Table of Contents
Table of Contents 4
Highlights 6
Chairman’s and Chief Executive’s Review 7
Introduction 7
Financial Review 7
Dividend & Buyback 8
Annual General Meeting 8
Review of Activities 9
Introduction and Overview 9
Global Investment Environment 9
Livermore’s Strategy 11
Review of Significant Investments 12
Events after the Reporting Date 17
Litigation 17
Report of the Directors 18
The Board’s Objectives 18
The Board of Directors 18
Directors’ responsibilities in relation to the consolidated financial statements 19
Disclosure of information to the Auditor 19
Substantial Shareholdings 20
Corporate Governance Statement 21
Introduction 21
The Board Constitution and Procedures 21
Board Committees 21
Remuneration Committee 21
Audit Committee 21
Communication with Investors 22
Internal Control 22
Independence of Auditor 22
Annual Report 2010
4
Remuneration Report 23
Directors’ Emoluments 23
Directors’ Interests 23
Interests of Directors in share options 24
Share Option Scheme 24
Remuneration Policy 24
Review of the Business and Risks 26
Risks 26
Share Capital 26
Related Party Transactions 27
Report of the independent auditor to the members of Livermore Investments Group Limited 28
Consolidated Statement of Financial Position as at 31 December 2010 30
Consolidated Income Statement for the year ended 31 December 2010 31
Consolidated Statement of Comprehensive Income for the year ended 31 December 2010 32
Consolidated Statement of Changes in Equity for the year ended 31 December 2010 33
Consolidated Statement of Cash Flows for the year ended 31 December 2010 35
Notes on the Financial Statements 37
Shareholder Information 82
Registrars 82
Website 82
Direct Dividend Payments 82
Lost Share Certificate 82
Duplicate Shareholder Accounts 82
Notice of Annual General Meeting 83
Corporate Directory 86
5
Highlights
• Net Asset Value per share - USD 0 50 (December 2009: USD 0 44, June 2010: 0 46) - representing
a net increase of 13 6%
• NAV uplift driven by strong performance of financial portfolio (28 3% net performance) as well
as currency gains, partially offset by write offs on legacy investments
• Successfully rented all apartments at Wyler Park, Bern The property is fully let
• No material developments in the private equity portfolio
•
Total administrative expenses during the year (excluding provisions for legal and other matters)
were USD 3 2m, representing 2 4% of the average NAV
• Net profit of USD 8 5m mainly from interest and dividend income
Annual Report 2010
6
Chairman’s and Chief Executive’s Review
Introduction
We are pleased to announce the consolidated financial results for Livermore Investments Group
Limited (“Livermore” or “the Company”) and its subsidiaries (together “the Group”) for the year
ended 31 December 2010
During the year, the Group performed well generating an increase of 13 6% on a NAV per share
basis The Group took advantage of the continued economic recovery in the US, reduced systemic
risk, dislocation in market prices and availability of cheap leverage and increased allocation to its
financial portfolio, specifically corporate bonds and exposure to US and European senior secured
loans
The year-end NAV was USD 0 50 per share (2009 NAV: USD 0 44 per share) Net profit for the year
was USD 8 5m (2009 Net Loss: USD 61 1m) The portfolio remained well diversified across sectors
and geographies with increased exposure to fixed income securities and senior secured loans as
compared to 2009
The positive performance is attributed largely to the capital gains and income from the financial
portfolio and currency gains on the non-USD denominated investments Interest and dividend
income from the financial portfolio was USD 10 5m
Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 5 4m
in net rent during the year All of the 39 apartments and commercial spaces are fully rented
There were no significant developments in the private equity portfolio during the year
With continued recovery in most developed economies and the worst of the crisis behind us, we are
confident that Livermore’s diversified portfolio is well positioned to generate robust returns over
the medium term The Group holds certain value investments, which form the basis for long term
returns In addition, the Group holds yielding investments that generate sufficient cash to cover its
operating expenses and support incremental investment requirements
Financial Review
The NAV of the Group at 31 December 2010 was USD 142 3m This represents an increase of USD
13 7m or 12 2% over the NAV at 31 December 2009 excluding share buybacks On a per share basis,
the NAV increased by 13 6% Net profit during the year was USD 8 5m, which represents earnings
per share of USD 0 03
Administrative expenses excluding provisions for legal and other matters were USD 3 2m (2009: USD
4 7m), representing 2 4% of the average NAV
7
The overall change in the NAV is primarily attributed to the following:
Shareholders’ funds at beginning of year
Income from investments
Realised gains / (losses) on investments
Loss on impairment on investments
Unrealised gains / (losses) on investments
Unrealised exchange gains
Administration costs including provisions for legal cases
Finance costs
Tax (charge) / credit
Gain for year from discontinued operations
Increase / (Decrease) in net assets from operations
Purchase of own shares
Adjustments for share option charge
Shareholders’ funds at end of year
31 December
2010
US $m
128 6
15 2
0 6
(6 3)
5 6
5 9
(1 0)
(3 5)
(0 8)
-
15 7
(2 0)
-
142 3
31 December
2009
US $m
179 9
7 6
(6 2)
(28 2)
(17 4)
4 0
(8 9)
(3 9)
0 2
1 7
(51 1)
(0 6)
0 4
128 6
Net Asset Value per share
US $0 50
US $0 44
Dividend & Buyback
The Board has decided not to declare a dividend for the year ended 31 December 2010
Given the discount between the market price and the NAV, the Board recommends continuing the
share buyback as the most efficient means to generate value for shareholders
During 2010, the Company purchased 8,409,798 shares to be held in treasury for a total cost of USD
2 037m The total number of shares held in treasury at 30 April 2011 was 31,832,883
Annual General Meeting
The Group’s Annual General Meeting will be held on 23 August 2011 The Notice for the meeting is
on page 83 of this report
Richard B Rosenberg
Chairman
18 May 2011
Noam Lanir
Chief Executive Officer
Annual Report 2010
8
Review of Activities
Introduction and Overview
During 2010 Livermore took advantage of the continued economic recovery in the US, reduced
systemic risk, dislocation in market prices and availability of cheap leverage and increased allocation
to its financial portfolio, specifically corporate bonds and exposure to US and European senior
secured loans
The year-end NAV was USD 0 50 per share (2009 NAV: USD 0 44 per share) The portfolio remained
well diversified across sectors and geographies with increased exposure to fixed income securities
and senior secured loans as compared to 2009
In 2010, the Group generated interest and dividend income of USD 10 5m and investment property
income of USD 4 7m The Group’s results (net income of USD 8 5m) relate mainly to gains and interest
and dividend income from fixed income securities, currency gains from the non-USD portfolio, and
income and valuation gains on its Wyler Park property in Switzerland At the same time the results
were negatively affected by impairments related to CALS refinery and reclassification of certain
losses from reserves to income statement Administrative expenses excluding provisions amounted
to USD 3 2m Finance costs were USD 3 5m, of which USD 3 2m relates to the loan against the Wyler
Park property
The Company does not have an external management company structure and thus does not bear
the burden of external management and performance fees Further, the interests of Livermore’s
management are aligned with those of its shareholders as management members have a large
ownership interest in Livermore shares
Considering the strong liquidity position of Livermore, together with the robustness and
diversification of its investment portfolio and the alignment of management’s interest with those
of its shareholders, management believes that the Group is well positioned to benefit from current
market conditions
Global Investment Environment
Economies in most developed and developing countries continued their recovery during the year,
albeit at a slower pace than anticipated in developed economies Sovereign risks were heightened
substantially during the year especially in certain European economies Job destruction reduced,
however, economic growth in developed economies was not sufficient to increase employment
Central banks in developed economies continued to keep short-term interest rates at historically low
levels and signalled that they could remain low until sustainable recovery and job growth was evident
During the first half of 2010, world growth accelerated to over 5% before slowing down to 3 75% in
the second half reflecting a normal inventory cycle Businesses rebuilt depleted inventories resulting
in a sharp rebound in industrial production and trade Subsequently in the latter half, inventory
rebuilding and thus industrial production reduced However, low excess capacity, accommodative
policies, and further improvements in confidence encouraged private investment and consumption
Global financial conditions broadly improved, amid lingering vulnerabilities Equity markets rose,
risk spreads continued to tighten, and bank lending conditions in major advanced economies became
less tight, even for small and medium-sized firms Consequently, risks of a double-dip recession in
advanced economies have receded, and global activity seems set to accelerate again Nonetheless,
9
pockets of vulnerability persisted; real estate markets and household incomes were still weak in
some major advanced economies
Emerging market economies exhibited robust growth momentum driven by domestic demand
Inflation and overheating risks, however, prompted monetary tightening at varied pace Commodity
prices firmed up, largely reflecting easy liquidity conditions in developed economies, as well as
growing demand pressures in emerging markets The asymmetry in monetary and liquidity conditions
between the developed and the emerging economies and the imbalance in their growth outlook led
to larger capital inflows to emerging markets
Credit markets in general performed well during the year as investors searched for income in a low
interest rate environment In particular, the High Yield and the Leveraged Loan markets performed
well amid improving credit fundamentals and declining default rates The U S lagged 12-month
loan default rate fell to 1 87% in December 2010, down from a high of 10 8% recorded in November
2009 The S&P/LSTA Leveraged Loan Index and the CS High Yield Index were up 10 1% and 14 5%
respectively during the year
EURO ZONE: The overall macroeconomic environment in the euro area continued to improve
moderately in early 2010, albeit with pronounced heterogeneity at the country level The Euro zone
GDP grew by 3% in 2010 on a year-on-year basis Corporate balance sheets improved with large
firms in better shape than small and medium enterprises which are dependent on bank finance
and faced tighter lending standards Concerns about sovereign credit risks within the euro area
intensified progressively impairing the functioning of some financial markets intermittently and
hampering monetary policy transmission Greece had to be bailed out and non-standard policy
actions were required to address the severe tensions in certain market segments Credit spreads,
especially of financial institutions, widened considerably and equity markets dropped in the first
half of the year before recovering substantially in the latter half
SWITZERLAND: In spite of the appreciation of the Swiss franc, the economic recovery in Switzerland
proved to be more dynamic than anticipated GDP grew by 3 2% in 2010 on a year-on-year basis and
exceeded potential growth and was broad based Technical capacity utilisation continued to increase
Manufacturing and the services sector utilizations were at a satisfactory level, while construction
industry utilization was at a high At the same time, demand for labour has firmed, resulting in
a renewed drop in unemployment and short-time work Despite the noticeable dampening effect
of the Swiss franc appreciation, the continued positive business expectations suggest favourable
developments in the coming months
INDIA: Robust broad-based growth put the Indian economy back on its earlier high growth trajectory
The GDP grew by 8 6% in 2010 Private consumption expenditure and gross capital formation emerged
as the key growth drivers Inflation risks from structural demand supply imbalance in certain sectors
and firming global commodity prices increased and food inflation continued to inch upwards The
Reserve Bank of India tightened monetary policy and hiked the reverse repo rate by 200 bps Equity
market in India performed well with the NIFTY Index posting an 18% gain over the prior year *
*Sources: International Monetary Fund (IMF), Swiss National Bank (SNB), European Central Bank (ECB), Reserve Bank of India
(RBI), Bloomberg
Annual Report 2010
10
Livermore’s Strategy
Livermore’s investment strategy is to establish a balanced and diversified portfolio of private
investments with a mid-long term investment horizon and financial investments which provide on-
going liquidity
The first part of the portfolio is focused on Switzerland and Asia and targets investments in real
estate and private equity opportunities which have usually reached profitability Investments are
focused on sectors that Management believes will provide superior growth over the mid to long term
with relatively low downside risk
The financial portfolio is focused on fixed income instruments which generate periodic cash flows
and include mainly corporate bonds and exposure to senior secured loans This part of the portfolio
is geographically focused on the US and Europe with limited exposure to emerging markets
Livermore’s investments are made directly or alongside professional managers with a proven track
record 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
11
Review of Significant Investments
Name
Wyler Park*
SRS Charminar **
Montana Tech Components
Other Real Estate Assets
Total
Book Value
US $m
34 3
24 0
4 5
1 7
64 5
* Net of related loan
** Including accrued but unpaid interest- see details below
Wyler Park – Switzerland
Wyler Park is a top quality mixed-use property located in Berne, Switzerland It has over 16,800
square meters of commercial space, 4,100 square meters of residential space, and another
7,800 square meters available for additional commercial development The commercial part
is leased entirely to SBB (AAA rated), the Swiss national transport 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 and ends in 2019 with two 5 year extension periods
thereafter
Following the successful development of 39 residential apartments, management has completed
renting all of the apartments The entire property is now fully rented
Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore
Investments AG The loan outstanding on the project is CHF 79m, which is a non-recourse loan to
Livermore Investments AG backed only by this property The loan matures in July 2014 The valuation
of the property as of year-end 2010 is CHF 111 17m
Management continues to evaluate the potential development of the additional commercial
development rights of 7,800 square meters attached to the property
SRS Charminar – India
In 2008, Livermore invested USD 20m, through SRS Charminar Investments Ltd, in a leading Indian
Real Estate company, in association with SRS Private and other investors as part of a total investment
of USD 154m The investee company is a top 10 real estate developer in India by land bank value and
size It controls over 5,000 acres across Southern India, with over 650 acres in Hyderabad
The investment in the investee company was in the form of compulsorily convertible debt and
included a put option, which can be exercised if the investee company does not IPO within 3 years or
if certain terms in the agreement are not met The put option is secured by land which was valued at
around USD 1 3 billion at the time of investment and guarantees a minimum return of approximately
30% IRR if exercised
Annual Report 2010
12
As reported earlier, the Fund manager for this investment served a put option exercise notice to
the promoters in 2009 Following a dispute on the grounds of the put option notice between the
promoters and the fund, the parties agreed to invoke arbitration to be held in Mumbai
On 14 August 2009, the arbitration process was completed and the arbitrator ruled in favour of the
investors The award entitles the investors to investment plus interest amounting to 30% IRR until
