REG - Life Settlement - Half-year Report
27/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230927:nRSa7357Na&default-theme=true
RNS Number : 7357N Life Settlement Assets PLC 27 September 2023
LIFE SETTLEMENT ASSETS PLC
LEI: 2138003OL2VBXWG1BZ27
(the "Company" or "LSA")
Half-Year Announcement
LSA, a closed-ended investment company which manages portfolios of whole and
fractional interests in life settlement policies issued by life insurance
companies operating predominantly in the United States, is pleased to announce
its unaudited half-year results for the period ended 30 June 2023.
Highlights
· Total maturities during the period were USD $14.2 million (H1 2022
USD $16.3 million)
· Estimated AE ratio ("actual to expected ratio") of HIV segment of
80%, and of non-HIV segment of 147%, aggregating to 119%
· The Company's Net Asset Value ("NAV") as at 30 June 2023 was $USD
2.16 per share
· Cost reductions continue to be a strategic priority.
Michael Baines, Chairman, commented:
"While these results cover a period when market fears of stagflation are
accompanied by inflation and rising interest rates, the non-correlation of our
performance with financial markets works in favour of our investment case. It
is worth noting the outperformance of the portfolio when measured against
other long duration fixed income assets over the last two years.
The non-HIV policy component of the portfolio has experienced a high level of
maturities, while the HIV policy component had somewhat less. On an
aggregated basis, this has meant higher than expected cash receipts, but with
maturities closely reflecting their book values, NAV has not been materially
affected.
With the completion of the acquisition and the current assimilation of the
acquired policies into the portfolio, the Board remains focussed on assessing
the mortality risk in the Company's portfolio. Alongside continuing to make
further distributions when maturities occur, controlling costs against the
background of the inflationary environment remains a core priority for the
Board."
Enquiries
For further information, please visit https://www.lsaplc.com/
(https://www.lsaplc.com/) , or contact:
Acheron Capital Limited (Investment Manager)
Jean-Michel Paul
020 7258 5990
Shore Capital (Financial Adviser and Broker)
Robert Finlay
020 7408 4080
ISCA Administration Services Limited
Company
Secretary
Tel: 01392 487056
Company performance
Performance analysis is provided in the tables below:
A Share Class
As at As at Percentage
30 June 31 December Change
2023 2022 (%)
Net assets attributable to Shareholders (USD '000)
107,776 109,913 (1.9)
Shares in issue 49,826,784 49,826,784 -
NAV per share (USD) 2.16 2.21 (1.9)
Closing share price (USD) 1.56 1.37 13.9
(Discount) to NAV (%) (27.9) (38.0) 10.1
Period ended Period ended Percentage
30 June 30 June Change
2023 2022 (%)
Total maturities (USD '000) 14,190 16,266 (12.8)
Net income from portfolio (USD '000) 5,446 4,892 11.3
Profit for the period (USD '000) 864 101 7.6
Chairman's Statement
On behalf of the Board, I am pleased to present the Company's half year
results for the period ended 30 June 2023.
These results cover a period when market fears of stagflation are accompanied
by inflation and rising interest rates. Positively for the Company, the
non-correlation of our performance with financial markets works in favour of
our investment case. In this context it is worth noting the outperformance
of the portfolio when measured against other long duration fixed income assets
over the last two years.
Investment overview
The financial highlights above show the results for the half year to 30 June
2023. As investors are aware, in the first half of 2023 the acquisition of
the MBC portfolio of insurance policies in the MBC Trust was completed.
However, the Company still awaits confirmation of the final distribution by
MBC to its investors, including APT. Confirmation of the value of the
portfolio was conducted by the Company's external actuary, and this value has
been incorporated into the estimated NAV as at 30 June 2023.
The Company's portfolio has experienced a number of sizeable maturities in the
period, with an aggregate value of USD 14.2 million arising from a total of 51
policies.
Policy administration costs are a key component in determining the future
returns available on the Company's portfolio and Acheron, continues its review
of the policy administration cost base. Whilst the Company's portfolio
structure has been somewhat simplified following the MBC acquisition, the
overall cost of holding life settlements has, nevertheless, been increasing
due to inflationary pressures on all market participants.
