Sherborne Investors Guernsey C : Annual Report 2023

SHERBORNE INVESTORS (GUERNSEY) C LIMITED

Annual Report and Audited Consolidated Financial Statements

For the year ended 31 December 2023

1

Contents

	Pages
THE COMPANY AND ITS ADVISERS	1
COMPANY SUMMARY	2
CHAIRMAN'S STATEMENT	3-4
BOARD OF DIRECTORS	5
DIRECTORS' REPORT (INCLUDING THE STRATEGIC REPORT)	6-12
DIRECTORS' REMUNERATION REPORT	13-14
CORPORATE GOVERNANCE REPORT	15-26
REPORT OF THE AUDIT COMMITTEE	27-30
STATEMENT OF DIRECTORS' RESPONSIBILITIES	31-32
INDEPENDENT AUDITOR'S REPORT	33-43
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	44
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	46
CONSOLIDATED STATEMENT OF CASH FLOWS	47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	48-60

1

The Company and Its Advisers

Non-Executive Directors

Talmai Morgan (Chairman) Trevor Ash

Ian Brindle Helen Sinclair Linda Wilding

Christopher Legge, resigned 23 May 2023

(all care of the registered office)

Investment Manager

Sherborne Investors Management LP

135 East 57th Street New York, NY 10022

Legal Advisers (as to English law)

Herbert Smith Freehills LLP

Exchange House

Primrose Street

London, EC2A 2EG

Registrar

Link Market Services (Guernsey) Limited

Mont Crevelt House

Bulwer Avenue

St Sampson

Guernsey, GY2 4LH

Administrator, Designated Manager and Company Secretary

Apex Fund and Corporate Services (Guernsey)

Limited

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey, GY1 2HL

General Partner to the Investment Partnership Until 24 May 2023

Sherborne Investors (Guernsey) GP, LLC

135 East 57th Street New York, NY 10022

Company Website: www.sherborneinvestorsguernseyc.com

1

Registered Office

1 Royal Plaza

Royal Avenue

St Peter Port

Guernsey, GY1 2HL

Registered Number 63600

Independent Auditor

Deloitte LLP

Regency Court

Glategny Esplanade

St Peter Port

Guernsey, GY1 3HW

Legal Advisers (as to Guernsey law) Ogier

Redwood House

St Julian's Avenue

St Peter Port

Guernsey, GY1 1WA

Broker

Deutsche Numis

The London Stock Exchange Building

10 Paternoster Square

London, EC4M 7LT

Investment Partnership

Until 24 May 2023

SIGC, LP (Incorporated)

1 Royal Plaza, Royal Avenue

St Peter Port

Guernsey, GY1 2HL

Custodian

The Bank of New York Mellon

240 Greenwich Street

New York, NY 10286

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 capital return 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.

2

Chairman's Statement

For the year ended 31 December 2023

Dear Shareholder

I am pleased to present the Annual Report and Audited Consolidated Financial Statements of the Company for the year from 1 January 2023 to 31 December 2023.

At 31 December 2023, the net asset value ("NAV") attributable to shareholders of the Company was £566.3 million (2022: £529.4 million) or 80.9 pence per share (2022: 75.6 pence per share) (see Note 8). As at 31 March 2024 the estimated (unaudited) NAV, as reported, was 77.1 pence per share.

The Company co-invests in Navient Corporation ("Navient") with other investors through Newbury Investors LLC ("Newbury") which is managed by Sherborne Investors Management LP ("Sherborne Investors"). Newbury currently owns 26.1% of Navient's outstanding shares, making it the largest shareholder in Navient. Newbury also currently owns a 24.9% interest in the outstanding shares of the Company. The Company is pursuing its investment strategy through its indirect shareholding in Navient. See Note 5 of the Notes to the Consolidated Financial Statements.

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.

In May 2023, the Company announced that it had been advised by the Investment Manager that, following the distribution to the Company of any proceeds from the Company's indirect investment in Navient, the Investment Manager did not intend to seek to recall any funds for further investment. To effectuate this, on 24 May 2023, SIGC, LP (Incorporated) (the "Investment Partnership") 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 the assignment, the Investment Partnership was dissolved by operation of its limited partnership agreement. For further details see Note 1 and Note 9 of the Consolidated Financial Statements.