14 August 2009 and 18% IRR thereafter However, Livermore decided, for prudent reasons, to stop
accruing interest on its investment as of February 2009
Subsequently, the promoters offered to settle and transfer land parcels from the company to the
investors However, Livermore was notified by the manager of the investment that the Indian Income
Tax authority had frozen some of these assets
In the meanwhile, the investors have filed and won an interim order for injunction against the
promoters or the company to sell, transfer, or encumber the assets of the company
Thereafter, the promoters have filed against the arbitration award Legal counsel representing the
investors believes that the grounds of appeal against the award are limited under applicable laws
and that the investors have a strong case to defend The Fund manager is of the opinion that the
value of the land is sufficient to secure the put option As at 31 December 2010 there was no
change in the status of this case Due to the legal complexity of these legal proceedings as well as
the various counterparties involved the outcome remains uncertain
In January 2011, the Corporate Law Board of India (CLB) inducted IL&FS, a leading local infrastructure
and finance company, into the target company as the new promoters
The carrying amount of the investment is based on cost in local currency The accrued interest as
described above is included in receivables
Montana Tech Components (“MTC”) - Europe
Montana Tech Components AG is a leading components manufacturer in the fields of Aerospace &
Industrial Components, Metal Tech and Micro Batteries
The Aerospace Components business segment manufactures specialized components for Airbus and
Boeing and is the market leader The facilities are currently located in the US and in Switzerland with
a new low cost facility in Romania under development The company has over 50% market share
in the US with Boeing and is expected to have over 45% in Europe with Airbus after the Romanian
facility becomes operational The build-out of the Romanian facility was completed as planned in
mid November 2009 The certification process with Airbus could be concluded in significant areas
and a fast close of the remaining certification is planned as an ongoing process
Metal Tech business segment operates in a niche area and is a market leader in an otherwise highly
fragmented industry This business segment produces tools for identification and marking of steel
products Sales and results were as expected below the previous year mainly because of reduced
order intakes
The Micro Batteries business is a market leader in hearing aid batteries and rechargeable batteries
with a strong brand (VARTA Micro Power) VARTA has formed a significant joint venture with the
Volkswagen group to develop batteries for hybrid cars The business segment registered rising sales
during the year due to increasing demand in the Original Equipment Manufacturer (OEM) business
The MTC Group increased net sales by 15% compared to the previous year and recorded sales of EUR
13
351m (2009: EUR 304 4m) EBITDA for the year was EUR 45m (2009: EUR 31 8m) or 12 8% and EBIT
was 27 9m (2009: EUR 13 6m) or 7 9%
In January 2011, the shareholders of MTC approved a capital raise from existing shareholders
The funds will be used to repay the convertible debt and fund additional build-out for the Romanian
factory, and to possibly purchase non–controlling shareholders in the Romanian subsidiary
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 2010
the investment environment relating to most funds continued to improve and the Group expects
that exits of portfolio companies should materialize between 2011 and 2014 No material exits
occurred during the reported period
Name
India Blue Mountains (India)
Elephant Capital (India)
SRS Private & JM Financial (India)
Panda Capital (China)
Blue Ridge (China)
Evolution Venture (Israel)
Da Vinci (Russia)
Total
Book Value
US $m
6 7
3 3
3 2
1 9
1 9
1 6
1 2
19 8
India Blue Mountains: India Blue Mountains is a leading hotel and hospitality development fund that
is developing 4 star and 5 star hotels in India The fund has acquired land and is in the process of
developing 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 being built on a land area of 70,200 sq ft with a total built-up area of 338,692 sq
ft The hotel will be a Novotel brand hotel with 333 bays Casting of the 4th floor is completed and
the 5th floor is in progress The project is expected to be completed by May 2012
The Mumbai hotel is on a 82,609 sq ft land site with a built-up area of 550,217 sq ft The hotel will
be a Novotel brand hotel with 572 bays The hotel is close to the Mumbai airport with an unusually
high frontage area of 38 meters on one of Mumbai’s main arterial roads Civil contracts for the
construction have been awarded and work has begun on the site The project is expected to be
completed by November 2013
The Goa hotel is on a 905,790 sq ft land site with a built-up area of 200,000 sq ft The hotel will be a
Annual Report 2010
14
Novotel brand resort with approximately 250 rooms The land site benefits from being on the beach
front with easy access to the airport Construction will begin once the master plan is approved So
far the local government has finalized and notified two zones and the remaining seven zones are
expected to be notified by Q2 2011
Elephant Capital: India-focused private equity fund, which is AIM quoted (formerly called Promethean
India plc) (Ticker: ECAP) The fund executes an active value strategy in both public and private
businesses in India Its portfolio investments to date include a leading tiles manufacturer in India,
an established automotive components manufacturer, a hospitality company with luxury hotels
located in prime locations in top Indian cities, a media business with an exclusive content library,
a clinical research organization, a m-commerce player, and an online venture to distribute cricket
related content (GCV)
During the year, the Board of Control of Cricket in India (BCCI) decided to rescind its media rights
contract, which had a material impact on GCV The board of the fund has decided to impair and
dispose of the investment The investment in the clinical research organization was also marked down
as it reported lower than expected performance The m-commerce player roll-out is progressing but
slower than anticipated
SRS Private & JM Financial India Property Fund: These are Private Equity funds focused on Real Estate
in India The funds have 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
Panda Capital: China-based Private Equity Fund focused on early-stage industrial operations in
China and Taiwan, which represent strong growth opportunities The fund has invested in a bamboo
based flooring manufacturer, a lens moulding company, an electronic components manufacturer, an
FDA approved wound healing cream producer, and an outdoor media company
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 This investment could generate
attractive returns once the shipping industry recovers from the current downturn
Blue Ridge: Blue Ridge is a China focused Private Equity fund The fund has made investments in
six portfolio companies Portfolio companies include a distressed real estate turnaround company,
a plastic and chemicals manufacturer, a higher education company, an innovative bio-pesticide
company, a software company specializing in Oil & Gas applications and a refinery In 2011, the fund
has realized partial exits from the plastic and chemicals manufacturer and the distressed real estate
turnaround company at valuations higher than cost
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 language enhancement products company, a software company operating
in the digital radio market, a software test tool developer, and a virtualization technology company
Da Vinci: The fund is primarily focused on Russia and CIS countries The fund has made five
investments 70% of the fund corpus is invested in RTS, the leading Russian stock exchange, and a
leading Eastern European software company Both investments are performing well
15
Financial portfolio and trading activity
The Group manages a financial portfolio of USD 54m (net of leverage), invested mainly in fixed
income securities The recovery of the global financial markets witnessed through 2010 has led to
improvements in the credit quality and overall strength of Livermore’s credit portfolio We believe
that these improvements are likely to be sustainable, at least in the short to medium-term, and
therefore take a positive view of our investment portfolio
During 2010, the Group increased its exposure to corporate bonds generally at credit spreads which
were wider than current market spreads Exposure to senior corporate bonds was reduced as credit
spreads tightened Exposure to subordinated bonds of highly rated Central European and US banks
was increased Investments were generally restricted to debt with inflation protection features
Management took advantage of special opportunities such as the sell‐off in European markets
during the second quarter to increase exposure to high quality credit mainly of large European
banks The introduction of Basel 3 including the requirement to phase out from 1 January 2013
legacy tier 1 debt, was followed by a rally in tier 1 bank debt which benefited our portfolio As part
of Basel 3, banks are being required to replace the legacy tier 1 debt by other means of subordinated
debt with a conversion or permanent write off feature and to boost up their capital adequacy ratios
This should be positive for the existing portfolio In addition to capital gains, interest received
during 2010 from corporate bonds totalled USD 2 16m
During 2010 the Group almost doubled its exposure to the US and EU syndicated loan market mainly
through investment into US Collateralized Loan Obligations (CLO) mostly of 2006 and 2007 vintages
These are managed funds invested into large pools of senior secured floating rate loans and financed
with long term financing pre-fixed at the respective pre crisis levels On absolute and relative value
basis the loan market offered value as an undervalued, diversified inflation linked asset class with
a senior collateralized claim on the borrower and with overall low volatility and low correlation to
equity market New issue loans offered historically high spreads (including Libor floors) of 400-600
bps over the average cost of the respective CLO Fund’s liabilities New issue credit quality was also
attractive, especially compared to the pre crisis vintages That allows CLO managers to reinvest their
prepayment proceeds in higher spread, better quality new issue loans
The Group increased significantly during 2010 its exposure to performing CLOs at lower than current
market prices and at modelled IRRs and cash‐on‐cash returns of over 30%. This portfolio has
performed extremely well on account of declining default rates and improving credit fundamentals
of their underlying loans During 2010, the portfolio generated dividend income of USD 7 56m and
since inception in 2007 USD 16 6m
At the end of 2010 nearly all of our investments were passing their coverage tests (thereby making
dividend distributions), which significantly outperformed the general market average The excess
spread of these CLOs, namely the difference between the interest income generated by a CLO’s
assets and the cost of financing through its liabilities as well as certain fees (which are locked-
in at closing), increased substantially from original levels The robust performance of this asset
class during the 2008 financial crisis (as noted in Citibank report of 26 January 2011 “CLO Equity-
performing as marketed” and Morgan Stanley CLO market tracker dated 8 February 2011) as well as
the improving credit environment resulted in exceptionally strong performance for all CLO tranches
in 2010
This combination of improving coverage ratios and increasing excess spread availability led in 2010 to
increased payments to CLO income notes This trend is likely to continue over the next few quarters
Furthermore, these cushions are expected to insulate the portfolio from moderate potential future
credit losses, implying that performance should remain strong even in the absence of a significant
Annual Report 2010
16
improvement in macroeconomic conditions, so long as another dramatic fundamental downturn or
financial market crisis is avoided We also expect loan market credit quality to continue to improve
in 2011, as corporate profits continue their recent rapid growth, with moderate growth in the US
economy Recently, interest rate concerns have sparked increased demand for floating rate loans
which again emphasized the attractiveness of loans as an asset class
At the same time mid-long term performance may be negatively impacted by a pull back into a
double dip recession in US and/or Europe involving a spike in defaults Despite positive developments
in the overall health of the US economy in 2010 we acknowledge the potential headwinds posed by
continued weakness in the US housing market, high unemployment and the recent spike in inflation
expectations driven by increasing commodity prices and unrest in the Middle-East
The following is a table summarizing the financial portfolio as of year-end 2010
Name
Corporate bonds
Hedge Funds & Credit Managers
Public Equities
Total
Total net of leverage
Book Value
US $m
45 5
30 4
8 3
84 2
54 0
Events after the reporting date
There were no significant events after the reporting date
Litigation
At the time of this Report, there are two litigation matters that the Group is involved in Further
information is provided in note 36 to the consolidated financial statements
17
Report of the Directors
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 Group’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 55), Non-Executive Director, Chairman of the Board
Richard joined the Group 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
Menachem Marder (age 58), Non-Executive Director
Menachem joined the Group in September 2009 He brings with him a profound background of
accounting and business experience Menachem is a Certified Public Accountant, and was the
founder and senior manager of the accounting firm Shlomo Ziv and Partners (BDO) In addition
to his work with Livermore, Menachem, through his company, Mimtar Business Consulting LTD,
provides business, economic, managerial and financial consultancy to a wide range of firms with a
specialization in company turn arounds and mergers and acquisitions Menachem earned an MBA
with a major in Finance from Tel Aviv University, and holds a BA in Economics and Accounting from
Tel Aviv University Menachem is a director of a large number of companies operating in a variety
of business segments
Noam Lanir (age 44), Founder and Chief Executive Officer
Noam founded the Group in July 1998, to develop a specialist online marketing operation Noam
has led the growth and development of the Group’s operations over the last thirteen years which
culminated in its IPO in June 2005 on AIM He is also a major benefactor of a number of charitable
organisations Prior to 1998, Noam was involved in a variety of businesses mainly within the leisure
and entertainment sector
Ron Baron (age 43), Executive Director and Chief Investment Officer
Ron was appointed as Executive Director and Chief Investment Officer on 10 August 2007 Ron
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 portfolio management activity
Prior to this he spent five years as a commercial lawyer at Kantor, Elhanani, Tal & Co Law Offices
in Tel Aviv, Israel, advising banks and large corporations on corporate transactions, including buy-
outs and privatisations He holds an MBA from INSEAD Fontainebleau and a LLB (LAW) and BA in
Economics from Tel Aviv University
The Directors shall retire from office at the third Annual General Meeting after that at which they
were last elected, and if they so wish, offer themselves up for re-election to the Board Subject to
the Companies Act and the Articles, the Directors to retire by rotation at the Annual General Meeting
in every year shall be in addition to any Director who wishes to retire and not to offer himself for
reappointment, any Director required to retire under the Company’s Articles The interests of the
Annual Report 2010
18
Directors and their related companies in the shares and options over shares in the Company are as
shown on page 23 Details of the Directors’ remuneration and service contracts also appear on page 23
The Directors submit their annual report and audited consolidated financial statements of the Group
for the year ended 31 December 2010
Directors’ responsibilities in relation to the consolidated financial statements
