Third Point Investors Limited

THIRD POINT OFFSHORE
INVESTORS LIMITED

ANNUAL REPORT &
AUDITED
FINANCIAL STATEMENTS

For the year ended 31 December 2018

 
Contents

01 Chairman’s Statement
03 Directors’ Report
16 Disclosure of Directorships in Public Listed Companies
17 Statement of Directors’ Responsibilities in

Respect of the Audited Financial Statements

18 Directors’ Remuneration Report
20 Report of the Audit Committee
24 Investment Manager’s Review
26 Independent Auditor’s Report
32 Statements of Assets and Liabilities
33 Statements of Operations
34 Statements of Changes in Net Assets
35 Statements of Cash Flows
36 Notes to the Audited Financial Statements
IBC Management and Administration

CHAIRMAN’S STATEMENT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

1

Chairman’s Statement

Dear Shareholder,

I am pleased to present the Twelfth Annual Report for Third Point Offshore Investors (“the Company”/
“TPOIL”).

The Company was established as a closed-end investment company, registered and incorporated in
Guernsey on 19 July 2007. The Company invests its assets in Third Point Offshore Master Fund L.P. (the
“Master Partnership”) via Third Point Offshore Fund, Ltd. (the “Master Fund”), which pursues an
opportunistic investment approach based on event-driven fundamental value analysis.

I was delighted to have been named Non-Executive Chairman of the Company in February 2019 and this
is therefore my first statement to you. The returns to investors for the year were disappointing, as
explained later, but the Manager has responded to this by refining parts of the investment process to
reflect changes in the structure of markets, and by resourcing these initiatives with high quality
personnel. There is a greater wariness of market volatility as a result of the influence of algorithmic and
ETF trading, and this presents both a threat to market stability and an opportunity for the Master
Partnership to be a provider of liquidity when a dislocation occurs. A greater degree of caution is evident
in the portfolio structure than was the case during much of 2018, and this gives the Company the ability
to benefit from episodes of volatility that the Manager sees lying in wait. I am very supportive of Third
Point’s ability to create long-term shareholder value and believe that the investor will be well served by a
high-quality team which invests globally across the capital structure and takes a research intensive
approach to identifying catalysts for change.

An area of concern for your Board has been the level of the discount to net asset value, which remains
stubbornly high. This will be a major focus for the Board in the year ahead, and I look forward to
engaging with both Third Point and with shareholders to ensure the market rating more properly reflects
the intrinsic value of the Company. Before my arrival, the Company’s Board of Directors and Third
Point LLC (the “Investment Manager”) undertook a number of corporate actions throughout 2018, with
the aim of addressing some governance concerns and removing structural obstacles to reducing the
discount. These included:

1) Fee Structure: As announced by the Board on 28 December 2018, the Company’s annual
management fee was reduced to 1.25% (from 2%) effective 1 January 2019 following a transfer
into a new share class in the Master Fund and to reflect the Company’s size and longevity as an
investor in the Master Fund. Further, because the Master Fund carries a modified high
watermark provision as it relates to the performance fee, the Company will bear a reduced 10%
performance fee on all gains in the Master Fund until the Master Fund’s returns increase by
approximately 35% since 31 December 2018. Details of this arrangement can be found on
page 3.

2) Transfer to Premium Listing on the London Stock Exchange: The Company was admitted to the
Premium Official List Segment (“Premium Listing”) of the London Stock Exchange (“LSE”) on
10 September 2018. Following the Premium Listing, TPOIL was approved for inclusion in the
FTSE UK All Share Index effective 24 December 2018. The Directors expect that such inclusion
will likely improve liquidity for secondary market trading in the Shares on the LSE, and also
improve demand for the shares by appealing to a wider group of potential buyers.

3)

of

new initiatives

Investment Manager has

committed to enhanced
Improved Communications: The
communications regarding the Company and the underlying Master Fund portfolio through a
variety
comprehensive Company website
(www.thirdpointoffshore.com), more frequent engagement with Company shareholders, senior
investment team presence in London, and regular portfolio updates. I plan to work closely with
the Board and the Investment Manager to maintain a constant dialogue with Company
shareholders as well.

including

a more

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

2

CHAIRMAN’S STATEMENT

Chairman’s Statement continued

4)

Share Buyback Programme: As announced by the Board on 5 December 2018, the Company
has been engaged in a share repurchase programme (the “Programme”) with the intention of
further improving the Company’s rating. From December 2018 to the date of these financial
statements, the Net Asset Value (“NAV”) uplift due to share buybacks was 15 cents per share.
A monthly summary of repurchase activity related to the Programme is available on the
Company’s website.

5) Updated Capital Allocation Policy: In Q1 2018, the Board reviewed the Company’s capital
allocation policy and determined that the dividend policy established in 2012 is not aligned
with the Company’s corporate structure or the Investment Manager’s strategy. As such, the
dividend policy was discontinued in favour of the share buyback programme. Shares bought
back will either be held in Treasury or can be cancelled at the discretion of the Board. In either
event, purchases at the current level of discount have a significant positive effect on net asset
value. The previous buyback approach led to the Master Fund holding shares in the Company,
and it was felt that this created some confusion, leading to the more conventional approach
now in place. As part of this change, the Board repurchased and cancelled 5% of the
Company’s outstanding shares held by the Master Fund, resulting in a concurrent uplift to the
NAV per share of approximately 19 cents.

6) Conversion of Sterling-denominated Share Class: Finally, effective 27 June 2018, the previously
existing Sterling-denominated class shares was converted into the U.S. Dollar-denominated class
shares in an effort to afford the U.S. Dollar class shareholders greater liquidity. The Conversion
was in accordance with the provision in the Company’s Articles of Incorporation granting the
directors the discretionary right to convert any class with a net asset value of less than $50
million.

As I mentioned, the results for the year were disappointing, with particular weakness visible in the fourth
quarter. For the year ended 31 December 2018, the NAV per share performance decreased by (10.9%)
for the U.S. Dollar share class. Performance was driven primarily by losses in core equity long positions
against a challenging broader market environment and a significant rise in market volatility. I am happy
to report that for the first three months of 2019, the NAV has increased by 8.8%. I am encouraged by
the changes the Investment Manager enacted toward year-end including a deleveraging across the
portfolio, a reduction in net equity exposures, and a focus on increasing the short equity portfolio. Please
refer to the Investment Manager’s Statement for additional details regarding 2018 performance and
portfolio repositioning in 2019. I encourage all shareholders to review the portfolio commentary
available on the Company website as well.

My fellow Directors and I are available to meet with shareholders at any time and very much welcome a
dialogue. I look forward to connecting with many of you in the months ahead.

Steve Bates

24 April 2019

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

3

DIRECTORS’ REPORT

Directors’ Report

The Directors submit their Report together with the Company’s Statements of Assets and Liabilities,
Statements of Operations, Statements of Changes in Net Assets, Statements of Cash Flows and the
related notes for the year ended 31 December 2018, “Audited Financial Statements”. These Audited
Financial Statements have been properly prepared, in accordance with accounting principles generally
accepted in the United States of America, any relevant enactment for the time being in force, and are in
agreement with the accounting records and have been properly prepared in all material aspects.

The Company
The Company was incorporated in Guernsey on 19 June 2007 as an authorised closed-ended investment
scheme and was admitted to a secondary listing (Chapter 14) on the Official List of the London Stock
Exchange on 23 July 2007. The proceeds from the initial
issue of shares on listing amounted to
approximately US$523 million. Following changes to the Listing Rules on 6 April 2010, the secondary
listing became a standard listing. The Company was admitted to the Premium Official List Segment
(“Premium Listing”) of the London Stock Exchange (“LSE”) on 10 September 2018.

The Company is a member of the Association of Investment Companies (“AIC”).

Investment Objective and Policy
The Company’s investment objective was to provide its Shareholders with consistent long term capital
appreciation utilising the investment skills of Third Point LLC (the “Investment Manager”) through
investment of all of its capital (net of short term working capital requirements) in Class E Shares of Third
Point Offshore Fund, Ltd (the “Master Fund”), an exempted company formed under the laws of the
Cayman Islands on 21 October 1996.

The Master Fund is a limited partner of Third Point Offshore Master Fund L.P. (the “Master
Partnership”), an exempted limited partnership organised under the laws of the Cayman Islands, of
which Third Point Advisors II L.L.C., an affiliate of the Investment Manager, is the general partner.
Third Point LLC is the Investment Manager to the Company, the Master Fund and the Master
Partnership. The Master Fund and the Master Partnership have the same investment objectives,
investment strategies and investment restrictions.

The Master Fund and Master Partnership’s investment objective is to seek to generate consistent long-term
capital appreciation, by investing capital in securities and other instruments in select asset classes, sectors,
and geographies, by taking long and short positions. The Investment Manager’s implementation of the
Master Fund and Master Partnership’s investment policy is the main driver of the Company’s performance.

The Investment Manager identifies opportunities by combining a fundamental approach to single
security analysis with a reasoned view on global, political and economic events that shapes portfolio
construction and drives risk management.

The Investment Manager seeks market and economic dislocations and supplements its analysis with
considerations of managing overall exposures across specific asset classes, sectors, and geographies by
evaluating sizing, concentration, factor risk, and beta, among other considerations. The resulting
portfolio expresses the Investment Manager’s best ideas for generating alpha and its tolerance for risk
given global market conditions. The Investment Manager is opportunistic and often seeks a catalyst that
will unlock value or alter the lens through which the greater market values a particular investment. The
Investment Manager applies aspects of this framework to its decision-making process, and this approach
informs the timing and risk of each investment.

As of January 1, 2019, the Company transferred substantially all of its holding into a newly-created share
class of the Master Fund. The new share class will be subject to a 25% quarterly redemption gate. The
Company will plan to redeem an appropriate amount each quarter to account for planned share buybacks
and Company fees and expenses. The new share class will attract a lower management fee and the
Company will also qualify for an additional reduction of management fee applicable to it based on its size
and longevity as an investor in the Master Fund. As a result, the Company’s management fee in the newly
created share class will be reduced from 2.0% to 1.25% per annum commencing on 1 January 2019.

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

4

Directors’ Report continued

Results and Dividends
The results for the year are set out in the Statements of Operations. As disclosed in the announcement
dated 1 March 2018, the Board, after consultation with major shareholders, resolved that the Dividend
Policy should be discontinued with immediate effect and therefore there are no dividends due in respect
of the calendar year 2018. On 5 January 2018, an annual distribution was declared equivalent to 4% of
the NAV of the Company in respect of the year to 31 December 2017, amounting to $0.81 per US Dollar
Share and £0.77 per Sterling Share and paid on 16 February 2018.

Stated Capital
Share Capital Conversions took place during the year ended 31 December 2018. A summary and the
number of shares in issue at the year-end are disclosed in Note 6 to the Audited Financial Statements.
All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.

Key performance indicators (“KPI’s”)
At each Board meeting, the Board considers a number of performance measures to assess the Company’s
success in achieving its objectives. Below are the main KPI’s which have been identified by the Board for
determining the progress of the Company:

(cid:129) Net asset value;

(cid:129) Discount to the NAV;

(cid:129) Share price; and

(cid:129) Ongoing charges.

Directors
The Directors of the Company during the year (with the exception of Mr. Autheman who resigned from
the Board of Directors on 12 September 2018) and to the date of this report are as listed on page 5 of
these Audited Financial Statements.

Directors’ Interests
Mr. Targoff holds the position of Chief Operating Officer, Partner and General Counsel of Third Point
LLC.

Pursuant to an instrument of indemnity entered into between the Company and each Director, the
Company has undertaken, subject to certain limitations, to indemnify each Director out of the assets and
profits of the Company against all costs, charges, losses, damages, expenses and liabilities arising out of
any claims made against them in connection with the performance of their duties as a Director of the
Company.

Christopher Legge and Keith Dorrian held 4,500 and 2,500 U.S. Dollar shares respectively as at
31 December 2018 (31 December 2017: Christopher Legge and Keith Dorrian held 4,500 and
2,500 U.S. Dollar shares respectively). No other Directors held shares in the Company during the year.

Corporate Governance Policy
The Board has considered the principles and recommendations of the Association of Investment
Companies Code of Corporate Governance (“AIC Code”) by reference to the Association of Investment
Companies Corporate Governance Guide for Investment Companies (“AIC Guide”). The AIC Code, as
explained by the AIC Guide, addresses all the principles set out in the UK Corporate Governance Code,
as well as setting out additional principles and recommendations on issues that are of specific relevance.

The Board has determined that reporting against the principles and recommendations of the AIC Code,
and by reference to the AIC Guide (which incorporates the UK Corporate Governance Code), will
provide better information to Shareholders. The Company has complied with all the recommendations of
the AIC Code and the relevant provisions of the UK Corporate Governance Code, except as set out
below.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

5

DIRECTORS’ REPORT

Corporate Governance Policy – continued
The UK Corporate Governance Code includes provisions relating to:

(cid:129) the role of the chief executive;

(cid:129) executive Directors’ remuneration; and

(cid:129) the need for an internal audit function.

For the reasons set out in the AIC Guide, the Board considers these provisions are not relevant to the
position of the Company, being an externally advised investment company with no executive directors or
employees. The Company has therefore not reported further in respect of these provisions.

