Half Yearly Report

8 August 2016

Sherborne Investors (Guernsey) B Limited

Interim Report and Unaudited Consolidated Financial Statements

For the period from 1 January 2016 to 30 June 2016

Company Summary

Chairman's Statement

During the period the Company continued to pursue its investment strategy through its shareholding in Electra Private Equity PLC ("Electra").

On 25 January 2016 Electra announced it was undertaking a review of its investment strategy and policy and its structure. Electra announced that the review would look at all options for maximising long-term shareholder value.

On 26 May 2016 Electra released an interim update on the strategic review in which it announced the establishment of an executive function to provide resources to the board of Electra, including analytical support during the review process. As a part of this new structure, Electra appointed Edward Bramson, a managing director of the Investment Manager, as interim Chief Executive Officer.

Electra also announced that it had served notice of termination to Electra's investment manager, Electra Partners LLP. The board of Electra believed that service of termination at this time would provide it with flexibility to put in place any potential changes as an outcome of the review without any delay.

On 23 June 2016 the United Kingdom held a referendum resulting in the decision for the United Kingdom to leave the European Union. The timing and ramifications of the United Kingdom leaving the EU are not certain. Although short term market volatility has been experienced and may continue to be experienced, at present the directors believe that the referendum result will not ultimately have a material impact on the Company's performance or its investment in Electra. The principal risks and uncertainties of the Company are in relation to performance risk, market risk and relationship risk. These are unchanged from 31 December 2015, and further details may be found in the Directors' Strategic Report within the annual report and Consolidated Financial Statements of the Company for the year ended 31 December 2015. The Directors will continue to assess the principal risks and uncertainties relating to the Company for the remaining six months of the year but expect these to remain unchanged.

At 30 June 2016, the net asset value attributable to shareholders of the Company was £382 million or 121.42 pence per share (see note 12 of the Consolidated Financial Statements). The Company's net asset value was based on the closing price of 3,649 pence as at 30 June 2016 for the shares of Electra.

Following the receipt of distributions from Electra, on 13 May 2016 a dividend of 1.5 pence was paid by the Company and a further dividend of 0.75 pence was paid on 29 July 2016, representing a total 2.25 pence per share paid to shareholders during 2016.

Pursuant to its existing authority, the Investment Manager may sell, short or otherwise dispose of all or a part of such shares held in Electra or purchase additional securities at any time.

The Company intends to continue to pursue its strategy as set out in its prospectus.

We are grateful for your continued support and will keep you informed of the status of our investment as it develops.

Statement of Directors' Responsibilities

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

• The Interim Report and Condensed Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS);

• The Interim Report, comprising the Chairman's Statement, meets the requirements of an interim management report and includes a fair review of information required by:

• DTR 4.2.7R of the UK Disclosure and Transparency Rules, being an indication of important events that have occurred during the period from 1 January 2016 to 30 June 2016 and their impact on the Condensed Consolidated Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

• DTR 4.2.8R of the UK Disclosure and Transparency Rules, being related party transactions that have taken place in the period from 1 January 2016 to 30 June 2016 and that have materially affected the financial position or performance of the Company during that period, and any material changes in the related party transactions disclosed in the last Annual Report; and

• The Condensed Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial position and result of the Company as required by DTR 4.2.4R of the UK Disclosure.

Going Concern

Under the UK Corporate Governance Code and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern.

The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration.

As a result of the repayment of the loan facility being within 12 months, the Company has a net current liability position. The revolving loan facility with HSBC Bank plc (the "Facility") was extended for an additional 12 months on 29 January 2016, with a new maturity date of 26 February 2017. The Facility commitment remains £50 million and borrowings under the facility are £20 million as at the date of this report. The Company has significant highly liquid assets in respect of its investment in Electra Private Equity Plc ("Electra"), which therefore can be realised in order to satisfy repayment if required. Therefore, after making enquiries and based on the sufficient cash reserves as at 30 June 2016, the Directors are of the opinion that the Group has adequate resources to continue its operational activities for the foreseeable future.

After making enquiries of the Investment Manager and the Administrator, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these unaudited Condensed Consolidated Financial Statements.

