TIDMLIV
RNS Number : 9548S
Livermore Investments Group Limited
28 May 2009
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LIVERMORE INVESTMENTS GROUP LIMITED
AUDITED RESULTS FOR YEAR ENDED 31 DECEMBER 2008
Livermore Investments Group Limited (the "Group" or "Livermore") today announces
its preliminary results for the year ended 31 December 2008.
Highlights
* Net Asset Value per share - USD 0.63 (GBP 0.43).
* Cash, cash equivalents and marketable securities at 31 December 2008 - USD
39.8m.
* Revenues from operations - USD 17.5m.
* Successfully completed the construction of the residential units in Wylerpark,
Bern, of which 75% are already let.
* Total administrative expenses (excluding amortisation and non-recurring items)
were USD 3.3m, representing 1.5% of the average NAV
* Loss before Interest, Tax, Depreciation, Amortization and non recurring items -
USD 58.6m mainly attributed to unrealized loss on holdings in associated company
(Atlas Estates Ltd.) USD 22.7m and additional unrealized losses of USD 15.4m.
* Net loss after tax - USD 61.9m.
* Total pay out during the year of 4.1 cents per share, attributed to 2007
dividend (USD 4.1m cash, and USD 5.7m scrip), and share buy back for USD 1.8m
Commenting on the results, Noam Lanir, CEO of Livermore Investments Group
Limited, said:
"2008 was a challenging year, characterised by unprecedented levels of turmoil
in financial markets and deteriorating global economic conditions. In 2008 the
company maintained a strong liquidity position which enables us to consider
investment opportunities in 2009. I am pleased with the progress of our
Wylerpark investment in Switzerland, with almost all of the residential units
now occupied. The company is well positioned to take advantage of market
conditions and I am confident that our diversified portfolio will generate value
to our shareholders."
Enquiries:
+--------------------------------------------------------+--------------------+
| Livermore Investments Group Limited | |
+--------------------------------------------------------+--------------------+
| Doron Yassur, Chief Financial Officer | +97 25 4255 5900 |
+--------------------------------------------------------+--------------------+
| | |
+--------------------------------------------------------+--------------------+
| Matrix Corporate Capital LLP | |
+--------------------------------------------------------+--------------------+
| Stephen Mischler | +44 20 3206 7203 |
+--------------------------------------------------------+--------------------+
| Tim Graham | +44 20 3206 7206 |
+--------------------------------------------------------+--------------------+
| | |
+--------------------------------------------------------+--------------------+
Chairman's and Chief Executive's Review
Introduction
We are pleased to report the audited financial results for Livermore Investments
Group Limited ("Livermore" or "the Company") for the year ended 31 December
2008.
In the first half of the year, the Company performed well and maintained its NAV
level thanks to its robust and diversified portfolio. As global markets and
economic conditions deteriorated rapidly in the second half, management resolved
to systematically improve its cash position and reduce its trading portfolio and
overall exposure to capital markets. The crippling knock-on effects of the
global crisis had an adverse effect on the NAV reflected in mark to market
adjustments in valuations of the portfolio companies and losses on the trading
portfolio. In addition, the NAV as measured in USD decreased due to the
appreciation of the USD partially offset by successful currency hedging activity
for underlying currency investments, which are not in USD.
During 2008 the Company implemented a defensive investment approach and prepared
itself for a deteriorating investment environment. The Company holds certain
significant value investments of over USD 10m each, which form the portfolio's
cornerstone investments over the mid term. In addition, the Company holds
yielding investments, which cover its operational cash requirements. Overall the
Company is well positioned to withstand a lengthy economic downturn as its cash
position is strong and it holds a few core assets such as Wyler Park in
Switzerland, which have limited downside risk.
Financial Review
The NAV of the Group at 31 December 2008 was approximately USD 179.9m following
a dividend payment of USD 9.8m (USD 4.1m cash and USD 5.7m scrip), and a share
buy back of USD 1.8m. This represents a decrease of USD 96.5m over the NAV at 31
December 2007. Net loss was USD 61.9m, which represents a loss per share of USD
0.22.
Administrative expenses (excluding amortisation and non-recurring items) were
USD 3.3m, representing 1.5% of the average NAV. The Company intends to maintain
its lean infrastructure and cost structure, and to achieve further cost savings
in 2009.
The overall decrease in the NAV is primarily attributed to the following:
+----------------+-------------+--------+----------+------------------------------------------------+
| | 31 | | 31 |
| | December | | December |
| | 2008 | | 2007 |
+----------------+-------------+--------+----------+
| | $m | | $m |
+----------------+-------------+--------+-----------------------------------------------------------+
| Shareholders' | 276.4 | | 274.2 |
| funds at | | | |
| beginning of | | | |
| year | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| | ___________ | | ___________ |
+----------------+-------------+--------+-----------------------------------------------------------+
| Income | 17.5 | | 18.4 |
| from | | | |
| investments | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Realised | (20.5) | | 3.0 |
| (losses) | | | |
| / gains | | | |
| on | | | |
| investments | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Loss | (14.2) | | (5.5) |
| on | | | |
| impairment | | | |
| on | | | |
| investments | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Unrealised | (62.1) | | 5.7 |
| (losses) / | | | |
| gains on | | | |
| investments | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Unrealised | (5.8) | | - |
| exchange | | | |
| losses | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Administration | (3.3) | | (3.0) |
| costs | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Amortization | (0.3) | | (0.1) |
| and non | | | |
| recurring | | | |
| items | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Finance | (4.9) | | (1.5) |
| costs | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Tax | 1.9 | | (0.3) |
| credit | | | |
| / | | | |
| (charge) | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| | ___________ | | ___________ |
+----------------+-------------+--------+-----------------------------------------------------------+
| (Decrease) | (91.7) | | 16.7 |
| / Increase | | | |
| in net | | | |
| assets | | | |
| from | | | |
| operations | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Purchase | (6.0) | | (16.9) |
| of own | | | |
| shares | | | |
| and | | | |
| dividends | | | |
| paid - | | | |
| cash and | | | |
| scrip | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Adjustments | 1.2 | | 2.4 |
| for share | | | |
| option | | | |
| charge | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| | ___________ | | ___________ |
+----------------+-------------+--------+-----------------------------------------------------------+
| Shareholders' | 179.9 | | 276.4 |
| funds at end | | | |
| of year | | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| | | | ------ |
| | ------ | | |
+----------------+-------------+--------+-----------------------------------------------------------+
| Net | $0.63 | | $0.97 |
| Asset | | | |
| Value | | | |
| per | | | |
| share | | | |
+----------------+-------------+--------+----------+------------------------------------------------+
Dividend
On 25 June 2008, the Board announced that it had resolved to pay to shareholders
a dividend of USD 0.35 per share for the year ended 31 December 2007 at a total
cost of USD 9.8m. As approved by shareholders at the EGM held on 12 August 2008,
the Board offered to shareholders the choice of receiving the dividend in new
fully paid ordinary shares in the Company instead of cash (the "Scrip Dividend
Offer"). The Board received acceptances of the Scrip Dividend Offer from holders
of 162,653,267 ordinary shares in the Company, which resulted in the issue of
11,342,629 new ordinary shares (representing 3.7% per cent of the currently
issued share capital of the Company, excluding shares held in treasury) having a
value of USD 5.7m. The balance of USD 4.1m was paid in cash. These new shares
have been admitted to trading on AIM.
During 2008, the Company purchased 3,391,961 shares to be held in treasury for a
total cost of USD1.8m. In 2009, the Company purchased an additional 211,000
shares. The total number of shares held in treasury at 30 April 2009 was
12,352,961.
Due to the global economy, the financial crisis, and its effect on the Company
portfolio, the Board decided not to declare dividends for the year ended 31
December 2008. Future dividend payments will be considered based on the net
performance of the Group's investment portfolio.
+-----------+-----------+
| Richard | Noam |
| B | Lanir |
| Rosenberg | |
+-----------+-----------+
| | |
+-----------+-----------+
| Chairman | Chief |
| | Executive |
| | Officer |
+-----------+-----------+
27 May 2009
Review of Activities
Introduction and Overview
2008 was a tough year for financial markets. Global economic conditions
deteriorated rapidly, demand declined sharply, and equity and credit markets
were decimated across the world. The knock-on effects of Lehman Brothers'
bankruptcy in September are well documented in financial literature now and this
event may well prove to be a turning point in financial and political history.
2008 saw significant central bank and government intervention in markets and in
the economy to provide a safety net against systemic risk. While the
deleveraging of the private sector continues, government balance sheets are
being levered up to provide fiscal stimulus and jump start growth. While there
are some "green shoots" of stabilization in the financial system and signs that
the sharp decline in global economic activity is slowing, the overall outlook
for growth in 2009 looks bleak. However we are hopeful that the powerful
monetary and fiscal impetus so far and the political will to emerge from the
crisis will stimulate the global economies to recover sometime in 2010.
The year-end NAV was USD 0.63 per share (mid-year NAV: USD 0.97, Dec 2007 NAV:
USD 0.97). The portfolio remains well diversified across sectors and geographies
with reduced exposure to capital markets and has a mixture of yielding and
growth assets in Europe and Asia. The short term main driver of NAV is movements
in currencies as the underlying assets are invested in EUR, CHF, USD, INR and
other currencies.
The Company results include interest and dividend income of USD 14.0m, property
income of USD 3.5m and realised losses of USD 20.5m. The latter relates mainly
to losses on disposal of public equities. The Company made an impairment loss of
USD 14.2m relating to non - performing positions in its fixed income portfolio.
In addition the Company recorded a loss totalling USD 22.7m on its holding of
21.21% in Atlas Estates limited at year end. The Company recorded a loss of USD
6.8m relating to unrealized valuation of interest rate swap agreements, mainly
in connection with hedging the loans granted to a subsidiary in connection with
the acquisition of Wyler Park in Switzerland. The maturity of such loans and of
the respective hedging agreement is 2014. As the Company is expected to hold
these loans to maturity, it expects to regain the above loss by the time the
loan matures.
Administrative expenses amounted to USD 3.3m and interest payable amounted to
USD 4.9m, of which USD 3.1m relate to the debt facility of the Real Estate SPV
(Wylerpark, Bern) that generated gross income of USD 4.0m.
The resulting loss before tax for the year was USD 63.8m (2007: USD 21.0m
profit).
The Company does not have an external management company structure and thus does
not bear the burden of external management and performance fees. Further, the
interests of Livermore's management are aligned with those of its shareholders
as management members have a large ownership interest in Livermore shares.
Considering the strong liquidity position of Livermore, together with the
robustness and diversification of its investment portfolio and the alignment of
management's interest with those of its shareholders, the Board believes the
Company is well positioned to withstand the current market conditions and
generate long term returns for its shareholders.
Global Investment Environment
The international economy deteriorated sharply during 2008, especially in the
second half of the year. Economic output dropped in all three major economic
regions (US, euro area, Japan), while the emerging economies also lost momentum.
Consumer and producer confidence indices witnessed sharp declines, new orders
fell off dramatically, capacity utilization dropped significantly and job losses
accelerated. Financial markets were in turmoil and volatility peaked to its
highest levels in October and November. Following the bankruptcy of Lehman
Brothers in mid-September, the crisis spread across the world. Credit risk
premiums shot up to the highest levels attained since the beginning of the
financial crisis. In view of the uncertain balance sheet position of banks and
the massive loss of trust among money market participants, central banks took
unprecedented measures designed to increase liquidity and kick start the credit
markets. The MSCI World index plummeted by over 40% during the year. Exchange
rates became considerably more volatile.
To reduce systemic risk and prevent what could be a chain reaction of defaults,
the Governments of most major economies recapitalized their banks and guaranteed
bank debt and transactions. Aggressive fiscal measures have now been designed to
provide stimulus to the economies. The Federal Reserve and other central banks
deployed traditional and non-traditional monetary policy measures to support the
credit markets with target interest rates between 0% - 2% in most developed
economies.
The meteoric rise of the oil price to $140+ per barrel in the first half of 2008
was short lived. As economic slowdown spread from developed to emerging
economies, oil prices along with other commodity prices witnessed sharp declines
with the oil price ending the year around $46 per barrel.
EURO ZONE: In the euro area, GDP declined by 0.8% in the third quarter,
following a drop of 0.7% in the second quarter. Capital expenditure declined
again, due to the poor economic outlook, and the growth in exports lost
momentum. A sharper decline was only prevented by a solid increase in government
consumption. While the smaller economies proved resilient, Germany and Italy
experienced the biggest drop in growth. Spain recorded its first decline in GDP
since 1993. Employment plans in manufacturing deteriorated markedly and the
sector experienced a period of cyclical weakness. Consumer fears about the
future labour market situation are also likely to slow momentum. Car production
is particularly hard hit. The situation in the credit markets remained tense.
The extent to which the increasing tightness of credit conditions is affecting
commercial bank lending is still unclear. Decreasing commodity prices, a weaker
euro and the measures taken by a number of governments as well as the European
Central Bank may, however, stabilize the economic situation in the medium term.
CENTRAL & EASTERN EUROPE: GDP growth slowed across the region, especially during
the latter half of 2008. The group of Central and Eastern European countries
(CEE, including Bulgaria, Poland, Romania, and the middle-income Baltic states
but excluding Turkey), saw growth ease from 6.6 percent to 5.5 percent in the
year. In Hungary, the economy contracted by 1% quarter on quarter in the fourth
quarter of 2008, following a decline of 0.1% in the third quarter. Real GDP
growth decelerated slightly in the third quarter in the Czech Republic and
Poland, to 0.9% and 1.2% respectively. Short-term indicators point to a
weakening of economic activity in both countries. In Romania, real GDP growth
was still strong in the third quarter of 2008, partly driven by good harvests in
the agricultural sector; however, a marked deceleration has been experienced in
recent months. Slowing demand in the Euro Area dampened export performance,
while overheating in several countries required a mix of fiscal and monetary
tightening to stem inflationary pressures. The global financial crisis disrupted
Hungary's slow recovery of domestic demand and led the country to accept an
emergency EUR15 billion loan from the International Monetary Fund. By year end,
the Polish zloty had lost a third of its value against the euro since last
summer, with Hungary's forint down over 16% in the same period.
SWITZERLAND: Switzerland was also affected by the slowdown but much less than
the US or Euro zone. In particular, consumer spending was more dynamic than in
other countries because the labour market was still in good shape. From
September on, the worsening crisis of confidence increasingly made itself felt
with both producer and consumer sentiment deteriorating substantially. Although
initial signs of a slackening of demand had been observed, the speed with which
order intake dropped off from mid-September came as a surprise. Exports were
particularly badly affected. In contrast, construction, retail and hospitality
demand was still robust. In view of the deterioration in the economic outlook,
the Swiss Confederation adopted a package of measures in early November totaling
CHF 1.5 billion (around 0.3% of GDP) to support the economy.
INDIA: The Indian economy, after exhibiting strong growth during the second
quarter of 2008, experienced moderation in the wake of the global economic
slowdown. Industrial growth decelerated sharply especially in basic, capital and
intermediate goods categories, while growth in consumer goods accelerated. The
services sector, which has been the primary growth engine, slowed as well. Trade
deficit widened, initially due to high oil import bills, and later due to a
reversal of portfolio investment inflows. The Indian Rupee depreciated over 20%
during the year. Financial markets in India suffered in line with emerging
markets with the NIFTY (stock index) falling over 50% from the beginning of the
year. There are downside risks for economic growth due to global economic
slowdown, deterioration in financial markets and domestic demand. On a positive
note, there is an expected increase in consumption demand due to increased
disposable income from higher tax slabs and exemption limits, Sixth Pay
Commission awards, debt waiver for farmers and pre-election expenditure.
Further, easing of international oil and commodity prices and a high base effect
has helped in softening the inflationary pressure.
