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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Livermore Investments Group Limited | LSE:LIV | London | Ordinary Share | VGG550931015 | ORD NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.70 | 1.81% | 39.40 | 39.60 | 40.00 | 39.40 | 38.00 | 38.00 | 8,301 | 08:19:37 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Finance Services | 17.83M | 13.89M | 0.0840 | 4.69 | 63.99M |
TIDMLIV
RNS Number : 1603A
Livermore Investments Group Limited
25 September 2015
24 September 2015
LIVERMORE INVESTMENTS GROUP LIMITED
UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2015
Livermore Investments Group Limited (the "Company" or "Livermore") today announces its interim results for the six months ended 30 June 2015.
For further investor information please go to www.livermore-inv.com.
Enquiries:
Livermore Investments Group Limited +41 43 344 3200
Arden Partners plc +44 (0)20 7614 5917
Steve Douglas
Patrick Caulfield
Chairman's and Chief Executive's Review
Introduction
We are pleased to announce the interim consolidated financial results for Livermore Investments Group Limited (the "Company" or "Livermore") and its subsidiaries (together the "Group") for the six months ended 30 June 2015.
During the first half of 2015, the Group generated net income of USD 1.96m (30 June 2014: USD 10.86m), which represents earnings per share of USD 0.01 (30 June 2014: USD 0.06). The Group paid an interim dividend of USD 5m in March 2015 (USD 0.0256 per share). The NAV of the Group as of 30 June 2015 was USD 0.81 per share after payment of the interim dividend. During the reporting period, management continued to actively manage the financial portfolio and optimized exposure to US credit markets, which continues to provide attractive risk adjusted returns, albeit at a lower rate than prior years.
Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 2.7m in rent during the period. The property is fully rented. Valuation of Wyler Park has remained stable.
In September 2015, the lease with SBB for the Wyler Park property was extended from 2019 to 2029. As part of the lease extension agreement, the owner will invest up to a maximum of CHF 3.95m (USD 4.22m) and SBB is expected to invest up to CHF 9m to upgrade the property and allow for additional workspaces.
There were no significant developments in the private equity portfolio during the period.
Financial Review
The NAV of the Group as at 30 June 2015 was approximately USD 157.8m (30 June 2014: 168.2m). The profit after tax for the first half of 2015 was USD 1.96m, which represents earnings per share of USD 0.01. The performance relates largely to gains on the credit portfolio and net income from Wyler Park offset by write downs on certain investments.
30 June 2015 30 June 2014 31 December 2014 ----------------------------------------------------- ------------- ------------- ----------------- US $m US $m US $m ----------------------------------------------------- ------------- ------------- ----------------- Shareholders' funds at beginning of period 160.0 168.4 168.4 ----------------------------------------------------- ------------- ------------- ----------------- ___________ ___________ ___________ ----------------------------------------------------- ------------- ------------- ----------------- Income from investments 14.6 16.8 31.8 ----------------------------------------------------- ------------- ------------- ----------------- Other income - 0.5 0.5 ----------------------------------------------------- ------------- ------------- ----------------- Realised (losses) / gains on investments (0.5) 1.2 (1.6) ----------------------------------------------------- ------------- ------------- ----------------- Loss on impairment on investments (10.8) (1.6) (8.9) ----------------------------------------------------- ------------- ------------- ----------------- Unrealised gains / (losses) on investments 0.7 (6.4) (9.4) ----------------------------------------------------- ------------- ------------- ----------------- Unrealised exchange gains / (losses) 0.5 - (0.6) ----------------------------------------------------- ------------- ------------- ----------------- Administration costs (1.9) (2.7) (7.2) ----------------------------------------------------- ------------- ------------- ----------------- Net finance costs 0.4 (2.4) (7.2) ----------------------------------------------------- ------------- ------------- ----------------- Tax charge (0.2) (0.6) (0.8) ----------------------------------------------------- ------------- ------------- ----------------- ___________ ___________ ___________ ----------------------------------------------------- ------------- ------------- ----------------- Increase / (decrease) in net assets from operations 2.8 4.8 (3.4) ----------------------------------------------------- ------------- ------------- ----------------- Purchase of own shares - - - ----------------------------------------------------- ------------- ------------- ----------------- Dividends paid (5.0) (5.0) (5.0) ----------------------------------------------------- ------------- ------------- ----------------- ___________ ___________ ___________ ----------------------------------------------------- ------------- ------------- ----------------- Shareholders' funds at end of period 157.8 168.2 160.0 ----------------------------------------------------- ------------- ------------- ----------------- ------ ------ ------ ----------------------------------------------------- ------------- ------------- ----------------- Net Asset Value per share US $0.81 US $0.86 US $0.82 ----------------------------------------------------- ------------- ------------- -----------------
Livermore's Strategy
The financial portfolio is focused on fixed 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 with some exposure to Europe and emerging markets.
The remaining portfolio is focused on Switzerland and Asia with investments primarily in real estate and select private equity opportunities. Investments are focused on sectors that Management believes will provide superior growth over the mid to long term with relatively low downside risk.
Strong emphasis is given to maintaining sufficient liquidity and low leverage at the overall portfolio level and to re-invest in existing and new investments along the economic cycle.
Repurchase of shares
Between 31 December 2014 and 30 June 2015, the Company did not repurchase any additional shares. On 30 June 2015, the Company held 108,830,818 shares in treasury. Also no additional shares were purchased between 30 June 2015 and before the beginning of the interim closed period.
Dividends
In March 2015, the Company announced and paid an interim dividend of USD 5m (USD 0.0256 per ordinary share).
The Board of Directors will decide on the Company's dividend policy for 2015 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.
Richard Rosenberg Noam Lanir Chairman Chief Executive
24 September 2015
Review of Activities
Economic & Investment Environment
Global economic growth was weaker than expected in the first quarter of 2015. US GDP growth amounted to 0.6% and the Chinese economic growth continued to cool. In the Euro area, however, the economy continued to pick up, supported by persistent euro weakness and improved lending conditions on the back of the European Central Bank's (ECB) quantitative easing (QE) program. In Japan, too, the economy gained momentum. In the second quarter, however, US GDP grew by 3.7% as the West Coast port delays and the unusually harsh winter subsided. The Euro area grew by 0.5% in the second quarter whereas Japan GDP declined by 0.3%. Labour conditions continued to improve in the US with the unemployment rate falling to 5.3% in June 2015. Labour force participation rate, however, has remained at historic lows. With continued improvement in labour conditions, the Federal Reserve has indicated raising interest rates sometime this year, causing the US Dollar to appreciate versus other currencies. A stronger US Dollar, slowing economic growth in China, and excess supply has resulted in steep declines in commodity and energy prices, which along with modest wage growth is likely to keep inflation low in the near future.
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In January 2015, the ECB announced an extensive QE program to purchase EUR 60bn of government bonds each month until at least September 2016. This resulted in the Euro declining from 1.21 against the US Dollar at the start of the year to 1.05 in March before recovering to 1.11 at the end of June 2015. By April 2015, the EuroStoxx 50 Index had shot up 21.5% from its level at the start of the year. Sovereign bond yields declined significantly with the German bonds yielding just 7.5bps at its lows. In anticipation of the QE program from the ECB and the resultant expected pressure on the Swiss Franc, the Swiss National Bank (SNB) removed the floor of 1.20 Swiss Francs per Euro in January and negative rates to deter safe haven flows into the currency. The Swiss Franc surged higher against most currencies after removal of the floor and closed at 1.042 Swiss Francs per Euro as at 30 June 2015 and Swiss government bond yields declined to yield negative rates across almost all maturities up to 10 years. While European equity markets were generally higher in the first half of the year, a stronger US Dollar and anticipation of increasing rates in the US kept the S&P 500 Index range bound.
