REG - Livermore Inv. Group - Annual Financial Report <Origin Href="QuoteRef">AUIV.L</Origin> - Part 2
24/05/2016 07:06
- Part 2: For the preceding part double click ID:nRSX0648Za
17 1,407 78,092
Bank overdrafts 18 13,208 10,355
Trade and other payables 19 2,770 1,758
Provisions 31 128 -
Current tax payable 20 - 5
Derivative financial instruments 16 217 -
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17,730 90,210
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Total liabilities 97,055 92,482
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Total equity and liabilities 245,692 252,456
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Net asset value per share
Basic and diluted net asset value per share (US $) 21 0.77 0.82
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These consolidated Financial Statements were approved by the Board of Directors on 20 May 2016.
The notes 1 to 36 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2015
Note 2015 2014
US $000 US $000
Investment income
Interest and dividend income 23 25,675 26,619
Investment property income 24 5,227 5,159
Loss on investments 25 (26,136) (9,885)
------ ------
Gross profit 4,766 21,893
Other income 35 462
Administrative expenses 26 (5,155) (7,219)
------ ------
Operating (loss) /profit (354) 15,136
Finance costs 27 (2,454) (7,286)
Finance income 27 - 109
------ ------
(Loss) / profit before taxation (2,808) 7,959
Taxation charge 28 (1,951) (755)
------ ------
(Loss) / profit for the year (4,759) 7,204
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Earnings per share
Basic and diluted earnings per share ( US $) 29 (0.02) 0.04
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The profit for the year is wholly attributable to the owners of the parent.
The notes 1 to 36 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2015
Note 2015 2014
US $000 US $000
(Loss) / profit for the year (4,759) 7,204
Other comprehensive income:
Items that will be reclassified subsequently to the profit or loss
Available for sale financial assets - fair value losses (34,906) (17,128)
Foreign exchange losses from translation of subsidiaries (314) (626)
------ ------
(39,979) (10,550)
------ ------
Reclassification to profit or loss
Available for sale financial assets
- Reclassification to profit or loss due to disposals 25 3,459 (1,709)
- Reclassification to profit or loss due to impairment 25 31,726 8,861
------ ------
35,185 7,152
------ ------
Total comprehensive income for the year (4,794) (3,398)
------ ------
The total comprehensive income for the year is wholly attributable to the owners of the parent.
The notes 1 to 36 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2015
Note Sharecapital Sharepremium Treasury Shares Shareoption reserve Translation reserve Investments 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 2014 - 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 year - - - - - - 7,204 7,204
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses - - - - - (17,128) - (17,128)
- Reclassification to profit or loss due to disposals 25 - - - - - (1,709) - (1,709)
- Reclassification to profit or loss due to impairment 25 - - - - - 8,861 - 8,861
Foreign exchange losses arising from translation of subsidiaries - - - - (626) - - (626)
------ ------ ------ ------ ------ ------ ------ ------
Total comprehensive income for the year - - - - (626) (9,976) 7,204 (3,398)
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31 December 2014 - 215,499 (36,902) 5,777 (1,414) (1,426) (21,560) 159,974
Purchase of own shares - - (1,544) - - - - (1,544)
Dividends - - - - - - (4,999) (4,999)
Transfer on expiry of options - - - (271) - - 271 -
------ ------ ------ ------ ------ ------ ------ ------
Transactions with owners - - (1,544) (271) - - (4,728) (6,543)
------ ------ ------ ------ ------ ------ ------ ------
Loss for the year - - - - - - (4,759) (4,759)
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses - - - - - (34,906) - (34,906)
- Reclassification to profit or loss due to disposals 25 - - - - - 3,459 - 3,459
- Reclassification to profit or loss due to impairment 25 - - - - - 31,726 - 31,726
Foreign exchange losses arising from translation of subsidiaries - - - - (314) - - (314)
------ ------ ------ ------ ------ ------ ------ ------
Total comprehensive income for the year - - - - (314) 279 (4,759) (4,794)
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31 December 2015 - 215,499 (38,446) 5,506 (1,728) (1,147) (31,047) 148,637
------ ------ ------ ------ ------ ------ ------ ------
