note 8). As at 31 March 2025 the
estimated (unaudited) NAV, as reported, was 57.0 pence per share (31 March
2024: 77.1 pence per share).
The Company co-invests in Navient Corporation ("Navient") with other investors
in funds managed by Sherborne Investors Management LP ("Sherborne Investors").
Sherborne Investors owns approximately 29% of Navient's outstanding shares,
making it the largest shareholder in Navient, and also owns a 30.0% interest
in the outstanding shares of the Company. The Company is pursuing its
investment strategy through its indirect shareholding in Navient. The
reduction of the Company's NAV in the period resulted from a decline in the
share prices of Navient and the Company. See Note 5 of the Notes to the
Financial Statements.
In December 2024, it was announced that Navient and Sherborne Investors agreed
that Mr. Edward Bramson, a partner in Sherborne Investors, would be appointed
Chairman of the board of directors of Navient following Navient's annual
meeting of shareholders to be held in June 2025. In connection with this
agreement, Navient and Sherborne Investors extended their April 2022
nomination and cooperation agreement to a latest date of 30 June 2025.
Mr. Bramson is currently Vice Chairman of Navient and, through this role, has
assisted the Navient board with the formulation and execution of the first
phase of Navient's turnaround. The first phase consisted of three primary
objectives: outsourcing of loan servicing, divestiture of a non-core division,
and reducing operating expenses. Navient announced on 29 January 2025 that the
first phase of the turnaround resulted in the completion of the three primary
objectives, including a reduction in overhead expenses of approximately 40%.
Phase two of the turnaround is expected to be announced in the second half of
2025 and will consist of additional cost reductions and specific growth
targets, principally focusing on Navient's Earnest business.
For further information on Navient, including its strategy and performance,
please refer to its publicly available financial statements and presentations
available at www.sec.gov or Navient's website at www.navient.com
During 2024 Navient paid dividends to shareholders totalling $0.64 per share,
of which the Company received its proportionate share. The Company paid a
dividend with respect to 2023 results of 0.5 pence per share on 31 May 2024
and a further interim dividend of 0.5 pence per share with respect to 2024 on
4 October 2024. I am pleased to announce that the Company is declaring a
further 0.1 pence per share dividend to be paid on 23 May 2025 to shareholders
of record on 2 May 2025, bringing the total dividends paid in respect of 2024
results to 0.6 pence per share.
The Company's share price currently trades at an approximate 25% discount to
NAV and, in acknowledgement of this, the Board of the Company has taken the
decision to prioritise share repurchases over dividends for the upcoming year.
The Company expects initially to allocate between £10 million and £15
million to share repurchases over the next year and also to continue the
dividend at an annual rate of 0.1 pence per share to be paid following the
2025 annual results. The proposed buyback of shares is expected to be
accretive to the NAV of the Company.
The share repurchase and new level of dividend, in aggregate, would represent
a greater than 50% increase in return of capital to shareholders compared to
2024. The share repurchases will be subject to the passage of various
requisite resolutions at the annual meeting of shareholders in May 2025,
further details of which will be provided as a part of the forthcoming notice
of annual general meeting.
Details of Related Party Transactions are contained in Note 9 of the Financial
Statements.
We are grateful for your continued support and will keep you informed of the
status of our investment as it develops.
Board of Directors
Talmai Morgan (Chairman)
Appointed to the Board 25 May 2017
Mr Morgan has served as a non-executive director on the board of 14 publicly
listed investment companies (including 3 FTSE 250 companies) since 2005. He is
currently Chairman of Sherborne Investors (Guernsey) C Limited. From 1999 to
2004, Mr Morgan worked as a financial services regulator (Director of
Fiduciary Services and Enforcement at the Guernsey Financial Services
Commission) and was particularly involved in the activities of the Financial
Action Task Force and the Offshore Group of Banking Supervisors. Prior to
1999, Mr Morgan held positions at Barings and the Bank of Bermuda. He
qualified as a barrister in 1976 and holds an MA in Economics and Law from the
University of Cambridge.
Linda Wilding (Audit Committee Chairman)
Appointed to the Board 1 February 2023
Ms Wilding has previously served as Chair and non-executive director of
various public and private equity-backed companies for over 20 years. After
gaining a PhD in Biochemistry, she joined EY and trained as a Chartered
Accountant. From the late 1980s she spent over a decade at Mercury Asset
Management as a fund manager in their private equity division. She has chaired
the ESG committee at the Balanced Commercial Property Trust plc (BCPT plc).
She is also currently on the Board of Wesleyan Assurance Society, a specialist
in mutual financial services, and Odyssean Investment Trust plc, an investment
trust.
Trevor Ash (Director)
Appointed to the Board 25 May 2017
Mr Ash has been a non-executive director of a number of investment entities
since 1999, including funds managed by Rothschild, Insight, Cazenove, Merrill
Lynch and Thames River Capital. He was formerly Chairman of JPEL Private
Equity Limited. Prior to 1999, Mr Ash spent 27 years with the Rothschild Group
in various capacities, most recently as Managing Director of Rothschild Asset
Management (CI) Limited and as a non-executive director of Rothschild Asset
Management Limited in London. Mr Ash is a fellow of the Chartered Institute
for Securities & Investment.
Ian Brindle (Director)
Appointed to the Board 25 May 2017
Mr Brindle was the Senior Partner of Price Waterhouse from 1991 to 1998 and
Chairman of PricewaterhouseCoopers until 2001. Mr Brindle was a member of the
Accounting Standards Board between 1992 and 2001 and Deputy Chairman of the
Financial Reporting Review Panel between 2001 and 2008. Mr Brindle has served
as a non-executive director on a number of Boards, including Electra Private
Equity PLC, F&C Asset Management PLC, Spirent Communications PLC,
Elementis PLC and 4 Imprint Group PLC.
Helen Sinclair (Director)
Appointed to the Board 1 February 2023
Ms Sinclair has a degree in Economics from Cambridge and an MBA from INSEAD
business school. She began her career in investment banking and then moved
into private equity investment at 3i. Prior to her focus on non-executive
director roles, Helen co-founded and ran Matrix Private Equity (which became
Mobeus Equity Partners LLP). Helen has a thirty-year track record as an
investor, board member and board observer in various sectors. Helen serves on
the Boards of Octopus Future Generations VCT plc, BlackRock Smaller Companies
Trust plc, Shires Income plc and North-East Finance Ltd.
Directors' Report (including the Strategic Report)
The Directors present their annual report on the affairs of Sherborne
Investors (Guernsey) C Limited and its subsidiaries (together, the "Group"),
until their dissolution, together with the audited financial statements, for
the year ended 31 December 2024.
Principal activities and investing policy
The Company is a Guernsey domiciled company incorporated on 25 May 2017 with
limited liability. The Company's shares were admitted to trading on the SFS on
12 July 2017.
SIGC Midco Limited, a former wholly owned subsidiary of the Company, was
dissolved in early 2023, and therefore the Company became a limited partner in
SIGC LP (Incorporated) ("Investment Partnership"), a limited partnership
registered in Guernsey on 24 May 2017, until its dissolution in May 2023,
following which the Company became an investor in the Funds. During 2024,
Sherborne Investors undertook a reorganisation of the Funds, which resulted in
the shares of Navient Corporation ("Navient") and of the Company owned by the
Funds being transferred to Sherborne Strategic Fund F, LLC and Sherborne
Strategic Fund G, LLC, respectively. For further details, see Note 1 and Note
9 of the Financial Statements. All references to the Investment Partnership
herein shall be only until its date of dissolution.
The Company aims to provide investors with capital growth through its
investment in the Funds, to which it has committed £700,000,000.
The Company's investment policy, which it will affect indirectly through its
investment in the Funds, is to invest in a company which is publicly quoted,
and which the Investment Manager considers to be undervalued as a result of
operational deficiencies and which it believes can be rectified by the
Investment Manager's active involvement, thereby increasing the value of the
investment (a ''Turnaround''). Accordingly, the investment will not be
passive. The Company's investment may be made on-market or off-market.
The Company may invest, through the Funds, in a company operating in any
economic sector but will only be invested in one company at a time. Thus, it
will not seek to reduce risk through diversification. The choice of target
company will be subject to a vote in the affirmative of a majority in interest
of the limited partners of the Funds, in effect giving the Board a veto on
such decision since the Company owns, and is currently expected to continue to
own, more than 50% of the interests in the Funds.
The investment in a target company is intended to be in shares, but could also
be in warrants, convertibles, derivatives and any other equity, debt or other
securities.
Depending on the size of the investment, all or part of the Company's assets
will be invested in the Selected Target Company ("STC"), less the minimum
capital requirements. The investment objective and investment policy of the
Funds are the same as those of the Company. In selecting the STC, the
Investment Manager will consider the relevant Environmental, Social and
Governance ("ESG") aspects of the STC and will seek to positively influence
the relevant policies and performance of the STC through its active
involvement in seeking to effect a turnaround.
The holding period for investments is neither fixed nor predictable, but the
Company expects that a typical holding period would be greater than one year.
The average holding period of the four completed UK Turnarounds in companies
with which the Investment Manager's key personnel have been involved is 28
months; however, this should not be taken as being indicative of the holding
period to be adopted in effecting the Company's investment policy.
The Funds may engage in hedging transactions to protect the market value of
its investment in any company in which it is invested and may also engage in
stock lending.
The Company and the Funds do not currently intend to undertake borrowings but
are permitted to do so. Any borrowings undertaken by the Company will not, in
aggregate, be greater than 30% of the Company's Gross Assets as measured at
the time that such borrowings are incurred.
In the event that the Board considers it appropriate to amend materially the
investment objective or policy of the Company, Shareholder approval to any
such amendment will be sought. For further details on the current investment
refer to the Chairman's Statement on page 3.
Risk Management
The Directors are responsible for supervising the overall management of the
Company, whilst the day-to-day management of the Company's assets has been
delegated to the Investment Manager. Portfolio exposure has been limited by
the guidelines which are detailed within the principal activities and
investment policy section of the annual report above. The Board has undertaken
a robust assessment of the principal risks facing the Company and has
undertaken a detailed review of the effectiveness of the risk management and
internal control systems.
In its role as a third-party fund administration services provider, Apex Fund
and Corporate Services (Guernsey) Limited produced an annual SSAE 18 and ISAE
3402 Type 2 Assurance Report on the internal control procedures in place for
the year ended 30 September 2024 and this is subject to review by the Audit
Committee and the Board.
The principal risks facing the Company relate to the Company's investment
activities and these risks include the following:
· performance risk;
· market risk;
· key person risk;
· fraud and cyber security risk;
· accounting, legal and regulatory risks; and
· emerging risk
An explanation of these principal and emerging risks and how they are managed
is set out below.
The Board can confirm that the principal and emerging risks of the Company,
including those which would threaten its business model, future performance,
solvency or liquidity, have been robustly assessed for the year ended 31
December 2024.
· Performance risk - The Board is responsible for approving the
Investment Manager's recommended investment in an STC and monitoring the
performance of the Investment Manager. An inappropriate strategy or poor
execution of strategy may lead to underperformance. To manage that risk, the
Investment Manager will typically have several potential target companies
under review at any one time in various stages of analysis. The Investment
Manager's recommendation of an STC includes an assessment of the capital
appreciation potential of the proposed investment, assuming certain operating
improvements and capital realignment are successfully implemented. The Company
intends that its holding in the STC will be less than 30% of the outstanding
shares if the STC is a UK company, so that it is not required to make a bid
for the entire company. Accordingly, the Company will not control the STC. The
Investment Manager's involvement in the Turnaround of the STC requires the
support of other independent shareholders. The Board receives regular updates
of the Funds' ownership interest in the STC and other information that impacts
its Turnaround strategy. The Audit Committee is responsible for all matters
pertaining to risks and it formally monitors the investment performance of the
Company at least three times a year including when the Investment Manager
reports on the performance of the Company's portfolio at board meetings.
