2020
20
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 10
Livermore’s Strategy 14
Financial portfolio 14
Events after the Reporting Date 17
Litigation 17
Report of the Directors 18
The Board’s Objectives 18
The Board of Directors 18
Directors’ responsibilities in relation to the financial statements 19
Disclosure of information to the Auditor 19
Substantial Shareholdings 20
Corporate Governance Statement 21
Introduction 21
The Board Constitution and Procedures 21
Board Committees 21
Remuneration Committee 21
Audit Committee 21
The Quoted Company Alliance (QCA) Code 21
Communication with Investors 22
Internal Control 22
Going concern 22
4
Annual Report 2020 Independence of Auditor 23
Remuneration Report 24
Directors’ Emoluments 24
Directors’ Interests 24
Remuneration Policy 25
Review of the Business and Risks 26
Risks 26
Share Capital 27
Related Party Transactions 27
Independent Auditor’s Report to the Members of Livermore Investments Group Limited 28
Consolidated Statement of Financial Position as at 31 December 2020 33
Consolidated Statement of profit or loss for the year ended 31 December 2020 34
Consolidated Statement of Comprehensive Income for the year ended 31 December 2020 35
Consolidated Statement of changes in equity for the year ended 31 December 2020 36
Consolidated Statement of cash flows for the year ended 31 December 2020 37
Notes on the Financial Statements 39
Shareholder Information 71
Registrars 71
Website 71
Direct Dividend Payments 71
Lost Share Certificate 71
Duplicate Shareholder Accounts 71
Corporate Directory 72
5
Annual Report 2020 Highlights
•
Net profit for the year was USD 0 845m (2019: net loss of USD 1 1m)
• Net Asset Value per share remains stable at USD 0 94 (2019: USD 0 99)
•
On 08 March 2021, the Company announced an interim dividend of USD 8m (USD 0 0488 per
share) to members on the register on 19 March 2021 The dividend was paid on 16 April 2021
• CLO portfolio and warehouse generated USD 21 9m in distributions and USD 1 8m in net gains
in 2020
6
Annual Report 2020 Chairman’s and Chief Executive’s Review
Introduction
We are pleased to announce the financial results for Livermore Investments Group Limited
(“Livermore” or “the Company”) for the year ended 31 December 2020 References to the Company
hereinafter also include its consolidated subsidiary (note 8) References to financial statements
hereinafter are to the Company’s consolidated financial statements
The COVID-19 outbreak across the world has triggered tremendous human and economic hardship
Since February 2020, protective measures taken to contain spread of COVID-19 (lockdown) supressed
demand in many sectors of the global economy and resulted in supply chain constraints globally
This led to immense job losses and exceptional turbulence in financial markets In light of the
extra-ordinary situation, the Company focussed on protecting its capital, maintaining continuous
operations, and ensuring well-being of its employees and consultants
Management cut warehousing risk before the COVID-19 related market sell-off took hold and
maintained a high cash positions of over USD 60m through the end of the first half of the year This
conservative positioning helped the Company navigate the tremendous volatility and uncertainty
that ensued and allowed the Company to participate in the recovery phase by deploying capital
opportunistically
We are pleased to report that the Company was successful in achieving all of the above objectives
Our net profit for the year was USD 0 845m (2019 net loss: USD 1 1m) and the year-end NAV was
USD 0 94 per share (2019 NAV: USD 0 99 per share) after a dividend payment of USD 6m (USD
0 0343 per share)
The Company recorded net gains of USD 1 8m from its US CLO and warehousing portfolio Interest
and distribution income from the financial portfolio totalled USD 22 0m (2019: USD 29 0m) The
Company ended the year with over USD 50 4m in cash at hand During the second half of the year,
the Company added exposure to US equity index ETFs as well as profitably traded some CLO BB
tranches
Financial Review
The NAV of the Company on 31 December 2020 was USD 163 9m (2019: USD 173 1m) Net profit,
during the year was USD 0 845m, which represents earnings per share of USD 0 005
Operating expenses were USD 2 8m (2019: USD 5 1m)
7
Annual Report 2020 The overall change in the NAV is primarily attributed to the following:
Shareholders’ funds at beginning of year
Income from investments
Unrealised losses on investments
Operating expenses
Net finance income
Tax charge
Decrease in net assets from operations
Dividends paid
Shareholders’ funds at end of year
Net Asset Value per share
Dividend & Buyback
31 December 2020
US $m
31 December 2019
US $m
173 1
22 0
(22 6)
(2 8)
0 3
(0 1)
(3 2)
(6 0)
174 3
29 0
(25 5)
(5 1)
0 5
(0 1)
(1 2)
-
163 9
173 1
US $0 94
US $0 99
At 21 February 2020, the Company paid an interim dividend of USD 6m (USD 0 0343 per share) to
members on the register on 24 January 2020, as announced by the Board on 30 December 2019
The Board of Directors will decide future dividends based on profitability, liquidity requirements,
portfolio performance, market conditions, and the share price of the Company relative to its NAV
During 2021, the Company bought back 10,888,577 shares to be held in treasury for a total cost of USD
6 9m The Company had no shares in treasury as at 31 December 2020
Richard B Rosenberg
Chairman
25 May 2021
Noam Lanir
Chief Executive Officer
8
Annual Report 2020
Review of Activities
Introduction and Overview
2020 will forever be etched in our minds The COVID-19 pandemic, its immense economic and
human devastation, and humanity’s fight to survive – through medical and scientific breakthroughs,
unparalleled monetary and fiscal stimulus, and individual stories of courage and sacrifice – will all
go down in the annals of world history
Although the year started well for most asset classes and ended even better, only their movements
through the year tell the whole story Once the virus spread out from China, equity and credit markets
collapsed globally and developed nation bond yields declined sharply with safe-haven currencies
such as the Swiss Franc and US Dollar appreciating, as country after country enforced lockdowns
to protect its citizens and prevent their healthcare systems from complete collapse Central banks
and governments across the world responded swiftly and in good measure and seem to have saved
the world from a deep economic depression Global equity markets recovered sharply on these steps
taken and hope for effective vaccines against COVID-19 propelled risk markets to further highs
Floating rate loans in the US declined in line with the broader credit assets but were slower to
recover on expectations of very low rates for very long Rating agencies also acted quickly and
downgraded a significant portion of the leveraged loan and high-yield market The downgrades and
a handful of defaults eroded over-collateralization cushions in most CLOs and resulted in steep
decline in market valuations of CLO tranches However, there were almost no forced sales In April,
over 25% of CLO equity in the market (especially short reinvestment period deals) tripped key tests
and as expected, diverted some cash away from equity investors to bolster the CLO structure By
October, most CLO deals had recovered, and distributions were made to equity tranches
Although the Company’s CLO portfolio suffered mark-to-market declines, our CLO portfolio received
distributions from almost all of our positions as we were positioned with stronger deals with longer
reinvestment periods Further, management had taken a very conservative approach focussed on
capital preservation and retained a very high cash position of over USD 50m, allowing us to weather
this storm and opportunistically add value through trading secondary CLO positions For the 2020
year, our CLO and warehouse portfolio generated cash distributions of USD 21 9m Management had
one warehouse open pre-COVID-19 and swiftly converted it to a CLO prior to the market declines
Although the CLO market started to heal towards the end of the year, the mark-to-market declines
did not fully recover and adjusted for the valuations, the net gain on the CLO and warehousing
portfolio was USD 1 8m (2019: USD 3 35m) Our conservative approach resulted in gains in a year
that saw most CLO equity investors experience losses
For 2020, the Company reported NAV/share of USD 0 94 and net profit of USD 0 845m Interest and
distribution income amounted to USD 22 0m, of which, USD 21 9m was generated from the CLO and
warehousing portfolio The net return of the CLO and warehousing portfolio was USD 1 8m as mark-
to-market changes contributed to a loss of USD 19m Operating expenses amounted to USD 2 8m In
addition, the Company wrote down its investment in Evolution Venture and Elephant Capital These
write downs contributed to USD 3 7m in NAV decline
During 2020 management added exposure to equity index ETFs mostly in the US to capture some
market beta in light of the immense liquidity injected by Central Banks globally In December 2020,
the Company invested USD 10m in a new warehouse that has since been converted to a CLO, in April
2021, and generated a gain of USD 1 8m for 2021 The Company reduced its cash position somewhat
9
Annual Report 2020 ending the year with over USD 50 4m of cash at hand
The Company does not have an external management company structure and thus does not bear
the burden of external management and performance fees Furthermore, the interests of Livermore’s
management are aligned with those of its shareholders as management has a large ownership
interest in Livermore shares
Considering the strong liquidity positions of Livermore, together with its strong foothold in the
US CLO markets as well as the robustness of its investment portfolio and the alignment of the
management’s interests with those of its shareholders, management believes that the company is
well positioned to benefit from current conditions
Global Investment Environment
An already weak global economy on account of trade tensions between the US and China as well as
the uncertainty over the UK’s exit from the European Union, was plunged sharply into a recession as
the COVID-19 outbreak spread rapidly across the world Preventive measures to slow the infection
rate shut down several businesses sectors, disrupted global supply chains, and movement of people
across borders was also restricted which varied from country to country The resulting jobs losses,
especially in the travel, entertainment and retail sectors, inflicted significant economic damage
in addition to the health crisis Due to lower global production capacity utilization and lower oil
prices, consumer price inflation declined in advanced economies In the second quarter of 2020, GDP
in most countries was 10% to 20% lower than at the end of 2019 Unemployment levels rose in most
countries and are still above pre crisis levels
Thankfully, central Banks across the world acted swiftly to lower rates substantially and injected
unprecedented amounts of liquidity to ensure orderly functioning of the global markets In addition,
governments responded quickly to provide stimulus, such as forgivable business financing, generous
unemployment benefits and short-term work schemes, to blunt the impact of the crisis These
aggressive measures helped stabilize markets and supported household spending which in turn
improved sentiments on financial markets by end of March The decline in new infections, easing
of the containment measures in the Summer months, and hopes for an effective vaccine to prevent
COVID-19, increasingly allowed a strong recovery of the global economy in the third quarter
USA: COVID-19 restrictions imposed by governments and the resulting behavioural changes by
consumers and businesses resulted in GDP decline of 10% over the first half of 2020, and the
unemployment rate spiked to a high of 14 8% in April To counter the economic decline, the US
Federal Reserve (the Fed) eased monetary policy significantly and cuts its policy rate by 1 5%,
announced purchase of Treasury and mortgage-backed securities, and introduced various credit
facilities to support the flow of credit to households and businesses and support functioning of
financial markets The US government also launched several fiscal measures to support the economy
Still, overall GDP declined 2 5% in 2020 The unemployment rate rose from 3 6% at the beginning
of the year to nearly 15% but recovered to 6 3% Headline inflation fell to 1 2%, from 1 8% in 2019
and remained below pre-COVID-19 levels In August 2020, the Fed announced that it would seek
to achieve inflation that averages 2% over time and is on track to moderately exceed 2% for some
time
Eurozone: COVID-19 spread throughout Europe from mid-February 2020 and most countries
introduced restrictive public health measures to limit the spread of the pandemic Although the
measures were eased in May 2020, new strains and colder temperatures caused COVID-19 cases
to spread again later in the year Overall, GDP declined by 6 8% on average for the year The
10
Annual Report 2020 unemployment rate in the Eurozone area increased, although the rapid expansion of short-time work
schemes curtailed the rise Unemployment rate in the Eurozone was 8 3% in December compared
with 7 3% at the beginning of 2020 Eurozone countries and the European Central Bank (ECB)
provided extensive fiscal policy support from March 2020 onwards The ECB eased the conditions
and increased the volume of its asset purchase programme In addition to the short-time work
schemes, member states provided liquidity support and loan guarantees for businesses, tax relief
and investment in infrastructure By the end of the year, the ECB had increased the programme to
about 15% of GDP and planned to continue it until March 2022 The ECB signalled that it would not
raise its key interest rates until inflation had sufficiently firmed
Headline inflation in the Eurozone area fell to 0 3% in 2020, down from 1 2% in 2019 Core inflation
was dampened in particular by declining prices for tourism services owing to the pandemic and a
temporary reduction in value added tax in Germany
Japan: In Japan, GDP declined by 4 9% as a result of the pandemic In the first quarter, the public
health measures were still moderate, but a six-week state of emergency declared in mid-April 2020
had a strong impact on economic activity With the easing of measures in May2020, supported by
fiscal policy and global demand, the economy recovered quickly although GDP had still not returned
