Half Yearly Report

RNS Number : 9208S
Livermore Investments Group Limited
30 September 2014
 



 

 

30 September, 2014

 

LIVERMORE INVESTMENTS GROUP LIMITED

 

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2014

 

Livermore Investments Group Limited (the "Company" or "Livermore")today announces its interim results for the six months ended 30 June 2014.


For further investor information please go to
www.livermore-inv.com.

 

 

 

Enquiries:

Livermore Investments Group Limited                                                          +41 43 344 3200

Arden Partners plc                                                                                           +44 (0)20 7614 5917

Steve Douglas

Katelin Kennish



Chairman's and Chief Executive's Review

Introduction

We are pleased to announce the interim consolidated financial results for Livermore Investments Group Limited ("the Company" or "Livermore") and its subsidiaries (together "the Group") for the six months ended 30 June 2014. 

During the first half of 2014, the Group generated net income of USD 10.86m (30 Jun 2013: USD 7.3m), which represents earnings per share of USD 0.06 (30 Jun 2013: USD 0.04). The Group paid an interim dividend of USD 5m in H1 2014 (USD 0.0256 per share). The NAV of the Group as of 30 June 2014 was USD 0.86 per share after payment of the interim dividend. During the reporting period, management continued to actively manage the financial portfolio and optimized exposure to US credit markets, which provided attractive risk adjusted returns, albeit at a lower rate than prior years.

Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 2.7m in rent during the period. The property is fully rented. Market valuation of Wyler Park has remained stable.

There were no significant developments in the private equity portfolio during the period.

Financial Review

 The NAV of the Group as at 30 June 2014 was approximately USD 168.2m (30 Jun 2013: 174.2m). The profit after tax for the first half of 2014 was USD 10.86m, which represents earnings per share of USD 0.06. The performance relates largely to gains on the credit portfolio and the disposal of our investment in Montana Tech Components offset by write downs on certain investments.

30 June 2014

30 June 2013

31 December 2013

US $m

US $m

US $m

Shareholders' funds at beginning of period

168.4

173.0

173.0

___________

___________

___________

Income from investments

16.8

15.2

34.5

Other income

0.5

-

0.1

Realised gains / (losses) on investments

1.2

-

(0.6)

Loss on impairment on investments

(1.6)

(1.3)

(2.5)

Unrealised (losses) on investments

(6.4)

(1.9)

(16.0)

Unrealised exchange (losses) / gains

-

(0.1)

0.1

Administration costs including provisions

(2.7)

(6.5)

(12.3)

Net finance costs

(2.4)

(2.5)

(4.3)

Tax charge

(0.6)

-

(1.9)

___________

___________

___________

Increase / (Decrease) in net assets from operations

4.8

2.9

(2.9)

Purchase of own shares

-

(1.7)

(1.7)

Dividends paid

(5.0)

-

-

___________

___________

___________

Shareholders' funds at end of period

168.2

174.2

168.4

------

------

------

Net Asset Value per share

US $0.86

US $0.89

US $0.86

 

 

 

 

 

 

 



Livermore's Strategy

 

The financial portfolio is focused on fixed income instruments which generate regular cash flows and include exposure to senior secured and usually broadly syndicated US loans as well as emerging market debt through investments into Collateralized Loan Obligations ("CLOs"). This part of the portfolio is geographically focused on the US with some exposure to Europe and emerging markets. The remaining portfolio is focused on Switzerland and Asia with investments primarily in real estate and legacy private equity funds. 

  

Strong emphasis is given to maintaining sufficient liquidity and low leverage at the overall portfolio level and to re-invest in existing and new investments along the economic cycle. 

 

 

Repurchase of shares

Between 31 December 2013 and 30 June 2014, the Company repurchased no additional shares. On 30 June 2014, the Company held 108,830,818 shares in treasury. No additional shares were purchased between 30 June 2014 and before the beginning of the interim close period.

 

Dividends

In January 2014, the Company announced an interim dividend of USD 5m (USD 0.0256 per ordinary share).

The Board of Directors will decide on the Company's dividend policy for 2014 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.

 

 

Richard Rosenberg

Noam Lanir

Chairman

Chief Executive

 

 

 

 

30 September 2014

 

 



Review of Activities

Economic & Investment Environment

Global economic recovery remained hesitant in the first half of 2014. In the US, GDP declined in the first quarter, which was largely attributed to an exceptionally cold winter. Second quarter growth, however, has been strong suggesting a reversal of the temporary drag in the first quarter. In the euro area, growth was weak and varied greatly from one country to another. While economic activity picked up in Germany in the first quarter, renewed stagnation in France and Italy was disappointing. The Euro area faces significant challenges including consolidation of public finances and reforms which promote growth. Growth dynamics in emerging economies were also below expectations. In the US, overall conditions in the labour market continued to improve during the first half of 2014 with the unemployment rate falling to 6.1% in June. Nonetheless, labour force participation rates and the number of people working part time for economic reasons continued to suggest that significant slack remains in the labour market. Inflation inched up in the US from the unusually low levels in 2013 but remains somewhat below the longer run goal of 2%.

Global financial and market conditions remained supportive of economic growth in the first half of 2014 as developed market central banks continued to add stimulus to grow their respective economies. The US Federal Reserve continued to purchase US Treasury and Mortgage Backed Securities, albeit at a reducing pace. The European Central Bank reduced its main interest rate by 0.10% in June 2014 and lowered its marginal lending facility rate by 0.35% to 0.40%. It also introduced negative interest rates on the deposit facility for the first time to encourage lending and promote growth. The S&P 500 Index was up 6.5% in the first half of the year and the EuroStoxx 50 Index gained 4.1%. The 10 year US treasury bonds yielded 2.53% as at end of June versus 3.03% as at the beginning of the year.

Flows into high yield funds were erratic while loan funds have experienced outflows since the beginning of the second quarter after 95 consecutive weeks of inflows. At the same time, record issuance of CLOs has kept the demand steady for loans. Excluding the bankruptcy of Energy Future Holdings, the US leveraged loan trailing 12 month default rate ended June at a modest 1.3% according to Fitch Ratings. The S&P/LSTA Leverage Loan Index generated a total return of 2.6% for the first half of the year.

Sources: Swiss National Bank (SNB), European Central Bank (ECB), US Federal Reserve, Bloomberg

 

Review of Significant Investments

Name

Book Value US $m

Wyler Park*

42.3

SRS Charminar

8.9

Other Real Estate Assets

1.6

Total

52.8

* Net of related loan.

 

Wyler Park - Switzerland

Wyler Park is a top quality mixed-use property located in Bern, Switzerland. It has over 16,800 square meters of commercial area, 4,100 square meters of residential area, and another 7,100 square meters available for additional commercial development. The commercial part is leased entirely to SBB (AAA rated), the Swiss national transport authority wholly owned by the Swiss Confederation, and serves as the headquarters of their Passenger Traffic division. The commercial lease is 100% linked to inflation and ends in 2019 with two 5 year extension periods thereafter. The annual rental income from the commercial area of the project is CHF 4.36m.

Following the successful development of 39 residential apartments, the entire property is now fully rented. The annual rental income expected from the residential area is CHF 1.04m.

The property generated rent of CHF 2.7m during the first half of 2014.

Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore Investments AG. The loan outstanding on the project is CHF 78.03m, which is a non-recourse loan to Livermore Investments AG backed only by this property. The loan maturity has been extended until October 2014.

Management continues to evaluate the potential development of the additional commercial development rights of 7,100 square meters attached to the property.

 

SRS Charminar - India

Livermore invested USD 20m in 2008 in a leading Indian Real Estate company, in association with SRS Private and other investors as part of a total investment of USD 132.1m. The investment in the investee company was in the form of compulsorily convertible debt and included a put option, which can be exercised if the investee company does not have an IPO within 3 years or if certain terms in the agreement are not met.  As reported previously, the Manager for this investment served a put option exercise notice to the promoters in 2009 and entered into an arbitration process to resolve disputes.  The arbitrator ruled in favour of investors and awarded investors the investment plus interest amounting to 30% IRR until 14 August 2009 and 18% IRR thereafter.  Further, investors filed and won an interim order for injunction against the promoters and the company to prohibit sales, transfer or encumbering of the assets of the company.  Thereafter, the promoters filed against the arbitral award and the injunction order.  As at 30 June 2014, there was no change in the status of this case. On January 13, 2011 the Company Law Board ("CLB") passed an order and allowed Infrastructure Leasing & Financial Services Limited ("IL&FS") to become 80% shareholder and control the management of the company.

