REG - Livermore Inv. Group - Annual Financial Report <Origin Href="QuoteRef">AUIV.L</Origin> - Part 3
26/05/2017 07:06
- Part 3: For the preceding part double click ID:nRSZ2915Gb
loss when incurred.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (OCI) comprise equity securities which are not held for
trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair
value through OCI rather than profit or loss.
Where the Company's management has elected to present fair value gains and losses on equity investments in other
comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends
from such investments continue to be recognised in profit or loss when the Company's right to receive payments is
established.
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal
and interest are measured at amortised cost. A gain or loss on a financial asset that is measured at amortised cost is
recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is
recognised based on the effective interest rate method.
Impairment
The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised
cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade
and other receivables only, the Company applies the simplified approach permitted by IFRS 9, which permits expected
lifetime losses to be recognised from initial recognition of the receivables.
Write offs
The Company writes off a financial asset when there is information indicating that the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or
has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities,
taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.
3.15. Financial assets (policy applied until 31 December 2015 - refer to note 3.1)
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.
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.
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.
3.16. Financial liabilities
Financial liabilities are recognised when the Company 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 Company'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.
3.17. 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
Company's cash management.
3.18. Provisions
Provisions are recognised when the Company 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 Company are charged to the profit or loss as they are incurred.
3.19. Discontinued operations
A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale,
and:
(a) represents a separate major line of business or geographical area of operations;
(b) is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations; or
(c) is a subsidiary acquired exclusively with a view to resale.
The results from discontinued operations are presented in a single amount in the profit or loss with further analysis in
the notes. This amount comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss
resulting from the measurement and disposal of relevant assets. The comparative disclosures for discontinued operations
relate to the operations that have been discontinued during the current reporting period.
3.20. 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.
3.21. 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 Company'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 financial assets at amortised cost
The allowance for impairment on related party receivables (note 13) is based on assumptions about risk of default and
expected loss rates for expected lifetime losses. The Company uses judgement in making these assumptions and selecting the
inputs to the impairment calculation, based on the Company's past history, existing market conditions as well as forward
looking estimates at the end of each reporting period. For details of the key assumptions and inputs used.
The Company assesses at each reporting date whether financial assets at amortised cost are impaired. If impairment has
occurred, this loss is recognised in profit or loss.
(ii) Classification of financial assets
The Management exercises significant judgement in determining the appropriate classification of the financial assets of the
Company. The Directors determine the appropriate classification of the Company's financial assets based on Livermore's
business model. An entity's business model refers to how an entity manages its financial assets in order to generate cash
flows, considering all relevant and objective evidence. The factors considered include the contractual terms and
characteristics which are very carefully examined, and also the Company's intentions and expected needs for realisation of
the financial assets.
All investments (except from certain equity instruments that are designated at fair value through other comprehensive
income) are classified as at fair value through profit or loss, because this reflects more fairly the way these assets are
managed by the Company. The Company'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 Company's Board of Directors and other key management personnel.
Estimation uncertainty
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 8. 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.
3.22. Comparatives
The comparative figures in the consolidated statement of profit or loss and the consolidated statement of cash flows have
been restated for the effect of discontinued operations.
4. Available-for-sale financial assets
2016US $000 2015US $000
Non-current assets
Fixed income investments (CLO Income Notes) - 65,946
Private equities - 12,518
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- 78,464
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Current assets
Public equity investments - 1,619
Hedge funds - 1,064
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- 2,683
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For description of each of the above categories, refer to note 7.
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 are included within loss on investments (note 26), and represent
impairment losses arising due to:
2016 2015
US $000 US $000
Significant fall in value - 11,119
Prolonged fall in value - 1,490
Significant and prolonged fall in value - 19,117
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- 31,726
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5. Financial assets at fair value through profit or loss
2016 2015
US $000 US $000
Non-current assets
Fixed income investments (CLO Income Notes) 81,769 -
Private equities - 330
Real estate entities - 1,203
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81,769 1,533
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Current assets
Fixed income investments 18,368 6,655
Public equity investments 1,950 1,613
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20,318 8,268
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For description of each of the above categories, refer to note 7.
The above investments represent financial assets that are mandatorily measured at fair value through profit or loss.