The AIC Code provides a “comply or explain” code of corporate governance designed especially for the
needs of investment companies. The AIC published the code of corporate governance and the Company
has reviewed its compliance with these standards. The UK Financial Reporting Council (“FRC”) has
confirmed that so far as investment companies are concerned it considers that companies which comply
with the AIC Code will be treated as meeting their obligations under the UK Corporate Governance
Code (“The UK Code”) and Section 9.8.6 of the Listing Rules. The AIC Code is publicly available at:
https://www.theaic.co.uk/sites/default/files/hidden-files/AICCodeofCorporateGovernanceJUL16_0.pdf. In
July 2018, the FRC released a revised Corporate Governance Code which will become effective
1 January 2019. The AIC also updated its Code effective 1 January 2019 and because its 2019 Code
closely reflects the principles and provisions of the 2019 FRC Code the AIC Guide has been withdrawn.
The Directors are currently evaluating the impact this will have on the Company.

The Company does not have employees, hence no whistle-blowing policy is necessary. However, the
Directors have satisfied themselves that the Company’s service providers have appropriate whistle-
blowing policies and procedures and confirmation has been sought from the service providers that
nothing has arisen under those policies and procedures which should be brought to the attention of the
Board. The UK Code is publicly available at: https://www.frc.org.uk/Our-Work/Publications/Corporate-
Governance/UK-Corporate-Governance-Code-April-2016.pdf. The Board on an annual basis, ensures
that service providers have appropriate whistleblowing, AML, disaster recovery and risk monitoring
policies in place.

The Code of Corporate Governance (the “Guernsey Code”) provides a framework that applies to all
entities licensed by the Guernsey Financial Services Commission (“GFSC”) or which are registered or
authorised as a collective investment scheme. Companies reporting against the UK Code or the AIC Code
are deemed to comply with the Guernsey Code. It is the Company’s policy to comply with the AIC Code.

The Board confirms that, throughout the period covered in the financial statements, the Company
complied with the Guernsey Code issued by the GFSC, to the extent it was applicable based upon its
legal and operating structure and its nature, scale and complexity.

Board Structure
The Board currently consists of six non-executive Directors. As the Chairman of the Board is an
independent non-executive, the Board considers it unnecessary to appoint a senior independent Director.

Name

Steve Bates

Rupert Dorey

Keith Dorrian

Christopher Legge
Joshua L Targoff

Claire Whittet

Position

Independent

Date Appointed

Non-Executive Chairman

Non-Executive Director

Non-Executive Director

Non-Executive Director
Non-Executive Director

Non-Executive Director

Yes

Yes

Yes

Yes
No

Yes

5 February 2019

5 February 2019

19 June 2007

19 June 2007
29 May 2009

27 April 2017

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

6

Directors’ Report continued

As required by the AIC Code, every Director that has completed over nine years service on the Board
must be subject to annual re-election by the Shareholders. Christopher Legge who has served for over
nine years on the Board will be required to offer himself for re-election at the next Annual General
Meeting (“AGM”). Keith Dorrian is not going to stand for re-election at the next AGM.

is not considered independent and will

Directors may retire by rotation at every Annual General Meeting (“AGM”) with the exception of
Mr. J Targoff, who as the Chief Operating Officer, General Counsel and Partner of the Investment
to annual re-election by
Manager,
Shareholders. All other Directors are considered by the Board to be independent of the Company’s
Investment Manager. Any Directors appointed to the Board since the previous AGM also retire and
stand for re-election. The Independent Directors take the lead in any discussions relating to the
appointment or re-appointment of directors.

therefore be subject

The Board meets at least four times a year and in addition there is regular contact between the Board, the
Investment Manager and Northern Trust International Fund Administration Services (Guernsey) Limited
(the “Administrator” and “Corporate Secretary”). The Board requires to be supplied in a timely manner
with information by the Investment Manager, the Administrator, and the Corporate Secretary and other
advisors in a form and of a quality appropriate to enable it to discharge its duties. The Board, excluding
Mr. Targoff, regularly reviews the performance of the Investment Manager and the Master Fund to
ensure that performance is satisfactory and in accordance with the terms and conditions of the relative
appointments and Prospectus. It carries this review out through consideration of a number of objective
and subjective criteria and through a review of the terms and conditions of the advisors’ appointment
with the aim of evaluating performance, identifying any weaknesses and ensuring value for money for the
Company’s Shareholders.

New Directors will receive an induction from the Investment Manager on joining the Board, and all
Directors undertake relevant training as necessary.

The Company has no executive Directors or employees. All matters, including strategy, investment and
dividend policies, gearing and corporate governance procedures are reserved for approval by the Board
of Directors. The Board receives full information on the Company’s investment performance, assets,
liabilities and other relevant information in advance of Board meetings.

Board Tenure and Succession Planning
The Board notes the AIC Code and UK Code suggest it would be good practice for all Directors to be
offered for re-election at regular intervals subject to continued satisfactory performance. In accordance
with the Company’s articles of incorporation, the Independent Directors and Mr. Targoff (treated for the
purposes of the AIC Code as a Non-Independent Director) may retire at each AGM (Principle 3 – AIC
Code).

The Board believes that benefits to Shareholders arise from the Directors’ long-term knowledge and
experience of the Company and its management including their ongoing ability to independently review
the performance of the Investment Manager. The Board have implemented a policy whereby a
predesignated Director puts himself/herself up for re-election to the Board at each AGM. This policy is
intended to address the balance of views and experience on the Board, and to comply with the AIC Code
which requires that every Director that has completed over nine years service on the Board must be
subject to annual re-election by the Shareholders. The revised UK Corporate Governance Code, effective
1 January 2019, will require that all Directors be subject to annual re-election.

The Board takes the view that independence is not necessarily compromised by the length of tenure on
the Board and experience can add significantly to the Board’s strength.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

7

DIRECTORS’ REPORT

Board Tenure and Succession Planning – continued
The Directors undertake an annual evaluation of the Board’s performance and continuing independence
and during this evaluation (which includes a review of the diversity of experience within the Board to
ensure that it remains appropriate) all Directors are asked to confirm their future intentions. The Board has
robust procedures for the identification of prospective Non-Executive Director candidates, and as part of
the selection Process, due regard is paid to the recommendations for board diversity, however, ability and
experience will be the prime considerations. Keith Dorrian is not going to stand for re-election at the next
AGM and the Board recommends electing the other Directors who are standing for re-election.

Following the resignation of the previous Chairman in September 2018, Claire Whittet was appointed
Interim Chair and the Board engaged the services of a specialist recruitment firm to assist in the
appointment of a new Chair. Steve Bates was appointed Chairman of the Board on 5th February 2019.
In addition,
in view of Keith Dorrian’s decision not to stand for re-election in 2019, the Board
interviewed a number of candidates which culminated in Rupert Dorey joining the Board on 5 February
2019.

Directors’ Biographies

Marc Antoine Autheman
Marc Antoine Autheman, is a resident of France. He has over 39 years of experience in the public and
private finance sectors. Mr. Autheman is currently Chairman of Euroclear S.A. and Chairman of Cube
Infrastructure Fund. He worked in the French Treasury for ten years from 1978 to 1988, prior to joining
the Minister of Finance’s private office, Minister Beregovoy, as advisor for monetary and financial affairs
between 1988 and 1993. From 1993 to 1997, he worked as Executive Director for France for the
International Monetary Fund and the World Bank and chaired the audit committee of the World Bank
during this time. From 1997 to 2004, he worked in a number of roles at Credit Agricole S.A. (‘‘CASA’’),
mainly as CEO of Credit Agricole Indosuez. He holds Master’s degrees in Law and Economics from the
University of Paris. Mr. Autheman resigned from the Board of Directors on 12 September 2018.

Steve Bates
Mr. Bates has over 38 years’ experience in the investment industry. He began his career in 1980 with James
Capel & Co. as an analyst covering US markets. From 1984 to 2003, he worked for JP Morgan and its
predecessor Flemings where he was responsible for establishing and managing a range of Emerging Markets
businesses and investment activities across regions. Since then, Mr. Bates has been Chief Investment Officer
for GuardCap Asset Management Limited and its predecessor company. He is currently Chairman of both
VinaCapital Vietnam Opportunities Fund and of BMO Capital & Income Investment Trust and is a Non-
Executive Director of Biotech Growth Trust, all of which are listed on the London Stock Exchange. Mr.
Bates holds a law degree from Cambridge University and is a CFA charterholder.

Rupert Dorey
Mr Dorey has 35 years of experience in financial markets. Mr Dorey was at CSFB for 17 years from 1988
to 2005 where he specialised in credit related products, including derivative instruments where his expertise
was principally in the areas of debt distribution, origination and trading, covering all types of debt from
investment grade to high yield and distressed debt. He held a number of positions at CSFB, including
establishing CSFB’s high yield debt distribution business in Europe,
fixed income credit product
coordinator for European offices and head of UK Credit and Rates Sales. Since 2005 he has been acting in a
Non-Executive Directorship capacity for a number of Hedge Funds, Private Equity & Infrastructure Funds,
for both listed and unlisted vehicles. He is former President of the Guernsey Chamber of Commerce and is
a member of the Institute of Directors. Rupert has extensive experience as both Director and Chairman of
exchange listed and unlisted funds, chairing 9 of the funds, seven of which have been listed and 2 of which
are FTSE 250 companies. He has served on boards with 18 different managers, including Apollo, Aviva,
M&G, Partners Group, Cinven, Neuberger Berman and Harbourvest.

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

8

Directors’ Report continued

Keith Dorrian
Keith Dorrian, is a Guernsey resident and has over 44 years’ experience in the offshore finance industry.
Joining Manufacturers Hanover in 1973 he moved to First National Bank of Chicago in 1984 where he
was appointed Vice President and Company Secretary. In 1989 he joined ANZ Bank (Guernsey) where,
as a Director of the Bank and Fund Management company, he was closely involved in the banking and
fund management services of the Group. He took up the position of Manager Corporate Clients in Bank
of Bermuda Guernsey in 2000 and was appointed local Head of Global Fund Services and Managing
Director of the Guernsey Bank’s Fund Administration company Management International (Guernsey)
Limited in Guernsey in 2001, retiring on 31 December 2003. He is currently a member of the Guernsey
Investment Fund Association, the Institute of Financial Services, the Institute of Directors and is a
Director of a number of funds and fund management companies and holds the Institute of Directors
Diploma in Company Direction. Mr. Dorrian was elected a Fellow of the Institute of Directors.

Christopher Legge
Christopher Legge, is a Guernsey resident and worked for Ernst & Young in Guernsey from 1983 to 2003.
Having joined the firm as an audit manager in 1983, he was appointed a partner in 1986 and managing
partner in 1998. From 1990 to 1998, he was head of Audit and Accountancy and was responsible for the
audits of a number of insurance, banking, investment fund and financial services clients. He also had
responsibility for the firm’s training, quality control and compliance functions. He was appointed managing
partner of Ernst & Young for the Channel Islands region in 2000. Since his retirement from Ernst & Young
in 2003, Mr. Legge has held a number of non-executive directorships in the financial sector. He is an FCA
and holds a BA (Hons) in Economics from the University of Manchester.

Joshua L. Targoff
Joshua L. Targoff has been the Chief Operating Officer of the Investment Manager since May 2009. He
joined as General Counsel in May 2008. Previously, Mr. Targoff was the General Counsel of the
Investment Banking Division of Jefferies & Co. Mr. Targoff spent seven years doing M & A
transactional work at Debevoise & Plimpton LLP. Mr. Targoff graduated with a J.D. from Yale Law
School, and holds a B.A. from Brown University. In 2012, Mr. Targoff was made a Partner of the
Investment Manager.

Claire Whittet
Claire Whittet is a Chartered Banker. She is a Guernsey resident and has 40 years’ experience in the
banking industry. After gaining an MA in Geography from Edinburgh University, she joined the Bank of
Scotland where she remained until moving to Guernsey in 1996. In the intervening period she was
involved in a wide variety of credit transactions including commercial and corporate finance. She joined
Bank of Bermuda in Guernsey becoming Global Head of Private Client Credit and moved to
Rothschild & Co Bank International Ltd as Director of Lending in 2003.

She was latterly Co-Head and Managing Director and since May 2016 has been a Non-Executive
Director of the bank. She is a Non-Executive Director of a number of listed and unlisted funds, is a
Member of the Chartered Institute of Bankers in Scotland, the Insurance Institute and holds the Institute
of Directors Diploma in Company Direction.

Cross Directorships
Mr. Legge and Mrs. Whittet are also both Directors of another listed Fund. The Board believes that this
does not create a conflict or affect their independence.

A number of the directors are Non-Executive Directors of other listed funds. The Board notes that none
of these funds are trading companies and confirms that all Non-Executive Directors of the Company
have sufficient time and commitment (as evidenced by their attendance and participation at meetings) to
devote to this Company.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

9

DIRECTORS’ REPORT

Directors’ Biographies – continued
Meeting Attendance Records
The table below lists Directors’ attendance at meetings during the year.