to pre-crisis levels by the end of the year Labour market conditions remained difficult despite
employment subsidies to avoid redundancies Unemployment rose by almost 1% within the year
and stood at 2 9% in December In Japan, core inflation was slightly negative as prices for tourism
services, in particular, declined sharply in the second half of December 2020
Since 2016, the Bank of Japan (BoJ) has placed yield curve control at the centre of its monetary
policy In 2020, it maintained the target for 10-year government bond yields at around 0% and its
short-term deposit rate at – 0 1% Further, it announced purchasing Japanese government bonds
without an upper limit to stabilise the yield curve across all maturities It also introduced measures
to facilitate banks’ lending to small and medium-sized enterprises in particular and increased its
purchases of corporate bonds and equity exchange-traded funds (ETFs)
China: China recorded positive GDP growth of 2 3% despite the pandemic Stringent containment
measures put in place in January 2020 resulted in a decline in new infections The measures were
relaxed again in March 2020 After a historic contraction in the first quarter, economic activity
recovered quickly, and China’s GDP surpassed its pre-crisis level in the third quarter The recovery
was supported by public spending, financial assistance and temporary duty relief for companies
Exports benefited from the increased global demand for medical protective equipment and technical
equipment for working from home The labour market recovered significantly by the end of the year
and in urban areas the unemployment rate in December 2020 was back in line with the 2019 levels
of 5 2% Headline inflation was slightly lower at 2 5%, while core inflation hit its lowest level in
more than ten years at 0 8%
To support the recovery, the People’s Bank of China lowered its key rates, including its seven-day
reverse repo rate by 0 3% to 2 2%, and reduced the reserve requirement ratio for smaller banks
Brazil, India and Russia were severely affected by the COVID-19 crisis In India, strict containment
measures had a particularly severe impact on economic activity whereas Russia’s economy suffered
due to the weak global demand for oil With the easing of containment measures from June 2020,
economic activity recovered gradually in all three countries Headline inflation initially declined in
Brazil to 3 2% and Russia to 3 4% but rose in both countries towards the end of the year In India,
however, headline inflation rose to 6 6% as disrupted supply chains caused price increases The
central banks of Brazil, India and Russia also eased their monetary policies In Brazil, the policy rate
was reduced by 2 5% to 2%, in India by 1 15% to 4%, and in Russia by 2% to 4 25%
11
Annual Report 2020 Commodities: Commodity prices declined in the first half of the year on account of lower demand
The price of WTI oil futures for May 2020 futures fell temporarily to negative levels on concerns over
delivery of physical barrels of oil when storage sites were reaching full maximisation The oil price
recovered as the global economy revived again in the second half of 2020 and output cuts made by
OPEC Industrial metals prices also recovered from the decline in the first half of the year, supported
by increased demand from China, and closed 2020 significantly higher than at the beginning of the
year Gold finished the year up 24 6%
Equities and Bonds: Swift and plentiful monetary policy support helped financial markets recover
and hopes for efficient vaccine eventually propelled US equity markets to record highs Global
equity prices also recovered and sovereign credit spreads in emerging market economies and in
the European periphery narrowed In major developed economies, government yields remained near
historical low levels amid continued monetary policy accommodation Technology and work-from-
home related stocks soared with the NASDAQ composite gaining a monstrous 43 6% (compared to
16 3% for the S&P 500) Small cap stocks in the Russell 2000 outpaced the S&P 500 by 3%, but
also saw a steeper drawdown during times of volatility US equities continued to outperform the
European markets
US government and corporate bonds had a positive year; however, their returns were primarily
driven by support from the Federal Reserve’s monetary policy The Federal Reserve increased its
portfolio of Treasury notes and bonds by 79% since March 2020, with its total assets reaching $7 3
trillion at the end of 2020
Foreign exchange: At the onset of the COVID-19 pandemic and the ensuing flight-to-safety, the
US Dollar and the Swiss Franc gained against most major currencies However, as recovery took
hold, the US Dollar depreciated, more than reversing its appreciation as policy easing by the Fed
resulted in the US Dollar losing its interest-rate advantage Further fiscal stimulus expectations
in the US are likely to weigh on the dollar in the long term The Swiss Franc was one of the most
resilient currencies and also one of the best performers at the end of the year alongside the Euro
and Australian Dollar with gains of 9% or more
Loan Market: US Leveraged Loans fully recovered towards the end of 2020 despite a turbulent start
In light of the COVID-19 pandemic, rating agencies downgraded about 47% of the issuers (~USD 550
billion), the highest ever in a year (640 companies or $550 billion, or 47% of issuers) as reported by
J P Morgan Subsequently about 13 6% of the issuers were upgraded and the rate of loan defaults
slowed towards end of 2020 The Credit Suisse Leverage Loan Index (“CSLLI”) generated a return of
2 78%, while the Merrill Lynch High Yield Master II Index (“MLHYI”) generated returns of 6 17%
According to S&P Capital IQ, total institutional loan issuance was $287 8 billion, down 7% from
2019, while total institutional loans outstanding stood at $1 2 trillion as of 31 December 2020 In
2020, mutual funds and ETFs investing in US leveraged loans withdrew $27 billion from the asset
class, compared to a withdrawal of $38 billion in 2019 However, we expect this trend to reverse in 2021
The 12-month trailing par-weighted default rate as of December 2020 was at 3 83% versus
expectations of around 10% by rating agencies and bank analysts This compares to 1 39% in 2019
and the long- term average default rate of 2 9% Looking into 2021, we expect the default rate to
moderate from 2020 levels but remain somewhat elevated
12
Annual Report 2020 CLO Market: The CLO market began 2020 strongly after a lacklustre 2019 with lower mezzanine
tranches rally leading the way However, the momentum quickly turned negative in the wake of the
pandemic and the freezing of the credit markets The new issue market was effectively shut down
as CLO AAA spreads in the secondary market traded at over 400dm By June, the market recovered
somewhat with CLO AAAs in the mid-190s, and the CLO AAA spreads more or less fully recovered
and ended the year close to 2019-year end levels
Given the challenging environment, the refinancing and reset market option was out-of-the-money
as liability spreads were higher than locked-in for existing CLOs However, with the pace of tightening
late in the year as well as the demand for yield in an otherwise yield-less fixed income universe, we
expect strong demand to return in 2021 and CLO refinancing and reset market to reopen
Against this backdrop, CLO equity had a challenging year as higher defaults and significantly higher
downgrades eroded the over-collateralization cushion resulting in over 25% of CLOs diverting cash
from CLO equity tranche to either buying additional loans or pay down liabilities By October 2020,
however, this number had declined sharply in line with the improvement in the loan market as well
as active management and trading by CLO managers to reposition the loan portfolios Although the
loan market default rate remained at an elevated level, our CLOs experienced a much lower default
rate due to active management and credit selection by CLO managers
Sources: Board of Governors of the Federal Reserve System, European Central Bank (ECB), Swiss National Bank, Bloomberg
JP Morgan, Credit Suisse
13
Annual Report 2020 Livermore’s Strategy
The financial portfolio is focused on fixed income instruments which generate regular cash flows
and include exposure mainly to senior secured and usually broadly syndicated US loans and to a
limited extent emerging market debt through investments in CLOs This part of the portfolio is
geographically focused on the US
Strong emphasis is given to maintaining sufficient liquidity and low leverage at the overall portfolio
level and to re-invest in existing and new investments along the economic cycle
Financial portfolio
The Company manages a financial portfolio valued at USD 99 6m as of 31 December 2020, which is
invested mainly in fixed income and credit related securities
The following is a table summarizing the financial portfolio as of year-end 2020
Name
2020
Book Value US $m
2019
Book Value US $m
Investment in the loan market through CLOs
Open Warehouse facilities
Perpetual Bonds
Other Public Equities
Invested Total
Cash
Total
77 0
10 1
-
12 5
99 6
50 4
150 0
98 4
-
1 1
1 7
101 2
56 5
157 7
Senior Secured Loans and Collateralized Loan Obligations (CLO):
US senior secured loans are a floating rate asset class with a senior secured claim on the borrower and with
overall low volatility and low correlation to the equity market CLOs are managed portfolios invested into
diversified pools of senior secured loans and financed with long term financing
Evaluating the late cycle behaviour in the credit and loan market, the Company had already started cutting
down risk in late 2019 The Company started 2020 with over USD 56m in cash and one warehouse open
The CLO market performed strongly until the end of February and CLO tranches continued their late 2019
rally Management took advantage of this tightening and refinanced one CLO to lower its cost of funding
However, as soon as COVID-19 started spreading outside China, management further cut down risk and
exiting its open warehouse position with a net carry of USD 1 6m
The spread of COVID-19 across Europe and US from early March 2020 caused widespread concern for health
and markets declined sharply The US Central Bank and government responded quickly and in good measure,
14
Annual Report 2020
stemming the decline in broader risk markets This assistance, however, was not extended to borrowers in
the leveraged loan market and the rating agencies quickly downgraded several credits causing significant
declines in buffers for most CLOs As a result, market values across CLO equity positions declined sharply
However, there were almost no forced sales In April 2020, over 25% of CLO equity in the market (especially
short reinvestment period deals) tripped key tests, and as expected, diverted some cash away from equity
investors to improve the CLO structure Our CLO portfolio, however, continued to receive distributions
from almost all of our positions as we were positioned with stronger long reinvestment deals 91% of the
portfolio by market value was invested in CLOs with over two years of reinvestment period remaining at
January 2020
The loan market lagged initially but rallied strongly in the last quarter of 2020 Most IG rated CLO tranches
recovered to prior year levels and BB and CLO equity valuations were also catching up As the loan market
re-opened, new loans were issued with wider spreads and LIBOR floors LIBOR floors are very accretive to
CLO equity as CLO liabilities do not have a positive LIBOR floor The positive effect of LIBOR floors in the
loan market already resulted in higher cash flows in the fourth quarter payments
Management also took advantage of depressed and dislocated pricing levels in CLO BB tranches and
opportunistically traded them in the second half of the year In 2020, we received about USD 21 9m in cash
distributions from the CLO and warehouse portfolio and we expect to receive strong distributions in the
near future Further, with CLO liability spreads tightening into the year-end and expectations for further
tightening in 2021, management opened a new warehouse As of the date of this report, management
have converted this warehouse into a new issue CLO with the tightest liability spreads since 2018 This
warehouse generated USD 1 6m in net carry
As of the end of the year, all of the Company’s US CLO equity positions were passing their Junior
Overcollateralization (OC) tests Management continues to actively monitor the CLO portfolio and position
it towards longer reinvestment periods through recycling old CLOs into new or refinancing them with
extended reinvestment periods, as well as conducting relative value and opportunistic trading As of the
date of this report, management has already refinanced four of its CLOs to lower their cost of funding and
reset one 2017 CLO extending its reinvestment period by 5 years and also reduced its cost of funding
We expect loan default rates to be moderate from 2020 levels but to continue to stay somewhat elevated
Management expects credit markets to remain benign in the near future given the amount of liquidity and
lack of yield in investment grade fixed income
The Company’s CLO portfolio is divided into the following geographical areas:
US CLOs
2020
Amount
US $000
77,006
77,006
Percentage
100 00%
100%
2019
Amount
US $000
98,418
98,418
Percentage
100 00%
100%
Private Equity Funds
The other private equity investments held by the Company are incorporated in the form of Managed Funds
(mostly closed end funds) mainly in Israel and the emerging economies The investments of these funds
into their portfolio companies were mostly done in 2008 and 2009 The Company expects material exits of
portfolio companies from funds to materialize over the next couple of years
15
Annual Report 2020 The following summarizes the book value of the private equity funds as at year-end 2020
Name
Phytech (Israel)
Other investments
Total
Book Value US $m
1 9
1 8
3 7
Phytech: Phytech is an agriculture-technology company in Israel providing end-to-end solutions
for achieving higher yields on crops and trees In September 2020, Phytech raised USD 25m at a
pre-money valuation of USD 105m As part of the capital raise, the manager of the investment
reduced its holding in Phytech and distributed USD 471k (versus our investment of USD 394k) in
cash Following these transactions, Livermore continues to hold 12 2% in Phytech Global Advisors
Ltd, which in turns now holds 11 95% on a fully diluted basis in Phytech Ltd
The following table reconciles the review of activities to the Company’s financial assets as of 31