The Company treats its investments in the loan market through CLOs as non-current investments as the Company generally
intends to hold such investments over a period longer than twelve months.
6. Financial assets at fair value through other comprehensive income
2016 2015
US $000 US $000
Non-current assets
Private equities 5,634 -
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Current assets
Hedge funds 1,039 -
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For description of each of the above categories, refer to note 7.
The above investments are non-trading equity investments that have been designated at fair value through other
comprehensive income.
7. Financial assets at fair value
The Company allocates its non-derivative financial assets at fair value (notes 4, 5 and 6) as follows:
· Fixed income investments relate to fixed and floating rate bonds, perpetual bank debt, investments in the loan
market through CLOs, and investments in open warehouse facilities.
· Private equities relate to investments in the form of equity purchases 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 influence. Main investments under this category are in the fields of real estate.
· Hedge funds relate to equity 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.
8. 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.
The level within which the financial asset is classified is determined based on the lowest level of significant input to
the fair value measurement.
Valuation of financial assets and liabilities
· Fixed Income Investments, and Public Equity Investments are valued per their closing market prices on quoted
exchanges, or as quoted by market maker. Investments in open warehouse facilities that have not yet been converted to CLOs,
are valued based on an adjusted net asset valuation.
The Company 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.
· Private Equities 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.
· Hedge 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.
· Real Estates entities are valued by independent qualified property valuers with substantial relevant experience on
such investments. Underlying property values are determined based on their estimated market values.
· Derivative instruments are valued at fair value as provided by counter parties (banks) of the derivative agreement.
· Investments in subsidiaries are valued at fair value as determined on an adjusted net asset valuation basis.
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:
2016US$000 2016US$000 2016US$000 2016US $000 2015US$000 2015US$000 2015US$000 2015US $000
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Assets
Fixed income investments 1,117 81,769 17,251 100,137 1,634 65,946 5,021 72,601
Private equities - - 5,634 5,634 - - 12,848 12,848
Public equity investments 1,951 - - 1,951 3,232 - - 3,232
Hedge funds - 1,038 - 1,038 - 1,064 - 1,064
Real estate entities - - - - - - 1,203 1,203
Investments in subsidiaries - - 5,252 5,252 - - - -
------ ------ ------ ------ ------ ------ ------ ------
3,068 82,807 28,137 114,012 4,866 67,010 19,072 90,948
------ ------ ------ ------ ------ ------ ------ ------
Liabilities
Forward contract - - - - - 217 - 217
------ ------ ------ ------ ------ ------ ------ ------
- - - - - 217 - 217
------ ------ ------ ------ ------ ------ ------ ------
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, except from a certain equity instrument that was
delisted and therefore transferred from Level 1 to Level 3 in 2016.
Financial assets within level 3 can be reconciled from beginning to ending balances as follows:
At fair value through OCI Available-for-sale At fair value through profit or loss Derivative financial instruments Investments in subsidiaries
Private equities Private equities Other investments Real estate Private equities Fixed Incomeinvestments Total return swap Total
US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
As at 1 January 2015 - 17,157 - 1,476 330 - 1,125 - 20,088
Purchases - - - - - 5,000 - - 5,000
Settlement - (59) - - - - (1,332) - (1,391)
(Losses) / gains recognised in:
-Profit or loss - (4,177) - 104 - 21 207 - (3,845)
-Other comprehensive income - (403) - - - - - - (403)
Exchange difference - - - (377) - - - - (377)
------ ------ ------ ------ ------ ------ ------ ------ ------
As at 1 January 2016 - 12,518 - 1,203 330 5,021 - - 19,072
Transfer on initial application of IFRS 9 (note 3.1) 12,848 (12,518) - - (330) - - - -
Change in investment entity status (note 2.1) - - - (1,288) - - - 5,567 4,279
Transfer from Level 1 369 - - - - - - - 369
Purchases - - - - - 17,000 - - 17,000
Settlement (3,308) - - - - (6,062) - - (9,370)
(Losses) / gains recognised in:
-Profit or loss - - - - - 1,292 - (315) 977
-Other comprehensive income (4,275) - - - - - - - (4,275)
Exchange difference - - - 85 - - - - 85
------ ------ ------ ------ ------ ------ ------ ------ ------
As at 31 December 2016 5,634 - - - - 17,251 - 5,252 28,137
------ ------ ------ ------ ------ ------ ------ ------ ------
The above gains and losses recognised can be allocated as follows:
