REG - Livermore Inv. Group - Interim Results <Origin Href="QuoteRef">AUIV.L</Origin> - Part 1
RNS Number : 1603ALivermore Investments Group Limited25 September 201524 September2015
LIVERMORE INVESTMENTS GROUP LIMITED
UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2015
Livermore Investments Group Limited (the "Company" or "Livermore")today announcesits interim results for the six months ended 30 June 2015.
For further investor information please go to www.livermore-inv.com.
Enquiries:
Livermore Investments Group Limited +41 43 344 3200
Arden Partners plc +44 (0)20 7614 5917
Steve Douglas
Patrick Caulfield
Chairman's and Chief Executive's Review
Introduction
We are pleased to announce the interim consolidated financial results for Livermore Investments Group Limited (the "Company" or "Livermore") and its subsidiaries (together the "Group") for the six months ended 30 June 2015.
During the first half of 2015, the Group generated net income of USD 1.96m (30 June 2014: USD 10.86m), which represents earnings per share of USD 0.01 (30 June 2014: USD 0.06). The Group paid an interim dividend of USD 5m in March 2015 (USD 0.0256 per share). The NAV of the Group as of 30 June 2015 was USD 0.81 per share after payment of the interim dividend. During the reporting period, management continued to actively manage the financial portfolio and optimized exposure to US credit markets, which continues to provide attractive risk adjusted returns, albeit at a lower rate than prior years.
Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 2.7m in rent during the period. The property is fully rented. Valuation of Wyler Park has remained stable.
In September 2015, the lease with SBB for the Wyler Park property was extended from 2019 to 2029. As part of the lease extension agreement, the owner will invest up to a maximum of CHF 3.95m (USD 4.22m) and SBB is expected to invest up to CHF 9m to upgrade the property and allow for additional workspaces.
There were no significant developments in the private equity portfolio during the period.
Financial Review
The NAV of the Group as at 30 June 2015 was approximately USD 157.8m (30 June 2014: 168.2m). The profit after tax for the first half of 2015 was USD 1.96m, which represents earnings per share of USD 0.01. The performance relates largely to gains on the credit portfolio and net income from Wyler Park offset by write downs on certain investments.
30 June 2015
30 June 2014
31 December 2014
US $m
US $m
US $m
Shareholders' funds at beginning of period
160.0
168.4
168.4
___________
___________
___________
Income from investments
14.6
16.8
31.8
Other income
-
0.5
0.5
Realised (losses) / gains on investments
(0.5)
1.2
(1.6)
Loss on impairment on investments
(10.8)
(1.6)
(8.9)
Unrealised gains / (losses) on investments
0.7
(6.4)
(9.4)
Unrealised exchange gains / (losses)
0.5
-
(0.6)
Administration costs
(1.9)
(2.7)
(7.2)
Net finance costs
0.4
(2.4)
(7.2)
Tax charge
(0.2)
(0.6)
(0.8)
___________
___________
___________
Increase / (decrease) in net assets from operations
2.8
4.8
(3.4)
Purchase of own shares
-
-
-
Dividends paid
(5.0)
(5.0)
(5.0)
___________
___________
___________
Shareholders' funds at end of period
157.8
168.2
160.0
------
------
------
Net Asset Value per share
US $0.81
US $0.86
US $0.82
Livermore's Strategy
The financial portfolio is focused on fixed incomeinstruments which generate regular cash flows and include exposure mainly to senior secured and usually broadly syndicated US loans and to a limited extent emerging market debt through investments in CLOs. This part of the portfolio is geographically focused on the US with some exposure to Europe and emerging markets.
The remaining portfolio isfocused on Switzerland andAsia with investments primarily in real estate and select private equity opportunities. Investments arefocused on sectors that Management believes will provide superior growth over the mid to long term with relatively low downside risk.
Strong emphasis is given to maintaining sufficient liquidity and low leverage at the overall portfolio level andtore-invest in existing and new investments along the economic cycle.
Repurchase of shares
Between 31 December 2014 and 30 June 2015, the Company did not repurchase any additional shares. On 30 June 2015, the Company held 108,830,818 shares in treasury. Also no additional shares were purchased between 30 June 2015 and before the beginning of the interim closed period.
Dividends
In March 2015, the Company announced and paid an interim dividend of USD 5m (USD 0.0256 per ordinary share).
The Board of Directors will decide on the Company's dividend policy for 2015 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.
Richard Rosenberg
Noam Lanir
Chairman
Chief Executive
24 September 2015
Review of Activities
Economic & Investment Environment
Global economic growth was weaker than expected in the first quarter of 2015. US GDP growth amounted to 0.6% and the Chinese economic growth continued to cool. In the Euro area, however, the economy continued to pick up, supported by persistent euro weakness and improved lending conditions on the back of the European Central Bank's (ECB) quantitative easing (QE) program. In Japan, too, the economy gained momentum. In the second quarter, however, US GDP grew by 3.7% as the West Coast port delays and the unusually harsh winter subsided. The Euro area grew by 0.5% in the second quarter whereas Japan GDP declined by 0.3%. Labour conditions continued to improve in the US with the unemployment rate falling to 5.3% in June 2015. Labour force participation rate, however, has remained at historic lows. With continued improvement in labour conditions, the Federal Reserve has indicated raising interest rates sometime this year, causing the US Dollar to appreciate versus other currencies. A stronger US Dollar, slowing economic growth in China, and excess supply has resulted in steep declines in commodity and energy prices, which along with modest wage growth is likely to keep inflation low in the near future.
In January 2015, the ECB announced an extensive QE program to purchase EUR 60bn of government bonds each month until at least September 2016. This resulted in the Euro declining from 1.21 against the US Dollar at the start of the year to 1.05 in March before recovering to 1.11 at the end of June 2015. By April 2015, the EuroStoxx 50 Index had shot up 21.5% from its level at the start of the year. Sovereign bond yields declined significantly with the German bonds yielding just 7.5bps at its lows. In anticipation of the QE program from the ECB and the resultant expected pressure on the Swiss Franc, the Swiss National Bank (SNB) removed the floor of 1.20 Swiss Francs per Euro in January and negative rates to deter safe haven flows into the currency. The Swiss Franc surged higher against most currencies after removal of the floor and closed at 1.042 Swiss Francs per Euro as at 30 June 2015 and Swiss government bond yields declined to yield negative rates across almost all maturities up to 10 years. While European equity markets were generally higher in the first half of the year, a stronger US Dollar and anticipation of increasing rates in the US kept the S&P 500 Index range bound.
Oil prices declined further in January with West Texas Intermediate Crude dropping from USD 58/barrel to USD 51.5/barrel but recovered to end up at USD 60.10/barrel as of 30 June 2015. Despite lower oil prices, supply increased as the OPEC nations produced more oil to retain market share and push leveraged oil producers out of the market. Concerns of a sharp slowdown in China further weighed on oil and commodity prices and prices have dropped further post the reporting period. Lower commodity and energy prices are expected to give a boost to consumers around the world, which may help increase economic growth. At the same time, however, cutbacks in investment spending related to energy and commodity production will likely limit the positive contribution from lower prices in the near term.