The notes 1 to 36 form part of these consolidated financial statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2015
Cash flows from operating activities
(Loss) / profit before tax (2,808) 7,959
Adjustments for
Depreciation 3 16 13
Provision charge 31 513 -
Interest expense 27 1,607 3,780
Interest and dividend income 23 (25,675) (26,619)
Loss on investments 25 26,136 9,885
Exchange differences 27 723 3,506
---------- ----------
512 (1,476)
Changes in working capital
Increase in trade and other receivables 17,164 (16,292)
Decrease in trade and other payables 959 (1,050)
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Cash flows from operations 18,635 (18,818)
Interest and dividends received 25,969 25,773
Settlement of litigation - (26)
Tax paid (216) (167)
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Net cash from operating activities 44,388 6,762
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Cash flows from investing activities
Purchase of property, plant and equipment - (32)
Acquisition of investments (32,415) (27,340)
Proceeds from sale of investments 13,679 33,262
Settlement of derivative 2,332
Acquisition of associate 9 (7,500) -
Capital return of associate 8,183 -
Capital return of joint venture - 5,000
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Net cash used for investing activities (15,721) 10,890
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Cash flows from financing activities
Purchase of own shares 14 (1,544) -
Proceeds from bank loans 78,610 7,242
Repayments of bank loans (79,751) (11,547)
Interest paid (1,731) (3,884)
Dividends paid (4,999) (4,999)
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Net cash used for financing activities (9,415) (13,188)
---------- ----------
Net increase / (decrease) in cash and cash equivalents 19,252 4,464
Cash and cash equivalents at the beginning of the year (6,548) (11,038)
Exchange differences on cash and cash equivalents (124) 93
Translation differences on foreign operations' cash and cash equivalents (18) (67)
---------- ----------
Cash and cash equivalents at the end of the year 13 12,562 (6,548)
---------- ----------
Cash and cash equivalents at the end of the year
13
12,562
(6,548)
----------
----------
The notes 1 to 36 form part of these consolidated financial statements.
Notes on the Financial Statements
1. General Information
Incorporation, principal activity and status of the Company
1.1. The Company was incorporated as an international business company and registered in the British Virgin Islands (BVI)
on 2 January 2002 under IBC Number 475668 with the name Clevedon Services Limited. The liability of the members of the
Company is limited.
1.2. The Company changed its name to Empire Online Limited on 5 May 2005 and then to Livermore Investments Group Limited
on 28 February 2007.
1.3. The principal activity of the Group changed to investment activities on 1 January 2007. Before that the principal
activity of the Group was the provision of marketing services to the online gaming industry and, since 1 January 2006, the
operation of online gaming.
1.4. The principal legislation under which the Company operates is the BVI Business Companies Act, 2004.
1.5. The registered office of the Company is located at Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin
Islands.
2. Accounting Policies
The significant accounting policies applied in the preparation of the consolidated financial statements are as follows:
2.1. Basis of preparation
The consolidated financial statements of Livermore Investments Group Limited have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the European Union and on a going concern basis. The
consolidated financial statements have been prepared on the historical cost basis except for the following:
· Financial instruments at fair value through profit or loss (including derivatives) are measured at fair value.
· Available- for- sale financial assets are measured at fair value.
· Investment property is measured at fair value.
· Investments in associates and joint ventures are measured at fair value.
The financial information is presented in US dollars because this is the currency in which the Group primarily operates.
The Directors have reviewed the accounting policies used by the Group and consider them to be the most appropriate.
2.2. Adoption of new and revised IFRS
As from 1 January 2015, the Group adopted all the new or revised IFRS and relevant amendments which became effective and
also were endorsed by the European Union, and are relevant to its operations.
The adoption of the above did not have a material effect on the consolidated financial statements.