· Market risk - Market risk arises from uncertainty about the
future operating performance and market response to the Company's investment
in the STC. The Company's objective of market risk assessment is to manage and
control market risk exposures within acceptable parameters while optimising
the return on investment. The Company's investment approach is to invest in
only one company at a time. Such investment concentration may subject the
Company to greater market fluctuation and loss than might not result from a
more diversified investment portfolio. The market's valuation of the STC is
also subject to fluctuations in overall market prices as well as fluctuations
in the industry sectors in which the STC operates. The Investment Manager does
not typically hedge against overall market or sector fluctuations. The Company
may also use a limited amount of short-term leverage to acquire a portion of
its ownership interest in the STC, which will amplify the results of the STC.
In addition to interest and dividend income received from the STC, the source
of debt repayment could come from the proceeds realised from the sale of a
portion of the STC. The Investment Manager manages the Company's market risk
in accordance with policies and procedures in place as disclosed in the
Company's prospectus. The Company's market risk is monitored closely and
managed and mitigated as far as possible by the Investment Manager through
active portfolio management. The Investment Manager reports to the Board on
these matters.
· Key person risk - Key person risk refers to the potential
impact of losing individuals critical to a company's operations. For this
Company, the loss of a Director is significant due to the small Board size,
while losing key Investment Manager personnel poses an even greater risk given
their crucial roles. Mitigation measures include advance retirement notice to
be provided by Directors, Board annual reviews to identify inadequate support
or skills, and the existence of the Company's Conflict of Interest policy.
Although key person risk at the Investment Manager is difficult to mitigate,
investors were made aware of the importance of these key persons at the
Company's launch.
· Fraud and cybersecurity risk - Fraud such as misrepresentation,
omission, or manipulation of financial information could be disruptive to the
Company and pose a reputational risk if not dealt effectively. The Board
receives regular updates on measures designed to prevent and detect fraudulent
activities. These measures include establishing strong internal controls,
ensuring accurate and transparent financial reporting, and maintaining
thorough oversight of accounting processes. Large-scale network disruption
such as hacking, malware, phishing, disrupted denial of service attacks could
also disrupt and damage its reputation. The service providers also give
regular updates on any cyber security issues and how they are managing the
risk. All access to the offices of service providers is strictly controlled
and Data protection policies are in place.
· Accounting, legal and regulatory risks - The Company is exposed
to the risk of action or sanction by shareholders, counterparties or
regulators if it fails to comply with the regulations of the UK Listing
Authority or the Guernsey Financial Services Commission or if it fails to
maintain accurate accounting records. Increased regulation (including climate
change and ESG) may increase the Company's compliance burden and require
changes to policies, procedures or disclosure requirements. The Administrator
provides the Board with regular reports on changes in regulations and
accounting requirements, including increased regulation relating to ESG and
climate change. These contribute to the Board's ability to maintain its
awareness and knowledge of climate/ESG related reporting requirements and its
review of best practice for investment companies.
· Emerging risks - The Board is constantly alert to the
identification of any new or emerging risks through the monitoring of the
Company's investment portfolio and by conducting regular reviews of the
Company's risk assessment matrix. When an emerging risk is identified, the
risk assessment matrix is updated and appropriate mitigating measures are
agreed. No emerging risks have been identified during the course of the year.
Other risks faced by the Company are described in detail within the Company's
Offering Document and can be obtained at www.sherborneinvestorsguernseyc.com
(http://www.sherborneinvestorsguernseyc.com) .
Other risks faced by the STC are described in detail within the STC's publicly
available financial statements and can be obtained at www.sec.gov
(http://www.sec.gov) or the STC's website at www.navient.com
(http://www.navient.com) .
The Board describes in the annual report how opportunities and risks to the
future success of the business have been considered and addressed, the
sustainability of the company's business model and how its governance
contributes to the delivery of its strategy. Most of the Code requirements
will ordinarily be met by the description of a company's business model and
strategy required by Section 414C (8) (a) and (b) of the Companies Act 2006.
The Board has considered the Company's solvency and liquidity risk and
disclosure of this is made in Note 10 of the Financial Statements and in the
Viability Statement below.
The Company has no employees, and does not own any physical assets, therefore
it is not directly subject to climate change risk. The Board also made
enquiries of key service providers in respect of their assessment of how
climate change and ESG risk impacts their own operations and has been assured
that this has no impact on their ability to continue to supply their services
to the Company. The Board has considered the impact of climate change on the
Company and believes that it does not give rise to a material impact on the
financial statements of the Company.
The Board remains ultimately responsible for identifying and assessing risk
and implementing and monitoring procedures to control such risks where
possible. The Board seeks to mitigate and manage these risks through continual
review, policy-setting, enforcement of contractual obligations, and monitoring
of the Company's investment portfolio.
Viability Statement
In accordance with provision 31 principle O of the UK Corporate Governance
Code 2018, the Directors have assessed the viability of the Company as at 31
December 2024. The Directors have assessed the prospects of the Company over a
longer period than the 12 months minimum required by the 'going concern'
provision. For the purposes of this statement, having regard to the economic
planning cycle and the Company's strategy review period, the Board has adopted
a three-year viability period to 31 December 2027.
In its assessment of the Company's viability, the Board has considered each of
the Company's principal and emerging risks as detailed above and in particular
the impact of a significant fall in the value of the Company's investment
portfolio. The three-year period is the maximum period over which to provide
its viability statement in order to keep in line with its investment strategy.
The holding period for the investment in the STC is neither fixed nor
predictable, but the Company expects that a holding period of up to 3-4 years
would be sufficient to execute the Investment Manager's Turnaround strategy.
The Directors have identified the following factors as potential contributors
to ongoing viability:
· The liquidity of the Company's portfolio; and
· The ongoing relevance of the Company's investment objective in
the current environment.
At 31 March 2025 the Company had an estimated (unaudited) NAV of £398.7
million. The Company and the Funds have sufficient liquid assets to meet
expected costs. Expected costs are primarily based on contractual obligations
and are therefore not subject to material fluctuations. The nature and amount
of these costs are consistent with the prior year and are expected to be
materially similar for the foreseeable future. The primary source of cash
inflows is dividends paid by the STC to the Funds. The STC has paid a
quarterly dividend since 2015. Should the STC cease paying dividends and
should additional liquidity be required by the Funds or by the Company, shares
of the STC, even if the share value were to decline by 50%, could be sold with
sufficient liquidity provided to the Company. The Investment Manager has the
full intent and ability for the Funds to provide the Company with any
necessary funds as and if required.
Based on the foregoing, the Directors have a reasonable expectation that the
Company will be able to continue in operation and meet its obligations as and
when they fall due over the three-year period to 31 December 2027.
Subsequent events
Details of events that have occurred after the date of the Statement of
Financial Position are provided in Note 12 to the Financial Statements.
Dividend policy
The Company's dividend policy, subject to the discretion of the Directors who
reserve the right to retain amounts for minimum capital requirements or for
any share repurchases, is to pay dividends to Shareholders following receipt
of any distributions from the Funds, subject always to compliance with the
solvency test prescribed by the Companies (Guernsey) Law, 2008, as amended
(the "Companies Law").
This will be dependent on the frequency with which the STC pays dividends to
its shareholders as well as the extent to which such dividends are first
required to be used to repay outstanding indebtedness and meet the minimum
working capital requirements.
Dividend
During the year the Company declared and paid dividends to Shareholders as
follows:
Period end Dividend per share (p) Announcement date Ex div date Record date Paid date
Ad hoc 0.5 30.04.2024 09.05.2024 10.05.2024 31.05.2024
Ad hoc 0.5 04.09.2024 12.09.2024 13.09.2024 04.10.2024
The Company has declared a dividend of 0.1 pence per share, payable on 23 May
2025 to shareholders on the register at 2 May 2025.
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 7 to the Financial
Statements. All shares carry equal voting rights.
Substantial interests
As at 31 December 2024, the Company is aware of the following material
shareholdings:
Shareholder Number of Ordinary % of issued share capital
Shares
Sherborne Investors Management LP* 187,670,447 26.1
Invesco Limited 139,467,736 19.9
Columbia Threadneedle 129,298,511 18.5
Fidelity International Limited 77,210,833 11.0
Janus Henderson Group plc 73,267,400 10.5
*Shares are owned by Sherborne Strategic Fund G, LLC, an indirect investment
of SIGC LLC. Refer to Note 5 to the Financial Statements for additional
detail.
As at 31 March 2025, the Company is aware that Sherborne Investors Management
LP's shareholding is now 209,750,000 shares or approximately 30%. The Company
is not aware of any other changes to the table above.
The Directors currently hold no shares in the Company (unchanged from prior
year).
Independent Auditor
Deloitte resigned as the Auditor effective 31 July 2024 and Grant Thornton was
appointed as the new Auditor effective 1 August 2024.
By order of the Board of Directors
Directors' Remuneration Report
Remuneration Policy & Components
The Board endeavours to ensure the Remuneration Policy reflects and supports
the Company's strategic aims and objectives throughout the period under
review. It has been agreed that, due to the small size and structure of the
Company, a separate
Remuneration Committee would be inefficient; therefore, the Board is
responsible for discussions regarding remuneration. No external remuneration
consultants were appointed during the period under review.
Effective 1 July 2024, the remuneration for directors was increased by 14%. to
take into account inflationary increases since the company was incorporated.
This represents the first increase since the Company's incorporation on 25 May
2017.
As per the Company's Articles of Incorporation ("Articles"), all Directors are
entitled to such remuneration as is stated in the Company's Prospectus or as
the Company may by ordinary resolution determine; the aggregate overall limit
is currently set at £250,000. Subject to this limit, it is the Company's
policy to determine the level of Directors' fees, having regard for
the level of fees payable to non-executive Directors in the industry
generally, the role that individual Directors fulfil in respect of
responsibilities related to the Board and Audit Committee and the time
dedicated by each Director to the Company's affairs. Actual fees are set out
below.
Fees Received 2024 2023
Actual £
Actual £
Chairman (Talmai Morgan) 53,500 50,000
Audit Committee Chairman (Linda Wilding) 42,800 35,008
Audit Committee Chairman (Christopher Legge) (until 23 May 2023) - 16,060
Non-Executive Director (Trevor Ash) 37,500 35,000
Non-Executive Director (Ian Brindle) 37,500 35,000
Non-Executive Director (Helen Sinclair) 37,500 31,986
Total 208,800 203,054
As outlined in the Articles, the Directors may also be paid for all reasonable
travelling, hotel and other out-of-pocket expenses properly incurred in the
attendance of Board or Committee meetings, General meetings, or meetings with
shareholders of the Company or otherwise in the discharge of their duties; and
all reasonable expenses properly incurred by them seeking independent
professional advice on any matter that concerns them in the furtherance of
their duties as Directors of the Company, such expenses having been immaterial
during 2024.
No Director has any entitlement to pensions, paid bonuses or performance fees,
has been granted share options or has been invited to participate in long-term
incentive plans. No loans have been extended to a Director by the Company and
neither have any loans to a Director been guaranteed by the Company.
None of the Directors have a service contract with the Company. Each of the
Directors has entered into a letter of appointment with the Company, were
subject to election at the first Annual General Meeting ("AGM"), or as
determined in line with the Company's Articles, and re-election at subsequent
AGMs in accordance with the Company's Articles and all due regulations and
provisions. The Directors do not have any interests in contractual
arrangements with the Company or its investment during the year under review,
or subsequently. Each appointment can be terminated in accordance with the
Company's Articles and without compensation. No notice period is stated in the
Articles and is terminable at will of both parties.
Directors' and Officers' liability insurance cover is maintained by the
Company but is not considered a benefit in kind nor does it constitute part of
the Directors' Remuneration. The Company's Articles indemnify each Director,
Secretary, agent and officer of the Company, former or present, out of assets
of the Company in relation to charges, losses, liabilities, damages and
expenses incurred during the course of their duties, in so far as the law
allows and provided that such indemnity is not available in circumstances of
fraud, wilful misconduct or negligence.