In 2013, SRS agreed to a settlement with IL&FS and the investee company. As per the terms of the settlement, INR 8.5bn will be paid to the investors in four tranches over a five year period. The settlement is subject to certain court and regulatory approvals.

Due to the legal complexity and the receipt of the regulatory and court approvals required for the implementation of the proposed settlement as well as the various counterparties involved, the outcome remains uncertain.

The carrying amount of the investment is based on discounted expected cash flows and valued at USD 8.9m (2013: USD 8.9m). 

 

Montana Tech Components AG ("Montana") - Europe

Montana, based in Austria, is a leading components manufacturer in the fields of Aerospace Components, Metal Tech, Energy Storage, and Industrial Components.

In the first half of 2014, MTC bought back its shares from Livermore for a total consideration of EUR 6.9m.

 

Private Equity Funds

The other private equity investments held by the Group are in the form of Managed Funds (mostly closed end funds) mainly in the emerging economies of India and China. The investments of these funds into their portfolio companies were mostly done in 2008 and 2009. Overall, during the first half of 2014, the investment environment relating to most funds was challenging and the Group expects that material exits of portfolio companies should materialize between 2015 and 2017. 

 

Name

Book Value US $m

SRS Private (India)

3.7

Evolution Venture (Israel)

2.6

India Blue Mountains (India)

1.8

Da Vinci (Russia)

0.6

Elephant Capital (India)

0.6

Blue Ridge  (China)

0.4

Panda Capital (China)

0.3

Other investments

0.7

Total

10.7

 

 

SRS Private: SRS Private is a private equity fund focused on real estate in India. The fund has invested in residential and commercial projects as well as directly in certain real estate companies. The assets are primarily located in and around major cities of India such as Mumbai and Hyderabad. In September 2014, the Fund has announced the first distribution of USD 25m from a partial exit of its investment in Supreme Housing in Mumbai. Livermore is expected to receive USD 0.67m from this distribution in September 2014.

 

Evolution Venture: Evolution is an Israel focused Venture Capital fund. It invests in early stage technology companies. Its investments include a carrier-class Mobile Broadband Wireless Wi-Fi solutions company, a language enhancement products company, a software company operating in the digital radio market, a software testing tool, and a virtualization technology company.

 

India Blue Mountains: India Blue Mountains is a leading hotel and hospitality development fund that is developing 4 star and 5 star hotels in India. The fund has acquired land and is in the process of developing three hotels in prime areas of Mumbai, Pune and Goa. All hotels will be managed by the Accor Group (Novotel brands). Accor has also invested equity and holds a 26% stake in all of the hotels.

In the first half of the year, the Fund aimed to raise USD 2m to support operations at the Pune Hotel and continue development of the Mumbai project. However, it was only successful in raising USD 1m.

Da Vinci:  The fund is primarily focused on Russia and CIS countries and is primarily invested in the Moscow Exchange and a Ukrainian coal company. The Group's investment in the fund was valued at USD 0.6m as of 30 June 2014.

 

Elephant Capital: India-focused private equity fund, which is AIM quoted (formerly called Promethean India Plc).  (Ticker: ECAP).  Its portfolio investments include a leading tiles manufacturer in India, an established automotive components manufacturer, a media business with an exclusive content library, and an online venture to distribute cricket related content. 

As of February 2014, the NAV of the fund was 34 pence per share. In the first half of 2014, the Fund realized its investment in Mahindra CIE and returned capital to shareholders via share buy-backs. Additional information about the fund and its portfolio is available at www.elephantcapital.com

 

Blue Ridge: Blue Ridge is a China focused private equity fund. The fund has made investments in six portfolio companies. Portfolio companies include a distressed real estate turnaround company, a plastic and chemicals manufacturer, a higher education company, an innovative bio-pesticide company, a software company specializing in Oil & Gas applications and a refinery.

 

Panda Capital: Panda Capital is a China-based private equity fund focused on early-stage industrial operations in China and Taiwan. The fund's main investment is in a bamboo flooring company in China, which provides an innovative low cost alternative to hardwood flooring in shipping containers.  The manager is in the process of building up operational capacity for product manufacturing.  As the fund is close to its end of life, the fund manager has proposed a restructuring in Q1 2014 whereby consenting limited partners will remain in the fund and non-consenting limited partners will be bought out by the fund at the prevailing net asset value. Livermore has decided to stay in the fund.

 

Financial Investments and Corporate Bond Trading

The Group manages a financial portfolio valued at USD 94m (net of leverage) as at 30 June 2014, which is invested mainly in US credit and special situation equity opportunities.

 

Senior Secured Loans and CLOs:

The US senior secured loan market continued to offer good risk adjusted returns as an inflation linked asset class with a senior secured claim on the borrower and with overall low volatility and low correlation to equity market. The CLO structure proved itself through the financial crisis and thereafter as a robust means of investing into the loan asset class.

 

During the first half of 2014 the Group reduced exposure to pre-crisis and emerging market CLOs and opportunistically added equity tranches from new issue CLO transactions. CLOs are managed portfolios invested into diversified pools of senior secured loans and financed with long term financing pre-fixed at the time of issuance.

 

The fundamentals of the US corporate credit market continued to show resilience during the first half of 2014. Excluding the bankruptcy of Energy Future Holdings, the US leveraged loan trailing 12 month default rate ended June at a modest 1.3% according to Fitch Ratings and is below the historical average. New issue loan volumes stayed high driven by opportunistic re-financings by existing issuers as well as increased merger and acquisition activity. The S&P/LTSA index of issuers generated a total return of 2.6% for the first half of 2014.

 

The US CLO portfolio continued to perform well on account of low current default rates and a benign default outlook and stable credit fundamentals. At the end of the reporting period all of our CLO investments were passing their coverage tests (thereby making dividend distributions). The Emerging Market CLO portfolio, however, was negatively affected due to certain defaults in Latin America as well as the geopolitical situation in Ukraine. During the first half of 2014, the CLO portfolio generated USD 12.4m in cash distributions. CLO payments remained strong but reduced as loan spreads narrowed on account of aggressive re-pricings and re-financings in the latter part of 2013 and early part of 2014.  Loan spread levels seem to have widened somewhat in the summer and prepayment rates seem to have settled down as well. As discussed in earlier reports, cash distributions from pre-crisis CLOs are on the decline as most pre-crisis CLOs have ended their reinvestment periods and are amortizing the cheapest liabilities or face other reinvestment constraints, divert cash-flow to pay manager incentive fees, and loan re-pricing activity reduces excess spread. While new issue CLOs also faced lower excess spread, they have longer reinvestment periods which should enable them to weather a downturn, and benefit from wider spreads or any volatility in loan prices in the future.  As of 30 June 2014, over 80% of the Group CLO portfolio is invested in post-crisis CLOs.

 

Secondary market prices for equity tranches of post-crisis CLOs were steady to higher in the first half of 2014. Secondary market prices for CLO equities seem to have declined somewhat in the third quarter as investors look to lock in gains made from investing in new issue deals and reinvest the proceeds into future new issue transactions.

 

As US interest rates are expected to remain low until 2015 and very few loans mature in the near term, corporate defaults are expected to remain low in the near-medium term. Management believes that the environment should remain attractive for investments in CLO income notes.  In the first half of 2014, Livermore launched a new issue cash-flow CLO as an anchor investor and participated in select US new issue CLOs of leading managers.

 

While management maintains a positive view, mid-long term performance may be negatively impacted by a pull back into a substantial double dip recession in US and/or Europe involving a spike in defaults.  Despite positive developments in the overall health of the US economy, we acknowledge the high unemployment, continued EU sovereign debt crisis as well as the headwinds the economy may face relating to the austerity measures and the US debt ceiling discussions and geopolitical risks.