High yield and leveraged loans experienced higher volatility as the spectre of higher US interest rates and exposure to energy and commodity issuers dampened investor sentiment. At the same time, continued strong issuance of Collateralized Loan Obligations (CLOs) provided stability to the leveraged loan market. The S&P/LSTA Leveraged Loan Index generated a total return of 2.82% during the first half of the year as compared to a total return of 2.5% from the Bank of America US High Yield Index.
Sources: Swiss National Bank (SNB), European Central Bank (ECB), US Federal Reserve, Bloomberg
Review of Significant Investments
Name
Book Value US $m
Wyler Park*
53.0
SRS Charminar
9.1
Other Real Estate Assets
1.2
Total
63.3
* Net of related loan.
Wyler Park - Switzerland
Wyler Park is a top quality mixed-use property located in Bern, Switzerland. It has over 16,800 square meters of commercial area, 4,100 square meters of residential area, and another 7,100 square meters available for additional commercial development. The commercial part is leased entirely to SBB (AAA rated), the Swiss national train transportation authority wholly owned by the Swiss Confederation, and serves as the headquarters of their Passenger Traffic division. The commercial lease is 100% linked to inflation. The annual rental income from the commercial area of the project is CHF 4.36m (USD 4.66m).
In September 2015, the lease with SBB for the Wyler Park property was extended from 2019 to 2029. As part of the lease extension agreement, the owner will invest up to a maximum of CHF 3.95m (USD 4.22m) and SBB is expected to invest up to CHF 9m (USD 9.62m) to upgrade the property and allow for additional workspaces.
Following the successful development of 39 residential apartments, the entire property is now fully rented. The annual rental income expected from the residential area is CHF 1.04m (USD 1.11m).
The property generated rent of CHF 2.7m (USD 2.9m) during the first half of 2015.
Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore Investments AG. In January 2015, management successfully refinanced the previous loan against Wyler Park with a Swiss bank. The outstanding principal of the new loan facility is CHF 66.5m (USD 71.1m). The facility is committed until at least 30 June 2019. Following the lease extension agreement with SBB from 2019 to 2029, an additional CHF 10m (USD 10.69m) is available under this facility. The loan is a non-recourse loan to Livermore Investments AG backed only by this property.
Management continues to evaluate the potential development of the additional commercial development rights of 7,100 square meters attached to the property.
SRS Charminar - India
Livermore invested USD 20m in 2008 in a leading Indian Real Estate company, in association with SRS Private and other investors as part of a total investment of USD 132.1m. 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 13 January 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 investee 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 carrying amount of the investment is based on discounted expected cash flows and as of period-end was USD 9.1m (December 2014: USD 9.1m).
Private Equity Funds
The other private equity investments held by the Group are incorporated in the form of Managed Funds (mostly closed end funds) mainly in the emerging economies of India and China. The investments of these funds into their portfolio companies were mostly done in 2008 and 2009. Overall, during 2015 the investment environment relating to most funds was challenging and the Group expects that material exits of portfolio companies should materialize between 2016 and 2018. During the reporting period, Livermore received a distribution-in-kind from Evolution Fund in the form of shares of Whitesmoke Software Ltd, a company listed in Israel. Livermore received USD 0.049m from its investment in Blue Ridge fund, which is primarily liquidated.
The following summarizes the book value of the private equity funds as at 30 June 2015:
Name
Book Value US $m
SRS Private (India)
2.7
Evolution Venture (Israel)
2.6
Elephant Capital (India)
0.5
Panda Capital (China)
0.4
Da Vinci (Russia)
0.3
Blue Ridge (China)
0.06
India Blue Mountains (India)
-
Other investments
0.6
Total
7.1
SRS Private: SRS Private is a private equity fund focused on real estate in India. The fund has invested in residential and commercial projects as well as directly in certain real estate companies. The assets are primarily located in and around major cities of India such as Mumbai and Hyderabad.
Evolution Venture: Evolution is an Israel focused venture capital fund. It invests in early stage technology companies. Its investments include a carrier-class Mobile Broadband Wireless (MBW) Wi-Fi solutions company, Whitesmoke Software Ltd (a Tel-Aviv listed language enhancement products company), a software company operating in the digital radio market, a software test tool developer, and a virtualization technology company. The Wi-Fi solutions company, language enhancements product company and the virtualization technology company have been performing well. Livermore received a distribution-in-kind in the form of shares of Whitesmoke Software Ltd as a partial exit from the fund's position in Whitesmoke.
Elephant Capital: India-focused private equity fund, which is AIM quoted (Ticker: ECAP). During the period, the fund sold its remaining holdings in Nitco Limited for GBP 0.16m and bought back 5,000,000 shares for GBP 1m.
As of 28 February 2015, the fund reported an audited NAV of 36 pence per share. Additional information about the fund and its portfolio is available at www.elephantcapital.com.
Panda Capital: Panda Capital is a China-based private equity fund focused on early-stage industrial operations in China. The fund's main investment is in a bamboo flooring company in China, which provides an innovative low cost alternative to hardwood flooring in shipping containers. The manager is in the process of building up operational capacity for product manufacturing.
Da Vinci: The fund is primarily focused on Russia and CIS countries and is primarily invested in the Moscow Exchange and a Ukrainian coal company. The Moscow Exchange continues to perform well in local currency terms. The coal company is located in Western Ukraine. The Group's investment in the fund was valued at USD 0.3m as of 30 June 2015.
Blue Ridge: Blue Ridge is a China focused private equity fund. The fund is mostly wound down and distributed USD 0.049m during the period.
India Blue Mountains: India Blue Mountains is a hotel and hospitality development fund that is developing 4 star and 5 star hotels in India. The fund has acquired land to develop three hotels in prime areas of Mumbai, Pune and Goa. All hotels will be managed by the Accor Group (Novotel brands). Accor has also invested equity and holds a 26% stake in all of the hotels. The Pune hotel is now operational but occupancy has been lower than expected.
During the reporting period, the fund reorganized itself into three separate companies holding the individual assets separately and raised capital to fund operations and interest costs. Livermore decided not to participate in the capital raise as it believes that asset values are not likely to be in excess of the debt load.
Financial Investments and Corporate Bond Trading
The Group manages a financial portfolio valued at USD 90.4m (net of leverage) as at 30 June 2015, which is invested mainly in US credit and fixed income securities.
Senior Secured Loans and CLOs:
The US senior secured loan market continued to offer good risk adjusted returns as a floating rate asset class with a senior secured claim on the borrower and with overall low volatility and low correlation to the equity market. CLOs are managed portfolios invested into diversified pools of senior secured loans and financed with long term financing pre-fixed at the time of issuance.
The US leveraged loan market performed reasonably well during the first half of the year with the Credit Suisse Leveraged Loan Index returning 2.9%, albeit with heightened volatility driven by broader markets, increased participation of retail and high yield funds, and a steady deterioration in energy and commodity prices. As at the end of June 2015, the US loan market twelve month rolling default rate by number of issuers was 0.81%. Livermore expects default rates to stay low in the near future although defaults rates from Oil, Gas and Coal related issuers are likely to underperform and push the default rate higher.
