2015
5
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
Review of Activities 9
Introduction and Overview 9
Global Investment Environment 9
Livermore’s Strategy 11
Review of Significant Investments 11
Events after the Reporting Date 16
Litigation 16
Report of the Directors 17
The Board’s Objectives 17
The Board of Directors 17
Directors’ responsibilities in relation to the consolidated financial statements 17
Disclosure of information to the Auditor 18
Substantial Shareholdings 18
Corporate Governance Statement 19
Introduction 19
The Board Constitution and Procedures 19
Board Committees 19
Remuneration Committee 19
Audit Committee 19
Communication with Investors 20
Internal Control 20
Going concern 20
Independence of Auditor 20
4
Annual Report 2015 Remuneration Report 21
Directors’ Emoluments 21
Directors’ Interests 21
Interests of Directors in share options 22
Share Option Scheme 22
Remuneration Policy 22
Review of the Business and Risks 24
Risks 24
Share Capital 24
Related Party Transactions 24
Report of the independent auditor to the members of Livermore Investments Group Limited 25
Consolidated Statement of Financial Position as at 31 December 2015 27
Consolidated Statement of profit or loss for the year ended 31 December 2015 28
Consolidated Statement of Comprehensive Income for the year ended 31 December 2015 29
Consolidated Statement of changes in equity for the year ended 31 December 2015 30
Consolidated Statement of cash flows for the year ended 31 December 2015 32
Notes on the Financial Statements 34
Shareholder Information 84
Registrars 84
Website 84
Direct Dividend Payments 84
Lost Share Certificate 84
Duplicate Shareholder Accounts 84
Corporate Directory 85
5
Highlights
•
•
Net Asset Value per share - USD 0 77 after payment of interim dividend of USD 0 0256 per share
(December 2014: USD 0 82)
In addition to the USD 5m dividend, the Company bought back 3,000,000 shares during the year
at an average price of GBP0 34
• Wyler Park property in Bern, Switzerland was refinanced for a minimum term of 5 years Lease
with SBB was extended by another 10 years until 2029
•
No material developments in the private equity portfolio
6
Annual Report 2015 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 2015
The year-end NAV was USD 0 77 per share after payment of a USD 5m dividend, USD 0 0256 per
share (2014 NAV: USD 0 82 per share) Further, the Company bought back 3,000,000 shares for a
total cost of USD 1 54m Net loss for the year was USD 4 7m (2014 Net Profit: USD 7 2m)
Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 5 4m
(USD 5 6m) in net rent during the year All of the 39 apartments and commercial spaces are fully
rented The loan against Wyler Park was successfully refinanced in January 2015 for a minimum term
of 5 years and annual interest expense was reduced to CHF 1 1m from circa CHF 3 3m in prior years
Further, management successfully extended the lease with SBB by another 10 years until 2029
The portfolio recorded gains from revaluation as well as increased income from the Wyler Park
project These gains were offset by administration expenses, negative mark-to-market on the CLO
portfolio on account of lower loan prices and credit concerns in the high-yield market, as well
as certain impairments on legacy private equity positions Interest and dividend income from the
financial portfolio totalled USD 25 7m (2014: USD 26 6m)
Financial Review
The NAV of the Group at 31 December 2015 was USD 148 6m Net loss during the year was USD4 7m,
which represents earnings per share of USD (0 02)
Administrative expenses excluding provisions were USD 4 6m (2014: USD 7 2m)
7
The overall change in the NAV is primarily attributed to the following:
Shareholders’ funds at beginning of year
Income from investments
Other income
Realised losses on investments
Loss on impairment of investments
Unrealised gains / (losses) on investments
Unrealised exchange losses
Administration costs
Net finance costs
Tax charge
Decrease in net assets from operations
Purchase of own shares
Dividends paid
Adjustments for share option expiry
Shareholders’ funds at end of year
Net Asset Value per share
Dividend & Buyback
31 December
2015
US $m
160 0
30 9
0 1
(2 4)
(31 7)
8 5
(0 4)
(5 2)
(2 5)
(1 9)
(4 6)
(1 5)
(5 0)
(0 3)
31 December
2014
US $m
168 4
31 8
0 5
(1 6)
(8 9)
(9 4)
(0 6)
(7 2)
(7 2)
(0 8)
(3 4)
-
(5 0)
-
148 6
160 0
US $0 77
US $0 82
For the year ended 31 December 2015, the Company paid a dividend of USD 5m (USD 0 0256 per share)
During 2015, the Company bought back 3,000,000 shares to be held in treasury for a total cost of
USD 1 54m As at 31 December 2015, the Company held 111,830,818 shares in treasury
In addition since 1 January 2016 to date, the Company has purchased 17,475,585 shares to be held
in treasury for a total cost of USD 7 86m
Richard B Rosenberg
Chairman
23 May 2016
Noam Lanir
Chief Executive Officer
8
Annual Report 2015
Review of Activities
Introduction and Overview
2015 was a challenging year for financial markets as investors fretted over several issues ranging
from slow global economic growth, persistently low inflation, low productivity growth, the length
of the current business cycle, further slowdown in China, falling energy and commodity prices, and
policy tools remaining with central banks to manage a potential downturn The main issue, however,
was the strength of the US Dollar on the back of monetary policy divergence between the US and
the rest of the developed world The strength of the US Dollar created significant monetary policy
tightening via the currency route in the rest of the world and especially in emerging markets In
the US, cutbacks in spending from the energy and mining sector offset gains from lower oil prices
Corporate earnings declined as exporters and multinational companies struggled with the stronger
currency and energy and mining sector faced lower prices for their products Indicators in the high
yield and credit market flashed warning signs in the latter half of the year and gave up a significant
part of their first half gains
During the year, significant effort was put into first, refinancing the Wyler Park property at good
terms, and second, to extend the lease with SBB Both efforts were successful The new financing
has reduced the interest burden from CHF 3 3m per annum in prior years to about CHF 1 1m per
annum going forward, and the lease extension until 2029 has contributed to the increaseof the
value of the property from CHF 115 8m in 2014 to CHF 123 3m in 2015
The Group financial portfolio continued to generate strong cash flows despite mark-to-market
losses on the CLO portfolio as concerns over the health of speculative grade credit markets and
forced liquidations significantly affected investor sentiment
In 2015, the Group generated interest and dividend income of USD 25 7m and investment property
income of USD 5 2m The Group reported NAV/share of US D0 77 after a dividend of USD 0 0256/
share (2014: USD 0 82) and net loss of USD 4 7m Administrative expenses amount to USD 5 2m
(2014: USD 7 2m) and finance costs were USD 2 5m (2014: USD 7 3m), of which USD 1 3m relates to
the loan against the Wyler Park property
The Group does not have an external management company structure and thus does not bear the
burden of external management and performance fees Furthermore, the interests of Livermore’s
management are aligned with those of its shareholders as management members have a large
ownership interest in Livermore shares
Considering the strong liquidity position of Livermore, together with its strong foothold in the US
CLO market as well as the robustness of its investment portfolio and the alignment of management’s
interests with those of its shareholders, management believes that the Group is well positioned to
benefit from current market conditions
Global Investment Environment
The global economy continued to recover in 2015, however, contrary to expectations, growth did not
strengthen and stayed at anaemic levels While the economies of Euro area and US grew moderately
driven by services sector on the back of domestic demand, industrial activity was lacklustre as
growth in China slowed The economic environment continued to be dominated by considerable
9
uncertainty including that from the Greek debt crisis, geopolitical tensions such as Ukraine, and
military conflict in the Middle East
Energy and commodity prices continued to fall in 2015 amid slow growth and the Chinese efforts to
transition to a services oriented economy Low oil commodity prices negatively affected growth in
several emerging market countries dependent on commodity exports Low prices further contributed
to low inflation rates in many countries
In the US, GDP grew by a modest 2 4% in 2015 but labour market conditions continued to improve
towards full employment levels supported by robust services sector growth and unemployment
rate fell to 5% by the end of the year This prompted a sharp divergence in expected monetary
policy between the US and rest of the developed world and the US Dollar strengthened against
most currencies A stronger US Dollar had the effect of creating tighter monetary conditions across
the world further depressing growth Concerned about potential inflation due to high employment
levels, the US Federal Reserve indeed raised its main interest rate by 0 25% in December 2015 for
the first time since 2008
In the Euro area, GDP grew by 1 6% in 2015 as compared to 0 9% in 2014 This moderate recovery
was supported by the highly expansionary monetary policy of the European Central Bank (ECB) and
the associated weakening of the Euro The ECB started purchasing securities at the rate of EUR 60
billion per month in March and by December announced extending these purchases until March 2017
in addition to lowering its deposit rate by another 0 10% to -0 30% Credit conditions gradually
improved and business confidence picked up Low energy prices also improved household purchasing
power Although the unemployment rate continued to decline in the Euro area, it remained at
elevated levels with a reading of 10 4% as of year-end 2015
The Swiss economy faced several challenges in 2015, mainly emanating from sharp appreciation of
the Swiss franc following discontinuation of minimum exchange rate versus the Euro in mid-January
2015 as well as weakening of the global economy in the second half of the year Against a backdrop
of increasingly divergent monetary policy between the US and Euro zone, the Swiss National Bank
(SNB) could no longer support the minimum exchange rate regime and its discontinuation caused a
sharp increase in the value of the Swiss franc To discourage safe haven inflows in the Swiss Franc,
the SNB cut the deposit rates further into negative territory to -0 75% GDP declined in the first
quarter and recovered only marginally by year end 2015 Overall, GDP increased by 0 9% in 2015
vs 1 9% in 2014 Sales and profit margins came under severe pressure in several industries and the
tough business environment left an impact on the labour market with unemployment rate increasing
to 3 4% in December 2015 Inflation as measured by the Swiss consumer price index was -1 1% in 2015
Growth in emerging economies presented an uneven picture Economic growth in China slowed
slightly to 6 9% reflecting robust growth in services sector However, momentum in industrial
activity slowed perceptibly dampened by overcapacity in heavy industry and construction Recession
in Brazil and Russia deepened further as a result of the slump in commodity prices The People’s
Bank of China (PBOC) eased monetary policy significantly in 2015 While in the first half of the
year the PBOC focussed on stimulating the economy, further easing in the second half was driven
by turbulence in China’s stock market and the PBOC’s efforts to make its currency exchange rate
more flexible
Financial markets faced significant volatility in 2015 as investors braced for slow global growth, a
long structure transition of the Chinese economy, cut backs in investment due to low energy and
commodity prices, a stronger US Dollar and potentially higher short term rates in the US amidst
geopolitical tensions and conflict in the Middle East
10
Annual Report 2015 The S&P 500 Index managed to generate a positive total return of 1 38% in 2015 including dividends
while the EuroSTOXX 50 Index generated a net return of 6 4% driven by aggressive monetary and a
lower exchange rate The US Dollar was up 9 25% against international currencies as measured by
the DXY Index The Euro on the other hand ended the year at 1 086 as compared to 1 21 versus the
US Dollar at the start of 2015
Against widely held expectations of higher longer term rates, the US and German 10 year treasury
yields were only marginally changed yielding 2 26% and 0 629% respectively at the end of the year
as compared to 2 17% and 0 54% respectively at the beginning of 2015 2015 was a challenging
year for US credit as concerns over potential rate increases in the US as well as declining earnings
growth and low energy and commodity prices raised the specter of higher default rates in 2016 with
potentially lower recoveries if commodity prices stay low Both investment grade and high yield
finished 2015 with negative returns Total returns for investment grade and high yield were -0 75%
and -5 56%, respectively Spreads widened on the year (+32bp for investment grade,+168bp for
high yield), resulting in excess returns of -1 64% and -7 15% for investment grade and high yield,
respectively Loans outperformed high yield, but still had only the second negative return (-0 69%)
in 19 years of data
Sources: Board of Governors of the Federal Reserve System, European Central Bank (ECB), Swiss National Bank,Bloomberg, Morgan Stanley
Livermore’s Strategy
The financial portfolio is focused on fixed income instruments which generate regular cash flows
and include exposure mainly to senior secured and usually broadly syndicated US loans and to a
limited extent emerging market debt through investments in CLOs This part of the portfolio is
geographically focused on the US with some exposure to Europe and emerging markets
The remaining portfolio is focused on Switzerland and Asia with investments primarily in real estate
and select private equity opportunities Investments are focused on sectors that Management
believes will provide superior growth over the mid to long term with relatively low downside risk
Strong emphasis is given to maintaining sufficient liquidity and low leverage at the overall portfolio
level and to re-invest in existing and new investments along the economic cycle
Review of Significant Investments
Name
Wyler Park*
SRS Charminar
Other Real Estate Assets
Total
* Net of related loan
Book Value
US $m
46 9
7 1
1 2
55 2
11
Wyler Park – Switzerland
Wyler Park is a top quality mixed-use property located in Bern, Switzerland It has over 16,800 square
meters of commercial 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 annual rental income from the
commercial area of the project is CHF 4 43m (USD 4 61m)
Following the successful development of 39 residential apartments, management rented out all of
them The entire property is fully rented and the annual rental income from the residential area is
about CHF 0 98m (USD1 02m)
Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore
Investments AG The loan outstanding on the project as of 31 December 2015 is CHF 76 6m (USD
76 4m), which is a non-recourse loan to Livermore Investments AG backed only by this property
In January 2015, management successfully refinanced the loan against Wyler Park with a Swiss
bank The principal amount of the new loan facility is CHF 78 0m The facility is committed until at
least 30 June 2019 at a margin of CHF Libor + 1 4%
In September 2015, management successfully negotiated a lease extension with SBB for an additional
10 years The lease now extends until 2029 As part of the agreement, Livermore will invest up to
a maximum of CHF 3 95m to upgrade the ventilation and cooling systems and to increase capacity
SBB is expected to invest CHF 9m
The valuation of the property on current-use basis, as of year-end 2015 is CHF 123 3m (USD 123 3m)
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
Livermore invested USD 20m in 2008 in a leading Indian Real Estate company, in association
with SRS Private and other investors as part of a total investment of USD 132 1m In 2009, the
promoters of the investee company were arrested on charges of criminal conspiracy, cheating, and
misappropriation of funds Later it was discovered that the investee company had breached the terms
