TIDMLIV
RNS Number : 4351P
Livermore Investments Group Limited
29 May 2018
Highlights
-- Net Asset Value per share increased 11.0% to USD 1.00 (December 2016: USD 0.90).
-- For the year ended 31 December 2017, the Company announced an
interim dividend of USD 8m (USD 0.04576 per share) to members on
the register on 26 January 2018. The dividend was paid on 23
February 2018.
-- CLO portfolio and warehouse performed strongly generating USD 22.1m gains in 2017.
Chairman's and Chief Executive's Review
Introduction
We are pleased to announce the financial results for Livermore
Investments Group Limited ("Livermore" or "the Company") for the
year ended 31 December 2017. References to the Company hereinafter
also include its consolidated subsidiaries (note 10).
The year-end NAV was USD 1.00 per share (2016 NAV: USD 0.90 per
share). Net profit for the year was USD 16.4m (2016 Net Profit: USD
34.0m).
The Company recorded gains from the financial portfolio as the
US credit and CLO markets continued to perform well. Management
took advantage of lower funding costs to reduce the cost of
financing for several of its CLO positions. Interest and
distribution income from the financial portfolio totalled USD 28.0m
(2016: USD 26.3m).
References to financial statements hereinafter are to the
Company's consolidated financial statements.
Financial Review
The NAV of the Company at 31 December 2017 was USD 175.4m (2016:
USD 157.2m). Net profit, during the year was USD 16.4m, which
represents earnings per share of USD 0.09.
Administrative expenses were USD 6.2m (2016: USD 8.2m -
including discontinued operations).
The overall change in the NAV is primarily attributed to the
following:
31 December 2017 31 December 2016
US $m US $m
----------------- -----------------
Shareholders' funds at beginning of year 157.2 148.6
----------------- -----------------
___________ ___________
----------------- -----------------
Income from investments 28.0 30.4
----------------- -----------------
Disposal of Wyler Park - 7.6
----------------- -----------------
Realised (losses) / gains on investments (0.1) 0.3
----------------- -----------------
Unrealised gains on investments (4.0) (2.9)
----------------- -----------------
Unrealised exchange profit - 1.7
----------------- -----------------
Administration costs (6.2) (8.2)
----------------- -----------------
Net finance income / (costs) 0.5 (1.2)
----------------- -----------------
Tax credit - 3.8
----------------- -----------------
___________ ___________
----------------- -----------------
Increase in net assets from operations 18.2 31.5
----------------- -----------------
Purchase of own shares - (7.9)
----------------- -----------------
Dividends paid - (15.0)
----------------- -----------------
___________ ___________
----------------- -----------------
Shareholders' funds at end of year 175.4 157.2
----------------- -----------------
------ ------
----------------- -----------------
Net Asset Value per share US $1.00 US $0.90
----------------- -----------------
Dividend & Buyback
For the year ended 31 December 2017, the Board announced an
interim dividend of USD 8m (USD 0.04576 per share) to members on
the register on 26 January 2018. The dividend was paid on 23
February 2018.
During 2017, the Company cancelled 129,306,403 Ordinary Shares,
which it held as Treasury Shares. As at 31 December 2017, the
Company held no shares in treasury.
Richard B Rosenberg Noam Lanir
Chairman Chief Executive Officer
28 May 2018
Review of Activities
Introduction and Overview
The Company achieved strong performance in 2017, generating an
11.6% increase in NAV. Active management of its CLO and warehousing
portfolio were the key drivers of performance in 2017,
demonstrating the knowledge and skills of the management team to
create value as well as the resilience of the portfolio.
In 2017, the Company generated interest and distribution income
of USD 28.0m. The Company reported NAV/share of USD 1.00 and net
profit of USD 16.4m. Administrative expenses amount to USD 6.2m
(2016: USD 8.2m - including discontinued operations), finance
income USD 0.5m (2016: USD 0m) and finance costs were USD 0m (2016:
USD 1.2m - including discontinued operations). The net income was
primarily driven by interest and distribution income generated by
the CLO and warehousing portfolio partly offset by loss on fair
value of investments of USD 5.9m and administrative and financing
expenses as noted above.
The Company relies primarily on the interest and distribution
income generated by its CLO and warehouse portfolio. During the
year, the CLO and warehousing portfolio generated USD 27.8m in
income. CLO equity positions typically generate higher cashflow
than their expected IRRs because it is expected that future
defaults in the loans held by CLOs may erode the residual value
over time. Thus, the performance of the company's CLO portfolio is
mainly through the cash flow generated on a regular basis.
During 2017, spreads in the US senior secured loan market
tightened significantly, and management pro-actively worked with
banks and CLO managers to refinance and reduce the financing costs
of its individual CLO positions. This helped offset the spread
tightening on the assets and increased future potential cashflow
from these positions. On the warehousing front, management closed
six warehouses generating USD 4m in carry as well as generating
cheap entry points into new CLO positions. During the year, the CLO
and warehousing portfolio generated 22.7% return on invested
capital.
During the year, the Company invested an additional USD 35.9m in
primarily new issue CLO equity positions and disposed USD 26.2m of
CLO positions, while the warehouse portfolio increased by USD 8.3m
as compared to the beginning of the year.
The Company does not have an external management company
structure and thus does not bear the burden of external management
and performance fees. Furthermore, the interests of Livermore's
management are aligned with those of its shareholders as management
has a large ownership interest in Livermore shares.
Considering the strong liquidity position of Livermore, together
with its strong foothold in the US CLO market as well as the
robustness of its investment portfolio and the alignment of
management's interests with those of its shareholders, management
believes that the Company is well positioned to benefit from
current market conditions.
Global Investment Environment
The global economy gained further momentum in 2017 and global
GDP recorded its strongest growth since 2011. Monetary policies in
the major currency areas were still accommodative and financing
conditions favourable. Increased investment activity further buoyed
the broad-based recovery. In the advanced economies, employment
continued to grow and unemployment declined. Economic conditions
also developed favourably in the emerging economies. While
utilisation of production capacity increased globally, wage and
price gains remained subdued.
Global trade in goods rose by 4.5%, driven by the upswing in
manufacturing and the recovery in information and communications
technology. Higher demand from China further fostered global trade
and commodity prices continued to recover in 2017. While the price
for Brent crude briefly dipped below USD 50 per barrel in the first
half of the year, a reduction in high inventory levels, the
favourable global economic conditions and the agreement among the
major oil-producing countries to limit production saw the price
rise continuously from mid-year, reaching approximately USD 65 per
barrel at year-end. Prices for industrial metals also increased in
the wake of the global economic upturn.
Consumer and business confidence remained healthy until the end
of the year, suggesting that the upturn can be expected to
continue. Financing conditions, which remain favourable, are also
likely to contribute to this. Moreover, in 2017, several countries
saw structural reforms implemented that should boost economic
growth in the medium term. Political risks in certain countries, as
well as potential international tensions, remain a source of
uncertainty.
Economic growth in the US was considerably stronger at 2.3% in
2017 than in the previous year (1.5%). After a weak start at the
beginning of the year, the economy gained broad-based momentum. The
labour market was close to full employment with the unemployment
rate falling to 4.1% by the end of the year. Furthermore,
substantial tax cuts approved raised consumer confidence. These tax
cuts are likely to provide slight growth stimuli as early as
2018.
The economic upswing in the euro area firmed. Annual GDP growth
averaged 2.5% in 2017, compared with 1.8% the previous year. The
economy picked up in all euro area countries, with Germany
remaining a driving force. Employment continued to gain momentum in
most member states, and at year-end, the unemployment rate in the
euro area was below 9% for the first time since 2009. Against this
backdrop, consumer and business confidence continued to improve;
the last comparable boost in confidence was observed in 2000.
However, the situation in the individual Euro zone member states
painted an uneven picture with respect to the level of
unemployment, public debt levels and structural reform. While some
countries, such as France, initiated reforms, other countries only
made tentative progress. Moreover, the number of non-performing
loans remained high in some EU countries, despite an improvement on
the previous year. The future economic relationship between the EU
and the UK following the UK's decision to leave the union also
presents a challenge.
Inflation, as measured by the CPI, remained below central bank
targets in most advanced economies. Compared to 2016, however,
annual inflation recorded an increase in most cases, predominantly
due to higher energy prices. In the euro area, inflation rose to
1.5% from almost zero in the previous year. Core inflation,
however, remained at around 1%. US inflation averaged 2.1% and was
thus considerably higher than in the year before (1.3%). Core
inflation, however, receded slightly to 1.8%, primarily due to a
decline in prices for communication services.
In view of the moderate inflation rates, many central banks
maintained their expansionary monetary policy. One exception was
the US Federal Reserve, which continued to pursue a cautious
normalisation of its monetary policy after US inflation had
approached its target and the economy was close to full employment.
The Federal Reserve increased the target range for its policy rate
in three steps by a total of 0.75 percentage points to 1.25 -
1.50%. In October, it also began to reduce its balance sheet by no
longer reinvesting a portion of its matured government bonds and
mortgage-backed securities. The European Central Bank (ECB) left
its deposit rate at - 0.4% and the main refinancing rate at 0.0%.
It also continued its asset purchase programme, albeit reducing the
purchase volume by EUR 20 billion to EUR 60 billion per month in
April. Since developments in inflation were regarded as
disappointing, the ECB decided in October to further extend the
asset purchase programme until at least September 2018, but to
halve its monthly purchase volume to EUR 30 billion from January
2018. Key rates are expected to remain unchanged for an extended
period of time and well past the horizon of its net asset
purchases. The ECB also decided, as part of its regular refinancing
operations, to continue supplying banks with unlimited liquidity
until at least the end of 2019.
On the back of a strong economic growth and still accommodative
monetary policy, risk assets performed well in 2017. The S&P
500 was up every month of the year and ended with a gain of 21.8%
while the EuroStoxx 50 and MSCI ACWI Index generated a 9.15% and
24% return for the year respectively. US Credit markets had a good
year in 2017 with High Yield bonds returning 7.5% and Leveraged
Loans generating a total return of 4.25% as measured by the
Bloomberg Barclays US Corporate High Yield Index and the Credit
Suisse Leveraged Loan Index respectively. Volatility in the US
equity markets remained exceptionally low during the year and the
US 10 year Treasury bond yield was little changed.
Sources: Board of Governors of the Federal Reserve System,
European Central Bank (ECB), Swiss National Bank, Bloomberg, Morgan
Stanley
Livermore's Strategy
The financial portfolio is focused on fixed income instruments
which generate regular cash flows and include exposure mainly to
senior secured and usually broadly syndicated US loans and to a
limited extent emerging market debt through investments in CLOs.
This part of the portfolio is geographically focused on the US.
Strong emphasis is given to maintaining sufficient liquidity and
low leverage at the overall portfolio level and to re-invest in
existing and new investments along the economic cycle.
Financial portfolio and trading activity
The Company manages a financial portfolio valued at USD 126.9m
as at 31 December 2017, which is invested mainly in fixed income
and credit related securities.
The following is a table summarizing the financial portfolio as
of year-end 2017
Name 2017 2016
Book Value Book Value US
US $m $m
---------------------------- ------------- --------------
Investment in the
loan market through
CLOs 97.2 81.8
Open Warehouse facilities 25.5 17.3
Hedge Funds 1.0 1.0
Perpetual Bonds 1.2 1.2
Other Public Equities 2.0 2.0
---------------------------- ------------- --------------
Invested Total 126.9 103.3
---------------------------- ------------- --------------
Cash 34.2 60.4
---------------------------- ------------- --------------
Total 161.1 163.7
---------------------------- ------------- --------------
Senior Secured Loans and Collateralized Loan Obligations
(CLO):
US senior secured loans are a floating rate asset class with a
senior secured claim on the borrower and with overall low
volatility and low correlation to the equity market. CLOs are
managed portfolios invested into diversified pools of senior
secured loans and financed with long term financing.
US Leveraged loans continued to perform well in 2017 as demand
for floating rate product increased with expectations of higher
short terms rates in the US. Net inflows into loan funds amounted
to USD 9.4bn as per JP Morgan. The Credit Suisse Leveraged Loan
Index had a total return of 4.25% in 2017 and about two-thirds of
the loan market was trading over par according to S&P Capital
IQ. Borrowers took advantage of the increased demand and
successfully refinanced or repriced their spreads at lower levels.
At the same time, the 12 month lagging default rate by principal
amount on the S&P/LSTA Leveraged Loan Index as of December 2017
was 2.1% versus the long term average of 3%. Market participants
expect the default rates to stay at benign levels given economic
growth and the corporate tax cuts in the US.
The cost of financing for new CLOs also declined in line with
the spreads in the US loan market. Spreads on the AAA rated
tranches of CLOs declined from about 140bps at the start of the
year to about 110bps by the end of the year. The Company's
management took advantage of availability of lower financing costs
in the market to refinance and/or extend the reinvestment period of
several of its CLOs. As a result, the spread compression on the
loans has been significantly offset on such CLOs and an extension
of the reinvestment period has created optionality for CLO managers
to take advantage of loan price volatility that may arise in the
near-mid term.
The Company's CLO and warehousing portfolio generated cashflow
of USD 27.8m and a net return of about USD 22.1m in 2017
(approximately 22.7% on the 2017 invested capital). The Company
converted six warehouses into CLOs and generated about USD 4m in
carry during the year. As of year end 2017, the Company had two
open warehouses which have both been converted to CLOs as of the
date of publication of this report. The Company continues to look
for opportunities to invest in the first-loss tranche of warehouse
facilities with long tenures and no mark-to-market triggers. As of
the end of the year 2017, all of the Company's US CLO equity
positions were passing their Overcollateralization (OC) tests and
remained robust. Management continues to actively monitor the CLO
portfolio and position it towards longer reinvestment periods
through recycling old CLOs into new or refinancing them with
extended reinvestment periods, as well as conducting relative value
and opportunistic trading.
Looking into the near future, management believes that default
rates should continue to stay below historical averages as only a
small percentage of the US Leveraged Loan market matures before
2020 and the US corporate tax cuts and stronger economic growth
provide for a stable backdrop. Management continues to focus on
sectors such as Retail, Healthcare and Technology that are expected
to undergo shifts due to technology or regulation.
While management maintains a positive view on the CLO portfolio,
mid-long term performance may be negatively impacted by a strong
pull back in the US or European economy or geo-political events
that could result in a spike in defaults. Despite positive
developments in the overall health of the US economy, we
acknowledge the continued below trend growth globally as well as
headwinds relating to the potential monetary tightening in the US,
weak commodity markets and geopolitical risks.
The Company's CLO portfolio is divided into the following
geographical areas:
2017 Percentage 2016 Amount Percentage
Amount
US $000 US $000
US CLOs 96,536 99.28% 78,725 96.28%
Global Credit
CLOs - - 2,495 3.05%
European CLOs 699 0.72% 548 0.67%
------ ------ ------ ------
97,235 100% 81,768 100%
------ ------ ------ ------
Private Equity Funds
The other private equity investments held by the Company are
incorporated in the form of Managed Funds (mostly closed end funds)
mainly in the emerging economies of India and China. The
investments of these funds into their portfolio companies were
mostly done in 2008 and 2009. The Company expects material exits of
portfolio companies from funds to materialize between 2018 and
2020. During the reporting period distributions of USD 0.2m were
received from SRS Private.