Independent Auditor's Review Report to the Members of Sherborne Investors (Guernsey) B Limited.

We have been engaged by Sherborne Investors (Guernsey) B Limited ("the Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2016 which comprises the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and related notes 1 to 16. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 1, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the period ended 30 June 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Condensed Consolidated Statement of Comprehensive Income (Unaudited)

For the period from 1 January 2016 to 30 June 2016

The accompanying notes form an integral part of these consolidated financial statements.

Condensed Consolidated Statement of Financial Position (Unaudited)

As at 30 June 2016

The Condensed Consolidated Financial Statements were approved by the Board of Directors for issue on 5 August 2016.

Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.

The accompanying notes form an integral part of these consolidated financial statements.

Condensed Consolidated Statement of Changes in Equity (Unaudited)

For the period from 1 January 2016 to 30 June 2016

Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.

The accompanying notes form an integral part of these consolidated financial statements.

Condensed Consolidated Statement of Cash Flows (Unaudited)

For the period from 1 January 2016 to 30 June 2016

Although not required by IAS 34 - 'Interim Financial Reporting', the comparative figures for the preceding year and the related notes have been included on a voluntary basis.

The accompanying notes form an integral part of these consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements

For the period from 1 January 2016 to 30 June 2016

1. Summary of significant accounting policies

Reporting entity

Sherborne Investors (Guernsey) B Limited (the ''Company") is a closed-ended investment company with limited liability formed under The Companies (Guernsey) Law, 2008. The Company was incorporated and registered in Guernsey on 8 November 2012. The Company deals on the London Stock Exchange's Specialist Fund Segment ("SFS"). The Company's registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL. The "Group" is defined as the Company and its subsidiary, SIGB, LP.

Basis of preparation

The Unaudited Condensed Consolidated Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and in accordance with International Accounting Standard 34, 'Interim Financial Reporting' (IAS 34), together with applicable legal and regulatory requirements of Guernsey law. The same accounting policies have been applied as in the last audited accounts. The directors of the Company have taken the exemption in Section 244 of The Companies (Guernsey) Law, 2008 (as amended) and have therefore elected to only prepare Consolidated Financial Statements for the period.

These Condensed Consolidated Financial Statements have been prepared on the historical cost basis, as modified by the measurement at fair value of investments.

Going concern

Under the UK Corporate Governance Code and applicable regulations, the Directors are required to satisfy themselves that it is reasonable to assume that the Company is a going concern.

The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the on-going cash flows and the level of cash balances as of the reporting date as well as taking forecasts of future cash flows into consideration.

As a result of the repayment of the loan facility being within 12 months, the Company has a net current liability position. The revolving loan facility with HSBC Bank plc (the "Facility") was extended for an additional 12 months on 29 January 2016, with a new maturity date of 26 February 2017. The Facility commitment remains £50 million and borrowings under the facility are £20 million as at the date of this report. The Company has significant highly liquid assets in respect of its investment in Electra Private Equity PLC ("Electra"), which therefore can be realised in order to satisfy repayment if required. Therefore, after making enquiries and based on the sufficient cash reserves as at 30 June 2016, the Directors are of the opinion that the Group has adequate resources to continue its operational activities for the foreseeable future.

After making enquiries of the Investment Manager and the Administrator, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt a going concern basis in preparing these unaudited Condensed Consolidated Financial Statements.

Critical accounting judgments and key sources of estimation uncertainty

The preparation of the Group's Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies at the date of the Group's Condensed Consolidated Financial Statements and revenue and expenses during the reported period. Actual results could differ from those estimated.

As more fully described in Note 15, "Related Party Transactions", the Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to Partners of the Investment Partnership exceed a certain level. The basis of the incentive calculation differs depending on how the investment in the Selected Target Company is ultimately characterized (i.e, as a Turnaround or Stake Building Investment). Otherwise there are no significant estimates utilised for the preparation of the Group's Condensed Consolidated Financial Statements as at 30 June 2016 due to the nature of the activities that have occurred in this period, together with the sole investment held by the Group being quoted on the London Stock Exchange. Fair value of financial assets held through profit or loss is therefore based on the quoted closing bid price at 30 June 2016.