At fair value through OCI Available-for-sale At fair value through profit or loss Derivative financial instruments Investments in subsidiaries
Private equities Private equities Other investments Real estate Private equities Fixed Incomeinvestments Forward contract Total
2015 US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Profit or loss
-Financial assets held at year-end - (4,177) - 104 - 21 - - (4,052)
-Financial assets not held at year-end - - - - - - 207 - 207
------ ------ ------ ------ ------ ------ ------ ------ ------
- (4,177) - 104 - 21 207 - (3,845)
------ ------ ------ ------ ------ ------ ------ ------ ------
Other comprehensive income
-Financial assets held at year-end - (403) - - - - - - (403)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total (losses) / gains for 2015 - (4,580) - 104 - 21 207 - (4,248)
------ ------ ------ ------ ------ ------ ------ ------ ------
2016 US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Profit or loss
-Financial assets held at year-end - - - - - 1,292 - (315) 977
------ ------ ------ ------ ------ ------ ------ ------ ------
Other comprehensive income
-Financial assets held at year-end (4,275) - - - - - - - (4,275)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total (losses) / gains for 2016 (4,275) - - - - 1,292 - (315) (3,298)
------ ------ ------ ------ ------ ------ ------ ------ ------
The Company has not developed any quantitative unobservable inputs for measuring the fair value of its level 3 financial
assets at 31 December 2016 and 2015. Instead the Company 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.
9. Investment property
2016 2015
US $000 US $000
Valuation as at 1 January 123,324 116,609
Fair value (loss) / gain (102) 7,819
Additions 102 -
Exchange difference 1,439 (1,104)
Disposal (note 23) (124,763) -
------ ------
As at 31 December - 123,324
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The investment property relates to Wyler Park property in Bern, Switzerland, which was used for earning rental income.
Fair valuation
The investment property is the Group's only non-financial asset measured at fair value on a recurring basis, and its fair
value is classified within the fair value hierarchy as level 3.
The investment property was valued by the independent professional valuers Wüest & Partners as at 31 December 2015 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 significant inputs and assumptions are developed in close consultation with management.
The fair values of investment property were estimated using the discounted cash-flow (DCF) method. With this method, the
current market value of a 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
each property with due allowance for specific opportunities and threats, and with adjustment in line with market conditions
and risks.
Future rental income
The future minimum rental income under non-cancellable rental agreements, is receivable as follows:
2016 2015
US $000 US $000
- Less than 1 year - 5,629
- Between 1 and 5 years - 23,050
- Over 5 years - 36,879
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- 65,558
------ ------
Rental agreements are quoted in Swiss Francs. The equivalent USD amounts shown in the table above are based on the
exchange rates as at 31 December 2015.
10. Investments in associate and joint venture
2016 2015
US $000 US $000
As at 1 January - -
Additions - 7,500
Capital return - (8,183)
Fair value gain - 683
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As at 31 December - -
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Name of investee Type of investment Place of incorporation Proportion of voting rights held Principal activity
Silvermore Ltd Joint venture Cayman Islands 50% Investment Holding (dormant)
During 2015 , the Group invested in a 25% interest in Highbridge Loan Management Warehouse 7-2015 Ltd (a company
incorporated in Cayman Islands), through its subsidiary Mountview Holdings Ltd, until Highbridge was converted into a CLO.
After the conversion into a CLO the entity ceased to be an associate of the Company.
11. Investments in subsidiaries
2016 2015
US $000 US $000
As at 1 January - -
Additions (note 2.1) 5,567 -
Fair value loss (315) -
------ ------
As at 31 December 5,252 -
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Details of the investments in which the Company has a controlling interest as at 31 December 2016 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% Investment vehicle
Sycamore Loan Strategies Ltd Cayman Islands Ordinary shares 100% Investment vehicle
Livermore Israel Investments Ltd Israel Ordinary shares 100% Holding of investments
Livermore Capital AG Switzerland Ordinary shares 100% Administration services
Livermore Investments Cyprus Limited Cyprus Ordinary shares 100% Administration services
Sandhirst Limited Cyprus Ordinary shares 100% Holding of investments
Silvermore 2 Ltd and Enaxor S.a.r.l. were dissolved during the year. The shares of Sandhirst Limited which were previously
held by Enaxor S.a.r.l. were transferred upon the liquidation of the latter to the Company.