Corporate Governance Report
The Board places a great importance on ensuring that high standards of
corporate governance are maintained. The AIC Code addresses the Principles and
Provisions set out in the UK Corporate Governance Code (the "UK Code") in
addition to setting out additional Principles and Provisions on issues that
are of specific relevance to the Company. Accordingly, the Directors will take
appropriate measures to ensure that the Company operates with due
consideration to any codes of corporate governance that the Board deems
appropriate and operates in accordance with the UK Corporate Governance Code
2018 and/or the GFSC Finance Sector Code of Corporate Governance, in each case
having regard to the Company's size and nature of business. The Board
considers that reporting against the Principles and Provisions of the AIC
Code, which has been endorsed by the Financial Reporting Council and the
Guernsey Financial Services Commission, will provide more relevant information
to shareholders. As an unregulated, Guernsey incorporated company quoted on
the Specialist Fund Segment ("SFS"), the Company has complied substantially
with the Principles and Provisions of the AIC Code, with the exceptions
detailed further below. Further information on the Code can be obtained from
www.frc.org.uk (http://www.frc.org.uk) .
Except as disclosed below and within the report, the Board is of the view that
the Company has complied with the principles and provisions of the Code
throughout the year ended 31 December 2024, with the following exceptions:
- The Company has no Chief Executive, as envisaged by principle G
and provision 9 of the Code. See the Division of Responsibilities on page 17
below;
- The Company has no internal audit function, as envisaged by
principle M and provision 25 of the UK Code. See the Audit, Risk and Internal
control section on pages 21 to 22 below;
- The Company does not have a remuneration committee, as required
by principle Q and provision 32 of the UK Code. See the Remuneration section
on page 24 to 25 below; and
- The Company does not have a Nomination Committee, as required by
principle J and provision 17 of the Code. See Board Appointments Process on
pages 19 below.
Key issues affecting the Company's corporate governance responsibilities, how
they are addressed by the Board and application of the Code are presented
below.
Board Leadership and Company Purpose
The Board is composed entirely of Independent non-executive Directors, who
meet as required with and without the presence of the Investment Manager and
service providers to scrutinise the achievement of agreed goals and objectives
and monitor performance. Through the Audit Committee, they are able to
ascertain the integrity of financial information and confirm that all
financial controls and risk management systems are robust. In addition, a
non-executive Director may provide a written statement outlining any concerns
to the Chairman upon resignation.
Role of the Board
The Board is the Company's governing body and has overall responsibility for
ensuring the Company's success by directing and supervising the affairs of the
business and meeting the appropriate interests of shareholders and relevant
stakeholders, while enhancing the value of the Company and also ensuring
protection of investors. A summary of the Board's responsibilities is as
follows -
- statutory obligations and public disclosure;
- strategic matters and financial reporting;
- capital management, including gearing and dividend policy;
- review of investment performance and associated matters;
- risk assessment and management including reporting compliance,
governance, monitoring and control; and
- other matters having a material effect on the Company.
The Board's responsibilities for the Annual Report are set out in the
Statement of Directors' Responsibilities on pages 31 to 32.
The Board needs to ensure that the Financial Statements, taken as a whole, are
fair, balanced and understandable and provide the information necessary for
shareholders to assess the Company's performance, business model and strategy.
In seeking to achieve this, the Directors have set out the Company's
investment objective and strategy (see page 2) and have explained how the
Board and its delegated Committees operate and how the Directors review the
risk environment within which the Company operates and set appropriate risk
controls. Furthermore, throughout the Financial Statements the Board has
sought to provide further information to give shareholders a fair, balanced
and understandable view.
Information and Support
Information Provided to the Board
Reports and papers of corporate governance matters, containing relevant,
concise and clear information, are provided to the Board and Committees in a
timely manner to enable review and consideration prior to both scheduled and
ad-hoc specific meetings. Investment updates are provided verbally at
scheduled and ad hoc meetings. This ensures that Directors are capable of
contributing to, and validating, the development of Company strategy and
management. The regular reports also provide information that enables scrutiny
of the Company's Investment Manager and other service providers' performance.
When required, the Board has sought further clarification of matters with the
Investment Manager and other service providers, both in terms of further
reports and via in-depth discussions, in order to make a more informed
decision for the Company. Should Directors raise concerns in relation to the
operation of the Board or the management of the Company, these concerns are
recorded in the Board minutes.
Information on Shareholders
The Board welcomes shareholders' views and places great importance on
communication with its shareholders. The Board receives regular reports on the
views of its shareholders from the Company's Broker and Investment Manager
which are taken into consideration as part of the Board's decision-making
process.
The Chairman and other Directors are available to meet shareholders if
required, and the AGM of the Company provides a forum for shareholders to
engage with the Directors and discuss any issues. In prior years, the Chairman
has met directly with shareholders both in London and virtually to discuss
matters, and the Chairman and Directors have also addressed key strategic
topics and shareholder queries during virtual meetings. In 2024, the Chairman
has extended offers to meet shareholders in case of any concerns, although no
meetings were requested by the shareholders. The Investment Manager is
meticulous in holding direct meetings with shareholders and reporting these
discussions to the Board. During 2024, the Investment Manager met individually
with shareholders both in person and virtually to discuss the detailed
progress of the Navient investment. Additionally, the Investment Manager
provided written updates to shareholders highlighting new information
published by Navient.
The Directors place a great deal of importance on communication with
shareholders. The Investment Manager and Deutsche Numis Securities Limited
(the "Broker") offer to meet with all shareholders at least annually. The
Board also receives reports from the Broker on shareholder issues. The Annual
Report and Audited Financial Statements are widely distributed to other
parties who have an interest in the Company's performance and are available on
the Company's website. The Chairman also meets with major shareholders
independently of the Investment Manager from time to time. All Directors are
available for discussions with the shareholders, in particular the Chairman
and the Audit Committee Chairman, at the AGM and as and when required.
Division of Responsibilities
The Chairman
Appointed to the position of Chairman of the Board on 25 May 2017, Mr Morgan
is responsible for leading the Board in all areas, including determination of
strategy, organising the Board's business and ensuring the effectiveness of
the Board and
individual Directors. He also endeavours to produce an open culture of debate
within the Board. Mr Morgan is a non-executive Independent Director.
The Chairman of the Board must be independent for the purposes of Chapter 15
of the Listing Rules. Mr Morgan is considered independent because he:
- has no current or historical employment with the Investment
Manager;
- has not provided any professional advisory services to the
Investment Manager; and
- has no current directorships in any other investment funds
managed by the Investment Manager.
There are no executive Directors appointed to the Board, no employees and
therefore there is no requirement for a Chief Executive. The non-executive
Directors are all independent and their responsibilities are clearly defined
within the Schedule of Matters reserved to the Board. All day to day functions
are outsourced to external service providers.
The Board believes that its balance of skills, experience and knowledge,
provides for a sound base from which the interest of investors will be served
to a high standard. Due to the size and structure of the Company, the
appointment of a senior independent director is not deemed appropriate.
Board and Committee Meeting Attendance
The Board met 7 times and the Audit Committee met 5 times during the year.
Individual attendance at Board and Audit Committee meetings is set out below.
Board Audit Committee
Talmai Morgan 7 N/A
Trevor Ash 7 5
Ian Brindle 5 5
Linda Wilding 5 5
Helen Sinclair 5 5
The Board ensures that the Company's contracts of engagement with the
Investment Manager, Administrator and other service providers are operating
satisfactorily so as to ensure the safe and accurate management and
administration of the Company's affairs and business and that they are
competitive and reasonable for Shareholders. Terms of Reference that contain a
formal schedule of matters reserved for the Board of Directors and its duly
authorised Committee for decision has been approved and can be reviewed at the
Company's registered office.
Until the dissolution of the Investment Partnership in May 2023, management of
the Investment Partnership was the responsibility of the General Partner,
which had delegated investment decisions and day-to-day management of the
Investment Partnership to the Investment Manager under the terms of an
Investment Management Agreement. Through its majority interest in the
Investment Partnership, the Company and therefore the Board, had the ability
to approve proposed investments and to remove the General Partner. The
performance of the Investment Manager is subject to regular review by the
Board. Please refer to page 48 in Note 1 for further information.
Other matters for the Board include review of the Company's overall strategy
and business plans; approval of the Company's half-yearly and annual financial
statements; review and approval of any alteration to the Company's accounting
policies or practices and valuation of investments; approval of any alteration
to the Company's capital structure; approval of dividend policy; appointments
to the Board and constitution of Board Committees; and performance review of
key service providers.
Directors' Indemnity
The Company holds appropriate Directors' and Officers' Liability Insurance
cover in respect of any legal action taken against the Board.
Conflicts of interest
Directors are required to disclose all actual and potential conflicts of
interest as they arise for approval by the Board, who may impose restrictions
or refuse to authorise conflicts. The process of consideration and, if
appropriate, approval will be conducted only by those Directors with no
material interest in the matter being considered. The Board maintains a
Conflicts of Interest policy which is reviewed periodically and a Conflicts of
Interest Register which is reviewed by the Board at each quarterly Board
meeting.
Commitment
Chairman's Commitment
Prior to the Chairman's appointment, discussions were undertaken to ensure the
Chairman was sufficiently aware of the time needed for his role and agreed to
upon signature of his appointment letter. Other significant commitments of the
Chairman were disclosed prior to appointment to the Board, and any changes
declared as and when they arise. These commitments, and their subsequent
impact, can be identified in his biography on page 5.
Non-executive Directors' Commitments
The terms and conditions of appointment for non-executive Directors are
outlined in their letters of appointment and are available for inspection by
any person at the Company's registered office during normal business hours and
at the AGM for fifteen minutes prior to and during the meeting. As with the
Chairman, significant appointments are declared prior to appointment, any
changes reported as and when appropriate.
Development
The Board believes that the Company's Directors should develop their skills
and knowledge through participation at relevant courses. The Chairman is
responsible for reviewing and discussing the training and development of each
Director according to identified needs. Upon appointment, all Directors
participate in discussions with the Chairman and other Directors to understand
the responsibilities of the Directors, in addition to the Company's business
and procedures.
The Company also provides regular opportunities for the Directors to obtain a
thorough understanding of the Company's business by regularly meeting members
of the senior management team from the Investment Manager and other service
providers, both in person and virtually. The Board undertakes an annual
internal Board Performance Review. This exercise was completed in April 2025.
The Company Secretary circulated questionnaires to each Director to complete
independent of each other, and anonymously. Their completed forms were
returned to the Company Secretary, and their responses collated into a report
that was tabled at the Board meeting. The report findings were discussed at
the meeting. The results of the performance review were satisfactory with no
issues identified.
Company
Secretary
Under the direction of the Chairman, the Company Secretary facilitates the
flow of information between the Board, Committees, Investment Manager and
other service providers through the development of comprehensive meeting
packs, agendas and other media.
Full access to the advice and services of the Company Secretary is available
to the Board; in turn, the Company Secretary is responsible for advising on
all governance matters through the Chairman. The Articles and schedule of
matters reserved for the Board indicate the appointment and resignation of the
Company Secretary is an item reserved for the full Board. A review of the
performance of the Company Secretary is undertaken by the Board on a regular
basis.
Composition, succession and evaluation
Board Appointments Process
Appointment Process
There is currently no Nomination Committee for the Company as it is deemed
that the size, composition and structure of the Company would mean the process
would be inefficient and counterproductive. When new Directors are appointed
to the Company, an in-depth recruitment process takes place. For the
appointments of Linda Wilding and Helen Sinclair in February 2023, Cornforth
Consulting an independent firm from any of the directors or management were
engaged to liaise with the Company in the process of the appointments.
Board Diversity
In compliance with FCA Listing Rule 9.8.6 (LR 9.8.6), the Company has provided
information, set out in the tables below, on how it has met the following
targets on Board diversity-
- at least 40% of the Board is female
- at least one senior position on the Board is held by a woman
As 31 December 2024, the Company has not met the targets on board diversity
set out in LR 9.8.6 (9)(a), contrary to the FCA's target for listed companies.
The composition of the Board is monitored annually, and the future
appointments will be based on merit with due regard for the benefits of
diversity, including both gender and ethnic diversity.
Gender identity Number of Board members % of the Board Number of senior positions on the Board
Men 3 60 1
Women 2 40 1
Ethnic background Number of Board members % of the Board Number of senior positions on the Board
White British or other white 5 100 2
(including minority white groups)
The Listing Rules specify the positions of Chief Executive Officer ("CEO"),
Chief Finance Officer ("CFO") and Chair as senior positions. The Board notes
that as an externally-managed investment company, with a Board comprised
entirely of
non-executives Directors, it does not have the roles of a CEO or CFO as
envisaged in LR 9.8.6, and therefore for the purpose of the above targets, it
considers the senior positions on the Board to include the roles of Chair and
Chair of any permanent committee of the Board.