December 2020:
Name
Financial Portfolio
Private Equity Funds
Total
Financial assets at fair value through profit or loss (note 4)
Financial assets at fair value through other comprehensive
income (note 5)
Total
Book Value US $m
99 6
3 7
103 3
99 6
3 7
103 3
16
Annual Report 2020 Events after the reporting date
Details of materials events after the reporting date are disclosed in note 28 to the financial
statements
Litigation
At the time of this Report, there is one matter in litigation that the Company is involved in Further
information is provided in note 23 to the financial statements
17
Annual Report 2020 Report of the Directors
The Directors submit their annual report and audited financial statements of the Company for the
year ended 31 December 2020
This report has been prepared on a voluntary basis and it does not contain all of the information
that would have been required had it been prepared in accordance with the UK Companies Act 2006
guidance
The Board’s objectives
The Board’s primary objectives are to supervise and control the management activities, business
development, and the establishment of a strong franchise in the Company’s business lines Measures
aimed at increasing shareholders’ value over the medium to long-term, such as an increase in NAV
are used to monitor performance
The Board of Directors
Richard Barry Rosenberg (age 65) independent, Non-Executive Director, Chairman of the Board
Richard joined the Company in December 2004 He became Non-Executive Chairman on 31 October
2006 He qualified as a chartered accountant in 1980 and in 1988 co-founded the accountancy
practice SRLV He has considerable experience in giving professional advice to clients in the leisure
and entertainment sector Richard is a Director of a large number of companies operating in a
variety of business segments
Noam Lanir (age 54), Founder and Chief Executive Officer
Noam founded the Company in July 1998, to develop a specialist online marketing operation Noam
has led the growth and development of the Company’s operations over the last twenty 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 53), Executive Director and Chief Investment Officer
Ron was appointed as Executive Director and Chief Investment Officer in August 2007 Ron has led
the establishment and development of Livermore’s investment platform as a leading specialized
house in the credit space Ron also has wide investment and M&A experience From 2001 to 2006
Ron served as a member of the management at Bank Leumi, Switzerland and was responsible for
investment activity Prior to this he spent five years as a commercial lawyer advising banks and
large corporations on corporate transactions, including buyouts and privatisations Ron has over 18
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 an LLB (LAW) and BA in Economics from
Tel Aviv University Ron is also the founder and owner of the Israel Cycling Academy a non-profit
professional cycling team
Augoustinos Papathomas (age 58) independent, Non-Executive Director
Augoustinos joined the Board in February 2019 He is a trained and qualified UK Chartered
Accountant He is the senior Partner of APP Audit and APP Advisory in Cyprus with over 30 years
of experience in assurance, taxation and advisory for local and international clients He is also an
18
Annual Report 2020 insolvency practitioner with experience in many liquidations and receiverships Augoustinos has
served as a director in various bodies and organisations and currently he is the chairman of the
Famagusta Chamber of Commerce and Industry in Cyprus
Directors’ responsibilities in relation to the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and International Financial Reporting Standards as adopted by the European Union
The Directors are required to prepare financial statements for each financial year which give a true and fair
view of the financial position of the Company, and its financial performance and cash flows for that period
In preparing these financial statements, the Directors are required to:
•
Select suitable accounting policies and then apply them consistently;
• Make judgments and estimates that are reasonable and prudent;
•
•
State whether applicable accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
Prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company will continue in business
The Directors are responsible for keeping proper accounting records that are sufficient to show and
explain the Company’s transactions, and at any time enable the financial position of the Company
to be determined with reasonable accuracy and enable them to ensure that the financial statements
comply with the applicable law and International Financial Reporting Standards as adopted by the
European Union They are also responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities
The Directors are responsible for the maintenance and integrity of the corporate and financial
information included on the Company’s website Legislation in the British Virgin Islands governing
the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions
Disclosure of information to the Auditor
In so far as the Directors are aware:
•
•
there is no relevant audit information of which the Company’s auditor is unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of
any relevant audit information and to establish that the auditor is aware of that information
19
Annual Report 2020 Substantial Shareholdings
As at 19 March 2021 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
123,048,011
Ron Baron
25,456,903
70 39
14 56
75 06
15 53
* after consideration of the treasury shares bought during 2021
Save as disclosed in this report and in the remuneration report, the Company is not aware of any person
who is interested directly or indirectly in 3% or more of the issued share capital of the Company or
could, directly or indirectly, jointly or severally, exercise control over the Company
Details of transactions with Directors are disclosed in note 22 to the financial statements
20
Annual Report 2020
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
The Board Constitution and Procedures
The Company is controlled through the Board of Directors, which comprises of two independent Non-
Executive Directors (one of which is the Board’s Chairman) and two Executive Directors The Chief
Executive’s responsibility is to focus on co-ordinating the company’s business and implementing
Company strategy
A formal schedule of matters is reserved for consideration by the Board, which meets approximately
four times each year The Board is responsible for implementation of the investing strategy as described
in the circular to shareholders dated 6 February 2007 and adopted pursuant to shareholder approval at
the Company’s EGM on 28 February 2007 It reviews the strategic direction of the Company, its codes
of conduct, its annual budgets, its progress towards achievement of these budgets and any capital
expenditure programmes In addition, the Directors have access to advice and services of the Company
Secretary and all Directors are able to take independent professional advice if relevant to their duties
The Directors receive training and advice on their responsibilities as necessary All Directors submit
themselves to re-election at least once every three years
Board Committees
The Board delegates clearly defined powers to its Audit and Remuneration Committees The minutes
of each Committee are circulated by the Board
Remuneration Committee
The Remuneration Committee comprises of the Non-Executive Chairman of the Board and a Non-
Executive Director The Remuneration Committee considers the terms of employment and overall
remuneration of the Executive Directors and key members of Executive management regarding
share options, salaries, incentive payments and performance related pay The remuneration of Non-
Executive Directors is determined by the Board
Audit Committee
The Audit Committee comprises of the Non-Executive Chairman of the Board and a Non-Executive
Director and is chaired by the Chairman of the Board The duties of the Committee include monitoring
the auditor’s performance and reviewing accounting policies and financial reporting procedures
The Quoted Company Alliance (QCA) Code
The Directors recognise the importance of good corporate governance and have chosen to apply
the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’) The QCA Code was
developed by the QCA in consultation with a number of significant institutional small company
investors, as an alternative corporate governance code applicable to AIM companies The underlying
principle of the QCA Code is that “the purpose of good corporate governance is to ensure that the
21
Annual Report 2020 company is managed in an efficient, effective and entrepreneurial manner for the benefit of all
shareholders over the longer term” The Directors anticipate that whilst the Company will continue
to comply with the QCA Code, given the Group’s size and plans for the future, it will also endeavour
to have regard to the provisions of the UK Corporate Governance Code as best practice guidance to
the extent appropriate for a company of its size and nature To see how the Company addresses the
key governance principles defined in the QCA Code please refer to the table listed on the Company’s
website, which was last reviewed and updated in February 2021
A complete index of the disclosures required by the QCA Code, including those on the Company’s
website, can be found at http://www livermore-inv com/CorporateGovernance
Communication with Investors
The Directors are available to meet with shareholders throughout the year In particular the Executive
Directors prepare a general presentation for analysts and institutional shareholders following the
interim and preliminary results announcements of the Company The chairman, Richard Rosenberg,
is available for meetings with shareholders throughout the year The Board endeavours to answer
all queries raised by shareholders promptly
Shareholders are encouraged to participate in the Annual General Meeting at which the Chairman
will present the key highlights of the Company’s performance The Board will be available at the
Annual General Meeting to answer questions from shareholders
Internal Control
The Board is responsible for ensuring that the Company has in place a system of internal controls
and for reviewing its effectiveness In this context, control is defined in the policies and processes
established to ensure that business objectives are achieved cost effectively, assets and shareholder
value safeguarded, and that laws and regulations are complied with Controls can provide reasonable
but not absolute assurance that risks are identified and adequately managed to achieve business
objectives and to minimise material errors, frauds and losses or breaches of laws and regulations
The Company operates a sound system of internal control, which is designed to ensure that the risk
of misstatement or loss is kept to a minimum
Given the Company’s size and the nature of its business, the Board does not consider that it is
necessary to have an internal audit function An internal audit function will be established as and
when the Company is of an appropriate size
The Board undertakes a review of its internal controls on an ongoing basis
Going Concern
The Directors have reviewed the current and projected financial position of the Company, making
reasonable assumptions about interest and distribution income, future trading performance, valuation
projections and debt requirements On the basis of this review, the Directors have a reasonable
expectation that the Company has adequate resources to continue in operational existence for the
foreseeable future Accordingly, they continue to adopt the going concern basis in preparing the
Annual Report and accounts
22
Annual Report 2020 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
23
Annual Report 2020 Remuneration Report
The Directors’ emoluments, benefits and shareholdings during the year ended 31 December 2020
were as follows:
Directors’ Emoluments
Each of the Directors has a service contract with the Company
Total emoluments
Director
Date of
agreement
Fees
US $000
Benefits
US $000
Reward
payments
US $000
2020
US $000
2019
US $000
Richard Barry
Rosenberg
10/06/05
Noam Lanir
10/06/05
Ron Baron
01/09/07
Augoustinos
Papathomas
01/02/19
69
400
350
37
-
45
-
-
-
-
-
-
69
445
350
37
82
745
1,450
30
The dates are presented in day / month / year format
Directors’ Interests
Interests of Directors in ordinary shares
Notes
As at 31 December 2020
As at 31 December 2019
Number of
Ordinary
Shares
Percentage of
ordinary share
capital
Number of Ordinary
Shares
Percentage of
ordinary share
capital
Noam Lanir
a)
133,936,588
76 620%
133,936,588
76 620%
Ron Baron
25,456,903
14 560%
25,456,903
14 560%
Richard
Barry Rosenberg
Notes:
15,000
0 01%
15,000
0 01%
a) Noam Lanir has his interest in ordinary shares by virtue of the fact that he owns directly
24
Annual Report 2020 or indirectly all of the issued share capital of Groverton Management Limited Further
information is provided in note 22 to the financial statements
Remuneration Policy
The Company’s policy has been designed to ensure that the Company has the ability to attract, retain and
motivate executive Directors and other key management personnel to ensure the success of the organization
The following key principles guide its policy:
•
•
•
•
•
•
•
•
•
policy for the remuneration of executive Directors will be determined and regularly reviewed
independently of executive management and will set the tone for the remuneration of other
senior executives
the remuneration structure will support and reflect the Company’s stated purpose to maximize
long-term shareholder value
the remuneration structure will reflect a just system of rewards for the participants
the overall quantum of all potential remuneration components will be determined by the exercise
of informed judgement of the independent remuneration committee, taking into account the
success of the Company and the competitive global market
a significant personal shareholding will be developed in order to align executive and shareholder
interests
the assessment of performance will be quantitative and qualitative and will include exercise of
informed judgement by the remuneration committee within a framework that takes account of
sector characteristics and is approved by shareholders
the committee will be proactive in obtaining an understanding of shareholder preferences
remuneration policy and practices will be as transparent as possible, both for participants and