The following summarizes the book value of the private equity
funds as at year-end 2017
Name Book Value
US $m
--------------------------- ------------
Evolution Venture
(Israel) 3.8
SRS Private (India) 1.0
Elephant Capital (India) 0.6
Da Vinci (Russia) 0.4
Panda Capital (China) 0.3
Other investments 1.0
Total 7.1
--------------------------- ------------
Evolution Venture: Evolution is an Israel focused Venture
Capital fund. It invests in early stage technology companies. Its
investments include a carrier-class Mobile Broadband Wireless (MBW)
Wi-Fi solutions company, a mobile keyboard and language correction
software company, a software company operating in the digital radio
market, a software test tool developer, and a virtualization
technology company. The virtualization technology company has been
performing well and is the main contributor to the funds' NAV.
SRS Private Fund: SRS Private is a private equity fund focused
on real estate in India. The fund has invested in residential and
mixed use projects in India as well as directly in certain real
estate companies. The assets are primarily located in and around
major cities of India such as Mumbai and Hyderabad. In 2017, the
fund distributed USD 0.2m from proceeds of its investment in SRS
Charminar. As the term of the fund is drawing to a close, the fund
manager informed the Company that it is in process of proposing a
solution to generate liquidity for the fund investors.
Elephant Capital: India-focused private equity fund, which was
AIM quoted (Ticker: ECAP). The fund delisted from the LSE/AIM
market in order to reduce costs given the small size of the
remaining fund. Livermore owns 9.9% of the delisted fund. As of
August 2017, the fund reported an unaudited NAV of 0.27 pence per
share.
Da Vinci: The fund is primarily focused on Russia and CIS
countries and is primarily invested in the Moscow Exchange and a
Ukrainian coal company.
Panda Capital: Panda Capital is a China-based private equity
fund focused on early-stage industrial operations in China. The
fund's main investment is in a bamboo flooring company in China,
which provides an innovative low cost alternative to hardwood
flooring in shipping containers. The manager is in the process of
building up operational capacity for product manufacturing.
The following table reconciles the review of activities to the
Company's financial assets as of 31 December 2017
2017
Name Book Value
US $m
------------------------ -------------
Financial Portfolio 126.9
Private Equity Funds 7.1
------------------------ -------------
Total 134.0
------------------------ -------------
Financial assets at
fair value through
profit or loss (note
4) 125.8
Financial assets at
fair value through
other comprehensive
income (note 5) 8.2
Total 134.0
------------------------ -------------
Events after the reporting date
The two warehouse facilities that the Company invested in,
during 2017, were closed in April and May 2018. For both
warehouses, with a carrying amount as at 31 December 2017 of USD
25.5m, the Company invested an additional amount of USD 10m during
2018 (before their closure). For these warehouses, Livermore's
investment amount plus net carry amounting to a total of USD 37.6m
became receivable in April and May 2018.
At 15 January 2018, the Board announced an interim dividend of
USD 8m (USD 0.04576 per share) to members on the register on 26
January 2018. The dividend was paid on 23 February 2018. There were
no other material events after the end of the reporting year, which
have a bearing on the understanding of these financial
statements.
Litigation
At the time of this Report, there is one matter in litigation
that the Company is involved in. Further information is provided in
note 31 to the financial statements.
Report of the Directors
The Directors submit their annual report and audited financial
statements of the Company for the year ended 31 December 2017.
The Board's objectives
The Board's primary objectives are to supervise and control the
management activities, business development, and the establishment
of a strong franchise in the Company's business lines. Measures
aimed at increasing shareholders' value over the medium to
long-term, such as an increase in NAV are used to monitor
performance.
The Board of Directors
Richard Barry Rosenberg (age 62), Non-Executive Director,
Chairman of the Board
Richard joined the Company in December 2004. He became
Non-Executive Chairman on 31 October 2006. He qualified as a
chartered accountant in 1980 and in 1988 co-founded the accountancy
practice SRLV. He has considerable experience in giving
professional advice to clients in the leisure and entertainment
sector. Richard is a Director of a large number of companies
operating in a variety of business segments.
Noam Lanir (age 51), Founder and Chief Executive Officer
Noam founded the Company in July 1998, to develop a specialist
online marketing operation. Noam has led the growth and development
of the Company's operations over the last nineteen years which
culminated in its IPO in June 2005 on AIM. Prior to 1998, Noam was
involved in a variety of businesses mainly within the online
marketing sector. He is also the major shareholder of Babylon Ltd,
an International Internet Company listed on the Tel Aviv Stock
Exchange. He is also a major benefactor of a number of charitable
organisations.
Ron Baron (age 50), Executive Director and Chief Investment
Officer
Ron was appointed as Executive Director and Chief Investment
Officer on 10 August 2007. Ron has led the establishment and
development of Livermore's investment platform as a leading
specialized house in the credit space. Ron also has wide investment
and M&A experience. From 2001 to 2006 Ron served as a member of
the management at Bank Leumi, Switzerland and was responsible for
investment activity. Prior to this he spent five years as a
commercial lawyer advising banks and large corporations on
corporate transactions, including buy-outs and privatisations. Ron
has over 17 years of experience as an investment manager with
particular focus on the US credit market and CLOs. He holds an MBA
from INSEAD Fontainebleau and a LLB (LAW) and BA in Economics from
Tel Aviv University.
Directors' responsibilities in relation to the financial
statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
International Financial Reporting Standards as adopted by the
European Union.
The Directors are required to prepare financial statements for
each financial year which give a true and fair view of the
financial position of the Company, and its financial performance
and cash flows for that period. In preparing these financial
statements, the Directors are required to:
-- Select suitable accounting policies and then apply them consistently;
-- Make judgments and estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Company's
transactions, and at any time enable the financial position of the
Company to be determined with reasonable accuracy and enable them
to ensure that the financial statements comply with the applicable
law and International Financial Reporting Standards as adopted by
the European Union. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the British Virgin Islands
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Disclosure of information to the Auditor
In so far as the Directors are aware:
-- there is no relevant audit information of which the Company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
Substantial Shareholdings
As at 25 April 2018 the Directors are aware of the following
interests in 3 per cent or more of the Company's issued ordinary
share capital:
Number % of issued
of Ordinary ordinary
Shares share capital
------------- ---------------
Groverton Management Ltd 133,936,588 76.62
RB Investments GmbH 25,456,903 14.56
Save as disclosed in this report and in the remuneration report,
the Company is not aware of any person who is interested directly
or indirectly in 3% or more of the issued share capital of the
Company or could, directly or indirectly, jointly or severally,
exercise control over the Company.
Details of transactions with Directors are disclosed in note 29
to the financial statements.
Corporate Governance Statement
Introduction
The Company recognises the importance of the principles of good
Corporate Governance and the Board is pleased to accept its
commitment to such high standards throughout the year. As an AIM
quoted company, Livermore is not required to follow the provisions
of the UK Corporate Governance Code (the "Code").
The Board Constitution and Procedures
The Company is controlled through the Board of Directors, which
currently comprises one Non-Executive Director and two Executive
Directors. The Chief Executive's responsibility is to focus on
co-ordinating the company's business and implementing Company
strategy.
A formal schedule of matters is reserved for consideration by
the Board, which meets approximately four times each year. The
Board is responsible for implementation of the investing strategy
as described in the circular to shareholders dated 6 February 2007
and adopted pursuant to shareholder approval at the Company's EGM
on 28 February 2007. It reviews the strategic direction of the
Company, its codes of conduct, its annual budgets, its progress
towards achievement of these budgets and any capital expenditure
programmes. In addition, the Directors have access to advice and
services of the Company Secretary and all Directors are able to
take independent professional advice if relevant to their duties.
The Directors receive training and advice on their responsibilities
as necessary. All Directors, submit themselves to re-election at
least once every three years.
Board Committees
The Board delegates clearly defined powers to its Audit and
Remuneration Committees. The minutes of each Committee are
circulated by the Board.
Remuneration Committee
The Remuneration Committee comprises of the Non-Executive
Chairman of the Board and a Non-Executive Director. Following the
resignation of one of the Non-Executive Directors, this committee
has one member until a new Non-Executive Director is appointed. The
Remuneration Committee considers the terms of employment and
overall remuneration of the Executive Directors and key members of
Executive management regarding share options, salaries, incentive
payments and performance related pay. The remuneration of
Non-Executive Directors is determined by the Board.
Audit Committee
The Audit Committee comprises of the Non-Executive Chairman of
the Board and a Non-Executive Director and is chaired by the
Chairman of the Board. Following the resignation of one of the
Non-Executive Directors, this committee has one member until a new
Non-Executive Director is appointed. The duties of the Committee
include monitoring the auditor's performance and reviewing
accounting policies and financial reporting procedures.
Communication with Investors
The Directors are available to meet with shareholders throughout
the year. In particular the Executive Directors prepare a general
presentation for analysts and institutional shareholders following
the interim and preliminary results announcements of the Company.
The chairman, Richard Rosenberg, is available for meetings with
shareholders throughout the year. The Board endeavours to answer
all queries raised by shareholders promptly.
Shareholders are encouraged to participate in the Annual General
Meeting at which the Chairman will present the key highlights of
the Company's performance. The Board will be available at the
Annual General Meeting to answer questions from shareholders.
Internal Control
The Board is responsible for ensuring that the Company has in
place a system of internal controls and for reviewing its
effectiveness. In this context, control is defined in the policies
and processes established to ensure that business objectives are
achieved cost effectively, assets and shareholder value safeguarded
and that laws and regulations are complied with. Controls can
provide reasonable but not absolute assurance that risks are
identified and adequately managed to achieve business objectives
and to minimise material errors, frauds and losses or breaches of
laws and regulations.
The Company operates a sound system of internal control, which
is designed to ensure that the risk of mis-statement or loss is
kept to a minimum.
Given the Company's size and the nature of its business, the
Board does not consider that it is necessary to have an internal
audit function. An internal audit function will be established as
and when the Company is of an appropriate size.
The Board undertakes a review of its internal controls on an
ongoing basis.
Going Concern
The Directors have reviewed the current and projected financial
position of the Company, making reasonable assumptions about
interest and distribution income, future trading performance,
valuation projections and debt requirements. On the basis of this
review, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the Annual Report and
accounts.
Independence of Auditor
The Board undertakes a formal assessment of the auditor's
independence each year, which includes:
-- a review of non-audit related services provided to the Company and related fees;
-- discussion with the auditor of a written report detailing all
relationships with the Company and any other parties which could
affect independence or the perception of independence;
-- a review of the auditor's own procedures for ensuring
independence of the audit firm and partners and staff involved in
the audit, including the rotation of the audit partner;
-- obtaining written confirmation from the auditor that it is independent;
-- a review of fees paid to the auditor in respect of audit and non-audit services.
Remuneration Report
The Directors' emoluments, benefits and shareholdings during the
year ended 31 December 2017 were as follows:
Directors' Emoluments
Each of the Directors has a service contract with the
Company.
Director Date of Fees Benefits Reward Total emoluments
agreement US $000 US $000 payments
US $000
------------------ ------------ --------- --------- ----------
2017 2016
US $000 US $000
------------------ ------------ --------- --------- ---------- --------- ---------
Richard
Barry Rosenberg 10/06/05 59 - 26 85 110
------------------ ------------ --------- --------- ---------- --------- ---------
Noam Lanir 10/06/05 400 45 250 695 945
------------------ ------------ --------- --------- ---------- --------- ---------
Ron Baron 01/09/07 350 - 2,478 2,828 3,978
------------------ ------------ --------- --------- ---------- --------- ---------
The dates are presented in day / month / year format.
Directors' Interests
Interests of Directors in ordinary shares
Notes As at 31 December As at 31 December 2016
2017
------------------ ------- ------------------------------ -------------------------------------------
Number Percentage Number Percentage Percentage
of Ordinary of ordinary of Ordinary of ordinary of voting
Shares share capital Shares share capital rights*
------------------ ------- ------------- --------------- ------------- --------------- -----------
Noam Lanir a) 133,936,588 76.620% 133,936,588 44.041% 76.620%
------------------ ------- ------------- --------------- ------------- --------------- -----------
Ron Baron b) 25,456,903 14.560% 25,456,903 8.371% 14.560%
------------------ ------- ------------- --------------- ------------- --------------- -----------
Richard
Barry Rosenberg 15,000 0.01% 15,000 0.005% 0.01%
--------------------------- ------------- --------------- ------------- --------------- -----------
* after consideration of treasury shares (note 14)
Notes:
a) Noam Lanir is interested in his ordinary shares by virtue of
the fact that he owns directly or indirectly all of the issued
share capital of Groverton Management Limited.
b) In 2007, loans of USD 5.523m were made to RB Investments
GMBH, a company owned by Ron Baron, for the acquisition of shares
in the Company. Interest was payable on these loans at 6 month US
LIBOR plus 0.25% per annum and the loans were secured on the shares
acquired. The loans were repayable on the earlier of the employee
leaving the Company or April 2013. In December 2012 the Board
decided to renew the outstanding amount of these loans for a period
of another five years. Based on the Board's decision, the
outstanding amount will be reduced annually on a straight line over
five years, as long as the key management employee remains with the
Company. The relevant reduction in the loan amount for the year was
USD 1.128m. The loans together with their related accrued interest
of USD 0.117m were classified as "other assets" and are included
under trade and other receivables (note 12).
Another loan of USD 2.500m was made during 2016, for the
acquisition of shares in the Company. Interest is payable on the
loan at 6 month US LIBOR plus 0.25% per annum and the loan is
secured on the shares acquired. The loan, including interest
accrued, is repayable on the earlier of the employee leaving the
Company or August 2019. The loan is included within trade and other
receivables (note 12).
Interests of Directors in share options
No of options Date Exercise Exercise Vesting period
at of grant price, Price*, of options
31 December GBP US $
2017
--------------- -------------- ---------- --------- --------- ---------------
Richard Barry
Rosenberg 500,000 13/05/08 0.30 0.41 Vested
--------------- -------------- ---------- --------- --------- ---------------
The options are exercisable up to 10 years after the date of
grant. No options were exercised during the year ended 31 December
2017.
* The exercise price as per the share option scheme is quoted in
British Pounds. The indicative equivalent USD amount shown in the
table above is based on the exchange rates as at 31 December
2017.
Share Option Scheme
The Company's remuneration committee (the "Committee") is
responsible for administering the Share Option Scheme. Options to
acquire Shares in the Company may be granted under the Share Option
Scheme to any employee or Director of the Company or of other
Company entities.
The option exercise price per Ordinary Share is determined by
the Committee but will be no less than market value of the Ordinary
Shares on the dealing day immediately preceding the date of grant.
The options are subject to continuous service conditions but are
not subject to any performance criteria.