Marc Antoine Autheman ¹

Christopher Legge

Keith Dorrian 2

Joshua L Targoff 3, 4

Claire Whittet

Scheduled Board
Meetings
Attended
(max 4)

3 of 3

4 of 4

4 of 4

4 of 4

4 of 4

Audit Committee
Meetings
Attended
(max 3)

2 of 2

3 of 3

1 of 1

N/A

3 of 3

1 Mr. Autheman resigned from the Board of Directors on 12 September 2018.

2 Mr. Dorrian is not going to stand for re-election at the next AGM on 3 July 2019.

3 Mr. Targoff is not a member of the Audit Committee.

4 Mr. Targoff does not attend Meetings as a Director where recommendations from the Investment Manager are under consideration.

Committees of the Board
The AIC Code requires the Company to appoint nomination, remuneration and management
engagement committees. The Board has not deemed this necessary as, being comprised wholly of
non-executive Directors, the whole Board considers these matters.

Following the “Women on Boards” review conducted by Lord Davies’ of Abersoch in February 2011,
the Board has examined Lord Davies’ recommendations and noted that it was consistently reviewing its
policy and future appointments to the Board would continue to be based on the individual’s skills and
experience regardless of gender. The Board has a female director and therefore 16.67% diversity. This
will become 20% following Mr. Dorrian’s resignation at the next AGM on 3 July 2019.

The Investment Manager has wide experience in managing and administering fund vehicles and has
the continued
access to extensive investment management resources. The Board considers that
appointment of the Investment Manager on the terms agreed would be in the interests of the Company’s
Shareholders as a whole.

The Board has resolved to form a Management Engagement Committee which will meet at least annually
and will review the performance of the Company’s service providers. The first meeting will be held in 2019.

Audit Committee
The Company’s Audit Committee conducts formal meetings at least three times a year for the purpose,
the audit and
amongst others, of considering the appointment,
remuneration of the auditors and to review and recommend the annual statutory accounts and interim
report to the Board of Directors. Full Details of its functions and activities are set out in the Report of
the Audit Committee on pages 20 to 23 of this Annual Report.

independence, effectiveness of

Directors’ Duties and Responsibilities
The Directors have adopted a set of Reserved Powers, which establish the key purpose of the Board and
detail its major duties. These duties cover the following areas of responsibility:

(cid:129) Statutory obligations and public disclosure;

(cid:129) Strategic matters and financial reporting;

(cid:129) Board composition and accountability to Shareholders;

(cid:129) Risk assessment and management,

including reporting, compliance, monitoring, governance and

control; and

(cid:129) Other matters having material effects on the Company.

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

10

Directors’ Report continued

These Reserved Powers of the Board have been adopted by the Directors to clearly demonstrate the
seriousness with which the Board takes its fiduciary responsibilities and as an ongoing means of
measuring and monitoring the effectiveness of its actions.

The Directors are responsible for the overall management and direction of the affairs of the Company.
The Company has no Executive Directors or employees. The Company invests all of its assets in shares
of the Master Fund and Third Point LLC acts as Investment Manager to the Master Fund and is
responsible for the discretionary investment management of the Master Fund’s investment portfolio
under the terms of the Master Fund Prospectus.

Northern Trust
International Fund Administration Services (Guernsey) Limited (“NT”) acts as
Administrator and Company Secretary and is responsible to the Board under the terms of the
Administration Agreement. The Administrator is also responsible to the Board for ensuring compliance
with the Rules and Regulations of The Companies (Guernsey) Law, London Stock Exchange listing
requirements and observation of the Reserved Powers of the Board and in this respect the Board receives
detailed quarterly reports.

The Directors have access to the advice and services of the Company Secretary who is responsible to the
Board for ensuring that Board procedures are followed and that it complies with applicable rules and
regulations of The Companies (Guernsey) Law, the GFSC and the London Stock Exchange. Individual
Directors may, at the expense of the Company, seek independent professional advice on any matter that
concerns them in the furtherance of their duties. The Company maintains appropriate Directors’ and
Officers’ liability insurance in respect of legal action against its Directors on an ongoing basis and the
Company has maintained appropriate Directors’ Liability Insurance cover throughout the year.

The Board is also responsible for safeguarding the assets of the Company and for taking reasonable steps
for the prevention and detection of fraud and other irregularities.

Internal Control and Financial Reporting
The Directors acknowledge that they are responsible for establishing and maintaining the Company’s
system of internal control and reviewing its effectiveness. Internal control systems are designed to
manage rather than eliminate the failure to achieve business objectives and can only provide reasonable
but not absolute assurance against material misstatements or loss.

The Directors review all controls including operations, compliance and risk management. The key
procedures which have been established to provide internal control are:

(cid:129) Investment advisory services are provided by the Investment Manager. The Board is responsible for
setting the overall investment policy, ensuring compliance with the Company’s Investment Strategy
and monitors the action of the Investment Manager and Master Fund at regular Board meetings. The
Board has also delegated administration and company secretarial services to NT; however it retains
accountability for all functions it has delegated.

(cid:129) The Board considers the process for identifying, evaluating and managing any significant risks faced
by the Company on an on-going basis. It ensures that effective controls are in place to mitigate these
risks and that a satisfactory compliance regime exists to ensure all local and international laws and
regulations are upheld. Particular attention has been given to the effectiveness of controls to monitor
liquidity risk, asset values, counterparty exposure and credit availability.

(cid:129) The Board clearly defines the duties and responsibilities of their agents and advisors and appointments
are made by the Board after due and careful consideration. The Board monitors the ongoing
performance of such agents and advisors.

(cid:129) The Investment Manager and NT maintain their own systems of internal control, on which they
report to the Board. The Company, in common with other investment companies, does not have an

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

11

DIRECTORS’ REPORT

Internal Control and Financial Reporting – continued

internal audit function. The Audit Committee has considered the need for an internal audit function,
but because of the internal control systems in place at the Investment Manager and NT, has decided it
appropriate to place reliance on their systems and internal control procedures.

(cid:129) The systems are designed to ensure effectiveness and efficient operation,

internal control and
compliance with laws and regulations. In establishing the systems of internal control, regard is paid to
the materiality of relevant risks, the likelihood of costs being incurred and costs of control. It follows
therefore that the systems of internal control can only provide reasonable but not absolute assurance
against the risk of material misstatement or loss.

Board Performance
The Board and Audit Committee undertake a formal annual evaluation of their own performance and
that of their committees and individual Directors. In order to review their effectiveness, the Board and
Audit Committee carry out a process of formal self-appraisal. The Directors and Committee consider
how the Board and Audit Committee functions as a whole and also review the individual performance of
its members. This process is conducted by the respective Chairman reviewing individually with each of
the Directors and members of the Committee their performance, contribution and commitment to the
Company. The performance of the Chairman is evaluated by the other independent Directors. It is
intended to consider having an independent review carried out in 2020.

Management of Principal Risks and Uncertainties
As noted in the Statement of Directors’ Responsibilities in respect of the Audited Financial Statements,
the Directors are required to provide a description of the principal risks and uncertainties facing the
Company. The Directors have considered the risks and uncertainties facing the Company and have
prepared and review regularly a risk matrix which documents the significant risks faced by the Company.

This process has been in place for the period under review and up to the date of approval of the Audited
Financial Statements and is reviewed by the Board and is in accordance with the Guidance on Risk
Management, Internal Control and Related Financial and Business Reporting.

This document considers the following information:

(cid:129) Identifying and reporting changes in the risk environment;

(cid:129) Identifying and reporting changes in the operational controls;

(cid:129) Identifying and reporting on the effectiveness of controls and remediation of errors arising; and

(cid:129) Reviewing the risks faced by the Company and the controls in place to address those risks.

The Directors have acknowledged they are responsible for establishing and maintaining the Company’s
system of internal control and reviewing its effectiveness by focusing on four key areas:

(cid:129) Consideration of the investment advisory services provided by the Investment Manager;

(cid:129) Consideration of the process for identifying, evaluating and managing any significant risks faced by

the Company on an ongoing basis;

(cid:129) Clarity around the duties and responsibilities of the agents and advisors engaged by the Directors; and

(cid:129) Reliance on the Investment Manager and Administrator maintaining their own systems of internal

controls.

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

12

Directors’ Report continued

Further discussion on Internal Control is documented in the Directors’ Report under “Internal Control
and Financial Reporting”.

The main risks and uncertainties that the Directors consider to apply to the Company are as follows:

(cid:129) Underlying investment performance of the Master Fund. To mitigate this risk the Directors receive
regular updates from the Investment Manager on the performance of the Master Fund. The Board
reviews quarterly performance updates on the Master Fund and has access to the Investment Manager
on any potential question raised;

(cid:129) Concentration of Investor Base. The Directors receive quarterly investor reports from Jefferies
International Limited (“the Corporate Broker”) and there is regular communication between the
Directors and Corporate Broker to identify potential significant changes in the shareholder base;

(cid:129) Discount to the NAV. The Board monitors the discount to the NAV on a regular basis and continually
maintains regular contact with the Investment Manager when necessary. In addition, the Investment
Manager, Corporate Broker and, when considered necessary, the Board of Directors, maintain regular
contact with the significant Shareholders in the Company. As mentioned on page 1, the Board made
updates in May 2018 to the Company’s share repurchase programme, outlined in Note 6 on pages 39 to
41, and dividend policy. Following the final dividend payment of $38,397,151 and $2,231,249 on USD
Shares and Sterling Shares respectively on 16 February 2018 with respect to the year ended 31 December
2017, the Board elected to stop dividend payments, cancelled 5% of the Company’s outstanding shares
held by the Master Fund and adopted a more traditional share repurchase and cancellation practice. In
addition, the Board intends to cancel the remaining shares held by the Master fund in 2019 and has
committed not to sell any held shares unless the share price is at or above the NAV. On 5 December
2018, the Board announced the implementation of a share buyback programme, with share purchases
being made through the market at prices below the then prevailing NAV per share. As part of this
programme, 318,657 shares were repurchased during December 2018 at an average cost per share of
$14.07.

(cid:129) Performance of the Investment Manager. The Directors review the performance of the Investment
Manager on an annual basis and Board representatives conduct annual visits to the Investment
Manager;

(cid:129) Failure of appointed service providers to the Company. The Directors conduct a formal review of each
service provider annually in addition to receiving regular updates from each service provider and
ensuring that there is ongoing communication between the Board and the various service providers to
the Company;

(cid:129) Financial Risk. The Board employs independent administrators to prepare the Financial Statements of
the Company and meets with the independent auditors at least twice a year to discuss all financial
matters including the appropriateness of the accounting policies;

(cid:129) Liquidity Risk. Shares of the Master Fund may be redeemed quarterly on 60 days’ prior written notice
or at other times with the consent of the Master Fund’s Board of Directors in order to pay Company
expenses. The majority of the investments held by the Master Fund are held in cash and securities
with quoted prices available in active markets/exchanges; and

(cid:129) Cyber Security Risk. The Company is exposed to risk arising from a successful cyber-attack through
its service providers. The Company requests of its service providers that they have appropriate
safeguards in place to mitigate the risk of cyber-attacks (including minimising the adverse
consequences arising from any such attack), that they provide regular updates to the Board on cyber
security, and conduct ongoing monitoring of industry developments in this area.

Viability Statement
In accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial
in April 2016 (“The Code”), the Directors have assessed the prospects of the
Reporting Council

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

13

DIRECTORS’ REPORT

Viability Statement – continued
Company over the three year period to 31 December 2021. The Directors consider that three years is an
appropriate period based on a review of the Company’s investment horizon, anticipated cash flows,
management arrangements as well as the liquidity of the Company’s investment in the Master Fund.

The Company’s investment objective was to provide its Shareholders with consistent long term capital
appreciation, utilising the investment skills of the Investment Manager, through investment of all of its capital
(net of short-term working capital requirements) in Class E shares of Third Point Offshore Fund, Ltd. (the
“Master Fund”), an exempted company formed under the laws of the Cayman Islands on 21 October 1996.

As of January 1, 2019, the Company transferred substantially all of its holding into a newly-created
share class of the Master Fund. The new share class is subject to a 25% quarterly redemption gate. The
Company will plan to redeem an appropriate amount each quarter to account for planned share
buybacks and Company fees and expenses. The Company’s performance and operations therefore
depend upon the performance of the Master Fund and the Directors in assessing the viability of the
Company pay particular attention to the risks facing the Master Fund. The Investment Manager’s
Review on pages 24 and 25 sets out details of the Company’s financial performance, and outlook.

In its assessment of the viability of the Company, the Directors have considered each of the Company’s principal
risks and uncertainties as well as the internal control and financial reporting processes detailed above and in
particular the underlying investment performance of the Master Fund and share price discount to NAV.

The Directors acknowledge the two year notice period of the Investment Manager serving notice under
the Management Agreement. To mitigate against this risk, the Directors meet regularly with the
Investment Manager to review the Company’s performance, and closely monitor the relationship with
the Investment Manager. The Directors confirm their belief that the Company will remain viable for the
period to 31 December 2021.

Going Concern
During 2018, the Directors have carried out a robust assessment of the principal risks facing the
Company, including those that would threaten its business model, future performance, solvency or
liquidity. The Directors believe that the Company is well placed to manage its business risks successfully,
having taken into account the current economic outlook.

The Directors, having considered the above risks and reviewed ongoing budgeted expenses, have a
reasonable expectation that the Company will be able to continue in operation and meet its liabilities as
they fall due.