 

 

 

 

 

 


30 June 2014 Amount

Percentage

31 Dec 2013 Amount

Percentage

 

US $000

 

US $000

 

US CLOs

74,233

80.7%

64,874

70.6%

Global Credit CLOs

15,819

17.2%

25,021

27.2%

European CLOs

1,910

2.1%

1,986

2.2%

 

------

------

------

------

 

91,962

100%

91,881

100%

 

------

------

------

------

 

 

Public Equities:

Babylon is an International Internet Company based in Israel and listed on the Tel-Aviv Stock Exchange (TASE: BBYL).  It is a leading translation and language tools provider. The company generates revenues through Search and Advertising, Online Sales, and Corporate Sales with the largest share of revenues coming from Search in partnership with Google and other search providers. In Q4 2013, Google terminated its agreement with Babylon which led to a sharp drop in the share price and a further decline in revenues is expected.

In the first quarter of 2014, Livermore sold approximately half of its shareholding in Babylon at an average price of USD 1.98 and now holds approximately 4% of Babylon's issued share capital. In August 2014, Babylon distributed a dividend of ILS 2.45 per share (USD 0.67 per share).

Noam Lanir, the majority shareholder of the Group, is also a major shareholder in Babylon (note 28).

 

The following is a table summarizing the financial portfolio as at 30 June 2014 

Name

30 June 2014

Book Value US $m

30 June 2013

Book Value US $m

31 December 2013

Book Value US $m

Investment in the loan market through CLOs

92.0

96.1

91.9

Babylon

2.8

23.2

9.2

Corporate Bonds

1.6

4.3

1.9

Hedge Funds

1.3

2.1

2.2

Other Public Equities

2.4

2.7

2.8

Total

100.1

128.4

108.0

Total net of leverage

94.0

106.0

98.0

 

The following table reconciles the review of activities to the Group's financial assets and investment property as at 30 June 2014.  

Name

30 June 2014

Book Value US $m

Significant investments 

52.8

Private Equity Funds

10.7

Financial portfolio

100.1

Total

163.6

Available-for sale financial assets (note 4)

113.2

Financial assets at fair value through profit or loss (note 5)

8.1

Net Investment property (notes 8/15)

42.3

Total

163.6

Events after the reporting date

There were no significant events after the reporting date. 

 

Litigation

Information is provided in note 30 to the interim condensed consolidated financial statements.

 



 

Livermore Investments Group Limited

Condensed Consolidated Statement of Financial Position

as at 30 June 2014

 

Note

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

 

US $000

US $000

US $000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

 

23

27

23

Available-for-sale financial assets

4

110,144

120,878

116,846

Financial assets at fair value through profit or loss

5

2,122

3,453

2,157

Investment property

8

129,953

122,615

129,916

Investments in associate and joint venture

9

-

-

5,524

Other assets

11

2,961

3,948

3,384



--------

--------

--------

 

 

245,203

250,921

257,850



--------

--------

--------

Current assets

 

 

 

 

Trade and other receivables

11

13,065

2,357

3,399

Available-for-sale financial assets

4

3,018

3,534

3,242

Financial assets at fair value through profit or loss

5

5,987

29,184

13,244

Current tax asset

 

-

27

6

Cash at bank

12

9,996

2,523

4,150



--------

--------

--------

 

 

32,066

37,625

24,041



--------

--------

--------

Total assets

 

277,269

288,546

281,891

 

 

--------

--------

--------

Equity

 

 

 

 

Share capital

13

-

-

-

Share premium and treasury shares

13

178,597

178,597

178,597

Other reserves

 

7,485

14,563

13,539

Retained earnings

 

(17,908)

(18,955)

(23,765)



--------

--------

--------

Total equity

 

168,174

174,205

168,371



--------

--------

--------

Liabilities

 

 

 

 

Non-current liabilities

 

 

 

 

Bank loans

15

-

82,572

-

Deferred tax

 

2,413

503

1,956



--------

--------

--------

 

 

2,413

83,075

1,956

 

 

--------

--------

--------

Current liabilities

 

 

 

 

Bank loans

15

87,635

679

87,974

Bank overdrafts

12

13,527

16,255

15,188

Short term bank loans

 

2,377

7,600

3,475

Trade and other payables

16

2,752

2,798

2,776

Provisions

29

-

300

26

Current tax payable

 

13

-

-

Derivative financial instruments

17

378

3,634

2,125



--------

--------

--------

 

 

106,682

31,266

111,564



--------

--------

--------

Total liabilities

 

109,095

114,341

113,520

 

 

--------

--------

--------

Total equity and liabilities

 

277,269              

288,546

281,891

 

 

--------

--------

--------

Net asset valuation per share

 

 

 

 

Basic and diluted net asset valuation per share (US $)

18

0.86

0.89

0.86

 

 

--------

--------

--------

 

Livermore Investment Group Limited

Condensed Consolidated  Statement of Profit or Loss

for the six months ended 30 June 2014

 

 

 

Note

Six months

ended

30 June

2014

Unaudited

Six months

ended

30 June

2013

Unaudited

Year

ended

31 December

2013

Audited

 

 

US $000

US $000

US $000

 

 

 

 

 

Investment Income

 

 

 

 

Interest and dividend income

20

14,069

12,611

29,068

Investment property income

21

2,698

2,661

5,473

(Loss) / gain on investments

22

(616)

1,083

(13,652)

 

 

------

------

------

Gross profit

 

16,151

16,355

20,889

Other income

23

450

-

55

Administrative expenses

24

(2,665)

(6,523)

(12,259)

 

 

------

------

------

Operating  profit

 

13,936

9,832

8,685

Finance costs

25

(2,457)

(2,545)

(5,242)

Finance income

25

11

-

906

 

 

------

------

------

Profit before taxation

 

11,490

7,287

4,349

Taxation charge

 

(634)

(3)

(1,875)

 

 

------

------

------

Profit for period / year

 

10,856

7,284

2,474

 

 

------

------

------

Earnings per share

 

 

 

 

Basic and diluted  earnings per share (US $)

27

0.06

0.04

0.01

 

 

------

------

------

 



Livermore Investment Group Limited

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2014

 

 

Six months

ended

30 June

2014

Unaudited

Six months

ended

30 June

2013

Unaudited

Year

ended

31 December

2013

Audited

 

 

US $000

US $000

US $000

 

 

 

 

 

Profit for the period / year

 

10,856

7,284

2,474

 

 

 

 

 

Other comprehensive income:

 

 

 

 

Items that will be reclassified subsequently to profit or loss

 

 

 

 

- Available for sale financial assets - fair value (losses)

 

(5,258)

(5,176)

(8,840)

- Foreign exchange (losses) / gains from translation of subsidiaries

 

(3)

(80)

92

 

 

------

------

------

 

 

5,595

2,028

(6,274)

 

 

------

------

------

Reclassification to profit or loss

 

 

 

 

Available for sale financial assets

 

 

 

 

- Reclassification to profit or loss due to disposals

 

(2,409)

(356)

892

- Reclassification to profit or loss due to impairment

 

1,616

1,279

2,499

 

 

------

------

------

 

 

(793)

923

3,391

 

 

------

------

------

Total comprehensive income for the period / year

 

4,802

2,951

(2,883)

 

 

------

------

------

 

The total comprehensive income for the period is wholly attributable to the owners of the parent company.

 



Livermore Investments Group Limited

Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2014

 

Note

Share

capital

Share

premium

Treasury  Shares

Share

option reserve

Translation  reserve

Investment revaluation reserve

Retained earnings

Total

 

 

US $000

US $000

US $000

US $000

US $000

US $000

US $000

US $000

Balance at 1 January 2013

 

-

215,499

(35,180)

5,777

(880)

13,999

(26,239)

172,976

Purchase of own shares

 

-

-

(1,722)

-

-

-

-

(1,722)

 

 

------

------

------

------

------

------

------

------

Transactions with owners

 

-

-

(1,722)

-

-

-

-

(1,722)

 

 

------

------

------

------

------

------

------

------

Profit for the year

 

-

-

 

-

-

-

2,474

2,474

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

- Fair value  losses

 

-

-

-

-

-

(8,840)

-

(8,840)

- Reclassification to profit or loss due to disposals

 

 

-

 

-

 

-

 

-

 

-

 

892

 

-

 

892

- Reclassification to profit or loss due to impairment

 

 

-

 

-

 

-

 

-

 

-

 

2,499

 

-

 

2,499

Foreign exchange gain arising from translation of subsidiaries

 

-

-

-

-

92

-

-

92

 

 

------

------

------

------

------

------

------

------

Total comprehensive income for the year

 