of the investment agreement resulting in a default On 13 January 2011 the Company Law Board
(“CLB”) passed an order and allowed Infrastructure Leasing & Financial Services Limited (“IL&FS”)
to become an 80% shareholder and control the management of the company SRS Charminar and
other investors have agreed to a settlement with IL&FS wherein the settlement amount will be paid
in four tranches over five years
In November 2015, Livermore received the first tranche of the settlement in the amount of USD
2 9m The next tranche is expected in late 2016
The carrying amount of the investment is based on discounted expected cash flows and as of year-
end was USD 7 1m (2014: USD 9 1m)
Financial portfolio and trading activity
The Group manages a financial portfolio valued at USD 90 3m (net of leverage)as at 31 December
2015, which is invested mainly in fixed income and credit related securities
12
Annual Report 2015
The following is a table summarizing the financial portfolio as of year-end 2015
Name
2015
Book Value US $m
2014
Book Value US $m
Investment in the loan market through CLOs
66 0
Fixed income investment
Babylon
Hedge Funds
Corporate bonds
Other Public Equities
Total
Total net of leverage
5 0
0 9
1 0
1 8
2 0
76 7
90 3*
82 2
-
0 9
1 1
2 0
1 9
88 1
99 1**
* this figure includes USD 5m which the Company invested during the period in the first loss tranche
of a warehouse facility for accumulating loans with the intention to transfer these loans to a CLO
** this figure includes USD 16m which the Company invested during the period in the first loss
tranche of warehouse facilities for accumulating loans with the intention to transfer these loans
to a CLO
Senior Secured Loans and Collateralized Loan Obligations (CLO):
2015 was a volatile year in the US Leveraged Loan market Although the US Leveraged Loan market generated
a total return of -0 70% as measured by the S&P LSTA Total Return Index, the market experienced significant
intra-year volatility Earlier in the year, conditions in the Leveraged Loan market continued to stay difficult
much alike the fourth quarter of 2014 Concerns were driven by declines in the high yield market, continued
withdrawals from retail funds, and intensified pressure on the Energy and Metals/Mining sector as oil and
commodity prices stayed low and new issue CLO issuance was muted Late in the first quarter and the
second quarter, however, saw a sharp recovery as oil prices bounced back and loan prices recovered sharply
further helped by strong new issue CLO creation CLO equity prices increased in tandem and management
reduced exposure to short reinvestment period CLO equity positions at high levels Further, management
took advantage of lower loan prices by pricing a new CLO in the first quarter and also accumulating loans
for another CLO which was priced in July 2015 when liability costs were near the lows for the year Both
these new issue CLOs ramped well and generated strong first payments In the third quarter, however, oil
and commodity prices took another step down bringing significant stress into the high yield and leveraged
loan market Outflows from retail funds accelerated and loan prices fell on concerns of higher default and
risks in the credit market as well as serious lack of liquidity CLO equity prices suffered one of their worst
mark-to-market declines According to estimates, the total return in 2015 for USD CLO equity issued after
2010 was between -13 4% to -15%1
The Group’s CLO portfolio, however, continued to generate strong cash flows aggregating USD 21 3m in
2015 Also, warehousing for CLO’s generated net cash income of USD 1 6m during the year Management
reinvested proceeds into long new issue CLOs with clean collateral As of the end of the year 2015, all of the
Group’s US CLO equity positions were comfortably passing their Overcollateralization (OC) tests and remain
in healthy shape CLO Managers also took the opportunity of loan price volatility and wide new issue loan
13
spreads to trade out of some credit risk loans and purchase better quality loans at low prices Management
continues to actively monitor the CLO portfolio and position it towards longer reinvestment period and
better quality collateral CLOs
While default rates stayed low at 1 5% on a trailing twelve month basis, management expects the default
rate to tick up as energy and metals/mining related companies run out of liquidity in 2016 and idiosyncratic
situations arise in other sectors if the US high yield and leveraged loan markets deteriorate further
Management is also focused and engaged with CLO managers to actively manage exposure to Caa/CCC
rated loans in the underlying CLO portfolios ahead of rating agency downgrades of credit risk loans
1 Morgan Stanley, in its written January 2016 CLO market commentary, estimated total returns for 2015 to be -15%; Citi Research, in
a report published in January 2016, estimated total returns for 2015 to be -14 1%; and the total return of J P Morgan’s PricingDirect, a
pricing source for CLO 2 0 equity that is published annually, was -13 4% for 2015
The Group’s CLO portfolio is divided into the following geographical areas:
US CLOs
Global Credit CLOs
European CLOs
2015
Amount
US $000
60,401
4,780
765
65,946
Percentage
91 6%
7 2%
1 2%
100%
2014
Amount
US $000
68,704
12,008
1,505
82,217
Percentage
83 6%
14 6%
1 8%
100%
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 Blue Ridge fund was
unwound during the year and all distributions paid The Group expects material exits of portfolio
companies from other funds to materialize between 2016 and 2018 During the reporting period
distributions of USD 0 22m from SRS Private and USD 0 06m from Blue Ridge fund were received
The following is a table summarizing the financial portfolio as of year-end 2015
Name
SRS Private (India)
Evolution Venture (Israel)
India Blue Mountains (India)
Elephant Capital (India)
Da Vinci (Russia)
Panda Capital (China)
Other investments
Total
Book\ValueUS $m
1 7
1 6
0 7
0 4
0 3
0 3
1 0
6 0
14
Annual Report 2015 SRS Private Fund:
SRS Private is a private equity fund focused on real estate in India The fund has invested in
residential and mixed use projects in India as well as directly in certain real estate companies The
assets are primarily located in and around major cities of India such as Mumbai and Hyderabad
Approximately 58% of the net asset value of the fund is invested in mixed-use assets (commercial
and residential combined), 20% is in SRS Charminar, 10 6% is in land primarily for residential assets,
3 5% is invested at the entity level of real estate developers, and 8% in net cash and receivables
In 2015, the fund distributed USD 0 22m from proceeds of partial sale of a mixed use property in
Mumbai As of year-end 2015, the investment was valued at USD 1 7m
Evolution Venture:
Evolution is an Israel focused Venture Capital fund It invests in early stage technology companies
Its investments include a carrier-class Mobile Broadband Wireless (MBW) Wi-Fi solutions company,
a mobile keyboard and language correction software company, a software company operating in the
digital radio market, a software test tool developer, and a virtualization technology company The
keyboard and language correction software company and the virtualization technology company
have been performing well The Wi-Fi solutions company has not recovered from a failed launch and
has been written down
India Blue Mountains:
India Blue Mountains was a fund developing 4 star hotels in India In September 2015, the fund
was restructured into three separate SPV’s holding the Mumbai, Pune, and Goa assets and liabilities
Livermore now holds the same percentage in each of the SPV’s as it held in India Blue Mountains
Given the high debt load on the individual assets, as well as delays and underperformance, net
asset values for the properties held under the SPVs have declined As of year-end 2015, the Group’s
investment in India Blue Mountain properties were valued at USD 0 7m
Elephant Capital:
India-focused private equity fund, which is listed on the AIM exchange (Ticker: ECAP)
The fund has realized some of its investments and remains with its unlisted portfolio of investments
in Amar Chitra Katha (offline and digital content company), Air Works India (aircraft maintenance
company), and Global Cricket Ventures (online venture to distribute cricket content)
As of August 2015, the audited NAV of the fund was GBP 5 44m or 36 pence per share The fund
returned GBP 1m to shareholders via its buy-back programme in March 2015 Further details on
Elephant Capital and its portfolio companies is available at www elephantcapital com
On 26 February 2016, the Board announced its intention to delist from the AIM exchange in order to
reduce expenses relative to the value of its remaining assets The delisting has been completed and
Elephant Capital is now a private company
Da Vinci:
The fund is primarily focused on Russia and CIS countries and is primarily invested in the Moscow
Exchange and a Ukrainian coal company The Moscow Exchange performed well in local currency
terms increasing turnover in derivative and spot markets The coal company is located in Western
Ukraine The fund is building a club of investors to support and facilitate this investment The
Group’s investment in the fund was valued at USD 0 3m as of 31 December 2015
Panda Capital:
Panda Capital is a China-based private equity fund focused on early-stage industrial operations in
15
China The fund’s main investment is in a bamboo flooring company in China, which provides an
innovative low cost alternative to hardwood flooring in shipping containers The manager is in the
process of building up operational capacity for product manufacturing
Blue Ridge:
Blue Ridge is a China focused private equity fund The fund was dissolved on 30 December 2015 To
date, the fund has distributed USD 1 7m (77 9% of investment)
The following table reconciles the review of activities to the Group’s financial assets and investment
property as of year-end 2015
Name
Significant Investments
Private Equity Funds
Financial Portfolio
Total
Available-for-sale financial assets (note 4)
Financial assets at fair value through profit or
loss (note 5)
Net Investment property (note 8 & 17)
Total
Events after the reporting date
2015
Book Value US $m
55 2
6 0
76 7
137 9
81 2
9 8
46 9
137 9
There were no material events after the end of the reporting year, which have a bearing on the
understanding of these consolidated financial statements
Litigation
At the time of this Report, there is one matter in litigation that the Group is involved in Further
information is provided in note 32 to the consolidated financial statements
16
Annual Report 2015
Report of the Directors
The Directors submit their annual report and audited consolidated financial statements of the Group
for the year ended 31 December 2015
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 60), 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
Noam Lanir (age 49), 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 sixteen years which
culminated in its IPO in June 2005 on AIM Prior to 1998, Noam was involved in a variety of
businesses mainly within the online marketing sector He is also the major shareholder of Babylon
Ltd, an International Internet Company listed on the Tel Aviv Stock Exchange He is also a major
benefactor of a number of charitable organisations
Ron Baron (age 48), Executive Director and Chief Investment Officer
Ron was appointed as Executive Director and Chief Investment Officer on 10 August 2007 Ron has
led the establishment and development of Livermore’s investment platform as a leading specialized
house in the credit space Ron also has wide investment and M&A experience From 2001 to 2006
Ron served as a member of the management at Bank Leumi, Switzerland and was responsible for
investment’s activity Prior to this he spent five years as a commercial lawyer advising banks and
large corporations on corporate transactions, including buy-outs and privatisations Ron has over
16 years of experience as an investment manager with particular focus on the US credit market and
CLOs He holds an MBA from INSEAD Fontainebleau and a LLB (LAW) and BA in Economics from Tel
Aviv University
Directors’ responsibilities in relation to the 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
17
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
Substantial Shareholdings
As at 28 April 2016 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
49 79
RB Investments GmbH
25,456,903
Merrill Lynch Pierce, Fenner & Smith, Inc
9,329,051
8 37
3 07
78 74
13 24
4 85
* after consideration of treasury shares (note 14)
Save as disclosed in this report and in the remuneration report, the Company is not aware of any person
who is interested directly or indirectly in 3% or more of the issued share capital of the Companyor
could, directly or indirectly, jointly or severally, exercise control over the Company
Details of transactions with Directors are disclosed in note 30 to the consolidated financial statements
18
Annual Report 2015 Corporate Governance Statement
Introduction
The Company recognises the importance of the principles of good Corporate Governance and the
Board is pleased to accept its commitment to such high standards throughout the year As an AIM
quoted company, Livermore is not required to follow the provisions of the UK Corporate Governance
Code–September 2012 (the “Code”)
The Board Constitution and Procedures
The Company is controlled through the Board of Directors, which currently comprises one Non-Executive
Director and two Executive Directors The Chief Executive’s responsibility is to focus on co-ordinating
the company’s business and implementing 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, submit
themselves to re-election at least once every three years
Board Committees
The Board delegates clearly defined powers to its Audit and Remuneration Committees The minutes
of each Committee are circulated by the Board
Remuneration Committee
The Remuneration Committee comprises of the Non-Executive Chairman of the Board and a Non-
Executive Director Following the resignation of one of the Non-Executive Directors, this committee
has one member until a new Non-Executive Director is appointed The Remuneration Committee
considers the terms of employment and overall remuneration of the Executive Directors and key
members of Executive management regarding share options, salaries, incentive payments and
performance related pay The remuneration of Non-Executive Directors is determined by the Board
Audit Committee
The Audit Committee comprises of the Non-Executive Chairman of the Board and a Non-Executive
Director and is chaired by the Chairman of the Board Following the resignation of one of the
Non-Executive Directors, this committee has one member until a new Non-Executive Director is
appointed The duties of the Committee include monitoring the auditor’s performance and reviewing
accounting policies and financial reporting procedures
19
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
Going concern
The Directors have reviewed the current and projected financial position of the Group, making
reasonable assumptions about interest and dividend income, future trading performance, valuation
projections and debt requirements On the basis of this review, the Directors have a reasonable
expectation that the Company and the Group have adequate resources to continue in operational
existence for the foreseeable future Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and accounts
Independence of Auditor
The Board undertakes a formal assessment of the auditor’s independence each year, which includes:
•
•
•
a review of non-audit related services provided to the Company and related fees;
discussion with the auditor of a written report detailing all relationships with the Company and
any other parties which could affect independence or the perception of independence;
a review of the auditor’s own procedures for ensuring independence of the audit firm and
partners and staff involved in the audit, including the rotation of the audit partner;
• obtaining written confirmation from the auditor that it is independent;
•
a review of fees paid to the auditor in respect of audit and non-audit services
20
Annual Report 2015 Remuneration Report
The Directors’ emoluments, benefits and shareholdings during the year ended 31 December 2015
were as follows:
Directors’ Emoluments
Each of the Directors has a service contract with the Company
Director
Date of
agreement
Fees
US $000
Benefits
US $000
Reward
payments
US $000
Share options
expense
US $000
Total
emoluments
2015
US $000
Total
emoluments
2014
US $000