Oil prices declined further in January with West Texas Intermediate Crude dropping from USD 58/barrel to USD 51.5/barrel but recovered to end up at USD 60.10/barrel as of 30 June 2015. Despite lower oil prices, supply increased as the OPEC nations produced more oil to retain market share and push leveraged oil producers out of the market. Concerns of a sharp slowdown in China further weighed on oil and commodity prices and prices have dropped further post the reporting period. Lower commodity and energy prices are expected to give a boost to consumers around the world, which may help increase economic growth. At the same time, however, cutbacks in investment spending related to energy and commodity production will likely limit the positive contribution from lower prices in the near term.
High yield and leveraged loans experienced higher volatility as the spectre of higher US interest rates and exposure to energy and commodity issuers dampened investor sentiment. At the same time, continued strong issuance of Collateralized Loan Obligations (CLOs) provided stability to the leveraged loan market. The S&P/LSTA Leveraged Loan Index generated a total return of 2.82% during the first half of the year as compared to a total return of 2.5% from the Bank of America US High Yield Index.
Sources: Swiss National Bank (SNB), European Central Bank (ECB), US Federal Reserve, Bloomberg
Review of Significant Investments
Name Book Value US $m -------------------- ------------ Wyler Park* 53.0 -------------------- ------------ SRS Charminar 9.1 -------------------- ------------ Other Real Estate Assets 1.2 -------------------- ------------ Total 63.3 -------------------- ------------
* Net of related loan.
Wyler Park - Switzerland
Wyler Park is a top quality mixed-use property located in Bern, Switzerland. It has over 16,800 square meters of commercial area, 4,100 square meters of residential area, and another 7,100 square meters available for additional commercial development. The commercial part is leased entirely to SBB (AAA rated), the Swiss national train transportation authority wholly owned by the Swiss Confederation, and serves as the headquarters of their Passenger Traffic division. The commercial lease is 100% linked to inflation. The annual rental income from the commercial area of the project is CHF 4.36m (USD 4.66m).
In September 2015, the lease with SBB for the Wyler Park property was extended from 2019 to 2029. As part of the lease extension agreement, the owner will invest up to a maximum of CHF 3.95m (USD 4.22m) and SBB is expected to invest up to CHF 9m (USD 9.62m) to upgrade the property and allow for additional workspaces.
Following the successful development of 39 residential apartments, the entire property is now fully rented. The annual rental income expected from the residential area is CHF 1.04m (USD 1.11m).
The property generated rent of CHF 2.7m (USD 2.9m) during the first half of 2015.
Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore Investments AG. In January 2015, management successfully refinanced the previous loan against Wyler Park with a Swiss bank. The outstanding principal of the new loan facility is CHF 66.5m (USD 71.1m). The facility is committed until at least 30 June 2019. Following the lease extension agreement with SBB from 2019 to 2029, an additional CHF 10m (USD 10.69m) is available under this facility. The loan is a non-recourse loan to Livermore Investments AG backed only by this property.
Management continues to evaluate the potential development of the additional commercial development rights of 7,100 square meters attached to the property.
SRS Charminar - India
Livermore invested USD 20m in 2008 in a leading Indian Real Estate company, in association with SRS Private and other investors as part of a total investment of USD 132.1m. In 2009, the promoters of the investee company were arrested on charges of criminal conspiracy, cheating, and misappropriation of funds. Later it was discovered that the investee company had breached the terms of the investment agreement resulting in a default. On 13 January 2011 the Company Law Board ("CLB") passed an order and allowed Infrastructure Leasing & Financial Services Limited ("IL&FS") to become an 80% shareholder and control the management of the investee company. SRS Charminar and other investors have agreed to a settlement with IL&FS wherein the settlement amount will be paid in four tranches over five years.
The carrying amount of the investment is based on discounted expected cash flows and as of period-end was USD 9.1m (December 2014: USD 9.1m).
Private Equity Funds
The other private equity investments held by the Group are incorporated in the form of Managed Funds (mostly closed end funds) mainly in the emerging economies of India and China. The investments of these funds into their portfolio companies were mostly done in 2008 and 2009. Overall, during 2015 the investment environment relating to most funds was challenging and the Group expects that material exits of portfolio companies should materialize between 2016 and 2018. During the reporting period, Livermore received a distribution-in-kind from Evolution Fund in the form of shares of Whitesmoke Software Ltd, a company listed in Israel. Livermore received USD 0.049m from its investment in Blue Ridge fund, which is primarily liquidated.
The following summarizes the book value of the private equity funds as at 30 June 2015:
Name Book Value US $m ----------------------- ------------ SRS Private (India) 2.7 ----------------------- ------------ Evolution Venture (Israel) 2.6 ----------------------- ------------ Elephant Capital (India) 0.5 ----------------------- ------------ Panda Capital (China) 0.4 ----------------------- ------------ Da Vinci (Russia) 0.3 ----------------------- ------------ Blue Ridge (China) 0.06 ----------------------- ------------ India Blue Mountains - (India) ----------------------- ------------ Other investments 0.6 ----------------------- ------------ Total 7.1 ----------------------- ------------
SRS Private: SRS Private is a private equity fund focused on real estate in India. The fund has invested in residential and commercial projects as well as directly in certain real estate companies. The assets are primarily located in and around major cities of India such as Mumbai and Hyderabad.
Evolution Venture: Evolution is an Israel focused venture capital fund. It invests in early stage technology companies. Its investments include a carrier-class Mobile Broadband Wireless (MBW) Wi-Fi solutions company, Whitesmoke Software Ltd (a Tel-Aviv listed language enhancement products company), a software company operating in the digital radio market, a software test tool developer, and a virtualization technology company. The Wi-Fi solutions company, language enhancements product company and the virtualization technology company have been performing well. Livermore received a distribution-in-kind in the form of shares of Whitesmoke Software Ltd as a partial exit from the fund's position in Whitesmoke.
Elephant Capital: India-focused private equity fund, which is AIM quoted (Ticker: ECAP). During the period, the fund sold its remaining holdings in Nitco Limited for GBP 0.16m and bought back 5,000,000 shares for GBP 1m.
As of 28 February 2015, the fund reported an audited NAV of 36 pence per share. Additional information about the fund and its portfolio is available at www.elephantcapital.com.
Panda Capital: Panda Capital is a China-based private equity fund focused on early-stage industrial operations in China. The fund's main investment is in a bamboo flooring company in China, which provides an innovative low cost alternative to hardwood flooring in shipping containers. The manager is in the process of building up operational capacity for product manufacturing.
Da Vinci: The fund is primarily focused on Russia and CIS countries and is primarily invested in the Moscow Exchange and a Ukrainian coal company. The Moscow Exchange continues to perform well in local currency terms. The coal company is located in Western Ukraine. The Group's investment in the fund was valued at USD 0.3m as of 30 June 2015.
Blue Ridge: Blue Ridge is a China focused private equity fund. The fund is mostly wound down and distributed USD 0.049m during the period.
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India Blue Mountains: India Blue Mountains is a hotel and hospitality development fund that is developing 4 star and 5 star hotels in India. The fund has acquired land to develop three hotels in prime areas of Mumbai, Pune and Goa. All hotels will be managed by the Accor Group (Novotel brands). Accor has also invested equity and holds a 26% stake in all of the hotels. The Pune hotel is now operational but occupancy has been lower than expected.
During the reporting period, the fund reorganized itself into three separate companies holding the individual assets separately and raised capital to fund operations and interest costs. Livermore decided not to participate in the capital raise as it believes that asset values are not likely to be in excess of the debt load.
Financial Investments and Corporate Bond Trading
The Group manages a financial portfolio valued at USD 90.4m (net of leverage) as at 30 June 2015, which is invested mainly in US credit and fixed income securities.
Senior Secured Loans and CLOs:
The US senior secured loan market continued to offer good risk adjusted returns as a floating rate asset class with a senior secured claim on the borrower and with overall low volatility and low correlation to the equity market. CLOs are managed portfolios invested into diversified pools of senior secured loans and financed with long term financing pre-fixed at the time of issuance.