The Share Option Scheme will terminate ten years after it was
adopted by the Company, or earlier in certain circumstances.
Remuneration Policy
The Company's policy has been designed to ensure that the
Company has the ability to attract, retain and motivate executive
Directors and other key management personnel to ensure the success
of the organization.
The following key principles guide its policy:
-- policy for the remuneration of executive Directors will be
determined and regularly reviewed independently of executive
management and will set the tone for the remuneration of other
senior executives
-- the remuneration structure will support and reflect the
Company's stated purpose to maximize long-term shareholder
value
-- the remuneration structure will reflect a just system of rewards for the participants
-- the overall quantum of all potential remuneration components
will be determined by the exercise of informed judgement of the
independent remuneration committee, taking into account the success
of the Company and the competitive global market
-- a significant personal shareholding will be developed in
order to align executive and shareholder interests
-- the assessment of performance will be quantitative and
qualitative and will include exercise of informed judgement by the
remuneration committee within a framework that takes account of
sector characteristics and is approved by shareholders
-- the committee will be proactive in obtaining an understanding of shareholder preferences
-- remuneration policy and practices will be as transparent as
possible, both for participants and shareholders
-- the wider scene, including pay and employment conditions
elsewhere in the Company, will be taken into account, especially
when determining annual salary increases.
Review of the Business and Risks
Risks
The Board considers that the risks the Shareholders face can be
divided into external and internal risks.
External risks to shareholders and their returns are those that
can severely influence the investment environment within which the
Company operates, and include economic recession, declining
corporate profitability, higher corporate default rates and lower
than historical recoveries, rising inflation and interest rates and
excessive stock-market speculation.
The Company's portfolio is exposed to interest rate changes,
credit risk, liquidity risk and volatility particularly in the US,
EU and India. In addition, the portfolio is exposed to currency
risks as some of the underlying portfolio is invested in assets
denominated in non-US currencies while the Company's functional
currency is USD. Investments in certain emerging markets are
exposed to governmental and regulatory risks.
The mitigation of these risks is achieved by following micro and
macroeconomic trends and changes, regular monitoring of underlying
assets and price movements and investment diversification. The
Company also engages from time to time in certain hedging
activities to mitigate these risks.
Internal risks to shareholders and their returns are related to
Portfolio risks (investment and geography selection and
concentration), balance sheet risk (gearing) and/or investment
mismanagement risks. The Company's portfolio has a significant
exposure to senior secured loans of US companies and emerging
market countries therefore has a concentration risk to this asset
class.
A periodic internal review is performed to ensure transparency
of Company activities and investments. All service providers to the
Company are regularly reviewed. The mitigation of the risks related
to investments is effected by investment restrictions and
guidelines and through reviews at Board Meetings.
As the portfolio of the Company is currently invested in USD
denominated assets, movements in other currencies are expected to
have a limited impact on the business.
On the asset side, the Company's exposure to interest rate risk
is limited to the interest bearing deposits and portfolio of bonds
and loans in which the Company invests. Currently, the Company is
primarily invested in sub-investment grade corporate loans through
CLOs, which exposes the Company to credit risk (defaults and
recovery rates, loan spreads over base rate) as well as liquidity
risks in the CLO market.
Management monitors liquidity to ensure that sufficient liquid
resources are available to the Company. The Company's credit risk
is primarily attributable to its fixed income portfolio, which is
exposed to corporate bonds with a particular exposure to the
financial sector and to US senior secured loans.
Further information on Financial risk management is provided in
note 34 of the financial statements.
Share Capital
There was no change in the authorised share capital during the
year to 31 December 2017. The authorised share capital is
1,000,000,000 ordinary shares with no par value.
Related party transactions
Details of any transactions of the Company with related parties
during the year to 31 December 2017 are disclosed in note 29 to the
financial statements.
By order of the Board of Directors
Chief Executive Officer
28 May 2018
Independent Auditor's Report to the Members of Livermore
Investments Group Limited
Opinion
We have audited the consolidated financial statements of
Livermore Investments Group Limited (the "Company") and its
consolidated subsidiaries Livermore Investments Cyprus Limited and
Livermore Capital AG (together with the Company the "Group"), which
comprise the consolidated statement of financial position as at 31
December 2017, the consolidated statements of profit or loss,
comprehensive income, changes in equity, and cash flows for the
year then ended, and the notes to the consolidated financial
statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial
statements give a true and fair view of the consolidated financial
position of the Group as at 31 December 2017 and of its
consolidated financial performance and its consolidated cash flows
for the year then ended, in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities
for the Audit of the Consolidated Financial Statements section of
our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants' Code of
Ethics for Professional Accountants (IESBA Code) together with the
ethical requirements that are relevant to our audit of the
consolidated financial statements in Cyprus, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements and the IESBA Code. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Emphasis of Matter - Uncertain Outcome of a Legal Claim
We draw attention to note 31 to the consolidated financial
statements, which describes the uncertain outcome of a legal claim
against one of the custodian banks that the Group and the Company
uses on its behalf. Our opinion is not modified in respect of this
matter.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
We have determined the matters described below to be the key
audit matters to be communicated in our report.
Key audit matter How the matter was addressed
Investments' valuation -- Level Our audit work included,
3 but was not restricted to:
The Group has financial assets
of $39m classified within the -- discussing the valuation
fair value hierarchy of level methodologies applied by
3, as disclosed in note 7 to the the directors and assessing
consolidated financial statements. their appropriateness for
The fair value of level 3 financial each investment;
assets is generally determined -- obtaining third party
either based on third party valuations, confirmations indicating
or when not available, based on the NAV of the investments
adjusted Net Asset Value (NAV) and comparing to clients'
calculations using inputs from records; and evaluating the
third parties. independent professional
valuer's competence, capabilities
The Group has invested in five and objectivity;
warehouse facilities, of which -- in cases where the valuations
the two have not been converted have been performed by the
to Collateralized Loan Obligations directors, evaluating the
(CLOs) as at the year end. These reasonableness of the underlying
two warehouse facilities were assumptions and verifying
converted to CLOs in April and the inputs used; as from
May 2018. The directors classify reliable third - party sources;
these facilities as Financial -- considering the adequacy
Assets at Fair Value through Profit of consolidated financial
or Loss. Their fair value is determined statement disclosures in
on an adjusted NAV calculation relation to the valuation
based on their return which occur methodologies used for each
in the post year end period on class of level 3 financial
their conversion to CLO. assets.
Due to the use of significant
judgements by the Directors, the
existence of unobservable inputs
and the significant total value
of financial assets within the
Level 3 hierarchy, we consider
the valuation of these investments
as key audit matter.
Consolidation of subsidiaries Our audit work included,
During 2017 the Directors re-assessed but was not restricted to:
their determination of which of
the subsidiaries, that are not -- evaluating the Directors'
investment entities themselves, assessment for the determination
provide services that relate to of which of the subsidiaries,
the Group's investment activities that are not investment entities
and therefore need to be consolidated themselves, provide services
rather than included within the that relate to the Company's
investments in subsidiaries measured investment activities;
at fair value through profit or -- assessing the reasonableness
loss. As a result, two subsidiaries of the Directors' assessment;
have been identified that are and
not investment entities themselves -- checking the adequacy
and their services relate to the of relevant disclosures.
Company's investment activities
(note 10 shows further details
of the Company's consolidated
and unconsolidated subsidiaries).
In performing this re-assessment,
the Directors exercised significant
judgment (note 3.17 (ii)).
Due to the use of significant
judgment by the Directors, we
consider the consolidation of
subsidiaries to be a key audit
matter.
Other Information
The Board of Directors is responsible for the other information.
The other information comprises the information included in the
Highlights, Chairman's and Chief Executive's Review, Review of
Activities, Report of the Directors, Corporate Governance
Statement, Remuneration Report, Review of the Business and Risks,
the Shareholder Information, the Notice of Annual General Meeting
and the Corporate Directory, but does not include the consolidated
financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not
cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of the Board of Directors for the Consolidated
Financial Statements
The Board of Directors is responsible for the preparation of
consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as
adopted by the European Union, and for such internal control as the
Board of Directors determines is necessary to enable the
preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of
Directors is responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Board of Directors either intends to
liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors is responsible for overseeing the Group's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgment and maintain professional skepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the Board of Directors.
-- Conclude on the appropriateness of the Board of Directors'
use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on
the Group's ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to cease
to continue as a going concern.
-- Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves a true
and fair view.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with the Board of Directors regarding, among
other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we
have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the Board of Directors, we
determine those matters that were of most significance in the audit
of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in
our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Other Matter
This report, including the opinion, has been prepared for and
only for the Company's members as a body and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility
for any other purpose or to any other person to whose knowledge
this report may come to.
The engagement partner on the audit resulting in this
independent auditor's report is Mr Nicos Mouzouris.
Nicos Mouzouris
Certified Public Accountant and Registered
Auditor
for and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered
Auditors
Limassol, 28 May 2018
Livermore Investments Group Limited
Consolidated Statement of Financial Position as at 31 December
2017
Note 2017 2016
Assets US $000 US $000
Non-current assets
Property, plant and equipment 8 15
Financial assets at fair value through
profit or loss 4 97,235 81,769
Financial assets at fair value through
other comprehensive income 5 7,129 5,634
Investments in subsidiaries 10 5,426 4,339
Trade and other receivables 12 2,553 2,513
--------- ---------
112,351 94,270
Current assets --------- ---------
Trade and other receivables 12 3,166 5,507
Financial assets at fair value through
profit or loss 4 28,612 20,318
Financial assets at fair value through
other comprehensive income 5 1,118 1,039
Cash at bank 13 34,175 60,387
--------- ---------
67,071 87,251
--------- ---------
Total assets 179,422 181,521
--------- ---------
Equity
Share capital 14 - -
Share premium and treasury shares 14 169,187 169,187
Other reserves (37,978) (39,842)
Retained earnings 44,236 27,829
--------- ---------
Total equity 175,445 157,174
--------- ---------
Liabilities
Current liabilities
Bank overdrafts 17 - 1,160
Trade and other payables 18 3,977 7,802
Provisions 30 - 385
Dividend payable 19 - 15,000
--------- ---------
3,977 24,347
--------- ---------
Total liabilities 3,977 24,347
--------- ---------
Total equity and liabilities 179,422 181,521
--------- ---------
Net asset value per share
Basic and diluted net asset value per
share (US $) 20 1.00 0.90
--------- ---------
These financial statements were approved by the Board of
Directors on 28 May 2018.
The notes 1 to 35 form part of these consolidated financial
statements.
Livermore Investment Group Limited
Consolidated Statement of Profit or Loss for the year ended 31
December 2017
Note 2017 2016
US $000 US $000
Continuing operations
Investment income
Interest and distribution income 23 28,043 26,334
(Loss) / profit on investments 24 (5,918) 1,749
------ ------
Gross profit 22,125 28,083
Administrative expenses 25 (6,204) (7,942)
------ ------
Operating profit 15,921 20,141
Finance costs 26 (19) (218)
Finance income 26 488 -
------ ------
Profit before taxation 16,390 19,923
Taxation charge 27 (18) (38)
------ ------
Profit for the year from continuing operations 16,372 19,885
Discontinued operation
Profit for the year on discontinued operations 21 - 14,091
------ ------
Profit for the year 16,372 33,976
------ ------
Earnings per share
Basic and diluted earnings per share
( US $)
* From continuing operations 28 0.09 0.11
* On discontinued operations 28 - 0.08
------ ------
0.09 0.19
------ ------
The profit for the year is wholly attributable to the owners of
the parent.
The notes 1 to 35 form part of these consolidated financial
statements.
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2017
Note 2017 2016
US $000 US $000
Profit for the year 16,372 33,976
Other comprehensive income:
Items that will be reclassified subsequently
to profit or loss
Foreign exchange gains from translation
of subsidiaries - 190
------ ------
16,372 34,166
------ ------
Items that are not reclassified subsequently
to profit or loss
Financial assets designated at fair value
through other comprehensive income -
fair value gains / (losses) 1,899 (4,301)
------ ------
Reclassification to profit or loss
Foreign exchange losses reclassified
on disposal of subsidiary 21 - 1,538
------ ------
- 1,538
------ ------
Total comprehensive income for the year 18,271 31,403
------ ------
The total comprehensive income for the year is wholly
attributable to the owners of the parent.
The notes 1 to 35 form part of these consolidated financial
statements.
Livermore Investment Group Limited
Consolidated Statement of Changes in Equity for the year ended
31 December 2017
Share Share Treasury Share Translation Investments Retained Total
capital premium Shares option reserve revaluation earnings
Note reserve reserve
US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Balance at 1
January
2016 - 215,499 (38,446) 5,506 (1,728) (1,147) (31,047) 148,637
Adjustment on
initial
application
of IFRS
9 3.1 - - - - - (34,471) 34,471 -
------ ------ ------ ------ ------ ------ ------ ------
- 215,499 (38,446) 5,506 (1,728) (35,618) 3,424 148,637
------ ------ ------ ------ ------ ------ ------ ------
Purchase of
own shares - - (7,866) - - - - (7,866)
Dividends - - - - - - (15,000) (15,000)
Transfer on
expiry
of options 15 - - - (5,429) - - 5,429 -
------ ------ ------ ------ ------ ------ ------ ------
Transactions
with
owners - - (7,866) (5,429) - - (9,571) (22,866)
------ ------ ------ ------ ------ ------ ------ ------
Profit for the
year - - - - - - 33,976 33,976
Other
comprehensive
income:
Financial assets
at fair value
through
OCI- Fair value
losses - - - - - (4,301) - (4,301)
Foreign
exchange
gains arising
from
translation
of
subsidiaries - - - - 190 - - 190
Foreign
exchange
losses
reclassified
on disposal
of subsidiary 21 - - - - 1,538 - - 1,538
------ ------ ------ ------ ------ ------ ------ ------
Total
comprehensive
income for
the year - - - - 1,728 (4,301) 33,976 31,403
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31
December
2016 - 215,499 (46,312) 77 - (39,919) 27,829 157,174
------ ------ ------ ------ ------ ------ ------ ------
Cancellation
of shares 14 - (46,312) 46,312 - - - - -
------ ------ ------ ------ ------ ------ ------ ------
Transactions
with
owners - (46,312) 46,312 - - - - -
------ ------ ------ ------ ------ ------ ------ ------
Profit for the
year - - - - - - 16,372 16,372
Other
comprehensive
income:
Financial assets
at fair value
through
OCI- Fair value
gains - - - - - 1,899 - 1,899
Transfer of
realised
gains - - - - - (35) 35 -
------ ------ ------ ------ ------ ------ ------ ------
Total
comprehensive
income for
the year - - - - - 1,864 16,407 18,271
------ ------ ------ ------ ------ ------ ------ ------
Balance at 31
December
2017 - 169,187 - 77 - (38,055) 44,236 175,445
------ ------ ------ ------ ------ ------ ------ ------
The notes 1 to 35 form part of these consolidated financial
statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31
December 2017
Note 2017 2016
US $000 US $000
Cash flows from operating activities
Profit before tax 16,390 19,923
Adjustments for
Depreciation 7 7
Interest expense 26 19 216
Interest and distribution income 23 (28,043) (26,334)
Bank interest income 26 (91) -
Loss / (profit) on investments 24 5,918 (1,749)
Exchange differences 26 (397) (243)
---------- ----------
(6,197) (8,180)
Changes in working capital
Decrease in trade and other receivables 2,301 24,540
(Decrease) / increase in trade and other
payables (3,825) 4,251
---------- ----------
Cash flows from operations (7,721) 20,611
Interest and distribution received 28,304 26,561
Settlement of litigation 30 (385) (128)
Tax paid (18) (39)
---------- ----------
Net cash from operating activities 20,180 47,005
---------- ----------
Cash flows from investing activities
Proceeds from disposal of subsidiary
- net of cash and cash equivalents disposed 21 - 31,752
Acquisition of investments (120,675) (37,039)
Proceeds from sale of investments 90,140 14,462
Settlement of derivative - (148)
---------- ----------
Net cash (used for) / from investing
activities (30,535) 9,027
---------- ----------
Cash flows from financing activities
Purchase of own shares 14 - (7,866)
Interest paid (125) (331)
Dividends paid (15,000) -
---------- ----------
Net cash used for financing activities (15,125) (8,197)
---------- ----------
Net (decrease) / increase in cash and
cash equivalents:
- from continuing operations (25,480) 47,835
- of discontinued operations 21 - 826
Cash and cash equivalents at the beginning
of the year 59,227 12,562
Exchange differences on cash and cash
equivalents 428 (245)
Cash and cash equivalent of subsidiaries,
removed on change in investment entity
status 2.1 - (1,751)
---------- ----------
Cash and cash equivalents at the end
of the year 13 34,175 59,227
---------- ----------
The notes 1 to 35 form part of these consolidated financial
statements.