The Directors are responsible for preparing the Annual Report and the consolidated financial
statements in accordance with applicable law and International Financial Reporting Standards as
adopted by the European Union
The Directors are required to prepare consolidated financial statements for each financial year
which give a true and fair view of the financial position of the Group, and its financial performance
and cash flows for that period In preparing these consolidated 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 consolidated financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business
The Directors are responsible for keeping proper accounting records that are sufficient to show and
explain the Group’s transactions, and at any time enable the financial position of the Group to be
determined with reasonable accuracy and enable them to ensure that the consolidated 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
Group 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 Group’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
19
Substantial Shareholdings
As at 21 March 2011 the Directors are aware of the following interests in 3 per cent or more of the
Company’s issued ordinary share capital:
Number of Ordinary
Shares
% of issued ordinary
share capital
% of voting
rights*
Groverton Management Ltd
154,412,173
50 77
Bristol Investments Group S A
RB Investments GmbH
Aviv Raiz
Bank Leumi Swiss
Bank Hapoalim Luxemburg
28,429,426
13,915,419
13,847,726
12,481,937
10,773,015
Merrill Lynch Pierce, Fenner & Smith, Inc
9,329,051
* after consideration of treasury shares see details at note 14
9 35
4 57
4 55
4 10
3 54
3 07
56 71
10 44
5 11
5 09
4 58
3 96
3 43
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 per cent 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 34 to the consolidated financial
statements
Annual Report 2010
20
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 2008 FRC Combined Code
(“the Code”) However, the Company is keen to adopt and promote the provisions of that Code Up
to 31 December 2010 the Board has adopted several provisions of the Code, some of which have not
yet been fully implemented
The Board Constitution and Procedures
The company is controlled through the Board of Directors, which currently comprises two Non-
Executive Directors and two Executive Directors The Chief Executive’s responsibility is to focus on
co-ordinating the company’s business and implementing group 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 Group,
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, in accordance with the Code, 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 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 The duties of the Committee include monitoring
the auditor’s performance and reviewing accounting policies and financial reporting procedures
21
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 Group’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 Group 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 Group 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 Group’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
Group is of an appropriate size
The Board undertakes a review of its internal controls on an ongoing basis
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 auditors that they are independent;
•
a review of fees paid to the auditor in respect of audit and non-audit services
Annual Report 2010
22
Remuneration Report
The Directors’ emoluments, benefits and shareholdings during the year ended 31 December 2010
were as follows:
Directors’ Emoluments
Each of the Directors has a service contract with the Company
Date of
agreement
Salary/Fees
US $000
Benefits
US $000
Share
options
expense
US $000
Total
Emoluments
2010,
US $000
Total
Emoluments
2009,
US $000
Richard Barry Rosenberg
10/06/05
Noam Lanir
Ron Baron
10/06/05
01/09/07
Menachem Marder
23/09/09
69
400
350
-
-
45
-
-
14
-
-
-
83
445
350
-
156
768
350
-
The dates are presented in day / month / year format
Directors’ Interests
Interests of Directors in ordinary shares
Notes
As at 31 December 2010
As at 31 December 2009
Noam Lanir
Ron Baron
a)
b)
Number of
Ordinary Shares
Percentage of
ordinary share
capital
Number of
Ordinary Shares
Percentage of
ordinary share
capital
154,412,173
50 773%
154,412,173
50 773%
13,915,419
4 576%
13,915,419
4 576%
Richard Barry Rosenberg
15,000
0 005%
15,000
0 005%
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) On 16 April 2007, a loan of USD 5m was provided to RB Investments GMBH, a company owned by
Ron Baron to purchase Livermore shares The loan was renewed during the year ended 31
December 2010, and bears an annual interest rate of 6 month USD LIBOR plus 0 25%
23
Interests of Directors in share options
No of options at
31 December 2010
Date of grant
Exercise
price, GBP
Exercise
Price**,
US $
Vesting period
of options
Noam Lanir
10,000,000
19/07/06
0 78
1 22
One to three years*
Richard Barry Rosenberg
500,000
150,000
75,000
13/05/08
19/07/06
07/12/05
0 30
0 78
0 71
0 47
1 22
1 11
One to three years*
One to three years*
One to three years*
* The options normally vest in three equal tranches, on the first, second and third anniversary of
the grant
The options are exercisable up to 10 years after the date of grant No options were exercised during
the year ended 31 December 2010
** The exercise prices as per the share option scheme are quoted in British Pounds The indicative
equivalent USD amounts shown in the table above are based on the exchange rates as at 31 December
2010
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 member of the Group
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 not subject to any performance criteria (apart from continued service)
The Share Option Scheme will terminate ten years after it was adopted by the Company, or earlier
in certain circumstances
Remuneration Policy
The Group’s policy has been designed to ensure that the Group has the ability to attract, retain
and motivate executive directors and 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 Group’s stated purpose to maximize
long-term shareholder value
the remuneration structure will reflect a just system of rewards for the participants
•
•
Annual Report 2010
24
•
•
•
•
•
•
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 Group 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 Group, will be
taken into account, especially when determining annual salary increases
25
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 Group operates, and include economic recession, declining corporate
profitability, rising inflation and interest rates and excessive stock-market speculation
Current portfolio risks include predominantly currency risks as some of the underlying portfolio is
invested into assets denominated in non-US currencies while the Company’s functional currency
is USD In addition, the Group is exposed to interest rate changes, credit risk, liquidity risk and
volatility in the global economies and in particular in Emerging markets (mainly India), as well
as access to capital markets for certain investee companies In addition, investments in certain
countries are exposed to governmental and regulatory risks The SRS Charminar investment is
specifically subject to this risk as governmental authorities are in the process of examining irregular
behaviour of the promoters
The mitigation of these risks is achieved by investment diversification, both by sector and by
geography The Group 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 Group’s portfolio has a significant exposure to senior secured loans of mainly US companies and
therefore has a concentration risk to this asset class
A periodic internal review is performed to ensure transparency of Group activities and investments
All service providers to the Group 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 invested in non USD currencies (mainly EUR, CHF and INR), it is
exposed to movements in these currencies
On the asset side, the Group’s exposure to interest rate risk is limited to the interest bearing
deposits and portfolio of bonds in which the Group invests
Management monitors liquidity to ensure that sufficient liquid resources are available to the Group
The Group’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
Share Capital
There was no change in the authorised share capital during the year to 31 December 2010 The
authorised share capital is 1,000,000,000 ordinary shares with no par value
Annual Report 2010
26
Related party transactions
Details of any transactions of the Group with related parties during the year to 31 December 2010
are disclosed in Note 34 to the consolidated financial statements
By order of the Board of Directors
Chief Executive Officer
18 May 2011
27
Report of the independent auditor to the
members of Livermore Investments Group
Limited
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Livermore Investments
Group Limited (the ‘’Company’’) and its subsidiaries (together ‘’the Group’’), which comprise the
consolidated statement of financial position as at 31 December 2010 and the consolidated statements
of comprehensive income, of changes in equity, and of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory notes
Board of Directors’ Responsibility 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 (EU) 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
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on
our audit We conducted our audit in accordance with International Standards on Auditing Those
Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance whether the consolidated financial statements are free from material
misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation of the consolidated financial statements
that give a true and fair view 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 entity’s
internal control An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by the Board of Directors as well as evaluating
the overall presentation of the consolidated financial statements
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion
Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial
position of Livermore Investments Group Limited and its subsidiaries as of 31 December 2010 and of
its financial performance and its cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the EU
Annual Report 2010
28
Emphasis of matter
We draw attention to Note 5 to the consolidated financial statements which describe the uncertainty
related to the outcome of the legal case in India relating to the investment of the Group through SRS
Charminar Investments Ltd, in a leading Indian Real Estate company Our opinion is not qualified
in respect of this matter
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
Augoustinos Papathomas
Certified Public Accountant and Registered Auditor
for and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered Auditors
Nicosia
Date: 18 May 2011
29
Livermore Investments Group Limited
Consolidated Statement of Financial Position as at 31 December 2010
Note
2010
US $000
2009
US $000
Assets
Non-current assets
Property, plant and equipment
Available- for-sale financial assets
Financial assets at fair value through profit or loss
Investment property
Investment in associate
Deferred tax
Current assets
Trade and other receivables
Cash at bank
Available- for-sale financial assets
Financial assets at fair value through profit or loss
Total assets
Equity
Share capital
Share premium and treasury shares
Other reserves
Retained earnings
Total equity
Liabilities
Non current liabilities
Bank loans
Derivative financial instruments
Current liabilities
Bank overdrafts
Short term bank loans
Trade and other payables
Provisions for legal and other cases
Current tax payable
Total liabilities
Total equity and liabilities
Net asset valuation per share
3
5
6
8
9
11
12
13
5
6
14
14
16
17
18
19
20
35
21
181
68,436
4,607
119,018
-
1,799
194,041
10,131
3,294
20,554
41,041
75,020
274
55,862
5,885
106,333
10,936
1,923
181,213
7,788
5,898
19,914
23,602
57,202
269,061
238,415
-
203,852
(4,308)
(57,252)
142,292
-
205,889
(17,530)
(59,791)
128,568
84,722
8,723
93,445
76,436
8,576
85,012
13,289
17,128
1,159
1,585
163
33,324
5,198
13,987
1,295
4,200
155
24,835
126,769
269,061
109,847
238,415
Basic and diluted net asset valuation per share (US $)
22
0 50
0 44
These Financial Statements were approved by the Board of Directors on 18 May 2011
The notes on pages 37 to 81 form part of these financial statements
Annual Report 2010
30
Livermore Investments Group Limited
Consolidated Income Statement for the year ended 31 December 2010
Note
2010
US $000
2009
US $000
Continuing operations
Investment income
Interest and dividend income
Investment property revenue
Loss on investments
Gain / (loss) from investment in associate
Gross profit/ (loss)
Administrative expenses
Operating profit / (loss)
Finance costs
Finance income
Profit / (loss) before taxation
Taxation (charge) / credit
Profit / (loss) for year from continuing operations
Discontinued operations
Gain for year from discontinued operations
Profit / (Loss) for the year
Earnings per share
Basic and diluted earnings / (loss) per share ( US $) from
continuing operations
Basic and diluted earnings / (loss) per share ( US $)
24
25
26
27
28
29
29
30
31
32
33
10,490
4,734
(1,976)
495
13,743
(1,018)
12,725
(3,551)
99
3,211
4,432
(31,055)
(26,869)
(50,281)
(8,931)
(59,212)
(3,782)
-
9,273
(786)
(62,994)
204
8,487
(62,790)
-
1,665
8,487
(61,125)
0 03
0 03
(0 22)
(0 21)
The notes on pages 37 to 81 form part of these financial statements
31
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2010
Profit / (loss) for the year
Other comprehensive income:
Available for sale financial assets
•
Fair value losses
• Reclassification to profit or loss due to disposals
• Reclassification to profit or loss due to significant fall
in value
Share of other comprehensive loss of associate
Foreign exchange gains / (loss) from translation of:
•
•
•
associate
subsidiaries
reclassification to profit or loss due to disposal
of associate
Note
2010
US $000
8,487
2009
US $000
(61,125)
(1,364)
573
6,330
-
(4,856)
(577)
7,154
9
9
(21,873)
6,092
28,235
(2,918)
640
(151)
-
Total comprehensive income / (loss) for the year
15,747
(51,100)
The total comprehensive income for the year ended 31 December 2010 and 2009 is wholly
attributable to the owners of the parent company
The notes on pages 37 to 81 form part of these financial statements
Annual Report 2010
32
Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2010
Share
capital
US
$000
Share
premium
US
$000
Treasury
Shares
US
$000
Share
option
reserve
US
$000
Translation
reserve
US
$000
Investments
revaluation
reserve
US
$000
Retained
earnings
US
$000
Total
US
$000
215,499
(8,969)
5,400
(2,938)
(30,376)
1,334
179,950
Note
14
15/28
9
9
Balance at 1 January 2009
Purchase of own shares
Share option charge
Transactions with owners
Loss for the year
Other comprehensive
income:
Available-for-sale financial
assets
• Fair value losses
• Reclassification to
profit or loss due to
disposals
• Reclassification to
profit or loss due
to significant fall in
value
Share of other
comprehensive loss of
associate
Foreign exchange gain / loss
arising from translation of:
• associate
• subsidiaries
Total comprehensive loss
for the year
Balance at 31 December
2009
Purchase of own shares
Share option charge
14
15/28
Transactions with owners
Profit for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(641)
-
(641)
-
-
-
-
-
-
-
-
-
359
359
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(21,873)
6,092
28,235
(2,918)
-
-
-
-
-
-
-
(641)
359
(282)
(61,125)
(61,125)
-
-
-
-
-
-
(21,873)
6,092
28,235
(2,918)
640
(151)
640
(151)
-
-
489
9,536
(61,125)
(51,100)
215,499
(9,610)
5,759
(2,449)
(20,840)
(59,791)
128,568
-
-
-
-
(2,037)
-
(2,037)
-
-
14
14
-
-
-
-
-
-
-
-
-
-
-
-
(2,037)
14
(2,023)
8,487
8,487
33
Share
capital
US
$000
Share
premium
US
$000
Treasury
Shares
US
$000
Note
Share
option
reserve
US
$000
Translation
reserve
US
$000
Investments
revaluation
reserve
US
$000
Retained
earnings
US
$000
Total
US
$000
Other comprehensive
income:
Available-for-sale financial
assets
• Fair value losses
• Reclassification to
profit or loss due to
disposals
• Reclassification to
profit or loss due
to significant fall in
value
Transfer on disposal of
associate
Foreign exchange gain / loss
arising from translation of:
• associate
•
subsidiaries
• reclassification to
profit or loss due to
disposal of associate
Total comprehensive
income for the year
Balance at 31 December
2010
9
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,364)
573
6,330
-
-
-
(1,364)
573
6,330
5,948
(5,948)
-
(4,856)
(577)
7,154
-
-
-
-
-
-
(4,856)
(577)
7,154
1,721
11,487
2,539
15,747
215,499
(11,647)
5,773
(728)
(9,353)
(57,252) 142,292
The notes on pages 37 to 81 form part of these financial statements.