Adoption of new and revised standards

(i) Amendments early adopted by the Company:

There were no standards, amendments and interpretations adopted early by the Company.

(ii) Standards, amendments and interpretations that are in issue but not yet effective:

Unless stated otherwise, the Directors do not consider the adoption of new and revised Accounting Standards and Interpretations to have a material impact.

a. Basis of consolidation

The Condensed Consolidated Financial Statements incorporate the financial statements of the Company and an entity controlled by the Company (its subsidiary). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Non-controlling interests in the net assets of the consolidated subsidiary are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the non-controlling entities' share of changes in equity since the date of the combination. Losses applicable to the non-controlling entities in excess of their interest in the subsidiary's equity are allocated against their interests to the extent that this would create a negative balance.

Where necessary, adjustments are made to the financial statements of the subsidiary to bring the accounting policies used into line with those used by the Group.

All intra-group transactions, balances and expenses are eliminated on consolidation.

The Company owns approximately 95.55% (2015: 95.55%) of the capital interest in SIGB, LP. Whilst the general partner of SIGB, LP, Sherborne Investors (Guernsey) GP, LLC, a company registered in Delaware, USA, is responsible for directing the day to day operations of SIGB, LP, the Company, through its majority interest in SIGB, LP, has the ability to approve the proposed investment of SIGB, LP and to remove the general partner. Hence, the Company has consolidated SIGB, LP in its financial statements.

b. Non-controlling interest

The interest of non-controlling parties in the subsidiary is measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

c. Functional currency

Items included in the Condensed Consolidated Financial Statements of the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The Consolidated Financial Statements are presented in Pound Sterling (£), which is the Group's functional and presentational currency. Transactions in currencies other than £ are translated at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the date of the Consolidated Statement of Financial position are retranslated into sterling at the rate of exchange ruling at that date. Exchange differences are reported in the Consolidated Statement of Comprehensive Income.

d. Financial assets at fair value through profit or loss

Investments, including equity and loan investments in associates, are designated as fair value through profit or loss in accordance with International Accounting Standard 39 ("IAS 39") ''Financial Instruments: Recognition and Measurement'', as the Company is an investment company whose business is investing in financial assets with a view to profiting from their total return in the form of interest and changes in fair value. Despite the large holding, under International Accounting Standard 28 ("IAS 28") "Investments in Associates", the fund can hold the investment in Electra shares at fair value through profit or loss rather than as an associate as SIGB, LP is a closed-ended fund.

Investments in voting shares and derivative contracts are initially recognised at cost. The investments in voting shares and derivative contracts are subsequently re-measured at fair value, as determined by the Directors. Unrealised gains or losses arising from the revaluation of investments in voting shares and derivative contracts are taken directly to the Consolidated Statement of Comprehensive Income.

In determining fair value in accordance with IFRS 13 "Fair value Measurement" ("IFRS 13"), investments measured and reported at fair value are classified and disclosed in one of the following categories within the fair value hierarchy:

Level I - An unadjusted quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available. As required by IFRS 13, the Group will not adjust the quoted price for these investments, even in situations where it holds a large position and a sale could reasonably impact the quoted price.

Level II - Inputs are other than unadjusted quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Level III - Inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation.

The investments held by the Group at the period end are classified as meeting the definition of Level I (2015: Level I).

e. Revenue recognition

Dividend income is recognised when the Group's right to receive payment has been established. Tax suffered on dividend income for which no relief is available is treated as an expense.