The US leveraged loan market performed reasonably well during the first half of the year with the Credit Suisse Leveraged Loan Index returning 2.9%, albeit with heightened volatility driven by broader markets, increased participation of retail and high yield funds, and a steady deterioration in energy and commodity prices. As at the end of June 2015, the US loan market twelve month rolling default rate by number of issuers was 0.81%. Livermore expects default rates to stay low in the near future although defaults rates from Oil, Gas and Coal related issuers are likely to underperform and push the default rate higher.
After a record level of US CLO new issue volume in 2014, CLO supply has continued to be strong in 2015. Despite mark-to-market volatility on CLO equity tranches, cash flows to the equity tranche have remained high and even increased as CLO managers take advantage of higher spread and lower loan prices available in the market.
During the first half of 2015 the Group continued to re-invest distributions from its CLO portfolio into new issue CLO transactions. The Group also provided first loss investments into credit facilities to secure and warehouse collateral for its upcoming CLO transactions.
The Group's US CLO portfolio continued to perform well on account of low current default rates, a low default outlook and wider loan spreads. At the end of the reporting period all of our US CLO investments were passing their coverage tests (thereby making dividend distributions). During the period, the CLO portfolio generated USD 11.99m in cash distributions, as well as earning USD 0.41m on warehousing facilities. Cash payments to CLO equity increased somewhat as CLO managers used volatility in the loan market to increase portfolio spreads. The Group has continued to reduce exposure to CLOs with shorter reinvestment periods and focus on new issue CLOs. As at 30 June 2015, over 85% of the Group CLO portfolio is invested in post-crisis CLOs.
Secondary market prices for CLOs fell further in January but rose higher until May as loan prices recovered along with oil prices. In June and subsequent months, however, secondary market prices have declined following a sharp fall in oil and commodity prices, re-emergence of the Greek debt crisis, a currency devaluation from China along with concerns around the first rate hike in the US. While the Group's US CLO portfolio performed better than market, its global and emerging market credit CLO portfolio was further impacted by deteriorating conditions in emerging markets. Management continues to monitor developments in this portfolio.
As few loans mature in the near term and the US economy continues to grow, corporate defaults are expected to remain low with the exception of certain energy related companies. Management believes that the environment should remain attractive for investments in CLO income notes. In the first half of 2015, Livermore launched two new issue cash-flow CLOs as an anchor investor.
While management maintains a positive view on the CLO portfolio, mid-long term performance may be negatively impacted by a strong pull back in the US or European economy or geo-political events that could result in a spike in defaults. Despite positive developments in the overall health of the US economy, we acknowledge the continued below trend growth globally especially in Europe, China and other emerging markets as well as headwinds relating to the potential monetary tightening in the US and geopolitical risks.
30 Percentage 31 Dec Percentage June 2014 2015 Amount Amount US US $000 $000 US CLOs 63,556 86.0% 68,704 83.6% Global Credit CLOs 9,124 12.3% 12,008 14.6% European CLOs 1,234 1.7% 1,505 1.8% ------ ------ ------ ------ 73,914 100% 82,217 100% ------ ------ ------ ------
The following is a table summarizing the financial portfolio as at 30 June 2015
Name 30 June 30 June 31 December 2014 2015 2014 Book Value US Book Value Book Value $m US $m US $m ------------------- ------------- ----------- ---------------- Investment in the loan market through CLOs 73.9 92.0 82.2 ------------------- ------------- ----------- ---------------- Babylon 1.0 2.8 0.9 ------------------- ------------- ----------- ---------------- Corporate Bonds 1.7 1.6 2.0 ------------------- ------------- ----------- ---------------- Hedge Funds 1.1 1.3 1.1 ------------------- ------------- ----------- ---------------- Other Public Equities 1.8 2.4 1.9 ------------------- ------------- ----------- ---------------- Total 79.5 100.1 88.1 ------------------- ------------- ----------- ---------------- Total net of leverage 90.4* 94.0 99.1 ------------------- ------------- ----------- ----------------
* this figure includes USD 11.3m which the Company invested during the period in the first loss tranche of warehouse facilities for accumulating loans with the intention to transfer these loans to a CLO.
The following table reconciles the review of activities to the Group's financial assets and investment property as at 30 June 2015.
Name 30 June 2015 Book Value US $m -------------------------- ------------- Significant investments 63.3 -------------------------- ------------- Private Equity Funds 7.1 -------------------------- ------------- Financial portfolio 79.5 -------------------------- ------------- Total 149.9 -------------------------- ------------- Available-for sale financial assets (note 4) 91.6 -------------------------- ------------- Financial assets at fair value through profit or loss (note 5) 5.3 -------------------------- ------------- Net Investment property (notes 8/16) 53.0 -------------------------- ------------- Total 149.9 -------------------------- -------------
Events after the reporting date
Events after the reporting date are described in note 30 to the interim consolidated financial statements.
Litigation
Information is provided in note 28 to the interim condensed consolidated financial statements.
Livermore Investments Group Limited
Condensed Consolidated Statement of Financial Position
as at 30 June 2015
30 June 30 June 31 December 2015 2014 2014 Note Unaudited Unaudited Audited US $000 US $000 US $000 Assets Non-current assets Property, plant and equipment 37 23 42 Available-for-sale financial assets 4 89,367 110,144 99,374 Financial assets at fair value through profit or loss 5 1,518 2,122 1,806 Investment property 8 123,812 129,953 116,609 Investments in associate and joint venture 9 3,750 - - Other assets 11 1,692 2,961 2,538 -------- -------- -------- 220,176 245,203 220,369 -------- -------- -------- Current assets
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Trade and other receivables 11 12,823 13,065 20,890 Available-for-sale financial assets 4 2,247 3,018 2,561 Financial assets at fair value through profit or loss 5 3,772 5,987 3,704 Current tax asset 9 - - Derivative financial instruments 15 192 - 1,125 Cash at bank 12 12,340 9,996 3,807 -------- -------- -------- 31,383 32,066 32,087 -------- -------- -------- Total assets 251,559 277,269 252,456 -------- -------- -------- Equity Share capital 13 - - - Share premium and treasury shares 13 178,597 178,597 178,597 Other reserves 3,839 7,485 2,937 Retained earnings (24,599) (17,908) (21,560) -------- -------- -------- Total equity 157,837 168,174 159,974 -------- -------- -------- Liabilities Non-current liabilities Bank loans 16 67,511 - - Deferred tax 2,535 2,413 2,272 -------- -------- -------- 70,046 2,413 2,272 -------- -------- -------- Current liabilities Bank loans 16 3,315 87,635 78,092 Bank overdrafts 12 18,817 13,527 10,355 Short term bank loans - 2,377 - Trade and other payables 17 1,544 2,752 1,758 Current tax payable - 13 5 Derivative financial instruments 15 - 378 - -------- -------- -------- 23,676 106,682 90,210 -------- -------- -------- Total liabilities 93,722 109,095 92,482 -------- -------- -------- Total equity and liabilities 251,559 277,269 252,456 -------- -------- -------- Net asset valuation per share Basic and diluted net asset valuation per share (US $) 18 0.81 0.86 0.82 -------- -------- -------- Livermore Investment Group Limited Condensed Consolidated Statement of Profit or Loss for the six months ended 30 June 2015 ---------------------------------------------------- ------------------------------------------- Note Six months Six months Year ended ended ended 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Investment Income Interest and dividend income 20 11,850 14,069 26,619 Investment property income 21 2,738 2,698 5,159 Loss on investments 22 (10,944) (616) (9,885) ------ ------ ------ Gross profit 3,644 16,151 21,893 Other income - 450 462 Administrative expenses 23 (1,879) (2,665) (7,219) ------ ------ ------ Operating profit 1,765 13,936 15,136 Finance costs 24 (1,276) (2,457) (7,286) Finance income 24 1,677 11 109 ------ ------ ------ Profit before taxation 2,166 11,490 7,959 Taxation charge (206) (634) (755) ------ ------ ------ Profit for period / year 1,960 10,856 7,204 ------ ------ ------ Earnings per share Basic and diluted earnings per share (US $) 26 0.------01 0.06 0.04 ------ ------ ------
Livermore Investment Group Limited
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2015
Six months Six months Year ended ended ended 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Profit for the period / year 1,960 10,856 7,204 Other comprehensive income: Items that will be reclassified subsequently to profit or loss * Available for sale financial assets - fair value losses (11,032) (5,258) (17,128) * Foreign exchange gains / (losses) from translation of subsidiaries 529 (3) (626) ------ ------ ------ (8,543) 5,595 (10,550) ------ ------ ------ Reclassification to profit or loss Available for sale financial assets * Reclassification to profit or loss due to disposals 577 (2,409) (1,709) * Reclassification to profit or loss due to impairment 10.828 1,616 8,861 ------ ------ ------ 11,405 (793) 7,152 ------ ------ ------ Total comprehensive income for the period / year 2,862 4,802 (3,398) ------ ------ ------
The total comprehensive income for the period is wholly attributable to the owners of the parent company.