The Life Settlement Market
The secondary market in life settlements continues to be active, with the
decorrelation of the asset class (especially in US dollars) attracting
investors in search of a safe haven.
Portfolio
The overall portfolio is subdivided into portfolios exposed to either
HIV-positive policy holders or non-HIV positive policy holders. The following
table provides information on the Company's policies by exposure to HIV and
non-HIV positive insureds as at 30 June 2023.
Share Class A HIV Non-HIV Total
Number of policies 4 214 129 4 343
Total gross face value 413 951 446 83 568 597 497 520 043
Valuation 51 338 880 22 081 700 73 420 580
Percentage of face 12.4% 26.4% 14.8%
The non-HIV policy component of the portfolio has experienced a high level of
maturities, while the HIV policy component had somewhat less. On an
aggregated basis, this has meant higher than expected cash receipts, but with
maturities closely reflecting their book values, NAV has not been materially
affected.
Maturities in the period up to 30 June 2023 are shown in the table below.
Class A
HIV Maturities (USD) 4 014 946
Non-HIV Maturities (USD) 10 175 040
Total Maturities (USD) 14 189 986
In the period under review the non-HIV segment of the portfolio experienced an
estimated AE ("Actual to Expected") ratio of 147%. However, the HIV segment
of the portfolio had an estimated AE ratio of 80%. While the Non-HIV portfolio
has performed well above expectations, the HIV portfolio has underperformed
against expectation during the first half year.
AE* All classes
HIV 80%
Non-HIV 147%
Total 119%
* in maturity dollar amounts, estimated until June 2023.
The Board believes results over the long term are the best indicator of
underlying performance, and it will continue to monitor performance in the
second half to ascertain whether model assumptions remain accurate.
On 30 June 2023, Share Class A had a NAV of USD 2.1630 per share with the NAV
performance history shown in the table below.
Class A Year Jan Feb Mar April May Jun YTD
Total NAV Return 2023 3.87% -0.85% -1.19% 1.33% -1.01% -1.33% 0.78%
Portfolio Composition
Further information on the composition of the portfolio as at 30 June 2023 can
be found in the Factsheet on our website
https://www.lsaplc.com/investor-relations/announcements/
(https://www.lsaplc.com/investor-relations/announcements/) .
Distributions
On 3 February 2023 the Company declared a special dividend of 6.0209 cents per
share totalling approximately USD3.0 million, which was paid on 24 February
2023 to Shareholders on the register on 10 February 2023. The Board
anticipates being in a position to make further distributions following
receipt of the MBC proceeds, and, in the meantime, Acheron will be evaluating
the future potential cashflows from the portfolio in the light of its work on
reviewing administration costs.
Outlook
With the completion of the acquisition and the current assimilation of the
acquired policies into the portfolio, the Board remains focussed on assessing
the mortality risk in the Company's portfolio. Alongside continuing to make
further distributions when maturities occur, controlling costs against the
background of the inflationary environment remains a core priority for the
Board. At the same time the Board will continue to promote awareness of the
relative benefits to investors of the Company's investment case.
Michael Baines
Chairman
26 September 2023
Key Performance Indicators (KPIs)
The Board monitors success in implementing the Company's strategy against a
range of key performance indicators (KPIs), which are viewed as significant
measures of success over the longer term. These key indicators are those
provided in the performance tables above. Although performance relative to the
KPIs is monitored over quarterly periods, it is success over the long-term
that is viewed as more important. This is particularly important given the
inherent volatility of maturities and short-term investment returns.
The Board has adopted the following KPIs:
· Share Price - a key measure for Shareholders to show the most
likely realisable value of this investment if it was sold. Changes in the
share price are closely monitored by the Board.
· NAV per share - as this is the primary indicator of the
underlying value attributable to each share.
· Premium/(discount) to NAV - as this measure can be used to
monitor the difference between the underlying Net Asset Value and share price.
