2022
22
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 13
Financial portfolio 13
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 22
The Quoted Company Alliance (QCA) Code 22
Communication with Investors 22
Internal Control 23
Going concern 23
Independence of Auditor 23
5
Annual Report 2022 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 2022 33
Consolidated Statement of profit or loss for the year ended 31 December 2022 34
Consolidated Statement of Comprehensive Income for the year ended 31 December 2022 35
Consolidated Statement of changes in equity for the year ended 31 December 2022 36
Consolidated Statement of cash flows for the year ended 31 December 2022 37
Notes on the Financial Statements 39
Shareholder Information 73
Registrars 73
Website 73
Direct Dividend Payments 73
Lost Share Certificate 73
Duplicate Shareholder Accounts 73
Corporate Directory 74
6
Annual Report 2022 Highlights
•
Net loss for the year was USD 24 4m (2021: net profit of USD 24 7m)
• Net Asset Value per share declined to USD 0 77 (2021 USD 1 07) after paying USD 24m interim
dividend implying a net return of -16 7% for the year
•
The Company is conservatively positioned with over USD 43 9m of cash deposits and Government
bonds
• On 5 January 2022, the Company announced an interim dividend of USD 24m (USD 0 145 per
share) to members on the register on 14 January 2022 The dividend was paid on 7 February
2022
• Collateralized Loan Obligations (CLO) portfolio and warehouse generated USD 23 2m in cash
distributions and a total net negative return of USD 19 8m in 2022
7
Annual Report 2022 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 2022 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
2022 was a challenging year for the global economy Inflation across most developed countries
rose to multi-decade highs and geopolitical tensions increased with Russia’s attack on Ukraine
Sanctions applied to Russia and loss of production in Ukraine further increased energy and
agricultural commodity prices Developed economy central banks were forced to apply the economic
breaks and increase interest rates in order to contain inflation Financial markets declined with both
fixed income and equity markets recording significant losses in 2022 The US Dollar rallied sharply
against most currencies in the first three quarters as the US Federal Reserve led the monetary policy
tightening race
In anticipation of sharp interest rate increases and the potential for higher default and credit
losses, management positioned the Company to be able to reduce risk, and rapidly and successfully
converted its two open warehouses into new issue CLOs at amongst the lowest financing costs
in 2022 Over the year, the Company increased its cash, deposit, and government bond position
from USD 21 1m after paying a USD 24m interim dividend in January 2022 to USD 43 9m by year-
end Management believes that a high liquidity position will allow the Company to benefit from
opportunistic trading and price dislocations as and when they appear during the process of inflation
normalisation
The US senior secured loan and CLO market is directly exposed to rising interest rates Management
anticipates higher borrowing costs for loan issuers, higher default rates and potentially significant
rating downgrades – all of which are negative for the Company’s CLO equity portfolio This was also
reflective in the valuation declines of USD 42 7m during the year Overall, the Company received
USD 23 2m in cash distributions from its CLO and warehousing portfolio resulting in a net negative
contribution of USD 19 8m to the financial statements Most of these declines occurred in the first
half of the year
Our net loss for the year was USD 24 4m (2021 net profit: USD 24 7m) and the year-end NAV was
USD 0 77 per share (2021 NAV: USD 1 07 per share) after paying a dividend payment of USD 24m
(USD 0 145 per share)
The Company ended the year with over USD 43 9m of cash invested mainly in deposits and US
government debt
Financial Review
The NAV of the Company on 31 December 2022 was USD 127 7m (2021: USD 177 7m) Net loss,
during the year was USD 24 4m, which represents loss per share of USD 0 15 Operating expenses
were USD 3 0m (2021: USD 8 6m)
8
Annual Report 2022 The overall change in the NAV is primarily attributed to the following:
Shareholders’ funds at beginning of year
Income from investments
Unrealised (losses) / gains on investments
Unrealised exchange gains
Operating expenses
Net finance costs
Tax charge
(Decrease) / increase in net assets from operations
Dividends paid
Issuance / purchase of own shares
Shareholders’ funds at end of year
Net Asset Value per share
Dividend & Buyback
31 December 2022
US $m
31 December 2021
US $m
177 7
23 7
(46 3)
-
(3 0)
(0 2)
(0 2)
(26 0)
(24 0)
-
127 7
163 9
27 5
9 4
0 1
(8 6)
(0 4)
(0 1)
27 9
(8 0)
(6 1)
177 7
US $0 77
US $1 07
On 5 January 2022, the Company announced an interim dividend of USD 24m (USD 0 145 per share) to
members on the register as at 14 January 2022 The dividend was paid on 7 February 2022
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
Richard B Rosenberg
Chairman
Noam Lanir
Chief Executive Officer
19 May 2023
9
Annual Report 2022
Review of Activities
Introduction and Overview
High and rising inflation coupled with Russia’s attack on Ukraine and the resulting disruptions
to energy and commodity markets drove central banks in developed economies to rapidly tighten
monetary policy in 2022 Strong economic momentum from 2021 slowed down in 2022 and finan -
cial markets declined sharply in the first half of the year The safe government bond markets also
suffered their largest declines in decades as record low yields collided with the sharpest increases
During the year, the S&P 500 Index declined by 18 1%, marking its largest fall since the global financial
crisis, and the 10-year US Treasury note generated negative returns of 16 9% European markets
were particularly hard hit as energy prices skyrocketed due the Russia’s war on Ukraine Chinese
markets continued to decline as the Chinese government continued their “Covid-zero” lockdown
policies until October 2022 The Hang Seng Index declined by 15 6% in 2022, but was down over
35% before recovering sharply after the government announced they would loosen their lockdown
policy The US Dollar increased in value against most currencies as investors sought safety and the US
Federal Reserve was the most aggressive in raising rates amongst the developed market economies
Fixed Income markets fared poorly on account of higher interest rates and concerns about the
economic outlook The Bloomberg US Corporate Total Return index lost 15 76% and the High
Yield Total Return lost 11 19% in 2022 The US leveraged loan market performed much better
losing only 1 06% as their floating rate characteristics protected investors from interest rate
risk At the same time, the future outlook for leveraged loan borrowers is concerning as they
face rising interest burdens in the near term We expect higher default rates and potentially
lower recoveries from weaker borrowers if the US economy enters a recessionary environment
CLOs equity had a poor year as anticipation of higher default rates due to higher interest rates
affected prices significantly, especially those positions that were out of or close to their reinvestment
end dates CLO debt tranche spreads also widened sharply Management anticipated this reaction
and promptly converted its two open warehouses into new issue CLOs Over the course of the
year, management did not reinvest the dividends received from CLOs and increased its cash and
marketable securities position significantly Cashflows from CLO equity remained strong but were
lower on account of loss of the Libor floor benefit and also the increased basis between 1-month and
3-month Libor Over the past few years, most CLO assets (loans) have switched to pay on a monthly
basis with a 1-month Libor base rate setting whereas CLO liabilities pay on a quarterly basis with a
3-month Libor base rate setting In 2022, the basis between 1-month and 3-month Libor widened
to very high levels as the market priced in larger than normal rate increases by the US Federal
Reserve resulting in CLO liabilities being paid at higher base rates than the income received from
CLO assets and therefore CLO equity received smaller distributions than anticipated in early 2022
Further, CLO equity received higher than normal distributions in 2021 as most assets came with a
Libor floor whereas CLO liabilities did not have this benefit When 3m Libor turned higher than the
average floor on the assets in 2022, this benefit to CLO equity was eroded While credit spreads have
widened and loan prices have declined, defaults in the loan market stayed low in 2022 However, we
expect higher default and stressed situations in 2023 At the same time, lower loan prices allowed
CLO managers to build excess par which should offset some losses from defaults in the future We
are positioned conservatively with mostly recent vintage CLOs with long reinvestment periods that
are expected to perform better Further, our high cash position should enable us to take advantage
of opportunities in the secondary markets in the near to mid-term During the year, the CLO and
warehouse portfolio generated USD 23 2m in cash distributions
10