Livermore Investments Group Limited
Condensed Consolidated Statement of Changes in Equity
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for the period ended 30 June 2015
Note Share Share Treasury Share Translation Investment Retained Total capital premium Shares option reserve revaluation earnings reserve reserve US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000 Balance at 1 January 2014 - 215,499 (36,902) 5,777 (788) 8,550 (23,765) 168,371 Dividends - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Transactions with owners - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Profit for the year - - - - - 7,204 7,204 Other comprehensive income: Available-for-sale financial assets * Fair value losses - - - - - (17,128) - (17,128) * Reclassification to profit or loss due to disposals - - - - - (1,709) - (1,709) * Reclassification to profit or loss due to impairment - - - - - 8,861 - 8,861 Foreign exchange loss arising from translation of subsidiaries - - - - (626) - - (626) ------ ------ ------ ------ ------ ------ ------ ------ Total comprehensive income for the year - - - - (626) (9,976) 7,204 (3,398) ------ ------ ------ ------ ------ ------ ------ ------ Balance at 31 December 2014 - 215,499 (36,902) 5,777 (1,414) (1,426) (21,560) 159,974 Dividends - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Transactions with owners - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Profit for the period - - - - - - 1,960 1,960 Other comprehensive income: Available-for-sale financial assets * Fair value losses - - - - - (11,032) - (11,032) * Reclassification to profit or loss due to disposals - - - - - 577 - 577 * Reclassification to profit or loss due to impairment - - - - - 10,828 - 10,828 Foreign exchange gain arising from translation of subsidiaries - - - - 529 - - 529 ------ ------ ------ ------ ------ ------ ------ ------ Total comprehensive income for the period - - - - 529 373 1,960 2,862 ------ ------ ------ ------ ------ ------ ------ ------ Balance at 30 June 2015 - 215,499 (36,902) 5,777 (885) (1,053) (24,599) 157,837 ------ ------ ------ ------ ------ ------ ------ ------ Comparative period Share Share Treasury Share Translation Investment 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 2014 - 215,499 (36,902) 5,777 (788) 8,550 (23,765) 168,371 Dividends - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Transactions with owners - - - - - - (4,999) (4,999) ------ ------ ------ ------ ------ ------ ------ ------ Profit for the period - - - - - - 10,856 10,856 Other comprehensive income: Available-for-sale financial assets * Fair value losses - - - - - (5,258) - (5,258) * Reclassification to profit or loss due to disposal - - - - - (2,409) - (2,409) * Reclassification to profit or loss due to impairment - - - - - 1,616 - 1,616 Foreign exchange loss arising from translation of subsidiaries - - - - (3) - - (3) ------ ------ ------ ------ ------ ------ ------ ------ Total comprehensive income for the period - - - - (3) (6,051) 10,856 4,802 ------ ------ ------ ------ ------ ------ ------ ------ Balance at 30 June 2014 - 215,499 (36,902) 5,777 (791) 2,499 (17,908) 168,174 ------ ------ ------ ------ ------ ------ ------ ------
Livermore Investments Group Limited
Condensed Consolidated Statement of Cash Flows
for the period ended 30 June 2015
Note Six months Six months Year ended ended ended 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Cash flows from operating activities Profit before tax 2,166 11,490 7,959 Adjustments for: Depreciation expense 23 4 - 13 Interest expense 24 808 2,159 3,780 Interest and dividend income 20 (11,850) (14,069) (26,619) Loss on investments 22 10,944 616 9,885 Exchange differences (1,390) 298 3,506 ------ ------ ------ 682 494 (1,476) Changes in working capital Decrease / (increase) in trade and other receivables 9,271 (9,422) (16,292) Decrease in trade and other payables (162) (30) (1,050) ------ ------ ------
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Cash flows from operations 9,791 (8,958) (18,818) Interest and dividend received 11,197 13,981 25,773 Tax paid (13) (134) (167) ------ ------ ------ Net cash generated from operating activities 20,975 4,889 6,788 ------ ------ ------ Cash flows from investing activities Purchase of property, plant and equipment - - (32) Acquisition of investments (11,118) (22,498) (27,340) Proceeds from sale of investments 10,743 29,038 33,262 Settlement of derivative 1,332 - - Acquisition of associate 9 (3,750) - - Capital return of joint venture 9 - 5,000 5,000 ------ ------ ------ Net cash from investing activities (2,793) 11,540 10,890 ------ ------ ------ Cash flows from financing activities Purchases of own shares - - - Proceeds from bank loans 72,430 7,242 7,242 Repayment of bank loans (84,520) (8,704) (11,547) Interest paid (870) (2,159) (3,884) Settlement of litigation - (26) (26) Dividends paid (4,999) (4,999) (4,999) ------ ------ ------ Net cash from financing activities (17,959) (8,646) (13,214) ------ ------ ------ Net increase / (decrease) in cash and cash equivalents 223 7,783 4,464 Cash and cash equivalents at the beginning of the period / year (6,548) (11,038) (11,038) Exchange differences on cash and cash equivalents (181) (276) 93 Translation differences on foreign operations' cash and cash equivalents 29 - (67) ------ ------ ------ Cash and cash equivalents at the end of the period / year 12 (6,477) (3,531) (6,548) ------ ------ ------
Notes to the Financial Statements
1. Accounting policies
The interim condensed consolidated financial statements of Livermore have been prepared on the basis of the accounting policies and basis of consolidation stated in the 2014 Annual Report, available on www.livermore-inv.com. The application of the IFRS pronouncements that became effective as of 1 January 2015 has no significant impact on the Group's consolidated financial statements.
2. Critical accounting judgements and estimation uncertainty
When preparing the interim condensed consolidated financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The judgements, estimates and assumptions applied in the interim condensed consolidated financial statements, including the key sources of estimation uncertainty were the same as those applied in the Group's last annual consolidated financial statements for the year ended 31 December 2014. The only exception is the estimate of the provision for income taxes which is determined in the interim financial statements using the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.
3. Basis of preparation
These unaudited interim condensed consolidated financial statements are for the six months ended 30 June 2015. They have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. They do not include all of the information required for full annual consolidated financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2014.
The financial information for the year ended 31 December 2014 is extracted from the Company's consolidated financial statements for the year ended 31 December 2014 which contained an unqualified audit report.
4. Available-for-sale financial assets 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Non-current assets Fixed income investments 73,914 91,962 82,217 Private equities 6,187 9,114 7,891 Financial and minority holdings 9,266 9,068 9,266 ------ ------ ------ 89,367 110,144 99,374 ------ ------ ------ Current assets Public equities investments 1,156 1,959 1,491 Hedge funds 1,091 1,057 1,070 Other investments - 2 - ------ ------ ------ 2,247 3,018 2,561 ------ ------ ------
For description of each of the above categories, refer to note 6.