Each Director is required to be elected by shareholders at the first AGM
following their initial appointment to the Board. The Board recommends the
on-going annual re-election of each Director and supporting biographies,
including length of service, are disclosed on pages 5 and 6.
The Board currently consists of five non-executive members.
For the purposes of assessing compliance with the Code, the Board considers
the Directors are independent of the Investment Manager and free from any
business or other relationship that could materially interfere with the
exercise of their independent judgment.
Evaluation
Board and Director Evaluation
Using a pre-determined template based on the Code's provisions as a basis for
review, the Board undertakes an internal evaluation of its performance and
that of the Audit Committee. The Chairman led the process using a
pre-determined template and met with each of the Directors to ascertain their
views on the functioning of the Board and the Audit Committees. In addition,
the Chairman reviewed the performance commitment and contribution of each
Director. Following discussions with the other Directors, the Audit
Committee Chairman reviewed the performance of the Chairman. This was last
completed in April 2024. The Board evaluated the investment matters, internal
controls and corporate governance, administration and support services, and
the committees with a positive outcome where all the Directors were in
agreement. Additionally, an evaluation focusing on individual commitment,
performance and contribution of each Director is conducted. If appropriate,
new members would be proposed to resolve the perceived issues, or a
resignation sought. Due to the size and structure of the Board the evaluation
of the Chairman of the Board and Audit Committee is dealt with within the
Board and Audit evaluations.
Given the Company's size and the structure of the Board, no external
facilitator or independent third party is used in the performance evaluation.
Re-election and Board Tenure
The Board has considered the need for a policy regarding tenure of office;
however, the Board believes that any tenure decisions should consider the
Company's investment objective and the average length of seeking to achieve
that, the need for continuity and maintenance of knowledge and experience and
to balance this against the need to periodically refresh Board composition and
have a balance of skills, experience, age and length of service.
The Board remains satisfied that the individual contributions of each Director
are, and will continue to be, important to the Company's long term sustainable
success. Accordingly, at the AGM of the Company to be held on 21 May 2025,
Talmai Morgan, Ian Brindle, Trevor Ash, Helen Sinclair and Linda Wilding will
be proposed for re-election.
Board succession planning
The Board considers it has a breadth of experience relevant to the Company,
and the Directors believe that any changes to the Board's composition can be
managed without undue disruption. An induction programme is in place for all
Director appointees. Any proposals for a new Director are discussed and
approved by the Board.
The Board's succession planning policy seeks to ensure that the Board remains
well balanced and that the Directors have a sufficient level of skills,
knowledge and experience to meet the needs of the Company. The Directors are
ever-cognisant of the need for the Board to have a balance of gender and other
attributes.
Audit, Risk and Internal Control
The Board has established an Audit Committee composed of Trevor Ash, Ian
Brindle, Helen Sinclair and Linda Wilding, each of whom are independent. Linda
Wilding is the Chairman of the Audit Committee. The Chairman of the Board is
not a member of the Audit Committee, in accordance with Provision 24. The
Committee, its membership and its terms of reference, which can be found on
the Company's website, are kept under regular review by the Board.
The Audit Committee meets at least twice a year and is responsible for
ensuring that the financial performance of the Company is properly reported on
and monitored, including reviews of the half-yearly and annual financial
statements, results announcements, internal control systems and procedures and
accounting policies.
The Audit Committee is intended to assist the Board in discharging its
responsibilities for the integrity of the Company's financial statements, as
well as aid the assessment of the Company's internal control effectiveness and
objectivity of external
auditors. Further information on the Committee's responsibilities and the work
of the Committee is given in the Report of the Audit Committee on pages 26 to
29.
The Board has reviewed the need for an internal audit function and has decided
that the systems and procedures employed by the Administrator and Investment
Manager, including their own internal controls and procedures, provide
sufficient assurance that a sound system of risk management and internal
control, which safeguards shareholders' investment and the Company's assets,
is maintained. An internal audit function specific to the Company is therefore
considered unnecessary, as explained on page 23.
The Audit Committee considers the scope and effectiveness of the Company's
external audit. The Company's Auditor, Grant Thornton Limited, may also
provide additional non-audit services to the Company, which in the Audit
Committee's opinion, will not compromise the independence of Grant Thornton
Limited's audit team. Further information is provided in the Report of the
Audit Committee on pages 27 to 30.
The Directors' Responsibility Statement confirms that the financial
statements, prepared in accordance with the applicable set of accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company as a whole, whilst the Chairman's
Statement includes a fair view of the development and performance of the
business and the position of the Company.
The Directors affirm the Company's compliance with regulatory guidance
concerning Alternative Performance Measures ("APMs") in financial reporting
and remain committed to evaluating the applicability of such measures in
future reporting cycles.
The financial disclosures adhere to the provisions of IAS 1 Presentation of
Financial Statements, ensuring alignment with accounting principles and
regulatory frameworks governing listed entities. This decision reflects the
directors' objective to present financial results without the incorporation of
supplementary metrics that could deviate from standardized definitions,
prioritizing comparability and accuracy in financial reporting, and minimizing
the risk of misinterpretation by stakeholders.
Financial and Business Reporting
An explanation of the Directors' roles and responsibilities in preparing the
Annual Report and Audited Financial Statements for the year ended 31 December
2024 is provided in the Directors' Report, pages 6 to 12, and Statement of
Directors' Responsibilities, pages 30 and 31.
Further information enabling shareholders to assess the Company's performance,
business model and strategy can be sourced in the Chairman's Statement, pages
3 and 4, and the Directors' Report on pages 6 to 12.
Going concern
The Financial Statements have been prepared on the going concern basis. The
net current asset position at year end is approximately £0.7 million and as
at 4 April 2025 the company's estimated (unaudited) net current asset position
is £1.6m. The Company, via the Funds, has sufficient liquid assets to meet
expected costs. In the unlikely scenario that the Company's expenses were to
increase 100% the resulting expenses would only represent approximately 0.3%
of the Company's NAV. The level of liquid assets and expenses in the
underlying structure has been considered, and the Investment Manager has full
intent and ability for the Funds to provide the Company with funds as and if
required. Therefore, after making enquiries and conducting a thorough review
of the Company's working capital and cash flow requirements, the Directors
have a reasonable expectation that the Company, via the Funds, has adequate
resources to continue in operational activities for the foreseeable future,
based on sufficient cash reserves as of 31 December 2024. The Board is
satisfied, that at the time of approving the financial statement, no material
uncertainties exist that may cast significant doubt concerning the Company's
ability to continue for the foreseeable future, being 12 months after the date
of approval of the financial statements. In addition, the Company's holdings
of cash and cash equivalents means the Company has adequate financial
resources to meet its liabilities as they fall due. The Board is therefore of
the opinion that the going concern basis should be adopted in the preparation
of the Financial Statements. Further detail can be found in the Viability
Statement on page 10.
Investment Manager
After careful consideration of the Investment Manager's performance, primarily
in terms of advice, managing the portfolio and communicating effectively with
shareholders, the Board agreed that it would be in the best interests of the
Company and its shareholders that the Investment Manager continues on the
current agreed contractual terms.
The Investment Management Agreement will continue in force until terminated:
(i) upon the dissolution of the Funds; (ii) by the Investment Manager,
voluntarily, upon 180 days' prior written notice to the Managing Member; (iii)
resignation of the Managing Member; or (iv) upon the date of the Managing
Member's delivery to the Investment Manager of a written notice terminating
the agreement.
There are no arrangements relating to the termination of their appointment,
including compensation payable in the event of termination. See the related
parties transactions note 9 on pages 55 and 56.
Risk Management and Risk Control
The Board is required to annually review the effectiveness of the Company's
key internal controls such as financial, operational and compliance controls
and risk management. The Board has documented the controls to be reviewed and
will review their effectiveness on an ongoing basis. The controls are
designed to ensure that the risk of failure to achieve business objectives is
managed rather than eliminated, and are intended to provide reasonable, rather
than absolute, assurance against material misstatement or loss. Through
regular meetings and meetings of the Audit Committee, the Board seeks to
maintain full and effective control over all strategic, financial, regulatory
and operational issues.
The Board maintains an organisational and committee structure with clearly
defined lines of responsibility and delegation of authorities. The Company's
system of internal control includes inter alia the overall control exercise,
procedures for the identification and evaluation of business risk, the control
procedures themselves and the review of these internal controls by the Audit
Committee on behalf of the Board. Each of these elements that make up the
Company's system of internal control is explained in further detail as
follows:
(i) Control environment
The Company is ultimately dependent upon the quality and integrity of the
staff and management of both its Investment Manager and Administration and
Company Secretarial service provider. In each case, qualified and able
individuals have been selected at all levels. The staff of both the Investment
Manager and Administrator are aware of the internal controls relevant to their
activities and are also collectively accountable for the operation of those
controls. Appropriate segregation and delegation of duties is in place. The
Audit Committee undertakes a review of the Company's financial controls on a
regular basis.
In its role as a third-party fund administration services provider, Apex Fund
and Corporate Services (Guernsey) Limited produced an annual SSAE 18 and ISAE
3402 Type 2 Assurance Report on the internal control procedures in place for
the year ended 30 September 2024 and this is subject to review by the Audit
Committee and the Board.
During April 2024 the board performed a thorough evaluation of the controls of
the Investment Manager Administration and the Company Secretarial service
provider. No exceptions were noted during the review.
(ii) Identification and evaluation of business risks
Another key business risk is the performance of the Company's investment. This
is managed by the Investment Manager, who undertakes regular analysis and
reporting of business risks in relation to the STC, who then proposes
appropriate courses of action to the Board for their review.
(iii) Key procedures
In addition to the above, the Board's key procedures involve a comprehensive
system for reporting financial results to the Board regularly. A review of
controls is conducted by the Audit Committee annually, and a twice-yearly
review of investment valuations by the Board, including reports on the
underlying investment performance.
Due to the size and nature of the Company and the outsourcing of key services
to the Administrator and Investment Manager, the Company does not have an
internal audit function. It is the view of the Board that the controls in
relation to the operating, accounting, compliance and IT risks performed
robustly throughout the year. In addition, all key procedures have been in
full compliance with the various policies and external regulations, including:
§ Investment policy, as outlined in the IPO documentation
§ Personal Account Dealing
§ Whistleblowing Policy
§ Anti-Bribery Policy
§ Applicable Financial Conduct Authority Regulations
§ Treatment and handling of confidential information
§ Conflicts of interest
§ Compliance policies
§ Market Abuse Regulation
The Company has delegated the provision of all services to external service
providers whose work is overseen by the Board. Each year a short questionnaire
is circulated to all external service providers requesting thorough details in
regard to controls, personnel and information technology, amongst others. This
is in order to provide additional detail when reviewing the performance
pursuant to their terms of engagement.
There were no protected disclosures made pursuant to the whistleblowing policy
of service providers in relation to the Company, during the year ended 31
December 2024 (unchanged from prior year).In summary, the Board considers that
the Company's existing internal controls, coupled with the analysis of risks
inherent in the business models of the Company and its subsidiaries, continues
to provide appropriate tools for the Company to monitor, evaluate and mitigate
its risks.
Remuneration
There is currently no Remuneration Committee for the Company as it is deemed
that the size, composition and structure of the Company would mean the process
would be inefficient and counter-productive.
Level and Components of Remuneration
Directors are paid in accordance with agreed principles covering various
functions. Further information can be sourced in the Directors' Remuneration
Report, page 13.
Procedures
The Company has a formal remuneration policy, outlined in the Directors'
Remuneration Report, on page 13.
UK Companies Act, Section 172 Statement
Whilst directly applicable to UK domiciled companies, the intention of the AIC
Code is that matters set out in section 172 of the UK Companies Act, 2006
("s172 of the Companies Act") are reported. The Board considers the view of
the Company's other key stakeholders as part of its discussions and
decision-making process. As an investment company, the Company does not have
any employees and conducts its core activities through third-party service
providers. Each provider has an established track record and, through
regulatory oversight and control, are required to have in place suitable
policies to ensure they maintain high standards of business conduct, treat
customers fairly, and employ corporate governance best practice.