Livermore Investments AG was sold during 2016 (note 23).
There are no restrictions in receiving any amounts from any subsidiary, including cash dividends or repayments of loans and
advances.
12. Deferred tax
The Company is a British Virgin Islands (BVI) international business company and, under the BVI laws, is not subject to
taxation. Deferred taxes relate to temporary differences between carrying amounts and corresponding tax base of its
subsidiaries, in Switzerland.
The deferred tax shown in the consolidated statement of financial position relates to the following items:
2016 2015
US $000 US $000
Investment property - revaluation surplus - 6,362
Tax losses - (2,425)
------ ------
Net deferred tax liability - 3,937
------ ------
The movement on the deferred taxation account is as follows:
Investment property Derivative financial instruments Tax losses Total
US $000 US $000 US $000 US $000
As at 1 January 2015 (5,805) 47 3,486 (2,272)
(Charged) / credited to profit or loss (note 23)
- timing differences (895) (46) (913) (1,854)
Exchange difference 338 (1) (148) 189
------ ------ ------ ------
As at 1 January 2016 (6,362) - 2,425 (3,937)
(Charged) / credited to profit or loss (note 23)
- timing differences - - (380) (380)
Exchange difference (77) - 28 (49)
Reversal on disposal of subsidiary (note 23) 6,439 - (2,073) 4,366
------ ------ ------ ------
As at 31 December 2016 - - - -
------ ------ ------ ------
As at 31 December 2016 and 2015 there is no unrecognised deferred tax asset.
13. Trade and other receivables
2016 2015
US $000 US $000
Financial items
Accrued interest and dividend income 65 304
Amounts due by related parties (note 31) 9,634 2,514
Other receivables - 272
Allowance for impairment (2,940) -
------ ------
6,759 3,090
Non-Financial items
Other assets (note 31) 1,128 2,256
Prepayments 53 272
------ ------
7,940 5,618
------ ------
Allocated as:
Current assets 5,427 4,490
Non-current assets (note 31(2) and 31(3)) 2,513 1,128
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7,940 5,618
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Allowance for impairment
The allowance relates to amounts due by subsidiaries (note 31), which are regarded as credit-impaired and have been
assessed on an individual basis. The Directors in determining that these amounts are credit-impaired have considered that
the specific subsidiaries are in net liability position without prospects currently of generating adequate profits and cash
flows to become able to repay in full the amounts due to the Company. Their recoverable amount has been determined based
on an adjusted net asset valuation basis, which the Directors regard as approximation to the present value of the estimated
future cash inflows from those subsidiaries.
2016 2015
US $000 US $000
As at 1 January - -
Addition (note 2.1) 2,818 -
Charge for the year 122 -
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As at 31 December 2,940 -
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For the remaining receivables of financial nature, there are no lifetime expected losses. Therefore no corresponding
allowance for impairment has been recognised.
No receivable amounts have been written-off during either 2016 or 2015.
14. Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the following at the reporting
date:
2016 2015
US $000 US $000
Cash at bank 60,383 25,770
Bank overdrafts used for cash management purposes (1,160) (13,208)
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Cash and cash equivalents 59,223 12,562
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15. Share capital
Authorised share capital
The Company has authorised share capital of 1,000,000,000 ordinary shares with no par value, and no restrictions.
Issued share capital Number of shares Share premium arisingUS $000
Ordinary shares with no par value
As at 31 December 2015 and 31 December 2016 304,120,401 215,499
---------- ----------
Treasury shares Number of shares US $000
As at 1 January 2015 108,830,818 36,902
Additions 3,000,000 1,544
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As at 1 January 2016 111,830,818 38,446
Additions 17,475,585 7,866
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As at 31 December 2016 129,306,403 46,312
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In the consolidated statement of financial position the amount included as share premium and treasury shares comprises
of:
2016 2015
US $000 US $000
Share premium 215,499 215,499
Treasury shares (46,312) (38,446)
-------- --------
169,187 177,053
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16. Share options
The Company has a share option scheme for acquiring ordinary shares of the Company.