· Total maturities (USD) - the value of the total maturities in
USD provides an indicator of the underlying cash flow that the Company
receives from its main source of income - policy maturities. There are factors
which could impact the outcome of this performance measure including: average
life expectancy and the age of the underlying policy holders. Please note
that the Actual to Expected ("A/E") ratio, which is closely linked to the
total maturities KPI, is a key method by which the Board monitors the level of
maturities. The A/E ratio measures the declared maturities compared to the
projected maturities based on the actuarial models. A ratio close to 100%
indicates maturities correspond exactly to the model. A percentage greater
than 100% means the maturities are more than anticipated by the models and
less than 100% the opposite is the case.
· Earnings per share - this is a key measure of financial
performance used to assess the fortunes of the Company over each financial
period.
· Profit/(loss) for the period - this is a key measure of
financial performance used to assess the fortunes of the Company over each
financial period.
· Running costs - The Ongoing Charges of the Company for the
financial period under review represented 5.0% (year to 31 December 2022:
7.1%) of average net assets. Excluding the servicing and legal costs the ratio
would be 2.5%.
Shareholders should note that this ratio has been calculated in accordance
with the Association of Investment Companies' ("AIC") recommended methodology,
published in May 2012. This figure indicates the annual percentage reduction
in Shareholder returns as a result of recurring operational expenses. Although
the Ongoing Charges figure is based on historic information, it does provide
Shareholders with a guide to the level of costs that may be incurred by the
Company in the future.
Please Note: The Company regularly uses alternative performance measures to
present its financial performance. These measures may not be comparable to
similar measures used by other companies, nor do they correspond to IFRS
standards or other accounting principles.
Directors' Statement of Principal Risks and Uncertainties
The important events that have occurred during the period under review and the
key factors influencing the financial statements are set out in the Chairman's
Statement above.
In accordance with DTR 4.2.7, the Directors consider that the principal risks
and uncertainties facing the Company have not materially changed since the
publication of the Annual Report and Accounts for the year ended 31 December
2022.
The principal risks faced by the Company include, but are not limited to:
· HIV Mortality risk
· Premium management risk
· Volatility risk
· Fractional premium risk
· Fractional ownership risk
· Advance age mortality risk
· Discount rate risk
· Modelling risk
· Tax
· Breach of applicable legislative obligations
· Counterparty risk
A more detailed explanation of these risks and the way in which they are
managed can be found in the Strategic Report on pages 21 to 23 and in Note 4
to the Financial Statements on pages 63 to 66 of the 2022 Annual Report and
Accounts - copies can be found via the Company's website, www.lsaplc.com
(http://www.lsaplc.com) .
There have been no significant changes in the related party disclosures set
out in the Annual Report.
Directors' Statement of Responsibilities in Respect of the Financial
Statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10 Michael
Baines (Chairman), Christopher Casey (Audit Committee Chairman) and Guner
Turkmen, the Directors, confirm that to the best of their knowledge:
· The condensed set of financial statements contained within this
Half-Yearly financial report have been prepared in accordance with
International Accounting Standard ("IAS") 34 as adopted in the UK and gives a
true and fair view of the assets, liabilities, financial position and profit
of the Company; and
· The Half-Yearly financial report includes a fair review of the
information required by the FCA's Disclosure and Transparency Rule 4.2.7R
being disclosure of important events that have occurred during the first six
months of the financial year, their impact on the condensed set of financial
statements and a description of the principal risks and uncertainties for the
remaining six months of the year; and
· The Half Yearly financial report includes a fair review of the
information required by the FCA's Disclosure and Transparency Rule 4.2.8R
being disclosure of related party transactions during the first six months of
the financial year, how they have materially affected the financial position
of the Company during the period and any changes therein.