After making enquiries and given the nature of the Company and its investment, the Directors are satisfied that it
is appropriate to continue to adopt the going concern basis in preparing the Audited Financial Statements. The
Master Fund Shares are liquid and can be converted to cash to meet liabilities as they fall due. After due
consideration, the Directors consider that the Company is able to continue for the foreseeable future.

Significant Events During The Year
All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.

In August 2018, the Company proposed to transfer the listing category of its Ordinary Shares from a
standard listing to a premium listing (closed-ended investment fund) under Chapter 15 of the Listing
Rules. This transfer took effect in September 2018, as a result of the passing of the resolutions at the
extraordinary general meeting of the Company on 31 August 2018.

The Company was admitted to the Premium Official List Segment (“Premium Listing”) of the London
Stock Exchange (“LSE”) on 10 September 2018. In December 2018, the Premium Listing enabled TPOIL
to be included in the FTSE UK Index series.

Marc Antoine Autheman resigned from the Board of Directors on 12 September 2018.

DIRECTORS’ REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

14

Directors’ Report continued

Significant Events After Year End
The FRC and AIC have revised their corporate governance codes, which became effective 1 January
2019. The Directors are currently evaluating the impact this will have on the Company.

As of January 1, 2019, the Company transferred substantially all of its holding into a newly-created
share class of the Master Fund. The new share class will be subject to a 25% quarterly redemption gate.
The Company will plan to redeem an appropriate amount each quarter to account for planned share
buybacks and Company fees and expenses. The new share class will attract a lower management fee and
the Company will also qualify for an additional reduction of management fee applicable to it based on its
size and longevity as an investor in the Master Fund. As a result, the Company’s management fee will be
reduced from 2.0% to 1.25% per annum commencing on 1 January 2019.

For the period 1 January 2019 to 23 April 2019, 1,596,777 shares have been repurchased and cancelled
at an average cost per share of $14.48.

Steve Bates was appointed as Chairman on 5 February 2019.

Rupert Dorey was appointed as a Director on 5 February 2019.

On 11 February 2019, Christopher Legge purchased 2,000 shares in Third Point Offshore Investors
Limited taking his total holding to 6,500 shares.

On 13 February 2019, Rosemary Dorey (spouse of Rupert Dorey, non-executive director of the
Company) purchased 5,151 shares in Third Point Offshore Investors Limited taking their combined total
holding to 12,000 shares.

On 4 March 2019, Claire Whittet beneficially purchased 2,500 shares in Third Point Offshore Investors
Limited.

There were no other events subsequent to the year-end which, in the opinion of the Directors, may have
an impact on the Audited Annual Financial Statements for the period ended 31 December 2018. Please
refer to the Subsequent Events note on page 44.

Relations with Shareholders
The Board welcomes Shareholders’ views and places great importance on communication with its
Shareholders. The Board receives regular reports on the views of shareholders and the Chairman and
other Directors are available to meet shareholders if required. Shareholders who wish to communicate
with the Board should, in the first instance contact the Administrator, whose contact details can be found
on the Company’s website. The Annual General Meeting of the Company provides a forum for
shareholders to meet and discuss issues with the Directors of the Company. The eleventh Annual General
Meeting was held on 28 June 2018 with all proposed resolutions being passed by the Shareholders.

International Tax Reporting
For the purposes of the US Foreign Account Tax Compliance Act, the Company is registered with the US
Internal Revenue Services (“IRS”) as a Guernsey reporting Foreign Financial Institution (“FFI”), received
a Global Intermediary Identification Number and can be found on the IRS FFI list.

The Common Reporting Standard (“CRS”) is a global standard for the automatic exchange of financial
account information developed by the Organisation for Economic Co-operation and Development
(“OECD”), which has been adopted by Guernsey and which came into effect on 1 January 2016.

The Board has taken the necessary action to ensure that the Company is compliant with Guernsey
regulations and guidance in this regard.

Criminal Finances Act 2017
In respect of the UK Criminal Finances Act 2017 which has introduced a new corporate criminal offence
(“CCO”) of ‘failing to take reasonable steps to prevent the facilitation of tax evasion’, the Board
confirms that it is committed to zero tolerance towards the criminal facilitation of tax evasion.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

15

DIRECTORS’ REPORT

Criminal Finances Act 2017 – continued
The Board also keeps under review developments involving other social, environmental and regulatory
matters, such as Modern Slavery and the General Data Protection Regulation (“GDPR”), and will report
on those to the extent they are considered relevant to the Company’s operations.

Significant Shareholdings
As at 23 April 2019, the Company have been notified that the following had significant shareholdings in
excess of 5% in the Company:

Total Shares Held

% Holding in Class

Significant Shareholders

US Dollar Shares
Vidacos Nominees Limited

Goldman Sachs Securities
(Nominees) Limited

Chase Nominees Limited

HSBC Global Custody Nominee

(UK)

Morgan Stanley & Co.

Incorporated

Smith & Willamson Nominees

Limited

7,595,053

6,119,550

5,287,293

2,727,442

2,663,617

2,383,069

16.58%

13.36%

11.54%

5.95%

5.81%

5.20%

The Directors confirm to the best of their knowledge:-

(cid:129) there is no relevant audit information of which the Company’s Auditor is unaware of, and each
Director has taken steps he/she ought to have taken as a Director to make himself/herself aware of
any relevant information and to establish that the Company’s Auditor is aware of that Information;

(cid:129) these Annual Report and Audited Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and give a true and fair view
of the financial position of the Company;

(cid:129) these Annual Report and Audited Financial Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for the shareholder to assess the Company’s
performance, business model and strategy; and

(cid:129) these Annual Report and Audited Financial Statements include information detailed in the Directors’
Report, the Investment Manager’s Review and Notes to the Audited Financial Statements, which
provide a fair review of the information required by:-

a) DTR 4.1.8 of the Disclosure and Transparency Rules (“DTR”), being a fair review of the Company

business and a description of the principal risks and uncertainties facing the Company; and

b) DTR 4.1.11 of the DTR, being an indication of important events that have occurred since the ending

of the financial year and the likely future development of the Company.

Signed on behalf of the Board by:

Steve Bates
Chairman

Christopher Legge
Director

24 April 2019

DISCLOSURE OF DIRECTORSHIPS IN
PUBLIC LISTED COMPANIES

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

16

Disclosure of Directorships in
Public Listed Companies

The following summarises the Directors’ directorships in public companies:

Company Name

Steve Bates

VinaCapital Vietnam Opportunity Fund Limited

BMO Capital & Income Investment Trust plc

Biotech Growth Trust

Magna Umbrella Fund

Rupert Dorey

NB Global Floating Rate Income Fund Limited

AP Alternative Assets, L.P.

Keith Dorrian

MasterCapital Fund Limited

Christopher Legge

Ashmore Global Opportunities Limited

John Laing Environmental Assets Group Limited

NB Distressed Debt Investment Fund Limited

Sherborne Investors (Guernsey) B Limited

Sherborne Investors (Guernsey) C Limited

TwentyFour Select Monthly Income Fund Limited

Claire Whittet

BH Macro Limited

Eurocastle Investment Limited

International Public Partners Limited

Riverstone Energy Limited

TwentyFour Select Monthly Income Fund Limited

Exchange

London

London

London

Ireland

London

Euronext

Ireland

London

London

London

London

London

London

London

Euronext

London

London

London

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

17

STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE AUDITED FINANCIAL
STATEMENTS

Statement of Directors’ Responsibilities in
Respect of the Audited Financial Statements

The Directors are responsible for preparing the Audited Financial Statements in accordance with
applicable Guernsey Law and accounting principles generally accepted in the United States of America.
Guernsey Company Law requires the Directors to prepare Financial Statements for each financial period
which give a true and fair view of the state of affairs of the Company and of the net income or expense
of the Company for that year.

In preparing these Audited Financial Statements the Directors should:

(cid:129) select suitable accounting policies and then apply them consistently;

(cid:129) make judgements and estimates that are reasonable and prudent;

(cid:129) state whether the applicable accounting standards have been followed subject to any material

departures disclosed and explained in the Audited Financial Statements; and

(cid:129) prepare the Audited Financial Statements on a going concern basis unless it is inappropriate to

presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company and to enable them to ensure that the
Audited Financial Statements comply with The Companies (Guernsey) Law, 2008. They are also
responsible for the system of internal controls, safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors have responsibility to confirm that:

(cid:129) there is no relevant audit information of which the Company’s Auditor is unaware of, and each
Director has taken all the steps he ought to have taken as a Director to make himself aware of any
relevant information and to establish that the Company’s Auditor is aware of that information;

(cid:129) these Annual Report and Audited Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and give a true and fair view
of the financial position of the Company;

(cid:129) these Annual Report and Audited Financial Statements, taken as a whole, are fair, balanced and
understandable and provide information necessary for the shareholder to assess the Company’s
performance, business model and strategy; and

(cid:129) these Annual Report and Audited Financial Statements include information detailed in the Directors’
Report, the Investment Manager’s Review and Notes to the Audited Financial Statements, which
provide a fair review of the information required by:

a) DTR 4.1.8 of the Disclosure and Transparency Rules (“DTR”), being a fair review of the
Company business and a description of the principal risks and uncertainties facing the Company;
and

b) DTR 4.1.11 of the DTR, being an indication of important events that have occurred since the

ending of the financial year and the likely future development of the Company.

Steve Bates
Chairman

Christopher Legge
Director

24 April 2019

DIRECTORS’ REMUNERATION REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

18

Directors’ Remuneration Report

Introduction
The Board has prepared this report as part of its framework for corporate governance which, as
described in the Directors’ Report, enables the Company to comply with the main requirements of the
UK Corporate Governance Code published by the Financial Reporting Council.

An ordinary resolution for the approval of this report will be put to the shareholders at the forthcoming
AGM.

Remuneration Policy
All Directors are non-executive and a Remuneration Committee has not been established. The Board as a
whole considers matters relating to the Directors’ remuneration. No advice or services were provided by
any external person in respect of its consideration of the Directors’ remuneration.

The Company’s policy is that the fees payable to the Directors should reflect the time spent by the
Directors on the Company’s affairs and the responsibilities borne by the Directors and be sufficient to
attract, retain and motivate Directors of a quality required to run the Company successfully. The
Chairman of the Board is paid a higher fee in recognition of his additional responsibilities, as is the
Chairman of the Audit Committee. The policy is to review fee rates periodically, although such a review
will not necessarily result in any changes to the rates, and account is taken of fees paid to Directors of
comparable companies.

There are no long term incentive schemes provided by the Company and no performance fees are paid to
Directors.

No Director has a service contract with the Company but each of the Directors is appointed by a letter of
appointment which sets out the main terms of their appointment. Director appointments can also be
terminated in accordance with the Articles. Should shareholders vote against a Director standing for
re-election, the Director affected will not be entitled to any compensation.

Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director personally.
No other remuneration or compensation was paid or payable by the Company during the year to any of
the Directors apart from the reimbursement of allowable expenses.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

19

DIRECTORS’ REMUNERATION REPORT

Directors’ fees

The fees payable by the Company in respect of each of the Directors who served during 2018 and 2017,
were as follows:

Marc Antoine Autheman1

Christopher F L Legge (Audit Committee Chairman)

Keith Dorrian

Christopher N Fish2

Claire Whittet3

Joshua L Targoff5

Total

USD equivalent

2018

£

44,272

46,000

38,000

–

45,5514

–

2017

£

63,000

46,000

38,000

19,000

25,806

–

173,823

191,806

US$241,529 US$276,211

1 Mr. Autheman resigned from the Board of Directors on 12 September 2018.
2 Mr. Fish resigned from the Board of Directors on 21 June 2017.
3 Ms. Whittet was appointed to the Board of Directors on 27 April 2017.
4 Ms. Whittet was appointed Interim Chair with effect from 12 September 2018, therefore, her director fees were increased from
£38,000 per annum to £63,000 per annum.
5 As a non-independent Director and as a Partner of the Investment Manager Joshua L Targoff waived his Directors’ fee.

Performance table
The table shown on page 24 details the share price returns over the year.

Signed on behalf of the Board by:

Steve Bates
Chairman

Christopher Legge
Director

24 April 2019

REPORT OF THE AUDIT COMMITTEE

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

20

Report of the Audit Committee

On the following pages, we present the Audit Committee (the “Committee”) Report for the year ended
31 December 2018, setting out the Committee’s structure and composition, principal duties and key
activities during the year. As in previous years, the Committee has reviewed the Company’s financial
reporting, the independence and effectiveness of the independent auditor and the internal control and
risk management systems of service providers.

The Board is satisfied that for the year under review and thereafter the committee has recent and relevant
commercial and financial knowledge sufficient to satisfy the provisions of The Code.

Structure and Composition
The Committee is chaired by Christopher Legge and its other members are Claire Whittet and Rupert
Dorey who was appointed on 5 February 2019. The Committee operates within clearly defined terms of
reference and comprises all the Directors except the Investment Manager’s representative.

The Committee Terms of Reference indicates that appointments to the Committee shall be for a period
of up to three years, which may be extended for two further three year periods, and thereafter annually,
provided that the Director whose appointment is being considered remains an Independent Director for
the period of extension.