Sources: International Monetary Fund (IMF), Swiss National Bank (SNB), European
Central Bank (ECB), Reserve Bank of India (RBI), Bloomberg
Livermore's Strategy
Livermore's investment strategy is to establish a diversified portfolio of value
investments with a low - medium risk profile and a geographic focus on Europe
and Asia. Investments are also focused on sectors, which Management believes
will provide superior growth over the mid to long term. In Emerging Markets the
Group invests alongside local partners with relevant expertise and proven track
record. The credit and housing crisis that began in 2007 exploded into a global
crisis with historical asset price declines leading to a vicious deleveraging
cycle. Unprecedented monetary and fiscal interventions seem to have provided
some stability but systemic risks remain until the asset price declines are
stemmed and financial system stability is restored.
In light of worsening economic conditions, Management significantly reduced
during 2008 its leverage and exposure to global markets. Livermore suspended
its dividend payment and cut costs to retain maximum cash. The foremost
objective to maintain a strong liquidity position had been achieved by year end
with the Company now in a comfortable cash and marginal debt position. Although
most of the portfolio companies are cash flow positive and do not require
additional capital, a few became capital constrained as credit markets shut down
during 2008. In these cases Management closely reviewed, with the respective
management teams, alternative financing arrangements. Livermore Management set
as a priority to keep hold of capital reserves to support certain portfolio
companies, which exhibited good growth but were restrained by the lack of bank
credit. Such was the case with DTH Boom TV, which exhibited above expectations
growth in 2008 but as access to bank credit became more limited the shareholders
were requested to make additional capital injections to support the growth
strategy of the company. Supported by the equity contribution by shareholders,
DTH was successful in securing a credit line of EUR18.5m in September 2008.
During the year management decided to structure and manage the Group's portfolio
based on those investments which are considered to be long term, core
investments and those which could be readily convertible to cash, are expected
to be realised within the normal operating cycle and form part of the Group's
treasury function. As of year end the Company had over USD 39.8m in cash, cash
equivalent and marketable securities.
The Board believes that its conservative investment approach and robust
portfolio will provide downside protection in the near-mid term and upside
potential in the mid-longer term.
Review of Significant Investments
Wyler Park - Switzerland
Management was successful in completing in time the development of the
residential part of the Wyler Park project in Bern, Switzerland. Construction of
the 39 modern residential apartments was completed in August. Rental off-take of
the apartments has been ahead of expectations with over 25 rental contracts
signed to date, with the remaining expected to be rented by H1 2009. The
additional annual rental income expected from the residential development is CHF
1.1m.
The rental income from the commercial components of the project was stable with
an increment in the rental income expected in Jan 2009 due to the indexation of
rent. The Company reduced the leverage position on the project by reducing the
LTV from 85% to 72% as the residential project was financed with equity without
Bank loans.
The final fit out of the Wyler II commercial building is at a very high standard
and above expectations. As of 2008 over 800 SBB employees occupy the Wyler I and
Wyler II commercial buildings. The investment in Wyler Park was made through a
fully owned Swiss subsidiary, Livermore Investments AG. The loan outstanding on
the project is CHF 79m, which is a non-recourse loan to Livermore Investments AG
backed only by this property. The valuation of the property as of year end 2008
is CHF 110.4m.
During 2008, the Wyler Park property contributed some USD 2.1m to the Group's
annual profit before tax, derived from operating income, revaluation losses, and
exchange rate differences due to the appreciation of the CHF.
As the commercial property is rented to the Swiss SBB with a lease until 2019
and there is strong demand for the residential apartments, the Company expects
this property to continue to perform well, regardless of the global slowdown,
and maintain its value looking forward. In addition, the Company expects to add
value to this property by utilizing the additional commercial development rights
of 7800sqm attached to the property in the coming years.
Atlas Estates ("Atlas") - Central and Eastern Europe
The global economic crisis has had a significant impact on the Central and
Eastern European region resulting in depreciation of local currencies, a sharp
reduction in availability of credit, and low transactional volumes in real
estate. Hungary, where Atlas has 13% of its assets, has had to seek financial
support from the International Monetary Fund ("IMF"). However, Poland, where 64%
of Atlas' assets are located, appears the most resilient economy in the region.
According to Atlas's management, demand fundamentals, particularly for quality
office, residential and retail space, remain intact despite the challenging
environment.
For the year, revenue increased to EUR51.9m (2007: EUR27.4m). Loss from operations
was EUR3.9m (2007: profit from operations EUR17.1m), predominantly due to an
unrealised foreign exchange loss of EUR24.5m (2007: gain EUR1.9m) resulting from the
depreciating currencies in the CEE region. Net Asset Value declined to EUR173.8m
(31 December 2007: EUR224.1m) with NAV per share at EUR3.68 (31 December 2007:
EUR4.98) and Adjusted NAV per share at EUR4.42 (31 December 2007: EUR6.36). Atlas had
bank loans at 31 December 2008 of EUR247.7m (31 December 2007: EUR218.5m). During
the period, Atlas refinanced the Hilton Hotel in Warsaw and secured a new
construction loan at Platinum Towers, Warsaw. The company reported covenant
breaches on two loans granted to subsidiaries and announced that the banks are
aware of the technical breaches and have not asked for repayment of the loans.
In relation to the most material loan, the Group has received a written covenant
waiver from its lender after the year end and the lender will continue to extend
the EUR63.1m facility.
On the operational side, Atlas delivered Stage 1 of the Capital Art Apartments
residential development in Warsaw on time and to budget. 165 apartments have
been handed over to new owners to date and a further 30 are expected to be
completed in the coming months. The Hilton Hotel in Warsaw performed ahead of
expectations in 2008, proving to be among the strongest performing five-star
hotel and conference centres in the CEE region.
The developments in the region generally and at Atlas specifically have been
disappointing and below expectations. The share price of Atlas declined in 2008
by 90%. The Company received from Atlas a dividend payment of USD 2.6m on 22
July 2008. During the year, Livermore management was actively involved in
discussions with the Atlas Board and Management on issues relating to cost
reduction, currency hedging, and measures to close the NAV gap such as the
future of the Atlas Management Company.
Livermore believes that the fee burden of Atlas Management Company (AMC) is
excessive and the performance fee allocation unjustified. These concerns have
been actively voiced to the Atlas Board and suggestions to terminate the
Property Management Contract were made when there was a change of control at
AMC. Livermore continues to urge action by the Atlas Board on this issue.
Although liquidity was a concern during the second half of the year, Atlas
management has taken measures to retain cash within the company and slashed
dividends, cut costs, and refinanced some properties. Further, some management
fees due to Atlas Management Company have been accrued and not paid out in cash.
Over the next three to five years, taking account of more uncertain market
conditions, the company will be seeking to realise value through property
disposals and the completion of its ongoing development projects.
Given current conditions, we believe that certain development properties may
face refinancing risk and may be subject to forced sales. In light of this, we
have concluded an impairment review and have estimated Atlas Estates at EUR2.9 per
share instead of EUR3.68 per share. Please see note 19 for details.
DTH Television Grup SA, BOOM - Romania
Livermore invested in Boom in October 2007 and acquired a 15% minority stake for
approximately EUR9.5m. During 2008, the Company increased its holding to 18.23%
and made follow-on investments of EUR2.8m in the form of Convertible Loans.
Boom is a Direct-To-Home multi channel satellite television service in Romania,
which started operations during the third quarter of 2006. Despite the global
economic situation, Boom continued to demonstrate significant growth during 2008
and doubled its size reaching over 225,000 subscribers at year end. This was
achieved while maintaining the highest ARPU (average revenue per unit) amongst
the DTH players in the Romanian market. Boom managed to do so by using unique
sales approaches, and by offering its customers premium exclusive content, and
the best TV experience in the Romanian market.
The company plans to continue its growth while leveraging on its premium
content, enjoying the high penetration of TV to local households, and increasing
migration from analogue to digital TV services. In addition, during 2009 Boom
will introduce added value services, such as High Definition, Dolby Surround,
and ITV to its subscribers. Boom plans to reach 550,000-600,000 subscribers by
2012 and capture some 20% of the digital TV market in Romania. With a market
potential of 7.6m homes and regulatory encouragement to switch from analogue to
digital reception, Boom is well placed to capitalize on this tremendous window
of opportunity.
Boom met its planned growth targets and expects to break even from operations in
2009 and make significant profits in the years ahead. From summer 2009 and for a
period of 3 seasons, Boom will exclusively broadcast the UEFA Champions league,
which is considered to be Europe's best sports event.
While the global economy may affect the exit timing, Boom is becoming more and
more attractive to market players and industry related funds, as it nears
profitability. Livermore Management continues to expect realise this investment
within the next 24 months.
SRS Charminar - India
As noted in our 2007 Annual Report, Livermore has invested in 2008 USD 20m in a
leading Indian Real Estate company, in association with SRS Private and other
investors as part of a total investment of USD 154m. The target company is a top
10 real estate developer in India by land bank value and size. It controls over
5000 acres across Southern India, with over 650 acres in Hyderabad. The target
company is the world's first property development company to have been certified
as per four international standards - ISO 9001 - 2000, ISO 14001 - 2004, OHSAS
18001 - 1999 and SA 8000 - 2001.
The deal structure included a put option, which could be exercised if the IPO
does not take place within 3 years or if certain terms in the agreement are not
met. The put option is secured by land valued at around USD 1.3 Billion at the
time of investment and guarantees a minimum return of approximately 30% IRR if
exercised.
Infinite India Limited, the manager for this investment, informed Livermore on
25 February 2009 that following discussions with the promoters of the real
estate company on 20 January 2009 the fund served a put option notice in
accordance with the investment agreement demanding the return of capital and 30%
interest on the investment. As there was a dispute between the founders and the
fund as to the grounds for exercising the put option, the parties agreed to
invoke arbitration to be held in Mumbai, arbitrated by the retired chief justice
of the supreme court of India, the country's supreme judicial body. The outcome
of this arbitration should become clear over the coming months.
Montana Tech Components ("Montana") - Europe
Montana, based in Austria, is a leading components manufacturer in the fields of
Aerospace Components, Metal Tech and Micro Batteries.
The Aerospace Components business segment manufactures specialized components
for Airbus and Boeing and is the market leader. The facilities are currently
located in the US and in Switzerland with a new low cost facility in Romania
under construction. The company has over 50% market share in the US with Boeing
and is expected to have over 45% in Europe with Airbus after the completion of
the Romanian facility. The Aerospace Components business performed well during
2008 despite poor economic conditions. Both Airbus and Boeing have large order
back logs that have assisted in maintaining the volumes.
Metal Tech business segment operates in a niche area with 60%-70% of world
market share in an otherwise highly fragmented industry. This business segment
produces tools for identification and marking of Steel products and has
performed to expectations due to a large order backlog. This order backlog,
however, has been declining as new sales have been low in the last half of 2008.
The Micro Batteries business segment has 3 business units. 2 business units are
excellent with a strong brand (VARTA Micro Power) and market share in their
defined niches - Hearing Aid Batteries and Rechargeable Batteries. The revenues
and net incomes have been stable in these business units. The third business
unit is based on Lithium Polymer batteries and has recently been restructured to
an R&D only organization due to high fixed costs of production.
In 2008, the group had net revenues of EUR348m and an EBITDA of EUR26.6m. The group
expects to increase net revenues to EUR431m by 2011 and increase EBITDA margins
from 7.6% to 15% during this time.
In September 2008, the company raised EUR24m through a convertible bond issue of
Montana maturing in 2011, yielding 8% with option to convert to common equity at
EUR5 per share. Livermore invested EUR1.24m in the bond. Earlier in 2007, Livermore
had invested EUR5m at a valuation of EUR7.6 per share. Given that the primary equity
markets are more or less closed at the moment and based on discussions with the
Management of Montana, Livermore now expects that an exit via IPO is likely
before 2011. Montana's management will seek a trade sell of the underlying
businesses in 2011 in the event that an IPO is not feasible. As all three
businesses have a strong franchise value it could be expected that a trade sale
should generate significant market interest.
Livermore has decided to mark the investment down to an equity valuation of EUR3
per share in line with the decline in market value of peer companies. The
valuation is the median of the worst case valuation range suggested by Erste
Bank in an evaluation report dated February 2009. The median valuation based on
Management business plans, which already assumes a significant slowdown in sales
across all business lines, is EUR5 per share.
CALS refinery - India
In December 2007, Livermore entered into a Total Swap Agreement (TSA) with
respect to a Global Depositary Receipt (GDR) issued by an Indian refinery
company - CALS Refinery. CALS is promoted by Spice group to set up refineries in
India. Spice is a USD 2 billion turnover group with interests in Oil & Gas,
Aviation, Hotels, and Heavy engineering in India and Africa. CALS is relocating
a refinery from Germany to India and the GDR was issued to part finance the
relocation and set up of this refinery in India. CALS expects the refinery to
have a capacity of 4.8 Million Metric Tons Per Annum. During the period, CALS
signed an off-take agreement with BP to purchase crude and sell refinery output.
The TSA has a capital protection structure through a put option on the
promoters. The put option exercise notice has been sent to CALS promoters and
negotiations for a structured payment schedule, and possibly additional
collateral to be provided by the promoters, are underway.
Other Private Equity Investments
The other private equity investments held by the Group are incorporated in the
form of Managed Funds, mainly in the emerging economies of India and China.
India Blue Mountains: A leading hotel and hospitality development fund that
develops and acquires hotels in India. The fund has acquired land and is in the
process of developing four 4-star hotels in Mumbai, Chennai, Pune and Goa. All
four hotels will be managed by the Accor Group, who have also invested equity
and hold a 26% stake in all of the hotels.
The Indian hospitality sector has had mixed fortunes in recent months. In
particular occupancy rates and average room rates ("ARR") declined sharply in
the 5-star segment following the terrorist attacks on the Taj Palace Hotel and
the Oberoi in Mumbai on 26 November, 2008. However, demand for the 4-star
hotels, which is the relevant segment for India Blue Mountains, continues to be
robust with the National Capital Region reporting occupancy levels of 85% and
Mumbai reporting occupancy levels of 77.2% in 2008. There continues to be a
significant shortage of 4-star hotel rooms across India and domestic travellers
who would usually stay in 5-star hotels are trading down to 4 star hotels.
Concerns regarding availability of construction finance reduced as the Reserve
Bank of India reclassified the hospitality sector to Infrastructure rather than
real estate. Infrastructure is a priority lending sector for state owned banks
and, therefore, construction finance is now available for hotels.
For the Chennai project, the fund has negotiated a reduction in purchase price
by 34% in USD terms. Excavation is underway for the Pune project and is expected
to be completed in H1 2009. Excavation for the Mumbai project is expected to
commence in H1 2009. The fund is awaiting land reclassification on the Goa
project.
The NAV per share as of 31 December 2008 was USD 137.9 (31 December 2007: USD
127.05)
Elephant Capital plc: India-focused private equity fund, which is AIM quoted
(formerly called Promethean India plc). (Ticker: ECAP). The fund executes a
value activist strategy in both public and private businesses in India, building
a concentrated portfolio of investments in which the fund can act as a catalyst
for change and value creation. Its portfolio investments to date include a
leading tiles manufacturer in India, an established automotive components
manufacturer, a hospitality company with luxury hotels located in prime
locations in top Indian cities, and an m-commerce player. The fund has been
conservative and diligent in its investment approach, investing only 60% of its
capital to date, which positions it to capitalize on lower valuations in
attractive opportunities.
Panda Capital: China-based Private Equity Fund focused on early-stage industrial
operations in China and Taiwan, which represent strong growth opportunities. The
fund has invested in a bamboo based flooring manufacturer, a lens moulding
company, an electronic components manufacturer, an FDA approved wound healing
cream producer, and an outdoor media company. During 2008, Livermore management
visited the main portfolio companies of the fund and were impressed with the
quality of the investee companies and the investment team.
The fund has reported a drop of 37% in its NAV from cost on account of write
downs of some portfolio companies, especially in the media segment. The fund has
a 100% interest in an exciting bamboo flooring company in China, which provides
a low cost alternative to hardwood flooring in shipping containers. This
investment is expected to generate very attractive returns once the shipping
industry recovers from the current downturn.
Alternative Investment Managers
During 2008, given the deteriorating market and economic conditions, Livermore
reduced exposure to capital markets and redeemed or drastically reduced its
investments in most of the hedge funds, barring those which performed
exceedingly well in 2008 and are well positioned to capitalize the relative
value opportunities that arise in 2009. As of year end the portfolio of hedge
funds totals USD 9.6m. All funds that were redeemed have honoured the
redemption.