This Half-Yearly Report was approved by the Board of Directors on 26 September
2023 and the above responsibility statement was signed on its behalf by:
Michael Baines
Chairman
26 September 2023
Condensed Statement of Comprehensive Income
for the six months ended 30 June 2023
______________________________________________
Six months ended Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Income
Gains from life settlement portfolios 3
Maturities - 14,190 14,190 - 16,266 16,266 - 27,197 27,197
Acquisition cost of maturities and fair value movement
- (4,213) (4,213) - (3,644) (3,644) - (10,220) (10,220)
Sub total - 9,977 9,977 - 12,622 12,622 - 16,977 16,977
Incurred premiums paid in period on all policies
- (9,415) (9,415) - (7,944) (7,944) - (15,551) (15,551)
Unrealised gains
Fair value adjustments
- 4,554 4,554 - (89) (89) - 6,795 6,795
Income from life settlement portfolios
307 - 307 301 - 301 623 - 623
Other income 23 - 23 6 - 6 9 - 9
Net foreign exchange loss
(1) - (1) (4) - (4) - - -
______ ______ ______ ______ ______ ______ _______ _______ ______
Total income 329 5,116 5,445 303 4,589 4,892 632 8,221 8,853
Operating expenses
Investment management fees 4 (810) (743) (1,553) (820) 267 (553) (1,640) 409 (1,231)
Other expenses (1,927) - (1,927) (3,832) - (3,832) (6,051) - (6,051)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit before finance costs and taxation (2,408) 4,373 1,965 (4,349) 4,856 507 (7,059) 8,630 1,571
Finance costs
Interest payable (1,102) - (1,102) (406) - (406) (972) - (972)
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit/before taxation (3,510) 4,373 863 (4,755) 4,856 101 (8,031) 8,630 599
Taxation - - - - - - - - -
______ ______ ______ ______ ______ ______ _______ _______ _____
(Loss)/profit for the period (3,510) 4,373 863 (4,755) 4,856 101 (8,031) 8,630 599
====== ===== ====== ====== ===== ====== ======= ====== =====
Return per class A share USD 6 (0.070) 0.087 0.017 (0.095) 0.097 0.002 (0.161) 0.173 0.012
All revenue and capital items in the above statement derive from continuing
operations of the Company.
The Company does not have any income or expense that is not included in the
profit for the period and therefore the profit for the period is also the
total comprehensive income for the period.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company. The supplementary revenue and capital columns are
prepared in accordance with the Statement of Recommended Practice ("SORP")
issued by the Association of Investment Companies ("AIC") in July 2022.
The notes form part of these financial statements.
Condensed Statement of Financial Position
as at 30 June 2023
As at As at As at
30 June 2023 30 June 31 December 2022
(unaudited) 2022 (audited)
Note (unaudited)
USD'000 USD'000 USD'000
Non-current assets
Financial assets at fair value through profit or loss:
- Life settlement investments 8 73,421 65,902 62,742
_______ _______ _______
73,421 65,902 62,742
Current assets
Maturities receivable 7,518 15,454 7,410
Trade and other receivables 12,180 17 2,051
Premiums paid in advance 4,488 6,277 5,264
Cash and cash equivalents 13,908 25,902 35,907
_______ _______ _______
38,094 47,650 50,632
_______ _______ _______
Total assets 111,515 113,552 113,374
_______ _______ _______
Current liabilities
Other payables (1,557) (1,556) (1,522)
Provision for performance fees 9 (2,182) (2,581) (1,939)
_______ _______ _______
Total liabilities (3,739) (4,137) (3,461)
_______ _______ _______
Net assets 107,776 109,415 109,913
====== ====== ======
Represented by
Capital and reserves
Share capital 10 498 498 498
Special reserve 11 91,290 94,290 94,290
Capital redemption reserve 213 213 213
Capital reserve 57,727 49,580 53,354
Revenue reserve (41,952) (35,166) (38,442)
_______ _______ _______
Total equity attributable to ordinary Shareholders of the Company
107,776 109,415 109,913
======= ======= =======
Net Asset Value per share basic and diluted
Class A shares USD 12 2.16 2.20 2.21
Registered in England and Wales with Company Registration number: 10918785
The notes form part of these financial statements.