Notes on the Consolidated Financial Statements
1. General Information
Incorporation, principal activity and status of the Company
1.1. The Company was incorporated as an international business
company and registered in the British Virgin Islands (BVI) on 2
January 2002 under IBC Number 475668 with the name Clevedon
Services Limited. The liability of the members of the Company is
limited.
1.2. The Company changed its name to Empire Online Limited on 5
May 2005 and then to Livermore Investments Group Limited on 28
February 2007.
1.3. The principal activity of the Company changed to investment
activities on 1 January 2007. Before that the principal activity of
the Company was the provision of marketing services to the online
gaming industry and, since 1 January 2006, the operation of online
gaming.
1.4. The principal legislation under which the Company operates
is the BVI Business Companies Act, 2004.
1.5. The registered office of the Company is located at Trident
Chambers, PO Box 146, Road Town, Tortola, British Virgin
Islands.
2. Basis of preparation
The consolidated financial statements ("the 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 an
accrual basis (other than for cash flow information) using the
significant accounting policies and measurement bases summarised in
note 3, and also on a going concern assumption.
The financial information is presented in US dollars because
this is the currency in which the Company primarily operates (i.e.
the Company's functional currency).
References to the Company hereinafter also include its
consolidated subsidiaries (note 10).
The Directors have reviewed the accounting policies used by the
Company and consider them to be the most appropriate.
2.1. Investment entity status
On 28 October 2016, Livermore disposed to a third party the 100%
of the shares of its subsidiary Livermore Investments AG in
Switzerland, and as a result discontinued its investment property
activities that constituted an operating segment of the Company
(notes 21 and 22). The Directors have determined that since the
discontinuance of its investment property activities, Livermore
meets the definition of an investment entity, as this is defined in
IFRS 10 "Financial Statements". As per IFRS 10 an investment entity
is an entity that:
(a) obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
(b) commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income, or both; and
(c) measures and evaluates the performance of substantially all
of its investments on a fair value basis.
In accordance with IFRS 10, an investment entity is exempted
from consolidating its subsidiaries, unless any subsidiary which is
not itself an investment entity mainly provides services that
relate to the investment entity's investment activities.
In Livermore's situation, two of its subsidiaries provide such
services. Note 10 shows further details of the consolidated and
unconsolidated subsidiaries.
Given the above, these financial statements consolidate the
Company's subsidiaries up to 28 October 2016. As of that date, the
subsidiaries (other than the two ones providing services that
relate to the investment entity's investment activities) have been
de-consolidated, and recognised as Investments in subsidiaries at
their fair value as at 28 October 2016 (note 10). No material gains
or losses occurred on this transition.
3. Accounting Policies
The significant accounting policies applied in the preparation
of the financial statements are as follows:
3.1. Adoption of new and revised IFRS
As from 1 January 2017, the Company adopted all the new or
revised IFRS and relevant amendments which became effective and
also were endorsed by the European Union, and are relevant to its
operations.
The adoption of the above did not have a material effect on the
financial statements.
In 2016, the Company elected to apply IFRS 9 "Financial
Instruments" as issued in July 2014, earlier than its effective
date, because the new accounting policies reflect better the
Company's business model and provide more reliable and relevant
information for its users to assess the amounts and timing of
future cash flows.
IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and
Measurement". The new standard introduces extensive changes to IAS
39's guidance on the classification and measurement of financial
assets and introduces a new 'expected credit loss' model for the
impairment of financial assets.
The date of the initial application of IFRS 9 was 1 January
2016.
The most significant impact of the adoption of IFRS 9, was on
the classification and measurement of the Company's financial
assets. The Directors reviewed the classification and measurement
of the Company's financial assets based on the new criteria that
consider the assets' contractual cash flows and the business model
in which they are managed, and determined that:
-- Financial assets previously classified as "financial assets
at amortised cost", shall remain in this same category.
-- Financial assets previously classified as "financial assets
at fair value through profit or loss", shall remain in this same
category.
-- Financial assets previously classified as
"available-for-sale" shall be reclassified as "financial assets at
fair value through profit or loss". However, the Directors on
initial application date have made an irrevocable election to
designate certain equity investments that are not held for trading,
which were previously classified as "available-for-sale", as
"financial assets at fair value through other comprehensive
income".
The impact of the adoption of IFRS 9 is summarized as
follows:
31 December 1 January
2016 2016
US $000 US $000
Reclassification out of Available-for-sale
financial assets (95,566) (81,147)
Reclassification to Financial assets at
fair value through profit or loss 85,429 67,196
Designated as Financial assets at fair
value through other comprehensive income 10,137 13,951
------ ------
Net assets impact - -
------ ------
Adjustment to Retained earnings 34,832 34,471
Adjustment to Investments revaluation
reserve (34,832) (34,471)
------ ------
Equity impact - -
------ ------
Also, the profit or loss for the year 2016 was higher by USD
3.669m (representing an increase of USD 0.02 on basic and diluted
earnings per share for 2016) due to the adoption of IFRS 9. This is
mostly attributable to the fact that the additional fair value
losses recognised in profit or loss were less than the impairment
losses on available-for-sale financial assets that would have been
recognised based on IAS 39.
The adoption of IFRS 9 did not have any significant impact on
the Company's financial liabilities.
The following IFRS (including relevant amendments and
interpretations) had been issued by the date of authorisation of
these financial statements but are not yet effective, or have not
yet been endorsed by the EU, for the year ended 31 December
2017:
Endorsed Effective date
by the (IASB)
EU
No 1 January 2016
* IFRS 14: "Regulatory Deferral Accounts"
Yes 1 January 2018
* IFRS 15: "Revenue from Contracts with Customers"
Yes 1 January 2019
* IFRS 16: "Leases"
No 1 January 2021
* IFRS 17: "Insurance Contracts"
Yes 1 January 2018
* IFRIC 22: "Foreign Currency Transactions and Advance
Consideration"
No 1 January 2019
* IFRIC 23: "Uncertainty over Income Tax Treatments"
Yes 1 January 2018
* Annual Improvements to IFRS 2014-2016 Cycle
No 1 January 2019
* Annual Improvements to IFRS 2015-2017 Cycle
Yes 1 January 2018
* Amendment to IFRS 2: "Classification and Measurement
of Share--based Payment Transactions"
Yes 1 January 2018
* Amendments to IFRS 4: "Applying IFRS 9 Financial
Instruments with IFRS 4 Insurance Contracts"
Yes 1 January 2019
* Amendment to IFRS 9: "Prepayment Features with
Negative Compensation"
No to be determined
* Amendment to IFRS 10, and IAS 28: "Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture"
Yes 1 January 2018
* Clarifications to IFRS 15: "Revenue from Contracts
with Customers"
No 1 January 2019
* Amendment to IAS 19: "Plan Amendment, Curtailment or
Settlement"
No 1 January 2019
* Amendment to IAS 28: "Long--term Interests in
Associates and Joint Ventures"
Yes 1 January 2018
* Amendment to IAS 40: "Transfers of Investment
Property"
No 1 January 2020
* Conceptual Framework for Financial Reporting
(Revised)
The Board of Directors expects that when the above Standards or
Interpretations become effective in future periods, they will not
have a material effect on the financial statements.
3.2. Investments in subsidiaries and basis of consolidation
Subsidiaries are entities controlled either directly or
indirectly by the Company.
Control is achieved where the Company is exposed, or has right,
to variable returns from its involvement with a subsidiary and has
the ability to affect those returns through its power over the
subsidiary.
The financial statements consolidate the financial statements of
the Company and, until 28 October 2016, all of its subsidiaries.
Since 28 October 2016, the date on which the Company met the
definition of an investment entity (note 2.1), the financial
statements consolidate the financial statements of the Company and
its subsidiaries providing services that relate to the Company's
investment activities (note 10 shows further details of the
consolidated and unconsolidated subsidiaries).
Investments in unconsolidated subsidiaries are initially
recognised at their fair value and subsequently measured at fair
value through profit or loss. Subsequently, any gains or losses
arising from changes in their fair value are included in profit or
loss for the year.
Dividends and other distributions from unconsolidated
subsidiaries are recognised as income when the Company's right to
receive payment has been established.
A subsidiary that is not an investment entity itself and which
provides services that relate to the Company's investment
activities is consolidated rather than included within the
investments in subsidiaries measured at fair value through profit
or loss.
The financial statements of the consolidated subsidiaries are
prepared using uniform accounting policies. Where necessary,
adjustments are made to the financial statements of consolidated
subsidiaries to bring their accounting policies into line with
those used by the Company. All consolidated subsidiaries have a
reporting date of 31 December.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
The results and cash flows of any consolidated subsidiaries
acquired or disposed of during the year are consolidated from the
effective date of acquisition or up to the effective date of
disposal.
3.3. Investments in joint ventures
A joint venture is an arrangement that the Company controls
jointly with one or more other investors, and over which the
Company has rights to a share of the arrangement's net assets
rather than direct rights to underlying assets and obligations for
underlying liabilities.
Investments in joint ventures are measured at fair value through
profit or loss in accordance with IFRS 9, based on the exemption
available by IAS 28 "Investments in Associates and Joint Ventures"
for entities that are venture capital organisations or similar
entities.
Dividends and other distributions from associates and joint
ventures are recognised as income when the Company's right to
receive payment has been established.
3.4. Current assets are those which, in accordance with IAS 1
Presentation Of Financial Statements are:
-- expected to be realised within normal operating cycle, via
sale or consumption, or
-- held primarily for trading, or
-- expected to be realised within 12 months from the reporting
date, or
-- cash and cash equivalent not restricted in their use.
All other assets are non-current.
3.5. Interest and distribution income
-- Interest income is recognised based on the effective interest
method.
-- Distribution income is recognised on the date that the
Company's right to receive payment is established, which in the
case of quoted securities is the ex-dividend date.
3.6. Foreign currency
The financial statements of the Company are presented in USD,
which is the currency of the primary economic environment in which
it operates (its functional currency).
Transactions in foreign currencies are recorded at the rates of
exchange prevailing on the dates of the transaction. Monetary
assets and liabilities denominated in non-functional currencies are
translated into functional currency using year-end spot foreign
exchange rates. Non-monetary assets and liabilities are translated
upon initial recognition using exchange rates prevailing at the
dates of the transactions. Non-monetary assets that are measured in
terms of historical cost in foreign currency are not
re-translated.
Gains and losses arising on the settlement of monetary items and
on the re-translation of monetary items are included in the profit
or loss for the year. Those that arise on the re-translation of
non-monetary items carried at fair value are included in the profit
or loss of the year as part of the fair value gain or loss except
for differences arising on the re-translation of non-monetary
financial assets designated at fair value through other
comprehensive income in respect of which gains and losses are
recognised in other comprehensive income. For such non-monetary
items any exchange component of that gain or loss is also
recognised in other comprehensive income.
3.7. Taxation
Current tax is the tax currently payable based on taxable profit
for the year in accordance with the tax laws applicable and
enacted.
Deferred taxes are calculated using the liability method on
temporary differences. Deferred tax is generally provided on the
difference between the carrying amounts of assets and liabilities
and their tax bases. However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of
an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax on
temporary differences associated with shares in subsidiaries and
joint ventures is not provided if reversal of these temporary
differences can be controlled by the Company 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 Company are assessed for
recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no
discounting. Deferred tax assets are recognised to the extent that
it is probable that the underlying deductible temporary differences
will be able to be offset against future taxable income. Current
and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted as
at the reporting date.
3.8. Equity instruments
Equity instruments issued by the Company are recorded at
proceeds received, net of direct issue costs.
Own equity instruments purchased by the Company or its
subsidiaries are recorded at the consideration paid, including
directly associated costs, and they are deducted from total equity
as treasury shares until they are sold or cancelled. Where such
shares are subsequently sold, any consideration received is
included within 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
received.
3.9. Share Options
Equity settled share-based payments are measured at fair value
at the date of grant.
The Company issues equity-settled share based payments to
certain employees. The fair value of share-based payments to
employees at grant date is measured using the Binomial pricing
model.
The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the Company's
estimate of the shares that will eventually vest and adjusted for
the effect of non market-based vesting conditions. The
corresponding credit is taken to the share option reserve.
On exercise of the options any related amounts recognised in the
share option reserve are transferred to share premium.
On lapse of the options any related amounts recognised in the
share option reserve are transferred to retained earnings.
3.10. Borrowing costs
Borrowing costs primarily comprise interest on the Company's
borrowings. Any borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets are
added to the cost of the corresponding assets until such time as
the assets are substantially ready for their intended use or sale.
All other borrowing costs are expensed in the period in which they
are incurred and reported within "finance costs".
No borrowing costs have been capitalised for either 2017 or
2016.
3.11. Financial assets
Financial assets are recognised when the Company becomes a party
to the contractual provisions of the financial instrument.
A financial asset is derecognised only where the contractual
rights to the cash flows from the asset expire or the financial
asset is transferred and that transfer qualifies for derecognition.
A financial asset is transferred if the contractual rights to
receive the cash flows of the asset have been transferred or the
Company 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 Company transfers
substantially all the risks and rewards of ownership of the asset,
or if the Company neither retains nor transfers substantially all
the risks and rewards of ownership but does transfer control of
that asset.