Annual Report 2010
34
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2010
Cash flows from operating activities
Profit / (loss) before tax
Adjustments for
Depreciation and amortisation
Provisions for legal and other cases
Interest expense
Interest and dividend income
(Gain) / loss on investment in associate
Loss on sale of investments
Equity settled share options
Exchange differences
Changes in working capital
(Increase) / decrease in trade and other receivables
(Decrease) in trade and other payables
Cash flows from operations
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Acquisition of investments
Proceeds from investments
Payments for derivative financial instruments
Acquisition of investment property
Addition to associate
Disposal of associate
Interest and dividend received
Note
2010
US $000
2009
US $000
9,273
(61,329)
3/4
35
29
24
27
26
28
29
3
8
9
9
148
(2,248)
3,447
(10,490)
(495)
1,976
14
(99)
1,526
(593)
(423)
510
(469)
41
(55)
(66,805)
36,488
(585)
-
-
13,729
8,675
132
4,200
3,370
(3,211)
26,869
31,055
359
327
1,772
342
(1,950)
164
(25)
139
(45)
(58,942)
62,252
(1,911)
(152)
(259)
115
3,211
35
Net cash from investing activities
Cash flows from financing activities
Purchase of own shares
Proceeds from bank loans
Repayments of bank loans
Interest paid
Net cash from financing activities
Net (decrease) / increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of the year
Exchange differences on cash and cash equivalents
Translation differences on foreign operations’ cash and
cash equivalents
Note
2010
US $000
(8,553)
2009
US $000
4,269
14
(2,037)
142,193
(641)
108,202
(139,332)
(101,585)
(3,447)
(2,623)
(3,370)
2,606
(11,135)
7,014
700
284
156
(6,050)
(327)
63
700
Cash and cash equivalents at the end of the year
13
(9,995)
The notes on pages 37 to 81 form part of these financial statements
Annual Report 2010
36
Notes on the Financial Statements
1 Accounting Policies
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 changed
to Livermore Investments Group Limited on 28 February 2007
1 3 The principal activity of the Group changed to investment services on 1 January 2007
Before that the principal activity of the Group was the provision of marketing services to
the online gaming industry and, since 1 January 2006, the operation of online gaming
1 4 The principal legislation under which the Company operates is the BVI Business Companies
Act, 2004
1 5 The registered office and head office of the Company is located at Trident Chambers, PO
Box 146, Road Town, Tortola, British Virgin Islands
2
Accounting Policies
2 1 The significant accounting policies applied in the preparation of the financial information
are as follows:
a) Basis of preparation
The consolidated 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 consolidated financial
statements have been prepared on the historical cost basis except for the following:
•
•
•
•
Derivative financial instruments are measured at fair value
Financial instruments at fair value through profit or loss are measured at fair value
Available- for- sale financial assets are measured at fair value
Investment property is measured at fair value
The financial information is presented in US dollars because this is the currency in which
the Group primarily operates
The directors have reviewed the accounting policies used by the Group and consider them
to be the most appropriate
b) Adoption of new and revised IFRSs
As from 1 January 2010, the Group adopted all the IFRSs and International Accounting
Standards (IAS), which became effective and also were endorsed by the European Union
and are relevant to its operations The adoption of these Standards did not have any
material effect on the consolidated financial statements
All IFRSs issued by the International Standards Board (IASB) which are effective for the year
ended 31 December 2010, have been adopted by the EU through the endorsement procedure
established by the European Commission, with the exception of certain provisions of IAS
39: “Financial Instruments: Recognition and Measurement” relating to portfolio hedge
accounting
37
The following Standards, Amendments to Standards and Interpretations had been issued
by the date of authorisation of these consolidated financial statements but are not yet
effective for the year ended 31 December 2010:
Standards and Interpretations adopted by the EU
•
IAS 24 (Revised): “Related Party Disclosures” (effective for annual periods beginning on
or after 1 January 2011)
• FRIC 19: “Extinguishing Financial Liabilities with Equity Instruments” (effective for
•
annual periods beginning on or after 1 July 2010)
Improvements to IFRSs 2010 (effective for annual periods beginning on or after 1 July
2010 / 1 January 2011)
• Amendment to IFRS 1: “Limited Exemption from Comparative IFRS 7 Disclosures for
First time Adopters” (effective for annual periods beginning on or after 1 July 2010)
• Amendment to IAS 32: “Classification of Rights Issues” (effective for annual periods
•
beginning on or after 1 February 2010)
Amendment to IFRIC 14: “Prepayments of a Minimum Funding Requirement” (effective
for annual periods beginning on or after 1 January 2011)
Standards and Interpretations not adopted by the EU
•
IFRS 9: “Financial Instruments: Classification and Measurement” (effective for annual
periods beginning on or after 1 January 2013)
• Amendment to IFRS 1: “Severe Hyperinflation and Removal of Fixed Dates for First time
•
•
•
•
•
•
Adopters” (effective for annual periods beginning on or after 1 July 2011)
IFRS 10: “Consolidated Financial Statements” (effective for annual periods beginning
on or after 1 January 2013)
IFRS 11: “Joint Arrangements” (effective for annual periods beginning on or after 1
January 2013)
IFRS 12: “Disclosure of Interests in Other Entities” (effective for annual periods
beginning on or after 1 January 2013)
IFRS 13: “Fair Value Measurement” ” (effective for annual periods beginning on or after
1 January 2013)
IAS 27 (Revised): “Separate Financial Statements” (effective for annual periods
beginning on or after 1 January 2013)
IAS 28 (Revised): “Investments in Associates and Joint Ventures” (effective for annual
periods beginning on or after 1 January 2013)
• Amendment to IFRS 7: “Disclosures Transfers of Financial Assets” (effective for annual
periods beginning on or after 1 July 2011)
• Amendment to IAS 12: “Deferred Tax: Recovery of Underlying Assets” (effective for
annual periods beginning on or after 1 January 2012)
The Board of Directors expects that when these standards or interpretations become effective
in future periods they will not have a material effect on the financial statements of the Group
Exception to the above is the implementation of the amendment to IAS 12: “Deferred
Tax: Recovery of Underlying Assets”, under which the deferred tax liability for investment
Annual Report 2010
38
properties will be calculated based on the assumption of ultimate sale of these properties
Given that the capital gains tax rate in Switzerland is higher than the corporation tax rate,
the implementation will result in a significant increase of deferred tax liability
c) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the
Company and entities (including special purpose entities) controlled by the Company (its
subsidiaries) Control is achieved where the company has the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities
The financial statements of all the Group companies are prepared using uniform accounting
policies Where necessary, adjustments are made to the financial statements of subsidiaries
to bring their accounting policies into line with those used by the Group
All intra-group transactions, balances, income and expenses are eliminated on consolidation
The results and cash flows of any subsidiaries acquired or disposed of during the year are
included in the consolidated financial statements from the effective date of acquisition or
up to the effective date of disposal
d) Current assets are those which, in accordance with IAS 1 Presentation Of Financial
Statements are:
• expected to be realised within normal operating cycle, via sale or consumption, or
• held primarily for trading, or
• expected to be realised within 12 months from the balance sheet date, or
• cash and cash equivalent not restricted in their use
All other assets are non-current
e)
Investment in associate
The Group’s interests in associates, being those entities over which it has significant
influence and which are neither subsidiaries nor joint ventures, are accounted for using
the equity method
Under the equity method, the investment in an associate is carried in the statement of
financial position at cost plus post acquisition changes in the Group’s share of the net
assets of the associate and less any impairment in the value of the individual investment
The Group’s profit or loss includes the share of the associate’s results after tax The Group’s
other comprehensive income includes the share of any other comprehensive income and
expenses recognised by the associate
Financial statements of associates are prepared for the same period as the Group's
Adjustments are made to bring the associate's accounting policies in line with those of
the Group
On disposal of an associate the carrying amount is derecognised and a disposal gain or
loss is recognised in the profit or loss The disposal gain or loss is adjusted for the Group’s
share of the associate’s available-for-sale fair value gains or losses and also the relevant
cumulative foreign exchange translation differences that are reclassified from other
comprehensive income to profit or loss Other amounts recognised in other comprehensive
income in relation to the associate are transferred to retained earnings
39
Investment property revenue
f)
Rental income is recognised on a straight line basis over the lease term Service charges
and management fees are recognised as the related costs are incurred and charged
Changes to rental income that arise from reviews to open market rental values or increases
that are indexed linked on a periodic basis are recognised from the date on which the
adjustment became due Lease incentives granted are recognised as an integral part of the
net consideration for the use of the property Lease incentives are allocated evenly over
the life of the lease Rental income and services charged are stated net of vat and other
related taxes
Investment Income
g)
Investment income comprises interest income on funds invested, dividend income, and
investment property income Interest income is recognised based on applicable effective
interest rates Investment property income is recognised as described above Dividend
income is recognised on the date that the Group's right to receive payment is established,
which in the case of quoted securities is the ex-dividend date
Foreign currency
h)
The individual financial statements of each group company are presented in the currency
of the primary economic environment in which it operates (its functional currency) For
the purpose of the consolidated financial statements, the results and financial position of
each group company are expressed in USD, which is the functional currency of the parent
company and the presentation currency for the consolidated financial statements
Transactions in foreign currencies other than each group entity’s functional currency 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 equivalents using year-end spot foreign exchange rates Non-monetary
assets and liabilities are translated using exchange rates prevailing at the dates of the
transactions Non-monetary assets that are measured in terms of historical cost in foreign
currency are not re-translated
Gains and losses arising on the settlement of monetary items and on the re-translation
of monetary items are included in the 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 except for differences arising on the re-translation of non-monetary items 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
The results and financial position of all Group entities that have a functional currency
different from US dollars are translated into the presentation currency as follows:
• assets and liabilities are translated at the closing rate at the reporting date; and
•
income and expenses and also cash flows for each income statement item are translated
at an average exchange rate (unless this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, in which case income
and expenses are translated at the rates prevailing at the dates of the transactions); and
• exchange differences on the net investment in subsidiary entities with a different
functional currency to the group are recognised in other comprehensive income
Annual Report 2010
40
i)
Taxation
Current tax is the tax currently payable based on taxable profit for the year
Deferred income taxes are calculated using the liability method on temporary differences
Deferred tax is generally provided on the difference between the carrying amounts of
assets and liabilities and their tax bases However, deferred tax is not provided on the
initial recognition of goodwill, nor on the initial recognition of an asset or liability unless
the related transaction is a business combination or affects tax or accounting profit
Deferred tax on temporary differences associated with shares in subsidiaries and joint
ventures is not provided if reversal of these temporary differences can be controlled by the
group and it is probable that reversal will not occur in the foreseeable future In addition,
tax losses available to be carried forward as well as other income tax credits to the group
are assessed for recognition as deferred tax assets
Deferred tax liabilities are provided in full, with no discounting Deferred tax assets are
recognised to the extent that it is probable that the underlying deductible temporary
differences will be able to be offset against future taxable income Current and deferred
tax assets and liabilities are calculated at tax rates that are expected to apply to their
respective period of realisation, provided they are enacted or substantively enacted at the
reporting date
Changes in deferred tax assets or liabilities are recognised as a component of tax expense
in the income statement, except where they relate to items that are charged or credited
directly to equity (such as the revaluation of land) in which case the related deferred tax
is also charged or credited directly to equity
j)
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation
Carrying amounts are reviewed at each reporting date for impairment indications
Depreciation is calculated using the straight-line method, at annual rates estimated to
write off the cost of the assets less any estimated residual values over their expected
useful lives The annual depreciation rates used are as follows:
Computer Hardware
Fixtures and Fittings
Office Renovation
Motor Vehicles
-
-
-
-
33 3%
10%
25%
25%
Investment property
k)
Certain of the Group’s properties are classified as investment property, being held for long
term investment gains and to earn rental income
Investment properties are measured initially at cost, and thereafter are stated at fair
value, which reflects market conditions at the reporting date Gains or losses arising from
changes in the fair values of investment properties are included in the profit or loss in the
year in which they arise
Investment property is valued at fair value based on valuations provided by a certified
external appraiser
41
Equity instruments
l)
Equity instruments issued by the Company are recorded at proceeds received, net of direct
issue costs
Own equity instruments purchased by the Company are recorded at the consideration
paid, including directly associated assets and is deducted from total equity as treasury
shares until they are sold or cancelled Where such shares are subsequently sold, any
consideration received is included in total equity
The share premium account includes any premiums received on the initial issuing of the
share capital Any transaction costs associated with the issuing of shares are deducted
from the premium paid
m) Share Options
IFRS 2 "Share-based Payment" requires the recognition of equity settled share based
payments at fair value at the date of grant
The Group issues equity-settled share based payments to certain employees and other
advisors The fair value of share-based payments to employees at grant date is measured