Annual Report 2022 For the 2022 year-end, the Company reported a NAV/share of USD 0 77 after a dividend payment
of USD 24m (USD 0 145 per share) and net loss of USD 24 4m Interest and distribution income
amounted to USD 23 7m, of which, USD 23 2m was generated from the CLO and warehousing
portfolio The net loss of the CLO and warehousing portfolio was USD 19 8m as mark-to-market
changes offset distributions from the portfolio Management redeemed USD 2 0m from the digital
assets focussed fund in 2022 Operating expenses amounted to USD 3 0m The Company ended the
year with over USD 43 9m of cash, deposits, and investments in US treasury bills after paying an
interim dividend of USD 24m in February 2022
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
The global economy slowed down in 2022, and inflation in advanced economies continued to rise
This was due to a combination of factors, including supply bottlenecks, renewed waves of the
pandemic, and Russia’s attack on Ukraine The resulting decline in consumer and business sentiment
led to weakened demand and purchasing power, and financial conditions became more restrictive
as central banks tightened monetary policy Bond yields rose, and stock markets suffered losses
Differences in the scale and pace of monetary policy tightening by central banks led to larger
movements on foreign exchange markets, with the US dollar strengthening against most currencies
While international supply chain problems eased gradually, global demand momentum declined
in the second half of the year, weighing on global trade Commodity prices fluctuated strongly,
especially for energy sources
USA: In 2022, the US economy slowed due to high inflation, tighter monetary policy, and less
expansionary fiscal policy Real GDP fell in the first half of 2022, however rose at a 3% pace in
the second half Consumer spending endured to rise, supported by savings accumulated during the
pandemic Despite the slowdown, the labour market remained strong, with above-average growth
in employment and low unemployment rates at 3 5% Inflation in advanced economies, including
the US, continued to rise, with energy and food prices being key drivers due to war in Ukraine In
the US, inflation stood at 8 0% in contrast to 4 7% in 2021, the highest seen in around 40 years
The personal consumption expenditures (PCE) price index rose to 6 2% over the 12 months ending
in December, and the index that excludes food and energy items (so-called core inflation) was up
5 0% Due to high inflation and a strong labour market, the Federal Reserve significantly tightened
its monetary policy, raising its policy rate by a total of 4 25 percentage points ending the year at
4 25 – 4 50% Further, the Federal Reserve started reducing its balance sheet and signalled additional
interest rate hikes to curb inflation
Eurozone: In 2022, the euro area’s GDP grew by 3 5%, although growth slowed down over the
year due to higher inflation caused by Russia’s attack on Ukraine and reduced gas deliveries The
11
Annual Report 2022 labour market remained favourable, and the unemployment rate reached a historical low of 6 6%
in December Headline inflation rose to 8 4%, driven by higher energy and food prices, while core
inflation reached 5 2%, reflecting higher inflation in services and price increases for various goods
The ECB raised its key rates gradually from July, and in December, its deposit facility rate reached
2 0% The ECB discontinued its net asset purchases under the Pandemic Emergency Purchase
Program in March, and under the Asset Purchase Program in July, with plans to gradually reduce the
asset portfolio in 2023 However, the ECB approved the Transmission Protection Instrument in July
to combat a tightening in financing conditions not warranted by fundamentals that impedes the
transmission of monetary policy
Japan: Japan’s GDP grew by 1 1% in 2022 due to the expansionary monetary and fiscal policy
Economic activity fluctuated as a result of the repeated waves of the pandemic and procurement
problems in the automotive industry in the first half of the year Rising inflation led to a loss in real
income and dampened the recovery in consumption The unemployment rate declined marginally
and stood at 2 5% in December, still higher than before the pandemic Consumer prices rose by
2 5% Inflation fluctuated significantly over the course of 2022, being slightly positive (0 2%) in
the first half of the year but rose again and stood at 1 5% in December The Bank of Japan (BoJ)
maintained its highly accommodative monetary policy throughout 2021 and left its short-term
deposit rate at -0 10% and the target for the 10-year government bond yields to 0% However, In
December, the BoJ decided to expand the range of fluctuation for long-term bond yields to improve
market functioning
China: In 2022, China’s GDP growth was modest at 3 0% due to the impact of the coronavirus
pandemic and containment measures taken as part of zero-COVID policy Ongoing crisis in the
residential real estate market weight on the economy, hence increasing unemployment To support
the economy, the Chinese government announced measures such as infrastructure investment, tax
relief for companies, and support for the real estate market Inflation in China stood at 2 0%, with
higher food prices being the primary driver Core inflation remained essentially unchanged at 0 9%
The People’s Bank of China lowered policy interest rates slightly in January and August, including a
0 2 percentage point reduction in the reverse repo rate to 2 0%, lowered reserve requirement ratio
for banks and used targeted monetary policy instruments to support the economy
Commodities: Commodity prices were affected by the war in Ukraine and the sanctions imposed on
Russia At the beginning of the year, a barrel of Brent crude cost just under USD 80, rose to USD 130
per barrel in March; and at the end of the second quarter 2022, the price of Brent crude hovered
around USD 110 per barrel, thus remaining considerably higher than at the beginning of the year
As the global supply of oil increased thereafter and demand weakened in the wake of the economic
slowdown, the oil price fell again and stood at slightly over USD 80 at the end of 2022 In Europe,
natural gas and electricity prices rose strongly, in particular due to a reduction in the supply of
gas from Russia Energy-saving measures and well-stocked gas storage facilities contributed to the
situation easing again somewhat towards the end of the year Industrial metal prices also fluctuated
strongly over the course of 2022, closing slightly lower than at the beginning of the year
Equities and Bonds: In 2022, global financial markets experienced volatility and decline due to
several factors, including the ongoing COVID-19 pandemic, supply chain issues, inflation, political
instability, and energy price concerns following Russia’s invasion of Ukraine A midterm US election
shifted more power to Republicans but left Democrats in a stronger position than some had expected
Despite some rallies, the S&P 500 Index fell by 18 1%, its worst annual return since 2008, and
global stock markets ended with their largest declines since the financial crisis Global equities,
as measured by the MSCI All Country World Index, fell 18 4% Developed international stocks, as
represented by the MSCI World ex USA Index, lost 14 3%, while emerging markets declined even
12
Annual Report 2022 further, with the MSCI Emerging Markets Index down 20 1% Small capitalization stocks performed
slightly better than large cap stocks Cryptocurrencies and technology stocks were hit hard, with
bitcoin falling to about 75% lower than its high in November 2021 and the large mega-cap tech
stocks losing trillions in market value Benchmark US Treasuries also posted their worst annual
returns in decades, with 10-year Treasury notes losing 16 3%, reflecting the rare occurrence of
tandem declines for equities and fixed income The yield curve was inverted at year’s end, with the
2-year yield just above 4 4%, being higher than the 10-year yield just below 3 9%, reflecting the
higher short-term rates The Morningstar U S Corporate Bond Index had its worst decline in the 23-
year history of the benchmark with a 15 7% loss
Foreign exchange: The broad dollar index—a measure of the trade-weighted value of the dollar
against foreign currencies—continued to rise over the summer and through the beginning of the
fourth quarter Widening yield differentials between the U S and the rest of the world and concerns
around foreign growth pushed the dollar higher through October of last year, prompting several
central banks, especially in Asia, to intervene in foreign exchange markets to support their currencies
Since peaking in October, the dollar has largely retraced those gains, reflecting softer inflation data
in the U S , tighter monetary policy abroad, and better prospects for foreign economic growth Still,
the broad dollar index remains stronger than it was in early 2021 After reaching multidecade lows
against the dollar in October, the Japanese yen rebounded following the adjustment of the Bank of
Japan’s yield curve control policy
Loan Market: The Credit Suisse Leverage Loan Index (CSLLI) generated a negative total return of
-1 06% in 2022, which is only the third negative year for the CSLLI in its 31-year history However,