Interest receivable from short-term deposits and investment income are recognised on an accruals basis. Where receipt of investment income is not likely until the maturity or realisation of an investment then the investment income is accounted for as an increase in the fair value of the investment.

f. Expenses

All expenses are accounted for on an accruals basis. Expenses are charged through the Condensed Consolidated Statement of Comprehensive Income.

g. Finance costs

Finance costs include interest on bank loans and amortised transaction costs. Finance costs are recognised using the effective interest method.

h. Prepaid expenses and trade receivables

Trade and other receivables are initially recognised at fair value. A provision for impairment of trade receivables is established when there is objective evidence the Group will not be able to collect all amounts due according to the original terms of the receivables.

i. Cash and cash equivalents

Cash and cash equivalents comprises cash in hand, call and current balances with banks and similar institutions, which are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value. This definition is also used for the Condensed Consolidated Statement of Cash Flows.

j. Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently, where necessary, re-measured at amortised cost using the effective interest method.

k. Financial instruments

Financial instruments and financial liabilities are recognised in the Group's Condensed Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

l. Segmental reporting

As the Group invests in one investee company, there is no segregation between industry, currency or geographical location. No further disclosures have been made in conjunction with IFRS 8 Operating Segments as it is deemed not to be applicable.

m. Incentive allocation

The incentive allocation is accounted for on an accruals basis and the calculation is disclosed in Note 15. It was calculated as £8,025,112 at 30 June 2016 (£9,276,886 at 30 June 2015). The incentive is payable to Non-Controlling Interests and therefore recognised in the Condensed Consolidated Statement of Changes in Equity rather than recognised as an expense in the Condensed Consolidated Statement of Comprehensive Income.

2. Comprehensive income

The consolidated comprehensive income has been arrived at after charging:

*Interim review fee expected to be consistant with the prior year fee

In addition to the audit and half-yearly review related remuneration above, £45,000 non-audit related fees were paid to the Auditor in the prior year in relation to the share placing and a further £34,280 for Tax compliance services.

 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 £1,200) under the provisions of the Ordinance. As such it will not be liable to income tax in Guernsey other than on Guernsey source income (excluding deposit interest on funds deposited with a Guernsey bank). No withholding tax is applicable to distributions to Shareholders by the Company.

The Investment Partnership will not itself be subject to taxation in Guernsey. No withholding tax is applicable to distributions to partners of the Investment Partnership.

Income which is wholly derived from the business operations conducted on behalf of the Investment Partnership with, and investments made in, persons or companies who are not resident in Guernsey will not be regarded as Guernsey source income. Such income will not therefore be liable to Guernsey tax in the hands of non-Guernsey resident limited partners.

Dividend income is shown gross of any withholding tax.

4. Earnings per share

The calculation of basic and diluted gain per share is based on the return on ordinary activities less total comprehensive income attributable to the Non-Controlling Interest and on there being 314,547,259 weighted average shares in issue. The earnings per share as at 30 June 2016 amounted to a deficit of 0.65 pence (as at 30 June 2015: 3.65 pence profit as at 31 December 2015: 23.63 pence profit).

5. Financial assets at fair value through profit or loss

The Board of Directors approved an investment in Electra Private Equity plc ("Electra") which was proposed by SIGB, LP's Investment Manager, Sherborne Investors Management (Guernsey) LLC in December 2013. Electra is a London Stock Exchange listed investment trust focused on private equity investments.

As at 31 December 2015, the Group held 11,360,013 shares of Electra. During 2015 convertible bonds were purchased but mandatorily converted to ordinary shares on 29 December 2015. No interest was paid to the sellers when the bonds were purchased and therefore no purchased interest has been deducted.

As at 30 June 2016, the Company held 11,425,098 shares of Electra. In accordance with the Company's investment policy, the Investment Manager does not intend to effect a purchase of shares such that it would be required to make a mandatory bid for the entire share capital of Electra.

6. Prepaid Expenses

7. Dividend Income

On 26 October 2015 Electra declared a dividend of 78 pence per share, paid on 26 February 2016 to shareholders on record on 22 January 2016 which equates to £8,861,980.

On 4 May 2016 Electra declared an interim dividend of 44 pence per share, paid on 24 June 2016 to shareholders on record on 13 May 2016 which equates to £5,006,221 (2015: £3,778,198).

8. Cash and cash equivalents

Cash and cash equivalents comprises cash held by the Group and short term deposits held with various banking institutions. The carrying amount of these assets approximates their fair value.