using the Binomial pricing model The fair value of share-based payments to other advisors,
are measured directly at the fair value of the services provided
The fair value determined at the grant date is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of the shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions The corresponding credit is
taken to the share option reserve
On exercise or lapse of the options any related amounts recognised in the share option
reserve are transferred to retained earnings
Leases
n)
Leases where a significant portion of the risk and rewards of ownership are retained by the
lessor are classified as operating leases and rentals are charged to income on a straight-
line basis over the term of the lease
o) Borrowing costs
Borrowing costs primarily comprise interest on the Group’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 All other borrowing costs are
expensed in the period in which they are incurred and reported within “finance costs”
p)
Financial assets
Financial assets are recognised when the Group 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 Group retains the contractual rights
to receive the cash flows of the asset but assumes a contractual obligation to pay the
cash flows to one or more recipients A financial asset that is transferred qualifies for
Annual Report 2010
42
derecognition if the Group transfers substantially all the risks and rewards of ownership
of the asset, or if the Group neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset
Financial assets are measured initially at fair value plus transaction costs, except for
financial assets and financial liabilities carried at fair value through profit or loss, which
are measured initially at fair value
Financial assets are measured subsequently as described below
All financial assets except for those at fair value through profit or loss are subject to
review for impairment at least at each reporting date Financial assets are impaired when
there is any objective evidence that a financial asset or a group of financial assets is
impaired Different criteria to determine impairment are applied for each category of
financial assets, which are described below
Trade and other receivables
Trade and other receivables are recognised and carried at the original transaction value
An estimate for doubtful debts is made when collection of the full amount is no longer
probable Bad debts are written off when identified Where the time value of money is
significant receivables are carried at amortized cost
Cash and cash equivalents
Cash comprises cash in hand and balances with banks Cash equivalents are short term,
highly liquid investments that are readily convertible to known amounts of cash They
include unrestricted short-term bank deposits originally purchased with maturities of three
months or less
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets that are either
classified as held for trading or are designated by the Group to be carried at fair value
through profit or loss upon initial recognition All assets within this category are measured
at their fair value, with changes in value recognised in the profit or loss when incurred
Upon initial recognition, attributable transactions costs are recognised in profit or loss
when incurred
From 1 January 2008 all new financial assets acquired have been designated at fair value
through profit or loss upon initial recognition, because management consider this to
more fairly reflect the way these assets are managed by the Group The Group’s business
is investing in financial assets with a view to profiting from their total return in the
form of income and capital growth This portfolio of financial assets is managed and its
performance evaluated on a fair value basis, in accordance with a documented investment
strategy, and information about the portfolio is provided internally on that basis to the
Group’s Board of directors and other key management personnel
Available-for-sale financial assets
Available-for-sale financial assets include non-derivative financial assets that are either
designated as such or do not qualify for inclusion in any of the other categories of financial
assets Financial assets within this category are measured at fair value, with changes in
fair value recognised in other comprehensive income Unquoted equity investments for
which the fair value cannot be reliably measured are stated at cost less impairments Gains
43
and losses arising from investments classified as available-for-sale are recognised in the
profit or loss when they are sold or when the investment is impaired
In the case of impairment of available-for-sale assets, any loss previously recognised in
other comprehensive income is reclassified to profit or loss Impairment losses recognised
in the profit or loss on equity instruments are not subsequently reversed through the profit
or loss Impairment losses recognised previously on debt securities are reversed through
the profit or loss when the increase in fair value can be related objectively to an event
occurring after the impairment loss was recognised in the profit or loss
An assessment for impairment is undertaken at least at each reporting date
q)
Financial liabilities
Financial liabilities are recognised when the Group 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 transactions 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 group’s financial liabilities also include financial derivative instruments Derivative
instruments consist of interest rate swaps and forward currency contracts
All derivative financial instruments that are not designed and effective as hedging
instruments are accounted for at fair value through profit or loss
Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due in accordance with the original or modified terms of a debt
instrument
After initial recognition, financial guarantee contracts are measured at the higher of:
•
•
the amount determined in accordance with IAS 37; and
the amount initially recognised less, when appropriate, cumulative amortisation
recognised in accordance with IAS 18
Legal and other disputes
r)
Provision is made where a reliable estimate can be made of the likely outcome of legal
and other disputes against the Group In addition, provision is made for legal and other
expenses arising from claims received or other disputes No provision is made for other
possible claims or where an obligation exists but it is not possible to make a reliable
estimate Costs associated with claims made by the Group are charged to the profit or loss
as they are incurred
Annual Report 2010
44
s)
Segment reporting
In identifying its operating segments, management generally follows the Group's investment
activity lines Each of these operating segments is managed separately as each of these
investment activity lines requires different monitoring and strategic decision making
process as well as allocation of resources
The measurement policies the Group uses for segment reporting under IFRS 8 are the same
as those used in its consolidated financial statements Any inter-segment transfers are
carried out at arm's length prices
Critical accounting judgments and key sources of estimation uncertainty
t)
The following is the significant management judgment in applying the accounting policies
of the Group that has the most significant effect on the consolidated financial statements
Impairment of available-for-sale financial assets
The Group follows the guidance in IAS 39 on determining when an investment is impaired
This determination requires significant judgments In making this judgment, the Company
evaluates, among other factors, the duration and extent to which the fair value of an
investment is less than its cost and the financial health and near-term business outlook
for the investee, including factors such as industry and sector performance, changes in
technology and financing cash flow
The Group assesses at each reporting date whether financial assets are impaired If
impairment has occurred, this loss is recognised to profit or loss
If there is objective evidence that an impairment loss has been incurred on an unquoted
equity instrument that is not carried at fair value because its fair value cannot be reliably
measured, or on a derivative asset that is linked to and must be settled by delivery of
such an unquoted equity instrument, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the current market rate of return of similar financial assets
Further details of provisions are provided in note 5
u) Estimation uncertainty
The following are the significant estimates that have the most significant effect on
recognition and measurement of relevant items
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 6 In applying the valuation techniques management
makes maximum use of market inputs, and uses estimates and assumptions that are, as
far as possible, consistent with observable data that market participants would use in
pricing the instrument Where applicable data is not observable, management uses its best
estimate about the assumptions that market participants would make These estimates may
vary from the actual prices that would be achieved in an arm's length transaction at the
reporting date
45
Provision for legal and other cases
Determining whether provisions for legal and other disputes shall be recognised, requires
the Group to assess the likelihood of an economic outflow occurring as a result of past
events Where an economic outflow is considered probable, a provision has been made for
the estimated outflow Where an outflow is considered possible, but not probable, it has
only been disclosed
Where the information required by IAS 37 “Provisions, Contingent Liabilities and Contingent
Assets” is expected to prejudice the outcome of legal and other disputes, it has not been
disclosed on these grounds
Further details of provisions are provided in note 35
v) Comparatives
Since 1 January 2010, management has changed its monitoring and strategic decision
making process in relation to its investments, separating them into two activity lines,
which have also been identified as operating segments As a result, the Group initially
applies IFRS 8 “Operating Segments” for the year ended 31 December 2010 Segmental
information is also provided for 2009 for comparison purposes
The Group does not present a third statement of financial position as at 1 January 2009
since the initial application of IFRS 8, as described above, does not affect in any way
the financial position of the Group in any previously published consolidated financial
statements
3 Property, plant and equipment
Office
Renovation
US $000
Computer
Hardware
US $000
Fixtures and
Fittings
US $000
Motor
Vehicles
US $000
Total
US $000
Cost
As at 1 January 2009
315
Additions
As at 1 January 2010
Additions
As at 31 December 2010
10
325
35
360
134
2
136
9
145
Accumulated
depreciation
As at 1 January 2009
Charge for the year
(83)
(67)
As at 1 January 2010
(150)
(80)
(36)
(116)
88
7
95
11
106
(22)
(19)
(41)
-
26
26
-
26
-
(1)
(1)
537
45
582
55
637
(185)
(123)
(308)
Annual Report 2010
46
Office
Renovation
US $000
Computer
Hardware
US $000
Fixtures and
Fittings
US $000
Motor
Vehicles
US $000
Total
US $000
Charge for the year
(86)
As at 31 December 2010
(236)
Net book value
As at 31 December 2010
124
As at 31 December 2009 175
(29)
(145)
-
20
(27)
(68)
38
54
(6)
(7)
19
25
(148)
(456)
181
274
4
Intangible assets
Cost
As at 31 December 2009 and at 31 December 2010
Accumulated amortisation
As at 1 January 2009
Charge for the year
As at 1 January 2010 and 31 December 2010
Net book value
As at 31 December 2010
As at 31 December 2009
5 Available-for-sale financial assets
Non-current assets
Fixed income investments
Private equities
Financial and minority holdings *
Other investments
Computer
Software
US $000
147
(138)
(9)
(147)
-
-
2010
US $000
2009
US $000
25,827
18,070
18,919
5,620
68,436
10,426
18,193
22,092
5,151
55,862
47
Current assets
Fixed income investments
Public equity investments
Hedge funds
11,886
5,826
2,842
20,554
10,177
5,635
4,102
19,914
financial assets, comprising principally
in bonds and
Available-for-sale
equity are fair valued annually at least at each reporting date For investments traded in
active markets, fair value is determined by reference to Stock Exchange quoted bid prices
For other investments, fair value is estimated by reference to the current market value of
similar instruments or by reference to the discounted cash flows of the underlying assets
Equity investments for which fair values cannot be measured reliably are recognised at cost
less impairment
investments
* 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 and media
Included in the Financial and minority holdings investments is the investment in SRS
Charminar Investments Ltd, with carrying amount of USD 17 8m for which the investors have
filed and won an arbitration award and an interim order for injunction against the promoters
or the company to sell, transfer, or encumber the assets of the real estate company in which
SRS Investments Ltd has invested in India Thereafter, the promoters have filed against the
arbitral award Legal counsel representing the investors believes that the grounds of appeal
against the award are limited under applicable laws and that the investors have a strong case
to defend The Fund manager is of the opinion that the value of the land is sufficient to secure
the put option As at 31 December 2010 there was no change in the status of this case Due to
the legal complexity of these legal proceedings as well as the various counterparties involved
the outcome remains uncertain
Available-for-sale financial assets are classified as non-current, unless they are expected to
be realised within twelve months of the reporting date or unless they will need to be sold to
raise operating capital
The Group’s portfolio is structured based on those investments which are considered to be long
term, core investments and those which could be readily convertible to cash and are expected
to be realised within normal operating cycle and form part of the Group’s treasury function
During 2010 for the purpose of annual impairment and due to market conditions, management
considered the impairment of certain available-for-sale financial assets Impairment testing
indicated that for those financial assets their carrying amount may not be recoverable
The related charges in 2010, of USD 6 330m (2009 USD 28 235m), are included within loss on
investments
Annual Report 2010
48
6
Financial at fair value through profit or loss
Non-current assets
Private equities
Real estate entities
Current assets
Fixed income investments
Public equity investments
Hedge funds
2010
US $000
2009
US $000
2,844
1,763
4,607
33,453
5,878
1,710
41,041
2,903
2,982
5,885
22,062
742
798
23,602
The Financial assets at fair value through profit or loss, comprising principally investments in
bonds and equity, are fair valued at least at each reporting date
The Group’s portfolio is structured based on investments which are considered to be long term,
core investments and those which could be readily convertible to cash and are expected to be
realised within normal operating cycle and form part of the Group’s treasury function
7 Fair value measurements of financial assets
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 thefinancial assets and liabilities The fair value hierarchy
has the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (ie as prices) or indirectly (ie derived from prices); and
Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs)
The level within which the financial asset is classified is determined based on the lowest level
of significant input to the fair value measurement
Valuation of financial assets
• Public equities, Credit Notes and Bonds are valued per their closing bid market prices on
quoted exchanges, or as quoted by market maker
• Hedge Funds and Private Equity funds are valued per reports provided by the funds on a
periodic basis, and if traded, per their closing bid market prices on quoted exchanges, or as
49
quoted by market maker
• Private Equities and Unlisted Investments are valued using market valuation techniques as
determined by the directors
• Derivative instruments are valued at fair value as provided by counter parties of the
derivative agreement Derivative instruments consist of interest rate swaps and forward