Condensed Statement of Changes in Equity
for the six months ended 30 June 2023
Capital
Share capital Special reserve redemption Capital reserve Revenue
reserve reserve Total
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
Six months ended 30 June 2023
Balance as at 31 December 2022 498 94,290 213 53,354 (38,442) 109,913
Comprehensive income/(loss) for the period - 4,373 (3,510) 863
- -
Contributions by and distributions to owners
Dividends paid in period - (3,000) - - - (3,000)
____ _______ _______ ______ _______ _______
Balance as at 30 June 2023 498 91,290 213 57,727 (41,952) 107,776
===== ======= ======= ====== ======= =======
Of which:
Realised gains 39,813
Unrealised gains 17,914
Six months to 30 June 2022
Balance as at 31 December 2021 498 94,290 213 44,724 (30,411) 109,314
Comprehensive income/(loss) for the period - 4,856 (4,755) 101
- -
____ _______ _______ ______ _______ _______
Balance as at 30 June 2022 498 94,290 213 49,580 (35,166) 109,415
==== ====== ======= ===== ====== ======
Of which:
Realised gains 39,752
Unrealised gains 9,828
Year ended 31 December 2022
Balance as at 31 December 2021 498 94,290 213 44,724 (30,411) 109,314
Comprehensive income/(loss) for the year - - - 8,630 (8,031) 599
_____ _______ _______ ______ _______ ______
Balance as at 31 December 2022 498 94,290 213 53,354 (38,442) 109,913
===== ====== ======= ====== ====== ======
Of which:
Realised gains 40,500
Unrealised gains 12,854
The Special reserve was created as a result of the cancellation of the Share
premium account following a court order issued on 18 June 2019. The Special
reserve is distributable and may be used to fund purchases of the Company's
own shares and to make distributions to Shareholders.
The revenue and realised capital reserves are also distributable reserves.
The notes form part of these financial statements.
Condensed Cash Flow Statement
for the six months ended 30 June 2023
Six Six Year ended
months ended months ended 31 December 2022
30 June 2023 30 June 2022 (audited)
(unaudited) (unaudited)
USD'000 USD'000 USD'000
Cash flows generated from operating activities
Profit for the period 863 101 599
Non-cash adjustment
- movement on portfolios (341) 3,958 3,650
Investment in life settlement portfolios (11,904) (53) (132)
Movements in "policy advances" 1,566 18,217 21,764
Interest paid 1,102 406 972
Changes in operating assets and liabilities
Changes in maturities receivables (108) (9,249) (1,205)
Changes in trade and other receivables (10,129) 313 (1,721)
Changes in premiums paid in advance 776 248 1,261
Changes in other payables 35 608 574
Changes in performance fee provision 243 (267) (909)
______ ______ ______
Net cash (outflows)/inflows from operating activities (17,897) 14,282 24,853
Cash flow used in financing activities
Dividends paid (3,000) - -
Interest paid (1,102) (406) (972)
_____ _____ ______
Net cash flows used in financing activities (4,102) (406) (972)
______ ______ ______
Net changes in cash and cash equivalents (21,999) 13,876 23,881
Cash balance at the beginning of the period 35,907 12,026 12,026
______ ______ ______
Cash balance at the end of the period 13,908 25,902 35,907
====== ====== ======
The notes form part of these financial statements.
Notes to the Condensed Financial Statements
for the six months ended 30 June 2023
Note 1 General information
Life Settlement Assets ("Life Settlement Assets" or the "Company") is a public
company limited by shares and an investment company under section 833 of the
Companies Act 2006. It was incorporated in England and Wales on 16 August
2017 with a registration number of 10918785. The registered office of the
Company is 115 Park Street, 4th Floor, London W1K 7AP.
The principal activity of Life Settlement Assets is to manage investments in
whole and partial interests in life settlement policies issued by life
insurance companies operating predominantly in the United States.
In May 2018, the Company received confirmation from HM Revenue & Customs
of its approval as an investment trust for tax accounting periods commencing
on or after 26 March 2018, subject to the Company continuing to meet the
eligibility conditions contained in section 1158 of the Corporation Tax Act
2010 and the ongoing requirements in Chapter 3 of Part 2 of the Investment
Trust (Approved Company) (Tax) Regulations 2011(Statutory Instrument
2011/2999).
The Company currently has one class of Ordinary Shares in issue, namely the A
shares which principally participates in a portfolio of life settlement assets
and associated liabilities, which were acquired from Acheron Portfolio
Corporation (Luxembourg) SA ("APC" or the "Predecessor Company") on 26 March
2018.