All IFRS issued by the International Accounting Standards Board (IASB) which are effective for the year ended 31 December
2015, have been adopted by the EU through the endorsement procedure established by the European Commission, with the
exception of certain provisions of IAS 39: "Financial Instruments: Recognition and Measurement" relating to portfolio hedge
accounting.
The following Standards, Amendments to Standards and Interpretations had been issued by the date of authorisation of these
consolidated financial statements but are not yet effective, or have not yet been endorsed by the EU, for the year ended 31
December 2015:
Endorsed by the EU Effective for annual periods beginning on or after
· IFRS 9: "Financial Instruments" No 1 January 2018
· IFRS 14: "Regulatory Deferral Accounts" No 1 January 2016
· IFRS 15: "Revenue from Contracts with Customers" No 1 January 2018
· IFRS 16: "Leases" No 1 January 2019
· Annual Improvements to IFRS 2012-2014 Cycle Yes 1 January 2016
· Amendment to IFRS 10, IFRS 12, and IAS 28: "Investment Entities: Applying the Consolidation Exception" No 1 January 2016
· Amendment to IFRS 10, and IAS 28: "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" No to be determined
· Amendment to IFRS 11: "Accounting for Acquisitions of Interests in Joint Operations" Yes 1 January 2016
· Amendment to IAS 1: "Disclosure Initiative" Yes 1 January 2016
· Amendment to IAS 7: "Disclosure Initiative" No 1 January 2017
· Amendment to IAS 12: "Recognition of Deferred Tax Assets for Unrealised Losses" No 1 January 2017
· Amendment to IAS 16 and IAS 38: "Clarification of Acceptable Methods of Depreciation and Amortisation" Yes 1 January 2016
· Amendments to IAS 16 and IAS 41: "Bearer Plants" Yes 1 January 2016
· Amendment to IAS 27: "Equity Method in Separate Financial Statements" Yes 1 January 2016
The Board of Directors expects that when the above Standards or Interpretations become effective in future periods, they
will not have a material effect on the consolidated financial statements, other than for IFRS 9.
IFRS 9 ''Financial Instruments'' replaces IAS 39 ''Financial Instruments: Recognition and Measurement''. The new standard
introduces extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces
a new 'expected credit loss' model for the impairment of financial assets. IFRS 9 also provides new guidance on the
application of hedge accounting.
Management is not yet in a position to provide quantified information regarding the impact of IFRS 9. At this stage the
main areas of expected impact are as follows:
· the classification and measurement of the Company's financial assets will need to be reviewed based on the new
criteria that consider the assets' contractual cash flows and the business model in which they are managed
· an expected credit loss-based impairment will need to be recognised on the Company's financial assets at amortised
cost and any investments in debt-type assets, unless classified as at fair value through profit or loss in accordance with
the new criteria
2.3. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and all of its subsidiaries.
Control is achieved where the Company is exposed, or has right, to variable returns from its involvement with a subsidiary
and has the ability to affect those returns through its power over the subsidiary.
The financial statements of all the Group companies are prepared using uniform accounting policies. Where necessary,
adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by the Group. All subsidiaries have a reporting date of 31 December.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
The results and cash flows of any subsidiaries acquired or disposed of during the year are included in the consolidated
financial statements from the effective date of acquisition or up to the effective date of disposal.
2.4. Investments in associates and joint ventures
An associate is an entity over which the Group is able to exert significant influence but not control.
A joint venture is an arrangement that the Group controls jointly with one or more other investors, and over which the
Group has rights to a share of the arrangement's net assets rather than direct rights to underlying assets and obligations
for underlying liabilities.
Investments in associates and joint ventures are measured at fair value through profit or loss in accordance with IAS 39,
based on the exemption available by IAS 28 "Investments in Associates and Joint Ventures" for entities that are venture
capital organisations or similar entities.
2.5. Current assets are those which, in accordance with IAS 1 Presentation Of Financial Statements are:
• expected to be realised within normal operating cycle, via sale or consumption, or
• held primarily for trading, or
• expected to be realised within 12 months from the reporting date, or
• cash and cash equivalent not restricted in their use.