currency contracts
Financial assets and financial liabilities measured at fair value in the consolidated statement
of financial position are grouped into the fair value hierarchy as follows:
2010
US $000
Level 1
2010
US $000
Level 2
2010
US
$000
Level 3
2010
US
$000
Total
2009
US $000
Level 1
2009
US
$000
Level 2
2009
US
$000
Level 3
2009
US
$000
Total
45,339
25,827
-
71,166
32,239
10,426
-
42,665
2,850
-
18,064
20,914
4,669
18,919
18,919
-
16,427
21,096
22,092
22,902
-
-
-
-
4,900
-
-
-
5,620
5,151
11,704
6,377
4,552
1,763
-
-
-
-
-
5,151
6,377
4,900
2,982
Assets
Fixed income
investments
Private equities
Financial and minority
holdings
Other investments
5,620
Public equity
investments
Hedge funds
Real estate entities
11,704
-
-
-
-
-
-
4,552
-
1,763
-
2,982
65,513
30,379
38,746
134,638
48,436
15,326
41,501
105,263
Liabilities
Interest rate swaps
Forward contracts
-
-
-
-
8,723
8,723
-
-
8,723
8,723
-
-
-
-
8,537
8,537
39
39
8,576
8,576
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
The Group’s financial assets and liabilities classified in Level 3 use valuation techniques based
on significant inputs that are not based on observable market data
Annual Report 2010
50
Financial assets within this level can be reconciled from beginning to ending balances as
follows:
Available-for-sale
Financial
and minority
holdings
US $000
At 1 January 2009
43,796
Sales
Purchases
Gains losses
recognised in:
-
-
Private
equities
US $000
15,129
-
1,157
At fair value through
profit or loss
profit or loss
Private
equities
US $000
Real estate
US $000
4,443
-
-
3,138
(364)
-
Total
US $000
66,506
(364)
1,157
• Profit or loss
(22,484)
-
(889)
129
(23,244)
• Other
comprehensive
income
Exchange difference
Settlements
At 1 January 2010
22,092
Purchases
Gains losses
recognised in:
-
-
(2,762)
780
-
-
-
13,524
1,965
-
15
(587)
2,982
-
-
-
-
2,903
-
(2,762)
795
(587)
41,501
1,965
• Profit or loss
(3,896)
(1,944)
(1,210)
(59)
(7,109)
• Other
comprehensive
income
Exchange difference
Settlements
-
723
-
1,734
-
(59)
-
(9)
-
-
-
-
1,734
714
(59)
At 31 December 2010
18,919
15,220
1,763
2,844
38,746
51
Financial liabilities within this level can be reconciled from beginning to ending balances
as follows:
Interest rate swaps
US $000
Forward contracts
US $000
At 1 January 2009
Additions
Gains losses
recognised in:
• Profit or loss
• Exchange differences
At 1 January 2010
Gains losses
recognised in:
• Profit or loss
• Exchange differences
At 31 December 2010
7,539
1,911
(1,346)
433
8,537
536
(350)
8,723
610
-
(571)
-
39
(39)
-
-
Total
US $000
8,149
1,911
(1,917)
433
8,576
497
(350)
8,723
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
Valuation as at 1 January
Additions
Change in fair value
Exchange difference
As at 31 December
2010
US $000
106,333
-
1,114
11,571
119,018
2009
US $000
104,520
152
(1,358)
3,019
106,333
The investment property relates to Wyler Park property in Switzerland, which is used for
earning rental income
Annual Report 2010
52
The investment property was valued by Wuest & Partners as at 31 December 2010 and 2009 on
the basis of open market value in accordance with the appraisal and valuation guidelines of
the Royal Institute of Certified Surveyors, and the European Group of Valuers’ Associations
Wuest & Partners are independent qualified valuers with substantial relevant experience
Wyler Park property investment loan is secured on the property itself
The future minimum rental income under non-cancellable rental agreements, is receivable as
follows:
Less than 1 year
Between 1 and 5 years
Over 5 years
Exchange difference
2010
US $000
5,194
20,922
12,553
38,669
2009
US $000
4,506
19,982
15,985
40,473
Rental agreements are quoted in Swiss Francs The equivalent USD amounts shown in the
table above are based on the exchange rates as at 31 December 2010 and 31 December 2009
correspondingly
9
Investment in associate
As at 1 January
Share of loss for the year
Additions for the year
Sales for the year
Share of other comprehensive
loss
Exchange differences
Impairment charge
As at 31 December
2010
US $000
10,936
(2,141)
-
(3,939)
-
(4,856)
-
-
2009
US $000
39,939
(14,530)
1,668
(550)
(2,918)
640
(13,313)
10,936
The company disposed of its 21 71% interest in Atlas Estates Limited after taking the
opportunity of a public cash offer The disposal has the following impact in the results of the
Group for the year ended 31 December 2010:
53
Proceeds received
Carrying amount of investment in associate
Translation losses reclassified to profit or loss
Net gain on disposal of associate
2010
US $000
13,729
(3,939)
(7,154)
2,636
The following table illustrates summarised financial information of the Group’s investment in
Atlas Estates Ltd:
2010
US $000
2009
US $000
Share of the associate’s Financial
Position
Non-current assets
Current assets
Assets classified as held for sale
Share of gross assets
Current liabilities
Non-current liabilities
Liabilities classified as held for sale
Minority interest
Share of gross liabilities
Share of net assets
Impairment provision
-
-
-
-
-
-
-
-
-
-
-
-
-
87,312
48,595
8,275
144,182
(65,958)
(36,727)
(6,051)
(108,736)
(227)
(108,963)
35,219
(24,283)
10,936
The investment’s fair value based on its quoted market price as at 31 December 2009 of USD
1 07 per share was USD 10 936m
Annual Report 2010
54
10 Details of Group undertakings
Details of the investments in which the Group has a controlling interest are as follows:
Name of Subsidiary
Livermore Properties
Limited
Livermore Management
Limited
Livermore Israel
Investments Limited
Place of
incorporation
Holding
Proportion of
voting rights
and shares
held
British Virgin
Islands
British Virgin
Islands
Ordinary shares
100%
Ordinary shares
100%
Israel
Ordinary shares
100%
Livermore Capital AG
Switzerland
Ordinary shares
100%
Livermore Investments AG
Switzerland
Ordinary shares
100%*
Livermore Real Estate I AG
Switzerland
Ordinary shares
100%
Principal activity
Holding of
investments
Holding of
investments
Holding of
investments
Administration
services
Real Estate
management
Real Estate
management,
(Dormant)
Enaxor S a r l
Luxembourg
Ordinary shares
100%
Real Estate Owner
Livermore Investments
Cyprus Limited
Cyprus
Ordinary shares
100%
Sandhirst Ltd
Cyprus
Ordinary shares
100%
Administration
services
Holding of
investments
* Held by a Subsidiary undertaking
Livermore Management Limited and Livermore
established by the Group during the year
Israel
Investments Limited have been
11 Deferred tax
The company is an international business company based in the British Virgin Islands (BVI)
and, under its laws, is not subject to taxation Deferred taxes relate to the temporary
differences between carrying amounts and corresponding tax base of its subsidiaries
55
Investment property
Derivative financial instruments
Tax losses
Net deferred tax asset
2010
US $000
(2,271)
1,746
2,324
1,799
2009
US $000
(1,332)
1,740
1,515
1,923
The movement on the deferred taxation account is as follows:
Investment
property
US $000
Derivative
financial
instruments
US $000
Tax losses
US $000
Total
US $000
At 1 January 2009
(Charged) / credited to
profit or loss (note 30)
Exchange difference
(790)
(554)
12
At 1 January 2010
(1,332)
(Charged) / credited to
profit or loss (note 30)
Exchange difference
(763)
(176)
1,350
410
(20)
1,740
(176)
182
1,138
394
(17)
1,515
620
189
1,698
250
(25)
1,923
(319)
195
At 31 December 2010
(2,271)
1,746
2,324
1,799
The Group expects that future taxable profits will be available in the jurisdiction where the
deferred tax assets occurred (Switzerland) so as to utilise the carrying amount of the deferred
tax assets recognised as at the end of the year
As at 31 December 2010 and 2009 there is no unrecognised deferred tax asset
Annual Report 2010
56
12 Trade and other receivables
Accrued interest and dividend
income
Other receivables
Prepayments
2010
US $000
9,886
33
212
10,131
2009
US $000
7,615
173
-
7,788
The carrying amount of trade and other receivables approximates to their fair value
An amount of USD 3 7m (2009: USD 1 5m) is neither past due nor impaired and is due from
institutions that the Group never faced any difficulties
The ageing analysis of these past due but not impaired amounts is as follows:
Less that 3 months
Between 3 and 6 months
Between 6 and 12 months
More than 1 year
2010
US $000
-
-
-
6,152
6,152
2009
US $000
-
-
-
6,152
6,152
The amounts due for more than one year relate to accrued interest income receivable from
SRS Charminar Investments Ltd
13 Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the
following at the reporting date:
Cash at bank
2010
US $000
2009
US $000
3,294
5,898
3,294
5,898
Bank overdrafts used for cash management purposes
(13,289)
(5,198)
Cash and cash equivalents for the purposes of the
consolidated statement of cash flows
(9,995)
700
57
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
Ordinary shares with no par value
Number of
shares
Share premium
arising
US $000
As at 31 December 2009 and at 31 December 2010
304,120,401
215,499
Treasury shares
As at 1 January 2009
Additions
As at 1 January 2010
Additions
Number of
shares
12,141,961
1,284,005
13,425,966
8,409,798
US $000
8,969
641
9,610
2,037
As at 31 December 2010
21,835,764
11,647
In the consolidated statement of financial position the amount included comprises of:
Treasury shares
Share premium
Treasury shares
2010
US $000
215,499
(11,647)
203,852
2009
US $000
215,499
(9,610)
205,889
Annual Report 2010
58
15 Share capital
Outstanding options
At 1 January 2009 and 31
December 2009
12,045,555
Expired in the year
(705,555)
At 31 December 2010
11,340,000
Exercisable options
At 1 January 2009
Exercisable during the year
At 1 January 2010
Exercisable during the year
Expired
Number of
options
8,162,221
3,550,000
11,712,221
166,667
(705,555)
Number of
options
Average
exercise price
GBP
Average exercise
price* USD
0 82
1 90
0 75
1 28
2 97
1 18
Average
exercise price
GBP
Average exercise
price* USD
0 87
0 76
0 84
0 30
1 90
1 36
1 18
1 31
0 47
2 97
1 19
As at 31 December 2010
11,173,333
0 76
Details of share options outstanding at 31 December 2010
Number of
options
Grant date
Vesting
date
Earliest
exercise
date
Expire
date of
exercise
period
Exercise
price
GBP
Exercise
Price*
USD
Fair value at
grant date
USD
230,000
07/12/05
07/12/06
07/12/06
07/12/15
0 71
230,000
07/12/05
07/12/07
07/12/07
07/12/15
0 71
230,000
07/12/05
07/12/08
07/12/08
07/12/15
0 71
3,383,333
19/07/06
19/07/07
19/07/07
19/07/16
0 78
3,383,333
19/07/06
19/07/08
19/07/08
19/07/16
0 78
3,383,333
19/07/06
19/07/09
19/07/09
19/07/16
0 78
1 11
1 11
1 11
1 22
1 22
1 22
82,739
94,333
103,948
1,608,710
1,824,133
2,001,774
59
166,667
13/05/08
13/05/09 13/05/09
13/05/18
0 30
166,667
13/05/08
13/05/10 13/05/10
13/05/18
0 30
166,667
13/05/08
13/05/11
13/05/11
13/05/18
0 30
11,340,000
0 47
0 47
0 47
21,703
24,115
25,820
5,787,275
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 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 2010
16 Bank Loans
Long term bank loan
2010
US $000
84,722
2009
US $000
76,436
The long term bank loan is related to Wylerpark property investment purchase and is secured
on this property The increase in the loan amount from 2009 to 2010 reflects only the effects
of currency translation from CHF to USD
Interest is payable at 3M CHF Libor + 0 85% The Group has fixed the variable element of
interest to 3 3% using an interest rate swap (Note 17) Consequently, the loan’s effective
interest rate is 4 15%
The loan balance is repayable on 12 July 2014
17 Derivative Financial Instruments
Interest rate swaps
Forward contracts
2010
US $000
8,723
-
8,723
2009
US $000
8,537
39
8,576
The Company uses interest rate swaps to manage its exposure to interest rate movements on
its bank borrowings by swapping a proportion from floating rates to fixed rates as follows:
Annual Report 2010
60
Notional contract
amount
Underlying
floating rate
Contract
fixed rate
Contract
termination date
CHF 79,135,000
3M CHF Libor
CHF 10,000,000
6M CHF Libor
3 30%
3 255%
30 July 2014
17 June 2014
CHF 10,000,000
6M CHF Libor
3 1675%
17 November 2014
The calculation of the fair value of swaps is based on discounted cash flows of future
anticipated interest payments on the swap agreements in place compared with the discounted
cash flows of anticipated interest payments at market swap interest rates at the reporting date
The interest rate swap with CHF 79,135,000 notional amount relates to fixing the interest rate
on the loan against Wyler Park at 3 3%
For the year ended 31 December 2010 a fair value gain of USD 497,175 (2009: loss USD 1,913,606)
has been recognised in the profit or loss in relation to all derivative financial instruments
18 Bank Overdrafts
Short term bank overdrafts
19 Short term bank loans
Short term bank loans
2010
US $000
13,289
2010
US $000
17,128
2009
US $000
5,198
2009
US $000
13,987
Short term bank loans bear Libor + lender’s margin and have an average interest rate of 1 96%
(2009: 1 04%) Their repayment period is usually one to three months and upon repayment
date usually they are renewed
20 Trade and other payables
Other payables and accrued
expenses
2010
US $000
1,159
2009
US $000
1,295
1,159
1,295
61
The Directors consider that the carrying amount of trade and other payables approximates to
their fair value All amounts fall due within one year
21 Current tax payable
Corporation tax payable
22 Net asset value per share
2010
US $000
163
2009
US $000
155
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 2010 and 31 December 2009
Net assets attributable to ordinary shareholders
(US $000)
2010
2009
142,292
128,568
Closing number of ordinary shares in issue
282,284,637
290,694,435
Basic net asset value per share (US $)
0 50
0 44
Closing number of ordinary shares including the
effect of potentially diluted shares
282,284,637
290,694,435
Diluted net assets value per share (US $)
0 50
0 44
Number of Shares
Ordinary shares
Treasury shares
304,120,401
304,120,401
(21,835,764)
(13,425,966)
Closing number of ordinary shares in issue
282,284,637
290,694,435
Annual Report 2010
62
The Share options do not impact the diluted net asset value per share for 2010 and 2009 as
their exercise price was higher than the average market price of the Company’s shares on the
London Stock Exchange (AIM division) during the year ended 31 December 2010 and 2009
23 Segment reporting
Since 1 January 2010, management has changed its monitoring and strategic decision making
process in relation to its investments, separating them into two activity lines, which have also
been identified as 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 Segmental information is also provided for
2009 for comparison purposes
Equity and debt
instruments
investment activities
Investment
property
activities
Total per financial
statements
2010
US $000
2009
US $000
2010
US $000
2009
US $000
2010
US $000
2009
US $000
Segment results
Investment income
Interest and dividend
income
Investment property
revenue
10,490
3,211
-
-
10,490
3,211
-
-
4,734
4,432
4,734
4,432
Loss on investments
(3,090)
(29,697)
1,114
(1,358)
(1,976)
(31,055)
Gain / (loss) from
investment in
associate
495
(26,869)
-
-
495
(26,869)
Gross profit/ (loss)
7,895
(53,355)
5,848
3,074
13,743
(50,281)
Administrative
expenses
Operating profit /
(loss)
(823)
(8,853)
(195)
(78)
(1,018)
(8,931)
7,072
(62,208)
5,653
2,996
12,725
(59,212)
Finance costs
(326)
(702)
(3,225)
(3,080)
(3,551)
(3,782)
Finance income
99
-
-
-
99
-
Profit / (loss) before
taxation
6,845
(62,910)
2,428
(84)
9,273
(62,994)
63
Equity and debt
instruments
investment activities
Investment
property
activities
Total per financial
statements
2010
US $000
2009
US $000
2010
US $000
2009
US $000
2010
US $000
2009
US $000
(88)
(24)
(698)
228
(786)
204
6,757
(62,934)
1,730
144
8,487
(62,790)
-
1,665
-
-
-
1,665
8,487
(61,269)
8,487
144
8,487
(61,125)
Taxation (charge) /
credit
Profit / (loss) for
year from continuing
operations
Discontinued
operations
Gain for year
from discontinued
operations
Profit / (Loss) for
the year
Segment assets
149,001
130,326
120,060
108,089
269,061
238,415
Annual Report 2010
64
The Group’s interest and dividend income, investment property revenue and its investments
are divided into the following geographical areas:
Equity and debt
instruments investment
activities
Investment
property
activities
Total per financial
statements
2010
US $000
2009
US $000
2010
US $000
2009
US $000
2010
US $000
2009
US $000
204
1,814
8,396
76
10,490
121
462
2,571
57
3,211
4,734
4,432