The Company classifies its financial assets in the following
measurement categories:
(a) those to be measured at fair value (either through other
comprehensive income, or through profit or loss), and
(b) those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the cash
flows. Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are solely
payment of principal and interest.
At initial recognition, the Company measures a financial asset
at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through
profit or loss are expensed in profit or loss.
Financial assets at fair value through profit or loss
The Company classifies the following financial assets at fair
value through profit or loss:
(a) equity investments that are held for trading;
(b) other equity investments for which the Directors have not
elected to recognise fair value gains and losses through other
comprehensive income; and
(c) debt investments that do not qualify for measurement at
either amortised cost or at fair value through other comprehensive
income.
All financial assets within this category are measured at their
fair value, with changes in value recognised in the profit or loss
when incurred.
Financial assets at fair value through other comprehensive
income
Financial assets at fair value through other comprehensive
income (OCI) comprise equity securities which are not held for
trading, and for which the Company has made an irrevocable election
at initial recognition to recognise changes in fair value through
OCI rather than profit or loss.
Where the Company's management has elected to present fair value
gains and losses on equity investments in other comprehensive
income, there is no subsequent reclassification of fair value gains
and losses to profit or loss. Dividends from such investments
continue to be recognised in profit or loss when the Company's
right to receive payments is established.
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and
interest are measured at amortised cost. A gain or loss on a
financial asset that is measured at amortised cost is recognised in
profit or loss when the asset is derecognised or impaired. Interest
income from these financial assets is recognised based on the
effective interest rate method.
Impairment
The Company assesses on a forward looking basis the expected
credit losses associated with its assets carried at amortised cost.
The impairment methodology applied depends on whether there has
been a significant increase in credit risk. For trade and other
receivables only, the Company applies the simplified approach
permitted by IFRS 9, which permits expected lifetime losses to be
recognised from initial recognition of the receivables.
Write offs
The Company writes off a financial asset when there is
information indicating that the counterparty is in severe financial
difficulty and there is no realistic prospect of recovery, e.g.
when the counterparty has been placed under liquidation or has
entered into bankruptcy proceedings. Financial assets written off
may still be subject to enforcement activities, taking into account
legal advice where appropriate. Any recoveries made are recognised
in profit or loss.
3.12. Financial liabilities
Financial liabilities are recognised when the Company becomes a
party to the contractual provisions of the financial
instrument.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Financial liabilities are measured initially at fair value plus
transaction costs, except for financial liabilities carried at fair
value through profit or loss, which are measured initially at fair
value.
Financial liabilities at amortised cost
After initial recognition financial liabilities are measured at
amortised cost using the effective interest rate method.
Derivative financial liabilities
The Company's financial liabilities may also include financial
derivative instruments.
All derivative financial instruments (which are not designated
as hedging instruments) are measured at fair value through profit
or loss.
3.13. Cash and cash equivalents
Cash comprises cash in hand and on demand deposits with banks.
Cash equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash. They include
unrestricted short-term bank deposits originally purchased with
maturities of three months or less.
Bank overdrafts are considered to be a component of cash and
cash equivalents, since they form an integral part of the Company's
cash management.
3.14. Provisions
Provisions are recognised when the Company has a present legal
or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation, and a reliable estimate of the amount can be made.
Where the Company expects a provision to be reimbursed, for example
under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually
certain.
No provision is made for possible claims or where an obligation
exists but it is not possible to make a reliable estimate.
Costs associated with claims made by the Company are charged to
the profit or loss as they are incurred.
3.15. Discontinued operations
A discontinued operation is a component of the Company that
either has been disposed of, or is classified as held for sale,
and:
(a) represents a separate major line of business or geographical
area of operations;
(b) is part of a single co--ordinated plan to dispose of a
separate major line of business or geographical area of operations;
or
(c) is a subsidiary acquired exclusively with a view to
resale.
The results from discontinued operations are presented in a
single amount in the profit or loss with further analysis in the
notes. This amount comprises the post--tax profit or loss of
discontinued operations and the post--tax gain or loss resulting
from the measurement and disposal of relevant assets. The
comparative disclosures for discontinued operations relate to the
operations that have been discontinued during the current reporting
period.
3.16. Segment reporting
In identifying its operating segments, management generally
follows the Company's investment activity lines. Management regards
that since the discontinuance of the investment property activity
(note 21), the Company's activities fall under a single operating
segment.
3.17. Critical accounting judgments and key sources of
estimation uncertainty
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and
requires management to exercise its judgement in the process of
applying the Company's accounting policies. It also requires the
use of assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of current
events and actions, actual results may ultimately differ from those
estimates.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Critical accounting judgements
(i) Classification of financial assets
The management exercises significant judgement in determining
the appropriate classification of the financial assets of the
Company. The Directors determine the appropriate classification of
the Company's financial assets based on Livermore's business model.
An entity's business model refers to how an entity manages its
financial assets in order to generate cash flows, considering all
relevant and objective evidence. The factors considered include the
contractual terms and characteristics which are very carefully
examined, and also the Company's intentions and expected needs for
realisation of the financial assets.
All investments (except from certain equity instruments that are
designated at fair value through other comprehensive income) are
classified as at fair value through profit or loss, because this
reflects more fairly the way these assets are managed by the
Company. The Company's business is investing in financial assets
with a view to profiting from their total return in the form of
income and capital growth. This portfolio of financial assets is
managed and its performance evaluated on a fair value basis, in
accordance with a documented investment strategy, and information
about the portfolio is provided internally on that basis to the
Company's Board of Directors and other key management
personnel.
(ii) Consolidation of subsidiaries
Management exercised significant judgment in determining which
of the subsidiaries that are not investment entities themselves,
provide services that relate to the Company's investment activities
and therefore need to be consolidated rather than included within
the investments in subsidiaries measured at fair value through
profit or loss. Following a revised assessment in 2017, two
subsidiaries have been identified that are not investment entities
themselves and their services relate to the Company's investment
activities. As a result, the Company has revised its comparative
amounts to consolidate those subsidiaries (note 3.18). Note 10
shows further details of the Company's consolidated and
unconsolidated subsidiaries.
Estimation uncertainty
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value
of financial instruments, where active market quotes are not
available. Details of the bases used for financial assets and
liabilities are disclosed in note 7. In applying the valuation
techniques management makes maximum use of market inputs, and uses
estimates and assumptions that are, as far as possible, consistent
with observable data that market participants would use in pricing
the instrument. Where applicable data is not observable (level 3),
management uses its best estimates which may vary from the actual
prices that would be achieved in an arm's length transaction at the
reporting date. Further information on level 3 valuations of
financial assets is provided in note 7.2.
3.18. Comparatives
As described in note 3.17 (ii), the comparative figures have
been restated for the consolidation of two of the subsidiaries that
are not investment entities themselves and provide services that
relate to the Company's investment activities. The main impact of
this restatement is as follows:
2016
US $000
Decrease in investments in subsidiaries (913)
Increase in property, plant and equipment 15
Increase in trade and other receivables 80
Increase in cash at bank 4
Decrease in trade and other payables 814
------
Net assets impact -
------
US $000
Decrease in fair value loss on investments
in subsidiaries 54
Increase in administrative expenses (54)
------
Profit or loss impact -
------
The Company does not present a third consolidated statement of
financial position at 1 January 2016 since the financial position
as at that date is not affected from the above reclassifications,
and remains unchanged in relation to the previously published
consolidated financial statements.
4. Financial assets at fair value through profit or loss
2017 2016
US $000 US $000
Non-current assets
Fixed income investments (CLO Income
Notes) 97,235 81,769
------ ------
97,235 81,769
------ ------
Current assets
Fixed income investments 26,647 18,368
Public equity investments 1,965 1,950
------ ------
28,612 20,318
------ ------
For description of each of the above categories, refer to note
6.
The above investments represent financial assets that are
mandatorily measured at fair value through profit or loss.
The Company treats its investments in the loan market through
CLOs as non-current investments as the Company generally intends to
hold such investments over a period longer than twelve months.
5. Financial assets at fair value through other comprehensive income
2017 2016
US $000 US $000
Non-current assets
Private equities 7,129 5,634
------ ------
Current assets
Hedge funds 1,118 1,039
------ ------
For description of each of the above categories, refer to note
6.
The above investments are non-trading equity investments that
have been designated at fair value through other comprehensive
income.
6. Financial assets at fair value
The Company allocates its non-derivative financial assets at
fair value (notes 4 and 5) as follows:
-- Fixed income investments relate to fixed and floating rate
bonds, perpetual bank debt, investments in the loan market through
CLOs, and investments in open warehouse facilities.
-- Private equities relate to investments in the form of equity
purchases in both high growth opportunities in emerging markets and
deep value opportunities in mature markets. The Company generally
invests directly in prospects where it can exert influence. Main
investments under this category are in the fields of real
estate.
-- Hedge funds relate to equity investments in funds managed by
sophisticated investment managers that pursue investment strategies
with the goal of generating absolute returns.
-- Public equity investments relate to investments in shares of
companies listed on public stock exchanges.
7. Fair value measurements of financial assets and liabilities
The following table (note 7.2) presents financial assets
measured at fair value in the consolidated statement of financial
position in accordance with the fair value hierarchy. This
hierarchy groups financial assets and liabilities into three levels
based on the significance of inputs used in measuring the fair
value of the financial assets and liabilities. The fair value
hierarchy has the following levels:
- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the
measurement date;
- Level 2: inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly; and
- Level 3: unobservable inputs for the asset or liability.
The level within which the financial asset is classified is
determined based on the lowest level of significant input to the
fair value measurement.
7.1 Valuation of financial assets and liabilities
-- Fixed Income Investments, and Public Equity Investments are
valued per their closing market prices on quoted exchanges, or as
quoted by market maker. Investments in open warehouse facilities
that have not yet been converted to CLOs, are valued based on an
adjusted net asset valuation.
The Company values the CLOs based on the valuation reports
provided by market makers. CLOs are typically valued by market
makers using discounted cash flow models. The key assumptions for
cash flow projections include default and recovery rates,
prepayment rates and reinvestment assumptions on the underlying
portfolios (typically senior secured loans) of the CLOs.
Default and recovery rates: The amount and timing of defaults in
the underlying collateral and the amount and timing of recovery
upon a default affect are key to the future cash flows a CLO will
distribute to the CLO equity tranche. All else equal, higher
default rates and lower recovery rates typically lead to lower cash
flows. Conversely, lower default rates and higher recoveries lead
to higher cash flows.
Prepayment rates: Senior loans can be pre-paid by borrowers.
CLOs that are within their reinvestment period may, subject to
certain conditions, reinvest such prepayments into other loans
which may have different spreads and maturities. CLOs that are
beyond their reinvestment period typically pay down their senior
liabilities from proceeds of such pre-payments. Therefore, the rate
at which the underlying collateral prepays impacts the future cash
flows that the CLO may generate.
Reinvestment assumptions: A CLO within its reinvestment period
may reinvest proceeds from loan maturities, prepayments, and
recoveries into purchasing additional loans. The reinvestment
assumptions define the characteristics of the loans that a CLO may
reinvest in. These assumptions include the spreads, maturities, and
prices of such loans. Reinvestment into loans with higher spreads
and lower prices will lead to higher cash flows. Reinvestment into
loans with lower spreads will typically lead to lower cash
flows.
Discount rate: The discount rate indicates the yield that market
participants expect to receive and is used to discount the
projected future cash flows. Higher yield expectations or discount
rates lead to lower prices and lower discount rates lead to higher
prices for CLOs.
-- Private Equities are valued using market valuation techniques
as determined by the Directors, mainly on the basis of valuations
reported by third-party managers of such investments. Real Estate
entities are valued by independent qualified property valuers with
substantial relevant experience on such investments. Underlying
property values are determined based on their estimated market
values.
-- Hedge Funds are valued per reports provided by the funds on a
periodic basis, and if traded, per their closing bid market prices
on quoted exchanges, or as quoted by market maker.
-- Derivative instruments are valued at fair value as provided
by counter parties (banks) of the derivative agreement.
-- Investments in subsidiaries and joint ventures are valued at
fair value as determined on an adjusted net asset valuation
basis.
7.2 Fair value hierarchy
Financial assets and financial liabilities measured at fair
value in the consolidated statement of financial position are
grouped into the fair value hierarchy as follows:
2017 2017 2017 2017 2016 2016 2016 2016
US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Level Level Level Total Level Level Level Total
1 2 3 1 2 3
Assets
Fixed income investments 1,132 97,235 25,515 123,882 1,117 81,769 17,251 100,137
Private equities - - 7,129 7,129 - - 5,634 5,634
Public equity
investments 1,965 - - 1,965 1,951 - - 1,951
Hedge funds - 1,118 - 1,118 - 1,038 - 1,038
Investments in
subsidiaries - - 5,426 5,426 - - 4,339 4,339
------ ------ ------ ------ ------ ------ ------ ------
3,097 98,353 38,070 139,520 3,068 82,807 27,224 113,099
------ ------ ------ ------ ------ ------ ------ ------
Liabilities - - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------
The methods and valuation techniques used for the purpose of
measuring fair value are unchanged compared to the previous
reporting period.
No financial assets or liabilities have been transferred between
levels, except from a certain equity instrument that was delisted
and therefore transferred from Level 1 to Level 3 in 2017.
Financial assets within level 3 can be reconciled from beginning
to ending balances as follows:
At fair Available-for-sale At fair value through Investments
value through profit or loss in subsidiaries
OCI
Private Private Real estate Private Fixed Income
equities equities equities investments Total
US $000 US $000 US $000 US $000 US $000 US $000 US $000
As at 1 January
2016 - 12,518 1,203 330 5,021 - 19,072
Transfer on
initial
application of
IFRS
9 (note 3.1) 12,848 (12,518) - (330) - - -
Change in
investment
entity status
(note
2.1) - - (1,288) - - 4,600 3,312
Transfer from
Level
1 369 - - - - - 369
Purchases - - - - 17,000 - 17,000
Settlement (3,308) - - - (6,062) - (9,370)
Gains /
(losses)
recognised in:
-Profit or loss - - - - 1,292 (261) 1,031
-Other
comprehensive
income (4,275) - - - - - (4,275)
Exchange
difference - - 85 - - - 85
------ ------ ------ ------ ------ ------ ------
As at 1 January
2017 5,634 - - - 17,251 4,339 27,224
Purchases - - - - 83,500 1,200 84,700
Settlement (124) - - - (75,500) - (75,624)
Gains /
(losses)
recognised in:
-Profit or loss - - - - 264 (113) 151
-Other
comprehensive
income 1,619 - - - - - 1,619
------ ------ ------ ------ ------ ------ ------
As at 31
December
2017 7,129 - - - 25,515 5,426 38,070
------ ------ ------ ------ ------ ------ ------
The above gains and losses recognised can be allocated as
follows:
At fair value At fair value
through OCI through profit Investments
or loss in subsidiaries
Private equities Fixed Income
investments Total
2016 US $000 US $000 US $000 US $000
Profit or loss
-Financial assets
held at year-end - 1,292 (261) 1,031
------ ------ ------ ------
Other comprehensive
income
-Financial assets
held at year-end (4,275) - - (4,275)
------ ------ ------ ------
Total (losses) / gains
for 2016 (4,275) 1,292 (261) (3,244)
------ ------ ------ ------
At fair value At fair value
through OCI through profit Investments
or loss in subsidiaries
Private equities Fixed Income
investments Total
2017 US $000 US $000 US $000 US $000
Profit or loss
-Financial assets
held at year-end - 264 (113) 151
------ ------ ------ ------
Other comprehensive
income
-Financial assets
held at year-end 1,619 - - 1,619
------ ------ ------ ------
Total gains / (losses)
for 2017 1,619 264 (113) 1,770
------ ------ ------ ------
The Company has not developed itself any quantitative
unobservable inputs for measuring the fair value of its level 3
financial assets at 31 December 2017 and 2016. Instead the Company
used prices from third-party pricing information without
adjustment.