During the six months ended 30 June 2015, due to market conditions, management considered the impairment of certain available-for-sale financial assets. Impairment testing indicated that for those financial assets their carrying amount may not be recoverable.
The related impairment charges for the six months ended 30 June 2015, of USD 10.828m (June 2014: USD 1.616m, December 2014: USD 8.861m), are included within loss on investments (note 22), and represent impairment losses arising due to:
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Significant fall in value 2,175 1,400 5,693 Prolonged fall in value 3,560 216 1,328 Significant and prolonged fall in value 5,093 - 1,840 ------ ------ ------ 10,828 1,616 8,861 ------ ------ ------ 5. Financial assets at fair value through profit or loss 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Non-current assets Private equities 330 569 330 Real estate entities 1,188 1,553 1,476 ------ ------ ------ 1,518 2,122 1,806 ------ ------ ------ Current assets Fixed income investments 1,649 1,645 1,623 Public equity investments 2,080 3,845 1,717 Hedge funds 43 199 65 Other investments - 298 299 ------ ------ ------ 3,772 5,987 3,704 ------ ------ ------
For description of each of the above categories, refer to note 6.
6. Financial assets at fair value
The Group allocates its non-derivative financial assets at fair value (notes 4 and 5) as follows:
-- Fixed income investments relate to fixed and floating rate bonds, perpetual bank debt, and investments in the loan market through CLOs.
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-- Private equities relate to investments in both high growth opportunities in emerging markets and deep value opportunities in mature markets. The company generally invests directly in prospects where it can exert significant influence.
-- Financial and minority holdings relate to significant investments (of over USD 5m) which are strategic for the Company and are done in the form of equity purchases or convertible loans. Main investments under this category are in the fields of real estate.
-- Hedge funds relate to investments in funds managed by sophisticated investment managers that pursue investment strategies with the goal of generating absolute returns.
-- Public equity investments relate to investments in shares of companies listed on public stock exchanges.
-- Real estate entities relate to investments in real estate projects. -- Other investments are investments not otherwise included in the categories above. 7. Fair value measurements of financial assets and liabilities
The following table presents financial assets measured at fair value in the consolidated statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
- Level 3: unobservable inputs for the asset or liability.
Valuation of financial assets and liabilities
-- Public Equities, and Fixed Income Investments are valued per their closing bid market prices on quoted exchanges, or as quoted by market maker.
The Group values the CLOs based on the valuation reports provided by market makers. CLOs are typically valued by market makers using discounted cash flow models. The key assumptions for cash flow projections include default and recovery rates, prepayment rates and reinvestment assumptions on the underlying portfolios (typically senior secured loans) of the CLOs.
Default and recovery rates: The amount and timing of defaults in the underlying collateral and the amount and timing of recovery upon a default affect are key to the future cash flows a CLO will distribute to the CLO equity tranche. All else equal, higher default rates and lower recovery rates typically lead to lower cash flows. Conversely, lower default rates and higher recoveries lead to higher cash flows.
Prepayment rates: Senior loans can be pre-paid by borrowers. CLOs that are within their reinvestment period may, subject to certain conditions, reinvest such prepayments into other loans which may have different spreads and maturities. CLOs that are beyond their reinvestment period typically pay down their senior liabilities from proceeds of such pre-payments. Therefore the rate at which the underlying collateral prepays impacts the future cash flows that the CLO may generate.
Reinvestment assumptions: A CLO within its reinvestment period may reinvest proceeds from loan maturities, prepayments, and recoveries into purchasing additional loans. The reinvestment assumptions define the characteristics of the loans that a CLO may reinvest in. These assumptions include the spreads, maturities, and prices of such loans. Reinvestment into loans with higher spreads and lower prices will lead to higher cash flows. Reinvestment into loans with lower spreads will typically lead to lower cash flows.
Discount rate: The discount rate indicates the yield that market participants expect to receive and is used to discount the projected future cash flows. Higher yield expectations or discount rates lead to lower prices and lower discount rates lead to higher prices for CLOs.
-- Hedge Funds and Private Equity Funds are valued per reports provided by the funds on a periodic basis, and if traded, per their closing bid market prices on quoted exchanges, or as quoted by market maker.
-- Private Equities and unlisted investments are valued using market valuation techniques as determined by the Directors, mainly on the basis of discounted cash flow techniques or valuations reported by third-party managers of such investments.
-- Derivative instruments are valued at fair value as provided by counter parties of the derivative agreement.
-- The investment in associate is valued based on its underlying credit agreement. The credit agreement's fair value is provided by counter party bank.
Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into the fair value hierarchy as follows:
30 June 2015 Unaudited Unaudited Unaudited Unaudited US $000 US $000 US $000 US $000 Level Level Level Total 1 2 3 Assets Fixed income investments 1,648 73,914 - 75,562 Private equities - - 6,517 6,517 Financial and minority holdings - - 9,266 9,266 Public equity investments 3,236 - - 3,236 Hedge funds - 1,134 - 1,134 Real estate entities - - 1,189 1,189 Forward contract - 192 - 192 ------ ------ ------ ------ 4,884 75,240 16,972 97,096 ------ ------ ------ ------ 30 June 2014 Unaudited Unaudited Unaudited Unaudited US $000 US $000 US $000 US $000 Level Level Level Total 1 2 3 Assets Fixed income investments 1,645 91,962 - 93,607 Private equities - - 9,683 9,683 Financial and minority holdings - - 9,068 9,068 Public equity investments 5,804 - - 5,804 Hedge funds - 1,256 - 1,256 Real estate entities - - 1,553 1,553 Other investments 298 - 2 300 ------ ------ ------ ------ 7,747 93,218 20,306 121,271 ------ ------ ------ ------ Liabilities Interest rate swaps - 378 - 378 ------ ------ ------ ------ - 378 - 378 ------ ------ ------ ------ 31 December 2014 Audited Audited Audited Audited US $000 US $000 US $000 US $000 Level Level Level Total 1 2 3 Assets Fixed income investments 1,623 82,217 - 83,840 Private equities - - 8,221 8,221 Financial and minority holdings - - 9,266 9,266 Public equity investments 3,208 - - 3,208 Hedge funds - 1,135 - 1,135 Real estate entities - - 1,476 1,476 Other investments 299 - - 299 Total return swaps - - 1,125 1,125 ------ ------ ------ ------ 5,130 83,352 20,088 108,570 ------ ------ ------ ------
The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.
No financial assets or liabilities have been transferred between levels.