Livermore's portfolio construction and allocation strategy is based on hedge
fund strategy and sector diversification, internal correlations, macro-economic
conditions, market cycles, and fund strategy risk considerations. The Company
closely monitors the managers and continually adjusts the portfolio.
In addition, during 2008 the Group invested in a diversified portfolio of
exclusive managers in the credit arena, mainly through investments in
Collateralized Loan Obligations ("CLOs"). These investments were made with a
view to taking advantage of the tight financing terms secured in these deals and
the strong fundamentals of bank loans as an asset class, namely high recovery
rates and strong cash flows. In light of the credit crunch in 2008 the portfolio
suffered significant mark to market losses as default rates as well as
expectations for default rates rose and as a result loan prices deteriorated to
60-70c. At the same time the dividend income on the portfolio was in line with
expectations.
The total dividend/interest income generated by this portfolio in 2008 was USD
14.0m. The company recognised an impairment of USD14.1m at year end relating
mainly to non performing positions. The total CLO portfolio (at market value) as
at 2008 year end amounted to USD 10.4m.
Post balance sheet events and investments
Since the year end Atlas Estates has reported a drop of 20.1% in its IFRS NAV to
EUR 2.94 per share as at 31 March 2009. The drop is attributed primarily to
unrealised currency losses due to further deterioration of local currencies.
Atlas has cited challenging credit and refinancing conditions, possibly leading
to asset sales and other measures.
Other than the above there have been no significant post balance sheet events or
investments. In assessing investments for impairment, the directors have
conducted a review of post balance sheet events and are satisfied that no
further adjustments to valuations are required.
Litigation
At the time of this Report, there are two litigation matters that the Company is
involved in. Management believes that each poses minimal to no exposure to the
Company and to its financial situation. Further information is provided in note
0 - Litigation.
Report of the independent auditor to the members of Livermore Investments Group
Limited
We have audited the consolidated financial statements of Livermore Investments
Group Limited for the year ended 31 December 2008, which comprise the
Consolidated Income Statement, the Consolidated Balance Sheet, the Consolidated
Statement of Changes in Equity, the Consolidated Statement of Cash Flows and
notes 1 to 0. The consolidated financial statements have been prepared under the
accounting policies set out therein.
This report is made solely to the Company's members, as a body. Our audit work
has been undertaken so that we might state to the Company's members those
matters we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
The directors' responsibilities for preparing the Annual Report and the
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union are set out in the
statement of Directors' Responsibilities.
Our responsibility is to audit the consolidated financial statements in
accordance with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the consolidated financial statements
give a true and fair view. In addition we report to you if, in our opinion, we
have not received all the information and explanations we require for our audit,
or if information, specified by IFRS regarding directors' remuneration and other
transactions, is not disclosed.
We read other information contained in the Annual Report, and consider whether
it is consistent with the audited consolidated financial statements. This other
information comprises only the Highlights, the Chairman's and Chief Executive's
Review, the Review of Activities, the Report of the Directors, the Corporate
Governance Statement, the Remuneration Report and the Review of the Business and
Risks. We consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the consolidated
financial statements. Our responsibilities do not extend to any other
information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the consolidated financial statements. It also includes an
assessment of the significant estimates and judgments made by the directors in
the preparation of the consolidated financial statements, and of whether the
accounting policies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations, which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the consolidated financial
statements are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion, we also evaluated the overall
adequacy of the presentation of information in the consolidated financial
statements.
Opinion
In our opinion the consolidated financial statements give a true and fair view,
in accordance with IFRS's as adopted by the European Union, of the state of the
group's affairs as at 31 December 2008 and of its result for the year then
ended.
GRANT THORNTON UK LLP
CHARTERED ACCOUNTANTS
LONDON
Date: 27 May 2009
Livermore Investment Group Limited
Consolidated Income Statement for the year ended 31 December 2008
+-----------------------+-----------+--------+--------+--------+--------------------+--------------------+
| | Note | | | 2007 |
| | | 2008 | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | $000 | | $000 |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Investment | | | | |
| income | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Interest | 4 | 14,032 | | 16,573 |
| / | | | | |
| dividend | | | | |
| income | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Property | 5 | 3,487 | | 1,822 |
| revenue | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Loss | 6 | (40,920) | | (1,433) |
| on | | | | |
| investments | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| (Loss) | 7 | (22,712) | | 8,827 |
| / gain | | | | |
| from | | | | |
| investment | | | | |
| in | | | | |
| associate | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Revaluation | | (9,147) | | - |
| of | | | | |
| financial | | | | |
| assets | | | | |
| designated | | | | |
| at fair | | | | |
| value | | | | |
| through | | | | |
| profit and | | | | |
| loss | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Gross | | (55,260) | | 25,789 |
| (loss) | | | | |
| / | | | | |
| profit | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Amortisation | 8 | (349) | | (134) |
| and non | | | | |
| recurring | | | | |
| items | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Administrative | 9 | (3,345) | | (3,029) |
| expenses | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Operating | | (58,954) | | 22,626 |
| (loss) / | | | | |
| profit | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Finance | 10 | (4,840) | | (1,541) |
| expenditure | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| (Loss) | | (63,794) | | 21,085 |
| / | | | | |
| profit | | | | |
| before | | | | |
| taxation | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Taxation | 11 | 1,935 | | (368) |
| credit / | | | | |
| (charge) | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| (Loss) | | (61,859) | | 20,717 |
| / | | | | |
| profit | | | | |
| for | | | | |
| year | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Earnings | | | | |
| per | | | | |
| share | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Basic | 12 | (0.22) | | 0.07 |
| and | | | | |
| diluted | | | | |
| (loss) | | | | |
| / | | | | |
| earnings | | | | |
| per | | | | |
| share | | | | |
| ($) | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Dividends | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Proposed | | - | | $0.035 |
| final | | | | |
| dividend | | | | |
| per | | | | |
| share | | | | |
| ($) | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Proposed | | - | | 10,000 |
| final | | | | |
| dividend | | | | |
| ($000) | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Dividends paid | $0.035 | | $0.033 |
| during the year | | | |
| per share ($) | | | |
+-----------------------------------+--------+--------+-----------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| Dividends | | 9,848 | | 9,657 |
| paid | | | | |
| during | | | | |
| the year | | | | |
| ($000) | | | | |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | ------ | | ------ |
+-----------------------+-----------+-----------------+--------+-----------------------------------------+
| | | | | |
+-----------------------+-----------+--------+--------+--------+--------------------+--------------------+
The notes form part of these financial statements.
Livermore Investments Group Limited
Consolidated Balance Sheet as at 31 December 2008
+--------------------+-------------+------------------+------------------+
| | Note | 2008 | 2007 |
+--------------------+-------------+------------------+------------------+
| | | $000 | $000 |
+--------------------+-------------+------------------+------------------+
| Assets | | | |
+--------------------+-------------+------------------+------------------+
| Non-current | | | |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| Property, | 14 | 352 | 405 |
| plant and | | | |
| equipment | | | |
+--------------------+-------------+------------------+------------------+
| Intangible | 15 | 9 | 45 |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| Available- | 16 | 78,932 | 217,763 |
| for-sale | | | |
| financial | | | |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| Financial | 17 | 8,135 | 729 |
| assets | | | |
| designated | | | |
| at fair | | | |
| value | | | |
| through | | | |
| profit or | | | |
| loss | | | |
+--------------------+-------------+------------------+------------------+
| Investment | 18 | 104,520 | 97,632 |
| in | | | |
| property | | | |
+--------------------+-------------+------------------+------------------+
| Investment | 19 | 39,939 | 69,639 |
| in | | | |
| associate | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| | | 231,887 | 386,213 |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Current | | | |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| Trade | 20 | 9,828 | 1,850 |
| and | | | |
| other | | | |
| receivables | | | |
+--------------------+-------------+------------------+------------------+
| Cash | 21 | 2,468 | 9,917 |
| and | | | |
| cash | | | |
| equivalents | | | |
+--------------------+-------------+------------------+------------------+
| Available- | 16 | 28,314 | - |
| for-sale | | | |
| financial | | | |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| Financial | 17 | 8,971 | - |
| assets | | | |
| designated | | | |
| at fair | | | |
| value | | | |
| through | | | |
| profit or | | | |
| loss | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| | | 49,581 | 11,767 |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Total | | 281,468 | 397,980 |
| assets | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Equity | | | |
+--------------------+-------------+------------------+------------------+
| Share | | - | - |
| capital | | | |
+--------------------+-------------+------------------+------------------+
| Share | 22 | 206,530 | 202,635 |
| premium | | | |
+--------------------+-------------+------------------+------------------+
| Other | | (27,914) | 767 |
| reserves | | | |
+--------------------+-------------+------------------+------------------+
| Retained | | 1,334 | 73,041 |
| earnings | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Total | | 179,950 | 276,443 |
| equity | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Liabilities | | | |
+--------------------+-------------+------------------+------------------+
| Non | | | |
| current | | | |
| liabilities | | | |
+--------------------+-------------+------------------+------------------+
| Bank | 23 | 74,134 | 69,411 |
| loans | | | |
+--------------------+-------------+------------------+------------------+
| Derivative | | 8,149 | |
| financial | | | - |
| instruments | | | |
+--------------------+-------------+------------------+------------------+
| Deferred | | - | 258 |
| tax | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| | | 82,283 | 69,669 |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Current | | | |
| liabilities | | | |
+--------------------+-------------+------------------+------------------+
| Bank | 24 | 8,518 | 15,825 |
| overdrafts | | | |
+--------------------+-------------+------------------+------------------+
| Short | 25 | 7,370 | - |
| term | | | |
| bank | | | |
| loans | | | |
+--------------------+-------------+------------------+------------------+
| Trade | 26 | 3,220 | 35,934 |
| and | | | |
| other | | | |
| payables | | | |
+--------------------+-------------+------------------+------------------+
| Current | 27 | 127 | 109 |
| tax | | | |
| payable | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| | | 19,235 | 51,868 |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Total | | 101,518 | 121,537 |
| liabilities | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Total | | 281,468 | 397,980 |
| equity | | | |
| and | | | |
| liabilities | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
| Net | | | |
| asset | | | |
| valuation | | | |
| per share | | | |
+--------------------+-------------+------------------+------------------+
| Basic | | 0.63 | 0.97 |
| and | | | |
| diluted | | | |
| net | | | |
| asset | | | |
| valuation | | | |
| per share | | | |
| ($) | | | |
+--------------------+-------------+------------------+------------------+
| | | --------- | --------- |
+--------------------+-------------+------------------+------------------+
These Financial Statements were approved by the Board of Directors on 27 May
2008.
The notes form part of these financial statements.
Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2008
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | Note | Share | Share | Share | Investments | Retained | Total |
| | | capital | premium | option | revaluation | earnings | |
| | | | | | reserve | | |
| | | | | reserve | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | $000 | $000 | $000 | $000 | $000 | $000 |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Balance | | - | 209,807 | 1,794 | 882 | 61,763 | 274,246 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2007 | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Changes | | | | | | | |
| in | | | | | | | |
| equity | | | | | | | |
| for the | | | | | | | |
| year | | | | | | | |
| ended | | | | | | | |
| 31 | | | | | | | |
| December | | | | | | | |
| 2007 | | | | | | | |
| | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Unrealised | | - | - | - | (4,348) | - | (4,348) |
| loss on | | | | | | | |
| revaluation | | | | | | | |
| of | | | | | | | |
| available | | | | | | | |
| for sale | | | | | | | |
| investments | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Profit | | - | - | - | - | 20,717 | 20,717 |
| for | | | | | | | |
| the | | | | | | | |
| year | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Dividends | | - | - | - | - | (9,657) | (9,657) |
| paid | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Purchase | | - | (7,172) | - | - | - | (7,172) |
| of own | | | | | | | |
| shares | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Share | | - | - | 2,657 | - | - | 2,657 |
| option | | | | | | | |
| charge | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Share | | - | - | (218) | - | 218 | - |
| options | | | | | | | |
| forfeited | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | ------ | ------ | ------ | ------ | ------ | ------ |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Balance | | - | 202,635 | 4,233 | (3,466) | 73,041 | 276,443 |
| at 31 | | | | | | | |
| December | | | | | | | |
| 2007 | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Changes | | | | | | | |
| in | | | | | | | |
| equity | | | | | | | |
| for the | | | | | | | |
| year | | | | | | | |
| ended | | | | | | | |
| 31 | | | | | | | |
| December | | | | | | | |
| 2008 | | | | | | | |
| | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Unrealised | | - | - | - | (23,880) | - | (23,880) |
| loss on | | | | | | | |
| revaluation | | | | | | | |
| of | | | | | | | |
| available | | | | | | | |
| for sale | | | | | | | |
| investments | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Share | | - | - | - | (3,030) | - | (3,030) |
| of | | | | | | | |
| losses | | | | | | | |
| through | | | | | | | |
| reserves | | | | | | | |
| of | | | | | | | |
| associate | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Unrealised | | - | - | - | (2,938) | - | (2,938) |
| foreign | | | | | | | |
| exchange | | | | | | | |
| loss | | | | | | | |
| arising | | | | | | | |
| from | | | | | | | |
| translation | | | | | | | |
| of | | | | | | | |
| associate | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Loss | | - | - | - | - | (61,859) | (61,859) |
| for | | | | | | | |
| the | | | | | | | |
| year | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Dividends | | - | - | - | - | (9,848) | (9,848) |
| paid | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Shares | | - | 5,693 | - | - | - | 5,693 |
| issued | | | | | | | |
| under | | | | | | | |
| scrip | | | | | | | |
| dividend | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Purchases | | - | (1,798) | - | - | - | (1,798) |
| of own | | | | | | | |
| shares | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Share | | - | - | 1,167 | - | - | 1,167 |
| option | | | | | | | |
| charge | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | ------ | ------ | ------ | ------ | ------ | ------ |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| Balance | | - | 206,530 | 5,400 | (33,314) | 1,334 | 179,950 |
| at 31 | | | | | | | |
| December | | | | | | | |
| 2008 | | | | | | | |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
| | | ------ | ------ | ------ | ------ | ------ | ------ |
+--------------+--------+-----------+---------+---------+-------------+-------------+----------+
The notes form part of these financial statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2008
+-----------------------+-----------+------------+-------------------+
| |
+-----------------------+
| |
+-----------------------+
| | Note | 2008 | 2007 |
+-----------------------+-----------+------------+-------------------+
| | | $000 | $000 |
+-----------------------+-----------+------------+-------------------+
| Cash | | | |
| flows | | | |
| from | | | |
| operating | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| (Loss) | | (63,794) | 21,085 |
| / | | | |
| profit | | | |
| before | | | |
| tax | | | |
+-----------------------+-----------+------------+-------------------+
| Adjustments | | | |
| for | | | |
+-----------------------+-----------+------------+-------------------+
| | 18 | (5,997) | - |
| Effects | | | |
| on | | | |
| foreign | | | |
| currency | | | |
+-----------------------+-----------+------------+-------------------+
| Depreciation | 14/15 | 146 | 93 |
| and | | | |
| amortisation | | | |
+-----------------------+-----------+------------+-------------------+
| | 10 | 4,670 | 1,398 |
| Interest | | | |
| expense | | | |
+-----------------------+-----------+------------+-------------------+
| | 18 | 3,323 | (1,244) |
| Decrease | | | |
| / | | | |
| (increase) | | | |
| in value | | | |
| of | | | |
| investment | | | |
| property | | | |
+-----------------------+-----------+------------+-------------------+
| | 7 | 22,712 | (8,827) |
| Effects | | | |
| on | | | |
| associate | | | |
| carrying | | | |
| value | | | |
+-----------------------+-----------+------------+-------------------+
| Realised | | 40,717 | 2,263 |
| losses | | | |
| on | | | |
| investments | | | |
+-----------------------+-----------+------------+-------------------+
| Fair | | 9,147 | - |
| value | | | |
| losses | | | |
| on | | | |
| financial | | | |
| assets at | | | |
| fair | | | |
| value | | | |
| through | | | |
| profit or | | | |
| loss | | | |
+-----------------------+-----------+------------+-------------------+
| | 8 | 1,167 | 2,657 |
| Equity | | | |
| settled | | | |
| share | | | |
| options | | | |
+-----------------------+-----------+------------+-------------------+
| Loss | | 6 | 13 |
| on | | | |
| sale | | | |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| | | 12,097 | 17,438 |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Changes | | | |
| in | | | |
| working | | | |
| capital | | | |
+-----------------------+-----------+------------+-------------------+
| | | (6,280) | 48,945 |
| (Increase) | | | |
| / Decrease | | | |
| in trade | | | |
| and other | | | |
| receivables | | | |
+-----------------------+-----------+------------+-------------------+
| | | (32,714) | 2,024 |
| (Decrease) | | | |
| / Increase | | | |
| in trade | | | |
| and other | | | |
| payables | | | |
+-----------------------+-----------+------------+-------------------+
| | | (3) | (8) |
| Tax | | | |
| paid | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| | | (38,997) | 50,961 |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Net | | (26,900) | 68,399 |
| cash | | | |
| generated | | | |
| from | | | |
| operating | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Cash | | | |
| flows | | | |
| from | | | |
| investing | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| | 14 | (63) | (418) |
| Purchase | | | |
| of | | | |
| property, | | | |
| plant and | | | |
| equipment | | | |
+-----------------------+-----------+------------+-------------------+
| | 15 | - | (16) |
| Purchase | | | |
| of | | | |
| intangible | | | |
| assets | | | |
+-----------------------+-----------+------------+-------------------+
| | | (108,422) | (584,938) |
| Acquisition | | | |
| of | | | |
| investments | | | |
+-----------------------+-----------+------------+-------------------+
| | | 136,967 | 484,326 |
| Proceeds | | | |
| from | | | |
| investments | | | |
+-----------------------+-----------+------------+-------------------+
| | 18 | (4,214) | (96,388) |
| Acquisition | | | |
| of | | | |
| investment | | | |
| and | | | |
| development | | | |
| property | | | |
+-----------------------+-----------+------------+-------------------+
| | 19 | (1,590) | (60,812) |
| Acquisition | | | |
| of | | | |
| associate | | | |
+-----------------------+-----------+------------+-------------------+
| | 19 | 2,610 | - |
| Proceeds | | | |
| from | | | |
| associate | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Net | | 25,288 | (258,246) |
| cash | | | |
| from/(used | | | |
| in) | | | |
| investing | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Cash | | | |
| flows | | | |
| from | | | |
| financing | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| | | (4,155) | (9,657) |
| Dividends | | | |
| paid | | | |
+-----------------------+-----------+------------+-------------------+
| | | (1,798) | (7,172) |
| Purchase | | | |
| of own | | | |
| shares | | | |
+-----------------------+-----------+------------+-------------------+
| | | 12,093 | 69,411 |
| Proceeds | | | |
| from | | | |
| bank | | | |
| loan | | | |
+-----------------------+-----------+------------+-------------------+
| | 10 | (4,670) | (1,398) |
| Interest | | | |
| expense | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Net | | 1,470 | 51,184 |
| cash | | | |
| from | | | |
| financing | | | |
| activities | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Net | | (142) | (138,663) |
| decrease | | | |
| in cash | | | |
| and cash | | | |
| equivalents | | | |
+-----------------------+-----------+------------+-------------------+
| Cash | | (5,908) | 132,755 |
| and | | | |
| cash | | | |
| equivalents | | | |
| at the | | | |
| beginning | | | |
| of the year | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
| Cash | | (6,050) | (5,908) |
| and | | | |
| cash | | | |
| equivalents | | | |
| at the end | | | |
| of the year | | | |
+-----------------------+-----------+------------+-------------------+
| | | ---------- | ---------- |
+-----------------------+-----------+------------+-------------------+
The notes form part of these financial statements.