After a record level of US CLO new issue volume in 2014, CLO supply has continued to be strong in 2015. Despite mark-to-market volatility on CLO equity tranches, cash flows to the equity tranche have remained high and even increased as CLO managers take advantage of higher spread and lower loan prices available in the market.
During the first half of 2015 the Group continued to re-invest distributions from its CLO portfolio into new issue CLO transactions. The Group also provided first loss investments into credit facilities to secure and warehouse collateral for its upcoming CLO transactions.
The Group's US CLO portfolio continued to perform well on account of low current default rates, a low default outlook and wider loan spreads. At the end of the reporting period all of our US CLO investments were passing their coverage tests (thereby making dividend distributions). During the period, the CLO portfolio generated USD 11.99m in cash distributions, as well as earning USD 0.41m on warehousing facilities. Cash payments to CLO equity increased somewhat as CLO managers used volatility in the loan market to increase portfolio spreads. The Group has continued to reduce exposure to CLOs with shorter reinvestment periods and focus on new issue CLOs. As at 30 June 2015, over 85% of the Group CLO portfolio is invested in post-crisis CLOs.
Secondary market prices for CLOs fell further in January but rose higher until May as loan prices recovered along with oil prices. In June and subsequent months, however, secondary market prices have declined following a sharp fall in oil and commodity prices, re-emergence of the Greek debt crisis, a currency devaluation from China along with concerns around the first rate hike in the US. While the Group's US CLO portfolio performed better than market, its global and emerging market credit CLO portfolio was further impacted by deteriorating conditions in emerging markets. Management continues to monitor developments in this portfolio.
As few loans mature in the near term and the US economy continues to grow, corporate defaults are expected to remain low with the exception of certain energy related companies. Management believes that the environment should remain attractive for investments in CLO income notes. In the first half of 2015, Livermore launched two new issue cash-flow CLOs as an anchor investor.
While management maintains a positive view on the CLO portfolio, mid-long term performance may be negatively impacted by a strong pull back in the US or European economy or geo-political events that could result in a spike in defaults. Despite positive developments in the overall health of the US economy, we acknowledge the continued below trend growth globally especially in Europe, China and other emerging markets as well as headwinds relating to the potential monetary tightening in the US and geopolitical risks.
30 June 2015 Amount
Percentage
31 Dec 2014 Amount
Percentage
US $000
US $000
US CLOs
63,556
86.0%
68,704
83.6%
Global Credit CLOs
9,124
12.3%
12,008
14.6%
European CLOs
1,234
1.7%
1,505
1.8%
------
------
------
------
73,914
100%
82,217
100%
------
------
------
------
The following is a table summarizing the financial portfolio as at 30 June 2015
Name
30 June 2015
Book Value US $m
30 June 2014
Book Value US $m
31 December 2014
Book Value US $m
Investment in the loan market through CLOs
73.9
92.0
82.2
Babylon
1.0
2.8
0.9
Corporate Bonds
1.7
1.6
2.0
Hedge Funds
1.1
1.3
1.1
Other Public Equities
1.8
2.4
1.9
Total
79.5
100.1
88.1
Total net of leverage
90.4*
94.0
99.1
* this figure includes USD 11.3m which the Company invested during the period in the first loss tranche of warehouse facilities for accumulating loans with the intention to transfer these loans to a CLO.
The following table reconciles the review of activities to the Group's financial assets and investment property as at 30 June 2015.
Name
30 June 2015
Book Value US $m
Significant investments
63.3
Private Equity Funds
7.1
Financial portfolio
79.5
Total
149.9
Available-for sale financial assets (note 4)
91.6
Financial assets at fair value through profit or loss (note 5)
5.3
Net Investment property (notes 8/16)
53.0
Total
149.9
Events after the reporting date
Events after the reporting date are described in note 30 to the interim consolidated financial statements.
Litigation
Information is provided in note 28 to the interim condensed consolidated financial statements.
Livermore Investments Group Limited
Condensed Consolidated Statement of Financial Position
as at 30 June 2015
Note
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Assets
Non-current assets
Property, plant and equipment
37
23
42
Available-for-sale financial assets
4
89,367
110,144
99,374
Financial assets at fair value through profit or loss
5
1,518
2,122
1,806
Investment property
8
123,812
129,953
116,609
Investments in associate and joint venture
9
3,750
-
-
Other assets
11
1,692
2,961
2,538
--------
--------
--------
220,176
245,203
220,369
--------
--------
--------
Current assets
Trade and other receivables
11
12,823
13,065
20,890
Available-for-sale financial assets
4
2,247
3,018
2,561
Financial assets at fair value through profit or loss
5
3,772
5,987
3,704
Current tax asset
9
-
-
Derivative financial instruments
15
192
-
1,125
Cash at bank
12
12,340
9,996
3,807
--------
--------
--------
31,383
32,066
32,087
--------
--------
--------
Total assets
251,559
277,269
252,456
--------
--------
--------
Equity
Share capital
13
-
-
-
Share premium and treasury shares
13
178,597
178,597
178,597
Other reserves
3,839
7,485
2,937
Retained earnings
(24,599)
(17,908)
(21,560)
--------
--------
--------
Total equity
157,837
168,174
159,974
--------
--------
--------
Liabilities
Non-current liabilities
Bank loans
16
67,511
-
-
Deferred tax
2,535
2,413
2,272
--------
--------
--------
70,046
2,413
2,272
--------
--------
--------
Current liabilities
Bank loans
16
3,315
87,635
78,092
Bank overdrafts
12
18,817
13,527
10,355
Short term bank loans
-
2,377
-
Trade and other payables
17
1,544
2,752
1,758
Current tax payable
-
13
5
Derivative financial instruments
15
-
378
-
--------
--------
--------
23,676
106,682
90,210
--------
--------
--------
Total liabilities
93,722
109,095
92,482
--------
--------
--------
Total equity and liabilities
251,559
277,269
252,456
--------
--------
--------
Net asset valuation per share
Basic and diluted net asset valuation per share (US $)
18
0.81
0.86
0.82
--------
--------
--------
Livermore Investment Group Limited
Condensed Consolidated Statement of Profit or Loss
for the six months ended 30 June 2015
Note
Six months
ended
30 June
2015
Unaudited
Six months
ended
30 June
2014
Unaudited
Year
ended
31 December
2014
Audited
US $000
US $000
US $000
Investment Income
Interest and dividend income
20
11,850
14,069
26,619
Investment property income
21
2,738
2,698
5,159
Loss on investments
22
(10,944)
(616)
(9,885)
------
------
------
Gross profit
3,644
16,151
21,893
Other income
-
450
462
Administrative expenses
23
(1,879)
(2,665)
(7,219)
------
------
------
Operatingprofit
1,765
13,936
15,136
Finance costs
24
(1,276)
(2,457)
(7,286)
Finance income
24
1,677
11
109
------
------
------
Profit before taxation
2,166
11,490
7,959
Taxation charge
(206)
(634)
(755)
------
------
------
Profit for period / year
1,960
10,856
7,204
------
------
------
Earnings per share
Basic and diluted earnings per share (US $)
26
0.------01
0.06
0.04
------
------
------
Livermore Investment Group Limited
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2015
Six months
ended
30 June
2015
Unaudited
Six months
ended
30 June
2014
Unaudited
Year
ended
31 December
2014
Audited
US $000
US $000
US $000
Profit for the period / year
1,960
10,856
7,204
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
- Available for sale financial assets - fair value losses
(11,032)
(5,258)
(17,128)
- Foreign exchange gains / (losses) from translation of subsidiaries
529
(3)
(626)
------
------
------
(8,543)
5,595
(10,550)
------
------
------
Reclassification to profit or loss
Available for sale financial assets
- Reclassification to profit or loss due to disposals
577
(2,409)
(1,709)
- Reclassification to profit or loss due to impairment
10.828
1,616
8,861
------
------
------
11,405
(793)
7,152
------
------
------
Total comprehensive income for the period / year
2,862
4,802
(3,398)
------
------
------
The total comprehensive income for the period is wholly attributable to the owners of the parent company.