Financial assets within level 3 can be reconciled from beginning to ending balances as follows:
Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total US $000 US $000 US $000 US $000 US $000 US $000 US $000 As at 1 January 2015 9,266 7,891 - 1,476 330 1,125 20,088 Purchases - - - - - - - Settlement - - - - - (1,332) (1,332) Losses recognised in:
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-Profit or loss - (890) - - - 207 (683) -Other comprehensive income - (814) - - - - (814) Exchange difference - - - (287) - - (287) ------ ------ ------ ------ ------ ------ ------ As at 30 June 2015 9,266 6,187 - 1,189 330 - 16,972 ------ ------ ------ ------ ------ ------ ------ Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total US $000 US $000 US $000 US $000 US $000 US $000 US $000 As at 1 January 2014 9,068 9,081 2 1,588 569 - 20,308 Purchases - 132 - - - - 132 (Losses) / gains recognised in: -Profit or loss - (217) - - - - (217) -Other comprehensive income - 118 - - - - 118 Exchange difference - - - (35) - - (35) ------ ------ ------ ------ ------ ------ ------ As at 30 June 2014 9,068 9,114 2 1,553 569 - 20,306 ------ ------ ------ ------ ------ ------ ------ Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total US $000 US $000 US $000 US $000 US $000 US $000 US $000 As at 1 January 2014 9,068 9,081 2 1,588 569 - 20,308 Purchases - 323 - - - - 323 (Losses) / gains recognised in: -Profit or loss - (1,470) - 68 (239) 1,125 (516) -Other comprehensive income 198 (43) (2) - - - 153 Exchange difference - - - (180) - - (180) ------ ------ ------ ------ ------ ------ ------ As at 31 December 2014 9,266 7,891 - 1,476 330 1,125 20,088 ------ ------ ------ ------ ------ ------ ------
The above recognised (losses) / gains can be allocated as follows:
Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total Six month ended US $000 US $000 US $000 US $000 US $000 US $000 US $000 30 June 2015 Profit or loss -Financial assets held at period-end - (890) - - - 207 (683) ------ ------ ------ ------ ------ ------ ------ - (890) - - - 207 (683) ------ ------ ------ ------ ------ ------ ------ Other comprehensive income -Financial assets held at period-end - (814) - - - - (814) ------ ------ ------ ------ ------ ------ ------ - (814) - - - - (814) ------ ------ ------ ------ ------ ------ ------ Net (losses) / gains for period - (1,704) - - - 207 (1,497) ------ ------ ------ ------ ------ ------ ------ Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total Six month ended US $000 US $000 US $000 US $000 US $000 US $000 US $000 30 June 2014 Profit or loss -Financial assets held at period-end - (217) - - - - (217) ------ ------ ------ ------ ------ ------ ------ - (217) - - - - (217) ------ ------ ------ ------ ------ ------ ------ Other comprehensive income -Financial assets held at period-end - 118 - - - - 118 ------ ------ ------ ------ ------ ------ ------ - 118 - - - - 118 ------ ------ ------ ------ ------ ------ ------ Net losses for period - (99) - - - - (99) ------ ------ ------ ------ ------ ------ ------ Available-for-sale At fair value Derivative through profit financial or loss instruments Financial Private Other Real Private Total and minority equities investments estate equities return holdings swap Total Year ended 31 US $000 US $000 US $000 US $000 US $000 US $000 US $000 December 2014 Profit or loss -Financial assets held at period-end - (1,470) - 68 (239) 1,125 (516) ------ ------ ------ ------ ------ ------ ------ - (1,470) - 68 (239) 1,125 (516) ------ ------ ------ ------ ------ ------ ------ Other comprehensive income -Financial assets held at period-end 198 (43) (2) - - - 153 ------ ------ ------ ------ ------ ------ ------ 198 (43) (2) - - - 153 ------ ------ ------ ------ ------ ------ ------ Net gains / (losses) for year 198 (1,513) (2) 68 (239) 1,125 (363) ------ ------ ------ ------ ------ ------ ------
The Group has not developed any quantitative unobservable inputs for measuring the fair value of its level 3 financial assets at the reporting date. Instead the Group used prices from third - party pricing information without adjustment.
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A reasonable change in any individual significant input used in the level 3 valuations is not anticipated to have a significant change in fair values as above.
8. Investment property 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Valuation as at 1 January 116,609 129,916 129,916 Fair value gain - recognised in profit or loss - - 61 Exchange differences 7,203 37 (13,368) ------ ------ ------ As at 30 June / 31 December 123,812 129,953 116,609 ------ ------ ------
The investment property relates to Wyler Park property in Bern, Switzerland, which is used for earning rental income. The Group has no restrictions on the realisability of the property or the remittance of income and any proceeds of disposals.
The investment property which is revalued at each year-end was last valued by Wuest & Partners as at 31 December 2014 on the basis of open market value (as disclosed in the 2014 annual report) in accordance with the appraisal and valuation guidelines of the Royal Institute of Certified Surveyors, and the European Group of Valuers' Associations.
The Wyler Park property bank loan (note 16) is secured on the property itself.
9. Investments in associate and joint venture 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 As at 1 January - 5,524 5,524 Additions 3,750 - - Capital return - (5,000) (5,000) Fair value (loss) / gain - (524) (524) ------ ------ ------ As at 30 June / 31 December 3,750 - - ------ ------ ------ Fair value Name of Type of Place of Principal Proportion 30 June 30 June 31 December investee investment incorporation activity of voting 2015 2014 2014 rights held Unaudited Unaudited Audited US $000 US $000 US $000 Silvermore Joint venture Cayman Islands Investment 50% Ltd holding - - - Investment Highbridge* Associate Cayman Islands holding 25% 3,750 - - ----- ----- ----- 3,750 - - ------ ------ ------
*Highbridge Loan Management Warehouse 7-2015, Ltd is held by the subsidiary Mountview Holdings Limited.
Silvermore was dissolved in January 2015
The activities of the associate are in line with the Group's activities and strategy.
The associate (Highbridge) does not prepare any financial information. As at the period end Highbridge was a contractual party to a credit agreement with BNP Paribas. As at that date Highbridge had no other assets or liabilities.
10. Details of subsidiaries
Details of the investments in which the Group has a controlling interest are as follows:
Name of Subsidiary Place Holding Proportion Principal activity of incorporation of voting rights and shares held Livermore Properties British Ordinary 100% Holding of investments Limited Virgin shares Islands Mountview Holdings British Ordinary 100% Investment vehicle Limited Virgin shares Islands Silvermore 2 Cayman Ordinary 100% Investment vehicle Ltd Islands shares Sycamore Loan Cayman Ordinary 100% Investment vehicle Strategies Ltd Islands shares Sycamore Loan Cayman Ordinary 100% Investment vehicle Funding Ltd Islands shares Livermore Israel Israel Ordinary 100% Holding of investments Investments shares Ltd Blackline Investments USA Ordinary 52.5% Holding of investments Inc. shares (Dormant) Livermore Capital Switzerland Ordinary 100% Administration AG shares services Livermore Investments Switzerland Ordinary 100% Real Estate AG* shares owner and management Enaxor S.a.r.l Luxembourg Ordinary 100% Holding of investment shares Livermore Investments Cyprus Ordinary 100% Administration Cyprus Limited shares services Sandhirst Ltd Cyprus Ordinary 100% Holding of investments shares
* Held by Enaxor S.a.r.l.
11. Trade and other receivables
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Financial items Accrued interest and dividend income 735 112 514 Amounts due by related parties (note 27) 2,512 500 2,497 Other receivables 8,340 11,334 16,757 ------ ------ ------ 11,587 11,946 19,768 Non-Financial items Other assets (note 27) 2,820 3,948 3,384 Prepayments 108 132 276 ------ ------ ------ 14,515 16,026 23,428 ------ ------ ------ Allocated as: Current assets 12,823 13,065 20,890 Non-current assets 1,692 2,961 2,538 ------ ------ ------ 14,515 16,026 23,428 ------ ------ ------
Other receivables include an amount of USD 7.5m that the Company invested during the period in the first loss tranche of a warehouse facility for accumulating loans with the intention to transfer these loans to a CLO which would be managed by MJX Asset Management LLC. In June 2015, the said CLO was priced and the loans accumulated in the warehouse were agreed to be transferred at purchase price to the CLO on 10 July, 2015. Consequently, Livermore's investment amount plus net carry earned became receivable as of end of June. On 10 July 2015 Livermore received USD 8.2m.
12. Cash and cash equivalents
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Cash and cash equivalents included in the cash flow statement comprise the following at the reporting date:
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Cash at bank 12,340 9,996 3,807 Bank overdraft used for cash management purposes (18,817) (13,527) (10,355) ------ ------ ------ Cash and cash equivalents for the purposes of the consolidated statement of cash flows (6,477) (3,531) (6,548) ------ ------ ------
13. Share capital, share premium and treasury shares
Livermore Investments Group Limited (the "Company") is an investment company incorporated under the laws of the British Virgin Islands. The Company has an issued share capital of 304,120,401 ordinary shares with no par value.