-

-

-

-

92

(5,449)

2,474

(2,883)

 

 

------

------

------

------

------

------

------

------

Balance at 31 December 2013

 

-

215,499

(36,902)

5,777

(788)

8,550

(23,765)

168,371

Dividends

 

-

-

-

-

-

-

(4,999)

(4,999)

 

 

------

------

------

------

------

------

------

------

Transactions with owners

 

-

-

-

-

-

-

(4,999)

(4,999)

 

 

------

------

------

------

------

------

------

------

Profit for the period

 

-

-

-

-

-

-

10,856

10,856

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

- Fair value  losses

 

-

-

-

-

-

(5,258)

-

(5,258)

- Reclassification to profit or loss due to disposals

 

 

-

 

-

 

-

 

-

 

-

 

(2,409)

 

-

 

(2,409)

- Reclassification to profit or loss due to impairment

 

 

-

 

-

 

-

 

-

 

-

 

1,616

 

-

 

1,616

Foreign exchange loss arising from translation of subsidiaries

 

-

-

-

-

(3)

-

-

(3)

 

 

------

------

------

------

------

------

------

------

Total comprehensive income for the period

 

-

-

-

-

(3)

(6,051)

10,856

4,802

 

 

------

------

------

------

------

------

------

------

Balance at 30 June 2014

 

-

215,499

(36,902)

5,777

(791)

2,499

(17, 908)

168,174

 

 

------

------

------

------

------

------

------

------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparative period

Note

 

 

Share

capital

Share

premium

Treasury  Shares

Share

option reserve

Translation  reserve

Investment revaluation reserve

Retained earnings

Total

 

 

 

US $000

US $000

US $000

US $000

US $000

US $000

US $000

US $000

 

Balance at 1 January 2013

 

-

215,499

(35,180)

5,777

(880)

13,999

(26,239)

172,976

 

Purchase of own shares


-

-

(1,722)

-

-

-

-

(1,722)

 

 

 

------

------

------

------

------

------

------

------

 

Transactions with owners

 

-

-

(1,722)

-

-

-

-

(1,722)

 

 

 

------

------

------

------

------

------

------

------

 

Profit for the period

 

-

-

-

-

-

-

7,284

7,284

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

Available-for-sale financial assets

 

 

 

 

 

 

 

 

 

 

- Fair value losses

 

-

-

-

-

-

(5,176)

-

(5,176)

 

- Reclassification to profit or loss due to disposal

 

 

-

 

-

 

-

 

-

 

-

 

(356)

 

-

 

(356)

 

- Reclassification to profit or loss due to impairment

 

-

-

-

-

 

-

 

1,279

 

-

 

1,279

 

Foreign exchange loss arising from translation of subsidiaries

 

-

-

-

-

(80)

-

-

(80)

 

 

 

------

------

------

------

------

------

------

------

 

Total comprehensive income for the period

 

-

-

-

-

(80)

(4,253)

7,284

2,951

 

 

 

------

------

------

------

------

------

------

------

 

Balance at 30 June 2013

 

-

215,499

(36,902)

5,777

(960)

9,746

(18,955)

174,205

 

 

 

------

------

------

------

------

------

------

------

 



Livermore Investments Group Limited

Condensed Consolidated Statement of Cash Flows

for the period ended 30 June 2014

 

 

Note

Six months

ended

30 June

2014

Unaudited

Year

ended

31 December

2013

Audited

 

 

US $000

US $000

US $000

Cash flows from operating activities

 

 

 

 

Profit before tax

 

11,490

7,287

4,349

 

 

 

 

 

Adjustments for:

 

 

 

 

Depreciation expense

24

-

3

32

Provisions for legal and other cases

 

-

-

(274)

Interest expense

25

2,159

2,025

4,739

Interest and dividend income

20

(14,069)

(12,611)

(29,068)

Gain / (loss) on investments

22

616

(1,083)

13,652

Exchange differences

25

298

520

503

 

 

------

------

------

 

 

494

(3,859)

(6,067)

 

 

 

 

 

Changes in working capital

 

 

 

 

(Increase) / decrease in trade and other receivables

 

(9,422)

173

(817)

(Decrease) in trade and other payables

 

(30)

(3,454)

(3,539)

 

 

------

------

------

Cash flows from operations

 

(8,958)

(7,140)

(10,423)

Interest and dividend received

 

13,981

12,964

28,821

Tax paid

 

(134)

(127)

(572)

 

 

------

------

------

Net cash generated from operating activities

 

4,889

5,697

17,826

 

 

------

------

------

Cash flows from investing activities

 

 

 

 

Acquisition of investments

 

(22,498)

(31,159)

(43,597)

Proceeds from sale of investments

 

29,038

12,915

28,850

Acquisition of joint venture

 

-

-

(5,000)

Capital return of joint venture

9

5,000

-

-

 

 

------

------

------

Net cash from investing activities

 

11,540

(18,244)

(19,747)

 

 

------

------

------

Cash flows from financing activities

 

 

 

 

Purchases of own shares

 

-

(1,722)

(1,722)

Proceeds from bank loans 

 

7,242

36,034

48,374

Repayment of bank loans 

 

(8,704)

(28,763)

(45,605)

Interest paid

 

(2,159)

(2,025)

(4,739)

Settlement of litigation

 

(26)

-

-

Dividends paid

 

(4,999)

-

-

 

 

------

------

------

Net cash from financing activities

 

(8,646)

3,524

(3,692)

 

 

------

------

------

Net increase / (decrease) in cash and cash equivalents

 

7,783

(9,023)

(5,613)

Cash and cash equivalents at the beginning of the period / year

 

(11,038)

(5,254)

(5,254)

Exchange differences on cash and cash equivalents

 

(276)

572

(182)

Translation differences on foreign operations' cash and cash equivalents

 

-

(27)

11

 

 

------

------

------

Cash and cash equivalents at the end of the period / year

12

(3,531)

(13,732)

(11,038)

 

 

------

------

------


Notes to the Financial Statements

 

1.     Accounting policies

The interim condensed consolidated financial statements of Livermore have been prepared on the basis of the accounting policies and basis of consolidation stated in the 2013 Annual Report, available on www.livermore-inv.com. The application of the IFRS pronouncements that became effective as of 1 January 2014 have no significant impact on the Group's consolidated financial statements.      

 

2.     Critical accounting judgements and estimation uncertainty

When preparing the interim condensed consolidated financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.  The judgements, estimates and assumptions applied in the interim condensed consolidated financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group's last annual consolidated financial statements for the year ended 31 December 2013. The only exception is the estimate of the provision for income taxes which is determined in the interim financial statements using the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

 

3.     Basis of preparation

These unaudited interim condensed consolidated financial statements are for the six months ended 30 June 2014. They have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. They do not include all of the information required for full annual consolidated financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013.

The financial information for the year ended 31 December 2013 is extracted from the Company's consolidated financial statements for the year ended 31 December 2013 which contained an unqualified audit report.

 

4.     Available-for-sale financial assets

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Non-current assets

 

 

 

Fixed income investments

91,962

96,083

91,881

Private equities

9,114

15,358

15,897

Financial and minority holdings

9,068

9,437

9,068

 

------

------

------

 

110,144

120,878

116,846

 

------

------

------

Current assets

 

 

 

Public equities investments

1,959

2,539

2,214

Hedge funds

1,057

993

1,026

Other investments

2

2

2

 

------

 ------

------

 

3,018

3,534

3,242

 

------

------

------

For description of each of the above categories, refer to note 6.

Available-for-sale financial assets are fair valued at least at each reporting date.  For investments traded in active markets, fair value is determined by reference to Stock Exchange quoted bid prices.  For other investments, fair value is estimated by reference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying assets.

 

The total investment in CLO Income Notes as at 30 June 2014 amounts to USD 92.0m.  

 

During the six months ended 30 June 2014, due to market conditions, management considered the impairment of certain available-for-sale financial assets.  Impairment testing indicated that for those financial assets their carrying amount may not be recoverable.