All other assets are non-current.
2.6. Investment property income
Rental income is recognised on a straight line basis over the lease term. Service charges and management fees are
recognised as the related costs are incurred and charged. Changes to rental income that arise from reviews to open market
rental values or increases that are indexed linked on a periodic basis are recognised from the date on which the adjustment
becomes due. Lease incentives granted are recognised as an integral part of the net consideration for the use of the
property. Lease incentives are allocated evenly over the life of the lease. Rental income and services charged are stated
net of VAT and other related taxes.
2.7. Interest and dividend income
· Interest income is recognised based on the effective interest method.
· Dividend income is recognised on the date that the Group's right to receive payment is established, which in the case of
quoted securities is the ex-dividend date.
2.8. Foreign currency
The individual financial statements of each Group company are presented in the currency of the primary economic environment
in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and
financial position of each Group company are expressed in USD, which is the functional currency of the Company and the
presentation currency for the consolidated financial statements.
Transactions in foreign currencies other than each group entity's functional currency are recorded at the rates of exchange
prevailing on the dates of the transaction. Monetary assets and liabilities denominated in non-functional currencies are
translated into functional currency equivalents using year-end spot foreign exchange rates. Non-monetary assets and
liabilities are translated upon initial recognition using exchange rates prevailing at the dates of the transactions.
Non-monetary assets that are measured in terms of historical cost in foreign currency are not re-translated.
Gains and losses arising on the settlement of monetary items and on the re-translation of monetary items are included in
the profit or loss for the year. Those that arise on the re-translation of non-monetary items carried at fair value are
included in the profit or loss of the year except for differences arising on the re-translation of non-monetary
available-for-sale financial assets in respect of which gains and losses are recognised in other comprehensive income. For
such non-monetary items any exchange component of that gain or loss is also recognised in other comprehensive income.
The results and financial position of all Group entities that have a functional currency different from US dollars are
translated into the presentation currency as follows:
(i) assets and liabilities are translated at the closing rate at the reporting date; and
(ii) income and expenses and also cash flows are translated at an average exchange rate (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case the items
are translated at the rates prevailing at the dates of the transactions); and
(iii) exchange differences arising are recognised in other comprehensive income within the translation reserve. Such
translation exchange differences are reclassified to profit or loss in the period in which the foreign operation is
disposed of.
2.9. Taxation
Current tax is the tax currently payable based on taxable profit for the year in accordance with the tax laws applicable in
jurisdictions where the Group operates.
Deferred taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be
controlled by the group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses
available to be carried forward as well as other income tax credits to the group are assessed for recognition as deferred
tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences will be able to be offset against future taxable
income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted as at the reporting date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense within profit or loss, except
where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also
charged or credited directly to equity.
2.10. Investment property
Certain of the Group's properties are classified as investment property, being held for long term investment gains and to
earn rental income.
Investment properties are measured initially at cost, and thereafter are stated at fair value, which reflects market
conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are
included in the profit or loss in the year in which they arise.
Investment property is valued at fair value based on valuations provided by a certified external valuer.
2.11. Equity instruments
Equity instruments issued by the Company are recorded at proceeds received, net of direct issue costs.
Own equity instruments purchased by the Company or its subsidiaries are recorded at the consideration paid, including
directly associated assets, and they are deducted from total equity as treasury shares until they are sold or cancelled.
Where such shares are subsequently sold, any consideration received is included in total equity.
The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from the premium paid.
2.12. Share Options
IFRS 2 "Share-based Payment" requires the recognition of equity settled share based payments at fair value at the date of
grant.
The Group issues equity-settled share based payments to certain employees. The fair value of share-based payments to
employees at grant date is measured using the Binomial pricing model.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the
Group's estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting
conditions. The corresponding credit is taken to the share option reserve.
On exercise of the options any related amounts recognised in the share option reserve are transferred to share premium.