Name of Audit Committee Member

Chris Legge

Date of Appointment
to Audit Committee

June 19, 2007

Marc-Antoine Autheman2

June 21, 2007

Next Date for Review

— 17 April 20131
— 18 April 2016
— April 2019
— 17 April 20131
— 18 April 2016
— N/A
— 17 April 20131
— 18 April 2016
— N/A

June 19, 2007

April 27, 2017

— April 2020

February 5, 2019 — April 2020

Keith Dorrian3

Claire Whittet

Rupert Dorey4

1 Date specific tenure introduced on 17 April 2013.
2 Mr. Autheman resigned on 12 September 2018.
3 Mr. Dorrian resigned on 18 April 2018.
4 Mr. Dorey was appointed on 5 February 2019.

The Committee conducts formal meetings at least three times a year. The table on page 9 sets out the
number of Committee meetings held during the year ended 31 December 2018 and the number of such
meetings attended by each committee member. The independent auditor is invited to attend those
meetings at which the annual and interim reports are considered. The independent auditor and the
Committee will meet together without representatives of either the Administrator or Investment Manager
being present if either considers this to be necessary.

Principal Duties
The role of the Committee includes:

(cid:129) monitoring the integrity of the published financial statements of the Company;

(cid:129) keeping under review the consistency and appropriateness of accounting policies on a year to year
basis. Satisfying itself that the annual accounts, the interim statement of financial results and any
other major financial statements issued by the Company follow generally accepted accounting

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

21

REPORT OF THE AUDIT COMMITTEE

Principal Duties – continued

principles in the United States of America and give a true and fair view of the Company and any
associated undertakings’ affairs; matters raised by the external auditors about any aspect of the
accounts or, of the Company’s control and audit procedures, are appropriately considered and, if
necessary, brought to the attention of the Board, for resolution.

(cid:129) monitoring and reviewing the quality and effectiveness of the independent auditors and their

independence;

(cid:129) considering and making recommendations to the Board on the appointment, reappointment,

replacement and remuneration of the Company’s independent auditor;

(cid:129) monitoring and reviewing the internal control and risk management systems of the service providers; and

(cid:129) considering at least once a year whether there is a need for an internal audit function.

The complete details of the Committee’s formal duties and responsibilities are set out in the Committee’s
terms of reference, which can be obtained from the Company’s website.

Independent Auditor
The Committee is also the forum through which the independent auditor (the “auditor”) reports to the
Board of Directors. The objectivity of the auditor is reviewed by the Committee which also reviews the
terms under which the auditor is appointed to perform non-audit services. The Committee reviews the
scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditor,
with particular regard to non-audit fees. The Committee has established pre-approval policies and
procedures for the engagement of Ernst & Young LLP to provide non-audit services.

Ernst & Young LLP has been the independent auditor from the date of the initial listing on the London
Stock Exchange.

The audit fees proposed by the auditors each year are reviewed by the Committee taking into account the
Company’s structure, operations and other requirements during the year and the Committee makes
recommendations to the Board.

Non-audit fees were paid to Ernst and Young LLP during the year in respect of the interim review of the
Company’s condensed accounts to 30 June 2018 and for work associated with the Premium Listing. The
Committee considers Ernst & Young LLP to be independent of the Company. The Committee also met
with the external auditors without the Investment Manager or Administrator being present so as to
provide a forum to raise any matters of concern in confidence.

Evaluations or Assessments Made During the Year
The following sections discuss the assessments made by the Committee during the year:

Significant Areas of Focus for the Financial Statements
The Committee’s review of the interim and annual financial statements focused on the following area:

The Company’s investment in the Master Fund represents substantially all the net assets of the Company
and as such is the biggest factor in relation to the accuracy of the Financial Statements. The holding in
the Master Fund has been confirmed with the Company’s Administrator and the Master Fund. This
investment has been valued in accordance with the Accounting Policies set out in Note 3 to the Audited
Financial Statements. The Audit Committee has reviewed the Financial Statements of the Master Fund
and their Accounting Policies and determined the fair value of the investment as at 31 December 2018 is
reasonable. The Financial Statements of the Master Fund for the year ended 31 December 2018 were
audited by Ernst & Young who issued an unmodified audit opinion dated 24 April 2019.

REPORT OF THE AUDIT COMMITTEE

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

22

Report of the Audit Committee continued

Effectiveness of the Audit
The Committee had formal meetings with Ernst & Young LLP during the course of the year: 1) before
the start of the audit to discuss formal planning, discuss any potential issues and agree the scope that will
be covered and 2) after the audit work was concluded to discuss any significant matters such as those
stated on the previous page.

The Board considered the effectiveness and independence of Ernst & Young LLP by using a number of
measures, including but not limited to:

(cid:129) the audit plan presented to them before the start of the audit;

(cid:129) the audit results report including where appropriate, explanation for any variations from the original

plan;

(cid:129) changes to audit personnel;

(cid:129) the auditor’s own internal procedures to identify threats to independence;

(cid:129) feedback from both the Investment Manager and the Administrator; and

(cid:129) the Committee obtains confirmation from Ernst & Young LLP on their independence as additional

comfort for the Committee.

Further to the above, at the point of substantial conclusion of the 2018 audit, the Committee performed
a specific evaluation of the performance of the independent auditor. This is supported by the results of
questionnaires completed by the Committee covering areas such as quality of audit team, business
understanding, audit approach and management. This questionnaire was part of the process by which
the Committee assessed the effectiveness of the audit.

There were no adverse findings from this evaluation.

The outsourcing of any non-audit services such as interim review, tax compliance, tax structuring,
private letter rulings, accounting advice, quarterly reviews and disclosure are normally permitted but
should be pre-approved by the Committee, or two non-executive Directors.

The annual budget for both the audit and non-audit related services was presented to the Committee for
pre-approval.

Audit fees and Safeguards on Non-Audit Services
The tables below summarises the remuneration payable by the Company to Ernst & Young LLP during
the years ended 31 December 2018 and 31 December 2017.

Audit Services
Interim review
Reporting Accountant
Non-audit Services

2018 (£)

2017 (£)

Total

40,000
41,160
82,500
123,660

Total

38,885
41,460
—
41,460

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

23

REPORT OF THE AUDIT COMMITTEE

Evaluations or Assessments Made During the Year – continued
Audit fees and Safeguards on Non-Audit Services – continued
The independence of Ernst & Young LLP is in the Committee’s opinion not compromised by Ernst &
Young performing the interim review and work associated with the Premium Listing.

Internal Control
The Committee has examined the need for an internal audit function. The Committee considered that the
systems and procedures employed by the Investment Manager and the Administrator, including their
internal audit functions, provided sufficient assurance that a sound system of internal control, which
safeguards the Company’s assets, has been maintained. An internal audit function specific to the
Company is therefore considered unnecessary.

The Committee has requested and received SOC1 or equivalent reports such as service provider
assessment reports from the Company’s Administrator and Master Fund’s Administrators to enable it to
fulfil its duties under its terms of reference. Representatives of the auditors, Investment Manager and the
Administrator attend the meetings as a matter of practice and presentations are made by those attendees
as and when required.

Conclusion and Recommendation
framework and
After reviewing various reports such as the operational and risk management
performance reports from management, liaising where necessary with Ernst & Young LLP, and assessing
the significant areas of focus for financial statement issues listed on page 21, the Committee is satisfied
that the financial statements appropriately address the critical judgements and key estimates (both in
respect to the amounts reported and the disclosures).

The Committee is also satisfied that the significant assumptions used for determining the value of assets
and liabilities have been appropriately scrutinised, challenged and are sufficiently robust.

The Independent Auditor reported to the Committee that no material misstatements were found in the
course of its work. Furthermore, both the Investment Manager and the Administrator confirmed to the
Committee that they were not aware of any material misstatements including matters relating to
presentation. The Committee confirms that it is satisfied that the Independent Auditor has fulfilled its
responsibilities with diligence and professional scepticism.

Consequent to the review process on the effectiveness of the independent audit and the review of audit
services, the Committee has recommended that Ernst & Young LLP be reappointed for the coming
financial year.

For any questions on the activities of the Committee not addressed in the foregoing, a member of the
Committee remains available to attend each Annual General Meeting to respond to such questions.

The Company is not required to apply the EU Directive as it is not an EU Public Interest Entity (“PIE”),
due to being incorporated in Guernsey. However, the Audit Partner rotates every 5 years.

Christopher Legge
Audit Committee Chairman

24 April 2019

INVESTMENT MANAGER’S REVIEW

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

24

Investment Manager’s Review

Performance Summary1

USD Class
Share Price
Net asset value per share
Premium/(discount)

31-December-2018
14.00
17.24
(18.8%)

31-December-2017
17.29
20.25
(14.6%)

% Return2
(14.3%)
(10.9%)

1
2

For the period 1 January 2018 to 31 December 2018.
Calculation includes dividends paid up to the year ended 31 December 2018.

Strategy Performance
For the twelve months ended 31 December 2018, the net asset value per share performance decreased by
(10.9%) for the U.S. Dollar share class. Highlights for 2018 performance are listed below. Please refer to
for more detailed commentary from the
the Company’s website (www.thirdpointoffshore.com)
Investment Manager via shareholder letters and the Company’s overview presentation.

2018 was the fourth year in a 24-year history during which the Investment Manager sustained a loss of
over 1% in a calendar year and only the second double digit decline in the firm’s history. Third Point
was disappointed with the results but took the opportunity to learn from mistakes, reflect on competitive
advantages, and adjust the portfolio.

A significant portion of the negative results for 2018 were attributable to excess unhedged long cyclical
investments and one large risk arbitrage position related to a merger that failed to close. The Investment
Manager maintained too much long exposure heading into the fourth quarter which drove a portfolio
decline during the market sell-offs in October and December. While the Investment Manager’s single
name equity short positions and structured credit portfolios performed well, exposures to the assets
classes were insufficient to offset the losses in core equity long positions.

As of 31 December 2018, the top five single issuer positions in the portfolio were Baxter International
Inc., Nestle´ SA, Campbell Soup Co., United Technologies Corp., and DowDuPont Inc., excluding any
positions deemed confidential.

Risk Outlook
The Investment Manager significantly reduced net equity exposure heading into 2019 with a belief that
more moderate positioning is appropriate for the market environment. The Manager expects volatility to
re-emerge following a sharp rally during the first two months of the year and plans to be well positioned
to be providers of liquidity during any future market dislocations across both equity and credit markets.
Event-driven, catalyst-oriented investing across asset classes remains core for the Investment Manager. As
such, Third Point has renewed focus on several core areas in which the Manager has generated
significant alpha over the firm’s history including activism or constructivism,
identifying mispriced
intrinsic value securities, single name short selling, and opportunistic investing across the capital
structure, including credit.

At 31 December 2018, exposure in the Investment Manager’s portfolio is summarized below. Please refer
to www.thirdpointoffshore.com for an updated portfolio exposure breakdown or reach out
to
ir@thirdpoint.com for additional information.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

25

INVESTMENT MANAGER’S REVIEW

Exposure Breakdown 1

Long/Short Equity

Consumer

Energy & Utilities

Financials

Healthcare

Industrials & Commodities

TMT

Market Hedges

Total L/S Equity

Credit

Distressed

Government

Performing

ABS

Total Credit

Other

Risk Arbitrage

Macro 2

Privates

Currency ³

Total Other

Long

18.9%

2.4%

9.8%

17.1%

17.2%

3.5%

4.1%

73.0%

2.0%

1.8%

4.5%

14.2%

22.5%

2.1%

0.0%

9.8%

0.0%

11.9%

Exposure

Short

(4.3%)

0.0%

(2.1%)

(1.7%)

(8.8%)

(6.3%)

(6.7%)

(29.9%)

0.0%

0.0%

(1.8%)

(3.6%)

(5.4%)

(1.0%)

0.0%

0.0%

0.0%

(1.0%)

Net

14.6%

2.4%

7.7%

15.4%

8.4%

(2.8%)

(2.6%)

43.1%

2.0%

1.8%

2.7%

10.6%

17.1%

1.1%

0.0%

9.8%

0.0%

10.9%

1 Relates to the Third Point Offshore Master Fund L.P. Exposures are categorized in a manner consistent with the Investment Manager’s classifications for portfolio and risk management purposes.

2 Rates and FX excluded.

³ Gains and losses attributable to FX price movements on portfolio positions vs USD.

Net equity exposure is defined as the long exposure minus the short exposure of all equity positions
(including long/short, arbitrage, and other strategies), and can serve as a rough measure of the exposure
to fluctuations in overall market levels. The Investment Manager continues to closely monitor the
liquidity of the portfolio and is comfortable that the current composition is aligned with the redemption
terms of the fund.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

26

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report

to the members of Third Point Offshore Investors Limited

Opinion
We have audited the financial statements of Third Point Offshore Investors Limited (the “Company”) for
the year ended 31 December 2018, which comprise the Statement of Assets and Liabilities, the Statement
of Operations, the Statement of Changes in Net Assets, the Statement of Cash Flows and the related
notes 1 to 13, including a summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and accounting principles generally accepted
in the United States of America.

In our opinion, the financial statements:
(cid:129) give a true and fair view of the state of the Company’s affairs as at 31 December 2018 and of its

results for the year then ended;

(cid:129) have been properly prepared in accordance with accounting principles generally accepted in the

United States of America; and

(cid:129) have been properly prepared in accordance with the requirements of the Companies (Guernsey) Law,

2008.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and
applicable law. Our responsibilities under those standards are further described in the “Auditor’s
responsibilities for the audit of the financial statements” section of our report below. We are independent
of the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.