Fixed income investments within level 3 represent open
warehouses that have been valued based on their net asset value.
Their net asset value is primarily driven by the fair value of
their underlying loan asset portfolio plus received and accrued
interest less the nominal value of the financing and accrued
interest on the financing. In all cases, due to the nature and the
short life of a warehouse, the carrying amounts of the warehouses'
underlying assets and liabilities are considered as representative
of their fair values.
Private equities within level 3 represent investments in private
equity funds. Their value has been determined by each fund manager
based on the funds' net asset value. Each fund's net asset value is
primarily driven by the fair value of its underlying investments.
In all cases, considering that such investments are measured at
fair value, the carrying amounts of the funds' underlying assets
and liabilities are considered as representative of their fair
values.
Investments in subsidiaries have been valued based on their net
asset position. The main assets of the subsidiaries represent
investments measured at fair value and receivables from the Company
itself. Their net asset value is considered as a fair approximation
of their fair value.
A reasonable change in any individual significant input used in
the level 3 valuations is not anticipated to have a significant
change in fair values as above.
8. Investment property
2017 2016
US $000 US $000
Valuation as at 1 January - 123,324
Fair value (loss) / gain - (102)
Additions - 102
Exchange difference - 1,439
Disposal (note 21) - (124,763)
------ ------
As at 31 December - -
------ ------
The investment property relates to Wyler Park property in Bern,
Switzerland, which was used for earning rental income.
9. Investment in joint venture
2017 2016
US $000 US $000
As at 1 January / 31 December - -
------ ------
Details of the company's investment in joint venture are as
follows:
Name of Place of Proportion Principal
investee incorporation of voting activity
rights held
Silvermore Cayman Islands 50% Investment
Ltd Holding
(dormant)
10. Investments in subsidiaries
2017 2016
Unconsolidated subsidiaries US $000 US $000
As at 1 January 4,339 -
Additions 1,200 4,600
Fair value loss (113) (261)
------ ------
As at 31 December 5,426 4,339
------ ------
Additions in 2016 relate to the initial recognition of the
unconsolidated subsidiaries, following the change into investment
entity status of the Company (note 2.1).
Additions in 2017 relate to the fair value of receivable amounts
from two of the Company's unconsolidated subsidiaries, that have
been waived by the Company. The nominal amount of these balances
was a total of USD 4.143m (Livermore Properties Ltd: USD 3.103m,
and Sandhirst Ltd: USD 1.040m).
Details of the investments in which the Company has a
controlling interest as at 31 December 2017 are as follows:
Name of Subsidiary Place of Holding Proportion Principal activity
incorporation of voting
rights
and shares
held
Consolidated subsidiaries
Livermore Capital Switzerland Ordinary shares 100% Administration
AG services
Livermore Investments Cyprus Ordinary shares 100% Administration
Cyprus Limited services
Unconsolidated
subsidiaries
Livermore Properties British Virgin Ordinary shares 100% Holding of investments
Limited Islands
Mountview Holdings British Virgin Ordinary shares 100% Investment vehicle
Limited Islands
Sycamore Loan Strategies Cayman Islands Ordinary shares 100% Investment vehicle
Ltd
Livermore Israel Israel Ordinary shares 100% Holding of investments
Investments Ltd
Sandhirst Limited Cyprus Ordinary shares 100% Holding of investments
11. Deferred tax
The Company is a British Virgin Islands (BVI) international
business company and, under the BVI laws, is not subject to
taxation. Deferred taxes relate to temporary differences between
carrying amounts and corresponding tax base of its subsidiaries in
Switzerland, which were discontinued in 2016 (note 21).
The movement on the deferred taxation account is as follows:
Investment Tax losses Total
property
US $000 US $000 US $000
As at 1 January 2016 (6,362) 2,425 (3,937)
Charged to profit or loss
(note 21)
- timing differences - (380) (380)
Exchange difference (77) 28 (49)
Reversal on disposal of
subsidiary (note 21) 6,439 (2,073) 4,366
------ ------ ------
As at 31 December 2016 and - - -
2017
------ ------ ------
As at 31 December 2017 and 2016 there is no unrecognised
deferred tax asset.
12. Trade and other receivables
2017 2016
US $000 US $000
Financial items
Accrued interest and distribution
income 2 65
Amounts due by related parties
(note 29) 5,577 9,634
Allowance for impairment - (2,940)
------ ------
5,579 6,759
Non-Financial items
Other assets (note 29) - 1,128
Prepayments 130 133
VAT receivable 10 -
------ ------
5,719 8,020
------ ------
Allocated as:
Current assets 3,166 5,507
Non-current assets (note 29(3)) 2,553 2,513
------ ------
5,719 8,020
------ ------
Allowance for impairment
The allowance relates to amounts due by subsidiaries (note 29),
which are regarded as credit-impaired and have been assessed on an
individual basis.
2017 2016
US $000 US $000
As at 1 January 2,940 -
Addition (note 2.1) - 2,818
Charge for the year - 122
Eliminated upon waiver of balances
(notes 10 and 29) (2,940) -
------ ------
As at 31 December - 2,940
------ ------
For the remaining receivables of financial nature, there are no
lifetime expected losses. Therefore, no corresponding allowance for
impairment has been recognised.
No receivable amounts have been written-off during either 2017
or 2016.
13. Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement
of cash flows comprise the following at the reporting date:
2017 2016
US $000 US $000
Cash at bank 34,175 60,387
Bank overdrafts used for cash management
purposes - (1,160)
------ ------
Cash and cash equivalents 34,175 59,227
------ ------
14. Share capital
Authorised share capital
The Company has authorised share capital of 1,000,000,000
ordinary shares with no par value, and no restrictions.
Issued share capital Number of Share premium
shares arising
US $000
Ordinary shares with no par value
As at 1 January and 31 December
2016 304,120,401 215,499
Cancellation of shares (129,306,403) (46,312)
---------- ----------
As at 31 December 2017 174,813,998 169,187
---------- ----------
Treasury shares Number of US $000
shares
As at 1 January 2016 111,830,818 38,446
Additions 17,475,585 7,866
---------- ---------
As at 31 December 2016 129,306,403 46,312
Cancellation of shares (129,306,403) (46,312)
---------- ---------
As at 31 December 2017 - -
---------- ----------
In August 2017 at the Annual General Meeting of the Company, a
resolution was passed to cancel 129,306,403 treasury shares
registered in the name of the Company, as a capital reduction.
In the consolidated statement of financial position, the amount
included as share premium and treasury shares comprises of:
2017 2016
US $000 US $000
Share premium 169,187 215,499
Treasury shares - (46,312)
-------- --------
169,187 169,187
-------- --------
15. Share options
The Company has a share option scheme for acquiring ordinary
shares of the Company.
Outstanding and exercisable Number Average Average
options of options exercise exercise
price GBP price* USD
As at 1 January 2016 10,650,000 0.76 1.12
Options expired (10,150,000) 0.78 0.96
--------
As at 31 December 2016 500,000 0.30 0.37
--------
As at 31 December 2017 500,000 0.30 0.41
----------
Details of share options outstanding at 31 December 2017
Number of Grant Vesting Earliest Expiry date Exercise Exercise Fair value
options date date exercise of exercise price Price* at grant
date period GBP USD date USD
166,667 13/05/08 13/05/09 13/05/09 13/05/18 0.30 0.41 21,703
166,667 13/05/08 13/05/10 13/05/10 13/05/18 0.30 0.41 24,115
166,666 13/05/08 13/05/11 13/05/11 13/05/18 0.30 0.41 25,820
---------- ----------
500,000 71,638
---------- ----------
* The exercise prices as per the share option scheme are quoted
in British Pounds. The indicative equivalent USD amounts shown in
the table of details above as well as the average exercise prices
are based on the exchange rates as at 31 December 2017.
The fair value of options granted to employees was determined
using the Binomial valuation model. The model takes into account a
volatility rate of 41-45% calculated using the historical
volatility of a peer group of similar companies and a risk free
interest rate of 4.0-4.4% and it has been assumed the options have
an expected life of two years post date of vesting.
The options lapse at the earliest of the expiry date of exercise
period or the termination of the corresponding employee's
service.
16. Bank loans
2017 2016
US $000 US $000
As at 1 January - 76,410
Interest charge - 923
Repayments of principal - (1,138)
Repayments of interests - (923)
Exchange difference - 936
Amortization of refinancing
fees - 79
Disposal (note 21) - (76,287)
------ ------
As at 31 December - -
------ ------
The bank loan relates to Wyler Park investment property purchase
(note 8) and was secured on this property.
17. Bank overdrafts
2017 2016
US $000 US $000
Bank overdrafts - 1,160
------ ------
The Company has no bank overdraft undrawn facilities at 31
December 2017.
18. Trade and other payables
2017 2016
US $000 US $000
Financial items
Trade payables 50 13
Amounts due to related parties
(note 29) 2,828 2,377
Accrued expenses 1,099 2,362
------ ------
3,977 4,752
Non-financial items
Employee benefits accrued - 3,050
------ ------
3,977 7,802
------ ------
19. Dividend payable
2017 2016
US $000 US $000
Dividend payable - 15,000
------ ------
At 15 January 2018, the Board announced an interim dividend of
USD 8m (USD 0.04576 per share) to members on the register on 26
January 2018. The dividend was paid on 23 February 2018.
20. Net asset value per share
Net asset value per share has been calculated by dividing the
net assets attributable to ordinary shareholders by the closing
number of ordinary shares (net of treasury 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 31 December 2017 and 31 December 2016.
2017 2016
Net assets attributable to ordinary
shareholders (USD 000) 175,445 157,174
------------- -------------
Closing number of ordinary shares in
issue 174,813,998 174,813,998
------------- -------------
Basic net asset value per share (USD) 1.00 0.90
------------- -------------
Net assets attributable to ordinary
shareholders (USD 000) 175,445 157,174
Dilutive share options - exercise amount 203 185
------------- -------------
Net assets attributable to ordinary
shareholders including the effect of
potentially diluted shares (USD 000) 175,648 157,359
------------- -------------
Closing number of ordinary shares in
issue 174,813,998 174,813,998
Dilutive share options 500,000 500,000
------------- -------------
Closing number of ordinary shares including
the effect of potentially diluted shares 175,313,998 175,313,998
------------- -------------
Diluted net asset value per share (USD) 1.00 0.90
------------- -------------
Number of Shares
Ordinary shares 174,813,998 304,120,401
Treasury shares - (129,306,403)
------------- -------------
Closing number of ordinary shares in
issue 174,813,998 174,813,998
------------- -------------
The Share options (note 15) granted on 13 May 2008 have a
dilutive effect on the net asset value per share, given that their
exercise price is lower than the net asset value per Company's
share at 31 December 2017 and 2016.
Repurchase of own shares
The Board believes that the ability of the Company to
re-purchase its own Ordinary shares in the market may potentially
benefit equity shareholders of the Company. The repurchase of
Ordinary shares at a discount to the underlying net asset value
enhances the net asset value per share of the remaining equity
shares.
In 2016, the Company bought 17,475,585 of its Ordinary shares at
an average price of USD 0.45 per share.
21. Discontinued operations
The discontinued operations relate to the investment property
(Wyler Park) activities that constituted an operating segment of
the Company (note 22). These activities were carried out through
the Company's subsidiary, Livermore Investments AG in Switzerland,
of which 100% of shares were disposed to a third party on 28
October 2016.
21.1 Profit or loss
Details of profit or loss items of the discontinued operations
are as follows:
2017 2016
US $000 US $000
Gross rental income - 4,459
Direct expenses - (423)
Other operating expenses - (278)
Investment property revaluation - (102)
Bank interest on investment
property loan - (1,004)
Gain on disposal of subsidiary
(note 21.2) - 7,563
------ ------
Profit before taxation on discontinued
operations - 10,215
Taxation credit (note 21.3) - 3,876
------ ------
Profit for the year on discontinued
operations - 14,091
------ ------
21.2 Gain on disposal of subsidiary
2017 2016
US $000 US $000
Cash consideration received - 31,758
Net assets at disposal date
- investment property - (124,763)
- cash and cash equivalents - (6)
- other assets - (1,075)
- Bank loan - 76,287
- other liabilities - 26,900
Foreign exchange losses reclassified
from translation reserve - (1,538)
------ ------
Gain on disposal of subsidiary - 7,563
------ ------
21.3 Taxation
Taxation credit on the discontinued operations is analysed as
follows:
2017 2016
US $000 US $000
Tax on ordinary activities - (110)
Deferred taxation (note 11) - 3,986
------ ------
Taxation credit - 3,876
------ ------
21.4 Cash flows
Details of the cash flows of the discontinued operations are as
follows:
2017 2016
US $000 US $000
Operating activities - 2,975
Investing activities - (102)
Financing activities - (2,061)
Translation differences on
foreign operations' cash and
cash equivalents - 14
------ ------
Net cash from discontinued
operations - 826
------ ------
22. Segment reporting
Following the discontinuance of the investment property
activities (note 21), the Directors determined that the Company's
activities fall under a single operating segment.