Notes on the Financial Statements
1.General Information
Incorporation, principal activity and status of the Company
1.1The Company was incorporated as an international business company and
registered in the
British Virgin Islands (BVI) on 2 January 2002
under IBC Number 475668 with the name
Clevedon Services Limited.
The liability of the members of the Company is limited.
1.2The Company changed its name to Empire Online Limited on 5 May 2005 and then
changed to
Livermore Investments Group Limited on 28 February
2007.
1.3The principal activity of the Group changed to investment services on 1
January 2007. Before
that the principal activity of the Group was
the provision of marketing services to the online
gaming industry
and, since 1 January 2006, the operation of online gaming.
1.4The principal legislation under which the Company operates is the BVI
Business Companies
Act (2004).
1.5The registered office and head office of the Company is located at Trident
Chambers, PO Box
146, Road Town, Tortola, British Virgin Islands.
2.Accounting Policies
2.1The significant accounting policies applied in the preparation of the
financial information are as
follows:
a)Basis of preparation
The audited financial statements of Livermore Investments Group Limited have
been prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted by the European Union and on a going concern basis. The
financial statements have been prepared on the historical cost except for the
following:
* Derivative financial instruments are measured at fair value.
* Financial instruments at fair value through profit or loss are measured at fair
value.
* Available- for- sale financial assets are measured at fair value.
* Investment property is measured at fair value.
* Share- based payments are fair valued at the date of grant.
The financial information is presented in US dollars because this is the
currency in which the Group primarily operates in.
The directors have reviewed the accounting policies used by the Group and
consider them to be the most appropriate.
b)New standards and interpretations currently in issue but not effective for
accounting periods
commencing on 1 January 2008 are:
* IAS 1 Presentation of Financial Statements (revised 2007) (effective 1 January
2009)
* IAS 23 Borrowing Costs (revised 2007) (effective 1 January 2009)
* Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation
of Financial Statements - Puttable Financial Instruments and Obligations Arising
on Liquidation (effective 1 January 2009)
* IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective
1 July 2009)
* Amendment to IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
(effective 1 January 2009)
* Amendments to IFRS 1 First-time Adoption of International Financial Reporting
Standards and IAS 27 Consolidated and Separate Financial Statements - Costs of
Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective 1
January 2009)
* Amendment to IAS 39 Financial Instruments: Recognition and Measurement -
Eligible Hedged Items (effective 1 July 2009)
* Amendment to IFRS 7 Financial Instruments: Disclosures - Improving Disclosures
About Financial Instruments (effective 1 January 2009)
* Improvements to IFRSs (effective 1 January 2009 other than certain amendments
effective 1 July 2009)
* IFRS 3 Business Combinations (Revised 2008) (effective 1 July 2009)
* IFRS 8 Operating Segments (effective 1 January 2009)
* IFRIC 13 Customer Loyalty Programmes (effective date 1 July 2008)
* IFRIC 15 Agreements for the Construction of Real Estate (effective 1 January
2009)
* IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October
2008)
* IFRIC 17 Distributions of Non-cash Assets to Owners (effective 1 July 2009)
* IFRIC 18 Transfers of Assets from Customers (effective prospectively for
transfers on or after 1 July 2009)
These Standards are not expected to have a material effect on the group's
accounts but will result in presentation and disclosure changes.
c)Basis of Consolidation
The consolidated results incorporate the results of Livermore Investments Group
Limited and all of its subsidiaries undertakings as at 31 December 2008 using
the acquisition method of accounting as required. Subsidiaries are those
entities that are controlled by the group. Control is achieved where the group
has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. Profits or
losses on intra group transactions are eliminated on consolidation. The results
for the subsidiary undertakings have been included from the date of acquisition.
On acquisition of a subsidiary, all of the subsidiary's assets and liabilities,
which exist at the date of acquisition, are recorded at fair value. The excess
of the fair value of the consideration given over the fair value of the
identifiable net assets acquired, is capitalised net of any provision for any
impairment.
d)Current assets are those which, in accordance with IAS 1 Presentation Of
Financial Statements are:
- expected to be realised within normal operating cycle, via sale or
consumption, or
- held primarily for trading, or
- expected to be realised within 12 months from the balance sheet date, or
- cash and cash equivalent not restricted in their use.
All other assets are non-current.
e)Investment in associates
The Group's interest in associates, being those entities over which it holds
significant influence and which are neither subsidiaries nor joint ventures, are
accounted for using the equity method.
Under the equity method, the investment in an associate is carried in the
balance sheet at cost plus post acquisition changes in the Group's share of the
net assets of the associate and less any impairment in the value of individual
investments. The Group income statement reflects the share of the associate's
results after tax. The Group Statement Of Changes in Equity reflects the Group's
share of any income and expenses recognised by the associate outside the income
statement.
Any goodwill arising on the acquisition of an associate, representing the excess
of the cost of investment compared to the Group's share of the net fair value of
the associate's identifiable assets, liabilities and contingent liabilities, is
included in the carrying amount of the associate and is not amortized. To the
extent that the net fair value of the associate's identifiable assets,
liabilities and contingent liabilities is greater than the cost of the
investment, a gain is recognised and added to the Group's share of the associate
profit and loss in the period in which the investment is acquired. Distributions
received from an investee reduce the carrying amount of the investment.
Financial statements of associates are prepared for the same period as the
Group's. Adjustments are made to bring the associate's accounting policies in
line with those of the Group.
f)Property revenue
Rental income is recognised on a straight line basis over the lease term.
Service charges and management fees are recognised as the related costs are
incurred and charged. Changes to rental income that arise from reviews to open
market rental values or increases that are indexed linked on a periodic basis
and recognised from the date on which the adjustment became due. Lease
incentives granted are recognised as an integral part of the net consideration
for the use of the property. Lease incentives are allocated evenly over the life
of the lease. Rental income and services charged are stated net of vat and other
related taxes.
g)Investment Income
Investment income comprises interest income on funds invested, dividend income,
and investment property income. Interest and investment property income is
recognised as it accrues. Dividend income is recognised on the date that the
Group's right to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
h)Foreign currency
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each group company are expressed in USD,
which is the functional currency of the group and the presentation currency for
the consolidated financial statements.
Transactions in foreign currencies other than the groups' functional currency
are recorded at the rates of exchange prevailing on the dates of the
transaction. Monetary assets and liabilities denominated in non-US dollar
currencies are translated into US dollar equivalents using year-end spot foreign
exchange rates. Non-monetary assets and liabilities are translated using
exchange rates prevailing at the dates of the transactions. Non-monetary assets
that are measured in terms of historical cost in foreign currency are not
re-translated.
Gains and losses arising on the settlement of monetary items and on the
re-translation of monetary items are included in the income statement for the
year. Those that arise on the re-translation on non-monetary items carried at
fair value are included in the income statement of the year except for
differences arising on the re-translation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such non-monetary
items any exchange component of that gain or loss is also recognised directly in
equity.
The results and financial position of all Group entities that have a functional
currency different from US dollars are translated into the presentation currency
as follows:
* assets and liabilities for each balance sheet item presented are translated at
the closing rate at the date of that balance sheet; and
* income and expenses for each income statement item are translated at an average
exchange rate (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which
case income and expenses are translated at the dates of the transactions).
Exchange differences arising are recognised through the Income Statement; and
* exchange differences on the net investment in subsidiary entities with a
different functional currency to the group are recognised through equity.
i)Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on the
initial recognition of an asset or liability, unless the related transaction is
a business combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and joint ventures
is not provided if reversal of these temporary differences can be controlled by
the group and it is probable that reversal will not occur in the foreseeable
future. In addition, tax losses available to be carried forward as well as other
income tax credits to the group are assessed for recognition as deferred tax
assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax
assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity (such as the revaluation of land) in
which case the related deferred tax is also charged or credited directly to
equity.
j)Goodwill
Goodwill, being the excess of the fair value of cost of an acquisition over the
fair value attributed to the net assets at acquisition, is capitalised.
Goodwill is not being amortised through the income statement; however, it is
subject to annual impairment reviews. Impairment of the goodwill is evaluated by
comparing the present value of the future expected cash flows, (the
"value-in-use") to the carrying value of the underlying net assets and goodwill.
If the net assets and goodwill were to exceed the value-in-use, an impairment
would be deemed to have occurred and the resulting write down in the goodwill
would be charged to the income statement immediately.
k)Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation. Carrying amounts are reviewed at each balance sheet date for
impairment.
Depreciation is calculated using the straight-line method, at annual rates
estimated to write off the cost of the assets less their estimated residual
values over their expected useful lives. The annual depreciation rates used are
as follows:
Computer hardware - 33.3%
Fixtures and Fittings - 10%
Office renovation - 25%
l)Intangible assets
Intangible assets comprise website design costs and computer software and are
stated at historic cost less accumulated amortisation. Carrying amounts are
reviewed at each balance sheet date for indications of impairment.
Amortisation is calculated using the straight-line method, at annual rates
estimated to write off the cost of the assets over their expected useful lives.
The annual amortisation rates are as follows:
Computer software - 33.3%
m)Investment property
Certain of the Group's properties are classified as investment property, being
held for long term investment and to earn rental income.
Investment properties are measured initially at cost, and thereafter are stated
at fair value, which reflects market conditions at the balance sheet date. Gains
or losses arising from changes in the fair values of investment properties are
included in the income statement in the year in which they arise.
n)Development property
Investment property under development is stated at cost incurred to date, and is
not depreciated. On completion of development, this asset is transferred to
investment property.
o)Equity and reserves
Equity issued by the Company is recorded as the proceeds are received, net of
direct issue costs.
Equity purchased by the Company is recorded as the consideration paid, including
directly associated assets and is deducted from total equity as treasury shares
until they are sold or cancelled. Where such shares are subsequently sold or
reissued, any consideration received is included in total equity.
The share premium account includes any premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from the premium paid.
Equity-settled share-based employee remuneration is credited to the share option
reserve until related stock options are exercised. On exercise or lapse amounts
recognised in the share option reserve are taken to retained earnings.
Unrealised gains and losses on available for sale financial assets are taken to
the investment revaluation reserve. When these gains/losses are realised, they
are taken to the income statement.
Retained earnings include all current and prior period retain profits.
p)Leases
Leases were a significant portion of the risk and rewards of ownership are
retained by the lessor are classified as operating leases and rentals are
charged to income on a straight-line basis over the term of the lease.
q)Borrowing costs
Borrowing costs primarily comprise interest on the Group's borrowings. All
borrowing costs, including borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets, are expensed in
the period in which they are incurred and reported within "finance costs"
r)Financial instruments
Financial assets and financial liabilities are recognised when the Group becomes
a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows
from the financial asset expire, or when the financial asset and all substantial
risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Financial assets and financial liabilities are measured initially at fair value
plus transactions costs, except for financial assets and financial liabilities
carried at fair value through profit or loss, which are measured initially at
fair value.
Financial assets and financial liabilities are measured subsequently as
described below.
Financial assets
For the purpose of subsequent measurement, financial assets other than those
designated and effective as hedging instruments are classified into the
following categories upon initial recognition:
- loans and receivables;
- cash and cash equivalents;
- trade and other payables;
- financial assets at fair value through profit or loss; and
- available-for-sale financial assets.
The category determines subsequent measurement and whether any resulting income
and expense are recognised in profit or loss or in other comprehensive income.
All financial assets except for those at fair value through profit or loss are
subject to review for impairment at least at each reporting date. Financial
assets are impaired when there is any objective evidence that a financial asset
or a group of financial assets is impaired. Different criteria to determine
impairment are applied for each category of financial assets, which are
described below.
Trade and other receivables
Trade and other receivables are recognised and carried at the original
transaction value. An estimate for doubtful debts is made when collection of the
full amount is no longer probable. Bad debts are written off when identified.
Where the time value of money is significant receivables are carried at
amortized cost.
Cash and cash equivalents
Cash comprises cash in hand and balances with banks. Cash equivalents are short
term, highly liquid investments that are readily convertible to known amounts of
cash. They include unrestricted short-term bank deposits originally purchased
with maturities of twelve months or less.
Trade and other payables
Trade and other payables are recognised and carried at the original transaction
value.