the loan asset class has shown greater resilience and outperformance compared to other risk assets
such as equities, high-yield, and investment grade The loan market experienced significant price
volatility due to inflation, recessionary fears, and rate hikes, with lower-rated loans underperforming
their higher quality peers Retail loan funds experienced regular net outflows throughout the year,
as mutual funds and ETF investors rotated out of risk assets During the year, net inflows into loan
mutual funds and ETFs amounts to net outflows of USD 13 billion, compared to net inflows of USD
47 billion in 2021 Institutional loan issuance totalled USD 225 billion in 2022, down from a record
USD 614 billion in 2021, with the total market size swelling to USD 1 41 trillion Loan refinancing
activity meaningfully increased in the fourth quarter The twelve-month trailing default rate fell
to 0 72% at year-end, and the loan prepayment rate remained in the mid-teens throughout 2022,
allowing CLOs to reinvest those proceeds into attractive loans at higher spreads and lower prices,
creating significant value within a CLO
CLO Market: The CLO market was not immune to the broader investment environment CLO debt
tranche spreads widened significantly during the year impeding what would have been a record year
of issuance after a record breaking 2021 Still, the CLO market saw USD 129bn of new issuance – the
second highest of record This despite poor arbitrage (difference between spread of loan assets and
the spread of CLO debt tranches) Most of the issuance was due to investors stuck in warehouses
open prior to the Russian attack on Ukraine and the remaining from investors attempting to capture
loan price discounts during period of volatility The refinancing and reset market remained on pause
as debt spreads were wider than on existing tranches
CLO equity distributions stayed consistent in 2022 but were lower on account of loss of Libor floor
benefit and the abnormally large difference between 1-month and 3-month Libor due to large
anticipated rate increases by the US Federal Reserve
As we look ahead in 2022, we expect higher stress from the loan universe continuing to pressure CLO
equity and lower mezzanine positions At the same time, we expect to see significant opportunities
in the secondary market
Sources: Swiss National Bank, Bloomberg, Board of Governors of the Federal Reserve System, European Central Bank (ECB),
Morningstar, JP Morgan, Credit Suisse
13
Annual Report 2022 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 117 4m as of 31 December 2022, which is
composed mainly of cash and investments in fixed income and credit related securities
The following is a table summarizing the financial portfolio as of year-end 2022
Name
Investment in the loan market through CLOs
Open Warehouse facilities
Public equities
Short term government bonds
Long term government bonds
Corporate bonds
Invested total
Cash
Total
2022
US $m
66 6
-
2 3
24 6
8 3
4 6
106.4
11.0
117.4
2021
US $m
101 7
7 6
10 0
-
119.3
45.1
164.4
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
In 2022, US leveraged loans were the best performer in the fixed income asset class The Credit Suisse
Leverage Loan Index (“CSLLI”) generated a total return of -1 06% in 2022, its third negative year in its
30+ years of existence The floating-rate characteristics of leveraged loans protected investors from rising
14
Annual Report 2022
interest rates Although leveraged loans typically have low volatility, 2022 was an outlier experiencing
significant swings during the course of the year
Institutional loan issuance was USD 225 billion (2021: USD 614 billion) as capital markets remained muted
in the face of significant rate and credit spread volatility While new issue activity was relatively low, the
fourth quarter saw higher quality issuers refinancing and extending maturities of their outstanding loans
As a result, most of the maturities are in 2025 and beyond
Institutional loan issuance totalled USD 225 billion in 2022, compared to a record USD 614 billion in 2021
Total institutional loans outstanding stood at $1 41 trillion as of December 31, 2022, up slightly from USD
1 35 trillion at the beginning of the year While primary issuance remained limited in the fourth quarter,
loan refinancing activity meaningfully increased as U S corporates rushed to address upcoming maturities
before year-end, including large par repayments from higher quality issuers
Loan defaults stayed relatively low in 2022, but the twelve-month trailing default rate increased to 0 72%
as at year end 2022 from the 0 29% at the beginning of the year The historical long-term default rate
is around 2 7% As interest rates rise higher, we anticipate the default rate to increase towards historical
averages over the near to mid-term
Despite declining loan issuance and widening CLO liabilities, the CLO market ended 2022 with its second
highest annual new issuance on record, at a total volume of USD 129 billion Most of this activity was
driven by warehouses open coming into the year as investors contended with very low returns to term out
their financing, as well as opportunistic issuance to take advantage of significant loan price drops during
certain periods
With a significant share of high-quality issuers trading at discounted prices, CLO collateral managers
were well positioned to improve underlying loan portfolios through relative value credit selection in the
secondary market, as well as take advantage of a high-quality primary market, at discounted prices
Despite the loan price volatility and widening credit spreads, CLO equity distributions were not disrupted
However, the distributions were lower than initially anticipated at the beginning of the year on account of
loss of Libor floor benefit and the rising basis between 1-month and 3-month Libor Many loan borrowers
took advantage of a lower 1-month rate, while CLO liabilities pay at the 3-month rate As this mismatch
resolves with slowing pace of rate increases, we believe equity distributions will increase for many CLOs
over the coming quarters
Our CLO portfolio was also negatively affected during 2022 Despite significant and consistent cashflow,
valuations of CLO equity positions declined meaningfully due to wider spreads, higher anticipated
defaults and low liquidity During the year, the CLO and warehouse portfolio generated USD 23 2m in
cash distributions but valuations declined by USD 42 7m resulting in a negative return of USD 19 8m
Management anticipated a negative reaction from the expected inflation fight and promptly converted its
two open warehouses into new issue CLOs in the first four months of the year This transaction recorded
the lowest cost of debt for 2022 vintage CLOs Over the course of the year, management did not reinvest
the dividends received from CLOs and increased its cash and marketable securities position significantly
While credit spreads have widened and loan prices have declined, defaults in the loan market stayed low
in 2022 However, we expect higher default and stressed situations in 2023 At the same time, lower loan
prices allowed CLO managers to build excess par (i e buying CLO eligible loans at prices below par but
receive par treatment for the purposes of CLO over-collateralization tests) which should offset some losses
from defaults in the future We are positioned conservatively with mostly recent vintage CLOs with long
reinvestment periods that are expected to perform better Further, our high cash position should enable us
to take advantage of opportunities in the secondary markets in the near to mid-term
15
Annual Report 2022 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
From July 2023, Libor is expected to cease to exist In the US, SOFR (Secured Overnight Funding Rate) will
be the base rate for most floating rate contracts Most US CLOs are expected to transition their liabilities
to term SOFR plus a credit spread adjustment as per the Libor transition language in their respective
documents Most US Leveraged Loans are also expected to transition to SOFR but the timing of such
transitions may not match the transition of CLO liabilities This may introduce a Libor-SOFR basis for a
short period of time
As we look ahead, we expect the interest rates staying high to combat high inflation Although leverage
loan borrower fundamentals are currently satisfactory, we expect high rates to put more pressure on their
interest coverage covenants Tighter financial conditions in the future can increase refinancing and default
risk for certain borrowers The counterbalance to this is most borrowers have addressed their near-term
financing needs and very few of them have near-term maturities
We expect loan default rates to moderately increase from the very low 2022 levels towards their long-term
averages
The Company’s CLO portfolio is divided into the following geographical areas:
2022
Amount
US $000
66,576
Percentage
2021
Amount
US $000
Percentage
100%
101,667
100%
US CLOs
Fund Investments
The fund investments held by the Company are mainly incorporated in the form of Managed Funds (mostly
closed end funds) in Israel and the emerging economies Also, the Company has some direct venture capital
investments
The following summarizes the book value of the private equity funds at 31 December 2022
Name
Cole Capital Fund
Fetcherr Ltd
Phytech (Israel)
Say2eat Inc
Other investments
Total
US $m