Note 2 IFRS accounting policies
2.1 Basis of preparation
These condensed interim financial statements have been prepared using the same
accounting policies and methods of computation as in the 2022 annual financial
statements.
The condensed financial statements, which comprise the unaudited results of
the Company have been prepared in accordance with UK adopted International
Reporting Standards ("IFRS") and with the requirements of the Companies Act
2006. They have also been prepared in accordance with the SORP for investment
companies issued by the AIC in July 2022, except to the extent that it
conflicts with IFRS. The accounting policies are as set out in the Report and
Accounts for the year ended 31 December 2022.
The half-year financial statements have been prepared in accordance with IAS
34 "Interim Financial Reporting".
The financial information contained in this Half-Yearly financial report does
not constitute statutory accounts as defined by the Companies Act 2006.The
financial information for the periods ended 30 June 2023 and 30 June 2022 have
not been audited or reviewed by the Company's Auditor. The figures and
financial information for the year ended 31 December 2022 are an extract from
the latest published audited statements and do not constitute the statutory
accounts for that year. Those accounts have been delivered to the Registrar of
Companies and include a report of the Auditor, which was unqualified and did
not contain a statement under either Section 498(2) or 498(3) of the Companies
Act 2006.
2.2 Going concern
The Directors have made an assessment of the Company's ability to continue as
a going concern and are satisfied that the Company has adequate resources to
continue in operational existence for the foreseeable future (being a period
of 12 months from the date these financial statements were approved).
Furthermore, the Directors are not aware of any material uncertainties that
may cast significant doubt upon the Company's ability to continue as a going
concern, having taken into account the liquidity of the Company's investment
portfolio and the Company's financial position in respect of its cash flows,
liabilities from its assets and the ongoing charges, including annual
premiums. Therefore, the financial statements have been prepared on the going
concern basis and on the basis that approval as an investment trust will
continue to be met.
Note 3 Gains from life settlement portfolios
When a maturity is declared, a realised capital gain or loss is recognised on
the investment in the policy, calculated by deducting from the value of the
maturity the initial acquisition cost and the previously unrealised fair value
adjustments.
The amount of premiums incurred during the period is reflected as a deduction
of income from life settlement portfolios. The amount of premiums paid in
advance as at 30 June 2023 amounted to USD 4,488,000 (30 June 2022: USD
6,277,000, 31 December 2022: USD 5,264,000).
Note 4 Management fees and performance fees
30 June 30 June 31 December
2023 2022 2022
USD'000 USD'000 USD'000
Acheron Capital management fees 810 820 1,640
Performance fees 743 (267) (409)
______ ______ _____
1,553 553 1,231
===== ===== =====
Under an agreement dated 26 March 2018, the Investment Manager is entitled to
a management fee payable by the Trust at an annual rate of no more than 1.5%
of the Net Asset Value. Management fees paid during the period amounted to USD
810,000 (30 June 2022: USD 820,000, 31 December 2022: USD 1,640,000).
Until 30 June 2022 the Performance fee in respect of the Trust was an amount
equal to 20% of the sum of the distributions made to the holders of the Shares
in the Company corresponding to the Trust, in excess of the Performance Hurdle
(assessed at the time of each distribution).
The Performance Hurdle" was met when (from time to time) the aggregate
distributions (in excess of the Catch-Up Amount) made to the holders of the
corresponding Ordinary Shares compounded at 3% per annum.
The"Catch-Up Amount"was an amount equal to the distributions that would have
been required to be made to the Predecessor Company's shareholders of the
corresponding share class in order for the Accrued Performance Distributions
(less, where applicable, any clawback of such Accrued Performance
Distributions) to be paid (determined as at 31 December 2021), reduced by an
amount equal to any distributions paid to the Predecessor Company's
shareholders of the relevant share class prior to the Acquisition.
On 30 June 2022 the Company announced that after discussions with Acheron
Capital Limited ("ACL") an agreement had been reached with ACL that once the
current litigation process with one of the policy trustees has been resolved,
the performance fee will be reduced from 20% as described above to 10% over
the existing hurdle rate.