Richard Barry
Rosenberg
10/06/05
Noam Lanir
10/06/05
Ron Baron
01/09/07
69
400
350
-
45
-
22
-
1,528
-
-
-
91
445
99
445
1,878
2,978
The dates are presented in day / month / year format
Directors’ Interests
Interests of Directors in ordinary shares
Director
Notes
As at 31 December 2015
As at 31 December 2014
Number of
Ordinary
Shares
Percentage
of ordinary
share capital
Percentage
of voting
rights
Number of
Ordinary
Shares
Percentage
of ordinary
share capital
Percentage
of voting
rights
151,412,173
49 787%
78 740% 154,412,173
50 773%
79 068%
25,456,903
8 371%
13 240% 13,915,419
4 576%
7 126%
15,000
0 005%
0 01%
15,000
0 005%
0 008%
Noam Lanir
Ron Baron
a)
b)
Richard
Barry Rosenberg
Notes:
a) Noam Lanir is interested in his ordinary shares by virtue of the fact that he owns directly or
indirectly all of the issued share capital of Groverton Management Limited
b) In 2007, loans of USD 5 523m were made to RB Investments GMBH, a company owned by Ron
Baron, for the acquisition of shares in the Company Interest was payable on these loans at 6
month US LIBOR plus 0 25% per annum and the loans were secured on the shares acquired
The loans were repayable on the earlier of the employee leaving the Company or April 2013
21
In December 2012 the Board decided to renew the outstanding amount of these loans for a
period of another five years Based on the Board’s decision, the outstanding amount will be
reduced annually on a straight line over five years, as long as the key management employee
remains with the Company The relevant reduction in the loan amount for the year was USD
1 128m The loans together with their related accrued interest of USD 0 117m were classified
as “other assets” and are included under trade and other receivables (note 12)
Interests of Directors in share options
No of options at
31 December 2015
Date of grant
Exercise
price, GBP
Noam Lanir
10,000,000
19/07/06
0 78
Richard Barry Rosenberg
500,000
150,000
13/05/08
19/07/06
0 30
0 78
Exercise
Price**,
US $
1 15
0 44
1 15
Vesting period
of options
Vested
Vested
Vested
The options are exercisable up to 10 years after the date of grant No options were exercised during
the year ended 31 December 2015
* 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 2015
Share Option Scheme
The Company’s remuneration committee (the “Committee”) is responsible for administering the
Share Option Scheme Options to acquire Shares in the Company may be granted under the Share
Option Scheme to any employee or director of the Company or of other Group entities
The option exercise price per Ordinary Share is determined by the Committee but will be no less than
market value of the Ordinary Shares on the dealing day immediately preceding the date of grant The
options are subject to continuous service conditions but are not subject to any performance criteria
The Share Option Scheme will terminate ten years after it was adopted by the Company, or earlier
in certain circumstances
Remuneration Policy
The 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
•
22
Annual Report 2015
•
•
•
•
•
•
•
the remuneration structure will reflect a just system of rewards for the participants
the overall quantum of all potential remuneration components will be determined by the exercise
of informed judgement of the independent remuneration committee, taking into account the
success of the 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
23
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
The Group’s portfolio is exposed to interest rate changes, credit risk, liquidity risk and volatility
particularly in the US, EU, Switzerland and India In addition, the portfolio is exposed to currency
risks as some of the underlying portfolio is invested in assets denominated in non-US currencies
while the Company’s functional currency is USD Investments in certain countries such as India
and China are exposed to governmental and regulatory risks The SRS Charminar investment is
specifically subject to regulatory and legal risks as well as currency risk
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
investment
geography selection and concentration), balance sheet risk
mismanagement risks The Group’s portfolio has a significant exposure to senior secured loans of
US companies and emerging market countries therefore has a concentration risk to this asset class
(gearing) and/or
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 and loans 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
Further information on Financial risk management is provided in note 35 of the consolidated
financial statements
Share Capital
There was no change in the authorised share capital during the year to 31 December 2015
The authorised share capital is 1,000,000,000 ordinary shares with no par value
Related party transactions
Details of any transactions of the Group with related parties during the year to 31 December 2015
are disclosed in note 30 to the consolidated financial statements
By order of the Board of Directors
Chief Executive Officer
23 May 2016
24
Annual Report 2015 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 with the Company, ‘’the Group’’), which
comprise the consolidated statement of financial position as at 31 December 2015 and the consolidated
statements of profit or loss, comprehensive income, changes in equity, and cash flows for the year then
ended, and a summary of significant accounting policies and other explanatory information
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 as to 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 the Group as at 31 December 2015 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
25
Emphasis of Matter
We draw attention to Note 4 to the consolidated financial statements which describes the existence
of material uncertainty of the future cash flows relating to the investment of the Group through
SRS Charminar Investments Ltd, an Indian Real Estate company
We also draw attention to Note 32 to the consolidated financial statements which describes the
existence of material uncertainty over the outcome of a legal case against one of the custodian
banks that the Group uses and Livermore as the beneficial owner
Our opinion is not qualified in respect of these matters
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
Limassol
Date: 23 May 2016
26
Annual Report 2015 Livermore Investments Group Limited
Consolidated Statement of Financial Position as at 31 December 2015
Note
2015
US $000
2014
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
Other assets
Current assets
Trade and other receivables
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Current tax asset
Derivative financial instruments
Cash at bank
Total assets
Equity
Share capital
Share premium and treasury shares
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Bank loans
Deferred tax
Provisions
Current liabilities
Bank loans
Bank overdrafts
Trade and other payables
Provisions
Current tax payable
Derivative financial instruments
Total liabilities
Total equity and liabilities
Net asset valuation per share
3
4
5
8
12
12
4
5
20
16
13
14
14
17
11
31
17
18
19
31
20
16
26
78,464
1,533
123,324
1,128
204,475
4,490
2,683
8,268
6
-
25,770
41,217
42
99,374
1,806
116,609
2,538
220,369
20,890
2,561
3,704
-
1,125
3,807
32,087
245,692
252,456
-
177,053
2,631
(31,047)
-
178,597
2,937
(21,560)
148,637
159,974
75,003
3,937
385
79,325
1,407
13,208
2,770
128
-
217
17,730
-
2,272
-
2,272
78,092
10,355
1,758
-
5
-
90,210
97,055
245,692
92,482
252,456
Basic and diluted net asset valuation per share (US $)
21
0 77
0 82
These consolidated Financial Statements were approved by the Board of Directors on 23 May 2016
The notes on pages 34 to 83 form part of these consolidated financial statements
27
2015
US $000
2014
US $000
Livermore Investments Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2015
Investment income
Interest and dividend income
Investment property income
Loss on investments
Gross profit
Other income
Note
23
24
25
25,675
5,227
(26,136)
4,766
35
Administrative expenses
26
(5,155)
Operating (loss) /profit
Finance costs
Finance income
(Loss) / profit before taxation
Taxation charge
(354)
(2,454)
-
(2,808)
(1,951)
27
27
28
26,619
5,159
(9,885)
21,893
462
(7,219)
15,136
(7,286)
109
7,959
(755)
(Loss) / profit for the year
(4,759)
7,204
Earnings per share
Basic and diluted earnings per share ( US $)
29
(0 02)
0 04
The profit for the year is wholly attributable to the owners of the parent
The notes on pages 34 to 83 form part of these consolidated financial statements
28
Annual Report 2015
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2015
Note
2015
US $000
2014
US $000
(4,759)
7,204
(Loss) / profit for the year
Other comprehensive income:
Items that will be reclassified subsequently to the profit or loss
• Available for sale financial assets – fair value losses
•
Foreign exchange losses from translation of subsidiaries
Reclassification to profit or loss
Available for sale financial assets
• Reclassification to profit or loss due to disposals
• Reclassification to profit or loss due to impairment
25
25
Total comprehensive income for the year
(34,906)
(17,128)
(314)
(626)
(39,979)
(10,550)
3,459
31,726
35,185
(4,794)
(1,709)
8,861
7,152
(3,398)
The total comprehensive income for the year is wholly attributable to the owners of the parent
The notes on pages 34 to 83 form part of these consolidated financial statements
29
Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2015
Note
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
25
25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
215,499 (36,902)
5,777
(788)
8,550
(23,765)
168,371
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,999)
(4,999)
(4,999)
(4,999)
7,204
7,204
(17,128)
-
(17,128)
(1,709)
8,861
-
-
(1,709)
8,861
(626)
-
-
(626)
(626)
(9,976)
7,204
(3,398)
215,499 (36,902)
5,777
(1,414)
(1,426)
(21,560)
159,974
-
-
-
-
-
(1,544)
-
-
(1,544)
-
-
-
(271)
(271)
-
-
-
-
-
-
-
-
-
-
-
-
(1,544)
(4,999)
(4,999)
271
-
(4,728)
(6,543)
(4,759)
(4,759)
Balance at 1 January 2014
Dividends
Transactions with owners
Profit 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
impairment
Foreign exchange gains
arising from translation of
subsidiaries
Total comprehensive
income for the year
Balance at 31 December
2014
Purchase of own shares
Dividends
Transfer on expiry of options
Transactions with owners
Loss for the year
30
Annual Report 2015 Note
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
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
impairment
Foreign exchange gains
arising from translation of
subsidiaries
Total comprehensive
income for the year
Balance at 31 December
2015
25
25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(34,906)
3,459
31,726
(314)
-
-
-
-
-
(34,906)
3,459
31,726
(314)
(314)
279
(4,759
(4,794)
215,499 (38,446)
5,506
(1,728)
(1,147)
(31,047)
148,637
The notes on pages 34 to 83 form part of these consolidated financial statements.
31
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2015
Cash flows from operating activities
(Loss) / profit before tax
(2,808)
7,959
Note
2015
US $000
2014
US $000
Adjustments for
Depreciation
Provision charge
Interest expense
Interest and dividend income
Loss on investments
Exchange differences
Changes in working capital
Increase in trade and other receivables
Decrease in trade and other payables
Cash flows from operations
Interest and dividends received
Settlement of litigation
Tax paid
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Acquisition of investments
Proceeds from sale of investments
Settlement of derivative
Acquisition of associate
Capital return of associate
Capital return of joint venture
Net cash used for investing activities
3
31
27
23
25
27
9
16
513
1,607
(25,675)
26,136
723
512
17,164
959
18,635
25,969
-
(216)
44,388
-
(32,415)
13,679
2,332
(7,500)
8,183
-
(15,721)
13
-
3,780
(26,619)
9,885
3,506
(1,476)
(16,292)
(1,050)
(18,818)
25,773
(26)
(167)
6,762
(32)
(27,340)
33,262
-
-
5,000
10,890
32
Annual Report 2015 Cash flows from financing activities
Purchase of own shares
Proceeds from bank loans
Repayments of bank loans
Interest paid
Dividends paid
Net cash used for financing activities
Net increase / (decrease) 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
2015
US $000
2014
US $000
14
(1,544)
78,610
-
7,242
(79,751)
(11,547)
(1,731)
(4,999)
(9,415)
19,252
(6,548)
(124)
(18)
(3,884)
(4,999)
(13,188)
4,464
(11,038)
93
(67)
Cash and cash equivalents at the end of the year
13
12,562
(6,548)
The notes on pages 34 to 83 form part of these consolidated financial statements
33
Notes on the Financial Statements
1 General Information
Incorporation, principal activity and status of the Company
1 1 The Company was incorporated as an international business company and registered in the
British Virgin Islands (BVI) on 2 January 2002 under IBC Number 475668 with the name
Clevedon Services Limited The liability of the members of the Company is limited
1 2 The Company changed its name to Empire Online Limited on 5 May 2005 and then to
Livermore Investments Group Limited on 28 February 2007
1 3 The principal activity of the Group changed to investment activities 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 of the Company is located at Trident Chambers, PO Box 146, Road
Town, Tortola, British Virgin Islands
2 Accounting Policies
The significant accounting policies applied in the preparation of the consolidated financial
statements are as follows:
2 1 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:
•
Financial instruments at fair value through profit or loss (including derivatives) are
measured at fair value
Available- for- sale financial assets are measured at fair value
Investment property is measured at fair value
Investments in associates and joint ventures are 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
2 2 Adoption of new and revised IFRS
As from 1 January 2015, the Group adopted all the new or revised IFRS and relevant
amendments which became effective and also were endorsed by the European Union, and
are relevant to its operations
The adoption of the above did not have a material effect on the consolidated financial
statements
All IFRS issued by the International Accounting Standards Board (IASB) which are
effective for the year ended 31 December 2015, have been adopted by the EU through
34
Annual Report 2015
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
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, or have not yet been endorsed by the EU, for the year ended 31 December 2015:
IFRS 9: “Financial Instruments”
IFRS 14: “Regulatory Deferral Accounts”
IFRS 15: “Revenue from Contracts with Customers”
IFRS 16: “Leases”
Annual Improvements to IFRS 2012–2014 Cycle
Amendment to IFRS 10, IFRS 12, and IAS 28:
“Investment Entities: Applying the Consolidation
Exception”
Amendment to IFRS 10, and IAS 28: “Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture”
“Accounting
Amendment
Acquisitions of Interests in Joint Operations”
IFRS 11:
to
for
Amendment to IAS 1: “Disclosure Initiative”
Amendment to IAS 7: “Disclosure Initiative”
Amendment to IAS 12: “Recognition of Deferred
Tax Assets for Unrealised Losses”
Amendment to IAS 16 and IAS 38: “Clarification
of Acceptable Methods of Depreciation and
Amortisation”
Amendments to IAS 16 and IAS 41: “Bearer Plants”
Amendment to IAS 27: “Equity Method in Separate
Financial Statements”
Endorsed by
the EU
No
No
No
No
Yes
No
Effective for annual
periods beginning
on or after
1 January 2018
1 January 2016
1 January 2018
1 January 2019
1 January 2016
1 January 2016
No
to be determined
Yes
Yes
No
No
Yes
Yes
Yes
1 January 2016
1 January 2016
1 January 2017
1 January 2017
1 January 2016
1 January 2016
1 January 2016
The Board of Directors expects that when the above Standards or Interpretations become
35
effective in future periods, they will not have a material effect on the consolidated financial
statements, other than for IFRS 9
IFRS 9 ‘’Financial Instruments’’ replaces IAS 39 ‘’Financial Instruments: Recognition and
Measurement’’ The new standard introduces extensive changes to IAS 39’s guidance on the
classification and measurement of financial assets and introduces a new ‘expected credit
loss’ model for the impairment of financial assets IFRS 9 also provides new guidance on
the application of hedge accounting
Management is not yet in a position to provide quantified information regarding the impact
of IFRS 9 At this stage the main areas of expected impact are as follows:
•
the classification and measurement of the Company’s financial assets will need to be
reviewed based on the new criteria that consider the assets’ contractual cash flows and