2 0
1 8
2 6
0 8
0 4
7.6
16
Annual Report 2022
Cole Capital: Cole Capital is a fund that trades in digital assets such as Bitcoin and it is advised
by Frequants The advisor has developed automated trading algorithms that have outperformed
the underlying digital assets performance by consistently avoiding large drawdowns The Company
invested USD 4m in Cole Capital on 10 March 2021 and in 2022 we redeemed and received from the
fund 3 5m The residual value of the Company’s investment as of year-end 2022 in the fund was USD
2m Post year-end, the Company has redeemed the remaining USD 2m
Fetcherr Ltd: Fetcherr is the Israeli start-up that has developed a proprietary AI-powered goal-
based enterprise pricing and workflow optimization system Founded in 2019 by experts in deep
learning, Algo-trading, e-commerce, and digitization of legacy architecture, Fetcherr aims to disrupt
traditional rule-based (legacy) revenue systems through reinforcement learning methodologies,
beginning with the airline industry The Company invested USD 2m in 2021
Phytech: Phytech is an agriculture-technology company in Israel providing end-to-end solutions
for achieving higher yields on crops and trees 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
Say2eat Inc: Say2eat is a company that has proved they can disrupt the existing food delivery (3rd
party) marketplace model, with a first party, direct delivery model that is commission free The
company has shown rapid growth in 2020 and is now active in over 20 US states from the east coast
all the way to Hawaii working with 200 restaurants The Company invested USD 0 750m in 2020
The following table reconciles the review of activities to the Company’s financial assets at 31
December 2022:
Name
Financial Portfolio
Fund investments
Total
Financial assets at fair value through profit or loss (note 4)
Financial assets at fair value through other comprehensive
income (note 5)
Total
US $m
106 4
7 6
114.0
106 4
7 6
114.0
Investments in Subsidiaries
The subsidiaries include investments in public equity investments and investments in the fields of
real estate The resulting fair value changes are mainly attributed to changes in quoted share prices
of the underlying investments
17
Annual Report 2022
Events after the reporting date
Details of material 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
18
Annual Report 2022 Report of the Directors
The Directors submit their annual report and audited financial statements of the Company for the
year ended 31 December 2022
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 67) 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 56), 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 55), 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 60) independent, Non-Executive Director
Augoustinos joined the Board in February 2019 He is a trained and qualified UK Chartered Accountant
He is a Partner of FRP Advisory Cyprus and 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
19
Annual Report 2022 also an 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; and
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
20
Annual Report 2022 Substantial Shareholdings
As at 02 May 2023, 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
Livermore Management Limited
25,456,903
70 39
14 56
74 41
15 40
* after consideration of the treasury shares
Save as disclosed in this report and in the remuneration report, the Company is not aware of any other
person or entity that 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
21
Annual Report 2022
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 29 December 2006 and adopted pursuant to shareholder approval
at the Company’s EGM on 17 January 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 Audit Committee’s key objectives are the provision of effective governance over the
appropriateness of the Group’s financial reporting, including the adequacy of related disclosures,
the performance of external audit function, and the management of the Group’s systems of internal
control and business risks
The primary roles and responsibilities delegated to, and discharged by, the Committee include:
22
Annual Report 2022 • monitoring and challenging the effectiveness of internal control and associated functions;
•
•
approving and amending Group accounting policies;
reviewing, monitoring, and ensuring the integrity of interim and annual financial statements,
and any formal announcements relating to the Company’s financial performance;
providing advice (where requested by the Board) on whether the Annual Report and Accounts,
taken, is fair, balanced, and understandable, and provides the information necessary for
shareholders to assess the Company’s position and performance;
reviewing and monitoring the external auditor’s independence, objectivity, and effectiveness
of the audit services; and
monitoring and approving the scope and costs of audit
•
•
•
Board and committee meetings – 2022 attendance
Number of meetings attended
Board
Audit
Remuneration
Richard Barry Rosenberg
Noam Lanir
Ron Baron
Augoustinos Papathomas
4 of 4
4 of 4
4 of 4
4 of 4
2 of 2
1 of 1
-
-
-
-
2 of 2
1 of 1
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
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 April 2022
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
23
Annual Report 2022 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
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; and
a review of fees paid to the auditor in respect of audit and non-audit services
24
Annual Report 2022 Remuneration Report
The remuneration report has been formed in accordance with the requirements of AIM rule 19 and
is not intended to comply with the UK statutory requirements
The Directors’ emoluments, benefits and shareholdings during the year ended 31 December 2022
were as follows:
Directors’ Emoluments
Each of the Directors has a service contract with the Company
Director
Date of
agreement
Fees
US $000
Benefits
US $000
Reward
payments
US $000
2022
US $000
2021
US $000
Total emoluments
Richard Barry
Rosenberg
10 June 2005
Noam Lanir
10 June 2005
Ron Baron
1 September
2007
Augoustinos
Papathomas
1 February
2019
55
400
350
31
Directors’ Interests
Interests of Directors in ordinary shares
-
45
-
-
35
-
-
15
90
445
350
46
73
1,445
2,350
35
As at 31 December 2022
As at 31 December 2021
Number of
Ordinary
Shares
Percentage
of ordinary
share capital
Percentage of
voting rights *
Number of
Ordinary Shares
Percentage of
ordinary share
capital
Percentage of
voting rights *
Noam Lanir
123,048,011
70 39%
74 41%
123,048,011
70 39%
Ron Baron
25,456,903
14 56%
15 40%
25,456,903
14 56%
74 41%
15 40%
Richard
Barry
Rosenberg
15,000
0 01%
0 01%
15,000
0 01%
0 01%
*after consideration of the treasury shares
25
Annual Report 2022 Noam Lanir has his interest in ordinary shares through direct or indirect ownership of the whole
issued share capital of Groverton Management Limited Further information is provided in note 22
to the financial statements
Ron Baron has his interest in ordinary shares through ownership of the whole issued share capital
of Livermore Management Limited
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
26
Annual Report 2022 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 COVID-19 virus, as well
as put most developed countries on a strong recovery course At the same time, high inflation seems
to be persisting as global supply chain issues and the Russian invasion of Ukraine add further fuel to
fire We anticipate a sharp interest rate tightening cycle in the US as well as withdrawal of liquidity
to slow the demand and bring inflation under control The Company is primarily exposed to the US
economy and has benefitted from the economic recovery The Company continues to be conservatively
positioned with 43 9m of cash, deposits, and investments in US treasury bills as of 31 December 2022
and 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
The Company’s credit risk is primarily attributable to its fixed income portfolio, which is exposed to
27
Annual Report 2022 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 2022 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
2022 are disclosed in note 22 to the financial statements
By order of the Board of Directors
Chief Executive Officer
19 May 2023
28
Annual Report 2022 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
and its subsidiary Livermore Capital AG (the ‘’Group’’), which are presented in pages 26 to 53
and comprise the Consolidated statement of financial position as at 31 December 2022, and
the consolidated statement 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 2022, and of its consolidated
financial performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) Our
responsibilities under those standards are further described in the ‘’Auditor’s Responsibilities for
the Audit of the Consolidated Financial Statements’’ section of our report We are independent
of the Group in accordance with the International Ethics Standards Board for Accountants’ Code
of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that
are relevant to our audit of the consolidated financial statements in Cyprus, and we have fulfilled
our other ethical responsibilities in accordance with these requirements and the IESBA Code We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion
Emphasis of Matter – Uncertain Outcome of a Legal Claim
We draw attention to note 23 of the consolidated financial statements which describes the
uncertain outcome of a legal claim against one of the custodian banks that the Group uses on its
behalf Our opinion is not modified in respect of this matter
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the consolidated financial statements of the current period These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters
Investments’ valuation Level 3
Refer to note 7 of the consolidated financial statements
29
Annual Report 2022 The Key audit matter
How the matter was addressed in our audit
The Group has financial assets of $14m (2021:
$27m) classified within the fair value hierarchy
at level 3, as disclosed in note 7, where $7,5m
relates to fund investments and $6,5m to
investments in subsidiaries The fair value of
level 3 financial assets is generally determined
on a basis of either third party valuations, or
when not available, 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:
Fund Investments:
•
obtaining an understanding of the valuation
methodologies applied by the Board of directors
and assessing their appropriateness for each
investment
obtaining third party confirmations indicating
either the NAV or fair value of the financial
assets and comparing to clients’ records and
fund’s financial statements
evaluating the independent professional valuer’s
competence, capabilities and objectivity
in cases where the valuations were performed
by the Board of Directors, evaluating the
reasonableness of the methodology applied and
verifying the inputs used by comparing them to
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
to
the
obtaining management accounts of
subsidiaries
their NAV; and
identify
evaluating any significant change in the fair
value of investment
assessing
the management accounts of
the subsidiaries to determine whether the
disclosed NAV is fairly stated by obtaining
portfolio statements and land valuations from
independent valuers
evaluating
competence, capabilities and objectivity
evaluating the methodology used and assessing
its adequacy; and
considering the adequacy of consolidated
financial statement disclosures in relation to
the valuation methodologies used for each
class of level 3 financial assets
assessing
valuers’
and
the
•
•
•
•
•
•
•
•
Investments in Subsidiaries:
•
Key observations
judgements and
• We concluded that the
estimates used by
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
the management
30
Annual Report 2022 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
31
Annual Report 2022 •
•
•
•
•
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report However, future
events or conditions may cause the Group to cease to continue as a going concern
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves a true and fair view
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements We are responsible for the direction, supervision and performance of the group
audit We remain solely responsible for our audit opinion
We communicate with 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
32
Annual Report 2022 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, 19 May 2023
33
Annual Report 2022 Livermore Investments Group Limited
Consolidated Statement of Financial Position at 31 December 2022
Note
2022
US $000
2021
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 and treasury shares
Other reserves
Accumulated (losses) / 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
43
87
66,576
7,596
6,546
80,848
72
39,800
10,971
50,843
52
176
101,667
12,435
7,196
121,526
366
17,553
45,130
63,049
131,691
184,575
-
163,130
(21,214)
(14,191)
-
163,130
(18,026)
32,618
127,725
177,722
-
88
3,733
87
146
3,966
6,641
88
36
6,765
3,966
131,691
6,853
184,575
Basic and diluted net asset value per share (US $)
14
0 77
1 07
These financial statements were approved by the Board of Directors on 19 May 2023
The notes 1 to 28 form part of these consolidated financial statements
34
Annual Report 2022
Livermore Investments Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2022
Investment income
Interest and distribution income
Fair value changes of investments
Note
16
17
2022
US $000
2021
US $000
23,665
(44,637)
(20,972)
27,495
6,250
33,745
Operating expenses
18
(3,000)
(8,599)
Operating (loss) / profit
Finance costs
Finance income
(Loss) / profit before taxation
Taxation charge
(Loss) / profit for the year
(Loss) / earnings per share
19
19
20
(23,972)
(265)
42
(24,195)
(167)
(24,362)
25,146
(398)
18
24,766
(66)
24,700
Basic and diluted (loss) /earnings per share (US $)
21
(0 15)
0 15
The (loss) / profit 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 2022
Livermore investments Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2022
(Loss) / profit for the year
Note
2022
US $000
2021
US $000
(24,362)
24,700
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Foreign exchange (losses) / gains on translation of consolidated
subsidiary
(29)
59
Items that are not reclassified subsequently to profit or loss
Financial assets designated at fair value through other
comprehensive income – fair value (losses) / gains
5
(1,606)
3,200
Total comprehensive (loss) /income for the year
(25,997)
27,959
The total comprehensive (loss) / income for the year is wholly attributable to the owners of the parent
The notes 1 to 28 form part of these consolidated financial statements
36
Annual Report 2022 Livermore Investments Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2022
Share
premium
US
$000
169,187
Note
13
11
11
Balance at 1 January 2021
Dividends
Purchase of own shares
Re-issue of shares
Transactions with owners
Profit for the year
Other comprehensive income:
Financial assets at fair value through OCI –
fair value gains
Foreign exchange gains on translation of
consolidated subsidiary
Total comprehensive income for the year
Balance at 31 December 2021
169,187
Dividends
13
Transactions with owners
Loss for the year
Other comprehensive income:
Financial assets at fair value through
OCI – fair value losses
5
Foreign exchange losses on translation
of consolidated subsidiary
Transfer of realised gains
Total comprehensive loss for the year
Treasury
Shares
US
$000
Translation
reserve
US
$000
Investments
revaluation
reserve
US
$000
Retained
earnings
US
$000
Total
US
$000
-
-
(6,973)
916
(6,057)
(6,057)
-
-
-
-
-
-
-
-
-
-
-
25
(21,310)
16,005
163,907
-
-
-
-
-
-
59
59
84
-
-
-
-
-
-
-
(8,000)
(8,000)
-
(6,973)
(87)
829
(8,087)
(14,144)
24,700
24,700
3,200
-
-
-
3,200
59
3,200
24,700
27,959
(18,110)
32,618
177,722
-
-
(24,000)
(24,000)
(24,000)
(24,000)
-
-
(24,362)
(24,362)
-
(1,606)
(29)
-
-
-
(1,606)
(29)
-
(1,553)
1,553
-
(29)
(3,159)
(22,809)
(25,997)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2022
169,187
(6,057)
55
(21,269)
(14,191)
127,725
The notes 1 to 28 form part of these consolidated financial statements.
37
Annual Report 2022
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2022
Cash flows from operating activities
(Loss) / profit before tax
(24,195)
24,766
Note
2022
US $000
2021
US $000
Adjustments for
Depreciation
Interest expense
Interest and distribution income
Bank interest income
Fair value changes of investments
Exchange differences
18
19
16
19
17
19
Changes in working capital
Decrease in trade and other receivables
(Decrease) / Increase in trade and other payables
Cash Flows (used in) / 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 investing activities
Cash flows from financing activities
Lease liability payments
Interest paid
Dividends paid
Purchases of own shares
102
36
109
35
(23,665)
(27,495)
(42)
44,637
229
(2,898)
(62)
(2,928)
(5,888)
23,707
(32)
17,787
(74,283)
46,729
(27,554)
(127)
(36)
(24,000)
-
19
13
11
(18)
(6,250)
363
(8,490)
7,817
1,774
1,101
27,512
(50)
28,563
(119,905)
100,629
(19,276)
(109)
(35)
(8,000)
(6,057)
Net cash used in financing activities
(24,163)
(14,201)
38
Annual Report 2022 Note
2022
US $000
2021
US $000
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange differences on cash and cash equivalents
Cash and cash equivalents at the end of the year
19
10
(33,930)
45,130
(229)
10,971
(4,914)
50,407
(363)
45,130
The notes 1 to 28 form part of these consolidated financial statements
39
Annual Report 2022
Notes to the Consolidated
Financial Statements
1. General Information
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 The principal
legislation under which the Company operates is the BVI Business Companies Act, 2004
The liability of the members of the Company is limited
1 2 The registered office of the Company is located at Trident Chambers, PO Box 146, Road
Town, Tortola, British Virgin Islands
1 3 The Company is tax resident in the Republic of Cyprus
1 4 The principal activity of the Company is to carry out investment activities
2 Basis of preparation
The consolidated financial statements (“the financial statements”) of Livermore Investments
Group Limited have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union (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 2022, the Company adopted any applicable new or revised IFRS and
relevant amendments and interpretations which became effective, and also were endorsed
by the EU
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 2022, or
have not yet been endorsed by the EU by 31 December 2022:
40
Annual Report 2022