Financial assets at fair value through profit or loss
From 1 January 2008 all new financial assets acquired have been designated at
fair value through profit or loss upon initial recognition, because management
considers this to more fairly reflect the way these assets are managed by the
Group. The Group's business is investing in financial assets with a view to
profiting from their total return in the form of income and capital growth. This
portfolio of financial assets is managed and its performance evaluated on a fair
value basis, in accordance with a documented investment strategy, and
information about the portfolio is provided internally on that basis to the
Group's Board of directors and other key management personnel.
Financial assets at fair value through profit and loss include financial assets
that are either classified as held for trading or are designated by the Group to
be carried at fair value through profit and loss upon initial recognition. All
assets within this category are measured at their fair value, with changes in
value recognised in the income statement when incurred. Upon initial
recognition, attributable transactions costs are recognised in profit or loss
when incurred.
Available-for-sale assets
During the year ended 31 December 2007, all financial assets (other than
derivatives) were classified as available for sale on initial recognition.
Available for sale financial assets are recognised when the Company becomes a
party to the contractual provisions of the instrument. Available for sale
financial assets are recognised at fair value plus transaction costs.
Available-for-sale financial assets include non-derivative financial assets that
are either designated as such or do not qualify for inclusion in any of the
other categories of financial assets. All financial assets within this category
are measured, with changes in value recognised in equity, through the statement
of changes in equity. Gains and losses arising from investments classified as
available-for-sale are recognised in the income statement when they are sold or
when the investment is impaired.
In the case of impairment of available-for-sale assets, any loss previously
recognised in equity is transferred to the income statement. Impairment losses
recognised in the income statement on equity instruments are not reversed
through the income statement. Impairment losses recognised previously on debt
securities are reversed through the income statement when the increase can be
related objectively to an event occurring after the impairment loss was
recognised in the income statement.
An assessment for impairment is undertaken at least at each balance sheet date.
A financial asset is derecognised only where the contractual rights to the cash
flows from the asset expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial asset is transferred if the
contractual rights to receive the cash flows of the asset have been transferred
or the Group retains the contractual rights to receive the cash flows of the
asset but assumes a contractual obligation to pay the cash flows to one or more
recipients. A financial asset that is transferred qualifies for derecognition if
the Group transfers substantially all the risks and rewards of ownership of the
asset, or if the Group neither retains nor transfers substantially all the risks
and rewards of ownership but does transfer control of that asset.
Valuation of financial assets
+--------+-------------+
| * | Cash |
| | and |
| | deposits |
| | are |
| | evaluated |
| | per |
| | holdings |
| | in banks. |
+--------+-------------+
| * | Public |
| | equities, |
| | Credit |
| | Notes and |
| | Bonds are |
| | valued |
| | per their |
| | bid |
| | market |
| | prices on |
| | quoted |
| | exchanges, |
| | or as |
| | quoted by |
| | market |
| | maker. |
+--------+-------------+
| * | Hedge |
| | Funds |
| | and |
| | Private |
| | Equity |
| | funds |
| | are |
| | valued |
| | per |
| | reports |
| | provided |
| | by the |
| | funds on |
| | a |
| | periodic |
| | basis, |
| | and if |
| | traded, |
| | per |
| | their |
| | 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. |
+--------+-------------+
| * | Investment |
| | property |
| | is valued |
| | at fair |
| | value |
| | based on |
| | valuations |
| | provided |
| | by a |
| | certified |
| | external |
| | appraiser. |
| | Development |
| | projects |
| | are valued |
| | at cost |
| | until |
| | completion. |
+--------+-------------+
| * | 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. |
+--------+-------------+
s)Financial liabilities
The group's financial liabilities include financial derivative instruments.
Derivative instruments consist of interest rate swaps and forward currency
contracts.
Financial liabilities are measured subsequently at amortised cost using the
effective interest rate method, except for financial liabilities held for
trading or designated at fair value through profit and loss, that are carried
subsequently at fair value with gains or losses recognised in profit or loss.
All derivative financial instruments that are not designed and effective as
hedging instruments are accounted for at fair value through profit and loss.
t)Share Options
IFRS 2 "Share-based Payment" requires the recognition of equity settled share
based payments at fair value at the date of grant.
The Group issues equity-settled share based payments to certain employees and
other advisors. The fair value of share-based payments to employees at grant
date is measured using the Binomial pricing model. The fair value of share-based
payments to other advisors, are measured directly at the fair value of the
services provided.
The fair value determined at the grant date is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of the shares that will
eventually vest and adjusted for the effect of non market-based vesting
conditions. The corresponding credit is taken to the share option reserve.
u)Legal and other disputes
Provision is made where a reliable estimate can be made of the likely outcome of
legal and other disputes against the Group. In addition, provision is made for
legal and other expenses arising from claims received or other disputes. No
provision is made for other possible claims or where an obligation exists, but
it is not possible to make a reliable estimate. Costs associated with claims
made by the Group are charged to the Income Statement as they are incurred.
v)Critical accounting judgments and key sources of estimation uncertainty.
The following areas are subject to judgment and uncertainty.
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial
instruments, where active market quotes are not available. Details of the bases
used for financial assets and liabilities are disclosed above. In applying the
valuation techniques management makes maximum use of market inputs, and uses
estimates and assumptions that are, as far as possible, consistent with
observable data that market participants would use in pricing the instrument.
Where applicable data is not observable, management uses its best estimate about
the assumptions that market participants would make. These estimates may vary
from the actual prices that would be achieved in an arm's length transaction at
the reporting date.
Impairment
An impairment loss is recognised for the amount by which the asset's or cash
generating unit's carrying amount exceeds its recoverable amount. Recoverable
amount is based on estimated expected future cash flows from each
cash-generating unit and discounted using a suitable interest rate in order to
calculate the present value of those cash flows. In the process of measuring
expected future cash flows assumptions are required about future gross profits.
These assumptions relate to future events and circumstances. The actual results
may vary, and may cause significant adjustments to the Group's assets within the
next financial year. In most cases, determining the applicable discount rate
involves estimating the appropriate adjustment to market risk and the
appropriate adjustment to asset specific factors.
The group assesses at each balance sheet date, whether financial assets are
impaired. If an impairment has occurred, this loss is taken to the income
statement.
Assets carried at cost
If there is objective evidence that an impairment loss on unquoted equity
instrument that is not carried at fair value because its fair value cannot be
reliably measured, or on a derivative asset that is linked to and must be
settled by delivery of such an unquoted equity instrument, has been incurred,
the amount of the loss is measured as the differences between the asset's
carrying amount and the present value of estimated future cash flows discounted
at the current market rate of return of similar financial assets.
Provision for legal and other disputes
Determining whether provisions for legal and other disputes is required requires
the Group to assess the likelihood of an economic outflow occurring as a result
of past events. Where an economic outflow is considered probable, a provision
has been made for the estimated outflow. Where an outflow is considered
possible, but not probable it has only been disclosed.
Where the information required by IAS 37 "Provisions, Contingent Liabilities and
Contingent Assets" is expected to prejudice the outcome of legal and other
disputes, it has not been disclosed on these grounds.
Further details of contingent assets, liabilities and provisions are provided in
note 0.
3.Segment Information
Management consider investment activity to be the Group's only material class of
business.
4.Interest / dividend income
+-------------+--------+--------+----------+
| | 2008 | | 2007 |
+-------------+--------+--------+----------+
| | $000 | | $000 |
+-------------+--------+--------+----------+
| Interest | 8,676 | | 9,187 |
| from | | | |
| available | | | |
| for sale | | | |
| investments | | | |
+-------------+--------+--------+----------+
| Interest | - | | 4,332 |
| on bank | | | |
| deposits | | | |
| and | | | |
| current | | | |
| accounts | | | |
+-------------+--------+--------+----------+
| Exchange | - | | 2,498 |
| gain | | | |
+-------------+--------+--------+----------+
| Dividend | 5,356 | | 556 |
| income | | | |
+-------------+--------+--------+----------+
| | ------ | | ------ |
+-------------+--------+--------+----------+
| | 14,032 | | 16,573 |
+-------------+--------+--------+----------+
| | ------ | | ------ |
+-------------+--------+--------+----------+
5.Investment property revenue
+--------+--------+--------+---------+
| | 2008 | | 2007 |
+--------+--------+--------+---------+
| | $000 | | $000 |
+--------+--------+--------+---------+
| Rental | 3,487 | | 1,822 |
| income | | | |
+--------+--------+--------+---------+
| | ------ | | ------ |
+--------+--------+--------+---------+
6.(Losses) / gains on investments
+-------------+----------+--------+---------+
| | 2008 | | 2007 |
+-------------+----------+--------+---------+
| | $000 | | $000 |
+-------------+----------+--------+---------+
| (Loss) | (20,756) | | 3,331 |
| / gain | | | |
| on | | | |
| sale | | | |
| of | | | |
| investments | | | |
+-------------+----------+--------+---------+
| Property | (3,323) | | 1,244 |
| revaluation | | | |
+-------------+----------+--------+---------+
| Exchange | (2,976) | | - |
| loss | | | |
+-------------+----------+--------+---------+
| Gain / | 311 | | (414) |
| (loss) | | | |
| on | | | |
| derivative | | | |
| instruments | | | |
+-------------+----------+--------+---------+
| Loss | (14,176) | | (5,594) |
| on | | | |
| impairment | | | |
+-------------+----------+--------+---------+
| | ------ | | ------ |
+-------------+----------+--------+---------+
| | (40,920) | | (1,433) |
+-------------+----------+--------+---------+
| | ------ | | ------ |
+-------------+----------+--------+---------+
7. (Losses) / gains from investment in associate
+-------------+----------+--------+---------+
| | 2008 | | 2007 |
+-------------+----------+--------+---------+
| | $000 | | $000 |
+-------------+----------+--------+---------+
| Atlas | (22,712) | | 8,827 |
| Estates | | | |
| Ltd. | | | |
+-------------+----------+--------+---------+
| | ------ | | ------ |
+-------------+----------+--------+---------+
| Adjustments | | | |
| for the | | | |
| year | | | |
+-------------+----------+--------+---------+
| Share | (10,613) | | 8,827 |
| of | | | |
| (loss) | | | |
| / | | | |
| profit | | | |
+-------------+----------+--------+---------+
| Deemed | (1,129) | | - |
| disposal | | | |
+-------------+----------+--------+---------+
| Impairment | (10,970) | | - |
| charge | | | |
+-------------+----------+--------+---------+
| | ------ | | ------ |
+-------------+----------+--------+---------+
| | (22,712) | | 8,827 |
+-------------+----------+--------+---------+
| | ------ | | ------ |
+-------------+----------+--------+---------+
8.Amortisation and non recurring items
Amortisation and non-recurring items refer to:
+--------------+--------+--------+-----------+
| | 2008 | | 2007 |
+--------------+--------+--------+-----------+
| | $000 | | $000 |
+--------------+--------+--------+-----------+
| Amortisation | 44 | | 63 |
| of | | | |
| intangible | | | |
| assets | | | |
+--------------+--------+--------+-----------+
| Share | 1,167 | | 2,657 |
| option | | | |
| expenses | | | |
+--------------+--------+--------+-----------+
| Non | - | | 32 |
| recurring | | | |
| expenses | | | |
+--------------+--------+--------+-----------+
| Income | (862) | | (2,618) |
| related | | | |
| to | | | |
| discontinued | | | |
| operations | | | |
+--------------+--------+--------+-----------+
| | ------ | | ------ |
+--------------+--------+--------+-----------+
| | 349 | | 134 |
+--------------+--------+--------+-----------+
| | ------ | | ------ |
+--------------+--------+--------+-----------+
Non recurring expenses relate to discontinued operations. No such expenses
incurred for the year of 2008.
9.Administrative expenses
+----------------+--------+--------+--------+
| |
+----------------+
| |
+----------------+
| | 2008 | | 2007 |
+----------------+--------+--------+--------+
| | $000 | | $000 |
+----------------+--------+--------+--------+
| | | | |
+----------------+--------+--------+--------+
| Operational | 1,053 | | 548 |
| expenses | | | |
+----------------+--------+--------+--------+
| Directors | 870 | | 985 |
| fees and | | | |
| expenses | | | |
+----------------+--------+--------+--------+
| Consultants | 534 | | 503 |
| fees and | | | |
| expenses | | | |
+----------------+--------+--------+--------+
| Other | 410 | | 258 |
| salaries | | | |
| and | | | |
| expenses | | | |
+----------------+--------+--------+--------+
| Office | 251 | | 407 |
| cost | | | |
+----------------+--------+--------+--------+
| Other | 108 | | 135 |
| administration | | | |
| costs | | | |
+----------------+--------+--------+--------+
| Group | 86 | | 162 |
| audit | | | |
| fees | | | |
+----------------+--------+--------+--------+
| Subsidiary | 33 | | 31 |
| audit fees | | | |
+----------------+--------+--------+--------+
| | ------ | | ------ |
+----------------+--------+--------+--------+
| | 3,345 | | 3,029 |
+----------------+--------+--------+--------+
| | ------ | | ------ |
+----------------+--------+--------+--------+
At 31 December 2008 the Group employed 8 staff (31 December 2007: 8).
10.Finance expenditure
+------------+--------+--------+
| | 2008 | 2007 |
+------------+--------+--------+
| | $000 | $000 |
+------------+--------+--------+
| Bank | 1,562 | 550 |
| interest | | |
| and fees | | |
+------------+--------+--------+
| Bank | 3,108 | 848 |
| interest | | |
| investment | | |
| property | | |
| loan | | |
+------------+--------+--------+
| Bank | 170 | 143 |
| custody | | |
| fees | | |
+------------+--------+--------+
| | ------ | ------ |
+------------+--------+--------+
| | 4,840 | 1,541 |
+------------+--------+--------+
| | ------ | ------ |
+------------+--------+--------+
11.Taxation
+--------------+----------+--------+
| | 2008 | 2007 |
+--------------+----------+--------+
| | $000 | $000 |
+--------------+----------+--------+
| | | |
+--------------+----------+--------+
| Tax | (1,935) | 368 |
| (credit) | | |
| / charge | | |
+--------------+----------+--------+
| | ------ | ------ |
+--------------+----------+--------+
| | (1,935) | 368 |
+--------------+----------+--------+
| | ------ | ------ |
+--------------+----------+--------+
| The | | |
| tax | | |
| (credit) | | |
| / charge | | |
| for the | | |
| year can | | |
| be | | |
| reconciled | | |
| to the | | |
| accounting | | |
| (loss) / | | |
| profit as | | |
| follows: | | |
+--------------+----------+--------+
| (Loss) | (63,794) | 21,085 |
| / | | |
| profit | | |
| before | | |
| tax | | |
+--------------+----------+--------+
| | ------ | ------ |
+--------------+----------+--------+
| Tax | - | - |
| effect | | |
| of | | |
| domestic | | |
| corporation | | |
| tax at 0% | | |
+--------------+----------+--------+
| Tax | 21 | 110 |
| effect | | |
| of | | |
| share | | |
| of | | |
| subsidiaries | | |
+--------------+----------+--------+
| Deferred | (1,956) | 258 |
| tax | | |
| (credit) | | |
| / charge | | |
+--------------+----------+--------+
| | ------ | ------ |
+--------------+----------+--------+
| Tax | (1,935) | 368 |
| for | | |
| the | | |
| year | | |
+--------------+----------+--------+
| | ------ | ------ |
+--------------+----------+--------+
The Company is an international business company based in the British Virgin
Islands (BVI) and, under its laws is not subject to corporation tax. Corporation
tax is calculated with reference to the result of the Company's subsidiaries.
12.(Loss) / earnings per share
Basic earnings per share has been calculated by dividing the net (loss) / profit
attributable to ordinary shareholders ((loss) / profit for the year) by the
weighted average number of shares in issue during the relevant financial
periods.