Segment information can be analysed as follows:
Equity and Investment Total per financial
debt instruments property activities statements
investment (discontinued
activities - note 21.1)
2017 2016 2017 2016 2017 2016
Segment results US $000 US $000 US $000 US $000 US $000 US $000
Investment income
Interest and distribution
income 28,043 26,334 - - 28,043 26,334
Investment property income - - - 4,036 - 4,036
(Loss) / gain on investments (5,918) 1,749 - (102) (5,918) 1,647
------ ------ ------ ------ ------ ------
Gross profit 22,125 28,083 - 3,934 22,125 32,017
Administrative expenses (6,204) (7,746) - (478) (6,204) (8,224)
------ ------ ------ ------ ------ ------
Operating profit 15,921 20,337 - 3,456 15,921 23,793
Finance costs (19) (212) - (1,008) (19) (1,220)
Finance income 488 - - - 488 -
------ ------ ------ ------ ------ ------
Profit before taxation 16,390 20,125 - 2,448 16,390 22,573
Taxation (charge) / credit (18) (5) - 3,844 (18) 3,839
------ ------ ------ ------ ------ ------
Profit for year 16,372 20,120 - 6,292 16,372 26,412
------ ------ ------ ------ ------ ------
Segment assets 179,422 181,521 - - 179,422 181,521
------ ------ ------ ------ ------ ------
Segment liabilities 3,977 24,347 - - 3,977 24,347
------ ------ ------ ------ ------ ------
The Company's investment income and its investments are divided
into the following geographical areas:
Equity and Investment Total per
debt instruments property activities financial
investment (discontinued statements
activities - note 21.1)
2017 2016 2017 2016 2017 2016
Investment Income US $000 US $000 US $000 US $000 US $000 US $000
Switzerland - - - 3,884 - 3,884
Other European countries 156 330 - - 156 330
United States 22,255 27,904 - - 22,255 27,904
India (68) 102 - - (68) 102
Asia (218) (203) - - (218) (203)
------ ------ ------ ------ ------ ------
22,125 28,133 - 3,884 22,125 32,017
------ ------ ------ ------ ------ ------
Investments
Switzerland - - - - - -
Other European countries 3,047 3,154 - - 3,047 3,154
United States 125,407 100,399 - - 125,407 100,399
India 1,600 2,022 - - 1,600 2,022
Asia 9,466 7,524 - - 9,466 7,524
------ ------ ------ ------ ------ ------
139,520 113,099 - - 139,520 113,099
------ ------ ------ ------ ------ ------
Investment income, comprising interest and distribution income,
gains or losses on investments, and investment property income, is
allocated on the basis of the customer's geographical location in
the case of the investment property activities segment and the
issuer's location in the case of the equity and debt instruments
investment activities segment. Investments are allocated based on
the issuer's location.
During 2016, 81.6% of the Company's rent related to rental
income from a single customer (SBB - Swiss national transport
authority) in the investment property activities segment. The
Company has no significant dependencies in respect of its
investment income to any single issuer.
23. Interest and distribution income
2017 2016
US $000 US $000
Interest from investments 115 114
Distribution income 27,928 26,220
------ ------
28,043 26,334
------ ------
Interest and distribution income is analysed between the
Company's different categories of financial assets, as follows:
2017 2016
Interest Distribution Total Interest Distribution Total
from investments income from investments income
Financial assets at fair US $000 US $000 US $000 US $000 US $000 US $000
value through
profit or loss
Fixed income investments 75 27,826 27,901 114 26,024 26,138
Public equity investments - 6 6 196 196
------ ------ ------ ------ ------ ------
75 27,832 27,907 114 26,220 26,334
------ ------ ------ ------ ------ ------
Financial assets at fair
value through other comprehensive
income
Private equities - 96 96 - - -
------ ------ ------ ------ ------ ------
Financial assets at amortised
cost
Loan receivable (note
29) 40 - 40 - - -
------ ------ ------ ------ ------ ------
115 27,928 28,043 114 26,220 26,334
------ ------ ------ ------ ------ ------
The Company's distribution income derives from multiple issuers.
The Company does not have any concentration to any single
issuer.
24. (Loss) / profit on investments
2017 2016
US $000 US $000
Fair value (losses) / gains
on financial assets through
profit or loss (5,699) 2,056
Fair value loss on investment
in subsidiaries (113) (261)
Fair value gains on derivative
investments - 69
Bank custody fees (106) (115)
------ ------
(5,918) 1,749
------ ------
For the year ended 31 December 2016, a net fair value gain of
USD 0.069m has been recognised in relation to derivative financial
instruments.
The investments disposed of had the following cumulative (i.e.
from the date of acquisition up to the date of disposal) financial
impact in the Company's net asset position:
Disposed in 2017 Disposed in 2016
Realised Cumulative Total Realised Cumulative Total
(losses)/ distribution financial losses* distribution financial
gains* or interest impact or interest impact
US $000 US $000 US $000 US $000 US $000 US $000
Financial assets
at fair value through
profit or loss
Fixed income investments (11,567) 19,686 8,119 (3,540) 4,998 1,458
------ ------ ------ ------ ------ ------
(11,567) 19,686 8,119 (3,540) 4,998 1,458
------ ------ ------ ------ ------ ------
Financial assets
at fair value through
other comprehensive
income
Private equities 35 - 35 - - -
------ ------ ------ ------ ------ ------
(11,532) 19,686 8,154 (3,540) 4,998 1,458
------ ------ ------ ------ ------ ------
* difference between disposal proceeds and original acquisition
cost
25. Administrative expenses
2017 2016
US $000 US $000
Legal expenses 19 19
Directors' fees and expenses 3,608 5,033
Other salaries and expenses 152 149
Professional fees 1,385 1,799
Office costs 409 306
Depreciation 7 7
Other operating expenses 512 388
Audit fees 112 119
Impairment charge on receivables - 122
------ ------
6,204 7,942
------ ------
Throughout 2017 the Company employed 4 members of staff (2016:
4). Two of those members are the Company's executive Directors.
Other salaries and expenses include USD 13,212 of social
insurance and similar contributions (2016: USD 18,706), as well as
USD 3,223 of defined contributions plan costs (2016: USD
16,655).
26. Finance costs and (income)
2017 2016
US $000 US $000
Finance costs
Other bank interest 19 216
Foreign exchange loss - 2
------ ------
19 218
Finance income
Foreign exchange gain (397) -
Bank interest income (91) -
------ ------
(469) 218
------ ------
27. Taxation
2017 2016
US $000 US $000
Current tax charge 18 38
------ ------
18 38
------ ------
The Company is a British Virgin Islands (BVI) international
business company and, under the BVI laws, is not subject to
corporation tax. Corporation tax for 2016, relates to the results
of the Company's consolidated subsidiaries in Switzerland and
Cyprus (note 10).
28. Earnings per share
Basic earnings per share has been calculated by dividing the
profit for the year attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares in issue
of the Company during the relevant financial periods.
Diluted earnings per share is calculated after taking into
consideration other potentially dilutive shares in existence during
the year ended 31 December 2017 and the year ended 31 December
2016.
2017 2016
Continuing operations
Profit / (loss) for the year attributable
to ordinary shareholders (USD 000) 16,372 19,885
------------- -------------
Weighted average number of ordinary
shares outstanding 174,813,998 186,255,696
------------- -------------
Basic earnings per share (USD) 0.09 0.11
------------- -------------
Weighted average number of ordinary
shares outstanding 174,813,998 186,255,696
Dilutive effect of share options 183,891 24,715
--------- ---------
Weighted average number of ordinary
shares including the effect of potentially
dilutive shares 174,997,889 186,280,411
------------- -------------
Diluted earnings per share (USD) 0.09 0.11
------------- -------------
2017 2016
Discontinued operations
Profit / (loss) for the year attributable
to ordinary shareholders (USD 000) - 14,091
------------- -------------
Weighted average number of ordinary
shares outstanding - 186,255,696
------------- -------------
Basic earnings per share (USD) - 0.08
------------- -------------
Weighted average number of ordinary
shares outstanding - 186,255,696
Dilutive effect of share options - 24,715
--------- ---------
Weighted average number of ordinary
shares including the effect of potentially
dilutive shares - 186,280,411
------------- -------------
Diluted earnings per share (USD) - 0.08
------------- -------------
The Share options (note 15) granted on 13 May 2008 have a
dilutive effect on the weighted average number of ordinary shares
only, given that their exercise price is lower than the average
market price of the Company's shares on the London Stock Exchange
(AIM division) during the year ended 31 December 2017 and 2016.
29. Related party transactions
The Company is controlled by Groverton Management Ltd, an entity
owned by Noam Lanir, which at 31 December 2017 held 76.62% (2016:
76.62%) of the Company's effective voting rights.
2017 2016
US $000 US $000
Amounts receivable from unconsolidated
subsidiaries
Livermore Properties Limited - 3,103 (1)
Sandhirst Limited 24 1,018 (1)
Allowance for impairment - (2,940) (1)
------ ------
24 1,181
------- -------
Amounts receivable from key management
Directors' current accounts 3,000 3,000 (1)
Other assets - 1,128 (2)
Loan receivable 2,553 2,513 (3)
------ ------
5,553 6,641
------- -------
Amounts payable to unconsolidated
subsidiaries
Livermore Israel Investments Ltd (2,603) (2,210) (4)
------- -------
Amounts payable to other related
party
Loan payable (149) (149) (5)
------- -------
Amounts payable to key management
Directors' current accounts (69) (13) (4)
Other key management personnel (7) (5) (6)
------ ------
(76) (18)
------- -------
Key management compensation
Short term benefits
Executive Directors' fees 795 795 (7)
Executive Directors' reward payments 2,728 4,128
Non-executive Directors' fees 59 60
Non-executive Directors' reward
payments 26 50
Other key management fees 994 1,092 (8)
------ ------
4,602 6,125
------- -------
(1) The amounts receivable from subsidiaries and the Director's
current accounts with debit balances are interest free, unsecured,
and have no stated repayment date.
(2) Loans of USD 5.523m were made to a key management employee
for the acquisition of shares in the Company. Interest was payable
on these loans at 6 month US LIBOR plus 0.25% per annum and the
loans were secured on the shares acquired. The loans were repayable
on the earlier of the employee leaving the Company or April 2013.
In December 2012 the Board decided to renew the outstanding amount
of these loans for a period of another five years. Based on the
Board's decision, the outstanding amount is reduced annually on a
straight line over five years, as long as the key management
employee remains with the Company. The relevant reduction in the
loan amount for the year was USD 1.128m. The loans are classified
as "other assets" and are included under trade and other
receivables (note 12).
(3) A loan of USD 2.500m was made to a key management employee,
during 2016, for the acquisition of shares in the Company. Interest
is payable on the loan at 6 month US LIBOR plus 0.25% per annum and
the loan is secured on the shares acquired. The loan, including
interest accrued, is repayable on the earlier of the employee
leaving the Company or August 2019. The loan is included within
trade and other receivables (note 12).
(4) The amounts payable to subsidiaries and Director's current
accounts with credit balances are interest free, unsecured, and
have no stated repayment date.
(5) A loan with a balance at 31 December 2017 of USD 0.149m (31
December 2016: USD 0.149m) has been received from a related company
(under common control), Chanpak Ltd. The loan is free of interest,
is unsecured and is repayable on demand. This loan is included
within trade and other payables (note 18).
(6) The amount payable to other key management personnel relates
to a payment made on behalf of the Company for investment purposes
and accrued consultancy fees.
(7) These payments were made directly to companies which are related to Directors.
(8) Other Key management fees are included within professional fees in note 25.
During the year, the Company has waived its receivable balances
from its subsidiaries Livermore Property Ltd (USD: 3.103m) and
Sandhirst Ltd (USD: 1.040m) as a means of capital contribution to
the subsidiaries (note 10).
No social insurance and similar contributions nor any other
defined benefit contributions plan costs were incurred for the
Company in relation to its key management personnel in either 2017
or 2016.
Noam Lanir, through an Israeli partnership, is the major
shareholder of Babylon Limited, an Israel based Internet Services
Company. The Company as of 31 December 2017 held a total of 1.941m
shares at a value of USD 0.845m (2016: 1.941m shares at a value of
USD 0.973m) which represents 4% of its effective voting rights. The
investment in Babylon Ltd is held through the subsidiary Livermore
Israel Investments Ltd.
In 2016, the Company bought 17,475,585 of its Ordinary shares
from Groverton Management Ltd, at an average price of USD 0.45 per
share. These shares were included in Treasury shares (note 14).
As at the reporting date Livermore had 335,816 number of shares
of Wanaka Capital Partners Mid-Tech Opportunity Fund registered in
its name but held for the absolute benefit of a related company
(under common control). These shares are not included in the
financial assets of the Company on the consolidated statement of
financial position.
During the year the Company received administrative services of
USD 0.048m (2016: 0.048m) in connection with investments from a
related company (under common control).
30. Provisions
The movement in provisions for the year is as follows:
2017 2016
US $000 US $000
As at 1 January 385 513
Settlements (385) (128)
----- -----
As at 31 December - 385
------ ------
31. Litigation
Fairfield Sentry Ltd vs custodian bank and beneficial owners
One of the custodian banks that the Company uses faces a
contingent claim up to USD 2.1m, and any interest as will be
decided by a US court and related legal fees, with regards to the
redemption of shares in Fairfield Sentry Ltd, which were bought in
2008 at the request of Livermore and on its behalf. The same case
was also filed in BVI where the Privy Council ruled against the
plaintiffs.
As a result of the surrounding uncertainties over the existence
of any obligation for Livermore, as well as for the potential
amount of exposure, the Directors cannot form an estimate of the
outcome for this case and therefore no provision has been made.
No further information is provided on the above case as the
Directors consider it could prejudice its outcome.
Ex employee vs Empire Online Ltd
In 2007 an ex employee of Empire Online Limited (the Company's
former name) filed a law suit against one of its Directors and the
Company in the Labor Court in Tel Aviv. According to the lawsuit
the plaintiff claimed compensation relating to the sale of all
commercial activities of Empire Online Limited until the end of
2006, and the dissolution of the company and the terms of
termination of his employment with Empire Online Limited.
Prior to the filing of the lawsuit in Israel, the Company filed
a claim against the plaintiff in the Court in Cyprus based upon
claims concerning breach of faith of the plaintiff towards his
employers. Litigation was completed in Israel.
On 5 March 2014, the Labor Court in Tel Aviv issued a ruling in
which the court denied most of the plaintiff's claims and accepted
only his claim for termination of employment. On 16 April 2014 the
plaintiff filed an appeal against the ruling. On 10 June 2015 the
court held a hearing of the appeal and suggested that both sides
settle the dispute by means of mediation. On 20 January 2016 the
parties reached an agreement for an out of court settlement, for
which a corresponding provision was made in 2016 and settled in
2017 (note 30).
32. Commitments
The Company has expressed its intention to provide financial
support to its subsidiaries, where necessary to enable them to meet
their obligations as they fall due.
Other than the above, the Company has no capital or other
commitments as at 31 December 2017.
33. Events after the reporting date
The two warehouse facilities that the Company invested in,
during 2017, were closed in April and May 2018. For both
warehouses, with a carrying amount as at 31 December 2017 of USD
25.5m, the Company invested an additional amount of USD 10m during
2018 (before their closure). For these warehouses, Livermore's
investment amount plus net carry amounting to a total of USD 37.6m
became receivable in April and May 2018.
At 15 January 2018, the Board announced an interim dividend of
USD 8m (USD 0.04576 per share) to members on the register on 26
January 2018. The dividend was paid on 23 February 2018.
There were no other material events after the end of the
reporting year, which have a bearing on the understanding of these
financial statements.
34. Financial risk management objectives and policies
Background
The Company's financial instruments comprise financial assets at
fair value through profit or loss, financial assets at fair value
through other comprehensive income, and financial assets and
liabilities at amortised cost that arise directly from its
operations. For an analysis of financial assets and liabilities by
category, refer to note 35.