the business model in which they are managed
an expected credit loss based impairment will need to be recognised on the Company’s
financial assets at amortised cost and any investments in debt type assets, unless
classified as at fair value through profit or loss in accordance with the new criteria
•
2 3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and all of its subsidiaries Control is achieved where the Company is exposed, or has right,
to variable returns from its involvement with a subsidiary and has the ability to affect
those returns through its power over the subsidiary
The financial statements 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 subsidiaries
have a reporting date of 31 December
All intra-group transactions, balances, income and expenses are eliminated on consolidation
The results and cash flows of any 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
2 4
Investments in associates and joint ventures
An associate is an entity over which the Group is able to exert significant influence but not
control
A joint venture is an arrangement that the Group controls jointly with one or more other
investors, and over which the Group has rights to a share of the arrangement’s net assets
rather than direct rights to underlying assets and obligations for underlying liabilities
Investments in associates and joint ventures are measured at fair value through profit or
loss in accordance with IAS 39, based on the exemption available by IAS 28 “Investments in
Associates and Joint Ventures” for entities that are venture capital organisations or similar entities
2 5 Current assets are those which, in accordance with IAS 1 Presentation Of Financial
36
Annual Report 2015
Statements are:
• expected to be realised within normal operating cycle, via sale or consumption, or
• held primarily for trading, or
• expected to be realised within 12 months from the reporting date, or
• cash and cash equivalent not restricted in their use
• All other assets are non-current
All other assets are non-current
2 6
Investment property income
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 becomes 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
2 7
Interest and dividend income
•
•
Interest income is recognised based on the effective interest method
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
2 8 Foreign currency
The individual financialstatements 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 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 upon initial recognition using exchange rates prevailing at the
dates of the transactions Non-monetary assets that are measured in terms of historical
cost in foreign currency are not re-translated
Gains and losses arising on the settlement of monetary items and on the re-translation
of monetary items are included in the profit or loss for the year Those that arise on
the re-translation of non-monetary items carried at fair value are included in the profit
or loss of the year except for differences arising on the re-translation of non-monetary
available-for-sale financial assets 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:
37
i
ii
assets and liabilities are translated at the closing rate at the reporting date; and
income and expenses and also cash flows 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 the items are
translated at the rates prevailing at the dates of the transactions); and
iii exchange differences arising are recognised in other comprehensive income within
the translation reserve Such translation exchange differences are reclassified to
profit or loss in the period in which the foreign operation is disposed of
2 9 Taxation
Current tax is the tax currently payable based on taxable profit for the yearin accordance
with the tax laws applicable in jurisdictions where the Group operates
Deferred taxes are calculated using the liability method on temporary differences Deferred
tax is generally provided on the difference between the carrying amounts of assets
and liabilities and their tax bases However, deferred tax is not provided on the initial
recognition of goodwill, nor on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting profit Deferred
tax on temporary differences associated with shares in subsidiaries and joint ventures is
not provided if reversal of these temporary differences can be controlled by the 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 as at
the reporting date
Changes in deferred tax assets or liabilities are recognised as a component of tax expense
within profit or loss, except where they relate to items that are charged or credited directly
to equity in which case the related deferred tax is also charged or credited directly to equity
2 10 Investment property
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 valuer
2 11 Equity instruments
Equity instruments issued by the Company are recorded at proceeds received, net of direct issue costs
38
Annual Report 2015
Own equity instruments purchased by the Company or its subsidiaries are recorded at the consideration
paid, including directly associated assets, and they are deducted from total equity as treasury shares
until they are sold or cancelled Where such shares are subsequently sold, any consideration received
is included 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
2 12 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 The fair value
of share-based payments to employees at grant date is measured using the Binomial pricing
model
The fair value determined at the grant date is expensed on a straight-line basis over the
vesting period, based on the 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 of the options any related amounts recognised in the share option reserve are
transferred to share premium
On lapse of the options any related amounts recognised in the share option reserve are
transferred to retained earnings
2 13 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 until such time as the assets are
substantially ready for their intended use or sale All other borrowing costs are expensed
in the period in which they are incurred and reported within “finance costs”
No borrowing costs have been capitalised for either 2015 or 2014
2 14 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
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
39
financial assets 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 also described below
Loans and receivables
• Trade and other receivables
Trade and other receivables are initially recognised at theirfair value which normally is
their original transaction value, and are subsequently measured at their amortised cost
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 discounted to present value
• Cash and cash equivalents
Cash comprises cash in hand and on demand deposits with banks Cash equivalents are
short term, highly liquid investments that are readily convertible to known amounts of cash
They include unrestricted short-term bank deposits originally purchased with maturities of
three months or less
Bank overdrafts are considered to be a component of cash and cash equivalents, since they
form an integral part of the Group’s cash management
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 transaction costs are recognised in profit or loss
when incurred
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, within the investments revaluation
reserve Unquoted equity investments for which the fair value cannot be reliably measured
are stated at cost less impairment Gains 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 financial assets, the cumulative 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
40
Annual Report 2015
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, following the
IAS 39 guidance
2 15 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 transaction costs, except for
financial liabilities carried at fair value through profit or loss, which are measured initially
at fair value
Financial liabilities at amortised cost
After initial recognition financial liabilities are measured at amortised cost using the
effective interest rate method
Derivative financial liabilities
The Group’s financial liabilities also include financial derivative instruments
All derivative financial instruments which are not designated as hedging instruments are
measured at fair value through profit or loss
2 16 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will be required
to settle the obligation, and a reliable estimate of the amount can be made Where the
Company expects a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is
virtually certain
No provision is made for possible claims or where an obligation exists but it is not possible
to make a reliable estimate
Costs associated with claims made by the Group are charged to the profit or loss as they
are incurred
2 17 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
41
2 18 Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates and requires management to exercise its judgement in the
process of applying the Group’s accounting policies It also requires the use of assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting period Although these estimates
are based on management’s best knowledge of current events and actions, actual results
may ultimately differ from those estimates
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances
Impairment of available-for-sale financial assets
Critical accounting judgments
i
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 Group
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 management regards a fall in fair value below cost
of 30% or more, or for 12 months or more, to be significant
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
Classification of financial assets
ii
The Management exercises significant
in determining the appropriate
classification of the financial assets of the Group, especially for its investments and the
identification of any embedded derivatives The factors considered include the contractual
terms and characteristics which are very carefully examined, and also the Group’s intentions
and expected needs for the realisation of the financial assets
judgement
Investments in loan markets through CLOs are classified as available-for-sale All other
investmentsare classified as at fair value through profit or loss upon initial recognition,
because this reflects more fairly 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
42
Annual Report 2015
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
Deferred tax assets
iii
The tax rules applicable for the relevant Company’s operations are carefully taken into
consideration for the recognition of a deferred tax asset If a positive forecast of taxable
income indicates the probable use of a deferred tax asset, especially when it can be utilised
without a time limit, that deferred tax asset is usually recognised in full The recognition
of deferred tax assets that are subject to certain legal or economic limits or uncertainties
is assessed individually by management based on the specific facts and circumstances
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
i
Management uses valuation techniques in measuring the fair value of financial instruments,
where active market quotes are not available Details of the bases used for financial assets
and liabilities are disclosed in note 7 In applying the valuation techniques management
makes maximum use of market inputs, and uses estimates and assumptions that are, as
far as possible, consistent with observable data that market participants would use in
pricing the instrument Where applicable data is not observable, 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
Refer also to note 4 for estimation uncertainty over the fair value determination of the
investment in SRS Charminar
Fair value of investment property
ii
Investment property is stated at fair value The fair valuation is based on discounted
cash-flow (DCF) method Under this method, the current market value of the property
is determined as the total of all projected future net earnings (before interest, taxes,
depreciation and amortization) discounted to present-day equivalents These net earnings
are discounted individually for property with due allowance for specific opportunities and
threats, and with adjustment in line with market conditions and risks A one-period DCF
model was adopted under which the valuation period extends for 100 years from the
valuation date, with an implicit residual value in the 11th period Discounting is based on
a risk-adjusted interest rate and a gross yield determined individually for each property on
the basis of appropriate benchmarks derived from arm’s-length transactions The weighted
average discount rate used is 4 09% and the weighted average gross yield used is 4 68%
The valuations assume 1% annual inflation for income and all expenditure
Further details are disclosed in note 8.
43
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 2014
377
176
113
Additions
Disposals
As at 1 January 2015
Additions
-
-
377
-
-
-
176
-
As at 31 December 2015
377
176
-
-
113
-
113
26
32
(26)
32
-
692
32
(26)
698
-
32
698
Accumulated
depreciation
As at 1 January 2014
(377)
(164)
(102)
(26)
Charge for the year
On disposals
-
-
As at 1 January 2015
(377)
Charge for the year
-
As at 31 December 2015
(377)
Net book value
As at 31 December 2015
As at 31 December 2014
-
-
(8)
-
(172)
(4)
(176)
-
4
(5)
-
(107)
(3)
(110)
3
6
-
26
-
(9)
(9)
23
32
(669)
(13)
26
(656)
(16)
(672)
26
42
4 Available-for-sale financial assets
Non-current assets
Fixed income investments (CLO Income Notes)
Private equities
Financial and minority holdings
2015
US $000
2014
US $000
65,946
5,295
7,223
82,217
7,891
9,266
44
Annual Report 2015
Current assets
Public equity investments
Hedge funds
78,464
99,374
1,619
1,064
2,683
1,491
1,070
2,561
For description of each of the above categories, refer to note6
The Group treats its investments in the loan market through CLOs as non-current investments
as the Group generally intends to hold such investments over a longer period
During 2015, due to market conditions, management considered the impairment of certain
available-for-sale financial assets Impairment testing indicated that for those financial assets
their carrying amount may not be recoverable
The related impairment charges in 2015, of USD 31 726m (2014 USD 8 861m), are included
within loss on investments (note 25),and represent impairment losses arising due to:
Significant fall in value
Prolonged fall in value
Significant and prolonged fall in value
Investment in SRS Charminar
2015
US $000
11,119
1,490
19,117
31,726
2014
US $000
5,693
1,328
1,840
8,861
Included in the Financial and minority holdings is the investment in SRS Charminar
Investments Ltd (“SRS Charminar”), a private company incorporated in the Republic of
Mauritius Livermore invested USD 20m in SRS Charminar acquiring a 15% ownership stake
SRS Charminar through its wholly owned subsidiaries invested INR 5 2b (USD 132 1m at date
of investment) which is equivalent to USD 82 5m as at 31 December 2014 (2013: 83m) in a
real estate company in India (“investee company”)
In 2009, the promoters of the investee company were arrested on charges of criminal
conspiracy, cheating, and misappropriation of funds Later it was discovered that the investee
company had breached the terms of the investment agreement resulting in a default
On January 13, 2011 the Company Law Board (“CLB”) passed an order and allowed
Infrastructure Leasing & Financial Services Limited (“IL&FS”) to become an 80% shareholder
and control the management of the company
SRS Charminar and other investors have agreed to a settlement with IL&FS wherein the
settlement amount will be paid in four tranches over five years The last two tranches are not
guaranteed by IL&FS and the significant uncertainty of these payments has been considered
45
in the discount rates used of 35% and 30% respectively in contrast to the 8% used for
discounting the first two tranches Also, all regulatory and court approvals were received and
the effective date of the settlement was fixed
The Group received the first tranche of USD 2 9m in late 2015 The carrying amount of the
investment is based on discounted expected cash flows and was USD 7 1m (2014: USD 9 1m),
which represents its estimated fair value SRS Charminar’s only holding is its investment in
the investee company (through its wholly owned subsidiaries) and thus its fair value is wholly
attributable to the above mentioned investment
Also included in Private equities is the investment in SRS Private Investments, L P (“SRS