Livermore Investments Group Limited
Condensed Consolidated Statement of Changes in Equity
for the period ended 30 June 2015
Note
Share
capital
Share
premium
Treasury Shares
Share
option reserve
Translation reserve
Investment revaluation reserve
Retained earnings
Total
US $000
US $000
US $000
US $000
US $000
US $000
US $000
US $000
Balance at 1 January 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
-
-
-
-
-
(1,709)
-
(1,709)
- Reclassification to profit or loss due to impairment
-
-
-
-
-
8,861
-
8,861
Foreign exchange loss 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
Dividends
-
-
-
-
-
-
(4,999)
(4,999)
------
------
------
------
------
------
------
------
Transactions with owners
-
-
-
-
-
-
(4,999)
(4,999)
------
------
------
------
------
------
------
------
Profit for the period
-
-
-
-
-
-
1,960
1,960
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses
-
-
-
-
-
(11,032)
-
(11,032)
- Reclassification to profit or loss due to disposals
-
-
-
-
-
577
-
577
- Reclassification to profit or loss due to impairment
-
-
-
-
-
10,828
-
10,828
Foreign exchange gain arising from translation of subsidiaries
-
-
-
-
529
-
-
529
------
------
------
------
------
------
------
------
Total comprehensive income for the period
-
-
-
-
529
373
1,960
2,862
------
------
------
------
------
------
------
------
Balance at 30 June 2015
-
215,499
(36,902)
5,777
(885)
(1,053)
(24,599)
157,837
------
------
------
------
------
------
------
------
Comparative period
Note
Share
capital
Share
premium
Treasury Shares
Share
option reserve
Translation reserve
Investment revaluation reserve
Retained earnings
Total
US $000
US $000
US $000
US $000
US $000
US $000
US $000
US $000
Balance at 1 January 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 period
-
-
-
-
-
-
10,856
10,856
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses
-
-
-
-
-
(5,258)
-
(5,258)
- Reclassification to profit or loss due to disposal
-
-
-
-
-
(2,409)
-
(2,409)
- Reclassification to profit or loss due to impairment
-
-
-
-
-
1,616
-
1,616
Foreign exchange loss arising from translation of subsidiaries
-
-
-
-
(3)
-
-
(3)
------
------
------
------
------
------
------
------
Total comprehensive income for the period
-
-
-
-
(3)
(6,051)
10,856
4,802
------
------
------
------
------
------
------
------
Balance at 30 June 2014
-
215,499
(36,902)
5,777
(791)
2,499
(17,908)
168,174
------
------
------
------
------
------
------
------
Livermore Investments Group Limited
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2015
Note
Six months
ended
30 June
2015
Unaudited
Six months
ended
30 June
2014
Unaudited
Year
ended
31 December
2014
Audited
US $000
US $000
US $000
Cash flows from operating activities
Profit before tax
2,166
11,490
7,959
Adjustments for:
Depreciation expense
23
4
-
13
Interest expense
24
808
2,159
3,780
Interest and dividend income
20
(11,850)
(14,069)
(26,619)
Loss on investments
22
10,944
616
9,885
Exchange differences
(1,390)
298
3,506
------
------
------
682
494
(1,476)
Changes in working capital
Decrease / (increase) in trade and other receivables
9,271
(9,422)
(16,292)
Decrease in trade and other payables
(162)
(30)
(1,050)
------
------
------
Cash flows from operations
9,791
(8,958)
(18,818)
Interest and dividend received
11,197
13,981
25,773
Tax paid
(13)
(134)
(167)
------
------
------
Net cash generated from operating activities
20,975
4,889
6,788
------
------
------
Cash flows from investing activities
Purchase of property, plant and equipment
-
-
(32)
Acquisition of investments
(11,118)
(22,498)
(27,340)
Proceeds from sale of investments
10,743
29,038
33,262
Settlement of derivative
1,332
-
-
Acquisition of associate
9
(3,750)
-
-
Capital return of joint venture
9
-
5,000
5,000
------
------
------
Net cash from investing activities
(2,793)
11,540
10,890
------
------
------
Cash flows from financing activities
Purchases of own shares
-
-
-
Proceeds from bank loans
72,430
7,242
7,242
Repayment of bank loans
(84,520)
(8,704)
(11,547)
Interest paid
(870)
(2,159)
(3,884)
Settlement of litigation
-
(26)
(26)
Dividends paid
(4,999)
(4,999)
(4,999)
------
------
------
Net cash from financing activities
(17,959)
(8,646)
(13,214)
------
------
------
Net increase / (decrease) in cash and cash equivalents
223
7,783
4,464
Cash and cash equivalents at the beginning of the period / year
(6,548)
(11,038)
(11,038)
Exchange differences on cash and cash equivalents
(181)
(276)
93
Translation differences on foreign operations' cash and cash equivalents
29
-
(67)
------
------
------
Cash and cash equivalents at the end of the period / year
12
(6,477)
(3,531)
(6,548)
------
------
------
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 2014 Annual Report, available on www.livermore-inv.com. The application of the IFRS pronouncements that became effective as of 1 January 2015 has 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 2014. 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 2015. 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 2014.
The financial information for the year ended 31 December 2014 is extracted from the Company's consolidated financial statements for the year ended 31 December 2014 which contained an unqualified audit report.
4. Available-for-sale financial assets
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Non-current assets
Fixed income investments
73,914
91,962
82,217
Private equities
6,187
9,114
7,891
Financial and minority holdings
9,266
9,068
9,266
------
------
------
89,367
110,144
99,374
------
------
------
Current assets
Public equities investments
1,156
1,959
1,491
Hedge funds
1,091
1,057
1,070
Other investments
-
2
-
------
------
------
2,247
3,018
2,561
------
------
------
For description of each of the above categories, refer to note 6.