• Amendments to IFRS 16: “Lease Liability in a
Sale and Leaseback”
No
1 January 2024
Endorsed by
EU
IASB
Effective date
• Amendments to
IAS 1: “Classification of
Liabilities as Current or Non-current”
• Amendments to IAS 1: “Non-current Liabilities
with Covenants”
•
IFRS 17: “Insurance Contracts”,
amendments of 2020
including
• Amendment to IFRS 17: “Initial Application of
IFRS 17 and IFRS 9 – Comparative Information”
• Amendments to
Statement 2:
policies”
IAS 1 and
IFRS Practice
“Disclosure of Accounting
No
No
Yes
Yes
1 January
2024
1 January
2024
1 January
2023
1 January 2023
Yes
1 January 2023
• Amendments to IAS 8: “Definition of Accounting
Estimates”
Yes
1 January 2023
• Amendment to IAS 12: “Deferred Tax related
to Assets and Liabilities arising from a Single
Transaction”
Yes
1 January 2023
• 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”
No
No
p o s t p o n e d
indefinitely
1 January 2016
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
41
Annual Report 2022
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 transactions between the Company and its consolidated subsidiary and all resulting
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
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
42
Annual Report 2022
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 the consolidated subsidiary, which has a functional
currency of Swiss Francs, 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
Own equity instruments purchased by the Company, or its consolidated subsidiary are
recorded as treasury shares at the consideration paid, including transaction costs, and
they are deducted from total equity until they are sold or cancelled Where such shares are
subsequently sold, any consideration received is included in total equity
3 7 Financial assets
Financial assets are recognised when the Company becomes a party to the contractual
43
Annual Report 2022
provisions of the financial instrument
A financial asset is derecognised only where the contractual rights to the cash flows
from the asset expire or the financial asset is transferred, and that transfer qualifies for
derecognition A financial asset is transferred if the contractual rights to receive the cash
flows of the asset have been transferred or the Company retains the contractual rights
to receive the cash flows of the asset but assumes a contractual obligation to pay the
cash flows to one or more recipients A financial asset that is transferred qualifies for
derecognition if the Company transfers substantially all the risks and rewards of ownership
of the asset, or if the Company neither retains nor transfers substantially all the risks and
rewards of ownership but does transfer control of that asset
The Company classifies its financial assets in the following measurement categories:
(a) those to be measured at fair value through profit or loss;
(b) those to be measured at fair value through other comprehensive income; and
(c)
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
44
Annual Report 2022
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
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
accounting estimates and requires management to exercise its judgement in the process of
45
Annual Report 2022
applying the Company’s accounting policies It also requires the use of assumptions that
affect the reported amounts of assets and liabilities and disclosures at the reporting date
and the reported amounts of revenues and expenses during the reporting period Although
these estimates are based on management’s best knowledge of current events and actions,
actual results may ultimately differ
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
Management, in preparing these financial statements, has not made any significant
estimates with a risk of material change in value in the next financial period
4. Financial assets at fair value through profit or loss
Non-current assets
Fixed income investments (CLOs)
66,576
101,667
2022
US $000
2021
US $000
46
Annual Report 2022
Current assets
Fixed income investments
Public equity investments
37,519
2,281
39,800
7,584
9,969
17,553
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
The movement in financial assets at fair value through profit or loss during the year was as
follows:
At 1 January
Purchases
Sales
Settlements
Fair value (losses) / gains
2022
US $000
119,220
73,963
(19,662)
(23,514)
(43,631)
2021
US $000
99,583
114,399
(28,408)
(72,221)
5,867
At 31 December
106,376
119,220
5. Financial assets at fair value through other comprehensive income
Non-current assets
Fund investments
2022
US $000
2021
US $000
7,596
12,435
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
47
Annual Report 2022
The movement in financial assets at fair value through other comprehensive income during
the year was as follows:
At 1 January
Purchases
Settlements
Fair value (losses) / gains
2022
US $000
12,435
320
(3,553)
(1,606)
2021
US $000
3,729
5,506
-
3,200
At 31 December
7,596
12,435
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
• Fund investments 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
48
Annual Report 2022
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 pre-payments Therefore, the rate at which the underlying
impacts the future cash flows that the CLO may generate
collateral prepays
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
•
Fund investments are valued using market valuation techniques as determined by
the Directors, mainly on the basis of valuations reported by third-party managers
independent qualified
of such
property
investments
Underlying property values are determined based on their estimated market values
investments Real Estate entities are valued by
valuers with
relevant experience on
substantial
such
•
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 are grouped into the fair value hierarchy as follows:
49
Annual Report 2022
2022
US
$000
Level 1
2022
US
$000
Level 2
2022
US
$000
Level 3
2022
US
$000
Total
2021
US
$000
Level 1
2021
US
$000
Level 2
2021
US
$000
Level 3
2021
US
$000
Total
Fixed income
investments
37,519
66,576
-
104,095
Fund investments
-
Public equity investments
2,281
Investments in
subsidiaries
-
-
-
-
7,596
-
7,596
2,281
6,546
6,546
-
-
-
9,969
101,667
7,584
109,251
-
-
-
12,435
12,435
-
9,969
7,196
7,196
39,800
66,576
14,142
120,518
9,969
101,667
27,215
138,851
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
50
Annual Report 2022
Financial assets within level 3 can be reconciled from beginning to ending balances as follows:
At fair value
through OCI
At fair value
through
profit or loss
Investments in
subsidiaries
Fund
investment
US $000
Fixed Income
investments
US $000
At 1 January 2021
Purchases
Settlement
Gains / (losses)
recognised in:
-
Profit or loss
- Other
comprehensive
income
At 1 January 2022
Purchases
Settlement
Losses recognised in:
-
Profit or loss
- Other
comprehensive
income
3,729
5,506
-
-
3,200
12,435
320
(3,553)
-
(1,606)
At 31 December 2022
7,596
10,036
69,805
(72,221)
(36)
-
7,584
15,930
(23,514)
-
-
-
US $000
6,813
-
-
383
-
7,196
356
-
(1,006)
-
Total
US $000
20,578
75,311
(72,221)
347
3,200
27,215
16,606
(27,067)
(1,006)
(1,606)
6,546
14,142
51
Annual Report 2022
The above gains and losses recognised can be allocated as follows:
At fair value
through OCI
At fair value
through
profit or loss
Investments in
subsidiaries
Fund
investment
US $000
Fixed Income
investments
US $000
US $000
Total
US $000
2021
Profit or loss
-
Financial assets held at
year-end
Other comprehensive income
-
Financial assets held at
year-end
Total gains / (losses) for 2021
-
3,200
3,200
(36)
-
(36)
383
347
-
3,200
383
3,547
At fair value
through OCI
At fair value
through
profit or loss
Investments in
subsidiaries
Fund
investment
US $000
Fixed Income
investments
US $000
US $000
Total
US $000
2022
Profit or loss
-
Financial assets held at
year-end
Other comprehensive income
-
Financial assets held at
year-end
Total losses for 2022
-
(1,606)
(1,606)
-
-
-
(1,006)
(1,006)
-
(1,006)
(1,606)
(2,612)
52
Annual Report 2022 The Company has not developed any quantitative unobservable inputs for measuring the fair
value of its level 3 financial assets at 31 December 2022 and 2021 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
Fund investments 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
At1 January
Additions
Fair value (losses) / gains
At 31 December
2022
US $000
2021
US $000
7,196
356
(1,006)
6,546
6,813
-
383
7,196
Additions relate to the fair value of the receivable amount from the Company’s unconsolidated
subsidiary Sandhirst Ltd, that was waived by the Company (note 22)
53
Annual Report 2022
Details of the investments in which the Company has a controlling interest at 31 December
2022 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%
Unconsolidated subsidiaries
Livermore Properties Ltd
Mountview Holdings Ltd
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%
Administration
services
Holding of
investments
Investment
vehicle
Investment
vehicle
Holding of
investments
Holding of
investments
54
Annual Report 2022
9. Trade and other receivables
Financial items
Amounts due by related parties
(note 22)
Non-financial items
Prepayments
VAT receivable
2022
US $000
2021
US $000
-
66
6
72
289
65
12
366
For the Company’s receivables of a financial nature, no allowance for impairment has