As at 30 June 2015 the Company had 108,830,818 ordinary shares held in treasury. The Company did not purchase any additional ordinary shares to be held in treasury during the period.
In the consolidated statement of financial position the amount included comprises of:
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Share premium 215,499 215,499 215,499 Treasury shares (36,902) (36,902) (36,902) ------ ------ ------ 178,597 178,597 178,597 ------ ------ ------
14. Share options
The Company has 11,340,000 outstanding share options at the end of the period. Options are normally exercisable in three equal tranches, on the first, second and third anniversary of the grant. There have been no changes to the term of the options in issue during the period. No options have been exercised during the period.
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Outstanding options At 1 January 11,340,000 11,340,000 11,340,000 --------- --------- --------- At 30 June / 31 December 11,340,000 11,340,000 11,340,000 --------- --------- --------- 30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Exercisable options At 1 January 11,340,000 11,340,000 11,340,000 --------- --------- --------- At 30 June / 31 December 11,340,000 11,340,000 11,340,000 --------- --------- ---------
15. Derivative financial instruments
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Current assets Total return swap - - 1,125 Forward contract 192 - - ------ ------ ------ Current liabilities Interest rate swaps - 378 - ------ ------ ------
16. Bank loans
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 As at 1 January 78,092 87,974 87,974 Additions 72,724 - - Repayments (84,520) (364) (830) Exchange differences 4,824 25 (9,052) Refinancing fees (294) - - ------ ------ ------ As at 30 June / 31 December 70,826 87,635 78,092 ------ ------ ------ Allocated as: Current bank loans 3,315 87,635 78,092 Non-current bank loans 67,511 - - ------ ------ ------ 70,826 87,635 78,092 ------ ------ ------
The bank loan relates to Wyler Park investment property purchase (note 8) and is secured on this property. The loan balance was fully repayable on 12 July 2014. The bank loan was extended for a six month period and became fully repayable on 31 January 2015. Additionally in January 2015, the Group successfully refinanced the loan with a new bank loan. The principal amount of the new loan facility is CHF 68 million (USD 73 million). The facility is committed until at least 30 June 2019. Following the lease extension agreement with SBB from 2019 to 2029, an additional CHF 10 million (USD 10.7 million) is available under this facility.
The weighted average effective Interest of the loan for the period was 1.80%.
17. Trade and other payables
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Financial items Trade payables 500 464 727 Amounts due to related parties (note 27) 565 1,247 579 Accrued expenses 394 967 430 ------ ------ ------ 1,459 2,678 1,736 Non-Financial items VAT payable 85 74 22 ------ ------ ------ 1,544 2,752 1,758 ------ ------ ------
18. Net asset value per share
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited Net assets attributable to ordinary shareholders (USD 000) 157,837 168,174 159,974 --------- --------- --------- Closing number of ordinary share in issue 195,289,583 195,289,583 195,289,583 --------- --------- --------- Basic net asset value per share (USD) 0.81 0.86 0.82 --------- --------- --------- Net assets attributable to ordinary shareholders (USD 000) 157,837 168,174 159,974 Dilutive share options - exercise amount 230 255 234 --------- --------- --------- Net assets attributable to ordinary shareholders including the effect of potentially diluted shares (USD 000) 158,067 168,429 160,208 ------------- ------------- ------------- Closing number of ordinary shares in issue 195,289,583 195,289,583 195,289,583 Dilutive share options 500,000 500,000 500,000 ------------- ------------- ------------- Closing number of ordinary shares including the effect of potentially diluted shares 195,789,583 195,789,583 195,789,583 Diluted net asset value per share (USD) 0.81 0.86 0.82
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--------- --------- --------- Number of Shares Ordinary shares 304,120,401 304,120,401 304,120,401 Treasury shares (108,830,818) (108,830,818) (108,830,818) --------- --------- --------- Closing number of ordinary shares in issue 195,289,583 195,289,583 195,289,583 --------- --------- ---------
The Share options granted on 13 May 2008 have a dilutive effect on the net asset value per share, given that their exercise price is lower than the net asset value per Company's share at 30 June 2015, 30 June 2014 and 31 December 2014. All other share options do not impact the diluted net asset value per share for June 2015, June 2014 and December 2014 as their exercise price was higher than the net asset value per Company's share at 30 June 2015, 30 June 2014 and 31 December 2014.
19. Segment reporting
The Group's monitoring and strategic decision making process in relation to its investments, is separated into two activity lines, which are also identified as the Group's operating segments. These operating segments are monitored and strategic decisions are made on the basis of segment operating results.
Segment information can be analysed as follows:
Six months ended 30 June 2015 - Unaudited Equity and debt instruments Investment Total per investment property financial activities activities statements Segment results 2015 2015 2015 US $000 US $000 US $000 Investment income Interest and dividend income 11,850 - 11,850 Investment property income - 2,738 2,738 Loss on investments (10,944) - (10,944) ------ ------ ------ Gross profit 906 2,738 3,644 Administrative expenses (1,535) (344) (1,879) ------ ------ ------ Operating profit (629) 2,394 1,765 Finance costs (582) (694) (1,276) Finance income 1,677 - 1,677 ------ ------ ------ Profit before taxation 466 1,700 2,166 Taxation charge - (206) (206) ------ ------ ------ Profit for the period 466 1,494 1,960 ------ ------ ------ Segment assets 126,416 125,143 251,559 ------ ------ ------ Segment liabilities 19,762 73,960 93,722 ------ ------ ------ Six months ended 30 June 2014 - Unaudited Equity and debt Investment Total per instruments property financial investment activities statements activities Segment results 2014 2014 2014 US $000 US $000 US $000 Investment income Interest and dividend income 14,069 - 14,069 Investment property income - 2,698 2,698 (Loss) / gain on investments (2,016) 1,400 (616) ------ ------ ------ Gross profit 12,053 4,098 16,151 Other income 450 - 450 Administrative expenses (2,033) (632) (2,665) ------ ------ ------ Operating profit 10,470 3,466 13,936 Finance costs (622) (1,835) (2,457) Finance income 11 - 11 ------ ------ ------ Profit before taxation 9,859 1,631 11,490 Taxation charge - (634) (634) ------ ------ ------ Profit for the period 9,859 997 10,856 ------ ------ ------ Segment assets 146,304 130,965 277,269 ------ ------ ------ Segment liabilities 17,794 91,301 109,095 ------ ------ ------ Year ended 31 December 2014 - Audited Equity and debt Investment Total per instruments property financial investment activities statements activities Segment results 2014 2014 2014 US $000 US $000 US $000 Investment income Interest and dividend income 26,619 - 26,619 Investment property income - 5,159 5,159 (Loss) / gain on investments (9,946) 61 (9,885) ------ ------ ------ Gross profit 16,673 5,220 21,893 Other income 462 - 462 Administrative expenses (5,417) (1,802) (7,219) ------ ------ ------ Operating profit 11,718 3,418 15,136 Finance costs (4,254) (3,032) (7,286) Finance income 109 - 109 ------ ------ ------ Profit before taxation 7,573 386 7,959 Taxation charge - (755) (755) ------ ------ ------ Profit for the year 7,573 (369) 7,204 ------ ------ ------ Segment assets 134,815 117,641 252,456 ------ ------ ------ Segment liabilities 11,278 81,204 92,482 ------ ------ ------
The Group's investment income and its investments are divided into the following geographical areas:
Six months ended 30 June 2015 - Unaudited Equity and debt Investment Total per instruments property financial investment activities statements activities 2015 2015 2015 US $000 US $000 US $000 Investment Income Switzerland - 2,738 2,738 Other European countries (52) - (185) United States 1,360 - 1,880 India (820) - (795) Asia 418 - 6 ------ ------ ------ 906 2,738 3,644 ------ ------ ------ Investments Switzerland - 123,812 123,812 Other European countries 5,004 - 5,004 United States 74,931 - 74,931 India 12,475 - 12,475
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Asia 4,686 - 4,686 ------ ------ ------ 97,096 123,812 220,908 ------ ------ ------ Six months ended 30 June 2014 - Unaudited Equity and debt Investment Total per instruments property financial investment activities statements activities 2014 2014 2014 US $000 US $000 US $000 Investment Income Switzerland - 3,045 3,045 Other European countries 116 - 116 United States 13,658 - 13,658 India (311) - (311) Asia (357) - (357) ------ ------ ------ 13,106 3,045 16,151 ------ ------ ------ Investments Switzerland - 129,953 129,953 Other European countries 7,243 - 7,243 United States 92,033 - 92,033 India 15,148 - 15,148 Asia 6,847 - 6,847 ------ ------ ------ 121,271 129,953 251,224 ------ ------ ------ Year ended 31 December 2014 - Audited Equity and debt Investment Total per instruments property financial investment activities statements activities 2014 2014 2014 US $000 US $000 US $000 Investment Income Switzerland - 6,732 6,732 Other European countries (723) - (723) United States 18,400 - 18,400 India (1,729) - (1,729) Asia (787) (787) ------ ------ ------ 15,161 6,732 21,893 ------ ------ ------ Investments Switzerland - 116,609 116,609 Other European countries 6,225 - 6,225 United States 83,843 - 83,843 India 14,219 - 14,219 Asia 4,283 - 4,283 ------ ------ ------ 108,570 116,609 225,179 ------ ------ ------
Investment income, comprising interest and dividend income, gains or losses on investments, and investment property income, is allocated on the basis of the customer's geographical location in the case of the investment property activities segment and the issuer's location in the case of the equity and debt instruments investment activities segment. Investments are allocated based on the issuer's location.