4,938
4,553
-
-
-
-
-
-
1,814
8,396
76
462
2,571
57
4,734
4,432
15,224
7,643
-
-
119,018
106,333
119,018
106,333
42,603
38,202
55,629
31,061
5,345
39,817
33,355
4,825
-
-
-
-
-
-
-
-
42,603
38,202
55,629
39,817
31,061
33,355
5,345
4,825
134,638
116,199
119,018
106,333
253,656
222,532
Revenue
Switzerland
Other European
countries
United States
India
Investments
Switzerland
Other European
countries
United States
India
Asia
Interest and dividend income, investment property revenues are 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 2010, 80 5% of the Group’s rent relate to rental income from a single customer (SBB –
Swiss national transport authority) in the investment property activities segment (2009: 89%)
65
24 Interest and dividend income
Interest from investments
Dividend income
25 Investment property revenue
Gross rental income
Direct expenses
26 Loss on investments
2010
US $000
1,970
8,520
10,490
2010
US $000
5,196
(462)
4,734
2009
US $000
1,172
2,039
3,211
2009
US $000
4,751
(319)
4,432
Loss on sale of investments
Investment property revaluation
Foreign exchange gain
Loss due to significant fall in value of available-
for-sale instruments
Fair value (losses) / gains on financial assets
through profit or loss
Fair value gains / (losses) on derivative instruments
2010
US $000
(573)
1,114
4,146
2009
US $000
(6,092)
(1,358)
3,480
(6,330)
(28,235)
(830)
497
(1,976)
3,064
(1,914)
(31,055)
The investments disposed of during the year resulted in the following realised gains/(losses)
(i e in relation to their original acquisition cost):
Annual Report 2010
66
Available-for-sale
At fair value through profit or loss
27 Gain / (loss) from investment in associate
Atlas Estates Ltd
Share of loss for the year
Gain on bargain purchase
Gain / (loss) on disposal
Impairment charge
Foreign exchange loss reclassified from translation
reserve
28 Administrative expenses
Operational expenses
Legal expenses
Directors’ fees and expenses
Share option expense
Consultants’ fees and expenses
Other salaries and expenses
Office cost
Other administration costs
Depreciation and amortisation of assets
Provision for legal and other matters – (credit) /
charge for the year
2010
US $000
(573)
1,198
625
2009
US $000
(6,092)
433
(5,659)
2010
US $000
2009
US $000
495
(26,869)
(2,141)
(14,530)
-
9,790
-
(7,154)
1,409
(435)
(13,313)
-
495
(26,869)
2010
US $000
385
626
864
14
266
420
283
157
148
2009
US $000
675
1,384
913
359
259
408
247
198
132
(2,248)
4,200
67
Audit fees
Audit fees prior year
Throughout 2010 the Group employed 7 staff (2009:8)
29 Finance costs and income
Finance costs
Bank interest and fees
Bank interest on investment property loan
Bank custody fees
Foreign exchange loss
Finance income
Foreign exchange gain
Net finance costs
30 Taxation
Current tax charge
Prior year tax charge
Deferred tax charge / (credit)
2010
US $000
103
-
1,018
2009
US $000
72
84
8,931
2010
US $000
2009
US $000
222
3,225
104
-
3,551
99
3,452
290
3,080
85
327
3,782
-
3,782
2010
US $000
2009
US $000
169
298
319
786
46
-
(250)
(204)
The tax credit for the year can be reconciled to the
accounting profit / (loss) as follows:
Profit / (loss) before tax
10,217
(62,994)
Annual Report 2010
68
Tax effect of applicable corporation tax rates
Effect of current year losses
Tax effect of expenses not deductible for tax
purposes
Effect of tax due to prior year
Interest withholding tax
Property tax
Deferred tax charge / (credit)
Tax for the year
52
-
-
298
45
72
319
786
(260)
275
8
-
-
23
(250)
(204)
The Company is an international business company based in the British Virgin Islands (BVI)
and, under its laws, is not subject to corporation tax Corporation tax is calculated with
reference to the results of the Company’s subsidiaries
31 Discontinued operations
The gains from discontinued operations represent adjustments made as a result of resolution
of uncertainties in relation to operations discontinued in 2007
32 Earnings / (loss) per share from continuing operations
Basic earnings / (loss) per share has been calculated by dividing the profit / (loss) for the year
from continuing operations by the weighted average number of ordinary shares in issue of the
parent Company during the relevant financial periods
Diluted earnings / (loss) per share is calculated after taking into consideration other
potentially dilutive shares in existence during the year ended 31 December 2010 and the year
ended 31 December 2009
2010
2009
Profit / (loss) for year from continuing operations ($000)
8,487
(62,790)
Weighted average number of ordinary shares in issue
286,552,752
291,602,250
Basic earnings / (loss) per share (US $)
0 03
(0 22)
Weighted average number of ordinary shares including
the effect of potentially dilutive shares
286,552,752
291,602,250
Diluted earnings / (loss) per share (US $)
0 03
(0 22)
The Share options do not impact the diluted earnings per share for 2010 and 2009 as their
exercise price was higher than the average market price of the Company’s shares on the
London Stock Exchange (AIM division) during the year ended 31 December 2010 and 2009
correspondingly
69
33 Earnings / (loss) per share
Basic earnings / (loss) per share has been calculated by dividing the profit / (loss) for the year
attributable to ordinary shareholders of the parent Company by the weighted average number
of ordinary shares in issue of the parent during the relevant financial periods
Diluted earnings / (loss) per share is calculated after taking into consideration other
potentially dilutive shares in existence during the year ended 31 December 2010 and the year
ended 31 December 2009
Profit / (loss) for the year attributable to ordinary
shareholders of the parent ($000)
2010
2009
8,487
(61,125)
Weighted average number of ordinary shares in issue
286,552,752
291,602,250
Basic earnings / (loss) per share (US $)
0 03
(0 21)
Weighted average number of ordinary shares including
the effect of potentially dilutive shares
286,552,752
291,602,250
Diluted earnings / (loss) per share (US $)
0 03
(0 21)
The Share options do not impact the diluted earnings per share for 2010 and 2009 as their
exercise price was higher than the average market price of the Company’s shares on the
London Stock Exchange (AIM division) during the year ended 31 December 2010 and 2009
correspondingly
34 Related party transactions
The Group is controlled by Groverton Management Ltd, an entity owned by Mr Noam Lanir,
which at 31 December 2010 held 56 71% (2009: 53 12%) of the company’s voting rights
Amounts owed by key management
Amounts owed to Directors
Key management compensation (including
executive directors)
Fees for the period*
Share option expense
Non-executive directors compensation
2010
US $000
5,523
(9)
2009
US $000
5,000
(38)
795
-
797
321
Annual Report 2010
70
Fees for the period
Share option expense
69
14
878
118
38
1,274
* These payments were made either directly to them or to the companies to which they are related
Loans with a balance at 31 December 2010 of USD 5 5m (31 December 2009: USD 5m) were
made to key management during the year ended 31 December 2007 for the acquisition of
shares in the Company and were renewed during the year 31 December 2010 Interest is
payable on these loans at 6 month US LIBOR plus 0 25% per annum and the loans are secured
on the shares acquired The loans are repayable on the earlier of the employee leaving the
Company or April 2013 These loans are classified as financial assets available for sale in the
consolidated statement of financial position
35 Provisions
Corporate guarantee
The Company provided a corporate guarantee to a bank in the amount up to €2 1m as part of
a shareholders’ guarantee required by a financing bank as condition to a loan facility provided
to DTH-Boom DTH-Boom is in a restructuring process and in breach of its loan covenants
The Group is currently negotiating with the said bank a possible settlement of the guarantee
but no agreement has been reached yet
The guarantee has been accounted for as a financial guarantee contract and an appropriate
amount has been provided for based on the management’s best estimate
No further information is provided as the Directors consider it could prejudice the outcome of
any claim
Litigation
For litigation refer to note 36
The movement in the provisions for the year is as follows:
Legal and other cases
At 1 January
Exchange differences
Provided for the year
Amounts reversed
At 31 December
2010
US $000
2009
US $000
4,200
(367)
-
(2,248)
1,585
-
-
4,200
-
4,200
71
During the year the Group’s management have decided to reverse an amount of USD 2 2m for
the provisions made during 2009 based on their estimate of the expected outcome of the legal
and other cases involving the Group
36 Litigation
Ex employee vs Empire Online Ltd
In Q3 2007 an ex employee of Empire Online Limited (the Company’s former name) filed a law
suit against one of its Directors and the Company in the Labor Court in Tel Aviv According to
the lawsuit the plaintiff claims compensation relating to the sale of all commercial activities
of Empire Online Limited until the end of 2006, and the dissolution of the company and the
terms of termination of his employment with Empire Online Limited
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 As of yet, both litigation procedures are in progress both in Israel and in Cyprus
No further information is provided on the above case as the Directors consider it could
prejudice the outcome of any claim
Secretline vs Livermore
In Q3 2009, Secretline Investments Ltd (“Secretline”), a supplier of DTH Boom, filed a claim
against the Company and certain other DTH Boom shareholders in the District Court in Tel
Aviv The claim is related to guarantees provided by Livermore and certain other DTH Boom
shareholders to Secretline to secure a payment from DTH Boom to Secretline The guarantee
has been accounted for as a financial guarantee contract
The procedures were concluded during Q1 2011 and there was a settlement during the same
period that is fully provided at 31 December 2010
37 Commitments and contingencies
The Group has commitments as at 31 December 2010, for investing an additional USD 8m
in JM Financial India Property Fund As at 31 December 2010, JM Financial India Property
Fund had called a second drawdown USD 2m, which the Group has not funded The Group is
currently negotiating a reduction of its commitment amount In the event no agreement is
reached and the Group does not fulfil its commitment, then it may be subject to forfeiture
of all its participating shares Alternatively the Group has the option to cap its total
commitments up to and including the second drawdown contribution by investing the USD 2m
subject to incurring a penalty, which is also currently in negotiation As of 31 December 2010,
the Group has decided to treat the existing investment as if all participating shares were
forfeited and impair the investment completely
38 Events after the reporting date
There were no material events after the end of the reporting year, which have a bearing on the
understanding of these consolidated financial statements
39 Financial risk management objectives and policies
Background
The Group’s financial instruments comprise available for sale financial assets, financial assets
Annual Report 2010
72
at fair value through profit or loss, derivatives, cash balances and receivables and payables
that arise directly from its operations
Risk objectives and policies
The objective of the Group is to achieve growth of shareholder value, yet in line with
reasonable risk, taking into consideration that the protection of long-term shareholder value
is paramount The policy of the Board is to provide a framework within which the investment
manager can operate and deliver the objectives of the Group
Risks associated with financial instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect the valuation of the investment
portfolio, 1) where an investment is denominated and paid for in a currency other than US
Dollars; and 2) where an investment has substantial exposure to non-US Dollar underlying
assets or cash flows Although the Group reports in USD, some of the Group’s assets are in
non-USD currencies and the Company in general does not hedge its currency exposure The
Group discretionally partially hedges against foreign currency movements affecting the value
of the investment portfolio based on its view on the relative strength of certain currencies
The Management monitors the effect of foreign currency fluctuations through the pricing of
the investments The level of investments denominated in foreign currencies held by the Group
at 31 December 2010 is the following:
2010
US $000
2009
US $000
2010
US $000
2009
US $000
2010
US $000
2009
US $000
Financial
assets
Liabilities
Net value
Financial
assets
Liabilities Net value
British Pounds (GPB)
10,312
(4,014)
Euro (EUR)
23,437
(16,255)
Swiss Francs (CHF)
Indian Rupee (INR)
Others
43,928
26,206
(5,668)
(2)
1,297
(4,120)
6,298
7,182
38,260
26,204
(2,823)
4,661
14,657
42,937
25,589
299
(2,320)
(4,653)
(8,460)
-
-
2,341
10,004
34,477
25,589
299
Total
105,180
(30,059)
75,121
88,143
(15,433)
72,710
Some of the USD denominated investments are backed by underlying assets which are invested
in non-USD assets
A 10% increase of the following currency rates against the rate of United States Dollar (USD)
at 31 December 2010 would have the following impact A 10% decrease of the following
currencies against USD would have an approximately equal but opposite impact
73
2010
US $000
2009
US $000
2010
US $000
2009
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
British Pounds (GPB)
Euro (EUR)
Swiss Francs (CHF)
Indian Rupee (INR)
Total
630
718
3,826
2,620
7,794
-
-
-
-
-
234
1,000
3,448
2,559
7,241
-
-
-
-
-
The above analysis assumes that all other variables in particular, interest rates, remain
constant The analysis does not include the impact arising from the translation of foreign
operations from their functional to the presentation currency
Interest rate risk
The Group is exposed to interest rate risk on its interest-bearing instruments which are
affected by changes in market interest rates The Group has borrowings of USD 84 7m (2009:
USD 76 4m) related to a real estate asset (Wylerpark, Bern), which have been fixed through
the use of an interest rate swap
The Group has banking credit lines which are available on short notice for the Company to use
in their investment activities, the costs of which are based on variable rates plus a margin
When an investment is made utilising the facility, consideration is given to the financing costs
which would impact the returns The level of banking facilities used is monitored by both the
Board and the management on a regular basis The level of banking facilities utilised at 31
December 2010 was USD 30 4m (2009: USD 19 2m)
As at 31 December 2010 the Group 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 Group 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 Group’s fixed rate financial assets is likely to be negatively impacted by an increase in
interest rates The interest income of the Group’s floating rate financial assets is likely to be
positively impacted by an increase in interest rates
Annual Report 2010
74
The Group’s interest bearing assets and liabilities are as follows:
Financial assets – subject to:
•
•
fair value changes
interest changes
Total
Financial liabilities – subject to:
•
interest changes
• both fair value and interest changes
Total
2010
US $000
2009
US $000
35,348
40,101
75,449
115,139
8,723
123,862
20,008
18,129
38,137
95,621
8,537
104,158
Changes in market interest rates will affect the valuation of fixed rate interest bearing
instruments A 1% (100 basis points) change in market interest rates would result in an
estimated 2 25% change in the net asset value as at 31 December 2010 (2009: 3 08%)
Particularly 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,
except for the financial liabilities’ fair value impact in profit or loss that would have been USD
(3 7)m (31 December 2009: USD (2 9)m)
2010
US $000
2010
US $000
2009
US $000
2009
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
Financial assets
•
•
fair value changes
(1,580)
interest changes
401
Financial liabilities
•
•
fair value changes
interest changes
4,406
(90)
85
-
-
-
(722)
181
4,380
1
118
-
-
-
3,137
85
3,840
118
75
The above analysis assumes that all other variables, in particular currency rates, remain constant