been recognised for their lifetime expected credit losses, as their default rates have been
determined to be close to 0%
No receivable amounts have been written-off during either 2022 or 2021
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
Cash at bank
2022
US $000
10,971
10,971
2021
US $000
45,130
45,130
55
Annual Report 2022
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
At 31 December 2022 and 2021
174,813,998
169,187
Treasury shares
At 1 January 2021
Additions (note 22)
Re-issued
At 31 December 2021 and 2022
Number of
shares
Share premium
US $000
-
10,888,577
(1,430,000)
9,458,577
-
6,973
(916)
6,057
During 2021, 1,430,000 of the Company’s treasury shares were re-issued to a key management
member (note 22) in full settlement of an accrued amount of USD 0 7m The re-issued shares
had an average cost of USD 0 916m and a fair value of USD 0 829m, as determined based on
their market price, resulting in the recognition of a loss in retained earnings of USD 0 087m
The difference between the fair value and the accrued amount is included in professional fees
(note 18)
In the consolidated statement of financial position, the amount included as share premium
and treasury shares comprises of:
Share premium
Treasury shares
12. Trade and other payables
Financial items
Trade payables
Amounts due to related parties (note 22)
Accrued expenses
2022
US $000
169,187
(6,057)
163,130
2021
US $000
169,187
(6,057)
163,130
2022
US $000
2021
US $000
63
3,283
387
3,733
36
6,193
412
6,641
56
Annual Report 2022
13. Dividend
On 5 January 2022, the Company announced an interim dividend of USD 24m (USD 0 145 per share)
to members on the register as at 14 January 2022 The dividend was paid on 7 February 2022
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
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)
Number of Shares
Ordinary shares
Treasury shares
Closing number of ordinary
shares in issue
2022
127,725
2021
177,722
165,355,421
165,355,421
0 77
1 07
174,813,998
(9,458,577)
174,813,998
(9,458,577)
165,355,421
165,355,421
The diluted net asset value per share equals the basic net asset value per share since no
potentially dilutive shares exist at 31 December 2022 and 2021
57
Annual Report 2022
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 (losses) / income
Other European countries
United States
Asia
Investments
Other European countries
United States
Asia
2022
US $000
(2,956)
(16,320)
(1,696)
(20,972)
6,850
105,577
8,091
120,518
2021
US $000
94
33,109
542
33,745
3,435
127,071
8,345
138,851
Investment (losses) / 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
2022
US $000
1,207
22,458
23,665
2021
US $000
669
26,826
27,495
58
Annual Report 2022
Interest and distribution income is analysed between different categories of financial assets,
as follows:
2022
Distribution
income
US $000
Interest
US $000
2021
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
1,207
22,282
23,489
669
26,632
27,301
-
176
176
-
194
194
1,207
22,458
23,665
669
26,826
27,495
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) / gains on
financial assets through profit
or loss
Fair value (losses) / gains on
investments in subsidiaries
Fair value gains on derivatives
2022
US $000
(43,782)
(1,006)
151
(44,637)
2021
US $000
5,867
383
-
6,250
59
Annual Report 2022
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 2022
Disposed in 2021
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
(5)
1,430
151
1,576
1,553
3,129
524
519
62
-
1,492
151
1,099
1,454
-
2,237
3,336
111
-
1,565
-
586
2,162
2,553
2,384
4,901
-
1,553
-
-
-
586
3,715
2,553
2,384
4,901
* 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
Tax fees
2022
US $000
932
237
822
13
139
237
102
441
75
2
2021
US $000
3,903
201
3,528
53
102
277
109
349
75
2
3,000
8,599
60
Annual Report 2022
Professional fees for 2021 include a share-based payment to a key management member of USD
0 129m (notes 11 and 22)
Throughout 2022 the Company employed 4 members of staff (2021: 4) Two of those members are
the Company’s executive Directors
Other salaries and expenses include USD 18,802 of social insurance and similar contributions (2021:
USD 18,977), as well as USD 4,508 of defined contributions plan costs (2021: USD 3,461)
19. Finance costs and income
Finance costs
Bank interest expense
Foreign exchange loss
Finance income
Bank interest income
20. Taxation
Current tax charge
2022
US $000
2021
US $000
36
229
265
42
35
363
398
18
2022
US $000
167
2021
US $000
66
The Company is a tax resident in the Republic of Cyprus and is subject to taxation under the tax
laws and regulations in Cyprus
The current tax charge relates to the results of the Company for 2022, as explained above, and
the Company’s consolidated subsidiary in Switzerland (note 8)
61
Annual Report 2022
21. (Loss) / earnings per share
The basic (loss) / earnings per share has been calculated by dividing the (loss) / profit for the year
attributable to ordinary shareholders of the Company by the weighted average number of ordinary
shares in issue of the Company during the relevant financial year
(Loss) / profit for the year attributable
to ordinary shareholders of the parent
(USD 000)
Weighted average number of ordinary
shares outstanding
2022
2021
(24,362)
24,700
165,355,421
165,372,512
Basic (loss) / earnings per share (USD)
(0 15)
0 15
The diluted (loss) / earnings per share equals the basic (loss) / earnings per share since no
potentially dilutive shares were in existence during 2022 and 2021
62
Annual Report 2022
22. Related party transactions
The Company is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which
at 31 December 2022 held 74 41% (2021: 74 41%) of the Company’s voting rights
2022
US $000
2021
US $000
Amounts receivable from unconsolidated
subsidiary
Sandhirst Ltd
-
289
(1)
Amounts payable to unconsolidated
subsidiary
Livermore Israel Investments Ltd
(3,046)
(3,046)
Amounts payable to other related party
Loan payable
(149)
(149)
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
(88)
-
(88)
795
-
87
50
385
1,317
(1,011)
(1,987)
(2,998)
795
3,000
108
-
2,829
6,732
(2)
(3)
(2)
(4)
(5)
(6)
(1) The amounts receivable from unconsolidated subsidiary are interest free, unsecured, and have no
stated repayment date
During 2022, the Company waived a receivable amount of USD 0 356m from its subsidiary Sandhirst
Ltd, as a means of capital contribution to the subsidiary (note 8)
(2) The amounts payable to unconsolidated subsidiary and Directors current accounts with credit
balances are interest free, unsecured, and have no stated repayment date
(3) A loan with a balance at 31 December 2022 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
63
Annual Report 2022
repayable on demand This loan is included within trade and other payables (note 12)
(4) The amount payable to other key management personnel relates to payments made on behalf of the
Company for investment purposes and accrued consultancy fees During the year 2021, an accrued
amount of USD 0 7m was settled by re-issuing 1,207,624 of the Company’s treasury shares at their
fair value as at the date of transfer
(5) These payments were made directly to companies which are related to the Directors
(6) During 2021, 222,376 of the Company’s treasury shares were re-issued to a key management
member for no consideration and no vesting conditions The fair value of these shares at the date of
transfer was USD 0 129m Other key management fees are included within professional fees (note 18)
During 2021, the Company bought back 10,888,577 shares from Groverton Management Ltd,
to be held in treasury, for a total cost of USD 6 973m, as determined based on the market
price of the shares
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
2022 or 2021
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 out 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 outcome of the case and the existence of
any obligation for Livermore, no provision has been made
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 at 31 December 2022
25. Impact of war in Ukraine
In February 2022, Russia attacked Ukraine and the ensuing conflict has resulted in significant
humanitarian losses for the Ukrainian people In response, the US, UK, Japan and European
member states have enacted significant sanctions against Russia including exclusion of Russia
from the SWIFT system and access to hard currencies Russia and Ukraine are significant
exporters of agricultural commodities and Russia is a significant export of Oil and Gas,
especially to Europe The conflict has led to large increases in commodity prices and loss of
agricultural supply This is expected to have potentially significant and unexpected negative
impact to global growth and business performance We expect the most direct and significant
impact to European member states and less developed economies while US is expected to fare
better with somewhat delayed and muted affects The Company does not have direct exposure
to European or emerging markets with most of the portfolio exposed to US domestic market
companies Still, the conflict has only recently begun and given the uncertain outcome, it
is difficult to quantify the impact on the Company’s portfolio at this stage In response, the
64
Annual Report 2022
Company intends to be conservatively positioned with sufficient cash balances and cashflow
to whether the uncertainty and position itself to take advantage of potential dislocations in