shareholders
the wider scene, including pay and employment conditions elsewhere in the Company, will be
taken into account, especially when determining annual salary increases
25
Annual Report 2020
Review of the Business and Risks
Risks
The Board considers that the risks the Shareholders face can be divided into external and internal risks
External risks to shareholders and their returns are those that can severely influence the investment
environment within which the Company operates, and include economic recession, declining corporate
profitability, higher corporate default rates and lower than historical recoveries, rising inflation and
interest rates and excessive stock-market speculation
The Company’s portfolio is exposed to interest rate changes, credit risk, liquidity risk and volatility
particularly in the US In addition, the portfolio is exposed to currency risks as some of the underlying
portfolio is invested in assets denominated in non-US currencies while the Company’s functional
currency is USD Investments in certain emerging markets are exposed to governmental and regulatory
risks
The mitigation of these risks is achieved by following micro and macroeconomic trends and changes,
regular monitoring of underlying assets and price movements and investment diversification The
Company also engages from time to time in certain hedging activities to mitigate these risks
As of the date of this report, large-scale vaccination programs and huge fiscal and monetary stimulus
seem to have been successful in reducing the spread and health impact of the virus, as well as put
most developed countries on a strong recovery course Unfortunately, the virus continues to spread
in less developed regions such as India and the risk of a vaccine-resistant mutated virus remains
The Company is primarily exposed to the US economy and is benefiting from the economic recovery
as tighter credit spreads and reduced distressed credits increase the value of the Company’s CLO
portfolio While the Company continues to be conservatively positioned with cash in excess of USD
45m as of 13 May 2021, the Company plans to increase its investments in the CLO market in the near-
mid term At the same time, the Company plans to maintain strong liquidity and stay debt free
Internal risks to shareholders and their returns are related to Portfolio risks (investment and geography
selection and concentration), balance sheet risk (gearing) and/or investment mismanagement risks
The Company’s portfolio has a significant exposure to senior secured loans of US companies and
therefore has a concentration risk to this asset class
A periodic internal review is performed to ensure transparency of Company activities and investments
All service providers to the Company are regularly reviewed The mitigation of the risks related to
investments is effected by investment restrictions and guidelines and through reviews at Board
Meetings
As the portfolio of the Company is currently invested in USD denominated assets, movements in other
currencies are expected to have a limited impact on the business
On the asset side, the Company’s exposure to interest rate risk is limited to the interest-bearing
deposits and portfolio of bonds and loans in which the Company invests Currently, the Company is
primarily invested in sub-investment grade corporate loans through CLOs, which exposes the Company
to credit risk (defaults and recovery rates, loan spreads over base rate) as well as liquidity risks in the
CLO market
Management monitors liquidity to ensure that sufficient liquid resources are available to the Company
26
Annual Report 2020 The Company’s credit risk is primarily attributable to its fixed income portfolio, which is exposed to
corporate bonds with a particular exposure to the financial sector and to US senior secured loans
Further information on Financial risk management is provided in note 26 of the financial statements
Share Capital
There was no change in the authorised share capital during the year to 31 December 2020 The
authorised share capital is 1,000,000,000 ordinary shares with no par value
Related party transactions
Details of any transactions of the Company with related parties during the year to 31 December
2020 are disclosed in note 22 to the financial statements
By order of the Board of Directors
Chief Executive Officer
25 May 2021
27
Annual Report 2020 Independent Auditor’s Report to the
Members of Livermore Investments
Group Limited
Opinion
We have audited the consolidated financial statements of Livermore Investments Group Limited
(the ‘’Company’’) and its subsidiary Livermore Capital AG (the ‘’Group’’), which are presented in
pages 24 to 51 and comprise the consolidated statement of financial position as at 31 December
2020, and the consolidated statements of profit or loss, Consolidated statement of comprehensive
income, Consolidated statement of changes in equity and Consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary
of significant accounting policies
In our opinion, the accompanying consolidated financial statements give a true and fair view of
the consolidated financial position of the Group as at 31 December 2020, and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) Our
responsibilities under those standards are further described in the ‘’Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements’’ section of our report We are independent
of the Group in accordance with the International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (including International Independence
Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit
of the consolidated financial statements in Cyprus, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion
Emphasis of Matter – Uncertain Outcome of a Legal Claim
We draw attention to note 23 of the consolidated financial statements which describes the
uncertainty outcome of a legal claim against one of the custodian banks that the Group and the
Company uses on its behalf Our opinion is not modified in respect of this matter
28
Annual Report 2020 Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the consolidated financial statements of the current period These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters This is
not a complete list of all risks identified by our audit
Investments’ valuation Level 3
Refer to note 7 of the consolidated financial statements
The Key audit matter
How the matter was addressed in our audit
The Group has financial assets of $21m (2019:
$12m) classified within fair value hierarchy at
level 3, as disclosed in note 7 The fair value of
level 3 financial assets is generally determined
either based on third party valuations, or when
not available based on adjusted Net Asset Value
(NAV) calculations using inputs from third
parties
Due to the use of significant
judgments
by the Board of Directors, the existence of
unobservable inputs and the significant total
value of financial assets within the Level 3
hierarchy, we consider the valuation of these
investments as a key audit matter
•
Our audit work included, but was not restricted to:
discussing and obtaining an understanding of
•
the valuation methodologies applied by the
directors and assessing their appropriateness
for each investment;
obtaining third party confirmations
indicating the NAV/Fair Value of the
investments and comparing to clients’
records; and evaluating the independent
professional valuer’s competence, capabilities
and objectivity;
in cases where the valuations have been
performed by the Board of directors,
evaluating the reasonableness of the
underlying assumptions and verifying the
inputs used by checking them to reliable third
party sources; and
considering the adequacy of consolidated
financial statement disclosures in relation to
the valuation methodologies used for each
class of level 3 financial assets
•
•
Key observations
We concluded that the judgements and estimates
used by the management in determining the Fair
Value of investments were reasonable and the
disclosures made in relation to these matters in the
consolidated financial statements were appropriate
29
Annual Report 2020 Other Information
The Board of Directors is responsible for the other information The other information comprises
the information included in the Highlights, Chairman’s and Chief Executive’s Review, Review of
Activities, Report of the Directors, Corporate Governance Statement, Remuneration report, Review
of the Business and Risks, but does not include the consolidated financial statements and our
auditor’s report thereon
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon
In connection with our audit of the consolidated financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact
We have nothing to report in this regard
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The Board of Directors is responsible for the preparation of consolidated financial statements that give
a true and fair view in accordance with International Financial Reporting Standards as adopted by the
European Union, and for such internal control as the Board of Directors determines is necessary to
enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so
Those charged with governance are responsible for overseeing the Group’s financial reporting process
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
30
Annual Report 2020 • Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors
•
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report However, future
events or conditions may cause the Group to cease to continue as a going concern
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves a true and fair view
• Obtain sufficient appropriate audit evidence regarding the financial information of the
•
entities or business activities within the Group to express an opinion on the consolidated
financial statements We are responsible for the direction, supervision and performance of the
group audit We remain solely responsible for our audit opinion
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current
period and are therefore the key audit matters We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication
31
Annual Report 2020 Other Matter
This report, including the opinion, has been prepared for and only for the Group’s members as a body
and for no other purpose We do not, in giving this opinion, accept or assume responsibility for any
other purpose or to any other person to whose knowledge this report may come to
The engagement partner on the audit resulting in this independent auditor’s report is Mrs Froso
Yiangoulli
Froso Yiangoulli
Certified Public Accountant and Registered Auditor
for and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered Auditors
Nicosia, 25 May 2021
32
Annual Report 2020 Livermore Investments Group Limited
Consolidated Statement of Financial Position as at 31 December 2020
Note
2020
US $000
2019
US $000
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Financial assets at fair value through profit or loss
Financial assets at fair value through other
comprehensive income
Investments in subsidiaries
Current assets
Trade and other receivables
Financial assets at fair value through profit or loss
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Total equity
Liabilities
Non-current liabilities
Lease liability
Current liabilities
Trade and other payables
Lease liability – current portion
Current tax payable
Total liabilities
Total equity and liabilities
Net asset value per share
4
5
8
9
4
10
11
11
12
32
272
77,006
3,729
6,813
87,852
8,238
22,577
50,407
81,222
45
329
98,418
6,204
5,787
110,783
8,251
2,837
56,499
67,587
169,074
178,370
-
169,187
(21,285)
16,005
-
169,187
(20,598)
24,491
163,907
173,080
181
248
4,868
91
27
4,986
4,907
83
52
5,042
5,167
169,074
5,290
178,370
Basic and diluted net asset value per share (US $)
14
0 94
0 99
These financial statements were approved by the Board of Directors on 25 May 2021
The notes 1 to 28 form part of these consolidated financial statements
33
Annual Report 2020
Livermore Investments Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2020
Investment income
Interest and distribution income
Fair value changes of investments
Note
16
17
2020
US $000
2019
US $000
22,010
29,028
(18,483)
(25,358)
3,527
3,670
Operating expenses
18
(2,808)
(5,132)
Operating profit / (loss)
Finance costs
Finance income
Profit / (loss) before taxation
Taxation charge
Profit / (loss) for the year
Earnings / (loss) per share
19
19
20
719
(40)
293
972
(127)
845
(1,462)
(18)
550
(930)
(151)
(1,081)
Basic and diluted earnings / (loss) per share (US $)
21
0 005
(0 006)
The profit / (loss) for the year is wholly attributable to the owners of the parent
The notes 1 to 28 form part of these consolidated financial statements
34
Annual Report 2020
Livermore Investments Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2020
Profit / (loss) for the year
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Foreign exchange gains on translation of subsidiary
Items that are not reclassified subsequently to profit or loss
Financial assets designated at fair value through other
comprehensive income – fair value losses
Note
2020
US $000
2019
US $000
845
(1,081)
8
5
4
9
(4,022)
(181)
Total comprehensive loss for the year
(3,173)
(1,253)
The total comprehensive loss for the year is wholly attributable to the owners of the parent
The notes 1 to 28 form part of these consolidated financial statements
35
Annual Report 2020 Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2020
Note
Share
premium
US
$000
Translation
reserve
US
$000
Balance at 1 January 2019
169,187
Loss for the year
Other comprehensive income:
Financial assets at fair value through OCI - fair
value losses
Foreign exchange gains on translation of
subsidiary
Transfer of realised gains
Total comprehensive loss for the year
Balance at 31 December 2019
Dividends
Transactions with owners
Profit for the year
Other comprehensive income:
17
13
169,187
Financial assets at fair value through OCI -
fair value losses
Foreign exchange gains on translation of
subsidiary
Transfer of realised gains
17
Total comprehensive loss for the year
-
-
-
-
-
-
-
-
-
-
-
-
Investments
revaluation
reserve
US
$000
Retained
earnings
US
$000
Total
US
$000
(20,291)
25,425
174,333
-
(1,081)
(1,081)
(181)
-
(147)
(328)
-
-
147
(181)
9
-
(934)
(1,253)
12
-
-
9
-
9
21
(20,619)
24,491
173,080
-
-
-
-
4
-
4
-
-
-
(6,000)
(6,000)
(6,000)
(6,000)
845
845
(4,022)
-
-
-
3,331
(3,331)
(4,022)
4
-
(691)
(2,486)
(3,173)
Balance at 31 December 2020
169,187
25
(21,310)
16,005
163,907
The notes 1 to 28 form part of these consolidated financial statements.