During the six months ended 30 June 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 for the six months ended 30 June 2015, of USD 10.828m (June 2014: USD 1.616m, December 2014: USD 8.861m), are included within loss on investments (note 22), and represent impairment losses arising due to:
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Significant fall in value
2,175
1,400
5,693
Prolonged fall in value
3,560
216
1,328
Significant and prolonged fall in value
5,093
-
1,840
------
------
------
10,828
1,616
8,861
------
------
------
5. Financial assets at fair value through profit or loss
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Non-current assets
Private equities
330
569
330
Real estate entities
1,188
1,553
1,476
------
------
------
1,518
2,122
1,806
------
------
------
Current assets
Fixed income investments
1,649
1,645
1,623
Public equity investments
2,080
3,845
1,717
Hedge funds
43
199
65
Other investments
-
298
299
------
------
------
3,772
5,987
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 stock exchanges.
Real estate entities relate to investments in real estate projects.
Other investments are investments not otherwise included in the categories above.
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.
The investment in associate is valued based on its underlying credit agreement. The credit agreement's fair value is provided by counter party bank.
Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into the fair value hierarchy as follows:
30 June 2015
Unaudited
US$000
Unaudited
US$000
Unaudited
US$000
Unaudited US $000
Level 1
Level 2
Level 3
Total
Assets
Fixed income investments
1,648
73,914
-
75,562
Private equities
-
-
6,517
6,517
Financial and minority holdings
-
-
9,266
9,266
Public equity investments
3,236
-
-
3,236
Hedge funds
-
1,134
-
1,134
Real estate entities
-
-
1,189
1,189
Forward contract
-
192
-
192
------
------
------
------
4,884
75,240
16,972
97,096
------
------
------
------
30 June 2014
Unaudited
US$000
Unaudited
US$000
Unaudited
US$000
Unaudited US $000
Level 1
Level 2
Level 3
Total
Assets
Fixed income investments
1,645
91,962
-
93,607
Private equities
-
-
9,683
9,683
Financial and minority holdings
-
-
9,068
9,068
Public equity investments
5,804
-
-
5,804
Hedge funds
-
1,256
-
1,256
Real estate entities
-
-
1,553
1,553
Other investments
298
-
2
300
------
------
------
------
7,747
93,218
20,306
121,271
------
------
------
------
Liabilities
Interest rate swaps
-
378
-
378
------
------
------
------
-
378
-
378
------
------
------
------
31 December 2014
Audited
US$000
Audited
US$000
Audited
US$000
Audited
US $000
Level 1
Level 2
Level 3
Total
Assets
Fixed income investments
1,623
82,217
-
83,840
Private equities
-
-
8,221
8,221
Financial and minority holdings
-
-
9,266
9,266
Public equity investments
3,208
-
-
3,208
Hedge funds
-
1,135
-
1,135
Real estate entities
-
-
1,476
1,476
Other investments
299
-
-
299
Total return swaps
-
-
1,125
1,125
------
------
------
------
5,130
83,352
20,088
108,570
------
------
------
------
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
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
US $000
US $000
US $000
US $000
US $000
US $000
US $000
As at 1 January 2015
9,266
7,891
-
1,476
330
1,125
20,088
Purchases
-
-
-
-
-
-
-
Settlement
-
-
-
-
-
(1,332)
(1,332)
Losses recognised in:
-Profit or loss
-
(890)
-
-
-
207
(683)
-Other comprehensive income
-
(814)
-
-
-
-
(814)
Exchange difference
-
-
-
(287)
-
-
(287)
------
------
------
------
------
------
------
As at 30 June 2015
9,266
6,187
-
1,189
330
-
16,972
------
------
------
------
------
------
------
Available-for-sale
At fair value through profit or loss
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
US $000
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
------
------
------
------
------
------
------
Available-for-sale
At fair value through profit or loss
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
US $000
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
-
323
-
-
-
-
323
(Losses) / gains recognised in:
-Profit or loss
-
(1,470)
-
68
(239)
1,125
(516)
-Other comprehensive income
198
(43)
(2)
-
-
-
153
Exchange difference
-
-
-
(180)
-
-
(180)
------
------
------
------
------
------
------
As at 31 December 2014
9,266
7,891
-
1,476
330
1,125
20,088
------
------
------
------
------
------
------
The above recognised (losses) / gains can be allocated as follows:
Available-for-sale
At fair value through profit or loss
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
Six month ended 30 June 2015
US $000
US $000
US $000
US $000
US $000
US $000
US $000
Profit or loss
-Financial assets held at period-end
-
(890)
-
-
-
207
(683)
------
------
------
------
------
------
------
-
(890)
-
-
-
207
(683)
------
------
------
------
------
------
------
Other comprehensive income
-Financial assets held at period-end
-
(814)
-
-
-
-
(814)
------
------
------
------
------
------
------
-
(814)
-
-
-
-
(814)
------
------
------
------
------
------
------
Net (losses) / gains for period
-
(1,704)
-
-
-
207
(1,497)
------
------
------
------
------
------
------
Available-for-sale
At fair value through profit or loss
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
Six month ended 30 June 2014
US $000
US $000
US $000
US $000
US $000
US $000
US $000
Profit or loss
-Financial assets held at period-end
-
(217)
-
-
-
-
(217)
------
------
------
------
------
------
------
-
(217)
-
-
-
-
(217)
------
------
------
------
------
------
------
Other comprehensive income
-Financial assets held at period-end
-
118
-
-
-
-
118
------
------
------
------
------
------
------
-
118
-
-
-
-
118
------
------
------
------
------
------
------
Net losses for period
-
(99)
-
-
-
-
(99)
------
------
------
------
------
------
------
Available-for-sale
At fair value through profit or loss
Derivative financial instruments
Financial and minority holdings
Private equities
Other investments
Real estate
Private equities
Total return swap
Total
Year ended 31 December 2014
US $000
US $000
US $000
US $000
US $000
US $000
US $000
Profit or loss
-Financial assets held at period-end
-
(1,470)
-
68
(239)
1,125
(516)
------
------
------
------
------
------
------
-
(1,470)
-
68
(239)
1,125
(516)
------
------
------
------
------
------
------
Other comprehensive income
-Financial assets held at period-end
198
(43)
(2)
-
-
-
153
------
------
------
------
------
------
------
198
(43)
(2)
-
-
-
153
------
------
------
------
------
------
------
Net gains / (losses) for year
198
(1,513)
(2)
68
(239)
1,125
(363)
------
------
------
------
------
------
------
The Group has not developed any quantitative unobservable inputs for measuring the fair value of its level 3 financial assets at the reporting date. Instead the Group used prices from third - party pricing information without adjustment.
A reasonable change in any individual significant input used in the level 3 valuations is not anticipated to have a significant change in fair values as above.
8. Investment property
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Valuation as at 1 January
116,609
129,916
129,916
Fair value gain - recognised in profit or loss
-
-
61
Exchange differences
7,203
37
(13,368)
------
------
------
As at 30 June / 31 December
123,812
129,953
116,609
------
------
------
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 2014 on the basis of open market value (as disclosed in the 2014 annual report) 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 (note 16) is secured on the property itself.