 

The related impairment charges for the six months ended 30 June 2014, of USD 1.616m (June 2013: USD 1.279m, December 2013: USD 2.499m), are included within gains on investments, net (note 22), and represent impairment losses arising due to:

 

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Significant fall in value

1,400

794

1,707

Prolonged fall in value

216

485

792

 

------

------

------

 

1,616

1,279

2,499

 

------

------

------

 

5.     Financial assets at fair value through profit or loss

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Non-current assets

 

 

 

Private equities

569

1,872

569

Real estate entities

1,553

1,581

1,588

 

------

------

 ------

 

2,122

3,453

2,157

 

------

------

------

 

 

 

 

Current assets

 

 

 

Fixed income investments

1,645

3,962

1,609

Public equity investments

3,845

23,806

10,137

Hedge funds

199

1,129

1,209

Other investments

298

287

289

 

 ------

------

------

 

5,987

29,184

13,244

 

------

------

------

For description of each of the above categories, refer to note 6.

The Financial assets at fair value through profit or loss are fair valued at least at each reporting date.

 

6.     Categories of financial assets at fair value

The Group categorises its financial assets at fair value as follows:

 

·      Fixed income investments relate to fixed and floating rate bonds, perpetual bank debt and investments in the loan market through CLOs.

 

·      Private equities relate to investments in both high growth opportunities in emerging markets and deep value opportunities in mature markets. The Group generally invests directly in opportunities where it can exert significant influence.

 

·      Financial and minority holdings relate to significant investments (of over USD 5m) which are strategic for the Group and are in the form of equity purchases or convertible loans.  Main investments under this category are in the fields of real estate and media. 

 

·      Hedge funds relate to investments in funds managed by sophisticated investment managers that pursue investment strategies with the goal of generating absolute returns.

 

·      Public equity investments relate to investments in shares of companies listed on public stock exchanges.

 

·      Real estate entities relate to investments in real estate projects.

 

7.     Fair value measurements of financial assets and liabilities

The following table presents financial assets measured at fair value in the consolidated statement of financial position in accordance with the fair value hierarchy.  This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

 

-       Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

-       Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

-       Level 3: unobservable inputs for the asset or liability.

 

Valuation of financial assets and liabilities

·        Public Equities, and Fixed Income Investments are valued per their closing bid market prices on quoted exchanges, or as quoted by market maker.

The Group values the CLOs based on the valuation reports provided by market makers. CLOs are typically valued by market makers using discounted cash flow models. The key assumptions for cash flow projections include default and recovery rates, prepayment rates and reinvestment assumptions on the underlying portfolios (typically senior secured loans) of the CLOs.

Default and recovery rates: The amount and timing of defaults in the underlying collateral and the amount and timing of recovery upon a default affect are key to the future cash flows a CLO will distribute to the CLO equity tranche. All else equal, higher default rates and lower recovery rates typically lead to lower cash flows. Conversely, lower default rates and higher recoveries lead to higher cash flows.

Prepayment rates: Senior loans can be pre-paid by borrowers. CLOs that are within their reinvestment period may, subject to certain conditions, reinvest such prepayments into other loans which may have different spreads and maturities. CLOs that are beyond their reinvestment period typically pay down their senior liabilities from proceeds of such pre-payments. Therefore the rate at which the underlying collateral prepays impacts the future cash flows that the CLO may generate.

Reinvestment assumptions: A CLO within its reinvestment period may reinvest proceeds from loan maturities, prepayments, and recoveries into purchasing additional loans. The reinvestment assumptions define the characteristics of the loans that a CLO may reinvest in. These assumptions include the spreads, maturities, and prices of such loans. Reinvestment into loans with higher spreads and lower prices will lead to higher cash flows. Reinvestment into loans with lower spreads will typically lead to lower cash flows.

Discount rate: The discount rate indicates the yield that market participants expect to receive and is used to discount the projected future cash flows. Higher yield expectations or discount rates lead to lower prices and lower discount rates lead to higher prices for CLOs.

·        Hedge Funds and Private Equity Funds are valued per reports provided by the funds on a periodic basis, and if traded, per their closing bid market prices on quoted exchanges, or as quoted by market maker.

·        Private Equities and unlisted investments are valued using market valuation techniques as determined by the Directors, mainly on the basis of discounted cash flow techniques or valuations reported by third-party managers of such investments. 

·        Derivative instruments are valued at fair value as provided by counter parties of the derivative agreement.  Derivative instruments consist of interest rate swaps and forward currency contracts.

Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into the fair value hierarchy as follows:          

                   

 

 

30 June

2014

Unaudited

US $000

30 June

2014

Unaudited

US $000

30 June

2014

Unaudited

 US $000

30 June

2014

Unaudited US $000

 

Level 1

Level 2

Level 3

Total

Assets

 

 

 

 

Fixed income investments

1,645

91,962

-

93,607

Private equities

-

-

9,683

9,683

Financial and minority holdings

-

-

9,068

9,068

Public equity investments

5,804

-

-

5,804

Hedge funds

-

1,256

-

1,256

Real estate entities

-

-

1,553

1,553

Other investments

298

-

2

300

 

------

------

------

------

 

7,747

93,218

20,306

121,271

 

------

------

------

------

Liabilities

 

 

 

 

Interest rate swaps

-

378

-

378

 

------

------

------

------

 

-

378

-

378

 

------

------

------

------

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

 

No financial assets or liabilities have been transferred between levels.

 

Financial assets within level 3 can be reconciled from beginning to ending balances as follows:

 

 

 

Available-for-sale

At fair value through  profit or loss

 

 

Financial and minority holdings

Private equities

Other investments

 Real estate

Private equities

Total

 

US $000

US $000

US $000

US $000

US $000

US $000

As at 1 January 2014

9,068

9,081

2

1,588

569

20,308

Purchases

-

132

-

-

-

132

(Losses) / gains recognised in:

 

 

 

 

 

 

-Profit or loss

-

(217)

-

-

-

(217)

-Other comprehensive income

-

118

-

-

-

118

Exchange difference

-

-

-

(35)

-

(35)

 

------

------

------

------

------

------

As at 30 June 2014

9,068

9,114

2

1,553

569

20,306

 

------

------

------

------

------

------

 

 

 

 

 

 

The above recognised (losses) / gains can be allocated as follows:

 

 

 

Available-for-sale

At fair value through  profit or loss

 

 

Financial and minority holdings

Private equities

Other investments

 Real estate

Private equities

Total

2014

US $000

US $000

US $000

US $000

US $000

US $000

Profit or loss

 

 

 

 

 

 

-Financial assets held at period-end

-

(217)

-

-

-

(217)

-Financial assets no longer held

-

-

-

-

-

-

 

------

------

------

------

------

------

 

-

(217)

-

-

-

(217)

 

------

------

------

------

------

------

Other comprehensive income

 

 

 

 

 

 

-Financial assets held at period-end

-

118

-

-

-

118

-Financial assets no longer held

-

-

-

-

-

-

 

------

------

------

------

------

------

 

-

118

-

-

-

118

 

------

------

------

------

------

------

Net losses for period 2014

-

(99)

-

-

-

(99)

 

------

------

------

------

------

------

 

 

 

 

 

 

 

The Group has not developed any quantitative unobservable inputs for measuring the fair value of its level 3 financial assets at the reporting date.  Instead the Group used prices from third - party pricing information without adjustment.

 

A reasonable change in any individual significant input used in the level 3 valuations is not anticipated to have a significant change in fair values as above.

 

8.     Investment property

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Valuation as at 1 January

129,916

126,543

126,543

Fair value loss - recognised in profit or loss

-

-

(179)

Exchange differences

37

(3,928)

3,552

 

------

------

------

As at 30 June / 31 December

129,953

122,615

129,916

 

------

------

------

 

The investment property relates to Wyler Park property in Bern, Switzerland, which is used for earning rental income. The Group has no restrictions on the realisability of the property or the remittance of income and any proceeds of disposals.  

 

The investment property which is revalued at each year-end was last valued by Wuest & Partners as at 31 December 2013 on the basis of open market value in accordance with the appraisal and valuation guidelines of the Royal Institute of Certified Surveyors, and the European Group of Valuers' Associations.

 

The Wyler Park property bank loan is secured on the property itself.