On lapse of the options any related amounts recognised in the share option reserve are transferred to retained earnings.
2.13. Borrowing costs
Borrowing costs primarily comprise interest on the Group's borrowings. Any borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets are added to the cost of the corresponding assets until such
time as the assets are substantially ready for their intended use or sale. All other borrowing costs are expensed in the
period in which they are incurred and reported within "finance costs".
No borrowing costs have been capitalised for either 2015 or 2014.
2.14. Financial assets
Financial assets are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the
financial asset is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred or the Group retains the contractual rights
to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition if the Group transfers substantially all the
risks and rewards of ownership of the asset, or if the Group neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset.
Financial assets are measured initially at fair value plus transaction costs, except for financial assets carried at fair
value through profit or loss, which are measured initially at fair value.
Financial assets are measured subsequently as described below.
All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at
each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group
of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial
assets, which are also described below.
Loans and receivables
· Trade and other receivables
Trade and other receivables are initially recognised at their fair value which normally is their original transaction
value, and are subsequently measured at their amortised cost. An estimate for doubtful debts is made when collection of
the full amount is no longer probable. Bad debts are written off when identified. Where the time value of money is
significant receivables are discounted to present value.
· Cash and cash equivalents
Cash comprises cash in hand and on demand deposits with banks. Cash equivalents are short term, highly liquid investments
that are readily convertible to known amounts of cash. They include unrestricted short-term bank deposits originally
purchased with maturities of three months or less.
Bank overdrafts are considered to be a component of cash and cash equivalents, since they form an integral part of the
Group's cash management.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets that are either classified as held for
trading or are designated by the Group to be carried at fair value through profit or loss upon initial recognition. All
assets within this category are measured at their fair value, with changes in value recognised in the profit or loss when
incurred. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred.
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are either designated as such or do not
qualify for inclusion in any of the other categories of financial assets. Financial assets within this category are
measured at fair value, with changes in fair value recognised in other comprehensive income, within the investments
revaluation reserve. Unquoted equity investments for which the fair value cannot be reliably measured are stated at cost
less impairment. Gains and losses arising from investments classified as available-for-sale are recognised in the profit
or loss when they are sold or when the investment is impaired.
In the case of impairment of available-for-sale financial assets, the cumulative loss previously recognised in other
comprehensive income is reclassified to profit or loss. Impairment losses recognised in the profit or loss on equity
instruments are not subsequently reversed through the profit or loss. Impairment losses recognised previously on debt
securities are reversed through the profit or loss when the increase in fair value can be related objectively to an event
occurring after the impairment loss was recognised in the profit or loss.
An assessment for impairment is undertaken at least at each reporting date, following the IAS 39 guidance.
2.15. Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Financial liabilities are measured initially at fair value plus transaction costs, except for financial liabilities carried
at fair value through profit or loss, which are measured initially at fair value.
Financial liabilities at amortised cost
After initial recognition financial liabilities are measured at amortised cost using the effective interest rate method.
Derivative financial liabilities
The Group's financial liabilities also include financial derivative instruments.
All derivative financial instruments which are not designated as hedging instruments are measured at fair value through
profit or loss.
2.16. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can
be made. Where the Company expects a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain.
No provision is made for possible claims or where an obligation exists but it is not possible to make a reliable estimate.
Costs associated with claims made by the Group are charged to the profit or loss as they are incurred.
2.17. Segment reporting
In identifying its operating segments, management generally follows the Group's investment activity lines. Each of these
operating segments is managed separately as each of these investment activity lines requires different monitoring and
strategic decision making process as well as allocation of resources.
The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its consolidated
financial statements. Any inter-segment transfers are carried out at arm's length prices.