Outstanding options Number of options Average exercise price GBP Average exercise price* USD
As at 1 January 2015 11,340,000 0.75 1.18
Options expired (690,000) 0.71 1.05
--------
As at 31 December 2015 10,650,000 0.76 1.12
Options expired (10,150,000) 0.78 0.96
--------
As at 31 December 2016 500,000 0.30 0.37
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Exercisable options Number of options Average exercise price GBP Average exercise price* USD
As at 1 January 2015 11,340,000 0.75 1.18
Options expired (690,000) 0.71 1.05
----------
As at 31 December 2015 10,650,000 0.76 1.12
Options expired (10,150,000) 0.78 0.96
----------
As at 31 December 2016 500,000 0.30 0.37
----------
Details of share options outstanding at 31 December 2016
166,667 13/05/08 13/05/09 13/05/09 13/05/18 0.30 0.37 21,703
166,667 13/05/08 13/05/10 13/05/10 13/05/18 0.30 0.37 24,115
166,666 13/05/08 13/05/11 13/05/11 13/05/18 0.30 0.37 25,820
---------- ----------
500,000 71,638
---------- ----------
71,638
----------
----------
* The exercise prices as per the share option scheme are quoted in British Pounds. The indicative equivalent USD amounts
shown in the table of details above as well as the average exercise prices are based on the exchange rates as at 31
December 2016.
The fair value of options granted to employees was determined using the Binomial valuation model. The model takes into
account a volatility rate of 41-45% calculated using the historical volatility of a peer group of similar companies and a
risk free interest rate of 4.0-4.4% and it has been assumed the options have an expected life of two years post date of
vesting.
The options lapse at the earliest of the expiry date of exercise period or the termination of the corresponding employee's
service.
17. Derivative financial instruments
2016 2015
US $000 US $000
Current liabilities
Forward contract - 217
------ ------
Forward contracts
The Group uses forward foreign exchange contracts to mitigate exchange rate exposure arising from forecast transactions
between USD and CHF. As at the reporting date the outstanding forward agreements are as follows:
Notional contract amount Foreign exchange currency Contract exchange rate Contract termination date
USD 5,000,000 CHF 0.9965 19 February 2016
USD 5,000,000 CHF 0.9988 19 February 2016
USD 10,000,000 CHF 1.0096 19 February 2016
USD 5,000,000 CHF 1.0234 19 February 2016
Forward contracts are considered by the Management as economic hedge arrangements but have not been designated as hedging
instruments for accounting purposes and their fair value changes are recognised in the profit or loss. The calculation of
the fair value of forward contracts is based on the contractual cash flows of future anticipated net settlement using the
foreign exchange rates prevailing at the reporting date.
For the year ended 31 December 2016 a net fair value gain of USD 0.069m (2015: USD 0.991) has been recognised in the profit
or loss in relation to all derivative financial instruments.
18. Bank loans
2016 2015
US $000 US $000
-
As at 1 January 76,410 78,092
Additions - 78,822
Interest charge 923 1,278
Repayments of principal (1,138) (79,751)
Repayments of interests (923) (1,278)
Exchange difference 936 (541)
Refinancing fees - (212)
Amortization of refinancing fees 79 -
Disposal (note 23) (76,287) -
------ ------
As at 31 December - 76,410
------ ------
Allocated as:
Current bank loans - 1,407
Non-current bank loans - 75,003
------ ------
- 76,410
------ ------
The bank loan relates to Wyler Park investment property purchase (note 9) and was secured on this property.
19. Bank overdrafts
2016 2015
US $000 US $000
Bank overdrafts 1,160 13,208
------ ------
Bank overdrafts bear Libor + lender's margin and have an average interest rate of 3.49% (2015: 1.78%).
The Company's bank overdraft facilities are secured by the Company's financial assets portfolio up to an amount, as at 31
December 2016, of USD 31.8m.
The Company's bank overdraft undrawn facilities at 31 December 2016 amount to USD 30.6m.
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