The Board's commitment to maintaining the high-standards of corporate
governance recommended in the AIC Code, combined with the directors' duties
incorporated into the Companies (Guernsey) Law, 2008, the constitutive
documents, the Disclosure Guidance and Transparency Rules, and Market Abuse
Regulation, ensures that shareholders are provided with frequent and
comprehensive information concerning the Company and its activities.
Consistent with the above, the Board is satisfied that its policies, practices
and behaviour throughout the business are aligned with the Company's purpose,
values and strategy.
Whilst the primary duty of the Directors is owed to the Company as a whole,
the Board considers as part of its decision making process the interests of
all stakeholders. Particular consideration being given to the continued
alignment between the activities of the Company and those that contribute to
delivering the Board's strategy, which include the Investment Manager and
Administrator.
The Board, in conjunction with the Investment Manager and Broker, engages
actively with Shareholders to understand their views and to ensure their
interests are taken into consideration when determining the Company's
strategic direction. Refer also to the Information and Support Section on
pages 15 and 16 above.
Risk Management
In order to minimise the risk of failure to achieve business objectives and
promote the success of the Company, the Company and the Board actively
identifies, evaluates, manages and mitigates risk as well as continually
evolving the approach to risk management. Further details in connection with
Risk Management can be found on pages 7 and 9 of the Directors' Report and
pages 23 and 24 of the Corporate Governance Report.
People, Community and Environment
As an externally managed investment company, the Company has no direct
employees and minimal direct impact on the environment, nor is it responsible
for the emission of greenhouse gases. The principal responsibility to
shareholders is ensuring that the portfolio is properly managed. The
Investment Manager is responsible for the management of the portfolio and
engages with the STC in relation to their corporate governance practices and
wider community responsibilities. For further details on their corporate
governance and social practices, refer to the Social Responsibility page of
the STC's website.
Anti-Bribery and Corruption
The Board acknowledges that the Company's international operations may give
rise to possible claims of bribery and corruption. In consideration of The
Bribery Act 2010, enacted in the UK, at the date of this report the Board had
conducted a review of the perceived risks to the Company arising from bribery
and corruption to identify aspects of business which may
be improved to mitigate such risks. The Board has adopted a zero tolerance
policy towards bribery and has reiterated its commitment to carry out business
fairly, honestly and openly.
Criminal Finances Act
The Board has a zero tolerance commitment to preventing persons associated
with it from engaging in criminal facilitation of tax evasion and will not
work with any service provider who does not demonstrate the same commitment.
The Board has satisfied itself in relation to its key service providers that
they have reasonable provisions in place to prevent the criminal facilitation
of tax evasion by their own staff or any associated persons.
UK Modern Slavery Act
The Board acknowledges the requirement to provide information about human
rights in accordance with the UK Modern Slavery Act. The Board conducts the
business of the Company ethically and with integrity, and has a zero tolerance
policy towards modern slavery in all its forms. As the Company has no
employees, all its Directors are non-executive and all its functions are
outsourced, there are no further disclosures to be made in respect of
employees and human rights.
Business Relationships
In order for the Company to succeed, it requires to develop and maintain long
term relationships with service providers for services such as custodian,
investment management, administration, company secretarial, external audit,
among others. The Company values all of its service providers and engages with
them on a regular basis.
Business Conduct
The Company is committed to act responsibly and ensure that the business
operates in a responsible and effective manner and with high standards in
order to meet its objectives.
Shareholders
The Board place a great deal of importance on communication with all
shareholders and envisages to continue effective dialogue with all
shareholders. Further information in connection with shareholder engagement
can be found on pages 15 and 16 of the Corporate Governance Report. Throughout
2024, the Board, both individually and collectively, will continue to review
and challenge how the Company can continue to act in good faith to promote the
success of the Company for the benefit of its members in the decisions taken.
The Board is supported by the Audit Committee, which is comprised of four of
the directors, not including the Chairman of the Board. The Board has
considered the composition of the Committee and is satisfied that there are
sufficient recent relevant skills and experience, in particular with the
Chairman of the Audit Committee, Linda Wilding. The Board is also satisfied
that the Committee as a whole has competence relevant to the sector in which
the Company operates.
Role and Responsibilities
The primary role and responsibilities of the Audit Committee are outlined in
the Committee's Terms of Reference, available at the registered office,
including:
· Monitoring the integrity of the financial statements of the
Company and any formal announcement relating to the Company's financial
performance, consideration of the viability statement and reviewing
significant financial reporting judgements contained within said statements
and announcements;
· Reviewing the Company's internal financial controls, and the
Company's internal control and risk management systems;
· Monitoring the need for an internal audit function annually;
· Monitoring and reviewing the scope, independence, objectivity and
effectiveness of the external auditors, taking into consideration relevant
regulatory and professional requirements;
· Making recommendations to the Board in relation to the
appointment, re-appointment and removal of the external auditors and approving
their remuneration and terms of engagement, which in turn can be placed to the
shareholders for their approval at the AGM;
· Developing and implementing policy on the engagement of the
external auditor to supply non-audit services, taking into account relevant
ethical guidance regarding the provision of non-audit services by the external
auditors, and reporting to the Board, identifying any matters in respect of
which it considers that action or improvement is needed and making
recommendations as to the steps to be taken;
· Reviewing the arrangements in place to enable Directors and staff
of service providers to, in confidence, raise concerns about possible
improprieties in matters of financial reporting or other matters insofar as
they may affect the Company;
· Providing advice to the Board on whether the annual financial
statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Company's
performance, business model and strategy; and
· Reporting to the Board on how the Committee discharged all
relevant responsibilities, undertaken by the Chairman at each Board meeting.
Financial Reporting
The primary role of the Audit Committee in relation to the financial reporting
is to review with the Administrator, Investment Manager and the Auditor the
appropriateness of the Annual Report and Audited Financial Statements and
Interim Condensed Financial Statements, concentrating on, amongst other
matters:
· The quality and acceptability of accounting policies and
practices;
· The clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
· Material areas in which significant judgements have been applied
or there has been discussion with the Auditor;
· Whether the Annual Report and Audited Financial Statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for the shareholders to assess the Company's performance, business
model and strategy; and
· Any correspondence from regulators in relation to the Company's
financial reporting.
To aid its review, the Audit Committee considers reports from the
Administrator and Investment Manager and also reports from the Auditor on the
outcomes of their half-year review and annual audit. There was no half-year
review performed in 2024. The Audit Committee supports the Auditor in
displaying the necessary professional scepticism their role requires.
The Audit Committee met five times during the year under review; individual
attendance of Directors is outlined on page 16. The main matters discussed at
those meetings were:
· Review of auditor independence;
· Appointment of the external auditors;
· Review and approval of the annual audit plan of the external
auditors;
· Discussion and approval of the fee for the external audit;
· Detailed review of the Half Year Report and Accounts and Annual
Report and Financial Statements and recommendation for approval by the Board;
· Discussion of reports from the external auditors following their
annual audit;
· Assessment of the effectiveness of the external audit process as
described below;
· Review of the Company's key risks and internal controls,
including valuation uncertainty as described below; and
· Consideration of the UK Corporate Governance Code 2018, Guidance
on Audit Committees and other regulatory guidelines, and the subsequent impact
upon the Company.
The Committee has also reviewed and considered the whistleblowing policies in
place for the Investment Manager and Administrator and is satisfied the
relevant staff can raise concerns in confidence about possible improprieties
in matters of financial reporting or other matters insofar as they may affect
the Company.
Annual General Meeting
The Audit Committee Chairman, or other members of the Audit Committee
appointed for the purpose, shall attend each AGM of the Company, prepared to
respond to any shareholder questions on the Audit Committee's activities.
Internal Audit
The Audit Committee considers at least once a year whether or not there is a
need for an internal audit function. Currently, the Audit committee does not
consider there to be a need for an internal audit function, given that there
are no employees in the Company and all outsourced functions are with parties
/ administrators who have their own internal controls and procedures. This is
evidenced by the internal control reports provided by the providers, which
give sufficient assurance that a sound system of internal control is
maintained.
Significant Risks in Relation to the Financial Statements
Throughout the year, the Audit Committee identified a number of significant
issues and areas of key audit risks in respect of the Annual Report and
Audited Financial Statements. The Committee reviewed the external audit plan
at an early stage and concluded that the appropriate areas of audit risk
relevant to the Company had been identified and that suitable audit procedures
had been put in place to obtain reasonable assurance that the financial
statements as a whole would be free of material misstatements. The below table
sets out the key areas of risk identified and how the Committee addressed the
issues.
Significant Risks in Relation to the Financial Statements (continued)
Significant Issue Actions to Address Issue
Valuation of investment - focus upon one target company means that any errors The Audit Committee and Board review detailed portfolio valuations on a
in valuation, depending on their size, can be highly material. A key risk is regular basis throughout the year under review, and receive confirmation from
incorrect pricing used based on requirement of IFRS taking into account the the Investment Manager that the pricing basis is appropriate and in line with
market for those shares. relevant accounting standards.
At 31 December 2024, the Company's investment consists solely of a
non-controlling investment in SIGC LLC, which has received unqualified audit
opinions since inception and measures its balance sheet at fair value. The net
asset value of SIGC LLC, obtained from the audited SIGC LLC financial
statements at year end, is used as a proxy for fair value to measure the fair
value of the investment in SIGC LLC.
Auditor Tenure and Objectivity
The Company's Auditor, Grant Thornton Limited, has been appointed to act
pursuant to an Engagement Letter signed on 1 August 2024, following a tender
process conducted earlier in the year. The Committee reviews the Auditor's
performance on a regular basis with a detailed formal review conducted on an
annual basis to ensure the Company receives an optimal service. The
re-appointment of the Company's Auditor will be subject to annual shareholder
approval at the AGM. The Auditor is required to rotate the audit partner
regularly every five years. A new audit partner, Michael Carpenter, was
appointed to the Company during 2024. There are no contractual obligations
restricting the choice of external auditor and the Company will consider
putting the audit services contract out to tender at least every ten years.
Grant Thornton Limited regularly updates the Committee on the rotation of
audit partners, staff, level of fees in proportion to overall fee income of
the Company, details of any relationships between the Auditor, the Company and
any target company, and also provides overall confirmation from the Auditor of
their independence and objectivity.
The audit Committee undertook a formal review of the external auditor for the
year ended 31 December 2024, with no issues arising. As a result of their
review, the Committee is satisfied that Grant Thornton Limited is independent
of the Company, the Investment Manager and other service providers and
recommends the continuing appointment of the Auditor to the Board.
Conclusions in Respect of the Financial Statements
The production and the audit of the Company's Annual Report and Audited
Financial Statements is a comprehensive process requiring input from a number
of different contributors. In order to reach a conclusion on whether the
Company's financial statements are fair, balanced and understandable, the
Board has requested that the Committee advise on whether it considers that the
Annual Report and Financial Statements fulfils these requirements. In
outlining their advice, the Committee has considered the following:
· The comprehensive documentation that is in place outlining the
controls in place for the production of the Annual Report, including the
verification processes in place to confirm the factual content;
· The detailed reviews undertaken at various stages of the
production process by the Investment Manager, Administrator and the Committee
that are intended to ensure consistency and overall balance; and
· The controls enforced by the Investment Manager, Administrator
and other third party service providers to ensure complete and accurate
financial records and security of the Company's assets.
As a result of the work performed during the year, the Audit Committee has
concluded it has acted in accordance with its Terms of Reference and ensured
the independence and objectivity of the external Auditor. The Annual Report
for the year ended 31 December 2024, taken as a whole, is fair, balanced and
understandable and provides the information necessary for shareholders to
assess the Company's performance, business model and strategy, and has
reported on these findings to the Board. The Board's conclusions in this
respect are set out in the Statement of Directors' Responsibilities on pages
30 and 31.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements for each financial year which give a true and fair view,
in accordance with applicable laws and regulations, of the state of affairs of
the Company and of the profit and loss of the Company for that year.