36
Annual Report 2020
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2020
Note
2020
US $000
2019
US $000
Cash flows from operating activities
Profit / (loss) before tax
Adjustments for
Depreciation
Interest expense
Interest and distribution income
Bank interest income
Fair value changes of 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 distributions received
Tax paid
Net cash from operating activities
Cash flows from investing activities
Acquisition of investments
Proceeds from sale of investments
Net cash (used in) / from investing activities
Cash flows from financing activities
Lease liability payments
Interest paid
Dividends paid
Net cash used in financing activities
19
16
19
17
19
13
972
102
40
(930)
98
18
(22,010)
(29,028)
(119)
18,483
(174)
(2,706)
(60)
(78)
(2,844)
22,204
(133)
19,227
(49,552)
30,201
(19,351)
(102)
(40)
(6,000)
(6,142)
(437)
25,358
(113)
(5,034)
(5,391)
(1,020)
(11,445)
29,756
(98)
18,213
(50,200)
62,273
12,073
(96)
(18)
-
(114)
37
Annual Report 2020 Net (decrease) / increase in cash and cash
equivalents
Cash and cash equivalents at the beginning of the year
Exchange differences on cash and cash equivalents
Note
2020
US $000
(6,266)
56,499
174
Cash and cash equivalents at the end of the year
10
50,407
2019
US $000
30,172
26,214
113
56,499
The notes 1 to 28 form part of these consolidated financial statements
38
Annual Report 2020
Notes on the Consolidated
Financial Statements
1 General Information
Incorporation, principal activity and status of the Company
1 1 The Company was incorporated as an international business company and registered in the
British Virgin Islands (BVI) on 2 January 2002 under IBC Number 475668 with the name
Clevedon Services Limited The liability of the members of the Company is limited
1 2 The Company changed its name to Empire Online Limited on 5 May 2005 and then to
Livermore Investments Group Limited on 28 February 2007
1 3 The principal activity of the Company changed to investment activities on 1 January 2007
Before that the principal activity of the Company was the provision of marketing services
to the online gaming industry and, since 1 January 2006, the operation of online gaming
1 4 The principal legislation under which the Company operates is the BVI Business Companies
Act, 2004
1 5 The Company is tax resident in the Republic of Cyprus
1 6 The registered office of the Company is located at Trident Chambers, PO Box 146, Road
Town, Tortola, British Virgin Islands
2 Basis of preparation
The consolidated financial statements (“the financial statements”) of Livermore Investments
Group Limited have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union (EU) The financial statements have been prepared on an accrual basis (other
than for cash flow information) using the significant accounting policies and measurement
bases summarised in note 3, and also on a going concern basis
The financial information is presented in US dollars because this is the currency in which the
Company primarily operates (i e , the Company’s functional currency)
References to the Company hereinafter also include its consolidated subsidiary (note 8)
The Directors have reviewed the accounting policies used by the Company and consider them
to be the most appropriate
3 Accounting Policies
The significant accounting policies applied in the preparation of the financial statements are
as follows:
3 1 Adoption of new and revised IFRS
As from 1 January 2020, the Company adopted any applicable new or revised IFRS and
relevant amendments and interpretations which became effective, and also were endorsed
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
The following IASB or IFRIC documents were issued by the date of authorisation of these
financial statements but are not yet effective for the year ended 31 December 2020, or
have not yet been endorsed either pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union by 31 December 2020, or by the UK Endorsement Board (UKEB) after
31 December 2020:
39
Annual Report 2020
• Amendments to IFRS 3: “Reference to the
Conceptual Framework”
• Amendments to IFRS 4: “Extension of the
Temporary Exemption from Applying IFRS 9”
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16: “Interest Rate Benchmark Reform
- Phase 2”
• Amendment to IFRS 10, and IAS 28: “Sale or
Contribution of Assets between an Investor
and its Associate or Joint Venture”
•
IFRS 14: “Regulatory Deferral Accounts”
• Amendment to IFRS 16: “COVID-19-Related
Rent Concessions”
• Amendment to IFRS 16: “COVID -19-Related
Rent Concessions beyond 30 June 2021”
•
IFRS 17: “Insurance Contracts”
• Amendments to IFRS 17
Endorsed by EU /
UKEB
Effective date
(IASB)
No
Yes
Yes
No
No
Yes
No
No
No
1 January 2022
1 January 2021
1 January
2021
to be
determined
1 January 2016
1 June 2020
1 April 2021
1 January 2023
1 January 2023
• Amendment
to
IAS 1: “Classification of
Liabilities as Current or Non-current”
No
1 January 2023
• Amendments to
Statement 2:
policies”
IAS 1 and
IFRS Practice
“Disclosure of Accounting
• Amendments to IAS 8: “Definition of Accounting
Estimates”
• Amendments to IAS 16: “Property, Plant and
Equipment: Proceeds before Intended Use”
• Amendments to IAS 37: “Onerous Contracts -
Cost of Fulfilling a Contract”
• Annual Improvements to IFRS Standards 2018-
2020
No
No
No
No
No
1 January 2023
1 January 2023
1 January 2022
1 January 2022
1 January 2022
40
Annual Report 2020
The Board of Directors expects that when the above become effective in future periods, they will
not have any material effect on the financial statements
3 2
Investments in subsidiaries and basis of consolidation
Subsidiaries are entities controlled either directly or indirectly by the Company
Control is achieved where the Company is exposed, or has right, to variable returns from its
involvement with a subsidiary and has the ability to affect those returns through its power
over the subsidiary
The Directors have determined that Livermore meets the definition of an investment entity,
as this is defined in IFRS 10 “Financial Statements” As per IFRS 10 an investment entity is
an entity that:
(a) obtains funds from one or more investors for the purpose of providing those investors with
(b)
investment management services;
commits to its investors that its business purpose is to invest funds solely for returns from
capital appreciation, investment income, or both; and
(c) measures and evaluates the performance of substantially all of its investments on a fair
value basis
An investment entity is exempted from consolidating its subsidiaries, unless any subsidiary
which is not itself an investment entity mainly provides services that relate to the investment
entity’s investment activities The financial statements consolidate the Company and one
of its subsidiaries providing such services (note 8 shows further details of the consolidated
and unconsolidated subsidiaries)
Investments in unconsolidated subsidiaries are initially recognised at their fair value and
subsequently measured at fair value through profit or loss Subsequently, any gains or
losses arising from changes in their fair value are included in profit or loss for the year
Dividends and other distributions from unconsolidated subsidiaries are recognised as
income when the Company’s right to receive payment has been established
A subsidiary that is not an investment entity itself and which provides services that relate
to the Company’s investment activities is consolidated rather than included within the
investments in subsidiaries measured at fair value through profit or loss
The financial statements of the consolidated subsidiary are prepared using uniform
accounting policies Where necessary, adjustments are made to the financial statements
of consolidated subsidiary to bring its accounting policies into line with those used by the
Company The consolidated subsidiary has a reporting date of 31 December
All intra-group transactions, balances, income and expenses are eliminated on consolidation
The results and cash flows of any consolidated subsidiary acquired or disposed of during
the year are consolidated from the effective date of acquisition or up to the effective date
of disposal
3 3 Interest and distribution income
•
•
Interest income is recognised based on the effective interest method
Distribution income is recognised on the date that the Company’s right to receive payment
is established, which in the case of quoted securities is the ex-dividend date
3 4 Foreign currency
41
Annual Report 2020
The financial statements of the Company are presented in USD, which is the currency of
the primary economic environment in which it operates (its functional currency)
Transactions in foreign currencies are recorded at the rates of exchange prevailing on the
dates of the transaction Monetary assets and liabilities denominated in non-functional
currencies are translated into functional currency using year-end spot foreign exchange
rates Non-monetary assets and liabilities are translated upon initial recognition using
exchange rates prevailing at the dates of the transactions Non-monetary assets that are
measured in terms of historical cost in foreign currency are not subsequently re-translated
Gains and losses arising on the settlement of monetary items and on the re-translation
of monetary items are included in the profit or loss for the year Those that arise on
the re-translation of non-monetary items carried at fair value are included in the profit
or loss of the year as part of the fair value gain or loss except for differences arising
on the re-translation of non-monetary financial assets designated at fair value through
other comprehensive income in respect of which gains and losses are recognised in other
comprehensive income For such non-monetary items any exchange component of that
gain or loss is also recognised in other comprehensive income
The results and financial position of consolidated subsidiaries that have a functional
currency different from US dollars are translated into the presentation currency as follows:
(a) assets and liabilities are translated at the closing rate at the reporting date;
(b)
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
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
(c)
3 5 Taxation
Current tax is the tax currently payable based on taxable profit for the year in accordance
with the applicable tax laws
Current and deferred tax assets and liabilities are calculated at tax rates that are expected
to apply to their respective period of realisation, provided they are enacted or substantively
enacted as at the reporting date
3 6 Equity instruments
Equity instruments issued by the Company are recorded at proceeds received, net of direct issue
costs
The share premium account includes any premiums received on the initial issuing of the share
capital Any transaction costs associated with the issuing of shares are deducted from the premium
received
3 8 Financial assets
Financial assets are recognised when the Company becomes a party to the contractual
provisions of the financial instrument
A financial asset is derecognised only where the contractual rights to the cash flows
42
Annual Report 2020
from the asset expire or the financial asset is transferred, and that transfer qualifies for
derecognition A financial asset is transferred if the contractual rights to receive the cash
flows of the asset have been transferred or the Company retains the contractual rights
to receive the cash flows of the asset but assumes a contractual obligation to pay the
cash flows to one or more recipients A financial asset that is transferred qualifies for
derecognition if the Company transfers substantially all the risks and rewards of ownership
of the asset, or if the Company neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset
The Company classifies its financial assets in the following measurement categories:
(a) those to be measured at fair value (either through other comprehensive income, or through
profit or loss), and
(b) those to be measured at amortised cost
At initial recognition, the Company measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs that are
directly attributable to the acquisition of the financial asset Transaction costs of financial
assets carried at fair value through profit or loss are expensed in profit or loss
Financial assets at fair value through profit or loss
The Company classifies the following financial assets at fair value through profit or loss:
(a) equity investments that are held for trading;
(b) other equity investments for which the Directors have not elected to recognise fair value
gains and losses through other comprehensive income; and
(c) debt investments that do not qualify for measurement at either amortised cost or at fair
value through other comprehensive income
All financial assets within this category are measured at their fair value, with changes in
value recognised in the profit or loss when incurred
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (OCI) comprise equity
securities which are not held for trading, and for which the Company has made an
irrevocable election at initial recognition to recognise changes in fair value through OCI
rather than profit or loss
Where the Company’s management has elected to present fair value gains and losses on
equity investments in other comprehensive income, there is no subsequent reclassification
of fair value gains and losses to profit or loss Dividends from such investments continue to
be recognised in profit or loss when the Company’s right to receive payments is established
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows where those cash flows
represent solely payments of principal and interest are measured at amortised cost A gain
or loss on a financial asset that is measured at amortised cost is recognised in profit or loss
when the asset is derecognised or impaired Interest income from these financial assets is
recognised based on the effective interest rate method
The classification of debt instruments depends on the entity’s business model for managing
the financial assets and the contractual terms of the cash flows Financial assets with
embedded derivatives are considered in their entirety when determining whether their cash
43
Annual Report 2020
flows are solely payment of principal and interest
Impairment
The Company assesses the expected credit losses associated with its assets carried at
amortised cost, on a forward-looking basis The impairment methodology applied depends on
whether there has been a significant increase in credit risk For trade and other receivables
only, the Company applies the simplified approach permitted by IFRS 9, which permits