Private”) with a carrying amount at reporting date of USD 1 7m (2014: USD 3 7m) which is
based on a net asset valuation (NAV) SRS Private through a fund has invested in various real
estate projects in India as well as in SRS Charminar, and its investment in SRS Charminar as at
31 December 2015 amounts approximately to 20% (2014: 17%) of its net assets
5 Financial assets 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
Other investments
2015
US $000
2014
US $000
330
1,203
1,533
6,655
1,613
-
-
8,268
330
1,476
1,806
1,623
1,717
65
299
3,704
For description of each of the above categories, refer to note 6
6 Financial assets at fair value
The Group allocates its non-derivative financial assets at fair value (notes 4 and 5) as follows:
•
•
•
Fixed income investments relate to fixed and floating rate bonds, perpetual bank debt,
and investments in the loan market through CLOs
Private equities relate to investmentsin both high growth opportunities in emerging
markets and deep value opportunities in mature markets The company generally invests
directly in prospects where it can exert significant influence
Financial and minority holdings relate to significant investments (of over USD 5m)
which are strategic for the Company and are done in the form of equity purchases or
convertible loans Main investments under this category are in the fields of real estate
46
Annual Report 2015
•
•
•
•
Hedge funds relate to investments in funds managed by sophisticated investment
managers that pursue investment strategies with the goal of generating absolute returns
Public equity investments relate to investments in shares of companies listed on public
stock exchanges
Real estate entities relate to investments in real estate projects
Other investments are investments not otherwise included in the categories above
7 Fair value measurements of financial assets and liabilities
The following table presents financial assets measured at fair value in the consolidated
statement of financial position in accordance with the fair value hierarchy This hierarchy
groups financial assets and liabilities into three levels based on the significance of inputs
used in measuring the fair value of the financial assets and liabilities The fair value hierarchy
has thefollowing levels:
•
•
•
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date;
Level 2: inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly;and
Level 3: unobservable inputs for the asset or liability
The level within which the financial asset is classified is determined based on thelowest level
of significant input to the fair value measurement
Valuation of financial assets and liabilities
•
Income
Investments, and Public Equity
Investments are valued per
Fixed
their closing market prices on quoted exchanges, or as quoted by market
maker
that have not yet been
converted to CLOs, are valued based on an adjusted net asset valuation
in open warehouse
Investments
facilities
the CLOs based on
The Group values
reports provided by
market makers CLOs are typically valued by market makers using discounted
include
cash
default and recovery rates, prepayment rates and reinvestment assumptions
loans) of the CLOs
on the underlying portfolios
flow models The key assumptions
(typically senior secured
flow projections
the valuation
for cash
Default and recovery rates: The amount and timing of defaults in the underlying
collateral and the amount and timing of recovery upon a default affect are key to
the future cash flows a CLO will distribute to the CLO equity tranche All else equal,
higher default rates and lower recovery rates typically lead to lower cash flows
Conversely, lower default rates and higher recoveries lead to higher cash flows
Prepayment rates: Senior loans can be pre-paid by borrowers CLOs that are
within their reinvestment period may, subject to certain conditions, reinvest such
prepayments into other loanswhich may have different spreads and maturities CLOs
that are beyond their reinvestment period typically pay down their senior liabilities
47
from proceeds of such pre-payments Therefore the rate at which the underlying
collateral prepays impacts the future cash flows that the CLO may generate
Reinvestment assumptions: A CLO within its reinvestment period may reinvest proceeds
from loan maturities, prepayments, and recoveries into purchasing additional loans
The reinvestment assumptions define the characteristics of the loans that a CLO may
reinvest in These assumptions include the spreads, maturities, and prices of such loans
Reinvestment into loans with higher spreads and lower prices will lead to higher cash
flows Reinvestment into loans with lower spreads will typically lead to lower cash flows
Discount rate: The discount rate indicates the yield that market participants expect to
receive and is used to discount the projected future cash flows Higher yield expectations or
discount rates lead to lower prices and lower discount rates lead to higher prices for CLOs
•
•
•
•
•
Private Equities are valued using market valuation techniques as determined by the
Directors, mainly on the basis of discounted cash flow techniquesor valuations reported
by third-party managers of such investments
Financial and Minority holdingsare valued using market valuation techniques as
determined by the Directors, mainly on the basis of discounted cash flow techniquesor
valuations reported by third-party managers of such investments
Hedge Funds are valued per reports provided by the funds on a periodic basis, and if
traded, per their closing bid market prices on quoted exchanges, or as quoted by market
maker
Real Estates entities are valued by independent qualified property valuers with
substantial relevant experience on such investments Underlying property values are
determined based on their estimated market values
Derivative instruments are valued at fair value as provided by counter parties (banks)
of the derivative agreement
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:
2015
US
$000
Level 1
2015
US
$000
Level 2
2015
US
$000
Level 3
2015
US
$000
Total
2014
US
$000
Level 1
2014
US
$000
Level 2
2014
US
$000
Level 3
2014
US
$000
Total
Assets
Fixed income
investments
Private equities
Financial and minority
holdings
-
-
Public equity investments
3,232
1,634
65,946
5,021
72,601
1,623
82,217
-
83,840
-
-
-
5,625
5,625
7,223
7,223
-
-
-
3,232
3,208
-
-
-
8,221
8,221
9,266
9,266
-
3,208
48
Annual Report 2015
Hedge funds
Real estate entities
Investment in
associate and joint
venture
Other investments
Total return swaps
Liabilities
Forward contract
-
-
-
-
-
1,064
-
-
-
-
-
1,203
1,064
1,203
-
-
-
-
-
-
-
-
-
299
-
1,135
-
-
-
-
-
1,476
1,135
1,476
-
-
-
299
1,125
1,125
4,866
67,010
19,072
90,948
5,130
83,352
20,088
108,570
-
-
217
217
-
-
217
217
-
-
-
-
-
-
-
-
The methods and valuation techniques used for the purpose of measuring fair value
areunchanged compared to the previous reporting period
No financial assets or liabilities have been transferred between levels
49
Financial assets within level 3 can be reconciled from beginning to ending balances as follows:
Available-
for-sale
At fair
value through
profit or loss
Derivative
financial
instruments
Financial
and
minority
holdings
US $000
Private
equities
US $000
Other
investments
US $000
Real
estate
US $000
Private
equities
US $000
Fixed
Income
investments
US $000
Total
return
swap
Total
US
$000
9,068
9,081
-
-
323
(1,470)
2
-
-
198
(43)
(2)
1,588
-
68
-
-
-
-
(180)
569
-
(239)
-
-
-
-
-
-
-
20,308
323
-
-
-
1,125
(516)
-
-
153
(180)
As at 1 January
2014
Purchases
(Losses) / gains
recognised in:
• Profit or loss
• Other
comprehensive
income
Exchange
difference
As at 1 January
2015
Purchases
Settlement
(Losses) / gains
recognised in:
9,266
7,891
-
-
-
(59)
-
• Profit or loss
(2,043)
(2,134)
• Other
comprehensive
income
Exchange
difference
-
-
(403)
-
As at 31 December
2015
7,223
5,295
-
-
-
-
-
-
1,476
330
-
1,125
20,088
-
-
104
-
(377)
-
-
-
-
-
5,000
-
5,000
-
(1,332)
(1,391)
21
207
(3,845)
-
-
-
-
(403)
(377)
1,203
330
5,021
-
19,072
50
Annual Report 2015
The above gains and losses recognised can be allocated as follows:
Available-
for-sale
At fair
value through
profit or loss
Derivative
financial
instruments
Financial
and
minority
holdings
US $000
Private
equities
US $000
Other
investments
US $000
Real estate
US $000
Private
equities
US $000
Fixed
Income
investments
US $000
Total
return
swap
Total
US
$000
2014
Profit or loss
•
Financial assets
held at year-end
Other comprehensive
income
•
Financial assets
held at year-end
-
-
(1,470)
(1,470)
198
198
(43)
(43)
Total gains / (losses)
for 2014
198
(1,513)
2015
Profit or loss
•
•
Financial assets
held at year-end
Financial assets
not held at year-
end
Other comprehensive
income
•
Financial assets
held at year-end
(2,043)
(2,134)
-
-
(2,043)
(2,134)
-
-
(403)
(403)
Total gains / (losses)
for 2015
(2,043)
(2,537)
-
-
(2)
(2)
(2)
-
-
-
-
-
-
68
68
-
-
(239)
(239)
-
-
68
(239)
104
-
104
-
-
104
-
-
-
-
-
-
-
-
-
-
-
21
-
21
-
-
21
1,125
1,125
(516)
(516)
-
-
153
153
1,125
(363)
-
(4,052)
207
207
207
(3,845)
-
-
(403)
(403)
207
(4,248)
51
The Group has not developed any quantitative unobservable inputs for measuring the fair
value of its level 3 financial assets at 31 December 2015 and 2014 Instead the Group used
prices from third-party pricing information without adjustment
A reasonable change in any individual significant input used in the level 3 valuations is not
anticipated to have a significant change in fair values as above
8
Investment property
Valuation as at 1 January
Fair value gain (note 25)
Exchange difference
As at 31 December
2015
US $000
116,609
7,819
(1,104)
123,324
2014
US $000
129,916
61
(13,368)
116,609
The investment property relates to Wyler Park property in Bern, Switzerland, which is used for
earning rental income The Group has no restriction on the realizability of the property or the
remittance of income and any proceeds of disposal
Wyler Park investment property loan (note 17) is secured on the property itself
Fair valuation
The investment property is the Group’s only non-financial asset measured at fair value on a
recurring basis, and its fair value is classified within the fair value hierarchy as level 3
The investment property was valued by the independent professional valuers Wüest & Partners
as at 31 December 2015 and 2014 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 The investment property is revaluedannually on 31
December
The significant inputs and assumptions are developed in close consultation with management
The valuation processes and fair value changes are reviewed by the Board of Directors at each
reporting date
The fair values of investment property are estimated using the discounted cash-flow (DCF)
method With this method, the current market value of a property is determined as the total
of all projected future net earnings (before interest, taxes, depreciation and amortization)
discounted to present-day equivalents These net earnings are discounted individually for
each property with due allowance for specific opportunities and threats, and with adjustment
in line with market conditions and risks All projected cash flows are presented to ensure
maximum transparency
The valuations are based on the following assumptions:
52
Annual Report 2015
• The property has been appraised as continuation scenario That means, that no change
of use scenarios have been calculated as well that would result to a higher value
• A one-period DCF model was adopted The valuation period extends for 100 years from
the valuation date, with an implicit residual value in the 11th period
• Discounting is based on a risk-adjusted interest rate Rates are determined on the
basis of appropriate benchmarks derived from arm’s-length transactions These are
broken down as follows: risk-free interest rate + property risk (immobility of capital) +
premium for macro location + premium for micro-location depending on use + premium
for property quality and income risk + any other specific premiums
• The valuations assume 1% annual inflation for income and all expenditure Where a
nominal discount rate is applied, this is adjusted accordingly
• Credit risks posed by specific tenants are not explicitly factored into the valuation
• Allowance is made for the specific indexing provisions in existing leases An indexing
factor of 80% (Swiss average) is assumed for the period following lease expiry
• For existing tenancies, the timing of individual payments is assumed to comply with
the terms of the lease
• Following lease expiry, cash flows for commercial premises are taken to be quarterly in
•
advance, for housing monthly in advance
In terms of running costs, entirely separate service charge accounts are assumed, with
no tenancy-related ancillary costs to be borne by the owner
• The maintenance (repair and upkeep) costs were calculated by means of a lifecycle
analysis of the individual building elements The building structure’s remaining lifespan
was estimated and periodic refurbishments modelled on the basis of the general
condition of the fabric as determined during the property inspection
Appropriate annual reserves were calculated accordingly and plausibility tested using
comparables and Wüest & Partner’s own benchmarks The calculation factors in 100% of
repair costs in the first 10 years; the proportion applied from year 11 onwards is limited to the
value-preserving investments (recoverable share)
The valuations are sensitive to the above inputs, all of which are unobservable
Future rental income
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
2015
US $000
5,629
23,050
36,879
65,558
2014
US $000
5,923
21,186
-
27,109
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 2015and 31 December 2014 respectively
53
9
Investments in associate and joint venture
As at 1 January
Additions
Capital return
Fair value (loss) / gain
As at 31 December
2015
US $000
-
7,500
(8,183)
683
-
Name of
investee
Type of
investment
Place of
incorporation
Principal
activity
Proportion of
voting rights
held
Silvermore Ltd
Joint
venture
Cayman
Islands
Investment
holding
(dormant)
50%
2014
US $000
5,524
-
(5,000)
(524)
-
Fair value
2015
US
$000
2014
US
$000
-
-
-
-
As at 31 December 2014 Silvermore had ceased to be a contractual party to a Total Return
Swap (ISDA) agreement with Citibank N A and had no other assets or liabilities Silvermore
Ltd is dormant since January 2015
During the year, the Group invested in a 25% interest in Highbridge Loan Management
Warehouse 7-2015 Ltd (a company incorporated in Cayman Islands), through its subsidiary
Mountview Holdings Ltd, until Highbridge was converted into a CLO After the conversion into
a CLO the entity ceased to be an associate of the Group
54
Annual Report 2015
10 Details of subsidiaries
Details of the investments in which the Group has a controlling interest are as follows:
Name of Subsidiary
Place of
incorporation
Holding
Proportion of
voting rights
and shares
held
Livermore Properties
Limited
Mountview Holdings
Limited
British Virgin
Islands
British Virgin
Islands
Ordinary shares
100%
Principal activity
Holding of
investments
Ordinary shares
100%
Investment vehicle
Silvermore 2 Ltd
Cayman Islands Ordinary shares
100%
Investment vehicle
(Dormant)
Sycamore Loan Strategies
Ltd
Cayman Islands Ordinary shares
100%
Investment vehicle
Sycamore Loan Funding Ltd
Cayman Islands Ordinary shares
100%
Investment vehicle
Livermore Israel
Investments Ltd
Israel
Ordinary shares
100%
Livermore Capital AG
Switzerland
Ordinary shares
100%
Livermore Investments AG*
Switzerland
Ordinary shares
100%
Enaxor S a r l
Luxembourg
Ordinary shares
100%
Livermore Investments
Cyprus Limited
Cyprus
Ordinary shares
100%
Sandhirst Limited*
Cyprus
Ordinary shares
100%
Holding of
investments
Administration
services
Real Estate owner
and management
Holding of
investment
Administration
services
Holding of
investments
* Held by Enaxor S a r l
Silvermore 2 Ltd was dissolved in 2016
Blackline Investments Inc was dissolved during the year
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, in
Switzerland
The deferred tax shown in the consolidated statement of financial position relates to the
following items:
55
2015
US $000
2014
US $000
Investment property
– revaluation surplus
Derivative financial instruments
– recognised carrying amount
Tax losses
Net deferred tax (liability)
(6,362)
-
2,425
(3,937)
(5,805)
47
3,486
(2,272)
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
As at 1 January 2014
(5,845)
344
3,545
(1,956)
(Charged) / credited to
profit or loss (note 28)
•
timing differences
Exchange difference
(329)
369
(294)
(3)
166