During the period, 89% of the investment property rent relates to rental income from a single customer (SBB - Swiss national transport authority) in the investment property activities segment (June 2014: 89%, December 2014: 89%).
20. Interest and dividend income
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Interest from investments 63 64 434 Dividend income 11,787 14,005 26,185 ------ ------ ------ 11,850 14,069 26,619 ------ ------ ------
21. Investment property income
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Gross rental income 2,862 3,039 5,923 Direct expenses (124) (341) (764) ------ ------ ------ 2,738 2,698 5,159 ------ ------ ------
All direct expenses relate to the generation of rental income.
22. Loss on investments
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Gain / (loss) on sale of investments (577) 2,409 1,709 Investment property revaluation - - 61 Foreign exchange losses - (22) (232) Loss due to impairment of available-for-sale financial assets (10,828) (1,616) (8,861) Fair value gains / (losses) on financial assets through profit or loss 124 (2,398) (5,067) Fair value loss on investment in joint venture - (524) (524) Fair value gains on derivative instruments 399 1,575 3,133 Bank custody fees (62) (40) (104) ------ ------ ------ (10,944) (616) (9,885) ------ ------ ------
The investments disposed of during the period resulted in the following realised gains / (losses) (i.e. in relation to their original acquisition cost):
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Available-for-sale (822) (1,982) (2,682) At fair value through profit or loss (87) (534) (2,374) ------ ------ ------ (909) (2,516) (5,056) ------ ------ ------
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23. Administrative expenses
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Legal expenses 55 41 118 Directors' fees and expenses 996 999 3,522 Professional and consulting fees 299 762 1,299 Other salaries and expenses 124 200 1,152 Office cost 153 130 299 Depreciation 4 - 13 Other operating expenses 213 477 657 Audit fees 35 56 159 ------ ------ ------ 1,879 2,665 7,219 ------ ------ ------
24. Finance costs and income
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Finance costs Bank interest on investment property loan* 694 1,828 3,032 Other swap interest cost - 173 496 Other bank interest 114 158 252 Foreign exchange loss 468 298 3,506 ------ ------ ------ 1,276 2,457 7,286 Finance income Foreign exchange gain 1,677 11 109 ------ ------ ------ Net Finance costs (401) 2,446 7,177 ------ ------ ------
*Includes interest payments on a related interest rate swap until July 2014.
25. Dividends
In March 2015, the Company announced an interim dividend of USD 5m (USD 0.0256 per ordinary share).
The Board of Directors will decide on the Company's dividend policy for 2015 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.
26. Earnings per share
Basic profit per share has been calculated by dividing the net profit attributable to ordinary shareholders of the parent by the weighted average number of shares in issue of the parent during the relevant financial periods.
Diluted profit per share is calculated after taking into consideration other potentially dilutive shares in existence during the period.
Six months Six months Year ended ended 30 June ended 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited Profit for the year attributable to ordinary shareholders of the parent (USD 000) 1,960 10,856 7,204 --------- --------- --------- Weighted average number of ordinary shares outstanding 195,289,583 195,289,583 195,289,583 --------- --------- --------- Basic earnings per share (USD) 0.01 0.06 0.04 --------- --------- --------- Weighted average number of ordinary shares outstanding 195,289,583 195,289,583 195,289,583 Dilutive effect of share options 77,318 95,687 84,418 --------- --------- --------- Weighted average number of ordinary shares including the effect of potentially dilutive shares 195,362,901 195,385,270 195,374,001 --------- --------- --------- Diluted earnings per share (USD) 0.01 0.06 0.04 --------- --------- ---------
The Share options granted on 13 May 2008 have a dilutive effect on the weighted average number of ordinary shares only, given that their exercise price is lower than the average market price of the Company's shares on the London Stock Exchange (AIM division) during the period ended 30 June 2015, 30 June 2014 and the year ended 31 December 2014. All other share options do not impact the diluted earnings per share for June 2015, June 2014 and December 2014 as their exercise price was higher than the average market price of the Company's shares during the period ended 30 June 2015, 30 June 2014 and the year ended 31 December 2014.
27. Related party transactions
The Group is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which
at 30 June 2015 held 79.06% of the Company's effective voting rights.
30 June 30 June 31 December 2015 2014 2014 Unaudited Unaudited Audited US $000 US $000 US $000 Amounts receivable from key management Other assets 2,820 3,948 3,384 (1) Directors' current accounts 2,512 500 2,497 ------- ------- ------- 5,332 4,448 5,881 ------- ------- ------- Amounts payable to other related party Loan payable (499) (1,212) (499) (2) ------- ------- ------- (499) (1,212) (499) ------- ------- ------- Amounts payable to key management Directors' current accounts (66) (35) (80) ------- ------- ------- (66) (35) (80) ------- ------- ------- Key management compensation Short term benefits Executive directors' fees 398 397 795 (3) Executive directors' reward payments 564 564 2,628 Non-executive directors' fees 34 38 74 Non-executive directors' reward payments - - 25 ------- ------- ------- 996 999 3.522 ------- ------- -------
(1) Loans of USD 5.523m were made to a key management employee for the acquisition of shares in the Company. Interest was payable on these loans at 6 month US LIBOR plus 0.25% per annum and the loans were secured on the shares acquired. The loans were repayable on the earlier of the employee leaving the Company or April 2013. In December 2012 the Board decided to renew the outstanding amount of these loans for a period of another five years. Based on the Board's decision, the outstanding amount is reduced annually on a straight line over five years, as long as the key management employee remains with the Company. The relevant reduction in the loan amount for the period was USD 0.564m. The loans are classified as "other assets" and are included under trade and other receivables (note 11).
(2) A loan with a balance at 30 June 2015 of USD 0.499m (June 2014: USD 1.2m, December 2014: USD 0.499m) has been received from a related company Chanpak Ltd. The loan is free of interest, it is unsecured and is repayable on demand. This loan is included within trade and other payables.
(3) These payments were made directly to companies to which they are related.
No social insurance and similar contributions nor any other defined benefit contributions plan costs incurred for the Group in relation to its key management personnel in either 2015 or 2014.
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