9. Trade and other payables

10. Bank Loan - Current

On 5 March 2015, the borrowings were repaid in their entirety. On 19 March 2015, £20 million of a new £50 million, unsecured term loan facility with HSBC Bank Plc was drawn with £10 million being repaid on 1 May 2015. The remaining £10 million was due to be repaid by 21 September 2015, but was extended. Two further drawdowns of £5 million each were made on 20 October 2015 and 25 November 2015. The finance costs amounted to approximately £1.12 million (2015: £1.62m), consisting of £20,467 amortisation of transaction costs, £463,435 loan interest and £632,393 non-utilisation fees to 30 June 2016.

At the date of this report £20 million of this facility is payable, with the interest, by 26 February 2017. The rate of interest per annum on the loan is LIBOR rates plus 4%. The weighted average effective interest rate for the year was 4.59% per annum.

The new Facility Agreement has the following main covenants which are the same as the old terminated agreement:

i. Any dividend received from Electra shall be applied in prepayment of the Loan and accrued interest up to the amount of the dividend.

ii. Any disposal proceeds from the sale of Electra shares, debt instruments or relevant derivatives shall be applied in the prepayment of the Loan and accrued interest up to the amount of the disposal proceeds.

iii. Any partnership capital injections in SIGB, LP shall be applied in the prepayment of the Loan and accrued interest up to the amount of the capital injections.

iv. SIGB, LP is also required to maintain a Loan to Value (LTV) ratio below 50%. An LTV ratio of 50% or higher would entitle the bank to require full or partial prepayment to restore the required LTV ratio. The LTV ratio is the percentage of the Loan, any accrued interest and fees to the value of SIGB, LP's investment in Electra.

The Loan to Value ratio is regularly monitored by the Board to ensure that covenants are maintained in accordance with the Facility Agreement. HSBC have waived the requirement of using any dividend payments to reduce outstanding borrowings at the period end.

11. Share capital and share premium

12. Net asset value per share attributable to the Company

13. Dividends

On 14 April 2016 a dividend of 1.5 pence per share was declared by the Company and was paid on 13 May 2016 to shareholders of record on 22 April 2016 which equated to £4,718,208.

14. Subsequent events

On 29 June 2016 the Company declared a dividend of 0.75 pence per share payable on 29 July 2016 to shareholders of record on 8 July 2016 which equates to £2,359,104.

Since 30 June 2016, the share price of Electra has increased from 3,649 pence to 3,799 pence as at 4 August 2016. If this share price was used to value the Electra shares at 30 June 2016, it would have resulted in an increase in the closing fair value from £416,901,826 to £434,039,473.

15. Related party transactions

The Investment Partnership and its General Partner, Sherborne Investors (Guernsey) GP, LLC, have engaged Sherborne Investors Management (Guernsey) LLC to serve as Investment Manager who is responsible for identifying the Selected Target Company, subject to approval by the Board of Directors of the Company, as well as day to day management activities of the Investment Partnership. The Investment Manager is entitled to receive from the Investment Partnership a monthly management fee equal to one-twelfth of 1% of the net asset value of the Investment Partnership, less cash and cash equivalents and certain other adjustments. At the period end, management fees of £2,029,387 (30 June 2015: £1,450,577) had been paid by the Partnership. No balance was outstanding at the period end.

One member of Sherborne Investors (Guernsey) GP, LLC is Sherborne Investors LP (part of the non-controlling interest), which also serves as the Special Limited Partner of the Investment Partnership. The Special Limited Partner is entitled to receive an incentive allocation once aggregate distributions to Partners of the Investment Partnership, of which one is the Company, exceed a certain level of capital contributions to the Investment Partnership, excluding amounts contributed attributable to management fees.

Sherborne Strategic Fund D, LLC ("SSFD"), an affiliate of the General Partner to the Investment Partnership, subscribed as a limited partner for £15 million of SIGB, LP on 20 May 2015, thereby acquiring a 4.43% capital interest. As at that date the interest was acquired at the net asset value ("NAV") of SIGB, LP on 20 May 2015. Management and incentive fees have been accrued based on the capital interest of the new limited partner since the date of its admission. 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.