(225)
(457)
141
As at 1 January 2015
(5,805)
47
3,486
(2,272)
(Charged) / credited to
profit or loss (note28)
•
timing differences
Exchange difference
(895)
338
As at 31 December 2015
(6,362)
(46)
(1)
-
(913)
(148)
(1,854)
189
2,425
(3,937)
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 2015 and 2014 there is no unrecognised deferred tax asset
56
Annual Report 2015
12 Trade and other receivables
2015
US $000
2014
US $000
Financial items
Accrued interest and dividend
income
Amounts due by related parties
(note 30)
Other receivables
Non-Financial items
Other assets (note 30)
Prepayments
Allocated as:
Current assets
Non-current assets (other assets
– note 30)
304
2,514
272
3,090
2,256
272
5,618
4,490
1,128
5,618
514
2,497
16,757
19,768
3,384
276
23,428
20,890
2,538
23,428
Other receivables at 31 December 2014 include:
a
b
an amount of USD 15m that the Company invested during the period in the first
loss tranche of a warehouse facility for accumulating loans with the intention to
transfer these loans to a CLO In December 2014, the said CLO was priced and the
loans accumulated in the warehouse were agreed to be transferred at purchase
price to the CLO on 10 January, 2015 Consequently, Livermore’s investment
amount plus net carry earned became receivable as of the end of December
2014 On 16 January 2015Livermore received a net amount of USD 16 3m
an amount of USD 1m that the Company invested during the period in the first
loss tranche of a warehouse facility for accumulating loans with the intention to
transfer these loans to a CLO In December 2014, the said CLO was priced and the
loans accumulated in the warehouse were agreed to be transferred at purchase
price to the CLO on 15 January, 2015 Consequently, Livermore’s investment amount
plus net carry earned became receivable as of the end of December 2014 On 16
January 2015Livermore received a net amount of USD 1 039m
57
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
2015
US $000
2014
US $000
25,770
3,807
Bank overdrafts used for cash management purposes
(13,208)
(10,355)
Cash and cash equivalents for the purposes of the
consolidated statement of cash flows
12,562
(6,548)
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 2014 and 31 December 2015
304,120,401
215,499
Treasury shares
As at 1 January 2014
As at 1 January 2015
Additions
Number of
shares
108,830,818
US $000
36,902
108,830,818
3,000,000
36,902
1,544
As at 31 December 2015
111,830,818
38,446
58
Annual Report 2015
In the consolidated statement of financial position the amount included comprises of:
Share premium
Treasury shares
2015
US $000
215,499
(38,446)
177,053
2014
US $000
215,499
(36,902)
178,597
15 Share options
The Company has a share option scheme for acquiring ordinary shares of the Company
Outstanding options
As at1 January 2014 and 31
December 2014
Options expired
As at 31 December 2015
Exercisable options
As at 31 December 2014 and 31
December 2015
Options expired
As at 31 December 2015
Number of
options
11,340,000
(690,000)
10,650,000
Number of
options
11,340,000
(690,000)
10,650,000
Average
exercise price
GBP
Average exercise
price* USD
0 75
0 71
0 76
1 18
1 05
1 12
Average
exercise price
GBP
Average exercise
price* USD
0 75
0 71
0 76
1 18
1 05
1 12
Details of share options outstanding at 31 December 2015
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
3,383,334
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
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
166,666
13/05/08
13/05/11
13/05/11
13/05/18
0 30
1 15
1 15
1 15
0 44
0 44
0 44
10,650,000
1,608,710
1,824,133
2,001,774
21,703
24,115
25,820
5,506,255
59
The fair value of options granted to employees was determined using the Binomial valuation
model The model takes into account a volatility rate of 41-45% calculated using the
historical volatility of a peer group of similar companies and a risk free interest rate of 4 0-
4 4% and it has been assumed the options have an expected life of two years post date of vesting
The options lapse at the earliest of the expiry date of exercise period or the termination of the
corresponding employee’s service
* 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 2015
16 Derivative financial instruments
Current assets
Total return swap
Current liabilities
Forward contract
2015
US $000
-
217
2014
US $000
1,125
-
Forward contracts
The Group uses forward foreign exchange contracts to mitigate exchange rate exposure arising
from forecast transactions between USD and CHF As at the reporting date the outstanding
forward agreements are as follows:
Notional
contract amount
USD 5,000,000
USD 5,000,000
USD 10,000,000
USD 5,000,000
Foreign
exchange
currency
Contract
termination
date
CHF
CHF
CHF
CHF
0 9965
0 9988
1 0096
1 0234
Contract
termination date
19 February 2016
19 February 2016
19 February 2016
19 February 2016
Forward contracts are considered by the Management as economic hedge arrangements but
have not been designated as hedging instruments for accounting purposes and their fair
value changes are recognised in the profit or loss The calculation of the fair value of forward
contracts is based on the contractual cash flows of future anticipated net settlement using
the foreign exchange rates prevailing at the reporting date
During 2014 the Group used forward currency contracts; however, no such derivatives were
open at 31 December 2014
60
Annual Report 2015
Total Return Swaps
As at 31 December 2014 the Group was a contractual party to a Total Return Swap (ISDA)
agreement with Macquarie bank Based on the swap agreement the Group is entitled to
receive the total returns arising from a portfolio of loan assets (referenced assets), and is
obliged to pay interest at a floating rate on the facility amount (warehouse facility):
Referenced
assets amount
USD
300,000,000
Total returns
Facility amount
Floating rate
Maturity
date
Interest
payments, fees,
repayment
premiums
or penalties,
and other
distributions
USD
270,000,000
3M USD Libor +
1 9%
18 Sept
2015
The swap was entered as a means for accumulating loans with the intention to transfer these
loans to a CLO In December 2014, the said CLO was priced and the loans accumulated in the
warehouse were agreed to be transferred to the CLO on 10 January, 2015 Consequently, on 16
January 2015 the swap was terminated
The calculation of the fair value of the swap is based on discounted cash flows of future
anticipated interest payments compared with the discounted cash flows of anticipated total
returns receivable
For the year ended 31 December 2015 a net fair value gain of USD 990,787 (2014: gain USD
3,133,381) has been recognised in the profit or loss in relation to all derivative financial instruments
17 Bank Loans
As at 1 January
Additions
Repayment
Exchange difference
Refinancing fees
As at 31 December
Allocated as:
Current bank loans
Non-current bank loans
2015
US $000
78,092
78,822
(79,751)
(541)
(212)
76,410
1,407
75,003
76,410
2014
US $000
87,974
-
(830)
(9,052)
-
78,092
78,092
-
78,092
61
The bank loan relates to Wyler Park investment property purchase (note 8) and is secured
on this property The loan was refinanced during the year The principal amount of the loan
facility as of 31 December 2015 is CHF 76 6 million The facility is committed until at least 30
June 2019 The loan facility maybe extended up to 30 June 2029, unless terminated by either party
The loan bears interest at 3-Month CHF Libor (with a floor rate at zero) plus 1 40% margin
The effective Interest rate of the loan as at 31 December 2015 is 1 40%
18 Bank Overdrafts
Short term bank overdrafts
2015
US $000
13,208
2015
US $000
10,355
Short term bank overdrafts bear Libor + lender’s margin and have an average interest rate of
1 78% (2014 1 49%)
The Group’s bank overdraft facilities are secured by the Group’s financial assets portfolio up to
an amount, as at 31 December 2015, of USD 31 5m
The Group’s bank overdraft undrawn facilities at 31 December 2015 amount to USD 18 3m
19 Trade and other payables
2015
US $000
2014
US $000
Financial items
Trade payables
Amounts due to related parties
(note 30)
Accrued expenses
Non-Financial items
Prepayment from tenants
VAT payable
444
1,377
386
2,207
510
53
2,770
727
579
430
1,736
-
22
1,758
The Directors consider that the carrying amount of trade and other payables approximates to
their fair value All amounts fall due within one year
62
Annual Report 2015
20 Current tax (asset) / payable
Corporation Tax
21 Net asset value per share
2015
US $000
(6)
2014
US $000
5
Net asset value per share has been calculated by dividing the net assets attributable to
ordinary shareholders by the closing numberof 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 2015and 31 December 2014
Net assets attributable to ordinary shareholders
(USD 000)
2015
2014
148,637
159,974
Closing number of ordinary shares in issue
192,289,583
195,289,583
Basic net asset value per share (USD)
0 77
0 82
Net assets attributable to ordinary shareholders
(USD 000)
148,637
159,974
Dilutive share options – exercise amount
221
234
Net assets attributable to ordinary shareholders
including the effect of potentially diluted shares
(USD 000)
148,858
160,208
Closing number of ordinary shares in issue
192,289,583
195,289,583
Dilutive share options
500,000
500,000
Closing number of ordinary shares including the
effect of potentially diluted shares
192,789,583
195,789,583
Diluted net asset value per share (USD)
0 77
0 82
63
Number of Shares
Ordinary shares
Treasury shares
304,120,401
304,120,401
(111,830,818)
(108,830,818)
Closing number of ordinary shares in issue
192,289,583
195,289,583
The Share options (note 15) granted on 13 May 2008 have a dilutive effect on the net asset
value per share, given that their exercise price is lower than the net asset value per Company’s
share at 31 December 2015 and 2014 All other share options do not impact the diluted net
asset value per share for 2015 and 2014 as their exercise price was higher than the net asset
value per share at 31 December 2015 and 2014
Repurchase of own shares
The Board believes that the ability of the Company to re-purchase its own Ordinary shares
in the market may potentially benefit equity shareholders of the Company The repurchase of
Ordinary shares at a discount to the underlying net asset value enhances the net asset value
per share of the remaining equity shares
In 2015, the Company bought 3,000,000 of its Ordinary shares at an average price of USD 0 51
per share In 2014 the Company did not buy any own shares
22 Segment reporting
The Group’s monitoring and strategic decision making process in relation to its investments is
separated into two activity lines which are also identified as the Group’s operating segments
These operating segments are monitored and strategic decisions are made on the basis of
segment operating results
Segment information can be analysed as follows:
Equity and debt
instruments
investment activities
Investment
property
activities
Total per financial
statements
2015
US $000
2014
US $000
2015
US $000
2014
US $000
2015
US $000
2014
US $000
Segment results
Investment income
Interest and dividend
income
25,675
26,619
-
-
25,675
26,619
64
Annual Report 2015
Equity and debt
instruments
investment activities
Investment
property
activities
Total per financial
statements
2015
US $000
2014
US $000
2015
US $000
2014
US $000
2015
US $000
2014
US $000
-
-
5,227
5,159
5,227
5,159
(33,955)
(9,946)
7,819
61
(26,136)
(9,885)
Investment property
income
(Loss) / gain on
investments
Gross (loss) / profit
(8,280)
16,673
13,046
5,220
4,766
21,893
Other income
Administrative
expenses
Operating (loss) /
profit
35
462
-
-
35
462
(4,510)
(5,417)
(645)
(1,802)
(5,155)
(7,219)
(12,755)
11,718
12,401
3,418
(354)
15,136
Finance costs
(1,109)
(4,254)
(1,345)
(3,032)
(2,454)
(7,286)
Finance income
-
109
-
-
-
109
(Loss) / profit
before taxation
(13,864)
7,573
11,056
386
(2,808)
7,959
Taxation charge
-
-
(1,951)
(755)
(1,951)
(755)
(Loss) / profit for
year
(13,864)
7,573
9,105
(369)
(4,759)
7,204
Segment assets
121,104
134,815
124,588
117,641
245,692
252,456
Segment liabilities
15,681
11,278
81,374
81,204
97,055
92,482
65
The Group’s investment income and its investments are divided into the following geographical areas:
Equity and debt
instruments investment
activities
Investment
property
activities
Total per financial
statements
2015
US $000
2014
US $000
2015
US $000
2014
US $000
2015
US $000
2014
US $000
Investment Income
Switzerland
Other European
countries
United States
India
Asia
-
(22)
(5,950)
(2,235)
(73)
-
13,046
6,732
13,046
6,732
(723)
18,400
(1,729)
(787)
-
-
-
-
-
-
(22)
(723)
(5,950)
18,400
(2,235)
(1,729)
(73)
(787)
(8,280)
15,161
13,046
6,732
4,766
21,893
Investments
Switzerland
Other European
countries
United States
India
Asia
-
-
123,324
116,609
123,324
116,609
5,089
6,225
72,030
10,004
3,825
83,843
14,219
4,283
-
-
-
-
-
-
-
-
5,089
6,225
72,030
83,843
10,004
14,219
3,825
4,283
90,948
108,570
123,324
116,609
214,272
225,179
Investment income, comprising interest and dividend income, gains or losses on investments,
and investment property income, is allocated on the basis of the customer’s geographical
location in the case of the investment property activities segment and the issuer’s location in
the case of the equity and debt instruments investment activities segment Investments are
allocated based on the issuer’s location
During 2015, 81 9% of the Group’s rent relates to rental income from a single customer (SBB –
Swiss national transport authority) in the investment property activities segment (2014: 89%)
66
Annual Report 2015
23 Interest and dividend income
Interest from investments
Dividend income
24 Investment property income
Gross rental income
Direct expenses
2015
US $000
127
25,548
25,675
2015
US $000
5,634
(407)
5,227
2014
US $000
434
26,185
26,619
2014
US $000
5,923
(764)
5,159
All direct expenses relate to the generation of rental income
25 Loss on investments
(Loss) / gain on sale of investments
Investment property revaluation
Foreign exchange loss
Loss due to impairment of available-for-sale
financial assets
Fair value losses on financial assets through
profit or loss
Fair value gain on associate
Fair value loss on investment in joint venture
Fair value gains on derivative instruments
Bank custody fees
2015
US $000
(3,459)
7,819
-
2014
US $000
1,709
61
(232)
(31,726)
(8,861)
(320)
(5,067)
683
-
991
(124)
(26,136)
-
(524)
3,133
(104)
(9,885)
67
The investments disposed of during the year resulted in the following realised losses (i e in
relation to their original acquisition cost):
Available-for-sale
At fair value through profit or loss
26 Administrative expenses
Legal expenses
Directors’ fees and expenses
Other salaries and expenses
Professional and consulting fees
Office costs
Depreciation
Other operating expenses
Provision charge
Audit fees
2015
US $000
(5,723)
(303)
(6,026)
2015
US $000
188
2,414
213
872
358
16
447
513
134
2014
US $000
(2,682)
(2,374)
(5,056)
2014
US $000
118
3,522
1,152
1,299
299
13
657
-
159
5,155
7,219
Throughout 2015 the Group employed 7members of staff (2014: 6)
Other salaries and expenses include USD 21,640 of social insurance and similar contributions
(2014: USD 82,632), as well as USD 6,593 of defined contributions plan costs (2014: USD 19,499)
27 Finance costs and income
Finance costs
Bank interest on investment property loan*
Other swap interest cost
Other bank interest
2015
US $000
2014
US $000
1,340
-
267
3,032
496
252
68
Annual Report 2015
Foreign exchange loss
Finance income
Foreign exchange gain
847
2,454
3,506
7,286
-
109
Net finance costs
2,454
7,177
*Includes interest payments on a related swap
28 Taxation
Current tax charge
Deferred tax charge
2015
US $000
97
1,854
1,951
2014
US $000
298
457
755
The tax charge for the year can be reconciled to
the accounting profit as follows:
(Loss) / profit before tax
(2,808)
7,959
Effect of applicable corporation tax rates
Effect of income not subject to tax
Effect of expenses not deductible for tax purposes
Effect of current year losses
Property tax
Deferred tax charge
Tax for the year
2,301
(1,961)
39
(383)
101
1,854
1,951
177
(131)
232
(87)
107
457
755
The parent company is an international business company based in the British Virgin Islands
(BVI) and, under the BVI laws, is not subject to corporation tax Corporation tax is calculated
with reference to the results of the Company’s subsidiaries in Switzerland and Cyprus
29 Earnings per share
Basic earnings per share has been calculated by dividing the profit 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
69
Diluted earnings per share is calculated after taking into consideration other potentially