Conclusions relating to principal risks, going concern and viability statement

We have nothing to report in respect of the following information in the annual report, in relation to
which the ISAs (UK) require us to report to you whether we have anything material to add or draw
attention to:

(cid:129) the disclosures in the annual report set out on pages 9 to 12 that describe the principal risks and

explain how they are being managed or mitigated;

(cid:129) the directors’ confirmation set out on page 12 in the annual report that they have carried out a robust
assessment of the principal risks facing the entity, including those that would threaten its business
model, future performance, solvency or liquidity;

(cid:129) the directors’ statement set out on page 12 in the annual report about whether they considered it
appropriate to adopt the going concern basis of accounting in preparing them, and their identification
of any material uncertainties to the entity’s ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;

(cid:129) whether the directors’ statement in relation to going concern required under the Listing Rules is

materially inconsistent with our knowledge obtained in the audit; or

(cid:129) the directors’ explanation set out on page 12 in the annual report as to how they have assessed the
prospects of the entity, over what period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable expectation that the entity will
be able to continue in operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.

INDEPENDENT AUDITOR’S REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

27

Overview of our audit approach

Key audit matters

(cid:129) Investment Valuation

(cid:129) Investment Existence and Ownership

Audit scope

(cid:129) We performed an audit of

the complete financial

information of the

Company for the year ended 31 December 2018.

(cid:129) Procedures were performed on the audit team’s behalf by EY New York,
under our instruction and supervision, in respect of the Company’s share of
the Master Fund’s income and expenses as reported in the Statement of
Operations on page 31.

Materiality

(cid:129) Overall materiality of US$16.3 million which represents 2% of net assets.

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified. These matters included those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in our opinion thereon, and we do not provide a separate
opinion on these matters.

Key observations communicated to the
Audit Committee

We confirmed there were no
matters identified during our
audit work on the valuation of
investments that we wanted to
bring to the attention of the
Audit Committee.

Risk

Our response to the risk

Valuation of investments
(US$803m, PY comparative
US$1,014m)

Our response comprised of
substantive audit testing of
investment valuation, including:

Refer to the Report of the Audit
Committee (page 19 to 22);
Accounting policies (page 35)

The investments held are measured
at fair value through profit or loss,
and their fair value is determined
by reference to the published NAV
per share of the investee fund, as
calculated by its independent
Administrator. The valuation risk
considers the risk of an error in the
application of the published NAV
per share, obtained from the
independent Administrator of the
investee fund, when calculating the
fair value of the Company’s
investments, as well as the effect
on valuation of any gating/
suspension of redemptions by the
investee fund.

(cid:129) Agreeing the valuation per
share of the Company’s
investments in the investee
fund to the NAV per share of
the investee fund published by
its independent Administrator;

(cid:129) Agreeing the valuation per
share of the Company’s
investments in the investee
fund to the NAV per share of
the investee fund per its
audited financial statements
for the year ended 31
December 2018, which were
approved on 19 March 2019;
and

Reviewing the subscriptions and
redemptions schedule of the
investee fund around the year-
end date to assess the liquidity of
the Company’s investments in the
investee fund.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

28

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report continued

to the members of Third Point Offshore Investors Limited

Key observations communicated to the
Audit Committee

We confirmed there were no
matters identified during our
audit work on existence and
ownership of investments that we
wanted to bring to the attention
of the Audit Committee.

Risk

Our response to the risk

Investment existence and
ownership

(US$803m, PY comparative
US$1,014m)

Refer to the Report of the Audit
Committee (page 19 to 22);
Accounting policies (page 35)

Risk that the investments
presented in the financial
statements do not exist or the
Company does not have the rights
to cash flows derived from them.
Failure to obtain good title
exposes the Company to
significant risk of loss.

Our response comprised the
performance of substantive audit
testing of investment existence
and ownership including:

(cid:129) Obtaining a confirmation, as
at 31 December 2018, of the
Company’s holdings in the
investee fund into which the
Company invests, from the
independent Administrator of
the investee fund, and
agreeing it to the accounting
records of the Company; and

(cid:129) Agreeing supporting

documentation for all additions
and disposals of holdings in the
investee fund that took place
during the year ended
31 December 2018, and
agreeing the details to the
accounting records of the
Company.

An overview of the scope of our audit

Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality
determine our audit scope. Taken together, this enables us to form an opinion on the financial
statements.

Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.

Materiality
“Materiality” is the magnitude of omissions or misstatements that, individually or in the aggregate, could
reasonably be expected to influence the economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Company to be US$16.3 million (2017: US$20.3 million), which is
approximately 2% (2017: 2%) of net assets. We believe that net assets provides us with an appropriate
basis for audit materiality as it is a key published performance measure and is a key metric used by
management in assessing and reporting on overall performance.

During the course of our audit, we reassessed initial materiality and noted no matters leading us to
amend the basis of materiality (2% of net assets).

INDEPENDENT AUDITOR’S REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

29

Performance materiality
“Performance materiality” is the application of materiality at the individual account or balance level. It
is set at an amount to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Company’s overall control
environment, our judgement was that performance materiality was 75% (2017: 75%) of our planning
materiality, namely US$12.2 million (2017: US$15.2 million). We have set performance materiality at
this percentage because we have considered the likelihood of misstatements to be low. We have
considered both quantitative and qualitative factors when determining the expected level of detected
misstatements and setting the performance materiality at this level.

Reporting threshold
The reporting threshold is an amount below which identified misstatements are considered as being
clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of US$0.8 million (2017: US$1.02 million), which is set at 5% (2017: 5%) of planning
materiality, as well as differences below that threshold that,
in our view, warranted reporting on
qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.

Other information
The other information comprises the information included in the annual report set out on pages 1 to 24,
other than the financial statements and our auditor’s report thereon. The directors are responsible for the
other information.

Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material
inconsistencies or apparent material misstatements, we are
required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the
following items in the other information and to report as uncorrected material misstatements of the other
information where we conclude that those items meet the following conditions:

(cid:129) Fair, balanced and understandable set out on page 14 – the statement given by the directors that they
consider the annual report and financial statements taken as a whole is fair, balanced and
understandable and provides the information necessary for shareholders to assess the Company’s
performance, business model and strategy, is materially inconsistent with our knowledge obtained in
the audit; or

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

30

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report continued

to the members of Third Point Offshore Investors Limited

(cid:129) Audit committee reporting set out on pages 19 to 22 – the section describing the work of the audit
committee does not appropriately address matters communicated by us to the audit committee is
materially inconsistent with our knowledge obtained in the audit; or

(cid:129) Directors’ statement of compliance with the UK Corporate Governance Code set out on page 3 to 4 –
the parts of the directors’ statement relating to the Company’s compliance with the UK Corporate
Governance Code containing provisions specified for review by the auditor in accordance with Listing
Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies
(Guernsey) Law, 2008 requires us to report to you if, in our opinion:

(cid:129) proper accounting records have not been kept by the Company; or

(cid:129) the financial statements are not in agreement with the Company’s accounting records and returns; or
(cid:129) we have not received all the information and explanations we require for our audit.

Responsibilities of directors
As explained more fully in the ‘Statement of Directors’ responsibilities’ set out on page 16, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

INDEPENDENT AUDITOR’S REPORT

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

31

Use of report
This report is made solely to the Company’s members, as a body, in accordance with Section 262 of the
Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.

David Robert John Moore, ACA
for and on behalf of Ernst & Young LLP
Guernsey, Channel Islands
25 April 2019

Notes:
1. The maintenance and integrity of Third Point Offshore Investors Limited’s web site is the responsibility of the directors; the
work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web
site.

2. Legislation in the Guernsey governing the preparation and dissemination of financial statements may differ from legislation in

other jurisdictions.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

32

STATEMENTS OF ASSETS
AND LIABILITIES

Statements of Assets and Liabilities

(Stated in United States Dollars)

Assets

Investment in Third Point Offshore Fund Ltd at fair value
(Cost: US$398,942,647; 31 December 2017: US$435,246,919)

Cash

Due from broker

Redemption receivable

Other assets

Total assets

Liabilities

Accrued expenses and other liabilities

Administration fee payable (Note 4)

Total liabilities

Net assets

Number of Ordinary Shares in issue (Note 6)

US Dollar Shares

Sterling Shares

Net asset value per Ordinary Share (Notes 8 and 11)

US Dollar Shares

Sterling Shares

Number of Ordinary B Shares in issue (Note 6)

US Dollar Shares

Sterling Shares

As at
31 December 2018
US$

As at
31 December 2017
US$

803,148,852

1,014,421,855

117,979

520,662

10,130,000

18,933

16,816

–

156,500

19,171

813,936,426

1,014,614,342

258,425

41,974

300,399

171,480

50,261

221,741

813,636,027

1,014,392,601

47,186,130

–

47,403,915

2,093,352

$17.24

–

$20.25

£19.21

31,457,421

–

31,602,630

1,395,582

The financial statements on pages 32 to 44 were approved by the Board of Directors on 24 April 2019
and signed on its behalf by:

Steve Bates
Chairman

Christopher Legge
Director

See accompanying notes and attached Audited Financial Statements of Third Point Offshore Fund Ltd.
and Third Point Offshore Master Fund L.P.

STATEMENTS
OF OPERATIONS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

33

Statements of Operations

(Stated in United States Dollars)

Realised and unrealised gain from investment transactions allocated
from Master Fund

Net realised gain from securities, derivative contracts and foreign

For the year ended
31 December 2018
US$

For the year ended
31 December 2017
US$

currency translations

36,297,228

111,085,131

Net change in unrealised (loss)/gain on securities, derivative

contracts and foreign currency translations

(146,195,764)

107,642,579

Net gain/(loss) from currencies allocated from Master Fund

724,671

(45,804)

Total net realised and unrealised (loss)/gain from investment

transactions allocated from Master Fund

(109,173,865)

218,681,906

Net investment loss allocated from Master Fund

Interest income

Dividends, net of withholding taxes of US$2,157,699; (31 December

2017: US$1,919,445)

Other income

Incentive allocation (Note 2)

Stock borrow fees

Investment Management fee

Dividends on securities sold, not yet purchased

Interest expense

Other expenses

Total net investment loss allocated from Master Fund

Company expenses

Administration fee (Note 4)

Directors’ fees (Note 5)

Other fees1

Expenses paid on behalf of Third Point Offshore Independent
Voting Company Limited2 (Note 4)

Total Company expenses

Net loss

14,743,524

18,377,507

7,792,842

2,058,865

5,327,309

566,339

(430,284)

(41,956,498)

(131,767)

(126,485)

(19,188,088)

(19,197,634)

(2,904,501)

(2,227,379)

(2,433,936)

(1,255,149)

(4,053,795)

(6,276,501)

(4,547,140)

(46,768,491)

(166,306)

(241,529)

(1,948,125)

(178,848)

(276,211)

(746,242)

(96,687)

(88,977)

(2,452,647)

(1,290,278)

(6,999,787)

(48,058,769)

Net (decrease)/increase in net assets resulting from operations

(116,173,652)

170,623,137

1 The increase in other fees is due to the costs associated with the Premium Listing. Please see page 1 for further details.
2 Third Point Offshore Independent Voting Company Limited consists of Director Fees, Audit Fee and General Expenses.

See accompanying notes and attached Audited Financial Statements of Third Point Offshore Fund Ltd.
and Third Point Offshore Master Fund L.P.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

34

STATEMENTS OF
CHANGES IN NET ASSETS

Statements of Changes in Net Assets

(Stated in United States Dollars)

(Decrease)/increase in net assets resulting from operations

Net realised gain from securities, commodities, derivative contracts
and foreign currency translations allocated from Master Fund

Net change in unrealised (loss)/gain on securities, derivative contracts

For the year ended
31 December 2018
US$

For the year ended
31 December 2017
US$

36,297,228

111,085,131

and foreign currency translations allocated from Master Fund

(146,195,764)

107,642,579

Net gain/(loss) from currencies allocated from Master Fund

Total net investment loss allocated from Master Fund

Total Company expenses

724,671

(45,804)

(4,547,140)

(46,768,491)

(2,452,647)

(1,290,278)

Net (decrease)/increase in net assets resulting from operations

(116,173,652)

170,623,137

Decrease in net assets resulting from capital share transactions

Dividend distribution

Share buyback

Share redemptions

Total net assets at the beginning of the year

Total net assets at the end of the year

(40,603,431)

(35,416,482)

(4,479,491)

(39,500,000)

–

–

1,014,392,601

879,185,946

813,636,027

1,014,392,601

See accompanying notes and attached Audited Financial Statements of Third Point Offshore Fund Ltd.
and Third Point Offshore Master Fund L.P.

STATEMENTS
OF CASH FLOWS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

35

Statements of Cash Flows

(Stated in United States Dollars)

Cash flows from operating activities

Operating expenses

Directors’ fees

Administration fee

Third Point Offshore Independent Voting Company Limited¹

Redemption from Master Fund

Cash inflow from operating activities

Cash flows from financing activities

Dividend distribution

Net increase/(decrease) in cash

Cash at the beginning of the year

Cash at the end of the year

For the year ended
31 December 2018
US$

For the year ended
31 December 2017
US$

(1,857,084)

(241,529)

(174,593)

(96,687)

(719,865)

(346,760)

(172,445)

(88,977)

43,074,487

36,672,500

40,704,594

35,344,453

(40,603,431)

(35,416,482)

101,163

16,816

117,979

(72,029)

88,845

16,816

¹ Third Point Offshore Independent Voting Company Limited consists of Director Fees, Audit Fee and General Expenses.