Diluted (loss) / earnings per share is calculated after taking into
consideration the potentially dilutive shares in existence as at the year ended
31 December 2008 and the year ended 31 December 2007.
+--------------+---------------+---------------+
| | 2008 | 2007 |
+--------------+---------------+---------------+
| Net | (61,859) | 20,717 |
| (loss) | | |
| / | | |
| profit | | |
| attributable | | |
| to ordinary | | |
| shareholders | | |
| ($000) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 285,572,172 | 286,944,439 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Basic | (0.22) | 0.07 |
| (loss) | | |
| / | | |
| earnings | | |
| per | | |
| share | | |
| ($) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 286,072,172 | 286,944,439 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| including | | |
| the | | |
| effect of | | |
| potentially | | |
| diluted | | |
| shares | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Diluted | (0.22) | 0.07 |
| (loss) | | |
| / | | |
| earnings | | |
| per | | |
| share | | |
| ($) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Number | | |
| of | | |
| Shares | | |
+--------------+---------------+---------------+
| Weighted | 285,572,172 | 286,944,439 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
+--------------+---------------+---------------+
| Effect | | |
| of | | |
| dilutive | | |
| potential | | |
| ordinary | | |
| shares: | | |
+--------------+---------------+---------------+
| Share | 500,000 | - |
| options | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 286,072,172 | 286,944,439 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| including | | |
| the | | |
| effect of | | |
| potentially | | |
| dilutive | | |
| shares | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
13.Net asset value per share
Net asset value per share has been calculated by dividing the net assets
attributable to ordinary shareholders by the weighted average number of shares
in issue during the relevant financial periods.
Diluted net asset value per share is calculated after taking into consideration
the potentially dilutive shares in existence as at the year ended 31 December
2008 and the year ended 31 December 2007.
+--------------+---------------+---------------+
| | 2008 | 2007 |
+--------------+---------------+---------------+
| Net | 179,950 | 276,443 |
| assets | | |
| attributable | | |
| to ordinary | | |
| shareholders | | |
| ($000) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 285,572,172 | 284,027,772 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Basic | 0.63 | 0.97 |
| net | | |
| asset | | |
| value | | |
| per | | |
| share | | |
| ($) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 286,072,172 | 284,027,772 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| including | | |
| the | | |
| effect of | | |
| potentially | | |
| diluted | | |
| shares | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Diluted | 0.63 | 0.97 |
| NAV per | | |
| share | | |
| ($) | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Number | | |
| of | | |
| Shares | | |
+--------------+---------------+---------------+
| Weighted | 285,572,172 | 284,027,772 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| in issue | | |
+--------------+---------------+---------------+
| | | |
| Effect | | |
| of | | |
| dilutive | | |
| potential | | |
| ordinary | | |
| shares: | | |
+--------------+---------------+---------------+
| | 500,000 | - |
| Share | | |
| options | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
| Weighted | 286,072,172 | 284,027,772 |
| average | | |
| number | | |
| of | | |
| ordinary | | |
| shares | | |
| including | | |
| the | | |
| effect of | | |
| potentially | | |
| dilutive | | |
| shares | | |
+--------------+---------------+---------------+
| | ------------- | ------------- |
+--------------+---------------+---------------+
14.Property, plant and equipment
+--------------+-------------+----------+----------+--------+--------+
| | Office | Computer | Fixtures | | Total |
| | Renovation | Hardware | and | | |
| | | | Fittings | | |
+--------------+-------------+----------+----------+--------+--------+
| | $000 | $000 | $000 | | $000 |
+--------------+-------------+----------+----------+--------+--------+
| Cost | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| As at | - | 79 | 9 | | 88 |
| 1 | | | | | |
| January | | | | | |
| 2007 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Additions | 281 | 66 | 71 | | 418 |
+--------------+-------------+----------+----------+--------+--------+
| Disposal | - | (20) | - | | (20) |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| As at | 281 | 125 | 80 | | 486 |
| 1 | | | | | |
| January | | | | | |
| 2008 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Additions | 34 | 14 | 15 | | 63 |
+--------------+-------------+----------+----------+--------+--------+
| Disposal | - | (5) | (7) | | (12) |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| As at | 315 | 134 | 88 | | 537 |
| 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| Accumulated | | | | | |
| depreciation | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| As at | - | (38) | (1) | | (39) |
| 1 | | | | | |
| January | | | | | |
| 2007 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Charge | (7) | (34) | (8) | | (49) |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Disposal | - | 7 | - | | 7 |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| As at | (7) | (65) | (9) | | (81) |
| 1 | | | | | |
| January | | | | | |
| 2008 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Charge | (76) | (19) | (15) | | (110) |
| for | | | | | |
| the | | | | | |
| year | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| Disposal | - | 4 | 2 | | 6 |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| As at | (83) | (80) | (22) | | (185) |
| 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| Net | | | | | |
| book | | | | | |
| value | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| As at | 232 | 54 | 66 | | 352 |
| 31 | | | | | |
| December | | | | | |
| 2008 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
| As at | 274 | 60 | 71 | | 405 |
| 31 | | | | | |
| December | | | | | |
| 2007 | | | | | |
+--------------+-------------+----------+----------+--------+--------+
| | ------ | ------ | ------ | | ------ |
+--------------+-------------+----------+----------+--------+--------+
15.Intangible assets
+--------------+-----------+
| |
+--------------+
| | Computer |
| | Software |
+--------------+-----------+
| | $000 |
+--------------+-----------+
| Cost | |
+--------------+-----------+
| As at | 131 |
| 1 | |
| January | |
| 2007 | |
+--------------+-----------+
| Additions | 16 |
+--------------+-----------+
| | -------- |
+--------------+-----------+
| As at | 147 |
| 1 | |
| January | |
| 2008 | |
| and at | |
| 31 | |
| December | |
| 2008 | |
+--------------+-----------+
| | -------- |
+--------------+-----------+
| Accumulated | |
| amortisation | |
+--------------+-----------+
| As at | (58) |
| 1 | |
| January | |
| 2007 | |
+--------------+-----------+
| Charge | (44) |
| for | |
| the | |
| year | |
+--------------+-----------+
| | -------- |
+--------------+-----------+
| As at | (102) |
| 1 | |
| January | |
| 2008 | |
+--------------+-----------+
| Charge | (36) |
| for | |
| the | |
| year | |
+--------------+-----------+
| | -------- |
+--------------+-----------+
| As at | (138) |
| 31 | |
| December | |
| 2008 | |
+--------------+-----------+
| | -------- |
+--------------+-----------+
| Net | |
| book | |
| value | |
+--------------+-----------+
| As at | 9 |
| 31 | |
| December | |
| 2008 | |
+--------------+-----------+
| | --------- |
+--------------+-----------+
| As at | 45 |
| 31 | |
| December | |
| 2007 | |
+--------------+-----------+
| | --------- |
+--------------+-----------+
16.Available-for-sale financial assets*
+-------------+--------+---------+
| Non-current | 2008 | 2007 |
| assets | $000 | $000 |
+-------------+--------+---------+
| Fixed | 10,161 | 96,000 |
| income | | |
| investments | | |
+-------------+--------+---------+
| Public | - | 40,940 |
| Equities | | |
| investments | | |
+-------------+--------+---------+
| Private | 18,094 | 25,246 |
| equities | | |
+-------------+--------+---------+
| Hedge | - | 25,120 |
| funds | | |
+-------------+--------+---------+
| Financial | 45,015 | 24,628 |
| and | | |
| minority | | |
| holdings | | |
| ** | | |
+-------------+--------+---------+
| Other | 5,662 | 5,829 |
| investments | | |
+-------------+--------+---------+
| | ------ | ------ |
+-------------+--------+---------+
| | 78,932 | 217,763 |
+-------------+--------+---------+
| | ------ | ------ |
+-------------+--------+---------+
| Current | | |
| assets | | |
+-------------+--------+---------+
| Fixed | 13,693 | - |
| income | | |
| investments | | |
+-------------+--------+---------+
| Public | 5,828 | - |
| Equities | | |
| investments | | |
+-------------+--------+---------+
| Hedge | 8,793 | - |
| funds | | |
+-------------+--------+---------+
| | ------ | ------ |
+-------------+--------+---------+
| | 28,314 | - |
+-------------+--------+---------+
| | ------ | ------ |
+-------------+--------+---------+
* * Financial assets relate to investments in bonds and equity classified as
available for sale. Financial assets are held in the balance sheet at the year
end at fair value. Fair value is measured by reference to the market value of
the assets at the balance sheet date as they are openly traded on a public
market.
** Financial and minority holdings relate to significant investments (of over
USD 5m) which are strategic for the company and are done on the form of equity
purchases or convertible loans. Main investments under this category are in the
fields of real estates and media.
During the year management decided to structure and manage the Group's portfolio
based on those investments which are considered to be long term, core
investments and those which could be readily convertible to cash, are expected
to be realised within normal operating cycle and form part of the Group's
treasury function.
During 2008 for the purpose of annual impairment and due to market conditions,
management considered the impairment of certain available for sale financial
assets. Impairment testing indicated that the financial assets carrying amount
may not be recoverable.
The related impairment charges in 2008, of USD 14,176m (2007 USD 5,594m), are
included within loss on investments.
17.Financial assets designated at fair value through profit or loss
+-------------+--------+--------+
| | 2008 | 2007 |
+-------------+--------+--------+
| | $000 | $000 |
+-------------+--------+--------+
| Non-current | | |
| assets | | |
+-------------+--------+--------+
| Private | 4,911 | - |
| equities | | |
+-------------+--------+--------+
| Real | 3,224 | - |
| estate | | |
+-------------+--------+--------+
| Derivatives | - | 729 |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| | 8,135 | 729 |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| Current | | |
| assets | | |
+-------------+--------+--------+
| Fixed | 8,106 | - |
| income | | |
| investments | | |
+-------------+--------+--------+
| Public | 35 | - |
| equity | | |
| investments | | |
+-------------+--------+--------+
| Hedge | 830 | - |
| funds | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| | 8,971 | - |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
During the year management decided to structure and manage the Group's portfolio
based on those investments which are considered to be long term, core
investments and those which could be readily convertible to cash, are expected
to be realised within normal operating cycle and form part of the Group's
treasury function.
18.Investment and development property
+-----------------+------------+-------------+-----------+
| 2008 | Investment | Development | |
+-----------------+------------+-------------+-----------+
| | property | Property | Total |
+-----------------+------------+-------------+-----------+
| | $000 | $000 | $000 |
+-----------------+------------+-------------+-----------+
| Valuation | 86,284 | 11,348 | 97,632 |
| as at 1 | | | |
| January | | | |
| 2008 | | | |
+-----------------+------------+-------------+-----------+
| Additions | - | 4,214 | 4,214 |
+-----------------+------------+-------------+-----------+
| Change | (3,323) | - | (3,323) |
| in | | | |
| fair | | | |
| value | | | |
+-----------------+------------+-------------+-----------+
| Exchange | 5,300 | 697 | 5,997 |
| difference | | | |
| translation | | | |
| value | | | |
+-----------------+------------+-------------+-----------+
| Transfer | 16,259 | (16,259) | - |
| on | | | |
| completion | | | |
+-----------------+------------+-------------+-----------+
| | ------ | ------ | ------ |
+-----------------+------------+-------------+-----------+
| Valuation | 104,520 | - | 104,520 |
| as at 31 | | | |
| December | | | |
| 2008 | | | |
+-----------------+------------+-------------+-----------+
| | ------ | ------ | ------ |
+-----------------+------------+-------------+-----------+
A real estate investment property - Wyler Park - in Bern, Switzerland was
purchased on 1 July 2007.
The investment property was valued by Wuest & Partners as at 31 December 2008 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. Development property was transferred to investment
property at year end, as, by the end of the year, the construction was
completed.
+---------------+------------+-------------+---------+
| 2007 | Investment | Development | |
+---------------+------------+-------------+---------+
| | property | Property | Total |
+---------------+------------+-------------+---------+
| | $000 | $000 | $000 |
+---------------+------------+-------------+---------+
| Valuation | - | - | - |
| as at 1 | | | |
| January | | | |
| 2007 | | | |
+---------------+------------+-------------+---------+
| Additions | 85,040 | 11,348 | 96,388 |
+---------------+------------+-------------+---------+
| Change | 1,244 | - | 1,244 |
| in | | | |
| fair | | | |
| value | | | |
+---------------+------------+-------------+---------+
| | ------ | ------ | ------ |
+---------------+------------+-------------+---------+
| Valuation | 86,284 | 11,348 | 97,632 |
| as at 31 | | | |
| December | | | |
| 2007 | | | |
+---------------+------------+-------------+---------+
| | ------ | ------ | ------ |
+---------------+------------+-------------+---------+
19.Investment in associate
+-------------+----------+--------+
| | 2008 | 2007 |
+-------------+----------+--------+
| | $000 | $000 |
+-------------+----------+--------+
| | | |
+-------------+----------+--------+
| As at | 69,639 | - |
| 1 | | |
| January | | |
+-------------+----------+--------+
| Adjustments | | |
| for the | | |
| period: | | |
+-------------+----------+--------+
| Share | (10,613) | 8,827 |
| of | | |
| (loss) | | |
| / | | |
| profit | | |
| for | | |
| the | | |
| year | | |
+-------------+----------+--------+
| Additions | 1,590 | 60,812 |
| for the | | |
| year | | |
+-------------+----------+--------+
| Deemed | (1,129) | - |
| disposal | | |
+-------------+----------+--------+
| Dividend | (2,610) | - |
| received | | |
+-------------+----------+--------+
| Share | (3,030) | - |
| of | | |
| (losses) | | |
| / gains | | |
| recognised | | |
| in equity | | |
+-------------+----------+--------+
| Unrealised | (2,938) | - |
| foreign | | |
| exchange | | |
| differences | | |
+-------------+----------+--------+
| Impairment | (10,970) | |
| charge | | |
+-------------+----------+--------+
| | ------ | ------ |
+-------------+----------+--------+
| As at | 39,939 | 69,639 |
| 31 | | |
| December | | |
+-------------+----------+--------+
| | ------ | ------ |
+-------------+----------+--------+
(a) Investment in associates - The group has 21.21% (2007: 21.28%) interest in
Atlas Estates Limited, an AIM - quoted real estate investment and Development
Company.
The following table illustrates summarised financial information of the group's
investment in Atlas Estates Ltd:
+-------------+-----------+----------+
| | 2008 | 2007 |
+-------------+-----------+----------+
| | $000 | $000 |
+-------------+-----------+----------+
| Share | | |
| of the | | |
| associate's | | |
| Balance | | |
| Sheet | | |
+-------------+-----------+----------+
| Non-current | 99,400 | 112,606 |
| assets | | |
+-------------+-----------+----------+
| Current | 52,783 | 52,546 |
| assets | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| Share | 152,183 | 165,152 |
| of | | |
| gross | | |
| assets | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| Current | (44,106) | (25,274) |
| liabilities | | |
+-------------+-----------+----------+
| Non-current | (56,810) | (70,239) |
| liabilities | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| | (100,916) | (95,513) |
+-------------+-----------+----------+
| Minority | (358) | - |
| interest | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| Share | (101,274) | (95,513) |
| of | | |
| gross | | |
| liabilities | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| Share | 50,909 | 69,639 |
| of net | | |
| assets | | |
+-------------+-----------+----------+
| Impairment | (10,970) | - |
| charge | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| | 39,939 | 69,639 |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
At the year end, the share price of Atlas Estates Limited was EUR 0.30 giving a
market value of the group's interest of USD 4.2m. The directors have carried out
an impairment review and have estimated that the recoverable amount is USD 11.0m
less than the Group's share of net assets. The impairment has been assessed
based on the risk that certain development properties may be subject to forced
sale. Accordingly, these properties have been written down to between 50%-70% of
their disclosed market value according to stage of development.
The directors recognise that such assumptions represent critical judgements that
are subject to uncertainty. In making such judgements, the directors have
assessed the exposure of each category of financial asset to market and
re-financing risk and the timeframe over which recoverable amount could be
achieved.