The Companies (Guernsey) Law, 2008 requires the directors to prepare financial
statements for each financial year. The financial statements have been
prepared in accordance with IFRS Accounting Standards ("IFRS") as adopted by
the European Union ("EU"). In preparing these financial statements,
International Accounting Standard 1 ("IAS1") requires that directors:
· select suitable accounting policies and apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
· assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors confirm that they have complied with the above requirements in
preparing the Financial Statements.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
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 Company and hence
for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for the maintenance and
integrity of the corporate and financial information included on the Company's
website. Legislation in Guernsey governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
the Financial Statements, prepared in accordance with IFRS as adopted by the
EU, give a true and fair view of the assets, liabilities, financial position
and profit of the Company, as required by the Disclosure and Transparency Rule
("DTR") 4.1.12R;
· the Annual Report and Financial Statements, taken as a whole, is
fair, balanced and understandable and includes a fair review of the
development and performance of the business and the position of the Company,
together with a description of the principal risks and uncertainties that they
face, as required by DTR 4.1.8R and DTR 4.1.11R.
In accordance with section 249 of the Companies (Guernsey) Law, 2008, each of
the Directors confirms that, to the best of their knowledge:
· There is no relevant audit information of which the Company's
Auditors are unaware; and
· All Directors have taken the necessary steps that they ought to
have taken to make themselves aware of any relevant audit information and to
establish that the Auditor is aware of said information.
INDEPENDENT AUDITOR'S REPORT
To the members of Sherborne Investors (Guernsey) C Limited
Qualified Opinion
We have audited the financial statements of Sherborne Investors (Guernsey) C
Limited (the "Company") for year ended 31 December 2024, which comprise the
Statement of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows for the year then
ended, and notes to the financial statements, including material accounting
policy information. The financial statements framework that has been applied
in their preparation is applicable law and IFRS Accounting Standards as
adopted by the European Union (EU).
In our opinion, except for the possible effects of the matters described in
the Basis of Qualified Opinion section of our audit report, the financial
statements:
· give a true and fair view of the financial position of the
Company as at 31 December 2024, and of its financial performance and its
cashflows for the year then ended;
· are in accordance with IFRS Accounting Standards as adopted by
the European Union (EU); and
· comply with the Companies (Guernsey) Law, 2008.
Basis for qualified opinion
The Company's financial asset at fair value through profit or loss includes
its investment in SIGC LLC amounting to £429.7m as at 31 December 2024
(£565.5m as at 31 December 2023). As at 31 December 2023, £32.4m of the
investment represents other net assets held in underlying intermediately
holding entities under SIGC LLC. We were unable to obtain sufficient and
appropriate audit evidence in relation to the fair value of these other net
assets as at the start of the period.
Consequently, we were unable to determine whether any adjustments to those
amounts were necessary and as a result, we were unable to obtain sufficient
and appropriate audit evidence on the other net assets portion of the opening
balance of the financial assets at fair value through profit or loss and the
related unrealised loss for the year reported in the Statement of
Comprehensive Income.
The auditors' opinion on the financial statements for the year ended 31
December 2023 was also qualified in respect of the same matter.
We conducted our audit in accordance with International Standards on Auditing
(ISAs) and applicable law. Our responsibilities under those standards are
further described in the 'Auditor's responsibilities for the audit of the
financial statements' section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of
the financial statements in Guernsey, as required by the Crown Dependencies'
Audit Rules and Guidance. We have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. In addition to the matter
described in the Basis for Qualified Opinion section, we have determined the
matters described below to be the key audit matters to be communicated in our
report.
The key audit matter How the matter was addressed in our audit
Valuation of financial assets at fair value through profit or loss (2024: Procedures performed
£429.7m, and 2023: £565.5m)
· We have obtained an understanding of processes, policies and
The Company has a single Level 3 Investment in SIGC LLC ("SIGC") as at 31 methodologies and controls concerning the valuation and measurement of
December 2024. In turn, SIGC has a single investment in an intermediary entity financial assets held at fair value through profit and loss.
which invests in two Funds. One of the Fund's sole investment is in Navient
Corporation ("Navient"), a NASDAQ listed entity.
There is a risk of error in the valuation through the complexity in the · We performed a walkthrough and tested the design and
structure. The risk is that the incorrect price has been used to determine the implementation of relevant controls.
fair value of the investment in Navient at year-end. Further, there is a risk
that the NAV of SIGC, consisting of the NAVs of the intermediary entities, · We assessed whether the Company's investment in SIGC LLC
does not approximate the fair value. accurately reflects its NAV driven by the value of the listed investment in
Navient held through the underlying intermediary entities.
Since the main driver of the Company's net asset value is the valuation of
Navient, this is an area of focus for stakeholders and a significant audit · We performed the following procedures on financial assets at fair
risk area. Therefore, this required significant audit attention. value through profit and loss to check the NAV of SIGC: LLC:
Refer to the Audit Committee Report (pages 26-29); Accounting policies in o Recalculated value of the investment in Navient, through the structure has
pages 41-45, and Note 5, Financial assets at fair value through profit or been measured at the bid price as at reporting date.
loss, to the Financial Statements.
o Assessed if Navient's shares are actively trading by inspecting
information in NASDAQ and that the bid price represents the fair value of the
shares.
o Obtained the audited financial statements of SIGC LLC and the intermediary
entities within the structure and reconciled the NAV to the fair value of the
investment recorded.
o Agreed the cash and cash equivalents balance to the bank statement across
the entities in the structure.
o Determined if there are any material differences between the financial
reporting framework applied by the underlying investee entities i.e. US GAAP
and the financial reporting framework applied by the Company which is IFRS
Accounting Standards.
· We inspected the announcement made to the market and media
coverage related to Navient Corporation to gain further insight into market
perceptions, risks and opportunities that might impact the fair value and
classification of the investment.
· We evaluated whether fair value disclosures in the financial
statements are appropriate, complete and in accordance with the requirements
of IFRS 13 Fair Value Measurement.
Our result
Except for the matter explained in the basis for qualified opinion section, we
did not identify any material misstatements concerning the valuation of
financial assets at fair value through profit or loss in the period.
Other matters
We draw attention to the fact that the financial statements of Sherborne
Investors (Guernsey) C Limited for the year ended 31 December 2023 were
audited by another auditor who expressed a qualified opinion on those
financial statement on 30 April 2024.
Other information in the Annual Report
The directors are responsible for the other information. The other information
comprises the information included in the Annual Report and Audited financial
statements but does not include the financial statements and our auditor's
report thereon.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
As described in the basis for qualified opinion section of our report, we were
unable to satisfy ourselves concerning the valuation of net asset portion of
the opening balance of financial assets. We have concluded that where the
other information refers to the net other asset portion of the opening balance
of the financial asset or the related unrealised loss, it may be materially
misstated for the same reason.
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' Responsibilities set
out on pages 30 - 31 in the Financial Statements, the Directors are
responsible for the preparation of the financial statements which give a true
and fair view in accordance with IFRS Accounting Standards as adopted by the
European Union, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Directors.
· Conclude on the appropriateness of the Directors' use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our
auditor's report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
From the matters communicated with the directors, we determine those matters
that were of most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's
report is Michael Carpenter.
Use of our report
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Matters on which we are required to report by exception
Arising solely from the limitation on the scope of our work relating to
valuation of financial assets, referred to above:
· we have not obtained all the information and explanations, which
to the best of our knowledge and belief, are necessary for the purposes of our
audit; .
We have nothing to report in respect of the following matters in relation to
which the Companies (Guernsey) Law, 2008 requires us to report to you if, in
our opinion:
· proper accounting records have not been kept by the Company; or
· the Company's financial statements are not in agreement with the
accounting records.
Statement of Comprehensive Income
For the year ended 31 December 2024
1 January 2024 to 1 January 2023 to
31 December 2024
31 December 2023
Notes £ £ £ £
Income
Unrealised (loss)/gain on financial assets at fair value through profit or 5 (128,191,068) 46,852,537
loss
Interest income 6,677 6,807
Total (loss)/income (128,184,391) 46,859,344
Expenses
Management fees 9 - 2,087,689
Professional fees 213,362 253,526
Directors' fees 2,9 208,800 203,054
Administrative fees 123,221 133,273
Other fees 173,249 178,719
Foreign exchange loss - 82,103
Total operating expenses 718,632 2,938,364
Comprehensive (loss)/income (128,903,023) 43,920,980
Comprehensive income/(loss) attributable to:
Equity Shareholders (128,903,023) 43,911,376
Non-controlling interest (NCI) - 9,604
Weighted average number of shares outstanding 4 700,000,000 700,000,000
Basic and diluted (loss)/earnings per share attributable to shareholders 4 (18.41)p 6.27p
(excluding NCI)
All Income and expenses are derived from continuing operations. There are no
items of other comprehensive income.
The accompanying notes form an integral part of these Financial Statements.
Statement of Financial Position
As at 31 December 2024
2024 2023
Notes £ £ £ £
Non-Current Assets
Financial assets at fair value through profit or loss 5 429,674,484 565,515,552
429,674,484 565,515,552
Current Assets
Cash and cash equivalents 10 758,603 816,593
Prepaid expenses 13,291 18,715
771,894 835,308
Current Liabilities
Trade and other payables 6 98,868 100,327
98,868 100,327
Net Current Assets 673,026 734,981
Net Assets 430,347,510 566,250,533
Capital and Reserves
Called up share capital and share premium 7 688,939,403 688,939,403
Retained deficit (258,591,893) (122,688,870)
Equity attributable to the Company 430,347,510 566,250,533
Total Equity 430,347,510 566,250,533
NAV Per Share 8 61.47p 80.89p
The accompanying notes form an integral part of these Financial Statements.
Statement of Changes in Equity
For the year ended 31 December 2024
Share Capital Retained Total
and Share deficit Equity
Premium
Notes £ £ £
Balance at 1 January 2024 688,939,403 (122,688,870) 566,250,533
Comprehensive loss - (128,903,023) (128,903,023)
Distributions 11 - (7,000,000) (7,000,000)
Balance at 31 December 2024 688,939,403 (258,591,893) 430,347,510
Share Capital Retained Non- Total
and Share deficit Controlling Equity
Premium Interests
Notes £ £ £ £
Balance at 1 January 2023 688,939,403 (159,610,954) 110,731 529,439,180
Comprehensive income - 43,911,376 9,604 43,920,980
Distributions 11 - (7,000,000) (103,982) (7,103,982)
NCI transfer - 10,708 (16,353) (5,645)
Balance at 31 December 2023 688,939,403 (122,688,870) - 566,250,533
The accompanying notes form an integral part of these Financial Statements.
Statement of Cash Flows
For the year ended 31 December 2024 Notes 1 January 2024 to 1 January 2023 to 31 December 2023
31 December 2024
£ £
Cash flows from operating activities
Comprehensive (loss)/income (128,903,023) 43,920,980
Adjustments for:
Unrealised loss/(gain) on financial assets at fair value through profit or 5 128,191,068 (46,852,537)
loss
Movement in prepaid expenses 5,424 11,116
Movement in trade and other payables 6 (1,459) (127,019)
Interest income (6,677) (6,807)
Net cash flow used in operating activities (714,667) (3,054,267)
Investing activities
Contribution to investments 5 - (633,786)
Distribution from investments 5 7,650,000 6,633,353
Interest income 6,677 6,807
Net cash flow from investing activities 7,656,677 6,006,374
Financing activities
Distributions to non-controlling interest 11 - (109,627)
Distributions to shareholders 11 (7,000,000) (7,000,000)
Net cash flow used in financing activities (7,000,000) (7,109,627)
Net movement in cash and cash equivalents (57,990) (4,157,520)
Opening cash and cash equivalents 816,593 4,974,113
Closing cash and cash equivalents 758,603 816,593
The accompanying notes form an integral part of these Financial Statements.
Notes to the Financial Statements
For the year ended 31 December 2024
1. Summary of material accounting policies
Reporting entity
Sherborne Investors (Guernsey) C Limited (the "Company") is a closed-ended
investment company with limited liability formed under the Companies
(Guernsey) Law, 2008 (as amended). The Company was incorporated and registered
in Guernsey on 25 May 2017. The Company's registered office is 1 Royal Plaza,
Royal Avenue, St Peter Port, Guernsey, Channel Islands, GY1 2HL.
The Company commenced dealings on the London Stock Exchange's Specialist Fund
Segment on 12 July 2017.