Also in May 2023, it was announced that Navient's Chief Executive Officer had been terminated and that a member of the board had been appointed Chief Executive Officer. Sherborne Investors advised the Board that they intended to work with the new Chief Executive Officer to achieve their investment objectives at Navient. Subsequently, on 8 December 2023, Mr Edward Bramson, a partner in Sherborne Investors, was appointed Vice Chairman of the board of directors of Navient. Through this role, Sherborne Investors assisted the Navient board with the formulation of Navient's strategic review update announced on 30 January 2024. In connection with Mr. Bramson's appointment as Vice Chairman, Navient and Sherborne Investors extended their April 2022 nomination and cooperation agreement to a latest date of 30 June 2024.

During 2023 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 2022 results of 0.5 pence per share on 26 May 2023 and a further interim dividend of 0.5 pence per share with respect to 2023 on 6 October 2023. I am pleased to announce that the Company is declaring a further 0.5 pence per share dividend to be paid on 31 May 2024 to shareholders of record on 10 May 2024, bringing the total dividends paid in respect of 2023 results to 1.0 pence per share.

3

Chairman's Statement (continued)

Details of Related Party Transactions are contained in Note 9 of the Consolidated Financial Statements.

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

Yours sincerely,

Talmai Morgan

Chairman

30 April 2024

4

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 is currently also on the Boards of BCPT plc, a real estate investment trust and Wesleyan Assurance Society, a specialist financial services mutual, and Odyssean Investment Trust plc, 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 a range of 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.

5

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 consolidated financial statements, for the year ended 31 December 2023.

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 the 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. For further details see Note 1 and Note 9 of the Consolidated 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 Investment Partnership, to which it has committed £700,000,000.

The Company's investment policy, which it will affect indirectly through its investment in the Investment Partnership or 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 Investment Partnership or 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 Investment Partnership or 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 Investment Partnership or 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"), through the Investment Partnership, less the minimum capital requirements. The investment objective and investment policy of the Investment Partnership or 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.

6

Directors' Report (Including the Strategic Report) (continued)

The Investment Partnership or 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, the Investment Partnership, and the Funds do not currently intend to undertake borrowings but are permitted to do so. Any borrowings undertaken by the Company and the Investment Partnership 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 2023 and this is subject to review by the Audit Committee and the Board.

The principal risks facing the Group and Company relate to the Company's investment activities and these risks include the following:

• performance risk;
• market risk;
• relationship risk;
• operational risk;
• emerging risk;
• cyber security risk; and
• Accounting, legal and regulatory risks

An explanation of these principal risks and how they are managed is set out below.

The Board can confirm that the principal 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 2023.

• Performance risk - The Board is responsible for approving the Investment Manager's recommended investment in a 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 a 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%

7

Directors' Report (Including the Strategic Report) (continued)

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 Investment Partnership's and 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 Advisor 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 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 also may 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 Company's market risk is managed by the Investment Manager 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 Advisor through active portfolio management. The Investment Advisor reports to the Board on these matters.
• Relationship risk - Neither the Company, the Investment Partnership, nor the Funds has a physical presence (employees and/or premises). The Company and Investment Partnership are heavily dependent on the Investment Manager for the selection of an appropriate STC and for the day- to-day management and operation of the STC's business and the execution of its Turnaround strategy. The Company has no employees and so enters into a series of contracts/legal agreements with a series of service providers to ensure that both operational performance and regulatory obligations are met. The Board performs ongoing internal monitoring of processes and controls and receives regular reports from the administrators of the Company and other service providers, along with a report from the Auditors.
• Operational risk - The Board is ultimately responsible for all operational facets of performance including cash management, asset management, regulatory and listing obligations. The risks are reviewed by the Board at each Board meeting. The Board also monitors the Company's investment performance and activities since the last Board meeting to ensure that the Investment Manager adheres to the agreed investment policy and approved investment guidelines. Further, at each Board meeting, the Board receives reports from the Company Secretary and Administrator in respect of compliance matters and duties performed by it on behalf of the Company.
• Fraud and cybersecurity risk - fraud or large-scale network disruption such as hacking, malware, phishing, disrupted denial of service attacks could be disruptive to the Company and also pose a reputational risk if they are not dealt with effectively. The Company's Board is provided with regular updates on any cyber security issues from its service providers and how they are managing

8