9. Investments in associate and joint venture
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
As at 1 January
-
5,524
5,524
Additions
3,750
-
-
Capital return
-
(5,000)
(5,000)
Fair value (loss) / gain
-
(524)
(524)
------
------
------
As at 30 June / 31 December
3,750
-
-
------
------
------
Fair value
Name of investee
Type of investment
Place of incorporation
Principal activity
Proportion of voting rights held
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Silvermore Ltd
Joint venture
Cayman Islands
Investment holding
50%
-
-
-
Highbridge*
Associate
Cayman Islands
Investment holding
25%
3,750
-
-
-----
-----
-----
3,750
-
-
------
------
------
*Highbridge Loan Management Warehouse 7-2015, Ltd is held by the subsidiary Mountview Holdings Limited.
Silvermore was dissolved in January 2015
The activities of the associate are in line with the Group's activities and strategy.
The associate (Highbridge) does not prepare any financial information. As at the period end Highbridge was a contractual party to a credit agreement with BNP Paribas. As at that date Highbridge 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%
Investment vehicle
Silvermore 2 Ltd
Cayman Islands
Ordinary shares
100%
Investment vehicle
Sycamore Loan Strategies Ltd
Cayman Islands
Ordinary shares
100%
Investment vehicle
Sycamore Loan Funding Ltd
Cayman Islands
Ordinary shares
100%
Investment vehicle
Livermore Israel Investments Ltd
Israel
Ordinary shares
100%
Holding of investments
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
* Held by Enaxor S.a.r.l.
11. Trade and other receivables
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Financial items
Accrued interest and dividend income
735
112
514
Amounts due by related parties (note 27)
2,512
500
2,497
Other receivables
8,340
11,334
16,757
------
------
------
11,587
11,946
19,768
Non-Financial items
Other assets (note 27)
2,820
3,948
3,384
Prepayments
108
132
276
------
------
------
14,515
16,026
23,428
------
------
------
Allocated as:
Current assets
12,823
13,065
20,890
Non-current assets
1,692
2,961
2,538
------
------
------
14,515
16,026
23,428
------
------
------
Other receivables include an amount of USD 7.5m that the Companyinvested during the periodin 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 MJX Asset Management LLC. In June 2015, the said CLO was priced and the loans accumulated in the warehouse were agreed to be transferred at purchase price to the CLO on 10July, 2015. Consequently, Livermore's investment amount plus net carry earned became receivable as of end of June. On 10 July 2015 Livermore received USD 8.2m.
12. Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement comprise the following at the reporting date:
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Cash at bank
12,340
9,996
3,807
Bank overdraft used for cash management purposes
(18,817)
(13,527)
(10,355)
------
------
------
Cash and cash equivalents for the purposes of the consolidated statement of cash flows
(6,477)
(3,531)
(6,548)
------
------
------
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 with no par value.
As at 30 June 2015 the Company had 108,830,818 ordinary shares held in treasury. The Company did not purchase any additional ordinary shares to be held in treasury during the period.
In the consolidated statement of financial position the amount included comprises of:
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Share premium
215,499
215,499
215,499
Treasury shares
(36,902)
(36,902)
(36,902)
------
------
------
178,597
178,597
178,597
------
------
------
14. Share options
The Company has 11,340,000 outstanding share options at the end of the period. Options are normally exercisable in three equal tranches, on the first, second and third anniversary of the grant. There have been no changes to the term of the options in issue during the period. No options have been exercised during the period.
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Outstanding options
At 1 January
11,340,000
11,340,000
11,340,000
---------
---------
---------
At 30 June / 31 December
11,340,000
11,340,000
11,340,000
---------
---------
---------
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Exercisable options
At 1 January
11,340,000
11,340,000
11,340,000
---------
---------
---------
At 30 June / 31 December
11,340,000
11,340,000
11,340,000
---------
---------
---------
15. Derivative financial instruments
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Current assets
Total return swap
-
-
1,125
Forward contract
192
-
-
------
------
------
Current liabilities
Interest rate swaps
-
378
-
------
------
------
16. Bank loans
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
As at 1 January
78,092
87,974
87,974
Additions
72,724
-
-
Repayments
(84,520)
(364)
(830)
Exchange differences
4,824
25
(9,052)
Refinancing fees
(294)
-
-
------
------
------
As at 30 June / 31 December
70,826
87,635
78,092
------
------
------
Allocated as:
Current bank loans
3,315
87,635
78,092
Non-current bank loans
67,511
-
-
------
------
------
70,826
87,635
78,092
------
------
------
The bank loan relates to Wyler Park investment property purchase (note 8) and is secured on this property. The loan balance was fully repayable on 12 July 2014. The bank loan was extended for a six month period and became fully repayable on 31 January 2015. Additionally in January 2015, the Group successfully refinanced the loan with a new bank loan. The principal amount of the new loan facility is CHF 68 million (USD 73 million). The facility is committed until at least 30 June 2019. Following the lease extension agreement with SBB from 2019 to 2029, an additional CHF 10 million (USD 10.7 million) is available under this facility.
The weighted average effective Interest of the loan for the period was 1.80%.
17. Trade and other payables
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Financial items
Trade payables
500
464
727
Amounts due to related parties (note 27)
565
1,247
579
Accrued expenses
394
967
430
------
------
------
1,459
2,678
1,736
Non-Financial items
VAT payable
85
74
22
------
------
------
1,544
2,752
1,758
------
------
------
18. Net asset value per share
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
Net assets attributable to ordinary shareholders (USD 000)
157,837
168,174
159,974
---------
---------
---------
Closing number of ordinary share in issue
195,289,583
195,289,583
195,289,583
---------
---------
---------
Basic net asset value per share (USD)
0.81
0.86
0.82
---------
---------
---------
Net assets attributable to ordinary shareholders (USD 000)
157,837
168,174
159,974
Dilutive share options - exercise amount
230
255
234
---------
---------
---------
Net assets attributable to ordinary shareholders including the effect of potentially diluted shares (USD 000)
158,067
168,429
160,208
-------------
-------------
-------------
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)
0.81
0.86
0.82
---------
---------
---------
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 2015, 30 June 2014 and 31 December 2014. All other share options do not impact the diluted net asset value per share for June 2015, June 2014 and December 2014 as their exercise price was higher than the net asset value per Company's share at 30 June 2015, 30 June 2014 and 31 December 2014.