dilutive shares in existence during the year ended 31 December 2015 and the year ended 31
December 2014
(Loss) / profit for the year attributable to ordinary
shareholders of the parent (USD 000)
2015
2014
(4,759)
7,204
Weighted average number of ordinary shares outstanding
194,599,172
195,289,583
Basic earnings per share (USD)
(0 02)
0 04
Weighted average number of ordinary shares outstanding
194,599,172
195,289,583
Dilutive effect of share options
59,005
84,418
Weighted average number of ordinary shares including
the effect of potentially dilutive shares
194,658,177
195,374,001
Diluted earnings per share (USD)
(0 02)
0 04
The Share options (note 15) granted on 13 May 2008 have a dilutive effect on the weighted
average number of ordinary shares only, given that their exercise price is lower than the
average market price of the Company’s shares on the London Stock Exchange (AIM division)
during the year ended 31 December 2015 and 2014 All other share options do not impact
the diluted earnings per share for 2015 and 2014 as their exercise price was higher than the
average market price of the Company’s shares during the year ended 31 December 2015 and 2014
70
Annual Report 2015
30 Related party transactions
The Group is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which
at 31 December 2015held 78 74% (2014: 79 06%) of the Company’s effective voting rights
2015
US $000
2014
US $000
Amounts receivable from key management
Other assets
Directors’ current accounts
Amounts payable to other related party
Loan payable
Amounts payable to key management
Directors’ current accounts
Other key management personnel
Key management compensation
Short term benefits
Executive directors' fees
Executive directors' reward payments
Non-executive directors' fees
Non-executive directors' reward payments
Other key management fees
2,256
2,514
4,770
(499)
(499)
(35)
(843)
(878)
795
1,528
69
22
383
2,797
(1)
(2)
(3)
(4)
3,384
2,497
5,881
(499)
(499)
(80)
-
(80)
795
2,628
74
25
-
3,522
(1) Loans of USD 5 523m were made to a key management employee for the acquisition of shares
in the Company Interest was payable on these loans at 6 month US LIBOR plus 0 25% per annum
and the loans were secured on the shares acquired The loans were repayable on the earlier of the
employee leaving the Company or April 2013 In December 2012 the Board decided to renew the
outstanding amount of these loans for a period of another five years Based on the Board’s decision,
the outstanding amount is reduced annually on a straight line over five years, as long as the key
management employee remains with the Company The relevant reduction in the loan amount for
71
the year was USD 1 128m The loans are classified as “other assets” and are included under trade
and other receivables (note 12)
(2) A loan with a balance at 31 December 2015 of USD 0 499m (31 December 2014: USD 0 499m)
has been received from an other related company, Chanpak Ltd The loan is free of interest, it is
unsecured and is repayable on demand This loan is included within trade and other payables (note 19)
(3) The amount payable to other key management personnel relates to a payment made on behalf
of the Company for investment purposes and accrued consultancy fees
(4) These payments were made directly to companies to which they are related
No social insurance and similar contributions nor any other defined benefit contributions plan costs
were incurred for the Group in relation to its key management personnel in either 2015 or 2014
Noam Lanir, through an Israeli partnership, is the major shareholder of Babylon Limited, an Israel
basedInternet Services Company The Group as of 31 December 2015 held a total of 1 941m shares
at a value of USD 0 931m (2014: 1 941m shares at a value of USD 0 922m) which represents 4% of
its effective voting rights Theinvestment in Babylon Ltd is included within public equity investments
under financial assets at fair valuethrough profit or loss (note 5)
During the year the Group received administrative services of USD 0 039m (2014: 0 103) in
connection with investments from another related company, Mash Medical Life Tree Marketing Ltd
During the year deeds of pledges of an amount of USD 5 4m were given for an other related party,
Chanpak Ltd, in relation to a bank loan which was repaid in February 2016
31 Provisions
The movement in provisions for the year is as follows:
As at 1 January
Additions (note 32)
Settlements
As at 31 December
Allocated as:
Current liability
Non-current liability
2015
US $000
2014
US $000
-
513
-
513
128
385
513
26
-
(26)
-
-
-
-
72
Annual Report 2015
32 Litigation
Fairfield Sentry Ltd vs custodian bank and beneficial owners
One of the custodian banks that the Group uses faces a contingent claim up to USD 2 1m,
and any interest as will be decided by a US court and related legal fees, with regards to the
redemption of shares in Fairfield Sentry Ltd, which were boughtrought in 2008 at the request
of Livermore and on its behalf The same case was also filed in BVI where the Privy Council
ruled against the plaintiffs
As a result of the surrounding uncertainties over the existence of any obligation for Livermore,
as well as for the potential amount of exposure, the Directors cannot form an estimate of the
outcome for this case and therefore no provision has been made
No further information is provided on the above case as the Directors consider it could
prejudice its outcome
Ex employee vs Empire Online Ltd
In 2007 an ex employee of Empire Online Limited (the Company’s former name) filed a law
suitagainst one of its Directors and the Company in the Labor Court in Tel Aviv According to
the lawsuit the plaintiff claimedcompensation relating to the sale of all commercial activities
of Empire Online Limited until the end of 2006, and the dissolution of the company and the
terms of termination of his employment with Empire Online Limited
Prior to the filing of the lawsuit in Israel, the Company filed a claim against the plaintiff in
the Court in Cyprus based upon claims concerning breach of faith of the plaintiff towards his
employers Litigation was completed in Israel
On 5 March 2014, the Labor Court in Tel Aviv issued a ruling in which the court denied most of
the plaintiff’s claims and accepted only his claim for termination of employment On 16 April
2014 the plaintiff filed an appeal against the ruling On 10 June 2015 the court held a hearing
of the appeal and suggested that both sides to settle the dispute by means of mediation On
20 January 2016 the parties reached an agreementfor an out of court settlement, for which a
corresponding provision has been made (note 31)
33 Commitments
As part of the lease extension agreement with SBB in 2015, the Group will invest up to a
maximum of CHF 3 95m and SBB is expected to invest up to CHF 9m to upgrade the property
and allow for additional workspaces
Other than the above, the Group has no capital or other commitments as at 31 December 2015
34 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
35 Financial risk management objectives and policies
Background
The Group’s financial instruments comprise available for sale financial assets, financial assets
at fair value through profit or loss, derivatives, cash balances and receivablesand payables
that arise directly fromits operations For an analysis of financial assets and liabilities by
73
category, refer to note 36
Risk objectives and policies
The objective of the Group is to achieve growth of shareholder value, in line with reasonable
risk, taking into consideration that the protection of long-term shareholder value is
paramount The policy of the Board is to provide aframework 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 foreign currency; and
2) where an investment has substantial exposure to non-US Dollar underlying assets or cash
flows denominated in a foreign currency The Group in general does not hedge its currency
exposure The Group discretionally and partially hedges against foreign currency movements
affecting the value of the investment portfolio based on its view on the relative strength of
certain currencies Any hedging transactions represent economic hedges; the Group does not
apply hedge accounting in any case Management monitors the effect of foreign currency
fluctuations through the pricing of the investments The level of financial instruments
denominated in foreign currencies held by the Group at 31 December 2015 is the following:
2015
US $000
2015
US $000
2015
US $000
2014
US $000
2014
US $000
2014
US $000
Financial
assets
Liabilities
Net value
Financial
assets
Liabilities Net value
1,611
2,641
28,653
7,099
2,850
-
(4,475)
(253)
(9)
-
(90)
(5)
(2,864)
2,388
1,485
3,947
28,644
31,109
7,099
2,760
(5)
9,142
2,892
-
(6,982)
(5,497)
(228)
(8)
-
(90)
(5)
3,719
31,101
9,142
2,802
(5)
42,854
(4,832)
38,022
48,575
(7,313)
41,262
British Pounds (GBP)
Euro
Swiss Francs (CHF)
Indian Rupee (INR)
Israel Shekels (ILS)
Others
Total
Also, some of the USD denominated investments are backed by underlying assets which
are invested in non-USD assets For instance, investments in certain emerging market
private equity funds are denominated in USD but the funds in turn have invested in assets
denominated in non-USD currencies
A 10% increase of the following currency rates against the rate of United States Dollar (USD)
at 31 December 2015 would have the following impact A 10% decrease of the following
currencies against USD would have an approximately equal but opposite impact
74
Annual Report 2015
2015
US $000
2015
US $000
2014
US $000
2014
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
(445)
162
2,842
-
273
2,832
159
77
-
710
3
949
(696)
221
3,110
-
280
146
150
-
914
-
2,915
1,210
British Pounds (GBP)
Euro
Swiss Francs (CHF)
Indian Rupee (INR)
Israel Shekels (ILS)
Total
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 interestrate risk on its interest-bearing instrumentswhich are affected
by changes in market interest rates The Group has borrowings of USD 76 4m (2014: USD
78 0m) related to a real estate asset (Wylerpark, Bern)
The Group has banking credit lines which are available on short notice forthe Group to use
in its investment activities, the costs of which are based on variable rates plus a margin
When an investment is made utilising the facility, consideration is given to the financing costs
which would impact the returns The level of banking facilities used is monitored by both the
Board and the management on a regular basis The level of banking facilities utilised at 31
December 2015 was USD 13 2m(2014: USD10 4m)
As at 31 December 2015the 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 anycertainty
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 anincreasein interest rates
The Group has exposure to US bank loans and to a lesser degree emerging market loans
through CLO equity tranches An investment in the CLO equity tranche represents a leveraged
75
investment into such loans As these loans (assets of a CLO) and the liabilities of a CLO are
floating rate in nature (typically 3 month LIBOR as the base rate), the residual income to CLO
equity tranches is normally linked to the floating rate benchmark and thus normally do not
carry substantial interest rate risk In the current low rate environment, however, most loans
feature a LIBOR floor The presence of LIBOR floors creates an interest rate risk to CLO equity
distributions as long as the benchmark rate is below the weighted average LIBOR floor level
on the CLO loan portfolio Thus, an increase in the benchmark floating rate up to the weighted
average LIBOR floor level is expected to cause distributions to CLO equity to reduce whereas a
decrease in the benchmark floating rate is expected to increase such distributions
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
Total
2015
US $000
2014
US $000
4,534
88,816
93,350
89,618
89,618
4,903
83,869
88,772
88,447
88,447
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 -0 18% change in the net asset value as at 31 December 2015 (2014: -0 23%)
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
2015
US $000
2015
US $000
2014
US $000
2014
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
Financial assets
•
•
fair value changes
interest changes
(269)
888
-
-
(322)
839
-
-
76
Annual Report 2015
2015
US $000
2015
US $000
2014
US $000
2014
US $000
Profit or loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
Financial liabilities
•
interest changes
(896)
(277)
-
-
(884)
(367)
-
-
The above analysis assumes that all other variables, in particular currency rates, remain constant
Market price risk
By the nature of its activities, most of the Group’s investments are exposed to market price
fluctuations The Board monitors the portfoliovaluation 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 portfoliocould 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
market price risk The Group has investments in CLO equity tranches These investments
represent leveraged exposure to typically senior secured loans Investments in CLOs are subject
to many risks including market price risk, liquidity, credit risk, interest rate, reinvestment and
certain other risks
Prices of these CLO investments may be volatile and will generally fluctuate due to a variety
of factors that are inherently difficult to predict, including but not limited to changes in
prevailing credit spreads and yield expectations, interest rates, underlying portfolio credit
quality and market expectations of default rates on non-investment grade loans, general
economic conditions, financial market conditions, legal and regulatory developments, domestic
and international economic or political events, developments or trends in any particular
industry, and the financial condition of the obligors that constitute the underlying portfolio
A 10% uniform change in the value of the Group’s portfolio of financial instruments (excluding
private equities and financial and minority holdings) would result in a4 84%change in the net
asset value as at 31 December 2015 (2014: 5 55%), and would have the following impact
(either positive or negative, depending on the corresponding sign of the change):
77
2015
US $000
2015
US $000
2014
US $000
2014
US $000
Profit or
loss
Other
comprehensive
income
Profit or loss
Other
comprehensive
income
Available-for-sale financial
assets
Financial assets at fair value
through profit or loss
-
358
358
6,721
-
6,721
-
403
403
7,677
-
7,677
Derivatives
The Investment Manager may use derivative instruments in order to mitigate marketrisk or
to take a directional investment These provide a limited degree of protection and would not
materially impact the portfolio returns if a large market movement did occur
Credit Risk
The 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 both in investment grade securities and in sub investment grade or unrated
debt instruments The investment manager mitigates the credit risk via diversification across
issuers However, the Group is exposed to a migration of credit rating, widening of credit
spreads and default of any specific issuer
The Group only transacts with regulated institutions on normal market terms which are trade
date plus one to threedays The levels of amounts outstanding from brokers are regularly
reviewed by the management The durationof credit risk associated with the investment
transactions is the period between the date the transaction took place, thetrade date and
the date the stock and cash are transferred, the settlement date The level of risk during the
period is thedifference 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 fixed income
investments(mainly CLOs) of USD72 6m (2014: USD 83 8m) The Group’s maximum credit risk
exposure at 31 December 2015 is as follows:
Financial assets:
Loans and receivables:
•
•
Trade and other receivables
Cash at bank
2015
US $000
2014
US $000
3,090
25,770
28,860
19,768
3,807
23,575
78
Annual Report 2015
Available-for-sale financial assets
Financial assets at fair value through profit or loss
Investments in associate and joint venture
Derivatives
65,946
6,655
-
-
82,217
1,623
-
1,125
101,461
108,540
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
The Group has exposure to US senior secured loans and to a lesser degree emerging market
loans through CLO equity tranches These loans are primarily non-investment grade loans
or interests in non-investment grade loans, which are subject to credit risk among liquidity,
market value, interest rate, reinvestment and certain other risks It is anticipated that these
non-investment grade loans generally will be subject to greater risks than investment grade
corporate obligations