In consideration of this reduction the Board agreed to release any accrued
performance fees payable to ACL held by the Company in excess of USD 1
million, as calculated at 31 January 2023, as a one-off payment. In
acknowledgement of the significant work that ACL has had to perform with
regard to the legal dispute over a long period, the Directors of LSA agreed to
make an advance to ACL on 30 June 2022, subject to an agreed clawback
mechanism, of USD 0.5 million, which was credited against the amount to be
paid under the above arrangement, following the publication of the 2022
financial results.
Note 5 Taxation
The Company has an effective UK tax rate of 0% for the year ending 31 December
2023. The estimated effective tax rate is 0% as investment gains are exempt
from tax owing to the Company's status as an investment trust and there is
expected to be an excess of management expenses over taxable income.
The company suffers US withholding tax on income received dividends and
interest. The tax charge for the period amounted to USD nil.
5.1 Withholding tax on matured policies
In accordance with the taxation treaty between the United States of America
and the United Kingdom, withholding tax on matured policies is not due if at
least 6% of the average capital stock of the main class of Shares is traded
during the previous year on a recognised stock exchange. The Board believes
that in the period ended 31 December 2022 the Company fulfilled this
requirement.
Note 6 Return per share
As stated in Note 10, the share capital of the Company comprises 49,826,784 A
shares. All Shares are fully paid. Neither unpaid shares nor any kind of
option are outstanding, so the basic profit/(loss) per share is also the
diluted profit/(loss) per share.
Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
Earnings per share:
Revenue return (USD'000) (3,510) (4,755) (8,031)
Capital return (USD'000) 4,373 4,856 8,630
Total return (USD'000) 863 101 599
Weighted average number of shares in the period
49,826,784 49,826,784 49,826,784
Income return per share (USD) (0.070) (0.095) (0.161)
Capital return per share (USD) 0.087 0.097 0.173
Basic and diluted total earnings per share (USD)
0.017 0.002 0.012
Note 7 Financial instruments measured at fair value
The life settlement portfolios have been classified as financial assets held
at fair value through profit or loss as their performance is evaluated on a
fair value basis.
The fair value hierarchy set out in IFRS 13 groups financial assets and
liabilities into three levels based on the significant inputs used in
measuring the fair value of the financial assets and liabilities.
The fair value hierarchy has the following levels:
- level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- level 2: inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly (i.e as
prices) or indirectly (i.e. derived from prices); and
- level 3: inputs for the assets or liabilities that are not based on
observable market data (unobservable inputs).
The life settlement portfolios of USD 73,421,000 (30 June 2022: USD
65,902,000, 31 December 2022: USD 62,742,000) are all classified as level 3.
Note 8 Financial assets held at fair value through profit or loss: Life Settlement Portfolios
As at 30 June As at 30 June As at 31 December 2022
2023 2022 USD'000
USD'000 USD'000
Movements for the period are as follows: 62,742 88,024
Opening valuation 88,024
Acquisitions during the period 11,904 53 132
Proceeds from matured policies (14,190) (16,266) (27,197)
Net realised gains on policies 9,978 12,622 16,977
Movements in cash from policy advances (1,566) (18,217) (21,764)
Escrow rebate - (225) 6,795
Movements in unrealised valuation 4,553 (89) (225)
_______ _______ ______
Closing valuation 73,421 65,902 62,742
======= ======= ======
Details at period end: USD'000 USD'000 USD'000
Acquisition value 95,955 91,409 88,770
Unrealised capital gains 17,914 9,828 12,854
Policy advances (40,448) (35,335) (38,882)
_______ _______ _______
Closing valuation 73,421 65,902 62,742
====== ====== =======
Distribution of the portfolio by class of Shares and by type of risk:
30 June 2023 30 June 2022 31 December 2022
USD'000 USD'000 USD'000
Elderly life insurance 22,082 23,770
(non-HIV) portfolio 22,075
HIV portfolio 51,339 42,132 40,667
(________) (________) (_________)
73,421 65,902 62,742
Balance as at 30 June 2023
===== ===== ======
Fair market value reflects the view of Acheron Capital Limited, the Investment
Manager of the trust in which the policies of Class A are kept.