The Company, via SIGC Midco Limited ("Midco"), a former wholly owned
subsidiary that was dissolved and liquidated during 2023, owned 99.98% of the
capital interest in SIGC, LP (Incorporated) (the "Investment Partnership"),
another former subsidiary that was also dissolved and liquidated during 2023,
as described below.
In 2023, the investment manager of the Investment Partnership, Sherborne
Investors Management (Guernsey) LLC, advised that following the Company's
distribution of proceeds from its indirect investment in Navient Corporation
("Navient"), it did not intend to seek to recall any funds for further
investment. To effectuate this, the Investment Partnership's investment
manager assigned to the Company the Investment Partnership's interest in SIGC
LLC, as the constitutional documents of SIGC LLC do not permit the recall of
distributed capital for reinvestment. As a result of this assignment, the
Investment Partnership was dissolved by operation of its limited partnership
agreement.
The "Group" was defined as the Company and its former subsidiaries, Midco and
the Investment Partnership. Both subsidiaries were established/incorporated
in Guernsey. Midco's and the Investment Partnership's results for the 2023
year were included in the financial statements up until their respective
liquidations. In the opinion of the Directors, there is no single ultimate
controlling party.
Basis of preparation
The Company's Financial Statements have been prepared in accordance with IFRS
Accounting Standards ("IFRS") as adopted by the European Union, which comprise
standards and interpretations approved by the International Accounting
Standards Board ("IASB") and International Accounting Standards and Standing
Interpretations Committee, Interpretations approved by the International
Accounting Standards Committee that remain in effect, together with applicable
legal and regulatory requirements of Guernsey law.
Going concern
The Directors are required to satisfy themselves that it is reasonable to
assume that the Company is a going concern. The Board is of the opinion that
the going concern basis should be adopted in the preparation of the Financial
Statements. Further detail can be found in the Viability Statement on page 10.
The Directors have undertaken a rigorous review of the Company's ability to
continue as a going concern including reviewing the ongoing cash flows and the
level of cash balances as of the reporting date, as well as taking forecasts
of future cash flows into consideration.
The Directors have considered the impact of the current economic environment,
including the current interest rates and inflationary environment, on the
company, Navient, and the stock prices of the two companies and have concluded
that there is no significant impact on the going concern.
As at 31 December 2024, the Company's net current asset position is £0.7
million (2023: £0.7 million) with a net asset value ("NAV") of £430.3
million (2023: £566.3 million). As at 4 April 2025, the Company's estimated
(unaudited) net current asset position is £1.6m.
The Company, via its investment in SIGC LLC and other funds in which the
Company is indirectly an investor (the "Funds"), has sufficient liquid assets
to meet expected costs. In the unlikely scenario that the Company's expenses
were to increase 100%, the resulting expenses would only represent
approximately 0.3% of the Company's NAV. The Investment Manager of the Funds,
Sherborne Investors Management LP (including affiliates, the "Investment
Manager"), has the full intent and ability for the Funds to provide the
Company with funds as and if required.
After enquiring with the Investment Manager and Apex Fund and Corporate
Services (Guernsey) Limited (the "Administrator") and conducting a thorough
review of the company's working capital and cash flow requirements, the
Directors have a reasonable expectation that the Company, via the Funds, has
adequate resources to continue in operational activities for the foreseeable
future, based on sufficient cash reserves as of 31 December 2024.
Accordingly, they continue to adopt a going concern basis in preparing these
audited Financial Statements. Please see the Corporate Governance section on
page 21.
Critical accounting judgments and key sources of estimation uncertainty
The preparation of the Company's Financial Statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, and contingencies at the date of the Company's Financial
Statements and income and expenses during the reported year. Actual results
could differ from those estimated.
i) Critical accounting judgement: Incentive allocation
Until 24 May 2023, when the Investment Partnership was dissolved, the Special
Limited Partner was entitled to receive an incentive allocation once aggregate
distributions to partners of the Investment Partnership exceeded a certain
level. After the Investment Partnership's dissolution, the incentive
allocation is incurred at SIGC LLC on the same economic terms as previously
incurred at the Investment Partnership and accounted for on the same basis.
Please see Note 9 on page 55 for further details.
ii) Critical accounting judgement: Consolidation of entities
As described further in Note 5, as at 31 December 2024 and 31 December 2023
the Company holds a non-controlling investment in SIGC LLC. While the Company
holds a majority interest in SIGC LLC and holds access to the rewards and
benefits, it does not exercise control over the day-to-day operations, nor
does it have the ability to remove the controlling party, Sherborne Investors
Master GP, LLC. As such, SIGC LLC is not consolidated but held and measured at
fair value through profit or loss in accordance with IFRS 9 'Financial
Instruments'. Fair value is measured in accordance with IFRS 13 'Fair Value
Measurement'.
iii) Source of estimation uncertainty: Financial assets at fair value through
profit or loss
The Company does not have influence over the investments and the purpose is to
hold investment. Contractual cashflows are recognised upon realisation of the
investment. Consequently, it has elected to value using fair value through
profit and loss ("FVTPL"). Fair value is based on the net asset value of the
investment, with the main contribution to the NAV being the quoted closing
price of the STC as at 31 December 2024, together with incentive fee and cash
balances. Please see Note 5 for further details.
Adoption of new and revised standards
(i) New standards adopted as at 1 January 2024:
The following standards are effective for the first time for the financial
period beginning 1 January 2024 and are relevant to the Company's operations:
· Amendments to IAS 1 - Classification of Liabilities as Current or
Non-Current
· Amendments to IAS 1 - Non-current Liabilities with Covenants
· Amendments to IAS 7 - Statement of Cash Flows
· Amendments to IFRS 7 - Financial Instruments
The above standards have been adopted and did not have a material impact on
the financial statements.
(ii) Standards, amendments, and interpretations early adopted by the Company:
There were no standards, amendments and interpretations early adopted by the
Company.
(iii) Standards, amendments, and interpretations in issue but not yet
effective:
· Amendments to IAS 21 - Lack of exchangeability
· Amendments to IFRS 18 - Presentation and disclosure in the
Financial Statements
· Amendments to IFRS 9 and IFRS 7 - Classification and measurement
of financial instruments
Unless stated otherwise, the Directors do not consider the adoption of any new
and revised accounting standards and interpretations to have a material impact
as the new standards or amendments do not have a significant impact to the
company except for IFRS 18 - Presentation and Disclosure in Financial
Statements which will be applied from its mandatory effective date of 1
January 2027. Since retrospective application is required, the Comparative
information for the financial year ending 31 December 2026 will be restated
accordingly.
a. Functional currency
The Financial Statements are presented in Pound Sterling ("£"), which is the
Company's functional and presentational currency. Items included in the
Financial Statements of the Company are incurred in Pound Sterling.
Foreign currency transactions are translated into the functional currency of
the Company using the exchange rates prevailing at the dates of the
transactions (spot exchange rate). Foreign exchange gains and losses resulting
from the settlement of such transactions and from the remeasurement of
monetary items denominated in foreign currency at period-end exchange rates
are recognised in profit or loss.
b. Financial Instruments
Financial Assets
Financial assets, as defined by IFRS 9, are assets that represent a
contractual right to receive cash or another financial asset from another
entity.
Financial asset is recognised in its statement of financial position when it
becomes party to the contractual provisions of the instrument. At initial
recognition, the Company measures a financial asset at its fair value.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred.
Financial assets, other than those designated and effective as hedging
instruments, are classified into one of the following categories:
• amortised cost
• fair value through profit or loss (FVTPL), or
• fair value through other comprehensive income (FVOCI).
Financial assets held within a different business model other than 'hold to
collect' or 'hold to collect and sell' are categorised at FVTPL. Further,
irrespective of the business model used, financial assets whose contractual
cash flows are not solely payments of principal and interest are accounted for
at FVTPL.
Assets in this category are measured at fair value with gains or losses
recognised in profit or loss. The fair values of financial assets in this
category are determined by reference to active market transactions or using a
valuation technique where no active market exists.
Investments are designated at fair value through profit or loss in accordance
with IFRS 9 'Financial instruments', as the Company's business model is to
invest in financial assets and to generate profit from their total return in
the form of interest and changes in fair value. Please refer to note 1 under
critical accounting judgements and key sources of estimation uncertainty.
In determining fair value in accordance with IFRS 13 'Fair Value Measurement'
("IFRS 13"), investments measured and reported at fair value are classified
and disclosed in one of the following categories within the fair value
hierarchy:
Level I - An unadjusted quoted price for identical assets and liabilities in
an active market provides the most reliable evidence of fair value and is used
to measure fair value whenever available. As required by IFRS 13, the
Company 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 using models or other valuation methodologies.
Level III - Inputs are unobservable for the investment and include situations
where there is little, if any, market activity for the investment. The inputs
into the determination of fair value require significant management judgement
or estimation.
The Company's investment is classified as a Level 3 investment within the fair
value hierarchy. Refer to Note 5 for the further details. On disposal of
shares, cost of investments is allocated on a first in, first out basis.
c. Revenue recognition
Investment income and interest receivable from short-term deposits 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.
d. Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the Statement of Comprehensive Income in the year in which they occur.
e. Prepaid expenses and trade receivables
Trade and other receivables are initially recognised at fair value and
subsequently, re-measured at amortised cost using the effective interest
method. A provision for an expected credit loss on trade receivables is
established when there is objective evidence the Company will not be able to
collect all amounts due according to the original terms of the receivables.
The Company only holds trade receivables with no financing component, and
which have maturities of less than 12 months at amortised cost and has
therefore applied the simplified approach to expected credit loss. In
accordance with IFRS 9, the Company also incorporates forward-looking
information into the determination of expected credit losses.
g. Cash and cash equivalents
Cash and cash equivalents comprise cash, 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 Statement of Cash Flows. The carrying amount
of these assets approximate their fair value, unless otherwise stated.
h. Trade and other payables
Trade and other payables are initially recognised at fair value and
subsequently, re-measured at amortised cost using the effective interest
method.
i. Financial instruments
Financial assets and liabilities are recognised in the Company's Statement of
Financial Position when the Company becomes a party to the contractual
provisions of the instrument.
j. Incentive allocation
Until 24 May 2023, when the Investment Partnership was dissolved, the
incentive allocation was accounted for on an accrual basis. The incentive
allocation was payable to the non-controlling interest and would therefore be
recognised in the Statement of Changes in Equity rather than recognised as an
expense in the Statement of Comprehensive Income. After the Investment
Partnership's dissolution, the incentive allocation is incurred at SIGC LLC on
the same economic terms as previously incurred at the Investment Partnership
and accounted for on the same basis. Please see Note 9 on page 55 for further
details.
2. Comprehensive income/(loss)
Ongoing charges are recurring expenses which are likely to recur in the
foreseeable future and are related to the operation of the Company. They
exclude costs for acquiring or disposing of investments, financing charges,
and investment gains/losses. The charges are based on annual costs, serving as
an estimate of future expenses.
The comprehensive income/(loss) has been arrived at after charging:
1 January 2024 to 1 January 2023 to
31 December 2024
31 December 2023
£ £
Directors' fees 208,800 203,054
Auditor's remuneration - Audit 90,000 55,000
Auditor's remuneration - Interim review - 28,000
The auditors have not provided any non-audit services during the reporting
period.
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 £1,600 per company) 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.
Income which is wholly derived from the business operations conducted on
behalf of the 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.
The Funds may be liable to pay withholding tax on behalf of non‐US persons,
such as the Company, on dividend income from US sources, such as Navient. The
maximum statutory withholding tax rate is 30%.
4. Earnings per share
The calculation of basic and diluted earnings per share is based on the return
on ordinary activities less total comprehensive income attributable to the
non-controlling interest and on there being 700,000,000 (2023: 700,000,000)
weighted average number of shares in issue during the year.
The earnings per share for the year attributable to equity shareholders ended
31 December 2024 amounted to loss of 18.41 pence per share (31 December 2023:
a profit of 6.27 pence per share).