2.18. Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates
and requires management to exercise its judgement in the process of applying the Group's accounting policies. It also
requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on management's best knowledge of current events
and actions, actual results may ultimately differ from those estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
(i) Impairment of available-for-sale financial assets
The Group follows the guidance in IAS 39 on determining when an investment is impaired. This determination requires
significant judgments. In making this judgment, the Group evaluates, among other factors, the duration and extent to which
the fair value of an investment is less than its cost and the financial health and near-term business outlook for the
investee, including factors such as industry and sector performance, changes in technology and financing cash flow. The
management regards a fall in fair value below cost of 30% or more, or for 12 months or more, to be significant.
The Group assesses at each reporting date whether financial assets are impaired. If impairment has occurred, this loss is
recognised to profit or loss.
If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not
carried at fair value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and
must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference
between the asset's carrying amount and the present value of estimated future cash flows discounted at the current market
rate of return of similar financial assets.
(ii) Classification of financial assets
The Management exercises significant judgement in determining the appropriate classification of the financial assets of the
Group, especially for its investments and the identification of any embedded derivatives. The factors considered include
the contractual terms and characteristics which are very carefully examined, and also the Group's intentions and expected
needs for the realisation of the financial assets.
Investments in loan markets through CLOs are classified as available-for-sale. All other investments are classified as at
fair value through profit or loss upon initial recognition, because this reflects more fairly the way these assets are
managed by the Group. The Group's business is investing in financial assets with a view to profiting from their total
return in the form of income and capital growth. This portfolio of financial assets is managed and its performance
evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio
is provided internally on that basis to the Group's Board of Directors and other key management personnel.
(iii) Deferred tax assets
The tax rules applicable for the relevant Company's operations are carefully taken into consideration for the recognition
of a deferred tax asset. If a positive forecast of taxable income indicates the probable use of a deferred tax asset,
especially when it can be utilised without a time limit, that deferred tax asset is usually recognised in full. The
recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed
individually by management based on the specific facts and circumstances.
Estimation uncertainty
The following are the significant estimates that have the most significant effect on recognition and measurement of
relevant items.
(i) Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are
not available. Details of the bases used for financial assets and liabilities are disclosed in note 7. In applying the
valuation techniques management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as
possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable
data is not observable, management uses its best estimate about the assumptions that market participants would make. These
estimates may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
Refer also to note 4 for estimation uncertainty over the fair value determination of the investment in SRS Charminar.
(ii) Fair value of investment property
Investment property is stated at fair value. The fair valuation is based on discounted cash-flow (DCF) method. Under this
method, the current market value of the property is determined as the total of all projected future net earnings (before
interest, taxes, depreciation and amortization) discounted to present-day equivalents. These net earnings are discounted
individually for property with due allowance for specific opportunities and threats, and with adjustment in line with
market conditions and risks. A one-period DCF model was adopted under which the valuation period extends for 100 years
from the valuation date, with an implicit residual value in the 11th period. Discounting is based on a risk-adjusted
interest rate and a gross yield determined individually for each property on the basis of appropriate benchmarks derived
from arm's-length transactions. The weighted average discount rate used is 4.09% and the weighted average gross yield used
is 4.68%. The valuations assume 1% annual inflation for income and all expenditure.
Further details are disclosed in note 8.
3. Property, plant and equipment
OfficeRenovation Computer Hardware Fixtures and Fittings Motor Vehicles Total
US $000 US $000 US $000 US $000 US $000
Cost
As at 1 January 2014 377 176 113 26 692
Additions - - - 32 32
Disposals - - - (26) (26)
------ ------ ------ ------ ------
As at 1 January 2015 377 176 113 32 698
Additions - - - - -
------ ------ ------ ------ ------
As at 31 December 2015 377 176 113 32 698
Accumulated depreciation
As at 1 January 2014 (377) (164) (102) (26) (669)
Charge for the year - (8) (5) - (13)
On disposals - - - 26 26
------ ------ ------ ------ ------
As at 1 January 2015 (377) (172) (107) - (656)
Charge for the year - (4) (3) (9) (16)
------ ------ ------ ------ ------
As at 31 December 2015 (377) (176) (110) (9) (672)
------ ------ ------ ------ ------
Net book value
As at 31 December 2015 - - 3 23 26
------ ------ ------ ------ ------
As at 31 December 2014 - 4 6 32 42
------ ------ ------ ------ ------
4. Available-for-sale financial assets
2015US $000 2014US $000
Non-current assets
Fixed income investments (CLO Income Notes) 65,946 82,217
Private equities 5,295 7,891
Financial and minority holdings 7,223 9,266
------ ------
78,464 99,374
------ ------
Current assets
Public equity investments 1,619 1,491
Hedge funds 1,064 1,070
------ ------
2,683 2,561
------ ------
For description of each of the above categories, refer to note 6.