Note 9 Provision for performance fees
30 June 2023 30 June 2022 31 December 2022
USD'000 USD'000 USD'000
Provision brought forward 1,939 2,848 2,848
Increase/(reduction) in provision during the period (note 4) 743 (267)
(409)
Performance fee paid in the period (500) (- ) (500)
(________) (________) (_________)
2,182 2,581 1,939
Balance as at 30 June 2023
===== ===== ======
The Performance fee does not have a fixed date for payment but can become
payable immediately in the event that:
a. a crystallisation event as set out in the Investment Management Agreement
occurs; or
b. distributions to Shareholders exceed the Performance Hurdle.
As a result the Performance fee has been treated as a current liability.
As described in Note 8 on page 67 of the 2022 Annual Report, an advance of USD
500,000 was made on 30 June 2022 as a one-off payment. A further payment of
USD 500,000 was advanced during the period as shown in the table above.
Note 10 Share Capital
At the 30 June 2023, (the Company's share capital amounts to USD 498,268 (30
June 2022: USD 498,268 31 December 2022: USD 498,268) and is represented by
49,826,784 Ordinary A shares of USD 0.01 each.
The issued and fully paid share capital at 30 June 2023 is comprised of
49,826,784 Class A shares.
Class A shares relate to specific investments determined by the Board of
Directors or as the case may be, by a general meeting of Shareholders. Each
investment is undertaken for the exclusive benefit and risk of the relevant
class of shares. All shares have equal voting rights.
Note 11 Special reserve
The Special reserve was created as a result of the cancellation of the Share
premium account following a court order issued on 18 June 2019. The Special
reserve is distributable and may be used to fund purchases of the Company's
own shares and to make distributions to Shareholders.
Note 12 Net assets and net asset value per Share Class
The Net Asset Value (NAV) is shown below.
30 June 2023 30 June 2022 31 December 2022
Net assets (USD'000) 107,776 109,415 109,913
Number of shares 49,826,784 49,826,784 49,826,784
NAV per share (USD) 2.16 2.20 2.21
Note 13 Related party transactions
Related parties to the Company are the members of the Board of Directors of
the Company, Compagnie Européenne de Révision S.à r.l. as Administrator who
previously had a member on the Board of Directors and the Trustee of the US
trust who was also previously a member of the Board of Directors.
30 June 2023
USD'000
Per income statement:
Trustee fees 74
Compagnie Européenne de Révision S.à r.l. 65
Directors' fees 72
Amounts payable per balance sheet:
Compagnie Européenne de Révision S.à r.l. 51
Directors' fees 14
All transactions with related parties are undertaken at arm's length.
Shares held by related parties (Directors and companies under their control)
- Michael Baines 50,000 A shares
Note 14 Post balance sheet events
There are no post balance sheets events to disclose.
COMPANY INFORMATION
Directors
Michael Baines - Chairman
Christopher Casey
Guner Turkmen
Registered Office
115 Park Street
4th Floor
London W1K 7AP
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Trust's Investment Manager
Acheron Capital Limited
115 Park Street
4th Floor
London W1K 7AP
Registrars
The City Partnership (UK) Limited
The Mending Rooms
Park Valley Mills
Meltham Road
Huddersfield
HD4 7BH
Brokers
Shore Capital and Corporate Limited
Cassini House
57 St James Street
London
SW1A 1LD
Company Secretary
ISCA Administration Services Limited
Suite 8,
Bridge House
Courtenay Street
Newton Abbot
TQ12 2QS
Email: lsa@iscaadmin.co.uk
Telephone: 01392 487056
LEI: 2138003OL2VBXWG1BZ27
Website - https://www.lsaplc.com (https://www.lsaplc.com)
Registered in England and Wales with Company Registration number: 10918785
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR UNANROVUKUARRecent news on Life Settlement Assets
See all newsREG - Life Settlement - Policy Maturities
AnnouncementREG - Life Settlement - Net Asset Value(s)
AnnouncementREG - Life Settlement - Dividend Declaration
AnnouncementREG - Life Settlement - Net Asset Value(s)
AnnouncementREG - Life Settlement - Net Asset Value(s)
Announcement