A non-investment grade loan or debt obligation or an interest in a non-investment grade
loan is generally considered speculative in nature and may become a defaulted security for
a variety of reasons A defaulted security may become subject to either substantial workout
negotiations or restructuring, which may entail, among other things, a substantial reduction
in the interest rate, a substantial write-down of principal, and a substantial change in the
terms, conditions and covenants with respect to such defaulted security In addition, such
negotiations or restructuring may be quite extensive and protracted over time, and therefore
may result in substantial uncertainty with respect to the ultimate recovery on such defaulted
security Bank loans have historically experienced greater default rates than has been the case
for investment grade securities
The Group has no investment in sovereign debt as at 31 December 2015 or 2014
At 31 December the credit rating distribution of the Group’s asset portfolio subject to credit
risk (CLOs, bonds and other debt instruments, bank balances and receivables) was as follows:
Rating
2015 Amount
US $000
Percentage
2014 Amount
US $000
Percentage
AA
A+
A
A-
18,772
18 5%
-
976
6,326
-
1 0%
6 2%
1,000
16,125
4,321
0 9%
14 9%
4 0%
79
BB
BB+
BB-
Not Rated
2,900
1,116
518
70,853
101,461
2 9%
1 1%
0 5%
69 8%
100%
3,280
1,111
512
82,191
108,540
3 0%
1 0%
0 5%
75 7%
100%
Included within “not rated” amounts are investments in loan market through CLOs of USD
63 046m (2014: USD 78 936m)
The modelled IRRs on the CLO portfolio are in low teens percentage points
Liquidity Risk
The major financial liability of the Group is the bank loan of CHF76 4m (USD78 0m) used for
purchase of a real estate property, which has a maturity in 2029 The loan is collateralized by
property valued at CHF 123 3m (USD 123 3m)at 31 December 2015 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 contractual cash outflows in relation to the Group’s financial liabilities according to
their maturity
Carrying
amount
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 2015
Bank loan
76,410
2,477
2,557
75,531
Bank overdraft
13,208
13,208
Trade and other payables
2,207
2,207
Forward contracts
-
-
-
-
-
-
Total
91,825
17,892
2,557
75,531
-
-
-
-
-
80
Annual Report 2015
Carrying
amount
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 2014
Bank loan
78,092
78,143
Bank overdraft
10,355
10,355
Trade and other payables
1,736
1,736
Total
90,183
90,234
-
-
-
-
-
-
-
-
-
A significant 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
There is currently no exchange traded market for CLO securities and they are traded over-the-counter
through private negotiations or auctions subject to market conditions Currently the CLO market is
liquid, but in times of market distress the realization of the investments in CLOs through sales may be
below fair value
The management take into consideration the liquidity of each investment when purchasing and selling
in orderto maximise the returns to shareholders by placing suitable transaction levels into the market
At 31 December 2015, the Group had liquid investments totalling USD 102 6m, comprising of USD
25 8m in cash and cash equivalents, USD 65 9 in investments in loan market through CLOs, USD 6 6m in
other fixed income investments, USD3 2m in public equities and USD 1 1m 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
Capital Management
The Group considers its capital to be its issued share capital and all of its reserves
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:
81
Cash at bank
Bank overdrafts
Bank loans
Net Debt
Total equity
2015
US $000
(25,770)
13,208
76,410
2014
US $000
(3,807)
10,355
78,092
63,848
84,640
148,637
159,974
Net debt to equity ratio
0 43
0 53
The Board believes that the ratio remains at an acceptable and manageable level
82
Annual Report 2015
36 Financial assets and liabilities by IAS 39 category
Note
2015
US $000
2014
US $000
Financial assets:
Loans and receivables:
Trade and receivables
Cash at bank
Available-for-sale financial assets
Financial assets at fair value through
profit or loss
Derivative financial instruments
Financial liabilities:
Financial liabilities at amortised cost:
Bank loan
Bank overdrafts
Trade and other payables
12
13
4
5
16
17
18
19
Financial liabilities at fair value through
profit or loss:
Derivative financial instruments
16
3,090
25,770
28,860
81,147
9,801
-
19,768
3,807
23,575
101,935
5,510
1,125
119,808
132,145
76,410
13,208
2,207
91,825
217
92,042
78,092
10,355
1,736
90,183
-
90,183
The carrying amount of the financial assets and liabilities at amortised cost approximates to
their fair value
83
Shareholder Information
Registrars
All enquiries relating to shares or shareholdings should be addressed to:
Capita Registrars
PXS
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0870 162 3100
Facsimile: 020 8639 2342
Change of Address
Shareholders can change their address by notifying Capita Registrars in writing at the above address
Website
www livermore-inv com
The Company’s website provides, amongst other things, the latest news and details of the Company’s
activities, share price details, share price information and links to the websites of our brands
Direct Dividend Payments
Dividends can be paid automatically into shareholders’bank or building society accounts Two
primary benefits of this service are:
•
•
There is no chance of the dividend cheque going missing in the post; and
The dividend payment is received more quickly because the cash sum is paid directly into the
account on the payment date without the need to pay in the cheque and wait for it to clear
As an alternative, shareholders can download a dividend mandate and complete and post to Capita Registrars
Lost Share Certificate
If your share certificate is lost or stolen, you should immediately contact Capita Registrars on 0870
162 3100 who will advise on the process for arranging a replacement
Duplicate Shareholder Accounts
If, as a shareholder, you receive more than one copy of a communication from the Company you may
have your shares registered in at least two accounts This happens when the registration details of
separate transactions differ slightly If you wish to consolidate such multiple accounts, please call
Capita Registrars on 0870 162 3100
Please note that the Directors of the Company are not seeking to encourage shareholders to either
buy or sell the Company’s shares
84
Annual Report 2015 Principal Bankers
Bank Hapoalim
18 Boulevard Royal
BP 703
L-2017
Luxembourg
FIBI Bank
Seestrasse 61
Zurich 8027
Switzerland
Credit Suisse AG
Seeefldstrasse 1
Zurich 8070
Switzerland
UBS AG
Paradeplatz 6
CH-8098 Zürich
Switzerland
Bank Julius Baer & Co Ltd
Bahnhofstrasse 36,
CH-8010 Zurich,
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
PXS
34 Beckenham Road
Beckenham
Kent BR3 4TU
England
Auditor
Grant Thornton (Cyprus) Ltd
143, Spyrou Kyprianou Avenue
Limassol 3083
Cyprus
Solicitors
Travers Smith
10 Snow Hill
London
EC1A 2AL
England
Nominated Adviser & Broker
Arden Partners plc
125 Old Broad Street
London
EC2N 1AR
England
85
5
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 24 August 2016 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 and 7 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 2015
To re-elect Mr Ron Baron, who is due to retire as Director 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 116,542,664 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 2017 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) provided that not more than 58,271,332 such new
ordinary shares shall be issued otherwise than by way of a fully pre-emptive rights issue;
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
Annual Report 2015
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
(b) the allotment of up to an aggregate amount of 17,481,399 of such ordinary shares
(representing approximately 10% of the Company’s issued ordinary share capital as at the
date of this Notice),
and this power, unless renewed, shall expire at the end of the Annual General Meeting
of the Company in 2017 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 UK 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
34,962,798;
(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
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
(c)
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
24 June 2016
Annual Report 2015
Notes
(i)
(ii)
(iii)
(iv)
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
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 Asset Services, PXS1, 34 Beckenham
Road, Beckenham, Kent, BR3 4ZF by no later than 48 hours (not including weekends or
banks holidays) before the time fixed for the Meeting or any adjourned meeting
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
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 Asset Services, 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@capita co uk to request a Letter of
Corporate Representation
(v) Resolution 6 – Disapplication of pre-emption rights - If the Directors wish to allot any equity
securities for cash, the Articles of Association of the Company require that such equity
securities are offered first to existing shareholders in proportion to their existing holdings
The Directors intend to adhere to the provisions in the Pre-Emption Group’s Statement of
Principles, as updated in March 2015 and therefore Resolution 6 asks shareholders to grant
the Directors authority to allot shares for cash on a non-pre-emptive basis pursuant to the
authority in Resolution 5, but such allotment shall not be:
in excess of an amount equal to 5% of the total issued ordinary share capital of the
Company (excluding treasury shares as at of the date of this Notice); or
in excess of an amount equal to 7 5% of the total issued ordinary share capital of the
Company (excluding treasury shares) within a rolling three-year period, without prior
consultation with shareholders
b)
a)
in each case other than in connection with an acquisition or specified capital investment
which is announced contemporaneously with the allotment or which has taken place in the
preceding six-month period and is disclosed in the announcement of the allotment
Resolution 6 also asks shareholders to disapply the statutory pre-emption provisions
in connection with a rights issue, but only in relation to the amount permitted under
Resolution 5, and allows the Directors, in the case of a rights issue, to make appropriate
arrangements in relation to fractional entitlements or other legal or practical problems
that might arise
Annual Report 2015
Livermore Investments Group Limited
(incorporated in the British Virgin Islands with registered number 475668)
(the “Company”)
FORM OF DIRECTION
Form of Direction for completion by holders of Depository Interests representing shares on a one for one basis in
the Company in respect of the Annual General Meeting of the Company to be held at 10 am on 24 August 2016
at 10 Snow Hill, London EC1A 2AL (and at any adjournment thereof),
I/We………………………………………………………………………………………………………………………………………
(Please inserts full name(s) and address(es) in BLOCK CAPITALS)
of………………………………………………………………………………………………………………………………………
being a holder of Depository Interests representing shares in the Company hereby direct Capita IRG Trustees
Limited, the Depository, to vote for me/us and on my/our behalf at the Annual General Meeting of the Company
to be held on the above date (and at any adjournment thereof) as directed by an “X” in the spaces below
Please indicate with an “X” in the spaces below how you wish your vote to be cast. If no indication is
given you will be deemed as instructing the Depository to abstain from voting on the specified resolution.
For
Against
Abstain
Resolutions of Members
1 To approve the annual report
2 To re-elect Ron Baron as Director
3
To re-appoint Grant Thornton Cyprus as auditor of the Company
4
To authorize the Directors to determine the auditor’s remuneration
5
To authorize the Directors to allot new ordinary shares
Special business resolutions
6
To authorize the Directors to allot new ordinary shares as if pre-
emption rights did not apply
7
To authorize the Directors to buy back the Company’s own shares
Signed ……………………………………………………………………………………… Dated ………………………………………… …………2016
Notes:
1
To be effective, this Form of Direction and the power of attorney or other authority (if any) under which
it is singed, or a notarially or otherwise certified copy of such power or authority, must be deposited with
Capita Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham Kent, BR3 4TU not later than
10am 18 August 2016
2 Any alterations made to this Form of Direction should be initialed
3
In the case of a corporation this Form of Direction should be given under its Common Seal or under the
hand of an officer or attorney duly authorized in writing
5
4 Please indicate how you wish your votes to be cast by placing “X” in the box provided On receipt of
this form duly signed, you will be deemed to have authorized the Depository to vote, or to abstain from
voting, as instructed
The ‘Abstain’ option is provided to enable you to abstain from voting on the resolutions However, it
should be noted that a ‘Vote Abstain’ is not a vote in law and will not be counted in the calculation of
the proportion of the votes ‘For’ and ‘Against’ a resolution
The Depository will appoint the Chairman of the meeting as its proxy to cast your votes The Chairman
may also vote or abstain from voting as he or she thinks fit on any other business (including amendments
to resolutions) which may properly come before the meeting
6
7 Depository Interest holders wanting to attend the Annual General Meeting should contact the Depository,
Capita IRG Trustees Limited, at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or email
custodymgt@capita co uk by no later than 10am 18 August 2016
Annual Report 2015
Livermore Investments Group Limited
(incorporated in the British Virgin Islands with registered number 475668)
(the “Company”)
FORM OF PROXY
For use at the Annual General Meeting of the Company to be held at 10 am on 24 August 2016 at 10 Snow Hill,
London EC1A 2AL (and at any adjournment thereof),
I/We………………………………………………………………………………………………………………………………………
(in BLOCK CAPITALS please)
of………………………………………………………………………………………………………………………………………
being a shareholder(s) of the above-named Company, appoint the Chairman of the Meeting or
………………………………………………………………………………………………………………………………………
to act as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to
be held on the above mentioned date (and at any adjournment thereof) and direct my/our proxy to vote for me/
us on my/our behalf on a poll as directed below
Please indicate with an “X” in the spaces below how you wish your vote to be cast. If no indication is
given your proxy will vote for or against the resolutions or abstain from voting as he thinks fit on the
specified resolutions, and unless instructed otherwise, on any other business (including amendments to
Resolutions) which may properly come before the meeting.
For
Against
Abstain
Resolutions of Members
1 To approve the annual report
2 To re-elect Ron Baron as Director
3
To re-appoint Grant Thornton Cyprus as auditor of the Company
4
To authorize the Directors to determine the auditor’s remuneration
5
To authorize the Directors to allot new ordinary shares
Special business resolutions
6
To authorize the Directors to allot new ordinary shares as if pre-
emption rights did not apply
7
To authorize the Directors to buy back the Company’s own shares
Signed ……………………………………………………………………………………… Dated ………………………………………… …………2016
Notes:
1
2
3
4
If any other proxy is preferred, strike out the words “the Chairman of the Meeting or” and add the name
and address of the proxy you wish to appoint and initial the alteration The proxy need not be a member
If the appointer is a corporation this form must be completed under its common seal or under the hand of
some officer or attorney duly authorized in writing
The signature of any one of joint holders will be sufficient, but the names of all joint holders should be stated
To be valid, this form and the power of attorney of other authority (if any) under which it is signed, or a
notarially certified copy of such power, must reach the Capita Asset Services, PXS1 34 Beckenham Road,
Beckenham, Kent, BR3 4ZF not less than 48 hours (not including weekends or bank holidays) before the
time appointed for holding the General Meeting or adjournment as the case may be
The completion of this form will not preclude a member from attending the Meeting and voting in person
5
6 Any alteration of this form must be initialed
Annual Report 2015