Interim Results for six month

RNS Number : 6139S

Livermore Investments Group Limited

14 September 2010

 



13 September, 2010

LIVERMORE INVESTMENTS GROUP LIMITED

("Livermore" or "Company")

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2010

Livermore Investments Group Limited (the "Company" or "Livermore")today announces its interim results for the six months ended 30 June 2010.

Highlights

·      Net Asset Value per share - USD 0.46 (June 2009: USD 0.53, December 2009: USD 0.44) representing a gain of 4.6% during the first six months of 2010

·      Net cash, cash equivalents and marketable securities at 30 June 2010 increased by USD 4.7m to USD 54.1m (June 2009: USD 28.7m, December 2009: USD 49.4m) in the first six months of 2010

·      Portfolio of financial assets generated a 24.8% annualized return on the net average invested amount

·      Successfully rented all apartments at Wyler Park, Bern. The property is now 100% let

·      Total administrative expenses during the period (excluding provisions for legal and other matters) were USD 1.3m, representing 1% of the NAV

·      Improved trading environment relating to most investments.

For further investor information please go to www.livermore-inv.com.

Livermore Investments Group Ltd.
Ron Baron, Chief Investment Officer	+ 41 433 443 200
Matrix Corporate Capital LLP (NOMAD)	[phone]
Stephen Mischler
Tim Graham
Hudson Sandler (PR agency)	[phone]
Michael Sandler

Chairman's and Chief Executive's Review

Introduction

We are pleased to announce the interim financial results for Livermore Investments Group Limited ("Livermore" or "the Company") for the half year ended 30 June 2010. 

During the first half of 2010, the Company generated a positive performance despite weak equity markets and weakening outlook for global growth. Overall NAV increased by 4.6% to USD 0.46 per share. During the reporting period, management focused on the financial portfolio with increased exposure to credit markets, which provided attractive risk adjusted returns. Continuing its solid performance from last year, the financial portfolio generated 24.8% returns (annualized) during the period on net average invested capital.

Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 2.64m in net rent during the period. All of the 39 apartments were rented out and the property is now 100% let. Market valuation of Wyler Park has remained stable both during and after the financial crisis.

The cash and marketable securities portion of the portfolio increased during the period to USD 54.1m representing the net proceeds from the sale of the Company's shareholding in Atlas Estates Limited as well as capital gains and interest income from the financial portfolio. There were no significant developments in the private equity portfolio during the period.

Financial Review

The NAV of the Group as at 30 June 2010 was approximately USD 132.2m.  The net profit for the first half of 2010 was USD 1.5m, which represents earnings per share of USD 0.01. The net profit and increase in NAV relate largely to positive performance of the financial portfolio and gains from sale of the Company's shareholding in Atlas Estates Limited. Weakness of non-USD currencies during the period partly offset these gains.

Administrative expenses (excluding provisions for legal and other matters) were USD 1.3m, representing 1% of the NAV. The Company continued to focus on reducing administrative costs.

	30 June 2010		30 June 2009		31 December 2009
	US $m		US $m		US $m
Shareholders' funds at beginning of period	128.6		179.9		179.9
	___________		___________		___________
Income from investments	6.4		5.1		7.6
Realised (losses) on investments	(0.8)		(5.6)		(6.2)
Loss on impairment on investments	-		(16.4)		(28.2)
Unrealised (losses) on investments	(0.1)		(7.2)		(17.4)
Unrealised exchange gains	0.7		0.6		4.0
Administration costs including provisions for legal cases	-		(2.0)		(8.9)
Other administrative costs	-		(0.3)		-
Finance costs	(1.1)		(1.6)		(3.9)
Tax (charge) / credit	(0.3)		-		0.2
Gain from discontinued operations	-		1.6		1.7
	___________		___________		___________
Increase / (Decrease) in net assets from operations	4.8		(25.8)		(51.1)
Purchase of own shares and dividends paid	(1.2)		-		(0.6)
Adjustments for share option charge	-		0.3		0.4
	___________		___________		___________
Shareholders' funds at end of period	132.2		154.4		128.6
	------		------		------
Net Asset Value per share	US $0.46		US $0.53		US $0.44

Livermore's Strategy

Livermore's investment strategy is to establish a balanced and diversified portfolio of private investments with a mid to long term investment horizon and financial investments which provide on-going liquidity.

The first part of the portfolio is focused on Switzerland and Asia and targets investments in real estate and private equity opportunities.  Investments are focused on value opportunities in sectors that management believes will provide superior growth over the mid to long term with relatively low downside risk. 

The financial portfolio is focused on fixed income instruments which usually generate periodic cash flows and includes exposure to corporate bonds, syndicated loans and other credit instruments.  This part of the portfolio is geographically focused on the US and Europe with limited exposure to emerging markets.