9.     Investments in associate and joint venture

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

As at 1 January

5,524

-

-

Additions

-

-

5,000

Capital return

(5,000)

 

 

Fair value (loss) / gain

(524)

-

524

 

------

------

------

As at 30 June / 31 December

-

-

5,524

 

------

------

------

 

 

 

 

 

 

Fair value

Name of investee

Type of investment

Place of incorporation

Principal activity

Proportion of voting rights held

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

 

 

 

 

US $000

US $000

US $000

Silvermore Ltd

Joint venture

Cayman Islands

Investment holding

50%

-

-

5,524

Covenant Credit Partners LLC*

Associate

Delaware, US

Investment holding

0%

-

-

-

 

 

 

 

 

-----

-----

-----

 

 

 



-

-

5,524

 

 

 

 

 

------

------

------

*Held by the subsidiary Blackline Investments Inc. Covenant Credit Partners is no longer an associate as at 30 June 2014.

 

The activities of the joint venture are in line with the Group's activities and strategy. The joint venture does not prepare any financial information. As at 30 June 2014 Silvermore had ceased to be a contractual party to the Total Return Swap (ISDA) agreement with Citibank N.A., and had no other assets or liabilities.

 

10.  Details of subsidiaries 

Details of the investments in which the Group has a controlling interest are as follows:

Name of Subsidiary

Place of incorporation

Holding

Proportion of voting rights and shares held

Principal activity

Livermore Properties Limited

British Virgin Islands

Ordinary shares

100%

Holding of investments

Mountview Holdings Limited*

British Virgin Islands

Ordinary shares

100%

Holding of investments

Silvermore 2 Ltd* 

Cayman islands

Ordinary shares

100%

Holding of investments

Livermore Israel Investments Limited

Israel

Ordinary shares

100%

Holding of investments (Dormant)

Blackline Investments Inc.

USA

Ordinary shares

52.5%

Holding of investments (Dormant)

Livermore Capital AG

Switzerland

Ordinary shares

100%

Administration services

Livermore Investments AG**

Switzerland

Ordinary shares

100%

Real Estate owner and management

Enaxor S.a.r.l

Luxembourg

Ordinary shares

100%

Holding of investment

Livermore Investments Cyprus Limited

Cyprus

Ordinary shares

100%

Administration services

Sandhirst Ltd

Cyprus

Ordinary shares

100%

Holding of investments

 

* Mountview Holdings Limited and Silvermore 2 Ltd were established during the period.

** Held by Enaxor S.a.r.l.

 

11.  Trade and other receivables

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Financial items


 


Accrued interest and dividend income

112

17

79

Amounts due by related parties (note 28)

500

497

1,339

Other receivables

11,334

594

654

 

------

------

------

 

11,946

1,108

2,072

Non-Financial items

 

 

 

Other assets (note 28)

3,948

5,076

4,512

Prepayments

132

121

199

 

------

------

------

 

16,026

6,305

6,783

 

------

------

------

 

 

 

 

Allocated as:

 

 

 

Current assets

13,065

2,357

3,399

Non-current assets

2,961

3,948

3,384

 

------

------

------

 

16,026

6,305

6,783

 

------

------

------

Other receivables include an amount of USD 10m that the Company invested during the period in the first loss tranche of a warehouse facility for accumulating loans with the intention to transfer these loans to a CLO which would be managed by Covenant Credit Partners. In June 2014, the said CLO was priced and the loans accumulated in the warehouse were agreed to be transferred at purchase price to the CLO on 10 July, 2014. Consequently, Livermore's investment amount plus net carry earned became receivable as of end of June. On 11 July 2014 Livermore received USD 10.7m.

 

12.  Cash and cash equivalents

Cash and cash equivalents included in the cash flow statement comprise the following at the reporting date:

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Cash at bank

9,996

2,523

4,150

Bank overdraft used for cash management purposes

(13,527)

(16,255)

(15,188)

 

------

------

------

Cash and cash equivalents for the purposes of the consolidated statement of cash flows

(3,531)

(13,732)

(11,038)

 

------

------

------

 

13.  Share capital, share premium and treasury shares   

Livermore Investments Group Limited (the "Company") is an investment company incorporated under the laws of the British Virgin Islands.  The Company has an issued share capital of 304,120,401 ordinary shares of no par value.

As at 31 December 2013 the Company had 108,830,818 ordinary shares held in treasury. During the period from 1 January to 30 June 2014 the Company purchased no additional ordinary shares to be held in treasury. 

In the consolidated statement of financial position the amount included comprises of:

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Share premium

215,499

215,499

215,499

Treasury shares

(36,902)

(36,902)

(36,902)

 

------

------

------

 

178,597

178,597

178,597

 

------

------

------

 

 

14.  Share options

The Company has 11,340,000 outstanding share options at the end of the period.  Options are normally exercisable in three equal tranches, on the first, second and third anniversary of the grant.  There have been no changes to the term of the options in issue during the period.  No options have been exercised during the period.

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Outstanding options

 

 

 

 

 

 

 

At 1 January

11,340,000

11,340,000

11,340,000

 

 ---------

---------

---------

At 30 June / 31 December

11,340,000

11,340,000

11,340,000

 

---------

---------

---------

 

 

 

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Exercisable options

 

 

 

 

 

 

 

At 1 January

11,340,000

11,340,000

11,340,000

 

---------

---------

---------

At 30 June / 31 December

11,340,000

11,340,000

11,340,000

 

---------

---------

---------

 

 

15.  Bank loans

The long-term bank loan relates to the Wyler Park property and is secured on this property.  Decreases in the carrying amount reflect the effect of currency translation from CHF to USD. 

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

As at 1 January

87,974

86,258

86,258

Repayments

(364)

(329)

(706)

Exchange differences

25

(2,678)

2,422

 

------

------

------

As at 30 June / 31 December

87,635

83,251

87,974

 

------

------

------

 

 

 

 

Allocated as:

 

 

 

Current liabilities

87,635

679

87,974

Non-current liabilities

-

82,572

-

 

------

------

------

 

87,635

83,251

87,974

 

------

------

------

 

 

16.  Trade and other payables

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Financial items


 


Trade payables

464

376

532

Amounts due to related parties (note 28)

1,247

1,581

1,212

Accrued expenses

787

773

964

Accrued interest expenses

180

-

-

 

------

------

------

 

2,678

2,730

2,708

Non-Financial items

 

 

 

Vat payable  

74

68

68

 

------

------

------

 

2,752

2,798

2,776

 

------

------

------

 

17.  Derivative financial instruments

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Non-current liabilities

 

 

 

Interest rate swaps

-

-

-

 

------

------

------

Current liabilities

 

 

 

Interest rate swaps

378

3,634

2,125

 

------

------

------

During the period from January to June 2014 the Group has not entered into any new derivative instruments.    

 

 

 

18.  Net asset value per share

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

Net assets attributable to ordinary shareholders  (USD 000)

168,174

174,205

168,371

 

---------

---------

---------

Closing number of ordinary share in issue

195,289,583

195,289,583

195,289,583

 

---------

---------

---------

Basic net asset value per share (USD)

0.86

0.89

0.86

 

---------

---------

---------

Net assets attributable to ordinary shareholders (USD 000)

168,174

174,205

168,371

Dilutive share options - exercise amount

255

228

247

 

---------

---------

---------

Net assets attributable to ordinary shareholders including the effect of potentially diluted shares (USD 000)

168,429

174,433

168,618

 

-------------

-------------

-------------

Closing number of ordinary shares in issue

195,289,583

195,289,583

195,289,583

Dilutive share options

500,000

500,000

500,000

 

-------------

-------------

-------------

Closing number of ordinary shares including the effect of potentially diluted shares

195,789,583

195,789,583

195,789,583

Diluted net asset value per share (USD)

0.86

0.89

0.86

 

---------

---------

---------

 

 

 

 

Number of Shares

 

 

 

Ordinary shares

304,120,401

304,120,401

304,120,401

Treasury shares

(108,830,818)

(108,830,818)

(108,830,818)

 

---------

---------

---------

Closing number of ordinary shares in issue

195,289,583

195,289,583

195,289,583

 

---------

---------

---------

The Share options granted on 13 May 2008 have a dilutive effect on the net asset value per share, given that their exercise price is lower than the net asset value per Company's share at 30 June 2014 and 2013. All other share options do not impact the diluted earnings per share for June 2014 and June 2013 as their exercise price was higher than the net asset value per Company's share at 30 June 2014 and 2013.

 

19.  Segment reporting

The Group's monitoring and strategic decision making process in relation to its investments, is separated into two activity lines, which are also identified as the Group's operating segments. These operating segments are monitored and strategic decisions are made on the basis of segment operating results.