the market
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:
2022
US $000
2022
US $000
2022
US $000
2021
US $000
2021
US $000
2021
US $000
Financial
assets
Financial
liabilities
Net value
Financial
assets
Financial
liabilities
Net value
British Pounds (GBP)
Euro
Swiss Francs (CHF)
Israel Shekels (ILS)
2,624
127
1,509
5,451
(122)
(89)
(70)
(3,046)
2,502
1,677
38
1,439
2,405
417
22
6,203
(110)
(21)
(2,099)
(3,046)
1,567
396
(2,077)
3,157
Total
9,711
(3,327)
6,384
8,319
(5,276)
3,043
65
Annual Report 2022
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 2022 would have the following impact A 10% decrease of the following
currencies against USD would have an approximately equal but opposite impact
2022
US $000
2022
US $000
2022
US $000
2021
US $000
2021
US $000
2021
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
250
4
144
240
638
-
-
-
-
-
250
4
144
240
638
157
40
(208)
316
305
-
-
-
-
-
157
40
(208)
316
305
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
At 31 December 2022 and 31 December 2021, 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
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
66
Annual Report 2022
The Company’s financial assets affected by interest rate changes are as follows:
Financial assets – subject to:
- fair value changes
- interest changes
Total
2022
US $000
4,616
10,971
15,587
2021
US $000
-
45,130
45,130
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
Total
2022
US $000
Profit or loss
2021
US $000
Profit or loss
(657)
110
547
-
451
451
The above analysis assumes that all other variables, in particular currency rates, remain constant
67
Annual Report 2022
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 6 07% change in the net asset value at 31 December
2022 (2021: 6 28%), 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
2022
US $000
Profit or
loss
7,758
2021
US $000
Profit or loss
11,163
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
No derivatives were held either at 31 December 2022 or 2021
68
Annual Report 2022
Credit risk
The Company invests in a wide range of securities with various credit risk profiles including
investment grade securities and sub investment grade positions The investment manager
mitigates the credit risk via diversification across issuers However, the Company is exposed to
a migration of credit rating, widening of credit spreads and default of any specific issuer
The Company only transacts with regulated institutions on normal market terms which are
trade date plus one to three days The levels of amounts outstanding from brokers are regularly
reviewed by the management The duration of credit risk associated with the investment
transactions is the period between the date the transaction took place, the trade date and
the date the stock and cash are transferred, the settlement date The level of risk during the
period is the difference between the value of the original transaction and its replacement
with a new transaction
The Company is mainly exposed to credit risk in respect of its fixed income investments
(mainly CLOs) and to a lesser extend in respect of its financial assets at amortised cost, and
other instruments held for trading (perpetual bonds)
The Company has exposure to US senior secured loans and to a lesser degree emerging market
loans through CLO equity tranches as well as warehouse first loss tranches These loans are
primarily non-investment grade loans or interests in non-investment grade loans, which are
subject to credit risk among liquidity, market value, interest rate, reinvestment and certain
other risks It is anticipated that these non-investment grade loans generally will be subject
to greater risks than investment grade corporate obligations
A non-investment grade loan or debt obligation or an interest in a non-investment grade
loan is generally considered speculative in nature and may become a defaulted security for
a variety of reasons A defaulted security may become subject to either substantial workout
negotiations or restructuring, which may entail, among other things, a substantial reduction
in the interest rate, a substantial write-down of principal, and a substantial change in the
terms, conditions and covenants with respect to such defaulted security In addition, such
negotiations or restructuring may be quite extensive and protracted over time, and therefore
may result in substantial uncertainty with respect to the ultimate recovery on such defaulted
security Bank loans have historically experienced greater default rates than has been the case
for investment grade securities
The Company has no investment in sovereign debt at 31 December 2022 or 2021
No collaterals are held by the Company itself in relation to the Company’s financial assets
subject to credit risk
69
Annual Report 2022
The Company’s maximum credit risk exposure at 31 December 2022 and 2021 is as follows:
Financial assets:
At amortised cost
Trade and other receivables
Cash at bank
At fair value through profit or loss
2022
US $000
2021
US $000
-
10,971
10,971
104,099
115,070
289
45,130
45,419
109,251
154,670
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
At 31 December 2022 and 2021 the credit rating distribution of the Company’s asset portfolio
subject to credit risk was as follows:
Rating
AA+
AA
A
B
B+
BB
BB+
BBB
B-
BB-
BBB-
Not Rated
2022
2021
US $000
Percentage
US $000
Percentage
28,800
9,812
446
5,347
735
6,108
842
908
-
805
618
60,649
115,070
25 0%
8 5%
0 5%
4 6%
0 6%
5 3%
0 7%
0 8%
-
0 7%
0 6%
52 7%
100%
26,063
12,872
922
-
-
6,195
4,576
5,280
98,762
154,670
16 9%
8 3%
0 6%
-
-
4 0%
3 0%
3 4%
63 8%
100%
70
Annual Report 2022
Included within “not rated” amounts are investments in loan market through CLOs (equity
tranches) of USD 60 649m and no open warehouses (2021: CLOs of USD 91 179m and open
warehouses of USD 7 583m)
The modelled internal rates of return on the CLO portfolio as well as the warehouse first loss
tranches are in low teens percentage points
Liquidity risk
The following table summarizes the contractual cash outflows in relation to the Company’s
financial liabilities according to their maturity
Carrying amount
US $000
Less than 1 year
US $000
31 December 2022
Trade and other payables
3,733
3,733
Carrying amount
US $000
Less than 1 year
US $000
31 December 2021
Trade and other payables
6,641
6,641
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 2022, the Company had liquid investments totalling USD 117 4m, comprising of USD
11m in cash and cash equivalents, USD 66 6m in investments in loan market through CLOs, USD 37 5m
in other fixed income investments, USD 2 3m 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
71
Annual Report 2022
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 2022 and 2021, the Company’s only borrowing is a loan
payable to a related party of USD 0 149m (note 22) and therefore to a significant extent it is
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:
Borrowings
Cash at bank
Net Debt
Total equity
Net debt to equity ratio
27. Financial assets and liabilities by class
2022
US $000
149
(10,971)
(10,822)
127,725
(0 08)
2021
US $000
149
(45,130)
(44,981)
177,722
(0 25)
Note
2022
US $000
2021
US $000
Financial assets:
Financial assets at amortised cost
9, 10
10,971
45,419
Financial assets at fair value through
profit or loss
Financial assets designated at fair value
through other comprehensive income
4
5
106,376
119,220
7,596
12,435
124,943
177,074
Financial liabilities:
Financial liabilities at amortised cost
12
3,733
6,641
The carrying amount of the financial assets and liabilities at amortised cost approximates to
their fair value
72
Annual Report 2022
28 Events after the reporting date
The following non-adjusting events occurred after 31 December 2022:
•
Credit Suisse, the second-largest bank in Switzerland, collapsed in March 2023 and
Switzerland’s regulatory authorities approved its takeover by the largest Swiss bank UBS
At that time Livermore owned USD 0 8m nominal of Credit Suisse Additional Tier 1 bonds
purchased at a cost of USD 0 675m The fair value of the bonds at 31 December 2022 was USD
0 578, included within Fixed income investments under Financial assets at fair value through
profit or loss (note 4) As a result of the takeover, the bonds were permanently written down
and the Company suffered a loss in 2023 of USD 0 578m
There were no other material events after the end of the reporting year, which have a bearing
on the understanding of these financial statements
73
Annual Report 2022
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 0300 who will advise on the process for arranging a replacement
Duplicate Shareholder Accounts
If, as a shareholder, you receive more than one copy of a communication from the Company you may
have your shares registered in at least two accounts This happens when the registration details of
separate transactions differ slightly If you wish to consolidate such multiple accounts, please call
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
74
Annual Report 2022 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
Solicitors
Travers Smith
10 Snow Hill
London
EC1A 2AL
England
Broker
Zeus Capital Limited
125 Old Broad Street
London
EC2N 1AR
England
Nominated And Financial Adviser
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
England
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
75
Annual Report 2022
22