If after acquiring a shareholding, the share price of the Selected Target Company rises to a level at which further investment and the effort of a Turnaround is, in the Investment Manager's opinion, no longer justified or otherwise no longer presents a viable Turnaround opportunity, the Investment Partnership intends to sell (and distribute the proceeds to the Company) or distribute in kind the holding to the limited partners (in each case after deductions for any costs and expenses and for the Investment Partnership's Minimum Capital Requirements and subject to applicable law and regulation), rather than seeking to join the Board of Directors or otherwise engage with Selected Target company (a "Stake Building Investment").

For Stake Building Investments, the incentive allocation is computed at 20% of net returns on the investment of the Investment Partnership, such amount to be 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 may waive or defer all or any part of any incentive allocation otherwise due.

At 30 June, the incentive allocation has been computed based on a Turnaround Investment and amounts to £8,025,112 (2015: £7,994,843) of which £180,016 (2015: £178,674) relates to SSFD.

Each of the directors (other than the Chairman) receives a fee payable by the Company currently at a rate of £30,000 per annum. The Chairman of the Audit Committee receives £5,000 per annum in addition to such fee. The Chairman receives a fee payable by the Company currently at the rate of £45,000 per annum. Individually and collectively, the Directors of the Company hold no shares of the Company as at 30 June 2016.

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 £20,000 per annum for the use of the licensed name.

16. Financial risk factors

The Group's investment objective is to realise capital growth from investment in the Selected Target Company, identified by the Investment Manager with the aim of generating significant capital return for Shareholders. Consistent with that objective, the Group's financial instruments mainly comprise of an investment in a Selected Target Company. In addition, the Group holds cash and cash equivalents as well as having trade and other receivables and trade and other payables that arise directly from its operations.

Liquidity risk

The Group's cash and cash equivalents are placed in demand deposits and short-term money market instruments with a range of financial institutions. The listed investment in Electra could be redeemed relatively quickly (within 3 months) should the Group need to meet obligations or pay ongoing expenses as and when they fall due. The following table details the liquidity analysis for financial liabilities at the date of the Condensed Consolidated Statement of Financial Position:

Credit risk

The Company is exposed to credit risk in respect of its cash and cash equivalents and derivative contracts, arising from possible default of the relevant counterparty, with a maximum exposure equal to the carrying value of those assets. The credit risk associated with derivative contracts is monitored by reviewing the credit rating for counterparty. The Group is exposed to credit risk in respect of its trade receivables and other receivable balances with a maximum exposure equal to the carrying value of those assets. UBS Financial Services Inc. currently has a stand alone credit rating of A- with Standard & Poor's (2015: Credit Suisse Securities (USA) LLC A- with Standard & Poor's).

Market price risk

Market price risk arises as a result of the Group's exposure to the future values of the share price of the Selected Target Company. It represents the potential loss that the Group may suffer through investing in the Selected Target Company.

As at 30 June 2016 a +/-20% change in the price of Electra Ordinary Shares would positively or negatively affect the Group's net assets, income and consolidated comprehensive expense for the period, by £83,380,365 (2015: £85,359,138).

Interest rate risk

The Group is subject to risks associated with changes in interest rates in respect of interest earned on its cash and cash equivalents. The Group seeks to mitigate this risk by monitoring the placement of cash balances on an ongoing basis in order to maximize the interest rates obtained.

As at 30 June 2016, the total interest sensitivity gap for interest bearing items was a deficit of £9,297,636 (2015: £11,044,883).

As at 30 June 2016, interest rates reported by the Bank of England were 0.5% which would equate to expense of £46,488 (2015: £55,224) per annum if interest bearing assets remained constant. If interest rates were to fluctuate by 0.25%, this would have a positive or negative effect of £23,244 (2015: £27,612) on the Group's annual income.

Capital risk management

The capital structure of the Company consists of proceeds raised from the issue of Ordinary Shares. As at 30 June 2016, the Group is not subject to any external capital requirement.

The Board of Directors believe that at the date of the Condensed Consolidated Statement of Financial Position there were no material risks associated with the management of the Company's capital.