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 2015 - Unaudited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
Segment results
2015
2015
2015
US $000
US $000
US $000
Investment income
Interest and dividend income
11,850
-
11,850
Investment property income
-
2,738
2,738
Loss on investments
(10,944)
-
(10,944)
------
------
------
Gross profit
906
2,738
3,644
Administrative expenses
(1,535)
(344)
(1,879)
------
------
------
Operating profit
(629)
2,394
1,765
Finance costs
(582)
(694)
(1,276)
Finance income
1,677
-
1,677
------
------
------
Profit before taxation
466
1,700
2,166
Taxation charge
-
(206)
(206)
------
------
------
Profit for the period
466
1,494
1,960
------
------
------
Segment assets
126,416
125,143
251,559
------
------
------
Segment liabilities
19,762
73,960
93,722
------
------
------
Six months ended 30 June 2014 - Unaudited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
Segment results
2014
2014
2014
US $000
US $000
US $000
Investment income
Interest and dividend income
14,069
-
14,069
Investment property income
-
2,698
2,698
(Loss) / gain on investments
(2,016)
1,400
(616)
------
------
------
Gross profit
12,053
4,098
16,151
Other income
450
-
450
Administrative expenses
(2,033)
(632)
(2,665)
------
------
------
Operating profit
10,470
3,466
13,936
Finance costs
(622)
(1,835)
(2,457)
Finance income
11
-
11
------
------
------
Profit before taxation
9,859
1,631
11,490
Taxation charge
-
(634)
(634)
------
------
------
Profit for the period
9,859
997
10,856
------
------
------
Segment assets
146,304
130,965
277,269
------
------
------
Segment liabilities
17,794
91,301
109,095
------
------
------
Year ended 31 December 2014 - Audited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
Segment results
2014
2014
2014
US $000
US $000
US $000
Investment income
Interest and dividend income
26,619
-
26,619
Investment property income
-
5,159
5,159
(Loss) / gain on investments
(9,946)
61
(9,885)
------
------
------
Gross profit
16,673
5,220
21,893
Other income
462
-
462
Administrative expenses
(5,417)
(1,802)
(7,219)
------
------
------
Operating profit
11,718
3,418
15,136
Finance costs
(4,254)
(3,032)
(7,286)
Finance income
109
-
109
------
------
------
Profit before taxation
7,573
386
7,959
Taxation charge
-
(755)
(755)
------
------
------
Profit for the year
7,573
(369)
7,204
------
------
------
Segment assets
134,815
117,641
252,456
------
------
------
Segment liabilities
11,278
81,204
92,482
------
------
------
The Group's investment income and its investments are divided into the following geographical areas:
Six months ended 30 June 2015 - Unaudited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
2015
2015
2015
US $000
US $000
US $000
Investment Income
Switzerland
-
2,738
2,738
Other European countries
(52)
-
(185)
United States
1,360
-
1,880
India
(820)
-
(795)
Asia
418
-
6
------
------
------
906
2,738
3,644
------
------
------
Investments
Switzerland
-
123,812
123,812
Other European countries
5,004
-
5,004
United States
74,931
-
74,931
India
12,475
-
12,475
Asia
4,686
-
4,686
------
------
------
97,096
123,812
220,908
------
------
------
Six months ended 30 June 2014 - Unaudited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
2014
2014
2014
US $000
US $000
US $000
Investment Income
Switzerland
-
3,045
3,045
Other European countries
116
-
116
United States
13,658
-
13,658
India
(311)
-
(311)
Asia
(357)
-
(357)
------
------
------
13,106
3,045
16,151
------
------
------
Investments
Switzerland
-
129,953
129,953
Other European countries
7,243
-
7,243
United States
92,033
-
92,033
India
15,148
-
15,148
Asia
6,847
-
6,847
------
------
------
121,271
129,953
251,224
------
------
------
Year ended 31 December 2014 - Audited
Equity and debt
instruments
investment
activities
Investment
property
activities
Total per
financial
statements
2014
2014
2014
US $000
US $000
US $000
Investment Income
Switzerland
-
6,732
6,732
Other European countries
(723)
-
(723)
United States
18,400
-
18,400
India
(1,729)
-
(1,729)
Asia
(787)
(787)
------
------
------
15,161
6,732
21,893
------
------
------
Investments
Switzerland
-
116,609
116,609
Other European countries
6,225
-
6,225
United States
83,843
-
83,843
India
14,219
-
14,219
Asia
4,283
-
4,283
------
------
------
108,570
116,609
225,179
------
------
------
Investment income, comprising interest and dividend income, gains or losses on investments, and investment property income, is allocated on the basis of the customer's geographical location in the case of the investment property activities segment and the issuer's location in the case of the equity and debt instruments investment activities segment. Investments are allocated based on the issuer's location.
During the period, 89% of the investment property rent relates to rental income from a single customer (SBB - Swiss national transport authority) in the investment property activities segment (June 2014: 89%, December 2014: 89%).
20. Interest and dividend income
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Interest from investments
63
64
434
Dividend income
11,787
14,005
26,185
------
------
------
11,850
14,069
26,619
------
------
------
21. Investment property income
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Gross rental income
2,862
3,039
5,923
Direct expenses
(124)
(341)
(764)
------
------
------
2,738
2,698
5,159
------
------
------
All direct expenses relate to the generation of rental income.
22. Loss on investments
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Gain / (loss) on sale of investments
(577)
2,409
1,709
Investment property revaluation
-
-
61
Foreign exchange losses
-
(22)
(232)
Loss due to impairment of available-for-sale financial assets
(10,828)
(1,616)
(8,861)
Fair value gains / (losses) on financial assets through profit or loss
124
(2,398)
(5,067)
Fair value loss on investment in joint venture
-
(524)
(524)
Fair value gains on derivative instruments
399
1,575
3,133
Bank custody fees
(62)
(40)
(104)
------
------
------
(10,944)
(616)
(9,885)
------
------
------
The investments disposed of during the period resulted in the following realised gains / (losses) (i.e. in relation to their original acquisition cost):
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Available-for-sale
(822)
(1,982)
(2,682)
At fair value through profit or loss
(87)
(534)
(2,374)
------
------
------
(909)
(2,516)
(5,056)
------
------
------
23. Administrative expenses
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Legal expenses
55
41
118
Directors' fees and expenses
996
999
3,522
Professional and consulting fees
299
762
1,299
Other salaries and expenses
124
200
1,152
Office cost
153
130
299
Depreciation
4
-
13
Other operating expenses
213
477
657
Audit fees
35
56
159
------
------
------
1,879
2,665
7,219
------
------
------
24. Finance costs and income
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
US $000
US $000
US $000
Finance costs
Bank interest on investment property loan*
694
1,828
3,032
Other swap interest cost
-
173
496
Other bank interest
114
158
252
Foreign exchange loss
468
298
3,506
------
------
------
1,276
2,457
7,286
Finance income
Foreign exchange gain
1,677
11
109
------
------
------
NetFinance costs
(401)
2,446
7,177
------
------
------
*Includes interest payments on a related interest rate swap until July 2014.
25. Dividends
In March 2015, the Company announced an interim dividend of USD 5m (USD 0.0256 per ordinary share).
The Board of Directors will decide on the Company's dividend policy for 2015 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.
26. Earnings per share
Basic profit per share has been calculated by dividing the net profit attributable to ordinary shareholders of the parent by the weighted average number of shares in issue of the parent during the relevant financial periods.
Diluted profit per share is calculated after taking into consideration other potentially dilutive shares in existence during the period.