expected lifetime losses to be recognised from initial recognition of the receivables
Write offs
The Company writes off a financial asset when there is information indicating that the
counterparty is in severe financial difficulty and there is no realistic prospect of recovery,
e g , when the counterparty has been placed under liquidation or has entered into
bankruptcy proceedings Financial assets written off may still be subject to enforcement
activities, taking into account legal advice where appropriate Any recoveries made are
recognised in profit or loss
3 8 Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the contractual
provisions of the financial instrument
A financial liability is derecognised when it is extinguished, discharged, cancelled or
expires
Financial liabilities at amortised cost
Financial liabilities are measured initially at fair value plus transaction costs
After initial recognition financial liabilities are measured at amortised cost using the
effective interest rate method
3 9 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
Any bank overdrafts are considered to be a component of cash and cash equivalents, since
they form an integral part of the Company’s cash management
3 10 Segment reporting
In making investment decisions, Management assesses individual investments and then, in
analysing their performance, it receives and uses information for each investment product
separately rather than based on any segmental information Given that, Management
regards that all the Company’s activities fall under a single operating segment
3 11 Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates and requires management to exercise its judgement in
the process of applying the Company’s accounting policies It also requires the use of
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
44
Annual Report 2020
amounts of revenues and expenses during the reporting period Although these estimates
are based on management’s best knowledge of current events and actions, actual results
may ultimately differ from those estimates
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances
Critical accounting judgements
(i)
Classification of financial assets
Management exercises significant judgement in determining the appropriate classification
of the financial assets of the Company The Directors determine the appropriate classification
of the Company’s financial assets based on Livermore’s business model An entity’s business
model refers to how an entity manages its financial assets in order to generate cash
flows, considering all relevant and objective evidence The factors considered include
the contractual terms and characteristics which are very carefully examined, and also the
Company’s intentions and expected needs for realisation of the financial assets
All investments (except from certain equity instruments that are designated at fair value
through other comprehensive income) are classified as financial assets at fair value through
profit or loss, because this reflects more fairly the way these assets are managed by the
Company The Company’s business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth This portfolio of financial
assets is managed, and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy, and information about the portfolio is provided
internally on that basis to the Company’s Board of Directors and other key management
personnel
(ii) Consolidation of subsidiary
Management exercised significant judgment in determining which of the subsidiaries
that are not investment entities themselves, provide services that relate to the Company’s
investment activities and therefore need to be consolidated rather than included within
the investments in subsidiaries measured at fair value through profit or loss
Estimation uncertainty
Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments,
where active market quotes are not available Details of the bases used for financial assets
and liabilities are disclosed in note 7 In applying the valuation techniques management
makes maximum use of market inputs, and uses estimates and assumptions that are, as far
as possible, consistent with observable data that market participants would use in pricing
the instrument Where applicable data is not observable (level 3), management uses its
best estimates which may vary from the actual prices that would be achieved in an arm’s
length transaction at the reporting date Further information on level 3 valuations of
financial assets is provided in note 7 2
45
Annual Report 2020
4 Financial assets at fair value through profit or loss
Non-current assets
Fixed income investments (CLOs)
Current assets
Fixed income investments
Public equity investments
2020
US $000
2019
US $000
77,006
77,006
10,036
12,541
22,577
98,418
98,418
1,127
1,710
2,837
For description of each of the above categories, refer to note 6
The above investments represent financial assets that are mandatorily measured at fair value
through profit or loss
The Company treats its investments in the loan market through CLOs as non-current
investments as the Company generally intends to hold such investments over a period longer
than twelve months
5 Financial assets at fair value through other comprehensive income
Non-current assets
Private equities
2020
US $000
2019
US $000
3,729
6,204
For description of each of the above categories, refer to note 6
The above investments are non-trading equity investments that have been designated at fair
value through other comprehensive income
46
Annual Report 2020
6 Financial assets at fair value
The Company allocates its non-derivative financial assets at fair value (notes 4 and 5) as follows:
•
Fixed income investments relate to fixed and floating rate bonds, perpetual bank debt,
investments in the loan market through CLOs, and investments in open warehouse facilities
Public equity investments relate to investments in shares of companies listed on public
stock exchanges
Private equities relate to investments in the form of equity purchases in both high growth
opportunities in emerging markets and deep value opportunities in mature markets
The Company generally invests directly in prospects where it can exert influence Main
investments under this category are in the fields of real estate
•
•
7 Fair value measurements of financial assets and liabilities
The table in note 7 2 presents financial assets and liabilities measured at fair value in the
consolidated statement of financial position in accordance with the fair value hierarchy This
hierarchy groups financial assets and liabilities into three levels based on the significance of
inputs used in measuring the fair value of the financial assets and liabilities The fair value
hierarchy has the following levels:
-
-
-
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
that the entity can access at the measurement date;
Level 2: inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly; and
Level 3: unobservable inputs for the asset or liability
The level within which the financial asset is classified is determined based on the lowest
level of significant input to the fair value measurement
7 1 Valuation of financial assets
•
Fixed Income Investments and Public Equity Investments are valued per their closing
market prices on quoted exchanges, or as quoted by market maker Investments in open
warehouse facilities that have not yet been converted to CLOs, are valued based on an
adjusted net asset valuation
The Company values the CLOs based on the valuation reports provided by market makers
CLOs are typically valued by market makers using discounted cash flow models The key
assumptions for cash flow projections include default and recovery rates, prepayment
rates and reinvestment assumptions on the underlying portfolios (typically senior secured
loans) of the CLOs
Default and recovery rates: The amount and timing of defaults in the underlying collateral
and the amount and timing of recovery upon a default are key to the future cash flows
a CLO will distribute to the CLO equity tranche All else equal, higher default rates and
lower recovery rates typically lead to lower cash flows Conversely, lower default rates
and higher recoveries lead to higher cash flows
Prepayment rates: Senior loans can be pre-paid by borrowers CLOs that are within their
reinvestment period may, subject to certain conditions, reinvest such prepayments into
other loans which may have different spreads and maturities CLOs that are beyond their
reinvestment period typically pay down their senior liabilities from proceeds of such
47
Annual Report 2020
pre-payments Therefore, the rate at which the underlying collateral prepays impacts the
future cash flows that the CLO may generate
Reinvestment assumptions: A CLO within its reinvestment period may reinvest proceeds
from loan maturities, prepayments, and recoveries into purchasing additional loans
The reinvestment assumptions define the characteristics of the loans that a CLO may
reinvest in These assumptions include the spreads, maturities, and prices of such loans
Reinvestment into loans with higher spreads and lower prices will lead to higher cash
flows Reinvestment into loans with lower spreads will typically lead to lower cash flows
Discount rate: The discount rate indicates the yield that market participants expect to
receive and is used to discount the projected future cash flows Higher yield expectations
or discount rates lead to lower prices and lower discount rates lead to higher prices for
CLOs
Private Equities are valued using market valuation techniques as determined by the
Directors, mainly on the basis of valuations reported by third-party managers of such
investments Real Estate entities are valued by independent qualified property valuers
with substantial relevant experience on such investments Underlying property values are
determined based on their estimated market values
Investments in subsidiaries are valued at fair value as determined on a net asset
valuation basis The Company has determined that the reported net asset value of each
subsidiary represents its fair value at the end of the reporting period
•
•
7 2 Fair value hierarchy
Financial assets measured at fair value in the consolidated statement of financial position are
grouped into the fair value hierarchy as follows:
2020
US
$000
Level 1
2020
US
$000
Level 2
2020
US
$000
Level 3
2020
US
$000
Total
2019
US
$000
Level 1
2019
US
$000
Level 2
2019
US
$000
Level 3
2019
US
$000
Total
Fixed income
investments
Private equities
-
-
Public equity investments
12,541
Investments in
subsidiaries
-
77,006
10,036
87,042
1,127
98,418
-
99,545
-
-
-
3,729
3,729
-
-
12,541
1,710
6,813
6,813
-
-
-
-
6,204
-
6,204
1,710
5,787
5,787
12,541
77,006
20,578
110,125
2,837
98,418
11,991
113,246
The Company has no financial liabilities measured at fair value
The methods and valuation techniques used for the purpose of measuring fair value are
unchanged compared to the previous reporting year
No financial assets have been transferred between different levels
48
Annual Report 2020
Financial assets within level 3 can be reconciled from beginning to ending balances as follows:
At fair value
through OCI
Private equities
US $000
At fair value
through
profit or loss
Fixed Income
investments
US $000
As at 1 January 2019
Purchases
Settlement
Gains / (losses)
recognised in:
-
Profit or loss
- Other
comprehensive
income
As at 1 January 2020
Purchases
Settlement
Gains / (losses)
recognised in:
-
Profit or loss
- Other
comprehensive
income
6,387
-
(33)
-
(150)
6,204
1,650
(103)
-
(4,022)
38,490
23,000
(60,500)
(990)
-
-
25,000
(15,000)
36
-
Investments in
subsidiaries
US $000
5,205
-
-
582
-
5,787
-
-
1,026
-
Total
US $000
50,082
23,000
(60,533)
(408)
(150)
11,991
26,650
(15,103)
1,062
(4,022)
As at 31 December 2020
3,729
10,036
6,813
20,578
49
Annual Report 2020
The above gains and losses recognised can be allocated as follows:
At fair value
through OCI
Private equities
US $000
At fair value
through
profit or loss
Fixed Income
investments
US $000
Investments in
subsidiaries
US $000
Total
US $000
2019
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
Total gains / (losses) for 2019
-
-
(150)
(150)
-
(990)
-
582
-
-
582
(990)
(150)
(990)
582
(558)
At fair value
through OCI
Private equities
US $000
At fair value
through
profit or loss
Fixed Income
investments
US $000
Investments in
subsidiaries
US $000
Total
US $000
2020
Profit or loss
-
Financial assets held at
year-end
Other comprehensive income
-
Financial assets held at
year-end
Total gains / (losses) for 2020
-
36
1,026
1,062
(4,022)
(4,022)
-
36
-
1,026
(4,022)
(2,960)
50
Annual Report 2020 The Company has not developed any quantitative unobservable inputs for measuring the fair
value of its level 3 financial assets at 31 December 2020 and 2019 Instead, the Company
used prices from third-party pricing information without adjustment
Fixed income investments within level 3 represent open warehouses that have been valued
based on their net asset value The net asset value of a warehouse is primarily driven by the
fair value of its underlying loan asset portfolio (as determined by the warehouse’s manager)
plus received and accrued interest less the nominal value of the financing and accrued interest
on the financing In all cases, due to the nature and the short life of a warehouse, the carrying
amounts of the warehouses’ underlying assets and liabilities are considered as representative
of their fair values
Private equities within level 3 represent investments in private equity funds Their value has
been determined by each fund manager based on the funds’ net asset value Each fund’s net
asset value is primarily driven by the fair value of its underlying investments In all cases,
considering that such investments are measured at fair value, the carrying amounts of the
funds’ underlying assets and liabilities are considered as representative of their fair values
Investments in subsidiaries have been valued based on their net asset position The main
assets of the subsidiaries represent investments measured at fair value and receivables from
the Company itself as well as third parties Their net asset value is considered as a fair
approximation of their fair value
A reasonable change in any individual significant input used in the level 3 valuations is not
anticipated to have a significant change in fair values as above
8
Investments in subsidiaries
Unconsolidated subsidiaries
As at 1 January
Fair value gain
As at 31 December
2020
US $000
2019
US $000
5,787
1,026
6,813
5,205
582
5,787
51
Annual Report 2020
Details of the investments in which the Company has a controlling interest as at 31 December