(Stated in United States Dollars)

Supplemental disclosure of non-cash transactions from:

Operating activities

Redemption from Master Fund

Financing activities

Share buyback

Share redemptions

For the year ended
31 December 2018
US$

For the year ended
31 December 2017
US$

43,979,491

(4,479,491)

(39,500,000)

–

–

–

See accompanying notes and attached Audited Financial Statements of Third Point Offshore Fund Ltd.
and Third Point Offshore Master Fund L.P.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

36

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

Notes to the Audited Financial Statements

For the year ended 31 December 2018

1. The Company
Third Point Offshore Investors Limited (the “Company”) is an Authorised closed-ended investment
company incorporated in Guernsey on 19 June 2007 for an unlimited period, with registration number
47161.

2. Organisation
Investment Objective and Policy
The Company’s investment objective was to provide its Shareholders with consistent long term capital
appreciation, utilising the investment skills of the Investment Manager, through investment of all of its
capital (net of short-term working capital requirements) in Class E shares of Third Point Offshore Fund,
Ltd. (the “Master Fund”), an exempted company formed under the laws of the Cayman Islands on
21 October 1996.

The Master Fund’s investment objective is to seek to generate consistent long-term capital appreciation,
by investing capital in securities and other instruments in select asset classes, sectors and geographies, by
taking long and short positions. The Master Fund is managed by the Investment Manager and the
Investment Manager’s implementation of the Master Fund’s investment policy is the main driver of the
Company’s performance. The Master Fund invests all of its investable capital in Third Point Offshore
Master Fund L.P. (the “Master Partnership”) a corresponding open-ended investment partnership having
the same investment objective as the Master Fund.

The Master Fund is a limited partner of the Master Partnership, an exempted limited partnership
organised under the laws of the Cayman Islands, of which Third Point Advisors II L.L.C., an affiliate of
the Investment Manager, is the general partner. Third Point LLC is the Investment Manager to the
Company, the Master Fund and the Master Partnership. The Master Fund and the Master Partnership
share the same investment objective, strategies and restrictions as described above.

The Audited Financial Statements of the Master Fund and the Audited Financial Statements of the
Master Partnership, should be read alongside the Company’s Audited Annual Report and Audited
Financial Statements.

Investment Manager
The Investment Manager is a limited liability company formed on 28 October 1996 under the laws of the
State of Delaware. The Investment Manager was appointed on 29 June 2007 and is responsible for the
management and investment of the Company’s assets on a discretionary basis in pursuit of the
Company’s investment objective, subject to the control of the Company’s Board and certain borrowing
and leveraging restrictions.

In the year ended 31 December 2018, the Company paid to the Investment Manager at the level of the
Master Partnership a fixed management fee of 2 percent per annum and a general partner incentive
allocation of 20 percent of the Master Fund’s NAV growth (“Full Incentive Fee”) invested in the Master
Partnership, subject to certain conditions and related adjustments, by the Master Fund. If a particular series
invested in the Master Fund depreciates during any fiscal year and during subsequent years there is a profit
attributable to such series, the series must recover an amount equal to 2.5 times the amount of depreciation
in the prior years before the Investment Manager is entitled to the Full Incentive Fee. Until this occurs, the
series will be subject to a reduced incentive fee of 10%. The Company was allocated US$430,284
(31 December 2017: US$41,956,498) of incentive fees for the year ended 31 December 2018.

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

37

3. Significant Accounting Policies
Basis of Presentation
These Audited Financial Statements have been prepared in accordance with relevant accounting
principles generally accepted in the United States of America (“US GAAP”). The functional and
presentation currency of the Company is United States Dollars.

Management has determined that the Company is an investment company in conformity with US GAAP.
Therefore the Company follows the accounting and reporting guidance for investment companies in the
Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) 946,
Financial Services – Investment Companies (‘‘ASC 946’’).

The following are the significant accounting policies adopted by the Company:

Cash and Cash Equivalents
Cash in the Statements of Assets and Liabilities and for the Statement of Cash Flows comprises cash at
bank and on hand.

Broker cash
Due from broker includes cash balances held at the Company’s clearing broker as of 31 December 2018.
The Company clears all of its securities transactions through a major international securities firm, UBS,
pursuant to agreements between the Company and prime broker.

Valuation of Investments
The Company records its investment in the Master Fund at fair value. Fair values are generally
determined utilising the net asset value (“NAV”) provided by, or on behalf of, the underlying Investment
Managers of each investment fund. In accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurement”, fair value is defined
as the price the Company would receive upon selling a security in a timely transaction to an independent
buyer in the principal or most advantageous market of the security. For further information refer to the
Master Partnership’s Audited Financial Statements.

The valuation of securities held by the Master Partnership, which the Master Fund directly invests in, is
discussed in the notes to the Master Partnership’s Audited Financial Statements. The net asset value of
the Company’s investment in the Master Fund reflects its fair value. At 31 December 2018, the
Company’s US Dollar and Sterling shares represented 13.30% and 0.00% (31 December 2017: 12.83%
and 0.73%) respectively of the Master Fund’s NAV. All Sterling shares were compulsorily converted to
the US Dollar class as of 1 July 2018.

The Company has adopted ASU 2015-07, Disclosures for Investments in Certain Entities that calculate
Net Asset Value per Share (or its equivalent) (“ASU 201-07”) , in which certain investments measured at
fair value using the net asset value per share method (or its equivalent) as a practical expedient are not
required to be categorised in the fair value hierarchy. Accordingly the Company has not levelled
applicable positions.

Uncertainty in Income Tax
ASC Topic 740 “Income Taxes” requires the evaluation of tax positions taken or expected to be taken in
the course of preparing the Company’s tax returns to determine whether the tax positions are “more-
likely-than-not” of being sustained by the applicable tax authority based on the technical merits of the
position. Tax positions deemed to meet the “more-likely-than-not” threshold would be recorded as a tax
benefit or expense in the year of determination. Management has evaluated the implications of ASC 740
and has determined that it has not had a material impact on these Audited Financial Statements.

Income and Expenses
The Company records its proportionate share of the Master Fund’s income, expenses and realised and
unrealised gains and losses on a monthly basis. In addition, the Company accrues interest income, to the
extent it is expected to be collected, and other expenses.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

38

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

Notes to the Audited Financial Statements
(continued)
For the year ended 31 December 2018

3. Significant Accounting Policies – continued
Use of Estimates
The preparation of Audited Financial Statements in conformity with US GAAP may require management
to make estimates and assumptions that affect the amounts and disclosures in the financial statements
and accompanying notes. Actual results could differ from those estimates. Other than what is underlying
in the Master Fund and the Master Partnership, the Company does not use any material estimates in
respect of the Audited Financial Statements.

Foreign Exchange
Investment securities and other assets and liabilities denominated in foreign currencies are translated into
United States Dollars using exchange rates at the reporting date. Purchases and sales of investments and
income and expense items denominated in foreign currencies are translated into United States Dollars at
the date of such transaction. All foreign currency translation gains and losses are included in the
Statement of Operations.

Recent accounting pronouncements
We have evaluated all accounting standards updates issued by the FASB, one of the accounting standards
updates will have a material impact on the Audited Annual Financial Statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted
Cash. ASU 2016-18 clarifies the presentation of restricted cash in the Statement of Cash Flows by requiring
the amounts described as restricted cash be included with cash and cash equivalents when reconciling the
beginning of period and end of period total amounts shown on the Statement of Cash Flows. If cash and
cash equivalents and restricted cash are presented separately in the Statement of Assets and Liabilities, a
reconciliation of these separate line items to the total cash amount included in the Statement of Cash Flows
will be required either in the footnotes or on the face of the Statement of Cash Flows. The guidance is
effective for the Company on January 1, 2019. Early adoption is permitted. The Company is currently
evaluating the implications of ASU 2016-18 and its impact on the financial statements.

4. Material Agreements
Management and Incentive fees
The Investment Manager was appointed by the Company to invest its assets in pursuit of the Company’s
investment objectives and policies. As disclosed in Note 2, the Investment Manager is remunerated by the
Master Partnership by way of management fees and incentive fees.

Administration fees
Under the terms of an Administration Agreement dated 29 June 2007, the Company appointed Northern
Trust
(the
“Administrator”) and Corporate Secretary.

International Fund Administration Services

(Guernsey) Limited as Administrator

The Administrator is paid fees based on the NAV of the Company, payable quarterly in arrears. The fee
is at a rate of 2 basis points of the NAV of the Company for the first £500 million of NAV and a rate of
1.5 basis points for any NAV above £500 million. This fee is subject to a minimum of £4,250 per month.
The Administrator is also entitled to an annual corporate governance fee of £30,000 for its company
secretarial and compliance activities.

In addition, the Administrator is entitled to be reimbursed out-of-pocket expenses incurred in the course
of carrying out its duties, and may charge additional fees for certain other services.

Total Administrator expenses during the year amounted to US$166,306 with US$41,974 outstanding
(31 December 2017: US$178,848 with US$50,261 outstanding).

Related Party
The Company has entered into a support and custody agreement with Third Point Offshore Independent
Voting Company Limited (“VoteCo”) whereby, in return for the services provided by VoteCo, the Company

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

39

4. Material Agreements – continued
will provide VoteCo with funds from time to time in order to enable VoteCo to meet its obligations as they
fall due. Under this agreement, the Company has also agreed to pay all the expenses of VoteCo, including the
fees of the directors of VoteCo, the fees of all advisors engaged by the directors of VoteCo and premiums for
directors and officers insurance. The Company has also agreed to indemnify the directors of VoteCo in respect
of all liabilities that they may incur in their capacity as directors of VoteCo. The expense paid by the
Company on behalf of VoteCo during the year is outlined in the Statement of Operations on page 33 and
amounted to US$96,687 (31 December 2017: US$88,977). As at 31 December 2018 expenses accrued by the
Company on behalf of VoteCo amounted to US$19,855 (31 December 2017: US$16,679).

5. Directors’ Fees
The Chairman is entitled to a fee of £63,000 per annum. All other independent Directors are entitled to receive
£38,000 per annum with the exception of Mr. Legge who receives £46,000 per annum as the audit committee
chairman. Mr. Targoff has waived his fees. The Directors are also entitled to be reimbursed for expenses
properly incurred in the performance of their duties as Director. The Directors’ fees during the year amounted to
US$241,529 with US$nil outstanding (31 December 2017: US$276,211 with US$nil outstanding).

6. Stated Capital
The Company was incorporated with the authority to issue an unlimited number of Ordinary Shares (the
“Shares”) with no par value and an unlimited number of Ordinary B Shares (“B Shares”) of no par
value. All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.

Number of Ordinary Shares
Shares issued 1 January 2018
Shares Converted/Cancelled
Total shares transferred to share class during the year
Total shares transferred out of share class during the year
Total shares cancelled during the year
Shares in issue at end of year

Stated Capital Account
Stated capital account at 1 January 2018
Shares Converted/Cancelled
Total share value transferred to share class during the year
Total share value transferred out of share class during the year
Total share value cancelled during the year
Stated Capital account at end of year
Retained earnings

Number of Ordinary B Shares
Shares in issue as at 1 January 2018
Shares Converted/Cancelled
Total shares transferred to share class during the year
Total shares transferred out of share class during the year
Total shares cancelled during the year
Shares in issue at end of year

US Dollar
Shares

Sterling
Shares

47,403,915

2,093,352

2,738,686
(137,814)
(2,818,657)
47,186,130

104,177
(2,197,529)
–
–

US Dollar
Shares US$

Sterling Shares
US$

364,699,309

38,002,424

53,721,723
(2,734,850)
(43,982,856)
371,703,326
441,932,701

2,734,850
(40,737,274)
–
–
–

US Dollar
Shares

Sterling
Shares

31,602,630

1,395,582

1,825,872
(91,877)
(1,879,204)
31,457,421

69,452
(1,465,034)
–
–

In respect of each class of Shares a separate class account has been established in the books of the Company.
An amount equal to the aggregate proceeds of issue of each Share Class has been credited to the relevant class
account. Any increase or decrease in the NAV of the Master Fund, as calculated by the Master Fund, is
allocated to the relevant class account in the Company according to the number of shares held by each class.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

40

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

Notes to the Audited Financial Statements
(continued)
For the year ended 31 December 2018

6. Stated Capital – continued
Each class account is allocated those costs, expenses, losses, dividends, profits, gains and income which the
Directors determine in their sole discretion relate to a particular class. Expenses which relate to the Company
as a whole rather than specific classes are allocated to each class in the proportion that its NAV bears to the
Company as a whole.

Voting Rights
Ordinary Shares carry the right to vote at general meetings of the Company and to receive any dividends,
attributable to the Ordinary Shares as a class, declared by the Company and, in a winding-up will be
entitled to receive, by way of capital, any surplus assets of the Company attributable to the Ordinary
Shares as a class in proportion to their holdings remaining after settlement of any outstanding liabilities
of the Company. B Shares also carry the right to vote at general meetings of the Company but carry no
rights to distribution of profits or in the winding-up of the Company.