The Group treats its investments in the loan market through CLOs as non-current investments as the Group generally intends
to hold such investments over a longer period.
During 2015, 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 in 2015, of USD 31.726m (2014 USD 8.861m), are included within loss on investments (note
25), and represent impairment losses arising due to:
2015 2014
US $000 US $000
Significant fall in value 11,119 5,693
Prolonged fall in value 1,490 1,328
Significant and prolonged fall in value 19,117 1,840
------ ------
31,726 8,861
------ ------
Investment in SRS Charminar
Included in the Financial and minority holdings is the investment in SRS Charminar Investments Ltd ("SRS Charminar"), a
private company incorporated in the Republic of Mauritius. Livermore invested USD 20m in SRS Charminar acquiring a 15%
ownership stake. SRS Charminar through its wholly owned subsidiaries invested INR 5.2b (USD 132.1m at date of investment)
which is equivalent to USD 82.5m as at 31 December 2014 (2013: 83m) in a real estate company in India ("investee
company").
In 2009, the promoters of the investee company were arrested on charges of criminal conspiracy, cheating, and
misappropriation of funds. Later it was discovered that the investee company had breached the terms of the investment
agreement resulting in a default.
On January 13, 2011 the Company Law Board ("CLB") passed an order and allowed Infrastructure Leasing & Financial Services
Limited ("IL&FS") to become an 80% shareholder and control the management of the company.
SRS Charminar and other investors have agreed to a settlement with IL&FS wherein the settlement amount will be paid in four
tranches over five years. The last two tranches are not guaranteed by IL&FS and the significant uncertainty of these
payments has been considered in the discount rates used of 35% and 30% respectively in contrast to the 8% used for
discounting the first two tranches. Also, all regulatory and court approvals were received and the effective date of the
settlement was fixed.
The Group received the first tranche of USD 2.9m in late 2015. The carrying amount of the investment is based on discounted
expected cash flows and was USD 7.1m (2014: USD 9.1m), which represents its estimated fair value. SRS Charminar's only
holding is its investment in the investee company (through its wholly owned subsidiaries) and thus its fair value is wholly
attributable to the above mentioned investment.
Also included in Private equities is the investment in SRS Private Investments, L.P. ("SRS Private") with a carrying amount
at reporting date of USD 1.7m (2014: USD 3.7m) which is based on a net asset valuation (NAV). SRS Private through a fund
has invested in various real estate projects in India as well as in SRS Charminar, and its investment in SRS Charminar as
at 31 December 2015 amounts approximately to 20% (2014: 17%) of its net assets.
5. Financial assets at fair value through profit or loss
2015 2014
US $000 US $000
Non-current assets
Private equities 330 330
Real estate entities 1,203 1,476
------ ------
1,533 1,806
------ ------
Current assets
Fixed income investments 6,655 1,623
Public equity investments 1,613 1,717
Hedge funds - 65
Other investments - 299
------ ------
8,268 3,704
------ ------
For description of each of the above categories, refer to note 6.
6. Financial assets at fair value
The Group allocates its non-derivative financial assets at fair value (notes 4 and 5) 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 company generally invests directly in prospects where it can exert significant
influence.
· Financial and minority holdings relate to significant investments (of over USD 5m) which are strategic for the
Company and are done in the form of equity purchases or convertible loans. Main investments under this category are in the
fields of real estate.
· 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
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