(b) Details of group undertakings
Details of the investments in which the group holds 20% or more of the nominal
value of any class of share capital are as follows:
+-------------+---------------+----------+------------+----------------+
| Name | Place | Holding | Proportion | Principal |
| of | of | | of voting | activity |
| Subsidiary | incorporation | | rights and | |
| | | | shares | |
| | | | held | |
+-------------+---------------+----------+------------+----------------+
| Livermore | British | Ordinary | 100% | Fund |
| Capital | Virgin | shares | | management |
| Limited | Islands | | | (Dormant) |
+-------------+---------------+----------+------------+----------------+
| Livermore | British | Ordinary | 100%* | Hedge |
| Fund I | Virgin | shares | | Fund, |
| Limited | Islands | | | (Dormant) |
+-------------+---------------+----------+------------+----------------+
| Livermore | Switzerland | Ordinary | 100% | Administration |
| Capital | | shares | | services |
| AG | | | | |
+-------------+---------------+----------+------------+----------------+
| Livermore | Switzerland | Ordinary | 100%* | Real |
| Investments | | shares | | Estate |
| AG | | | | management |
+-------------+---------------+----------+------------+----------------+
| Livermore | Switzerland | Ordinary | 100% | Real |
| Real | | shares | | Estate |
| Estate I | | | | management, |
| AG | | | | (Dormant) |
+-------------+---------------+----------+------------+----------------+
| Livermore | Luxemburg | Ordinary | 100% | Real |
| Enaxor | | shares | | Estate |
| S.a.r.l | | | | Owner |
+-------------+---------------+----------+------------+----------------+
| Livermore | Cyprus | Ordinary | 100% | Administration |
| Investments | | shares | | services |
| Cyprus | | | | |
| Limited | | | | |
+-------------+---------------+----------+------------+----------------+
| Empire | St. | Ordinary | 100% | Dormant |
| Payments | Kitts | shares | | company |
| Ltd | | | | |
+-------------+---------------+----------+------------+----------------+
| Sandhirst | Cyprus | Ordinary | 100% | Holding |
| Ltd | | shares | | of |
| | | | | investments |
+-------------+---------------+----------+------------+----------------+
+------------+------------+----------+--------+-------------+
| Associates | | | | |
+------------+------------+----------+--------+-------------+
| Atlas | Guernsey | Ordinary | 21.21% | Real |
| Estates | | shares | | Estates |
| Ltd | | | | Investments |
+------------+------------+----------+--------+-------------+
* Held by a Subsidiary undertaking.
All transactions between the 100% subsidiaries and the Group during the year
were eliminated on consolidation.
20.Trade and other receivables
+-------------+--------+--------+
| | 2008 | 2007 |
+-------------+--------+--------+
| | $000 | $000 |
+-------------+--------+--------+
| | | |
+-------------+--------+--------+
| Trade | 397 | 286 |
| receivables | | |
+-------------+--------+--------+
| Other | 9,431 | 1,564 |
| debtors | | |
| and | | |
| prepayments | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| | 9,828 | 1,850 |
+-------------+--------+--------+
| | ----- | ------ |
+-------------+--------+--------+
The carrying value of trade and other receivables approximates to their fair
value.
21.Cash and cash equivalents
Cash and cash equivalents included in the cash flow statement comprise the
following at the balance sheet date:
+-------------+-----------+----------+
| | 2008 | 2007 |
+-------------+-----------+----------+
| | $000 | $000 |
+-------------+-----------+----------+
| | | |
+-------------+-----------+----------+
| Short | - | 500 |
| term | | |
| deposits | | |
+-------------+-----------+----------+
| Cash | 2,468 | 9,417 |
| at | | |
| bank | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| | 2,468 | 9,917 |
+-------------+-----------+----------+
| Bank | (8,518) | (15,825) |
| overdrafts | | |
| used for | | |
| cash | | |
| management | | |
| purposes | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
| Cash | (6,050) | (5,908) |
| and | | |
| cash | | |
| equivalents | | |
| in the | | |
| statement | | |
| of cash | | |
| flows | | |
+-------------+-----------+----------+
| | ------ | ------ |
+-------------+-----------+----------+
22.Shareholders equity
Share capital comprises the following:
+--------------+-------------+-----------+
| 2008 | $0 | Share |
| | shares | premium |
| | Number | arising |
| | | $000 |
+--------------+-------------+-----------+
| | | |
+--------------+-------------+-----------+
| As at | 284,027,772 | 202,635 |
| 1 | | |
| January | | |
| 2008 | | |
+--------------+-------------+-----------+
| Issued | 11,342,629 | 5,693 |
| under | | |
| the | | |
| Scrip | | |
| dividend | | |
| offer | | |
+--------------+-------------+-----------+
| Re-purchased | (3,391,961) | (1,798) |
| and held in | | |
| treasury | | |
+--------------+-------------+-----------+
| | ---------- | --------- |
+--------------+-------------+-----------+
| As at | 291,978,440 | 206,530 |
| 31 | | |
| December | | |
| 2008 | | |
+--------------+-------------+-----------+
12,141,961 (2007: 8,750,000) shares were held in treasury at the year end.
The Company has authorised share capital of 1,000,000,000 ordinary shares with
no par value, and no restrictions.
On 22 August 2008 the company announced that it had issued 11,342,629 new
ordinary shares under the scrip dividend offer, which had been approved at the
AGM held on 12 August 2008.
The Company has a share option scheme. The outstanding share options to acquire
ordinary shares as at 31 December 2008 were as follows:
+-------------+-------------+-----------+----------+----------+----------+----------+
| |
+-------------+
| | Outstanding | Date | Exercise | Exercise | Earliest | Expiry |
| | Share | granted | price | price | exercise | of |
| | options | | GBP | $ | date | exercise |
| | | | | | | date |
+-------------+-------------+-----------+----------+----------+----------+----------+
| As at | 12,945,555 | | | | | |
| 1 | | | | | | |
| January | | | | | | |
| 2007 | | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| Share | (1,400,000) | | | | | |
| options | | | | | | |
| forfeited | | | | | | |
| on | | | | | | |
| termination | | | | | | |
| of | | | | | | |
| employment | | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| | ---------- | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| As at | 11,545,555 | | | | | |
| 1 | | | | | | |
| January | | | | | | |
| 2008 | | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| Issued | 500,000 | 13/05/08 | 0.30 | 0.58407 | 13/05/09 | |
| on 13 | | | | | |13/05/18 |
| May | | | | | | |
| 2008 | | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| | ---------- | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| As at | 12,045,555 | | | | | |
| 31 | | | | | | |
| December | | | | | | |
| 2008 | | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
| | ---------- | | | | | |
+-------------+-------------+-----------+----------+----------+----------+----------+
The fair value of options granted to employees was determined using the Binomial
valuation model. The model takes into account a volatility rate of between
41-45% calculated using the historical volatility of a peer group of similar
companies and a risk free interest rate of 4.0-4.4% and it has been assumed the
options have an expected life of two years post date of vesting.
The expense for the period has been included in amortisation and non-recurring
expenses (see note 0).
+--------------+-------------+-----------+
| 2007 | $0 | Share |
| | shares | premium |
| | Number | arising |
| | | $000 |
+--------------+-------------+-----------+
| | | |
+--------------+-------------+-----------+
| As at | 292,777,772 | 209,807 |
| 1 | | |
| January | | |
| 2007 | | |
+--------------+-------------+-----------+
| Re-purchased | (8,750,000) | (7,172) |
| and held in | | |
| treasury | | |
+--------------+-------------+-----------+
| | ---------- | --------- |
+--------------+-------------+-----------+
| As at | 284,027,772 | 202,635 |
| 31 | | |
| December | | |
| 2007 | | |
+--------------+-------------+-----------+
8,750,000 (2006: Nil) shares were held in treasury at the year end.
The Company has authorised share capital of 1,000,000,000 ordinary shares with
no par value, and no restrictions.
23.Bank Loans
+--------+--------+--------+
| | 2008 | 2007 |
+--------+--------+--------+
| | $000 | $000 |
+--------+--------+--------+
| | | |
+--------+--------+--------+
| Long | 74,134 | 69,411 |
| term | | |
| bank | | |
| loan | | |
+--------+--------+--------+
| | ------ | ------ |
+--------+--------+--------+
The long term bank loan is related to Wylerpark property investment purchase and
is secured on this property. Interest is payable at 4.15% and the loan balance
is repayable on 12 July 2014.
24.Bank Overdrafts
+------------+---------+--------+
| | 2008 | 2007 |
+------------+---------+--------+
| | $000 | $000 |
+------------+---------+--------+
| | | |
+------------+---------+--------+
| Short | 8,518 | 15,825 |
| term | | |
| bank | | |
| overdrafts | | |
+------------+---------+--------+
| | ------ | ------ |
+------------+---------+--------+
25.Short term bank loans
+--------+---------+--------+
| | 2008 | 2007 |
+--------+---------+--------+
| | $000 | $000 |
+--------+---------+--------+
| | | |
+--------+---------+--------+
| Short | 7,370 | - |
| term | | |
| bank | | |
| loans | | |
+--------+---------+--------+
| | ------ | ------ |
+--------+---------+--------+
26.Trade and other payables
Amounts falling due within one year
+----------+--------+--------+
| | 2008 | 2007 |
+----------+--------+--------+
| | $000 | $000 |
+----------+--------+--------+
| | | |
+----------+--------+--------+
| Trade | 1,370 | 1,607 |
| payables | | |
+----------+--------+--------+
| Other | 1,850 | 34,327 |
| payables | | |
| and | | |
| accrued | | |
| expenses | | |
+----------+--------+--------+
| | ------ | ------ |
+----------+--------+--------+
| | 3,220 | 35,934 |
+----------+--------+--------+
| | ------ | ------ |
+----------+--------+--------+
The Directors consider that the carrying value of trade and other payables
approximates to their fair value.
Included in other payables and accrued expenses as at 31 December 2007 is USD
28,794,000 relating to amounts due on the purchase of associate (31 December
2008: USD nil)
27.Current tax payable
+-------------+--------+--------+
| | 2008 | 2007 |
+-------------+--------+--------+
| | $000 | $000 |
+-------------+--------+--------+
| | | |
+-------------+--------+--------+
| Corporation | 127 | 109 |
| tax payable | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
28.Related party transactions
+----------------+---------+---------+
| | 2008 | 2007 |
+----------------+---------+---------+
| | $000 | $000 |
+----------------+---------+---------+
| | | |
+----------------+---------+---------+
| Amounts | 5,500 | 5,500 |
| owed by | | |
| key | | |
| management | | |
+----------------+---------+---------+
| | ------- | ------- |
+----------------+---------+---------+
| Interest | 225 | 190 |
| receivable | | |
| on key | | |
| management | | |
| balances | | |
+----------------+---------+---------+
| | ------- | ------- |
+----------------+---------+---------+
| Amounts | (63) | 94 |
| owed | | |
| (to) / | | |
| from | | |
| Directors | | |
+----------------+---------+---------+
| | ------- | ------- |
+----------------+---------+---------+
| Administration | 117 | 193 |
| services | | |
| provided by | | |
| Tradal Limited | | |
+----------------+---------+---------+
| | ------- | ------- |
+----------------+---------+---------+
| Paid | 840 | 688 |
| in | | |
| respect | | |
| of | | |
| services | | |
| * | | |
+----------------+---------+---------+
| | ------- | ------- |
+----------------+---------+---------+
* These payments were made in respect of members of key management either
directly to them or to companies to which they are related. Payments to key
management members are for salary and fees and do not include any amounts
related to short term employee benefits, post employment benefits, other long
term benefits, termination benefits and share based benefits.
Tradal Ltd is a related party by virtue of common ownership with Livermore
Investments Group Limited.
Loans of $5,500,000 were made to key management during the year ended 31
December 2007 for the acquisition of shares in the Company. Interest is payable
on these loans at US LIBOR plus 0.25% and the loans are secured on the shares
acquired. The loans are repayable on the earlier of the employee leaving the
Company or November 2010.
29.Contingent liabilities
The agreement with PartyGaming Plc relating to the disposal of the remaining
online gaming operations which was completed in January 2007, could potentially
give rise to a liability arising from warranties and indemnities included within
the sale and purchase agreement.
See further details in note 0 - "Litigation"
No further information is provided as the directors consider it could prejudice
the outcome of any claim.
30.Other commitments and contingencies
+-------------+--------+--------+
| | 2008 | 2007 |
+-------------+--------+--------+
| | $000 | $000 |
+-------------+--------+--------+
| Future | | |
| minimum | | |
| lease | | |
| commitments | | |
| under | | |
| property | | |
| operating | | |
| leases: | | |
+-------------+--------+--------+
| Less | - | - |
| than | | |
| one | | |
| year | | |
+-------------+--------+--------+
| Committed | - | 6,266 |
| real | | |
| estate | | |
| development | | |
| expenditure | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| Total | - | 6,266 |
| commitments | | |
| falling due | | |
| within one | | |
| year | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
The company provided a corporate guarantee to DTH-Boom TV in the amount of
EUR2.5m, as part of shareholders guarantee required by a financing bank as
condition to a loan facility provided to DTH-Boom. Wyler park property
investment loan is secured on the property itself.
31.Litigation
In Q3 2007, an ex-employee of Empire Online Limited (the Company's previous
name), filed a law suit against the Company, one of its directors, and one of
its former subsidiaries, in the Labour Court of Tel Aviv. According to the
lawsuit, the plaintiff claims compensation relating to the event of the sale of
all commercial activities of Empire Online Limited until the end of 2006, and
for terms relating to the termination of his employment with Empire Online
Limited. Prior to the filing of the lawsuit, 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. Both litigation procedures are
still in process. During 2008, positive progress was made in favour of the
Company relating to both litigation procedures, and the Company is confident
with its success in the process. Regardless, the Company expects that final
resolution will not be achieved in the near future.
On 23 December 2008, a law suit was filed against the Company by PartyGaming
PLC, for a disputed amount of USD 451,723 (of which USD 90,652 was paid to a
third party according to a specific agreement). The Company, which believes the
disputed amount is owed to it under past service contract, filed its statement
of defence and counter claim on 13 February 2009. Management believes there is
minimal risk that a ruling will be made against the Company in respect of this
case.
32.Financial risk management objectives and policies
Background
The Group's financial instruments comprise available for sale investments,
derivatives, cash balances and receivables and payables that arise directly from
its operations.
Risk Objectives and Policies
The objective of the Group is to achieve growth of shareholder value, yet in
line with reasonable risk, taking into consideration that the protection of
long-term shareholder value is paramount. The policy of the Board is to provide
a framework within which the Investment Manager can operate and deliver the
objectives of the Group.
Risks Associated with Financial Instruments
Tax risk
Since the Group trades in a number of jurisdictions, there is a risk that
certain tax authorities consider that it should be subject to tax in those
countries. The directors have considered these risks and concluded that no
further tax provision is required.
Foreign currency risk
Foreign currency risks arise in two distinct areas, which affect the valuation
of the investment portfolio, 1) where an investment is denominated and paid for
in a currency other than US Dollars; and 2) where an investment has substantial
exposure to non US Dollars underlying assets or cash flows. Although the Company
reports in USD, most of the Company's assets are in non USD currencies and the
Company in general does not hedge its currency exposure. The Company
discretionally partially hedges against foreign currency movements affecting the
value of the investment portfolio based on his view on the relative strength of
certain currencies. The management monitors the effect of foreign currency
fluctuations through the pricing of the investments by the various markets. The
level of investments denominated in foreign currencies held by the Group at 31
December 2008 is the following:
+---------+-----------+--------------+--------+-----------+-------------+--------+
| | 2008 | 2008 | 2008 | 2007 | 2007 | 2007 |
| | $m | $m | $m | $m | $m | $m |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| | Financial | Liabilities | Net | Financial | Liabilities | Net |
| | assets | | value | assets | | value |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| US | 89.3 | (15.2) | 74.1 | 156.8 | (23.3) | 133.5 |
| Dollar | | | | | | |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| British | 16.5 | (2.3) | 14.2 | 45.3 | (-) | 45.3 |
| Pounds | | | | | | |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| Euro | 58.5 | (2.5) | 56.0 | 66.3 | (28.9) | 37.4 |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| Swiss | 113.4 | (81.5) | 31.9 | 105.5 | (69.4) | 36.1 |
| Francs | | | | | | |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| Indian | 3.6 | (-) | 3.6 | 16.8 | (-) | 16.8 |
| Rupee | | | | | | |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| Others | 0.1 | (-) | 0.1 | 7.3 | (-) | 7.3 |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| | ------ | ------ | ------ | ------ | ------ | ------ |
+---------+-----------+--------------+--------+-----------+-------------+--------+
| Total | 281.4 | (101.5) | 179.9 | 398.0 | (121.6) | 276.4 |
+---------+-----------+--------------+--------+-----------+-------------+--------+
Some of the USD denominated investments are backed by underlying assets which
are invested in non USD assets.