Risk objectives and policies
The objective of the Company is to achieve growth of shareholder
value, 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
Company.
Risks associated with financial instruments
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 foreign currency; and 2) where an
investment has substantial exposure to non-US Dollar underlying
assets or cash flows denominated in a foreign currency. The Company
in general does not hedge its currency exposure. The Company
discretionally and partially hedges against foreign currency
movements affecting the value of the investment portfolio based on
its view on the relative strength of certain currencies. Any
hedging transactions represent economic hedges; the Company does
not apply hedge accounting in any case. Management monitors the
effect of foreign currency fluctuations through the pricing of the
investments. The level of financial instruments denominated in
foreign currencies held by the Company at 31 December 2017 is the
following:
2017 2017 2017 2016 2016 2016
US $000 US $000 US $000 US $000 US $000 US $000
Financial Financial Net Financial Financial Net value
assets liabilities value assets liabilities
British Pounds
(GBP) 1,587 (111) 1,476 1,754 (355) 1,399
Euro 994 (211) 783 2,715 (284) 2,431
Swiss Francs
(CHF) 4,757 (774) 3,983 8,090 (1,966) 6,124
Israel Shekels
(ILS) 6,253 (2,603) 3,650 5,052 (2,212) 2,840
Others - - - - (6) (6)
------ ------ ------ ------ ------ ------
Total 13,591 (3,699) 9,892 17,611 (4,823) 12,788
------ ------ ------ ------ ------ ------
Also, some of the USD denominated investments are backed by
underlying assets which are invested in non-USD assets. For
instance, investments in certain emerging market private equity
funds are denominated in USD but the funds in turn have invested in
assets denominated in non-USD currencies.
A 10% increase of the following currency rates against the rate
of United States Dollar (USD) at 31 December 2017 would have the
following impact. A 10% decrease of the following currencies
against USD would have an approximately equal but opposite
impact.
2017 2017 2016 2016
US $000 US $000 US $000 US $000
Profit Other comprehensive Profit Other comprehensive
or loss income or loss income
British Pounds
(GBP) 93 55 77 63
Euro 78 - 243 -
Swiss Francs
(CHF) 398 - 590 -
Israel Shekels
(ILS) 365 - 284 -
------ ------ ------ ------
Total 934 55 1,194 63
------ ------ ------ ------
The above analysis assumes that all other variables in
particular, interest rates, remain constant.
Interest rate risk
The Company is exposed to interest rate risk on its
interest-bearing instruments which are affected by changes in
market interest rates.
The Company has banking credit lines which are available on
short notice for the Company to use in its 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. The level of these banking
facilities utilised at 31 December 2017 was USD 0m (2016: USD
1.2m).
As at 31 December 2017 the Company had no financial liabilities
that bore an interest rate risk, other than the previously
disclosed bank facilities.
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.
The Company has fixed and floating rate financial assets
including bank balances that bear interest at rates based on the
banks floating interest rates. In particular, the fair value of the
Company's fixed rate financial assets is likely to be negatively
impacted by an increase in interest rates. The interest income of
the Company's floating rate financial assets is likely to be
positively impacted by an increase in interest rates.
The Company has exposure to US bank loans through CLO equity
tranches as well as through warehousing facilities. An investment
in the CLO equity tranche or first loss tranche of a warehouse
represents a leveraged investment into such loans. As these loans
(assets of a CLO) and the liabilities of a CLO are floating rate in
nature (typically 3 month LIBOR as the base rate), the residual
income to CLO equity tranches and warehouse first loss tranches is
normally linked to the floating rate benchmark and thus normally do
not carry substantial interest rate risk.
The Company's financial assets and liabilities affected by
interest rate changes are as follows:
2017 2016
US $000 US $000
Financial assets - subject
to:
- fair value changes 1,132 3,550
- interest changes 34,167 60,383
------ ------
Total 35,299 63,933
------ ------
Financial liabilities
- subject to:
- interest changes - 1,160
------ ------
Total - 1,160
------ ------
An increase of 1% (100 basis points) in interest rates would
have the following impact. An equivalent decrease would have an
approximately equal but opposite impact.
2017 2017 2016 2016
US $000 US $000 US $000 US $000
Profit Other comprehensive Profit Other comprehensive
or loss income or loss income
Financial assets
- fair value changes (148) - (256) -
- interest changes 342 - 604 -
Financial liabilities
- interest changes - - (12) -
------ ------ ------ ------
194 - 336 -
------ ------ ------ ------
The above analysis assumes that all other variables, in
particular currency rates, remain constant.
Market price risk
By the nature of its activities, most of the Company'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.
The Company had no single major financial instrument that in
absolute terms and as a proportion of the portfolio could result in
a significant reduction in the NAV and share price. Due to the very
low exposure of the Company to public equities, and having no
specific correlation to any market, the equity price risk is low.
The portfolio as a whole does not correlate exactly to any
Index.
Management of risks is primarily achieved by having a
diversified portfolio to spread the market price risk. The Company
mainly has investments in CLO equity tranches as well as first loss
tranches of warehouse facilities. These investments represent
leveraged exposure to typically senior secured loans. Investments
in CLOs are subject to many risks including market price risk,
liquidity, credit risk, interest rate, reinvestment and certain
other risks.
Prices of these CLO investments may be volatile and will
generally fluctuate due to a variety of factors that are inherently
difficult to predict, including but not limited to changes in
prevailing credit spreads and yield expectations, interest rates,
underlying portfolio credit quality and market expectations of
default rates on non-investment grade loans, general economic
conditions, financial market conditions, legal and regulatory
developments, domestic and international economic or political
events, developments or trends in any particular industry, and the
financial condition of the obligors that constitute the underlying
portfolio.
A 10% uniform change in the value of the Company's portfolio of
financial assets (excluding level 3 investments) would result in a
7.24% change in the net asset value as at 31 December 2017 (2016:
6.56%), and would have the following impact (either positive or
negative, depending on the corresponding sign of the change):
2017 2017 2016 2016
US $000 US $000 US $000 US $000
Profit Other comprehensive Profit Other comprehensive
or loss income or loss income
Financial assets at
fair value through
other comprehensive
income - 112 - 104
Financial assets at
fair value through
profit or loss 12,585 - 10,209 -
------ ------ ------ ------
12,585 112 10,209 104
------ ------ ------ ------
Derivatives
The Investment Manager may use derivative instruments in order
to mitigate market risk or to take a directional investment. These
provide a limited degree of protection and would not materially
impact the portfolio returns if a large market movement did
occur.
Credit Risk
The Company invests in a wide range of securities with various
credit risk profiles including investment grade securities and sub
investment grade positions. The investment manager mitigates the
credit risk via diversification across issuers. However, the
Company is exposed to a migration of credit rating, widening of
credit spreads and default of any specific issuer.
The Company 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 Company is mainly exposed to credit risk in respect of its
fixed income investments (mainly CLOs) and to a lesser extend in
respect of its financial assets at amortised cost, and other
instruments held for trading (perpetual bonds).
The Company's maximum credit risk exposure at 31 December 2017
is as follows:
2017 2016
US $000 US $000
Financial assets:
At amortised cost:
Trade and other receivables 5,579 6,759
Cash at bank 34,175 60,387
------ ------
39,754 67,146
Financial assets at fair value through
profit or loss 123,884 100,137
------ ------
163,638 167,283
------- -------
No collaterals are held by the Company itself in relation to the
Company's financial assets subject to credit risk.
The fair values of the above financial assets at fair value
through profit or loss are also affected by the credit risk of
those instruments. However, it is not practical to provide an
analysis of the changes in fair values due to the credit risk
impact for the year or previous periods, nor to provide any
relevant sensitivity analysis.
The Company has exposure to US senior secured loans and to a
lesser degree emerging market loans through CLO equity tranches as
well as warehouse first loss tranches. These loans are primarily
non-investment grade loans or interests in non-investment grade
loans, which are subject to credit risk among liquidity, market
value, interest rate, reinvestment and certain other risks. It is
anticipated that these non-investment grade loans generally will be
subject to greater risks than investment grade corporate
obligations.
A non-investment grade loan or debt obligation or an interest in
a non-investment grade loan is generally considered speculative in
nature and may become a defaulted security for a variety of
reasons. A defaulted security may become subject to either
substantial workout negotiations or restructuring, which may
entail, among other things, a substantial reduction in the interest
rate, a substantial write-down of principal, and a substantial
change in the terms, conditions and covenants with respect to such
defaulted security. In addition, such negotiations or restructuring
may be quite extensive and protracted over time, and therefore may
result in substantial uncertainty with respect to the ultimate
recovery on such defaulted security. Bank loans have historically
experienced greater default rates than has been the case for
investment grade securities.
The Company has no investment in sovereign debt as at 31
December 2017 or 2016.
At 31 December the credit rating distribution of the Company's
asset portfolio subject to credit risk was as follows:
Rating 2017 Percentage 2016 Amount Percentage
Amount
US $000 US $000
AA 16,563 10.1% 30,870 18.5%
A 9,768 6.0% 86 -
A- 7,111 4.4% 29,495 17.6%
BB - - 2,433 1.5%
BB+ 1,132 0.7% 1,117 0.7%
BBB 734 0.4% - -
Not Rated 128,330 78.4% 103,282 61.7%
------ ------ ------ ------
163,638 100% 167,283 100%
------ ------ ------ ------
Included within "not rated" amounts are investments in loan
market through CLOs (equity tranches) of USD 97.237m and open
warehouses of USD 25.139m (2016: CLOs of USD 79.336m and open
warehouses of USD 17.251m).
The modelled IRRs on the CLO portfolio as well as the warehouse
first loss tranches are in low teens percentage points.
Liquidity Risk
The following table summarizes the contractual cash outflows in
relation to the Company's financial liabilities according to their
maturity.
31 December 2017 Carrying Less than Between Between Over
amount 1 year 1 and 2 and 5 years
2 years 5 years
US $000 US $000 US $000 US $000 US $000
Trade and other payables 3,977 3,977 - - -
------ ------ ------ ------ ------
Total 3,977 3,977 - - -
------ ------ ------ ------ ------
31 December 2016 Carrying Less than Between Between Over
amount 1 year 1 and 2 and 5 years
2 years 5 years
Bank overdraft 1,160 1,160 - - -
Trade and other payables 4,752 4,752 - - -
------ ------ ------ ------ ------
Total 5,912 5,912 - - -
------ ------ ------ ------ ------
A small proportion of the Company'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.
There is currently no exchange traded market for CLO securities
and they are traded over-the-counter through private negotiations
or auctions subject to market conditions. Currently the CLO market
is liquid, but in times of market distress the realization of the
investments in CLOs through sales may be below fair value.
Warehouse facilities are private negotiated financing facilities
and are not traded and have no active market. The Company, however,
can opt to terminate such facility.
The management takes 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.
At 31 December 2017, the Company had liquid investments
totalling USD 135.6m, comprising of USD 34.2m in cash and cash
equivalents, USD 97.2m in investments in loan market through CLOs,
USD 1.1m in other fixed income investments, USD 2.0m in public
equities and USD 1.1m in hedge funds. management structures and
manages the Company'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 Company's
treasury function.
Capital management
The Company considers its capital to be its issued total equity
(i.e. its share capital and all of its reserves).
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximising the return to
shareholders through the optimisation of the balance between its
net debt and equity.
Net debt to equity ratio is calculated using the following
amounts as included on the consolidated statement of financial
position, for the reporting periods under review:
2017 2016
US $000 US $000
Cash at bank (34,175) (60,387)
Bank overdrafts - 1,160
------ ------
Net Debt (34,175) (59,227)
------ ------
Total equity 175,445 157,174
------ ------
Net debt to equity ratio (0.19) (0.38)
------- -------
35. Financial assets and liabilities by class
Note 2017 2016
US $000 US $000
Financial assets:
Financial assets at amortised
cost 12, 13 39,754 67,146
Financial assets at fair value
through profit or loss 4 125,847 102,087
Financial assets designated at
fair value through other comprehensive
income 5 8,247 6,673
------- -------
173,848 175,906
------- -------
Financial liabilities:
Financial liabilities at amortised
cost 17,18 3,977 5,912
------- -------
3,977 5,912
------- -------
The carrying amount of the financial assets and liabilities at
amortised cost approximates to their fair value.
Shareholder Information
Registrars
All enquiries relating to shares or shareholdings should be
addressed to:
Capita Registrars
PXS
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0870 162 3100
Facsimile: 020 8639 2342
Change of Address
Shareholders can change their address by notifying Capita
Registrars in writing at the above address.
Website
www.livermore-inv.com
The Company's website provides, amongst other things, the latest
news and details of the Company's activities, share price details,
share price information and links to the websites of our
brands.
Direct Dividend Payments
Dividends can be paid automatically into shareholders' bank or
building society accounts. Two primary benefits of this service
are:
-- There is no chance of the dividend cheque going missing in the post; and
-- The dividend payment is received more quickly because the
cash sum is paid directly into the account on the payment date
without the need to pay in the cheque and wait for it to clear.
As an alternative, shareholders can download a dividend mandate
and complete and post to Capita Registrars.
Lost Share Certificate
If your share certificate is lost or stolen, you should
immediately contact Capita Registrars on 0870 162 3100 who will
advise on the process for arranging a replacement.
Duplicate Shareholder Accounts
If, as a shareholder, you receive more than one copy of a
communication from the Company you may have your shares registered
in at least two accounts. This happens when the registration
details of separate transactions differ slightly. If you wish to
consolidate such multiple accounts, please call Capita Registrars
on 0870 162 3100.
Please note that the Directors of the Company are not seeking to
encourage shareholders to either buy or sell the Company's
shares.
Corporate Directory
Secretary Principal Bankers
Chris Sideras Bank Hapoalim
Registered Office 18 Boulevard Royal
Trident Chambers BP 703
PO Box 146 L-2017
Road Town Luxembourg
Tortola
British Virgin Islands CBH Compagnie Bancaire Helvétique
Company Number SAL öwenstrasse 29 Zurich
475668 8021
Registrars Switzerland
Capita Registrars
PXS Credit Suisse AG
34 Beckenham Road Seeefldstrasse 1
Beckenham Zurich 8070
Kent BR3 4TU Switzerland
England
Auditor UBS AG
Grant Thornton (Cyprus) Ltd Paradeplatz 6
143, Spyrou Kyprianou Avenue CH-8098 Zürich
Limassol 3083 Switzerland
Cyprus
Solicitors Bank Julius Baer & Co. Ltd.
Travers Smith Bahnhofstrasse 36,
10 Snow Hill CH-8010 Zurich,
London Switzerland
EC1A 2AL
England
Nominated Adviser & Broker
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
England
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LLFLREVITFIT
(END) Dow Jones Newswires
May 29, 2018 02:01 ET (06:01 GMT)
Livermore Investments (LSE:LIV)
Historical Stock Chart
From May 2024 to May 2024
Livermore Investments (LSE:LIV)
Historical Stock Chart
From May 2023 to May 2024