As prescribed in the Company’s Articles, each Shareholder present at general meetings of the Company shall,
upon a show of hands, have one vote. Upon a poll, each Shareholder shall, in the case of a separate class
meeting, have one vote in respect of each Share or B Share held and, in the case of a general meeting of all
Shareholders, have one vote in respect of each US Dollar Share or US Dollar B Share held. Fluctuations in
currency rates will not affect the relative voting rights applicable to the Shares and B Shares. In addition all of the
Company’s Shareholders have the right to vote on all material changes to the Company’s investment policy.

Repurchase of Shares and Discount Control
The Directors of the Company were granted authority to purchase in the market up to 14.99 percent of each
class of Shares in issue at the Annual General Meeting on 28 June 2018, and they intend to seek annual renewal
of this authority from Shareholders. The Directors have utilised this share repurchase authority by introducing a
new mechanism that will hopefully enhance future capital growth. Pursuant to the Director’s share repurchase
authority, the Company, through the Master Fund, commenced a share repurchase program in 2007. The Shares
are being held by the Master Partnership. The Master Partnership’s gains or losses and implied financing costs
related to the shares purchased through the share purchase programme are entirely allocated to the Company’s
investment in the Master Fund. The Master Partnership has an ownership of 7.16% of the USD shares
outstanding at 31 December 2018 (31 December 2017: 11.88%). Following the final dividend payment of
$38,397,151 and $2,231,249 on USD Shares and Sterling Shares respectively on 16 February 2018 with respect
to the year ended 31 December 2017, the Board elected to stop dividend payments, cancelled 5% of the
Company’s outstanding shares held by the Master Fund and adopted a more traditional share repurchase and
cancellation practice. In addition, the Board intends to cancel the remaining shares held by the Master fund in
2019, subject to the support of Master Fund profits, and has committed not to sell any held shares unless the
share price is at or above the NAV. On 5 December 2018, the Board announced the implementation of a share
buyback programme, with share purchases being made through the market at prices below the then prevailing
NAV per share. As part of this programme, 318,657 shares were repurchased and cancelled during December
2018 at an average cost per share of $14.07.

At 31 December 2018 and 31 December 2017 the Master Partnership held the following Shares in the
Company in the after-market:

31 December 2018
US Dollar Shares

31 December 2017
US Dollar Shares

Currency
USD

Currency
USD

Number of
Shares

Average Cost
per Share
3,379,753 US$38,286,262 US$11.33

Cost

Number of
Shares

Average Cost
per Share
5,879,753 US$65,025,532 US$11.06

Cost

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

41

Further issue of Shares
Under the Articles, the Directors have the power to issue further shares on a non-pre-emptive basis. If the
Directors issue further Shares, the issue price will not be less than the then-prevailing estimated weekly
NAV per Share of the relevant class of Shares.

Share Conversion Scheme
The Company’s Articles incorporate provisions to enable Shareholders of any one Class of Ordinary
Shares to convert all or part of their holding into any other Currency Class of Ordinary Share on a
monthly basis on the following terms:
(1)

the right of conversion is exercisable by the said holder giving to the Company or its authorised
agent at least 10 business days notice;
the notice shall specify the number and Currency Class to be converted from and the Currency
Class of Ordinary Shares into which they are to be converted.
the notice shall be submitted either through submission of the relevant instruction mechanism or
through the return of the relevant Ordinary Share Certificate.

(2)

(3)

Upon conversion a corresponding number of B Shares will be converted in a similar manner.

If
the aggregate NAV of any Currency Class at any month-end falls below the equivalent of
US$50 million, the Shares of that Class may be converted compulsorily into Shares of the Currency
Class with the greatest aggregate value in US Dollar terms at the time. Each conversion will be based on
NAV (Note 8) of the share classes to be converted. During the year ended 31 December 2018, the
Company compulsorily converted all Sterling shares to US Dollar shares and discontinued the Sterling
share class.

7. Taxation
The Fund is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies)
(Guernsey) Ordinance 1989.

8. Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets less its total liabilities. The NAV per
Share of each class is calculated by dividing the NAV of the relevant class account by the number of
Ordinary Shares of the relevant class in issue on that day.

9. Related Party Transactions
At 31 December 2018 other investment funds owned by or affiliated with the Investment Manager
owned 5,630,444 (31 December 2017: 5,630,444) US Dollar Shares in the Company. Refer to note 4
and note 5 for additional Related Party Transaction disclosures.

10. Significant Events
All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.

In August 2018, the Company proposed to transfer the listing category of its Ordinary Shares from a
standard listing to a premium listing (closed-ended investment fund) under Chapter 15 of the Listing
Rules. This transfer took effect in September 2018, as a result of passing the resolutions at the
extraordinary general meeting of the Company on 31 August 2018.

The Company was admitted to the Premium Official List Segment (“Premium Listing”) of the London
Stock Exchange (“LSE”) on 10 September 2018. In December 2018, the Premium Listing enabled TPOIL
to be included in the FTSE UK Index series.

Marc Antoine Autheman resigned from the Board of Directors on 12 September 2018.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

42

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

Notes to the Audited Financial Statements
continued
For the year ended 31 December 2018

11. Financial Highlights
The following tables include selected data for a single Ordinary Share of each of the Ordinary Share
classes in issue at the year end and other performance information derived from the Audited Financial
Statements.

Per Share Operating Performance
Net Asset Value beginning of the year
Income from Operations
Net realised and unrealised (loss)/gain from investment transactions

allocated from Master Fund 2

Net loss
Total Return from Operations

Share redemption accretion

Share buyback accretion
Distribution Paid
Net Asset Value, end of the year/conversion date
Total return before incentive fee allocated from Master Fund

Incentive allocation from Master Fund
Total return after incentive fee allocated from Master Fund

US Dollar
Shares
31 December 2018
US$

Sterling
Shares
30 June 20181
£

20.25

19.21

(2.38)
(0.05)
(2.43)

0.19

0.04
(0.81)
17.24
(10.82%)

(0.04%)
(10.86%)

0.12
(0.14)
(0.02)

–

–
(0.77)
18.42
0.09%

(0.19%)
(0.10%)

1 All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.
2 Includes foreign currency translation of profit/(loss) with respect to Sterling share class.

Total return from operations reflects the net return for an investment made at the beginning of the year
and is calculated as the change in the NAV per Ordinary Share during the year ended 31 December 2018
and is not annualised. An individual Shareholder’s return may vary from these returns based on the
timing of their purchases and sales of shares on the market.

Per Share Operating Performance
Net Asset Value beginning of the year
Income from Operations
Net realised and unrealised gain from investment transactions

allocated from Master Fund ¹

Net loss
Total Return from Operations
Distribution Paid
Net Asset Value, end of the year
Total return before incentive fee allocation from Master Fund

Incentive allocation from Master Fund
Total return after incentive fee allocation from Master Fund

1 Includes foreign currency translation of profit/(loss) with respect to Sterling share class.

US Dollar
Shares
31 December 2017
US$

Sterling
Shares
31 December 2017
£

17.63

16.84

4.29
(0.96)
3.33
(0.71)
20.25
23.65%

(4.76%)
18.89%

3.91
(0.87)
3.04
(0.67)
19.21
22.92%

(4.87%)
18.05%

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

43

Total return from operations reflects the net return for an investment made at the beginning of the year
and is calculated as the change in the NAV per Ordinary Share during the year ended 31 December 2017
and is not annualised. An individual Shareholder’s return may vary from these returns based on the
timing of their purchases and sales of shares on the market.

Supplemental data

Net Asset Value, end of the year

Average Net Asset Value, for the year ²

Ratio to average net assets

Operating expenses ³

Incentive fee allocated from Master Fund

Total operating expense ³

Net loss

Supplemental data

Net Asset Value, end of the year

Average Net Asset Value, for the year ²

Ratio to average net assets

Operating expenses ³

Incentive fee allocated from Master Fund

Total operating expense ³

Net loss

US Dollar
Shares
31 December 2018
US$

Sterling
Shares
31 December 2018
£

813,636,027

–

920,184,764

37,499,484

(3.30%)

(0.03%)

(3.33%)

(0.73%)

(1.61%)

(0.22%)

(1.83%)

(0.57%)

US Dollar
Shares
31 December 2017
US$

Sterling
Shares
31 December 2017
£

960,047,757

896,450,229

40,204,316

39,106,196

(3.21%)

(4.45%)

(7.66%)

(5.09%)

(3.22%)

(4.33%)

(7.55%)

(5.00%)

¹ Includes foreign currency translation of profit/(loss) with respect to Sterling share class.
2 Average Net Asset Value for the year is calculated based on published monthly estimates of NAV.
3 Operating expenses are Company expenses together with operating expenses allocated from the Master Fund.

THIRD POINT OFFSHORE INVESTORS LIMITED,
AUDITED FINANCIAL STATEMENTS 2018

44

NOTES TO THE AUDITED FINANCIAL
STATEMENTS

Notes to the Audited Financial Statements
continued
For the year ended 31 December 2018

12. Ongoing Charge Calculation
Ongoing charges for the year ended 31 December 2018 and 31 December 2017 have been prepared in
accordance with the AIC recommended methodology. Performance fees were charged to the Master
Fund. In line with AIC guidance, an Ongoing Charge has been disclosed both including and excluding
performance fees. The Ongoing charges for year ended 31 December 2018 and 31 December 2017
excluding performance fees and including performance fees are based on Company expenses and
allocated Master Fund expenses outlined below.

(excluding performance fees)

US Dollar Shares

Sterling Shares *

(including performance fees)

US Dollar Shares

31 December 2018

31 December 2017

2.82%

1.86%

2.85%

2.94%

31 December 2018

31 December 2017

2.87%

2.08%

7.30%

7.27%

Sterling Shares *
* All Sterling shares were compulsorily converted to the US Dollar class as of 1 July 2018.

13. Subsequent Events
As of January 1, 2019, the Company transferred substantially all of its holding into a newly-created
share class of the Master Fund. The new share class will be subject to a 25% quarterly redemption gate.
The Company will plan to redeem an appropriate amount each quarter to account for planned share
buybacks and Company fees and expenses. The new share class will attract a lower management fee and
the Company will also qualify for an additional reduction of management fee applicable to it based on its
size and longevity as an investor in the Master Fund. As a result, the Company’s management fee will be
reduced from 2.0% to 1.25% per annum.

For the period 1 January 2019 to 23 April 2019, 1,596,777 shares have been repurchased and cancelled
at an average cost per share of $14.48.

Steve Bates was appointed as Chairman on 5 February 2019.

Rupert Dorey was appointed as a Director on 5 February 2019.

On 11 February 2019, Christopher Legge purchased 2,000 shares in Third Point Offshore Investors
Limited taking his total holding to 6,500 shares.

On 13 February 2019, Rosemary Dorey (spouse of Rupert Dorey, non-executive director of the
Company) purchased 5,151 shares in Third Point Offshore Investors Limited taking their combined total
holding to 12,000 shares.

On 4 March 2019, Claire Whittet beneficially purchased 2,500 shares in Third Point Offshore Investors
Limited.

There were no other events subsequent to the year-end which, in the opinion of the Directors, may have
an impact on the Audited Annual Financial Statements for the year ended 31 December 2018.

Management and Administration

Directors
Marc-Antoine Autheman*1
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Steve Bates (Chairman)*2
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Rupert Dorey*2
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Keith Dorrian*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Investment Manager
Third Point LLC
18th Floor, 390 Park Avenue,
New York, NY 10022,
United States of America.

Auditors
Ernst & Young LLP
PO Box 9, Royal Chambers
St Julian’s Avenue,
St Peter Port, Guernsey,
Channel Islands, GY1 4AF.

Legal Advisors (UK Law)
Herbert Smith Freehills LLP
Exchange House, Primrose Street,
London, EC2A 2HS,
United Kingdom.

Legal Advisors (US Law)
Cravath, Swaine & Moore, LLP
825 Eighth Avenue, Worldwide Plaza,
New York, NY 10019-7475,
United States of America.

Registrar and CREST Service Provider
Link Market Services (Guernsey) Limited
(formerly Capita Registrars (Guernsey) Limited)
2nd Floor, No.1 Le Truchot,
St Peter Port, Guernsey,
Channel Islands, GY1 1WO.

Christopher Legge*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Joshua L Targoff
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Claire Whittet*
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

* These Directors are independent.
1 Resigned 12 September 2018.
2 Appointed 5 February 2019.

Registered Office
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Administrator and Secretary
Northern Trust International Fund
Administration Services (Guernsey) Limited,
PO Box 255, Trafalgar Court, Les Banques,
St Peter Port, Guernsey,
Channel Islands, GY1 3QL.

Legal Advisors (Guernsey Law)
Mourant Ozannes
Royal Chambers, St Julian’s Avenue,
St Peter Port, Guernsey,
Channel Islands, GY1 4HP.

Receiving Agent
Link Market Services Limited
The Registry,
34 Beckenham Road,
Beckenham, Kent BR3 4TU,
United Kingdom.

Corporate Broker
Jefferies International Limited
Vintners Place,
68 Upper Thames Street,
London EC4V 3BJ,
United Kingdom.

Kepler Partners LLP
9/10 Savile Row,
London W1S 3PF,
United Kingdom.