 

 

 

 

Segment information can be analysed as follows:

Six months ended 30 June 2014 - Unaudited

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 

Segment results

2014

2014

2014


US $000

US $000

US $000

Investment income

 

 

 

Interest and dividend income

14,069

-

14,069

Investment property income

-

2,698

2,698

(Loss) / gain on  investments

(2,016)

1,400

(616)

 

   ------  

------

------

Gross profit

12,053

4,098

16,151

Other income

450

-

450

Administrative expenses

(2,033)

(632)

(2,665)

 

   ------  

------

------

Operating profit

10,470

3,466

13,936

Finance costs

(622)

(1,835)

(2,457)

Finance income

11

-

11

 

   ------  

------

------

Profit before taxation

9,859

1,631

11,490

Taxation charge

-

(634)

(634)

 

   ------  

------

------

Profit for the period

9,859

997

10,856

 

------

------

------

Segment assets

146,304

130,965

277,269

 

------

------

------

Segment liabilities

17,794

91,301

109,095

 

------

------

------

 

Six months ended 30 June 2013 - Unaudited

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 

Segment results

2013

2013


US $000

US $000

Investment income

 

 

Interest and dividend income

-

12,611

Investment property income

2,661

2,661

Gain on  investments

-

1,083

 

------

------

Gross profit

2,661

16,355

Administrative expenses

(634)

(6,523)

 

------

------

Operating profit

2,027

9,832

Finance costs

(1,750)

(2,545)

 

------

------

Profit before taxation

277

7,287

Taxation charge

(3)

(3)

 

------

------

Profit for the period

274

7,284

 

------

------

Segment assets

123,782

288,022

 

------

------

Segment liabilities

87,470

113,817

 

------

------

 

 

Year ended 31 December 2013 - Audited

 

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 

Segment results

2013

2013

2013


US $000

US $000

US $000

Investment income

 

 

 

Interest and dividend income

29,068

-

29,068

Investment property income

-

5,473

5,473

(Loss) / gain on  investments

(16,324)

2,672

(13,652)

 

------

------

------

Gross profit

12,744

8,145

20,889

Other income

55

-

55

Administrative expenses

(11,122)

(1,137)

(12,259)

 

------

------

------

Operating profit

1,677

7,008

8,685

Finance costs

(1,680)

(3,562)

(5,242)

Finance income

906

-

906

 

------

------

------

Profit before taxation

903

3,446

4,349

Taxation charge

(411)

(1,464)

(1,875)

 

------

------

------

Profit for the year

492

1,982

2,474

 

------

------

------

Segment assets

150,875

131,016

281,891

 

------

------

------

Segment liabilities

20,798

92,722

113,520

 

------

------

------

               

 

The Group's investment income and its investments are divided into the following geographical areas:

Six months ended 30 June 2014 - Unaudited

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 


2014

2014

2014


US $000

US $000

US $000

Investment Income 

 

 

 

Switzerland

-

3,045

3,045

Other European countries

116

-

116

United States

13,658

-

13,658

India

(311)

-

(311)

Asia

(357)

-

(357)

 

------

------

------

 

13,106

3,045

16,151

 

------

------

------

Investments

 

 

 

Switzerland

-

129,953

129,953

Other European countries

7,243

-

7,243

United States

92,033

-

92,033

India

15,148

-

15,148

Asia

6,847

-

6,847

 

------

------

------

 

121,271

129,953

251,224

 

------

------

------

 

 

Six months ended 30 June 2013 - Unaudited

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 


2013

2013


US $000

US $000

Investment Income 

 

 

Switzerland

4,037

4,037

Other European countries

-

317

United States

-

13,099

India

-

(983)

Asia

-

(115)

 

------

------

 

4,037

16,355

 

------

------

Investments

 

 

Switzerland

122,615

122,615

Other European countries

-

16,660

United States

-

97,169

India

-

15,524

Asia

-

27,696

 

------

------

 

122,615

279,664

 

------

------

 

Year ended 31 December 2013 - Audited

Equity and debt

instruments

investment

activities

Investment

property

activities

 

Total per

financial

statements

 


2013

2013

2013


US $000

US $000

US $000

Investment Income  

 

 

 

Switzerland

-

8, 145

8,145

Other European countries

(888)

-

(888)

United States

18,941

-

18,941

India

(3,749)

-

(3,749)

Asia

(1,560)

 

(1,560)

 

------

------

------

 

12,744

8,145

20,889

 

------

------

------

Investments

 

 

 

Switzerland

-

129,916

129,916

Other European countries

14,521

-

14,521

United States

98,406

-

98,406

India

14,887

-

14,887

Asia

13,199

-

13,199

 

------

------

------

 

141,013

129,916

270,929

 

------

------

------

 

Investment income, comprising interest and dividend income, gains or losses on investments, and investment property income, is allocated on the basis of the customer's geographical location in the case of the investment property activities segment and the issuer's location in the case of the equity and debt instruments investment activities segment. Investments are allocated based on the issuer's location.

During the period, 89% of the investment property rent relates to rental income from a single customer (SBB - Swiss national transport authority) in the investment property activities segment (June 2013: 89%, December 2013: 89%). 

20.  Interest and dividend income

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Interest from investments

64

225

663

Dividend income

14,005

12,386

28,405

 

------

------

------

 

14,069

12,611

29,068

 

------

------

------

 

21.  Investment property income

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Gross rental income

3,039

2,891

5,846

Direct expenses

(341)

(230)

(373)

 

------

------

------

 

2,698

2,661

5,473

 

------

------

------

All direct expenses relate to the generation of rental income.

 

22.  (Loss) / gain on investments

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Gain / (loss) on sale of investments

2,409

356

(892)

Investment property revaluation

-

-

(179)

Foreign exchange (loss) / gain

(22)

(12)

81

Loss due to impairment of available-for-sale financial assets

 

(1,616)

 

(1,279)

 

(2,499)

Fair value (losses) / gains on financial assets through profit or loss

(2,398)

527

(13,985)

Fair value (loss) /gains on investment in joint venture

(524)

-

524

Fair value gains on derivative instruments

1,575

1,590

3,519

Bank custody fees

(40)

(99)

(221)

 

------

------

------


(616)

1,083

(13,652)


------

------

------

 

The investments disposed of during the period resulted in the following realised gains / (losses) (i.e. in relation to their original acquisition cost):

 

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Available-for-sale

(1,982)

(2,704)

(3,953)

At fair value through profit or loss

(534)

1,029

898

 

------

------

------


(2,516)

1,675

(3,055)


------

------

------

 

23.  Other income

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Disposal gain

450

-

-

Gain on liquidation of subsidiaries

-

-

55

 

------

------

------

 

450

-

55

 

------

------

------

Disposal gain relates to the sale of a fully amortized domain name. 

 

24.  Administrative expenses

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Legal expenses

41

22

57

Directors' fees  and expenses

999

4,993

9,078

Professional and consulting fees

762

578

1,667

Other salaries and expenses

200

496

769

Office cost

130

139

284

Depreciation

-

3

32

Other operating expenses

477

255

512

Provisions for legal and other cases - reversal

-

-

(274)

Audit fees

56

37

134

 

------

------

------

 

2,665

6,523

12,259

 

------

------

------

 

 

25.  Finance costs and income

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

 

US $000

US $000

US $000

Finance costs

 

 

 

Bank interest on investment property loan*

1,828

1,743

3,555

Other swap interest cost

173

 

689

Other bank interest 

158

282

495

Foreign exchange loss

298

520

503

 

------

------

------

 

2,457

2,545

5,242

Finance income

 

 

 

Foreign exchange gain

11

-

906

 

------

------

------

Net Finance costs

2,446

2,545

4,336

 

------

------

------

*Includes interest payments on a related interest rate swap.

 

26.  Dividends

 In January 2014, the Company announced an interim dividend of USD 5m (USD 0.0256 per ordinary share).

The Board of Directors will decide on the Company's dividend policy for 2014 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.

 

27.  Earnings per share

Basic profit per share has been calculated by dividing the net profit attributable to ordinary shareholders of the parent by the weighted average number of shares in issue of the parent during the relevant financial periods. 

Diluted profit per share is calculated after taking into consideration other potentially dilutive shares in existence during the period.