2020 are as follows:
Name of Subsidiary
Place of
incorporation
Holding
Voting
rights and
shares held
Principal
activity
Consolidated subsidiary
Livermore Capital AG
Switzerland
Ordinary shares
100%
Administration
services
Unconsolidated subsidiaries
Livermore Properties Limited
Mountview Holdings Limited
British Virgin
Islands
British Virgin
Islands
Ordinary shares
100%
Ordinary shares
100%
Sycamore Loan Strategies Ltd Cayman Islands
Ordinary shares
100%
Livermore Israel Investments Ltd
Israel
Ordinary shares
100%
Sandhirst Limited
Cyprus
Ordinary shares
100%
Holding of
investments
Investment
vehicle
Investment
vehicle
Holding of
investments
Holding of
investments
52
Annual Report 2020
9 Trade and other receivables
Financial items
Accrued interest and distribution
income
Amounts due by related parties
(note 22)
Non-Financial items
Prepayments
VAT receivable
2020
US $000
2019
US $000
-
8,151
8,151
67
20
8,238
80
8,091
8,171
71
9
8,251
For the Company’s receivables of a financial nature, no lifetime expected credit losses and
no corresponding allowance for impairment have been recognised, as their default rates have
been determined to be close to 0%
No receivable amounts have been written-off during either 2020 or 2019
10 Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the
following at the reporting date:
Demand deposits
Short-term fixed deposits
Cash at bank
2020
US $000
50,407
-
50,407
2019
US $000
41,499
15,000
56,499
53
Annual Report 2020
11 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
US $000
As at 31 December 2020 and 2019
174,813,998
169,187
12 Trade and other payables
Financial items
Trade payables
Amounts due to related parties (note 22)
Accrued expenses
2020
US $000
2019
US $000
34
4,464
370
4,868
23
4,468
416
4,907
13 Dividend
At 21 February 2020, the Company paid an interim dividend of USD 6m (USD 0 0343 per share) to
members on the register on 24 January 2020, as announced by the Board on 30 December 2019
14 Net asset value per share
Net asset value per share has been calculated by dividing the net assets attributable to
ordinary shareholders by the closing number of ordinary shares in issue during the relevant
financial periods
Net assets attributable to
ordinary shareholders (USD 000)
Closing number of ordinary
shares in issue
Basic net asset value per share
(USD)
2020
163,907
2019
173,080
174,813,998
174,813,998
0 94
0 99
The diluted net asset value per share equals the basic net asset value per share since no
potentially dilutive shares exist as at 31 December 2020 and 2019
54
Annual Report 2020
15 Segment reporting
The Company’s activities fall under a single operating segment
The Company’s investment income and its investments are divided into the following
geographical areas:
Investment Income
Other European countries
United States
India
Asia
Investments
Other European countries
United States
India
Asia
2020
US $000
(486)
3,384
-
629
3,527
3,102
98,985
-
8,038
110,125
2019
US $000
(463)
5,096
(171)
(792)
3,670
2,215
100,235
716
10,080
113,246
Investment income, comprising interest and distribution income as well as fair value gains or
losses on investments, is allocated on the basis of the issuer’s location Investments are also
allocated based on the issuer’s location
The Company has no significant dependencies, in respect of its investment income, on any
single issuer
16 Interest and distribution income
Interest from investments
Distribution income
2020
US $000
782
21,228
22,010
2019
US $000
695
28,333
29,028
55
Annual Report 2020
Interest and distribution income is analysed between different categories of financial assets,
as follows:
2020
Distribution
income
US $000
Interest
US $000
2019
Total
US $000
Interest
US $000
Distribution
income
US $000
Total
US $000
Financial assets at
fair value through
profit or loss
Fixed income
investments
Public equity
investments
782
-
782
21,195
21,977
695
28,002
28,697
33
33
-
331
331
21,228
22,010
695
28,333
29,028
The Company’s distribution income derives from multiple issuers The Company does not have
concentration to any single issuer
17 Fair value changes of investments
Fair value losses on financial
assets through profit or loss
Fair value gain on investment in
subsidiaries
Fair value losses on derivatives
2020
US $000
(18,990)
1,026
(519)
(18,483)
2019
US $000
(25,940)
582
-
(25,358)
56
Annual Report 2020
The investments disposed of had the following cumulative (i e , from the date of their acquisition up to
the date of their disposal) financial impact in the Company’s net asset position:
Disposed in 2020
Disposed in 2019
Realised
(losses)/
gains*
US $000
Cumulative
distribution or
interest
US $000
Total
financial
impact
US $000
Realised
(losses)/
gains*
US $000
Cumulative
distribution
or interest
US $000
Total
financial
impact
US $000
Financial assets
at fair value
through profit or
loss
Fixed income
investments
Public equities
Derivatives
Financial assets
at fair value
through OCI
Private equities
324
84
(519)
(111)
(3,331)
(3,442)
2,683
3,007
(9,926)
19,839
9,913
11
-
95
(519)
-
-
-
-
-
-
2,694
2,583
(9,926)
19,839
9,913
752
(2,579)
147
301
448
3,446
4
(9,779)
20,140
10,361
* difference between disposal proceeds and original acquisition cost
18 Operating expenses
Directors’ fees and expenses
Other salaries and expenses
Professional fees
Legal expenses
Bank custody fees
Office costs
Depreciation
Other operating expenses
Audit fees
2020
US $000
900
177
851
9
99
240
102
352
78
2019
US $000
2,307
202
1,360
18
111
221
98
726
89
2,808
5,132
57
Annual Report 2020
Throughout 2020 the Company employed 4 members of staff (2019: 4) Two of those members are
the Company’s executive Directors
Other salaries and expenses include USD 16,527 of social insurance and similar contributions (2019:
USD 10,708), as well as USD 3,148 of defined contributions plan costs (2019: USD 4,898)
19 Finance costs and income
Finance costs
Bank interest expense
Finance income
Bank interest income
Foreign exchange gain
20 Taxation
Current tax charge
2020
US $000
2019
US $000
40
119
174
293
18
437
113
550
2020
US $000
127
2019
US $000
151
The Company is a British Virgin Islands (BVI) international business company and until early
2019 was not subject to corporation tax, under the BVI laws During 2019 the Company became
a tax resident in the Republic of Cyprus and since then it is subject to taxation under the tax
laws and regulations in Cyprus
The current tax charge relates to the results of the Company for 2020, as explained above, and
the Company’s consolidated subsidiary in Switzerland (note 8)
58
Annual Report 2020
21 Earnings / (loss) per share
The basic earnings / (loss) per share has been calculated by dividing the profit / (loss) for the year
attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares in issue of the Company during the relevant financial year
Profit / (loss) for the year attributable
to ordinary shareholders of the parent
(USD 000)
Weighted average number of ordinary
shares outstanding
2020
845
2019
(1,081)
174,813,998
174,813,998
Basic earnings / (loss) per share (USD)
0 005
(0 006)
The diluted earnings / (loss) per share equals the basic earnings / (loss) per share since no
potentially dilutive shares were in existence during 2020 and 2019
59
Annual Report 2020
22 Related party transactions
The Company is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which
at 31 December 2020 held 76 62% (2019: 76 62%) of the Company’s voting rights
2020
US $000
2019
US $000
Amounts receivable from unconsolidated
subsidiaries
Sandhirst Ltd
221
161
(1)
Amounts receivable from key management
Loan receivable
1,000
1,000
Amounts receivable from parent company
Loan receivable
6,930
6,930
Amounts payable to unconsolidated
subsidiaries
Livermore Israel Investments Ltd
(3,522)
(3,522)
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
(149)
(93)
(700)
(793)
795
-
105
-
408
1,308
(149)
(7)
(790)
(797)
795
1,400
87
25
890
3,197
(2)
(3)
(4)
(5)
(4)
(6)
(7)
(8)
60
Annual Report 2020
(1) The amounts receivable from unconsolidated subsidiaries and any Director’s current accounts with
debit balances are interest free, unsecured, and have no stated repayment date
(2) A loan with a balance at 31 December 2020 of USD 1m was made during 2019 to a key management
employee and a Company’s Director The loan is free of interest, is unsecured and is repayable on
demand This loan is included within trade and other receivables (note 9)
(3) A loan with a balance at 31 December 2020 of USD 6 93m was made to the Company’s parent,
Groverton Management Ltd The loan is free of interest, is unsecured and is repayable on demand
This loan is included within trade and other receivables (note 9)
(4) The amounts payable to unconsolidated subsidiaries and Director’s current accounts with credit
balances are interest free, unsecured, and have no stated repayment date
(5) A loan with a balance at 31 December 2020 of USD 0 149m has been received from a related
company (under common control), Chanpak Ltd The loan is free of interest, is unsecured and is
repayable on demand This loan is included within trade and other payables (note 12)
(6) The amount payable to other key management personnel relates to payments made on behalf of the
Company for investment purposes and accrued consultancy fees
(7) These payments were made directly to companies which are related to the Directors
(8) Other key management fees are included within professional fees (note 18)
No social insurance and similar contributions nor any other defined benefit contributions plan
costs were incurred for the Company in relation to its key management personnel in either
2020 or 2019
Noam Lanir, through an Israeli partnership, was the major shareholder of Babylon Ltd, an
Israel based Internet Services Company Noam Lanir sold his interest in Babylon during the
first half of 2020 Babylon Ltd changed its name to ABRA INFO TECH BR immediately after the
sale The Company as of 31 December 2020 held a total of 1 941m shares at a value of USD
2 224m (2019: 1 941m shares at a value of USD 1 199m) which represents 4% of its effective
voting rights The investment in ABRA INFO TECH BR is held through the Company’s subsidiary
Livermore Israel Investments Ltd
23 Litigation
Fairfield Sentry Ltd vs custodian bank and beneficial owners
One of the custodian banks that the Company used faces a contingent claim up to USD 2 1m,
and any interest as will be decided by a US court and related legal fees, with regards to
the redemption of shares in Fairfield Sentry Ltd, which were bought in 2008 at the request
of Livermore and on its behalf If the claim proves to be successful Livermore will have to
compensate the custodian bank since the transaction was carried on Livermore’s 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
61
Annual Report 2020
24 Commitments
The Company has expressed its intention to provide financial support to its subsidiaries, where
necessary, to enable them to meet their obligations as they fall due
Other than the above, the Company has no capital or other commitments as at 31 December
2020
25 Impact of COVID-19
As of the date of this report, large-scale vaccination programs and huge fiscal and monetary
stimulus seem to have been successful in reducing the spread and health impact of the virus,
as well as put most developed countries on a strong recovery course Unfortunately, the virus
continues to spread in less developed regions such as India and the risk of a vaccine-resistant
mutated virus remains The Company is primarily exposed to the US economy and is benefiting
from the economic recovery as tighter credit spreads and reduced distressed credits increase
the value of the Company’s CLO portfolio While the Company continues to be conservatively
positioned with cash in excess of USD 45m as of 13 May 2021, the Company plans to increase
its investments in the CLO market in the near-mid term At the same time, the Company plans
to maintain strong liquidity and stay debt free
26 Financial risk management objectives and policies
Background
The Company’s financial instruments comprise financial assets at fair value through profit or
loss, financial assets at fair value through other comprehensive income, and financial assets
and liabilities at amortised cost that arise directly from its operations For an analysis of
financial assets and liabilities by category, refer to note 27
Risk objectives and policies
The objective of the Company is to achieve growth of shareholder value, in line with
reasonable risk, taking into consideration that the protection of long-term shareholder value
is paramount The policy of the Board is to provide a framework within which the investment
manager can operate and deliver the objectives of the Company
Risks associated with financial instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect the valuation of the investment
portfolio, 1) where an investment is denominated and paid for in a foreign currency; and
2) where an investment has substantial exposure to non-US Dollar underlying assets or
cash flows denominated in a foreign currency The Company in general does not hedge its
currency exposure The Company discretionally and partially hedges against foreign currency
movements affecting the value of the investment portfolio based on its view on the relative
strength of certain currencies Any hedging transactions represent economic hedges; the
Company does not apply hedge accounting in any case Management monitors the effect of
foreign currency fluctuations through the pricing of the investments The Company’s exposure
to financial instruments denominated in foreign currencies is the following:
62
Annual Report 2020
2020
US $000
2020
US $000
2020
US $000
2019
US $000
2019
US $000
2019
US $000
Financial
assets
Financial
liabilities
Net value
Financial
assets
Financial
liabilities
Net value
British Pounds (GBP)
Euro
Swiss Francs (CHF)
1,911
367
14
(114)
(68)
(27)
Israel Shekels (ILS)
6,175
(3,522)
1,797
299
(13)
2,653
2,850
537
3,592
5,153
(138)
(62)
(129)
(3,522)
2,712
475
3,463
1,631
Total
8,467
(3,731)
4,736
12,132
(3,851)
8,281
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 would have the following impact A 10% decrease of the following currencies
against USD would have an approximately equal but opposite impact
2020
US $000
2020
US $000
2020
US $000
2019
US $000
2019
US $000
2019
US $000
Profit
or loss
Other
comprehensive
income
Equity
Profit
or loss
Other
comprehensive
income
Equity
British Pounds (GBP)
Euro
Swiss Francs (CHF)
Israel Shekels (ILS)
Total
180
30
(1)
265
474
-
-
-
-
-
180
30
(1)
265
474
200
47
346
163
756
72
-
-
-
72
272
47
346
163
828