Equity price risk
By the nature of its activities, most of the Group’s investments are exposed to market price
fluctuations The Board monitors the portfolio valuation on a regular basis and consideration
is given to hedging or adjusting the portfolio against large market movements
The Group had no single major financial instrument that in absolute terms and as a proportion
of the portfolio that could result in a significant reduction in the NAV and share price Due
to the very low exposure of the Group to public equities, and having no specific correlation to
any market, the 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
equity price risk A 10% uniform change in the value of the Group’s portfolio of financial
instruments (excluding private equities and financial and minority holdings) would result in a
6 19% change in the net asset value as at 31 December 2010 (2009: 4 29%), and would have
the following impact (either positive or negative, depending on the corresponding sign of the
change):
2010
US $000
2010
US $000
2009
US $000
2009
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
99
4,546
642
3,044
4,223
4,322
2,471
-
4,645
3,113
3,044
Available-for-sale
financial assets
Financial assets at fair
value through profit or
loss
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 against a
rise in interest rates and would not materially impact the portfolio returns if a large market
movement did occur
Credit Risk
The Group invests in a wide range of securities with various credit risk profiles including
investment grade securities and sub investment grade positions The investment in debt
instruments is usually in investment grade securities, however, the Group may invest also
in sub investment grade or unrated debt instruments The investment manager mitigates
the credit risk via diversification across issuers However, the Group is exposed to a
Annual Report 2010
76
migration of credit rating, widening of credit spreads and default of any specific issuer
The Group only transacts with regulated institutions on normal market terms which are trade
date plus one to three days The levels of amounts outstanding from brokers are regularly
reviewed by the management The duration of credit risk associated with the investment
transactions is the period between the date the transaction took place, the trade date and
the date the stock and cash are transferred, the settlement date The level of risk during the
period is the difference between the value of the original transaction and its replacement with
a new transaction The Group is mainly exposed to credit risk in respect of its interest bearing
investments of USD 72 2m (2009: USD 32 2m) The Group’s maximum credit risk exposure at
31 December 2010 is USD 85 6m (2009: USD 45 9m)
The fair values of the Group’s investments in bonds and other debt instruments 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
At 31 December the credit rating distribution of the Group’s asset portfolio subject to credit
risk (bonds and other debt instruments, bank balances and receivables) was as follows:
Rating
2010 Amount
US $000
Percentage
2009 Amount
US $000
Percentage
AA
AA+
AA-
A
A-
BBB
BBB+
BBB-
B
BB
BB+
BB-
C
CCC+
5,692
-
321
13,231
6,161
5,735
9,879
-
2,959
2,750
5,993
760
242
5,275
7%
-
0%
15%
7%
7%
12%
-
4%
3%
7%
1%
0%
6%
6,266
1,360
1,939
17,449
3,730
1,642
3,015
3,096
846
2,079
221
258
-
3,850
14%
3%
4%
38%
8%
3%
7%
7%
1%
4%
1%
1%
-
8%
77
Not Rated
26,583
31%
173
1%
85,581
100%
45,924
100%
For past due financial assets refer to note 12
Liquidity Risk
The major financial liability of the Group is the bank loan of CHF 79m (USD 84 7m) used for
purchase of a real estate property, which has a maturity in 2014 The loan is collateralized by
property valued at CHF 111 2m (USD 119 0m) in December 2010 The loan is non-recourse, i e
the holding company and its assets (apart from the Wyler Park property) are neither pledged
for this loan nor liable for recovery in case of default The following table summarizes the
Group’s financial liabilities according to their maturity duration
Less than 1
year
US $000
Between 1 and
2 years
US $000
Between 2 and
5 years
US $000
Over 5 years
US $000
31 December 2010
Borrowings
31,281
864
86,234
Derivative financial
instruments
Other financial
liabilities
3,257
2,958
2,632
2,447
-
-
Total
36,985
3,822
88,866
-
-
-
-
Less than 1
year
US $000
Between 1
and 2 years
US $000
Between 2
and
5 years
US $000
Over 5 years
US $000
31 December 2009
Borrowings
20,027
842
78,612
Derivative financial
instruments
2,904
2,868
7,850
-
-
Annual Report 2010
78
Other financial
liabilities
4,744
-
-
Total
27,675
3,710
86,462
-
-
A large proportion of the Group’s portfolio is invested in mid term private equity investments
with low or no liquidity The investments of the Group in publicly traded securities are subject
to availability of buyers at any given time and may be very low or non existent subject to
market conditions
The management take into consideration the liquidity of each investment when purchasing
and selling in order to maximise the returns to shareholders by placing suitable transaction
levels into the market Special consideration is given to investments that represent more than
5% of the investee
At 31 December 2010, the Group had liquid investments totalling USD 64 9m, comprised of
USD 3 3m in cash and cash equivalents, USD 45 3m in fixed income investments, USD 11 7m in
public equities and USD 4 6m in hedge funds
Management structures and manages the Group’s portfolio based on those investments which
are considered to be long term, core investments and those which could be readily convertible
to cash, are expected to be realised within normal operating cycle and form part of the
Group’s treasury function
The following table lists the Group’s financial assets with a contractual maturity based on
their maturity
Less than 1
year
US $000
Between 1 and
2 years
US $000
Between 2and
5 years
US $000
Over 5 years
US $000
4,645
5,275
-
27,794
-
-
1,497
31,956
31 December 2010
Available-for-sale
financial assets
Financial assets
designated at fair value
through profit or loss
79
Less than 1
year
US $000
Between 1 and
2 years
US $000
Between 2and
5 years
US $000
Over 5 years
US $000
-
-
4,502
3,850
12,250
1,399
3,343
17,320
31 December 2009
Available-for-sale
financial assets
Financial assets
designated at fair value
through profit or loss
Capital Management
The Group considers its capital to be its issued share capital and reserves
Net debt to equity
The Group 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:
Cash at bank
Bank overdrafts
Bank loans
Short term bank loans
Net Debt
Total equity
2010
US $000
(3,294)
13,289
84,722
17,128
2009
US $000
(5,898)
5,198
76,436
13,987
111,845
89,723
143,236
128,568
Net debt to equity ratio
0 78
0 70
The increase of the ratio in 2010 is mainly attributable to foreign exchange differences that
arose on the translation of the bank loans from functional to presentation currency that
increased net debt by USD 8 3m and at the same time decreased equity by the same amount
The Board believes that the ratio remains at an acceptable level
Annual Report 2010
80
Re-purchase 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 re-purchase of
Ordinary shares at a discount to the underlying net asset value enhances the net asset value
per share of the remaining equity shares
Under this policy, in 2010, the Company bought 8,409,798 of its Ordinary shares at an average
price of USD 0 24 per share
Financial assets by category:
Non current assets
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Current assets
Loans and receivables:
Trade and receivables
Cash at bank
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Financial liabilities by category:
2010
US $000
2009
US $000
68,436
4,607
9,919
3,294
20,554
41,041
55,862
5,885
7,788
5,898
19,914
23,602
2010
US $000
2009
US $000
Non current liabilities
Financial liabilities at amortised cost:
Bank loan
84,722
76,436
Financial liabilities at fair value through
profit or loss:
Derivative financial instruments
8,723
8,576
Current liabilities
Financial liabilities at amortised cost:
Bank overdrafts
Short term bank loans
Other financial liabilities
13,289
17,128
2,447
5,198
13,987
4,744
81
Shareholder Information
Registrars
All enquiries relating to shares or shareholdings should be addressed to:
Capita Registrars
The Registry
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
Annual Report 2010
82
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Livermore Investments Group Limited
(the “Company”) will be held at the offices of Travers Smith LLP at 10 Snow Hill, London, EC1A 2AL
on 23 August 2011 at 10am for the purposes of the following:
To consider, and if thought fit, to pass the following resolutions, numbers 1 to 5 of which will
be proposed as Resolutions of Members and numbers 6 to 8 of which will be proposed as Special
Resolutions:
1
2
3
To receive and adopt the Report of Directors, the financial statements and the Report of the
Auditor for the year ended 31 December 2010
To re-elect Mr Ron Baron, who is due to retire in accordance with the Articles of Association
of the Company
To re-appoint Grant Thornton Cyprus as auditor of the Company to hold office from the
conclusion of this meeting until the conclusion of the next general meeting at which financial
statements are laid before the Company
4
To authorise the Directors to determine the auditor’s remuneration
5
That for the purposes of article 5 1 of the Articles of Association of the Company:
(a) the Directors be and are generally and unconditionally authorised to allot up to a maximum
aggregate amount of 90,762,506 new ordinary shares of no par value of the Company to
such persons and at such times and on such terms as they think proper during the period
expiring at the end of the annual general meeting of the Company in 2012 or, if earlier, 15
months from the date of the passing of this resolution (unless previously revoked or varied
by the Company in general meeting); and
(b) the Company be and is hereby authorised to make prior to the expiry of such period any offer or
agreement which would or might require such ordinary shares to be issued in pursuance of any
such offer or agreement notwithstanding the expiry of the authority given by this resolution;
so that all previous authorities of the Directors pursuant to the said article 5 1 be and are
hereby revoked
6
THAT, subject to the passing of resolution 5 set out in the Notice convening this Meeting, the
Directors be and are empowered in accordance with article 5 2 of the Articles of Association
of the Company to allot new ordinary shares of no par value in the capital of the Company
(“ordinary shares”) for cash, pursuant to the authority conferred on them to allot such shares
by that resolution 5 as if the pre-emption provisions contained in article 5 2 did not apply to
any such allotment, provided that the power conferred by this resolution shall be limited to:
(a) the allotment of ordinary shares in connection with an issue or offering in favour of
holders of ordinary shares and any other persons entitled to participate in such issue or
offering where the shares respectively attributable to the interests of such holders and
persons are proportionate (as nearly as may be) to the respective number of ordinary
shares held by or deemed to be held by them on the record date of such allotment, subject
only to such exclusions or other arrangements as the Directors may consider necessary or
expedient to deal with fractional entitlements or legal or practical problems under the
laws or requirements of any recognised regulatory body or stock exchange in any territory;
and
83
(b) the allotment of up to an aggregate amount of 13,614,375 of such ordinary shares
and this power, unless renewed, shall expire at the end of the annual general meeting of
the Company in 2012 or, if earlier, 15 months from the date of the passing of this resolution
(unless previously revoked or varied by the Company in general meeting) but shall extend
to the making, before such expiry, of an offer or agreement which would or might require
ordinary shares to be allotted after such expiry and the Directors may allot such shares in
pursuance of such offer or agreement as if the authority conferred hereby had not expired
7
That, in accordance with the Articles of Association of the Company, the Company be and
is hereby generally and unconditionally authorised to make market purchases (within the
meaning of section 693 of the Companies Act 2006 (as amended)) on the AIM market of the
London Stock Exchange plc of ordinary shares of no par value in the capital of the Company
(“ordinary shares”) provided that:
(a) the maximum number of ordinary shares hereby authorised to be purchased is 54,457,502;
(b) the authority hereby conferred (unless previously renewed or revoked) shall expire at the
conclusion of the annual general meeting of the Company next following the meeting at
which this resolution is passed; and
(c)
the Company may, under the authority hereby conferred and prior to the expiry of that
authority, make a contract to purchase its own shares which will or may be executed
wholly or partly after the expiry of that authority and may make a purchase of its own
shares in pursuance of such contract
A member of the Company unable to attend the Meeting may be represented at the Meeting by a
proxy appointed in accordance with the Notes attached hereto
By order of the Board
Chris Sideras
Company Secretary
Trident Chambers
PO Box 146
Road Town
Tortola
British Virgin Islands
14 June 2011
Annual Report 2010
84
Notes
(i) A member entitled to attend and vote at the Meeting convened by the above Notice is
entitled to appoint one or more proxies to attend and, on a poll, to vote in his place A
proxy need not be a member of the Company Completion of the Form of Proxy will not
prevent you from attending and voting in person
(ii) To appoint a proxy you should complete the Form of Proxy enclosed with this Notice
of Annual General Meeting To be valid, the Form of Proxy, together with the power of
attorney or other authority (if any) under which it is signed or a notarially certified or office
copy of the same, must be delivered to the offices of Capita Registrars, PXS, 34 Beckenham
Road, Beckenham, Kent BR3 4TU by no later than 48 hours (not including weekends or bank
holidays) before the time fixed for the meeting or any adjourned meeting
(iii) In the case of joint holders, the vote of the senior holder who tenders a vote whether in
person or by proxy shall be accepted to the exclusion of the votes of the other joint holders
and, for this purpose, seniority shall be determined by the order in which the names stand
in the register of members of the Company in respect of the relevant joint holding
(iv) In the case of holders of Depositary Interests representing ordinary shares in the Company,
a Form of Direction must be completed in order to appoint Capita IRG Trustees Limited, the
Depositary, to vote on the holder’s behalf at the meeting or, if the meeting is adjourned,
at the adjourned meeting To be effective, a completed and signed Form of Direction (and
any power of attorney or other authority under which it is signed) must be delivered to the
Company’s Transfer Agent, Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent,
BR3 4TU by no later than 72 hours (not including weekends or bank holidays) before the
time fixed for the meeting or any adjourned meeting Completion of the Form of Direction
will not prevent you from attending and voting in person Depository Interest holders
wishing to attend the meeting should contact the Depository on the above address or email
custodymgt@capitaregistrars com to request a Letter of Corporate Representation
85
Principal Bankers
Leumi Bank
Dianastrasse 5
CH-8002
Zurich
Switzerland
Bank Hapoalim
18 Boulevard Royal
BP 703
L-2017
Luxembourg
FIBI Bank
Seestrasse 61
Zurich 8027
Switzerland
Corporate Directory
Secretary
Chris Sideras
Registered Office
Trident Chambers
PO Box 146
Road Town
Tortola
British Virgin Islands
Company Number
475668
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
England
Auditor
Grant Thornton (Cyprus) Ltd
41-49 Agiou Nicolaou Str
Nicosia
Cyprus
Solicitors
Travers Smith
10 Snow Hill
London
EC1A 2AL
England
Nominated Adviser & Broker
Matrix Corporate Capital LLP
One Vine Street
London
W1J 0AH
England
Annual Report 2010
86