 

Six months

ended 30 June

2014

Unaudited

Six months

ended 30 June

2013

Unaudited

Year ended

31 December

2013

Audited

Profit for the year attributable to ordinary shareholders of the parent  (USD 000)

10,856

7,284

2,474

 

---------

---------

---------

Weighted average number of ordinary shares outstanding

195,289,583

198,095,143

196,692,363

 

---------

---------

---------

Basic earnings per share (USD)

0.06

0.04

0.01

 

---------

---------

---------

Weighted average number of ordinary shares outstanding

195,289,583

198,095,143

196,692,363

Dilutive effect of share options

95,687

-

83,102

 

---------

---------

---------

Weighted average number of ordinary shares including the effect of potentially dilutive shares

 

195,385,270

 

198,095,143

 

196,775,465

 

---------

---------

---------

Diluted earnings per share (USD)

0.06

0.04

0.01

 

---------

---------

---------

The decrease in the weighted average number of ordinary shares outstanding is due to the acquisition of treasury shares during 2013.

The Share options granted on 13 May 2008 have a dilutive effect on the weighted average number of ordinary shares only, given that their exercise price is lower than the average market price of the Company's shares on the London Stock Exchange (AIM division) during the period ended 30 June 2014 (June 2013: no dilutive effect since exercise price was higher than the average market price). All other share options do not impact the diluted earnings per share for June 2014 and June 2013 as their exercise price was higher than the average market price of the Company's shares during the period ended 30 June 2014 and 2013.

 

28.  Related party transactions

The Group is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which

at 30 June 2014 held 79.06% (June 2013: 79.06%, December 2013: 79.06%) of the Company's effective voting rights.

 

 

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

 

US $000

US $000

US $000

 

Amounts receivable from key management

 

 

 

 

Other assets

3,948

5,076

4,512

(1)

Directors' current accounts

500

497

425

 

 

-------

-------

-------

 

 

4,448

5,573

4,937

 

 

-------

-------

-------

 

Amounts receivable from associate

 

 

 

 

Promissory notes

-

-

914

(2)

 

-------

-------

-------

 

 

 

 

 

 

Amounts payable to other related party

 

 

 

 

Loan payable

(1,212)

(1,212)

(1,212)

(3)

Trade payable

-

(313)

-

 

 

-------

-------

-------

 

 

(1,212)

(1,525)

(1,212)

 

 

-------

-------

-------

 

 

 

 

 

 

Amounts payable to key management

 

 

 

 

Directors' current accounts

(35)

(56)

-

 

 

-------

-------

-------

 

 

(35)

(56)

-

 

 

-------

-------

-------

 

Key management compensation

 

 

 

 

Short term benefits

 

 

 

 

Executive directors fees

397

397

795

(4)

Executive directors reward payments 

564

4,561

8,212

 

Non-executive directors fees

38

35

71

 

 

-------

-------

-------

 

 

999

4,993

9.078

 

 

-------

-------

-------

 

(1) Loans of USD 5.523m were made to a key management employee for the acquisition of shares in the Company. Interest was payable on these loans at 6 month US LIBOR plus 0.25% per annum and the loans were secured on the shares acquired. The loans were repayable on the earlier of the employee leaving the Company or April 2013. In December 2012 the Board decided to renew the outstanding amount of these loans for a period of another five years. Based on the Board's decision, the outstanding amount will be reduced annually on a straight line over five years, as long as the key management employee remains with the Company. The relevant reduction in the loan amount for the period was USD 0.564m. The loans are classified as "other assets" and are included under trade and other receivables (note 11).

 

(2) Demand promissory notes of USD 0.914m were made from Covenant Credit Partners LLC (maker) to Blackline Investments Inc. (holder). Interest on these notes was at 2.0% per annum and has been fully repaid in June 2014.

 

(3) A loan with a balance at 30 June 2014 of USD 1.2m (June 2013: USD 1.2m, December 2013: USD 1.2m)

has been received from a related company Chanpak Ltd. The loan is free of interest, it is unsecured and is repayable on demand. This loan is included within trade and other payables.

 

(4) These payments were made directly to companies to which they are related.

 

No social insurance and similar contributions nor any other defined benefit contributions plan costs incurred for the Group in relation to its key management personnel in either 2014 or 2013.

 

Noam Lanir, through an Israeli partnership, is the major shareholder of Babylon Limited, an Israel based Internet Services Company. The Group as of 30 June 2014 held a total of 1.941m shares at a value of USD 2.8m (June 2013: 3.915m shares at a value of USD 23.2m, December 2013: 3.915m shares at a value of USD 9.3m) which represents 4.0% of its effective voting rights. The investment in Babylon Ltd is included within public equity investments under financial assets at fair value through profit or loss (note 5).

 

During the period the Group received administrative services of USD 0.62m in connection with investments from an other related company Mash Medical Life Tree Marketing Ltd.    

 

 

29.    Provisions   

The movement in the provisions for the period is as follows:

 

30 June

2014

Unaudited

30 June

2013

Unaudited

31 December

2013

Audited

 

US $000

US $000

US $000

Legal and other matters

 

 

 

At 1 January

26

300

300

Amounts reversed

-

-

(274)

Settlements

(26)

-

-

 

-------

-------

-------

At 30 June / 31 December

-

300

26

 

-------

-------

-------

 

30.    Litigation

Ex employee vs Empire Online Ltd

In 2007 an ex employee of Empire Online Limited (the Company's former name) filed a law suit against one of its Directors and the Company in the Labor Court in Tel Aviv. According to the lawsuit the plaintiff claims compensation relating to the sale of all commercial activities of Empire Online Limited until the end of 2006, and the dissolution of the company and the terms of termination of his employment with Empire Online Limited.  The litigation procedure is in progress in Israel.

 

Prior to the filing of the lawsuit in Israel, the Company filed a claim against the plaintiff in the Court in Cyprus based upon claims concerning breach of faith of the plaintiff towards his employers.  Litigation was completed in Israel and a final decision is pending.

 

On 5 March 2014, the Labor Court in Tel Aviv issued a ruling in which the court denied most of the plaintiff's claims and accepted only his claim for termination of employment.  On 16 April 2014 the plaintiff filed an appeal against the ruling. 

 

No further information is provided on the above case as the Directors consider it could prejudice the outcome of the appeal.

 

31.    Commitments

The Group has no capital or other commitments as at 30 June 2014.

32.    Events after the reporting date

There were no significant events after the reporting date. 

 

33.    Preparation of interim statements

Interim condensed consolidated financial statements are unaudited and do not constitute statutory accounts within the meaning of The BVI Business Companies Act 2004. Consolidated financial statements for Livermore Investments Group Limited for the year ended 31 December 2013, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, on which the auditors gave an unqualified audit report are available from the Company's website www.livermore-inv.com.



 

Report by the Independent Auditors on Review of Condensed Interim Consolidated Financial Statements to the Board of Directors of Livermore Investments Group Limited

 

Independent Review Report on the Interim Condensed Consolidated Financial Statements

We have reviewed the accompanying interim condensed consolidated financial statements of Livermore Investments Group Limited (the ''Company'') and its subsidiaries (''the Group'') on pages 10 to 34, which comprise the condensed consolidated statement of financial position as at 30 June 2014 and the condensed consolidated statement of profit or loss, and condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months then ended, and other explanatory notes.

Board of Directors' Responsibility for the Interim Condensed Consolidated Financial Statements

The Company's Board of Directors is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union.

Accountant's Responsibility

Our responsibility is to express a conclusion to the Company on these interim condensed consolidated financial statements, based on our review. We conducted our review in accordance with International Standard on Auditing 2410 ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the interim condensed consolidated financial statements are free of material misstatement.

A review of interim financial information is limited primarily to making inquiries of Company personnel and applying analytical and other review procedures to financial data. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements does not present fairly, in all material respects, the financial position of Livermore Investments Group Limited and its subsidiaries as at 30 June 2014 and of its financial performance and its cash flows for the six month period then ended in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union..

Other Matter

This report, including the conclusion, has been prepared for and only for the Company's members and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

 

 

Augoustinos Papathomas

Certified Public Accountant and Registered Auditor

for and on behalf of

 

Grant Thornton (Cyprus) Ltd

Certified Public Accountants and Registered Auditors

 

 

Limassol, 29 September 2014


 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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