The above analysis assumes that all other variables in particular, interest rates, remain constant
Interest rate risk
The Company is exposed to interest rate risk on its interest-bearing instruments which are
affected by changes in market interest rates
As at 31 December 2020 and 31 December 2019, the Company had no financial liabilities that
bore an interest rate risk
Interest rate changes will also impact equity prices The level and direction of changes in
equity prices are subject to prevailing local and world economics as well as market sentiment
all of which are very difficult to predict with any certainty
63
Annual Report 2020
The Company has fixed and floating rate financial assets including bank balances that bear
interest at rates based on the banks floating interest rates In particular, the fair value of
the Company’s fixed rate financial assets is likely to be negatively impacted by an increase in
interest rates The interest income of the Company’s floating rate financial assets is likely to
be positively impacted by an increase in interest rates
The Company has exposure to US bank loans through CLO equity tranches as well as through
warehousing facilities An investment in the CLO equity tranche or first loss tranche of a
warehouse represents a leveraged investment into such loans As these loans (assets of a CLO)
and the liabilities of a CLO are floating rate in nature (typically 3-month LIBOR as the base
rate), the residual income to CLO equity tranches and warehouse first loss tranches is normally
linked to the floating rate benchmark and thus normally do not carry substantial interest rate
risk
The Company’s financial assets affected by interest rate changes are as follows:
Financial assets – subject to:
fair value changes
interest changes
•
•
Total
2020
US $000
-
50,407
50,407
2019
US $000
1,128
56,499
57,627
An increase of 1% (100 basis points) in interest rates would have the following impact in
profit or loss and consequently to equity as well An equivalent decrease would have an
approximately equal but opposite impact There would be no impact in other comprehensive
income
Financial assets
•
•
fair value changes
interest changes
2020
US $000
2019
US $000
Profit or loss
Profit or loss
-
504
504
(2)
565
563
The above analysis assumes that all other variables, in particular currency rates, remain constant
64
Annual Report 2020
Market price risk
By the nature of its activities, most of the Company’s investments are exposed to market price
fluctuations The Board monitors the portfolio valuation on a regular basis and consideration
is given to hedging or adjusting the portfolio against large market movements
The Company had no single major financial instrument that in absolute terms and as
a proportion of the portfolio could result in a significant reduction in the NAV and share
price Due to the very low exposure of the Company to public equities, and having no specific
correlation to any market, the equity price risk is low The portfolio as a whole does not
correlate exactly to any Index
Management of risks is primarily achieved by having a diversified portfolio to spread the
market price risk The Company mainly has investments in CLO equity tranches as well as first
loss tranches of warehouse facilities Investments in the equity tranche of US CLOs represent
a levered exposure to senior secured corporate loans in the US, and are thus subject to many
risks including but not limited to lack of liquidity, credit or default risk, and risks related to
movements in market prices as well as the variations of risk premium in the market
Prices of these CLO investments may be volatile and will generally fluctuate due to a variety
of factors that are inherently difficult to predict, including but not limited to changes in
prevailing credit spreads and yield expectations, interest rates, underlying portfolio credit
quality and market expectations of default rates on non-investment grade loans, general
economic conditions, financial market conditions, legal and regulatory developments, domestic
and international economic or political events, developments or trends in any particular
industry, and the financial condition of the obligors that constitute the underlying portfolio
A 10% uniform change in the value of the Company’s portfolio of financial assets (excluding
level 3 investments) would result in a 5 46% change in the net asset value as at 31 December
2020 (2019: 5 85%), and would have the following impact in profit or loss and consequently
to equity as well (either positive or negative, depending on the corresponding sign of the
change) There would be no impact in other comprehensive income
2020
US $000
Profit or
loss
8,955
2019
US $000
Profit or loss
10,125
Financial assets at fair value through
profit or loss
Derivatives
The Investment Manager may use derivative instruments in order to mitigate market risk or
to take a directional investment These provide a limited degree of protection and would not
materially impact the portfolio returns if a large market movement did occur
Credit Risk
The Company invests in a wide range of securities with various credit risk profiles including
investment grade securities and sub investment grade positions The investment manager
65
Annual Report 2020
mitigates the credit risk via diversification across issuers However, the Company is exposed to
a migration of credit rating, widening of credit spreads and default of any specific issuer
The Company only transacts with regulated institutions on normal market terms which are
trade date plus one to three days The levels of amounts outstanding from brokers are regularly
reviewed by the management The duration of credit risk associated with the investment
transactions is the period between the date the transaction took place, the trade date and
the date the stock and cash are transferred, the settlement date The level of risk during the
period is the difference between the value of the original transaction and its replacement
with a new transaction
The Company is mainly exposed to credit risk in respect of its fixed income investments
(mainly CLOs) and to a lesser extend in respect of its financial assets at amortised cost, and
other instruments held for trading (perpetual bonds)
The Company’s maximum credit risk exposure at 31 December is as follows:
Financial assets:
At amortised cost
•
•
Trade and other receivables
Cash at bank
Financial assets at fair value through profit or loss
2020
US $000
2019
US $000
8,151
50,407
58,558
87,042
8,172
56,499
64,671
99,545
145,600
164,126
No collaterals are held by the Company itself in relation to the Company’s financial assets
subject to credit risk
The fair values of the above financial assets at fair value through profit or loss are also
affected by the credit risk of those instruments However, it is not practical to provide an
analysis of the changes in fair values due to the credit risk impact for the year or previous
periods, nor to provide any relevant sensitivity analysis
The Company has exposure to US senior secured loans and to a lesser degree emerging market
loans through CLO equity tranches as well as warehouse first loss tranches These loans are
primarily non-investment grade loans or interests in non-investment grade loans, which are
subject to credit risk among liquidity, market value, interest rate, reinvestment and certain
other risks It is anticipated that these non-investment grade loans generally will be subject
to greater risks than investment grade corporate obligations
A non-investment grade loan or debt obligation or an interest in a non-investment grade
loan is generally considered speculative in nature and may become a defaulted security for
a variety of reasons A defaulted security may become subject to either substantial workout
66
Annual Report 2020
negotiations or restructuring, which may entail, among other things, a substantial reduction
in the interest rate, a substantial write-down of principal, and a substantial change in the
terms, conditions and covenants with respect to such defaulted security In addition, such
negotiations or restructuring may be quite extensive and protracted over time, and therefore
may result in substantial uncertainty with respect to the ultimate recovery on such defaulted
security Bank loans have historically experienced greater default rates than has been the case
for investment grade securities
The Company has no investment in sovereign debt as at 31 December 2020 or 2019
At 31 December the credit rating distribution of the Company’s asset portfolio subject to
credit risk was as follows:
Rating
2020 Amount
US $000
Percentage
2019 Amount
US $000
Percentage
AA
A
A-
B
BB+
BBB
B-
BB-
Not Rated
31,415
16,350
-
3,998
-
2,642
1,148
8,818
81,229
145,600
21 6%
11 2%
-
2 7%
-
1 8%
0 8%
6 1%
55 8%
100%
48,143
6,433
-
874
1,127
1,936
4,239
-
101,464
164,216
29 3%
3 9%
-
0 5%
0 7%
1 2%
2 6%
-
61 8%
100%
Included within “not rated” amounts are investments in loan market through CLOs (equity
tranches) of USD 77 006m and open warehouses of USD 10 036m (2019: CLOs of USD 98 417m
and open warehouses of USD 0 0m)
The modelled Internal Rates of Return on the CLO portfolio as well as the warehouse first loss
tranches are in low teens percentage points
67
Annual Report 2020
Liquidity Risk
The following table summarizes the contractual cash outflows in relation to the Company’s
financial liabilities according to their maturity
31 December 2020
Trade and other payables
Total
Carrying amount
US $000
Less than 1 year
US $000
4,868
4,868
4,868
4,868
31 December 2019
Trade and other payables
Total
Carrying amount
US $000
Less than 1 year
US $000
4,907
4,907
4,907
4,907
A small proportion of the Company’s portfolio is invested in mid-term private equity investments
with low or no liquidity The investments of the Company in publicly traded securities are subject
to availability of buyers at any given time and may be very low or non-existent subject to market
conditions
There is currently no exchange traded market for CLO securities and they are traded over-the-counter
through private negotiations or auctions subject to market conditions Currently the CLO market is
liquid, but in times of market distress the realization of the investments in CLOs through sales may be
below fair value
Warehouse facilities are private negotiated financing facilities and are not traded and have no active
market The Company, however, can opt to terminate such facility
Management takes into consideration the liquidity of each investment when purchasing and selling in
order to maximise the returns to shareholders by placing suitable transaction levels into the market
At 31 December 2020, the Company had liquid investments totalling USD 137 9m, comprising of USD
50 4m in cash and cash equivalents, USD 77 0m in investments in loan market through CLOs, USD
12 5m in public equities Management structures and manages the Company’s portfolio based on those
investments which are considered to be long term, core investments and those which could be readily
convertible to cash, are expected to be realised within normal operating cycle and form part of the
Company’s treasury function
68
Annual Report 2020
Capital Management
The Company considers its capital to be its total equity (i e , its share capital and all of its
reserves)
The Company manages its capital to ensure that it will be able to continue as a going concern
while maximising the return to shareholders through the optimisation of the balance between
its net debt and equity During 2020 and 2019 the Company had no borrowings and therefore
it is wholly capital funded
Net debt to equity ratio is calculated using the following amounts as included on the
consolidated statement of financial position, for the reporting periods under review:
Cash at bank
Net Debt
Total equity
Net debt to equity ratio
27 Financial assets and liabilities by class
2020
US $000
(50,407)
(50,407)
163,907
(0 31)
2019
US $000
(56,499)
(56,499)
173,080
(0 33)
Note
2020
US $000
2019
US $000
Financial assets:
Financial assets at amortised cost
9,10
58,558
64,670
Financial assets at fair value through
profit or loss
Financial assets designated at fair value
through other comprehensive income
4
5
99,583
101,255
3,729
6,204
161,870
172,129
Financial liabilities:
Financial liabilities at amortised cost
12
4,868
4,907
The carrying amount of the financial assets and liabilities at amortised cost approximates to
their fair value
69
Annual Report 2020
28 Events after the reporting date
The following non-adjusting events occurred in 2021:
• On 8 March 2021, the Board announced an interim dividend of USD 8m (USD 0 0488 per share)
•
•
•
to members on the register on 19 March 2021 The dividend was paid on 16 April 2021
The Company bought back 10,888,577 shares to be held in treasury for a total cost of USD
6 9m
The Company invested an additional amount of USD 10m to the open warehouse facility as
at 31 December 2020, increasing its total investment to USD 20m Livermore’s investment
amount plus net carry amounting to a total of USD 1 6m became receivable in April 2021
The loans receivable from the Company’s parent and a Director, with a total carrying amount
of USD 7 9m (note 22), were fully settled during 2021
There were no other material events after the end of the reporting year, which have a bearing
on the understanding of these financial statements
70
Annual Report 2020
Shareholder Information
Registrars
All enquiries relating to shares or shareholdings should be addressed to:
Link Asset Services
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300
Facsimile: 020 8639 2342
Change of Address
Shareholders can change their address by notifying Link Asset Services 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 Link Asset Services
Lost Share Certificate
If your share certificate is lost or stolen, you should immediately contact Link Asset Services on
0871 664 0300who 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
Link Asset Services on 0871 664 0300
Please note that the Directors of the Company are not seeking to encourage shareholders to either
buy or sell the Company’s shares
71
Annual Report 2020 Principal Bankers
Banque J Safra Sarasin (Luxembourg) SA
17 - 21, Boulevard Joseph II L-1840
Luxembourg
CBH Compagnie Bancaire Helvétique SA
Löwenstrasse 29 Zurich 8021
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
Link Asset Services
34 Beckenham Road
Beckenham
Kent BR3 4TU
England
Auditor
Grant Thornton (Cyprus) Ltd
41-49, Agiou Nicolaou Street
Nemeli Court – Block C
2408 Engomi Nicosia
P O Box 239071687
1687 Nicosia 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
72
Annual Report 2020
20