Date Shares Days in issue Weighted Average Shares
31 December 2024 700,000,000 365 700,000,000
31 December 2023 700,000,000 365 700,000,000
5. Financial assets at fair value through profit or loss
2024 2023
£ £
Opening fair value 565,515,552 524,662,582
Contribution to investments - 633,786
Distributions from investments (7,650,000) (6,633,353)
Unrealised gain/(loss) on financial assets at fair value through profit or (128,191,068)
loss
46,852,537
Closing fair value 429,674,484 565,515,552
The following tables summarise by level within the fair value hierarchy the
Company's financial assets and liabilities at fair value as follows:
Level I Level II Level III Total
31 December 2024 £ £ £ £
Financial assets at fair value through profit and loss - - 429,674,484 429,674,484
Level I Level II Level III Total
31 December 2023 £ £ £ £
Financial assets at fair value through profit and loss - - 565,515,552 565,515,552
As at 31 December 2024 and 31 December 2023, the Company's investment consists
solely of a non-controlling investment in SIGC LLC which was organised to
invest in the STC. With SIGC LLC's balance sheet being measured at fair value,
the NAV of SIGC LLC provides the best estimate of fair value for the Company's
investment in SIGC LLC.
As at 31 December 2024 SIGC LLC's investment, via an intermediary, consists of
non-controlling investment in each of Sherborne Strategic Fund F, LLC, which
holds common stock of Navient, and Sherborne Strategic Fund G, LLC, which
holds common stock of the Company. As at 31 December 2023 SIGC LLC's
investment, via an intermediary, consisted of a non-controlling interest in
Newbury Investors LLC, which held common stock of Navient and of the Company.
The Investment Manager continually evaluates the optimal allocation of
ownership of shares in Navient versus those of the Company. The Investment
Manager may from time to time buy or sell shares in Navient and the Company to
adjust the allocation. Some of the factors in the allocation decision include
the relative liquidity of the shares of Navient and the Company, the discount
to net asset value at which the Company's share trade and various tactical
considerations, and general market conditions. Furthermore, the Level III
investments disclosed in the financial statement are solely comprised of the
Company's non-controlling invests in SIGC LLC. The value of those investments
equated to the Company's maximum exposure to loss from SIGC LLC.
Capital distributions made during the year ended 31 December 2024 were made to
fund the Company's dividend payment. Capital distributions made during the
year ended 31 December 2023 were made to return excess funds drawn including
the funding of the Company's dividend payment.
The key unobservable input in the valuation of the Level III investment is the
value of SIGC LLC's indirect non-controlling interests in the underlying
intermediaries which is impacted by the share price of Navient and the
Company.
Refer to Note 10 for the sensitivity analysis regarding changes in the Navient
and the Company share prices.
6. Trade and other payables
2024 2023
£ £
Professional fees payable 33,843 15,298
Administration fees payable 30,025 30,029
Audit fees payable 35,000 55,000
Total 98,868 100,327
7. Share capital and share premium
As at 31 December 2024 As at 31 December 2023
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 700,000,000 700,000,000
As at 31 December 2024 As at 31 December 2023
Share premium account £ £
Share premium account upon issue 700,000,000 700,000,000
Less: Costs of issue (11,060,597) (11,060,597)
Closing balance 688,939,403 688,939,403
Each Ordinary share has equal voting rights and no par value with no right to
fixed income.
8. Net asset value per share attributable to the Company (excluding NCI)
Basic and Diluted
No. of Shares Pence per Share
31 December 2024 700,000,000 63.30
31 December 2023 700,000,000 80.89
9. Related party transactions
The Investment Manager was entitled to receive from the Investment
Partnership, until its dissolution as disclosed in Note 1, 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. During the year ended 31 December 2024, management fees of £Nil
(year ended 31 December 2023: £2,087,689) were paid by the Investment
Partnership. Subsequent to the Investment Partnership's dissolution,
management fees were paid to the Investment Manager by SIGC LLC on the same
economic terms as previously incurred at the Investment Partnership as
described above. During the year ended 31 December 2024, management fees of
£4,950,867 were paid by SIGC LLC. No balance was outstanding at 31 December
2024 (31 December 2023: £Nil).
Sherborne Investors LP held the Special Limited Partner interest until the
Investment Partnership's dissolution, as disclosed in Note 1. The Special
Limited Partner was entitled to receive an incentive allocation once aggregate
distributions to partners of the Investment Partnership, of which one was the
Company, exceeded a certain level of capital contributions to the Investment
Partnership, excluding amounts contributed attributable to management fees.
Subsequent to the Investment Partnership's dissolution, the incentive
allocation is incurred at SIGC LLC on the same economic terms as previously
incurred at the Investment Partnership, as described below.
For Turnaround investments, the incentive allocation is computed at 10% of the
distributions to all partners in excess of 110%, increasing to 20% of the
distributions to all partners in excess of 150% and increasing to 25% of the
distributions to all partners in excess of 200% of capital contributions,
excluding amounts contributed attributable to management fees. An investment
is considered a Turnaround investment when a member of the General Partner is
appointed chairman of, or accepts an executive role at, the STC.
If, after acquiring a shareholding, the share price of the STC 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 Funds intend to sell (and
distribute the proceeds to the Company) or distribute in kind the holding to
the limited partners (in each case after deductions for any costs and expenses
and subject to applicable law and regulation), rather than seeking to join the
Board of Directors or otherwise engage with the STC (a "Stake Building
Investment").
As of 31 December 2023, the incentive allocation for Stake Building
Investments was computed at 20% of the net returns on the investment of the
Investment Partnership, applicable until its dissolution. This allocation was
payable after each partner in the Investment Partnership has had distributed
to it an amount equal to its aggregate capital contribution to the Investment
Partnership in respect to the Stake Building Investment (excluding any capital
contributions attributable to management fees). The Special Limited Partner
could waive or defer all or any part of any incentive allocation otherwise
due.
At 31 December 2024, the incentive allocation at SIGC LLC has been computed
based on a Stake Building Investment basis and amounted to £ Nil (31 December
2023: £1,585,047).
Through June 2024, the Company paid each Director, except for the Chairman, an
annual fee of £35,000. The Chairman of the Audit Committee received an extra
£5,000 annually, while the Chairman's fee was established at £50,000 per
year. As of July 1, 2024, there was approximately a 14% increase in director
remuneration, leading to a revised Director fee of £40,000 per annum and a
Chairman fee of £57,000 per annum. Furthermore, the fee for the Chairman of
the Audit Committee was adjusted to £45,600 per annum.
Individually and collectively, the Directors of the Company hold no shares of
the Company as at 31 December 2024 (2023: nil).
Sherborne Investors GP, LLC has granted to the Company a non-exclusive licence
to use the name "Sherborne Investors" in the UK and the Channel Islands in the
corporate name of the Company and in connection with the conduct of the
Company's business affairs. The Company may not sub-licence or assign its
rights under the
Trademark Licence Agreement. Sherborne Investors GP, LLC receives a fee of
£70,000 per annum for the use of the licenced name.
10. Financial risk factors
The Company's investment objective is to realise capital growth from
investment in the STC, identified by the Investment Manager, with the aim of
generating significant capital return for Shareholders. Consistent with that
objective, the Company's financial instruments mainly comprise an investment
in a STC. In addition, the Company 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 Company's cash and cash equivalents are placed in demand deposits with a
range of financial institutions. The listed investment in the STC could be
partially redeemed relatively quickly (within 3 months) should the Company
need to meet obligations or ongoing expenses as and when they fall due.
The following table details the liquidity analysis for financial liabilities
at the date of the Statement of Financial Position:
As at 31 December 2024 Less than 3 months 3 - 12 months Total
£ £ £
Trade and other payables - 98,868 98,868
- 98,868 98,868
As at 31 December 2023 Less than 3 months 3 - 12 months Total
£ £ £
Trade and other payables 4,120 96,207 100,327
4,120 96,207 100,327
Credit risk
The Company is exposed to credit risk in respect of its cash and cash
equivalents, arising from possible default of the relevant counterparty, with
a maximum exposure equal to the carrying value of those assets. The credit
risk on liquid funds is mitigated through the Company depositing cash and cash
equivalents across several banks. The Company does not adopt a write-off
policy for credit risk.
Royal Bank of Scotland International has a stand-alone long term credit rating
of A with Standard & Poor's (31 December 2023: A- with standard &
Poor's) whilst Barclays Bank PLC has a standalone long term credit rating of
A- with Standard & Poor's (31 December 2023: A+ with Standard &
Poor's). The Company considers these ratings to be acceptable.
Market price risk
Market price risk arises as a result of the Company's exposure to the future
values of the share price of the STC including the share price of Navient and
the Company. It represents the potential loss that the Company may suffer
through investing in the STC.
The sensitivity analysis below has been determined based on the exposure to
investment funds at the reporting date. The 10% reasonably possible price
movement for investment funds is based on the Investment Manager's best
estimates. The sensitivity rate for these investments of 10% is regarded as
reasonable, as in the Investment Manager's view there continues to be
potential for market volatility in the coming year.
As at 31 December 2024, the share price of Navient and the Company were $13.29
per share and 48.9 pence per share, respectively, which produced the Company's
NAV of £430.3 million. At 31 December 2024 a 10% increase/decrease in the
share price of Navient and the Company would increase/decrease the Company's
NAV by approximately £40.9 million.
Foreign exchange risk
Foreign currency risk arises as the value of future transactions, recognised
monetary assets and monetary liabilities denominated in other currencies
fluctuate due to changes in foreign exchange rates. The Investment Manager
monitors the Company's monetary and non-monetary foreign exchange exposure on
a regular basis. The Company has limited direct foreign exchange risk
exposure. SIGC LLC's investment in the US based STC during the year exposes
SIGC LLC to foreign currency risk, however, as a Company this is considered as
part of market price risk.
Interest rate risk
The Company is subject to risks associated with changes in interest rates in
respect of interest earned on its cash and cash equivalents. The Company seeks
to mitigate this risk by monitoring the placement of cash balances on an
on-going basis in order to maximise the interest rates obtained.
As at 31 December 2024
1 month to 3 months to Non- interest bearing Total
3 months 1 year
£ £ £ £
Assets
Cash and cash equivalents 758,603 - - 758,603
Total Assets 758,603 - - 758,603
As at 31 December 2023
Assets
Cash and cash equivalents 816,593 - - 816,593
Total Assets 816,593 - - 816,593
As at 31 December 2024, the total interest sensitivity gap for interest
bearing items was a surplus of £758,603 (2023: £816,593).
As at 31 December 2024, interest rates reported by the Bank of England were
4.75% (31 December 2023: 5.25%) which would equate to net income of £36,034
(31 December 2023: £42,871) per annum if interest bearing assets and
liabilities remained constant. If interest rates were to fluctuate by 100
basis points (2023: 100 basis points), this would have a positive or negative
effect of £7,586 (2023: positive or negative effect of £8,166) on the
Company's annual income.
Capital risk management
The capital of the Company is represented by proceeds raised from the issue of
Ordinary Shares. The Directors' objective when managing capital is to
safeguard the Company's ability to continue as a going concern in order to
provide returns for shareholders, provide benefits for other stakeholders and
to maintain a strong capital base to support the development of the
investment activities of the Company. As at 31 December 2024, the Company is
not subject to any external capital requirement.
The Directors believe that at the date of the Statement of Financial Position
there were no other material risks associated with the management of the
Company's capital.
11. Dividends and Distributions
There were no distributions paid by the company to non-controlling interests
during the year ended 31 December 2024 (year ended 31 December 2023:
£109,627). During the year ended 31 December 2024 the Company paid a dividend
of 1.0 pence per share as follows: 0.5 pence per share, or £3.5 million was
paid, on 31 May 2024 to shareholders on the register at 10 May 2024 and 0.5
pence per share, or £3.5 million, was paid on 4 October 2024 to shareholders
on the register at 13 September 2024. During the year ended 31 December 2023
the Company paid a dividend of 1.0 pence per share as follows: 0.5 pence per
share, or £3.5 million was paid, on 26 May 2023 to shareholders on the
register at 5 May 2023 and 0.5 pence per share, or £3.5 million, was paid on
6 October 2023 to shareholders on the register at 15 September 2023.
12. Subsequent events
On 21 March 2025 Navient paid a dividend of $0.16 per share to shareholders of
record on 7 March 2025.
The Company has declared a dividend on 23 April 2025 of 0.1 pence per share,
payable on 23 May 2025 to shareholders on the register at 2 May 2025.
There were no other material subsequent events that require disclosure in the
financial statements.
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