REG - Livermore Inv. Group - Half Yearly Report <Origin Href="QuoteRef">AUIV.L</Origin> - Part 2
17/10/2014 13:55
- Part 2: For the preceding part double click ID:nRSd9208Sa
(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)
------ ------ ------
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014UnauditedUS$000 30 June2014UnauditedUS$000 30 June2014Unaudited US$000 30 June2014Unaudited 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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 monthsended 30 June2014Unaudited Six monthsended 30 June2013Unaudited Year ended31 December2013Audited
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 June2014Unaudited 30 June2013Unaudited 31 December2013Audited
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 debtinstrumentsinvestmentactivities Investmentpropertyactivities Total perfinancialstatements
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 debtinstrumentsinvestmentactivities Investmentpropertyactivities Total perfinancialstatements
Segment results 2013 2013 2013
US $000 US $000 US $000
Investment income
Interest and dividend income 12,611 - 12,611
Investment property income - 2,661 2,661
Gain on investments 1,083 - 1,083
------ ------ ------
Gross profit 13,694 2,661 16,355
Administrative expenses (5,889) (634) (6,523)
------ ------ ------
Operating profit 7,805 2,027 9,832
Finance costs (795) (1,750) (2,545)
------ ------ ------
Profit before taxation 7,010 277 7,287
Taxation charge - (3) (3)
------ ------ ------
Profit for the period 7,010 274 7,284
------ ------ ------
Segment assets 164,240 123,782 288,022
------ ------ ------
Segment liabilities 26,347 87,470 113,817
------ ------ ------
Year ended 31 December 2013 - Audited Equity and debtinstrumentsinvestmentactivities Investmentpropertyactivities Total perfinancialstatements
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 debtinstrumentsinvestmentactivities Investmentpropertyactivities Total perfinancialstatements
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 -
- More to follow, for following part double click ID:nRSd9208ScRecent news on Livermore Investments
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