A 10% change of the rate of United States Dollar (USD) against the following
currencies at 31 December 2008 would have a change on equity by the amounts
shown below.
* A change of 10% in the exchange rate between USD and EURO will result in a
change of 3.0% in the NAV.
* A change of 10% in the exchange rate between USD and GBP will result in a change
of 0.8% in the NAV.
* A change of 10% in the exchange rate between USD and CHF will result in a change
of 1.7% in the NAV.
* A change of 10% in the exchange rate between USD and INR will result in a change
of 0.2% in the NAV.
Interest rate risk
The Group is exposed to interest rate risk on its interest-bearing instruments,
which are affected by changes in market interest rates. The Group has borrowings
of USD 74.1m (2007: USD 69.4m) related to a real estate asset (Wylerpark, Bern),
which have been fixed through the use of an interest rate swap.
The Group has banking credit lines, which are available on short notice for the
Company to use in their investment activities, the costs of which are based on
variable rates plus a margin. When an investment is made utilising the facility,
consideration is given to the financing costs which would impact the returns.
The level of banking facilities used is monitored by both the Board and the
management on a regular basis. If fully drawn, the credit lines could form up to
40% of the current value of the investment portfolio. The level of banking
facilities utilised at 31 December 2008 was USD 15.9m (2007: USD 15.8m). On 31
March 2009, the banking facilities utilised were USD 6.0m.
Interest rate changes will also impact equity prices. The level and direction of
changes in equity prices are subject to prevailing local and world economics as
well as market sentiment all of which are very difficult to predict with any
certainty. At 31 December 2008 and 2007 the Group had no financial liabilities
that bore an interest rate risk, other than the previously disclosed bank
facilities.
The Group has floating rate financial assets consisting of bank balances that
bear interest at rates based on the banks floating interest rate. During the
period the average rate of interest earned on cash balances was 5.39%. The
Group's interest bearing assets and liabilities are as follows:
+-------------+--------+--------+
| | |
+-------------+--------+
| | 2008 | 2007 |
| | $m | $m |
+-------------+--------+--------+
| Financial | | |
| assets | | |
+-------------+--------+--------+
| Subject | 13.1 | 29.1 |
| to | | |
| interest | | |
| rate | | |
| changes | | |
+-------------+--------+--------+
| Not | 8.4 | 29.2 |
| subject | | |
| to | | |
| interest | | |
| rate | | |
| changes | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| Total | 21.5 | 58.3 |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| Financial | | |
| liabilities | | |
+-------------+--------+--------+
| Subject | 23.9 | 15.8 |
| to | | |
| interest | | |
| rate | | |
| changes | | |
+-------------+--------+--------+
| Not | 74.1 | 69.4 |
| subject | | |
| to | | |
| interest | | |
| rate | | |
| changes | | |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
| Total | 98.0 | 85.2 |
+-------------+--------+--------+
| | ------ | ------ |
+-------------+--------+--------+
Changes in market interest rates will affect the valuation of fixed rate
interest bearing instruments. A 1% change in market interest rates would result
in an estimated 2.4% change in the value of fixed income financial assets.
+-----------+--------+--------+--------+--------+
| | 2008 | 2008 | 2007 | 2007 |
| | $000 | $000 | $000 | $000 |
+-----------+--------+--------+--------+--------+
| | Profit | Equity | Profit | Equity |
| | or | | or | |
| | loss | | loss | |
+-----------+--------+--------+--------+--------+
| Financial | 524 | - | 1,500 | - |
| assets | | | | |
+-----------+--------+--------+--------+--------+
| | ------ | ------ | ------ | ------ |
| | | | | |
+-----------+--------+--------+--------+--------+
| | 524 | - | 1,500 | - |
+-----------+--------+--------+--------+--------+
| | ------ | ------ | ------ | ------ |
+-----------+--------+--------+--------+--------+
Market price risk
By the nature of its activities, most of the Group's investments are exposed to
market price fluctuations. The Board monitors the portfolio valuation on a
regular basis and consideration is given to hedging or adjusting the portfolio
against large market movements.
Other than Atlas Estates, which represents some 20% of its portfolio, the Group
had no single major investments that in absolute terms and as a proportion of
the portfolio that could result in a significant reduction in the NAV and share
price. Due to the very low exposure of the group to public equities, and having
no specific correlation to any market, the market risk is negligible. The
portfolio as a whole does not correlate exactly to any Stock Exchange Index.
As the Group is now an investment company, many of the market risks are new.
Management of risks is primarily achieved by having a diversified portfolio to
spread the market risk. A 10% change in the value of the Group's portfolio of
financial instruments (excluding private equities and financial and minority
holdings) would result in a 2.6% change in equity.
+------------+--------+--------+--------+--------+
| | 2008 | 2008 | 2007 | 2007 |
| | $000 | $000 | $000 | $000 |
+------------+--------+--------+--------+--------+
| | Profit | Equity | Profit | Equity |
| | or | | or | |
| | loss | | loss | |
+------------+--------+--------+--------+--------+
| Available | - | 3,868 | - | 33,173 |
| for sale | | | | |
| financial | | | | |
| assets | | | | |
+------------+--------+--------+--------+--------+
| Financial | 1,025 | - | - | - |
| assets | | | | |
| designated | | | | |
| at fair | | | | |
| value | | | | |
| through | | | | |
| profit or | | | | |
| loss | | | | |
+------------+--------+--------+--------+--------+
| | ------ | ------ | ------ | ------ |
| | | | | |
+------------+--------+--------+--------+--------+
| | 1,025 | 3,868 | - | 33,173 |
+------------+--------+--------+--------+--------+
| | ------ | ------ | ------ | ------ |
+------------+--------+--------+--------+--------+
Derivatives
The Investment Manager may use derivative instruments in order to mitigate
market / price risk or to take a directional investment. These provide a limited
degree of protection against a rise in interest rates and would not materially
impact the portfolio returns if a large market movement did occur.
Credit Risk
The group invests in a wide range of securities with various credit risk
profiles including investment grade securities, sub investment grade and equity
positions. The investment in debt instruments is usually in investment grade
securities. However, the Group may invest also in sub investment grade or
unrated debt instruments. The investment manager mitigates the credit risk via
diversification across issuers. However, the Group is exposed to a migration of
credit rating, widening of credit spreads and default of any specific issuer.
The Group's portfolio of CDOs/CLOs which totals some USD 10.4m, is highly
correlated to the Global and US credit markets.
The Group only transacts with regulated institutions on normal market terms,
which are trade date plus one to three days. The levels of amounts outstanding
from brokers are regularly reviewed by the management. The duration of credit
risk associated with the investment transactions is the period between the date
the transaction took place, the trade date and the date the stock and cash are
transferred, the settlement date. The level of risk during the period is the
difference between the value of the original transaction and its replacement
with a new transaction. The Group is exposed to credit risk in respect of its
interest bearing investments of USD 21.5m.
At 31 December the credit rating distribution of the Group's bond portfolio was
as follows:
+--------+---------+------------+---------+------------+
| Rating | 2008 | Percentage | 2007 | Percentage |
| | Amount, | | Amount, | |
| | $000 | | $000 | |
+--------+---------+------------+---------+------------+
| AAA | - | - | 8,021 | 13.8% |
+--------+---------+------------+---------+------------+
| AA | - | - | 13,779 | 23.6% |
+--------+---------+------------+---------+------------+
| AA+ | 3,115 | 14.5% | - | - |
+--------+---------+------------+---------+------------+
| A | 2,913 | 13.5% | 2,087 | 3.6% |
+--------+---------+------------+---------+------------+
| A- | - | - | 6,451 | 11.0% |
+--------+---------+------------+---------+------------+
| BBB+ | 6,781 | 31.5% | 13,126 | 22.5% |
+--------+---------+------------+---------+------------+
| Bbe | - | - | 2,022 | 3.5% |
+--------+---------+------------+---------+------------+
| Not | 8,708 | 40.5% | 12,796 | 22.0% |
| Rated | | | | |
+--------+---------+------------+---------+------------+
| | ------ | ------ | ------ | ------ |
+--------+---------+------------+---------+------------+
| Total | 21,517 | 100.0% | 58,282 | 100.0% |
+--------+---------+------------+---------+------------+
| | ------ | ------ | ------ | ------ |
+--------+---------+------------+---------+------------+
Liquidity Risk
The only significant financial liability of the Group is the bank loan of CHF
79m used for purchase of a real estate property, which has a maturity in 2014
and is fully financed by the rental income from that same property. The loan is
collateralized by property valued at CHF 110.4m in December 2008. The loan is
non-recourse, i.e. the holding company and its assets (apart from the Wyler Park
property) are neither pledged for this loan nor liable for recovery in case of
default. The following table summarizes the Group's financial liabilities
according to their maturity duration.
+-------------+--------+---------+---------+--------+
| 31 | Less | Between | Between | Over 5 |
| December | than 1 | 1 and 2 | 2 and 5 | years |
| 2008 | year | years | years | |
+-------------+--------+---------+---------+--------+
| | $000 | $000 | $000 | $000 |
+-------------+--------+---------+---------+--------+
| Borrowings | 15,888 | - | - | 74,134 |
+-------------+--------+---------+---------+--------+
| Derivative | 1,985 | - | - | 6,164 |
| financial | | | | |
| instruments | | | | |
+-------------+--------+---------+---------+--------+
| Trade | 3,220 | - | - | - |
| and | | | | |
| other | | | | |
| payables | | | | |
+-------------+--------+---------+---------+--------+
+------------+--------+---------+---------+--------+
| 31 | Less | Between | Between | Over 5 |
| December | than 1 | 1 and 2 | 2 and 5 | years |
| 2007 | year | years | years | |
+------------+--------+---------+---------+--------+
| | $000 | $000 | $000 | $000 |
+------------+--------+---------+---------+--------+
| Borrowings | 15,825 | - | - | 69,411 |
+------------+--------+---------+---------+--------+
| Trade | 35,934 | - | - | - |
| and | | | | |
| other | | | | |
| payables | | | | |
+------------+--------+---------+---------+--------+
A large proportion of the Group's portfolio is invested in mid term private
equity investments with low or no liquidity. The investments of the Company in
publicly traded securities are subject to availability of buyers at any given
time and may be very low or non existent subject to market conditions.
The management take into consideration the liquidity of each investment when
purchasing and selling in order to maximise the returns to Shareholders by
placing suitable transaction levels into the market. Special consideration is
given to investments that represent more than 5% of the investee.
At 31 December 2008, the Company had liquid investments totalling USD 39.8m,
comprised of USD 5.9m in public equities, USD 9.6m in hedge funds, USD 21.8m in
fixed income investments and USD 2.5m in cash and cash equivalents.
During the year management decided to structure and manage the Group's portfolio
based on those investments which are considered to be long term, core
investments and those which could be readily convertible to cash, are expected
to be realised within normal operating cycle and form part of the Group's
treasury function.
The following table lists the Group's financial assets based on their maturity.
+------------+--------+---------+---------+--------+
| 31 | Less | Between | Between | Over 5 |
| December | than 1 | 1 and 2 | 2 and 5 | years |
| 2008 | year | years | years | |
+------------+--------+---------+---------+--------+
| | $000 | $000 | $000 | $000 |
+------------+--------+---------+---------+--------+
| Available | 28,314 | 20,288 | 50,590 | 8,054 |
| for sale | | | | |
| financial | | | | |
| assets | | | | |
+------------+--------+---------+---------+--------+
| Financial | 8,971 | 3,176 | 1,735 | 3,224 |
| assets | | | | |
| designated | | | | |
| at fair | | | | |
| value | | | | |
| through | | | | |
| profit or | | | | |
| loss | | | | |
+------------+--------+---------+---------+--------+
+------------+--------+---------+---------+--------+
| 31 | Less | Between | Between | Over 5 |
| December | than 1 | 1 and 2 | 2 and 5 | years |
| 2007 | year | years | years | |
+------------+--------+---------+---------+--------+
| | $000 | $000 | $000 | $000 |
+------------+--------+---------+---------+--------+
| Available | - | 158,553 | 30,128 | 29,102 |
| for sale | | | | |
| financial | | | | |
| assets | | | | |
+------------+--------+---------+---------+--------+
| Financial | - | - | - | 729 |
| assets | | | | |
| designated | | | | |
| at fair | | | | |
| value | | | | |
| through | | | | |
| profit or | | | | |
| loss | | | | |
+------------+--------+---------+---------+--------+
Capital Management
The Group considers its capital to be its issued share capital and reserves. The
Board regularly monitors its share discount policy and the level of discounts,
and whilst it has the option to re-purchase shares, it considers that the best
means of attaining good rating for its shares is to concentrate on good
shareholder returns.
However, the Board believes that the ability of the Company to re-purchase its
own Ordinary shares in the market may potentially enable it to benefit all
equity shareholders of the Company. The re-purchase of Ordinary shares at a
discount to the underlying net asset value would enhance the net asset value per
share of the remaining equity shares.
Under this policy, in 2008, the Company bought 3,391,961 of its Ordinary shares.
Financial assets by category:
+----------------------------------------+--------+---------+
| | 2008 | 2007 |
| | $000 | $000 |
+----------------------------------------+--------+---------+
| Non | | |
| current | | |
| assets | | |
+----------------------------------------+--------+---------+
| Available-for-sale | 78,932 | 217,763 |
| financial assets | | |
+----------------------------------------+--------+---------+
| Financial | 8,135 | 729 |
| assets | | |
| designated | | |
| at fair | | |
| value | | |
| through | | |
| profit and | | |
| loss | | |
+----------------------------------------+--------+---------+
| Current | | |
| assets | | |
+----------------------------------------+--------+---------+
| Loans | | |
| and | | |
| other | | |
| receivables: | | |
+----------------------------------------+--------+---------+
| Trade | 9,828 | 1,850 |
| and | | |
| receivables | | |
+----------------------------------------+--------+---------+
| Cash | 2,468 | 9,917 |
| and | | |
| cash | | |
| equivalent | | |
+----------------------------------------+--------+---------+
| Available-for-sale | 28,314 | - |
| financial assets | | |
+----------------------------------------+--------+---------+
| Financial | 8,971 | - |
| assets | | |
| designated | | |
| at fair | | |
| value | | |
| through | | |
| profit and | | |
| loss | | |
+----------------------------------------+--------+---------+
Financial liabilities by category:
+-------------------------------------------+--------+--------+
| |
+-------------------------------------------+
| | 2008 | 2007 |
| | $000 | $000 |
+-------------------------------------------+--------+--------+
| Current | | |
| liabilities | | |
+-------------------------------------------+--------+--------+
| Borrowings: | | |
+-------------------------------------------+--------+--------+
| Bank | 8,518 | 15,825 |
| overdrafts | | |
+-------------------------------------------+--------+--------+
| Short | 7,370 | - |
| term | | |
| bank | | |
| loans | | |
+-------------------------------------------+--------+--------+
| Trade | | |
| payables: | | |
+-------------------------------------------+--------+--------+
| Trade | 3,220 | 35,394 |
| and | | |
| other | | |
| payables | | |
+-------------------------------------------+--------+--------+
| Current | 127 | 109 |
| tax | | |
| payable | | |
+-------------------------------------------+--------+--------+
| Non | | |
| current | | |
| liabilities | | |
+-------------------------------------------+--------+--------+
| Borrowings: | | |
+-------------------------------------------+--------+--------+
| Bank | 74,134 | 69,411 |
| loan | | |
+-------------------------------------------+--------+--------+
| Derivative | 8,149 | - |
| financial | | |
| instruments | | |
+-------------------------------------------+--------+--------+
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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