Six months
ended 30 June
2015
Unaudited
Six months
ended 30 June
2014
Unaudited
Year ended
31 December
2014
Audited
Profit for the year attributable to ordinary shareholders of the parent (USD 000)
1,960
10,856
7,204
---------
---------
---------
Weighted average number of ordinary shares outstanding
195,289,583
195,289,583
195,289,583
---------
---------
---------
Basic earnings per share (USD)
0.01
0.06
0.04
---------
---------
---------
Weighted average number of ordinary shares outstanding
195,289,583
195,289,583
195,289,583
Dilutive effect of share options
77,318
95,687
84,418
---------
---------
---------
Weighted average number of ordinary shares including the effect of potentially dilutive shares
195,362,901
195,385,270
195,374,001
---------
---------
---------
Diluted earnings per share (USD)
0.01
0.06
0.04
---------
---------
---------
The Share options granted on 13 May 2008 have a dilutive effect on the weighted average number of ordinary shares only, given that their exercise price is lower than the average market price of the Company's shares on the London Stock Exchange (AIM division) during the period ended 30 June 2015, 30 June 2014 and the year ended 31 December 2014. All other share options do not impact the diluted earnings per share for June 2015, June 2014 and December 2014 as their exercise price was higher than the average market price of the Company's shares during the period ended 30 June 2015, 30 June 2014 and the year ended 31 December 2014.
27. Related party transactions
The Group is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which
at 30 June 2015 held 79.06% of the Company's effective voting rights.
30 June
2015
Unaudited
30 June
2014
Unaudited
31 December
2014
Audited
US $000
US $000
US $000
Amounts receivable from key management
Other assets
2,820
3,948
3,384
(1)
Directors' current accounts
2,512
500
2,497
-------
-------
-------
5,332
4,448
5,881
-------
-------
-------
Amounts payable to other related party
Loan payable
(499)
(1,212)
(499)
(2)
-------
-------
-------
(499)
(1,212)
(499)
-------
-------
-------
Amounts payable to key management
Directors' current accounts
(66)
(35)
(80)
-------
-------
-------
(66)
(35)
(80)
-------
-------
-------
Key management compensation
Short term benefits
Executive directors' fees
398
397
795
(3)
Executive directors' reward payments
564
564
2,628
Non-executive directors' fees
34
38
74
Non-executive directors' reward payments
-
-
25
-------
-------
-------
996
999
3.522
-------
-------
-------
(1) Loans of USD 5.523m were made to a key management employee for the acquisition of shares in the Company. Interest was payable on these loans at 6 month US LIBOR plus 0.25% per annum and the loans were secured on the shares acquired. The loans were repayable on the earlier of the employee leaving the Company or April 2013. In December 2012 the Board decided to renew the outstanding amount of these loans for a period of another five years. Based on the Board's decision, the outstanding amount is reduced annually on a straight line over five years, as long as the key management employee remains with the Company. The relevant reduction in the loan amount for the period was USD 0.564m. The loans are classified as "other assets" and are included under trade and other receivables (note 11).
(2) A loan with a balance at 30 June 2015 of USD 0.499m (June 2014: USD 1.2m, December 2014: USD 0.499m) has been received from a related company Chanpak Ltd. The loan is free of interest, it is unsecured and is repayable on demand. This loan is included within trade and other payables.
(3) These payments were made directly to companies to which they are related.
No social insurance and similar contributions nor any other defined benefit contributions plan costs incurred for the Group in relation to its key management personnel in either 2015 or 2014.
Noam Lanir, through an Israeli partnership, is the major shareholder of Babylon Limited, an Israel based Internet Services Company. The Group as of 30 June 2015 held a total of 1.941m shares at a value of USD 0.997m (June 2014: 1.941m shares at a value of USD 2.8m, December 2014: 1.941m shares at a value of USD 0.922m) which represents 3.8% of its effective voting rights. The investment in Babylon Ltd is included within public equity investments under financial assets at fair value through profit or loss (note 5).
During the period the Group received administrative services of USD 0.021m (June 2014: USD 0.062m, December 2014: USD 0.103m) in connection with investments from an other related company Mash Medical Life Tree Marketing Ltd.
28. Litigation
Fairfield Sentry Ltd vs custodian bank and beneficial owners
One of the custodian banks that the Group uses faces a contingent claim up to USD 2.1m, and any interest as will be decided by a US court and related legal fees, with regards to the redemption of shares in Fairfield Sentry Ltd, which were brought in 2008 at the request of Livermore and on its behalf. The same case was also filed in BVI where the Privy Council ruled against the plaintiffs.
As a result of the surrounding uncertainties over the existence of any obligation for Livermore, as well as for the potential amount of exposure, the Directors cannot form an estimate of the outcome for this case and therefore no provision has been made.
Ex employee vs Empire Online Ltd
In 2007 an ex employee of Empire Online Limited (the Company's former name) filed a law suit against one of its Directors and the Company in the Labor Court in Tel Aviv. According to the lawsuit the plaintiff claims compensation relating to the sale of all commercial activities of Empire Online Limited until the end of 2006, and the dissolution of the company and the terms of termination of his employment with Empire Online Limited. The litigation procedure is in progress in Israel.
Prior to the filing of the lawsuit in Israel, the Company filed a claim against the plaintiff in the Court in Cyprus based upon claims concerning breach of faith of the plaintiff towards his employers. Litigation was completed in Israel and a final decision is pending.
On 5 March 2014, the Labor Court in Tel Aviv issued a ruling in which the court denied most of the plaintiff's claims and accepted only his claim for termination of employment. On 16 April 2014 the plaintiff filed an appeal against the ruling. On 10 June 2015 the court held a hearing of the appeal but no final outcome has been reached.
No further information is provided on the above case as the Directors consider it could prejudice the outcome of the appeal.
29. Commitments
The Group has no capital or other commitments as at 30 June 2015.
30. Events after the reporting date
In September 2015, the lease with SBB for the Wyler Park property was extended from 2019 to 2029.
31. Preparation of interim statements
Interim condensed consolidated financial statements are unaudited. Consolidated financial statements for Livermore Investments Group Limited for the year ended 31 December 2014, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, on which the auditors gave an unqualified audit report are available from the Company's website www.livermore-inv.com.
Report by the Independent Auditors on Review of Condensed Interim Consolidated Financial Statements to the Board of Directors of Livermore Investments Group Limited
Independent Review Report on the Interim Condensed Consolidated Financial Statements
We have reviewed the accompanying interim condensed consolidated financial statements of Livermore Investments Group Limited (the ''Company'') and its subsidiaries (the ''Group'') on pages 9 to 34, which comprise the condensed consolidated statement of financial position as at 30 June 2015 and the condensed consolidated statement of profit or loss, and condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months then ended, and other explanatory notes.
Board of Directors' Responsibility for the Interim Condensed Consolidated Financial Statements
The Company's Board of Directors is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union.
Accountant's Responsibility
Our responsibility is to express a conclusion to the Company on these interim condensed consolidated financial statements, based on our review. We conducted our review in accordance with International Standard on Auditing 2410 ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the interim condensed consolidated financial statements are free of material misstatement.
A review of interim financial information is limited primarily to making inquiries of Company personnel and applying analytical and other review procedures to financial data. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements does not present fairly, in all material respects, the financial position of Livermore Investments Group Limited and its subsidiaries as at 30 June 2015 and of its financial performance and its cash flows for the six month period then ended in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union..
Other Matter
This report, including the conclusion, has been prepared for and only for the Company's members and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.
Augoustinos Papathomas
Certified Public Accountant and Registered Auditor
for and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered Auditors
Limassol, 24 September 2015
This information is provided by RNSThe company news service from the London Stock ExchangeENDIR QZLFLEKFBBBL
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