Livermore's above investments are made directly or alongside professional managers with a proven track record.  Livermore considers having good liquidity to be paramount and had some USD 54.1m in cash, cash equivalent and marketable securities as at 30 June 2010.  Strong emphasis is given to keep leverage low at the overall portfolio level and to re-invest in existing and new investments along the economic cycle. 

Repurchase of shares

Between 31 December 2009 and 30 June 2010, the Company repurchased 5,000,000 shares at an average price of GBP 0.16 per share. An additional 3,399,798 shares were purchased at an average price of GBP 0.16 per share between 30 June 2010 and before the beginning of the interim close period. As at 30 June 2010, the Company holds 18,425,966 shares in treasury.

Further share buybacks will be considered in the light of both the discount to net asset value and management's strategic view of the investment portfolio.

Dividends

Due to the prevailing uncertain economic and financial conditions, the Board decided not to distribute dividends for the period ended 30 June 2010.

The Board of Directors will decide on the Company's dividend policy for 2010 based on market conditions and portfolio performance over the current financial year.

Richard Rosenberg                                            Noam Lanir

Chairman                                                            Chief Executive

13 September 2010

Review of Activities

Economic & Investment Environment

Economies in most developed and developing countries continued their recovery during the period, albeit at a slower pace than anticipated in developed economies. Central banks in developed economies continued to keep short-term interest rates at historically low levels and signalled that they could remain low until sustainable recovery and job growth was evident. Global equity markets were lower than their starting levels on account of slower growth in US and Europe as well as heightened sovereign risks, especially in certain European economies. The S&P 500 index and the EuroStoxx 50 were down 7.5% and 13% respectively. Traditional safe haven assets like U.S. treasuries, German bunds and gold gained in value.

Credit markets in general performed well during the period as investors searched for income in a low interest rate environment. In particular, the High Yield and the Leveraged Loan markets performed well amid improving credit fundamentals and declining default rates. The U.S. lagged 12-month loan default rate fell to 4.02% by principal amount during the second quarter, down from 5.8% in the prior quarter and a high of 10.8% recorded in November 2009.  The S&P/LSTA Leveraged Loan Index and the CS High Yield Index were up 3.3% and 5% respectively in the first half of the year.

EURO ZONE: The overall macroeconomic environment in the euro area continued to improve moderately in early 2010, albeit with pronounced heterogeneity at the country level. The Euro zone GDP grew 0.8% and 1.9% on a year-on-year basis in the first and second quarters of 2010. Corporate balance sheets improved slightly with large firms in better shape than small and medium enterprises which are dependent on bank finance and faced tighter lending standards. Concerns about sovereign credit risks within the euro area intensified progressively over the last six months impairing the functioning of some financial markets and hampering monetary policy transmission. Greece had to be bailed out and non-standard policy actions were required to address the severe tensions in certain market segments. Credit spreads, especially of financial institutions, widened considerably during the turmoil and equity markets dropped. The EuroStoxx 50 was down 13% from the beginning of the year. The Euro declined 14.5% against the US Dollar and 11% against the Swiss Franc.

SWITZERLAND: After the powerful recovery in the second half of 2009, the Swiss economy grew at a slower rate in the first quarter of 2010. The slowdown was largely due to a sharp decline in added value in the banking sector. By contrast, the manufacturing sector continued to recover. On the demand side, robust growth in both exports and consumer spending continued. The situation in the labour market improved against the backdrop of economic recovery. Like the output gap, however, the unemployment rate points to continued under-utilisation of capacity in the economy. Accordingly, inflationary pressures remained low. The SMI Index declined 6.4% during the first half following the sovereign risk concern in the European region.

INDIA: Economic recovery in India gained further momentum in the first half of 2010, with robust growth in GDP recorded in the last quarter of 2009-10. Industrial production continued to exhibit strong double digit growth during the year. Private investment demand recovered sharply, with gross fixed capital formation accelerating significantly in the first quarter of 2010. Lead indicators for services activities suggest continuation of the momentum. Inflation expectations continued to rise forcing the Reserve Bank of India to tighten monetary policy and increase interest rates during the period.

Sources: International Monetary Fund (IMF), Swiss National Bank (SNB), European Central Bank (ECB), Reserve Bank of India (RBI), Bloomberg

Review of Significant Investments

Name	Book Value US $m
Wyler Park*	28.5
SRS Charminar **	23.3
Montana Tech Components	5.2
CALS	5.0
Other Real Estate Assets	2.7
Private Equity Funds	18.4
Financial Portfolio	57.5
Total	140.6

* Net of related loan.

** Including related interest until February 2009.

Wyler Park - Switzerland

Wyler Park is a top quality mixed-use property located in Berne, Switzerland. It has over 16,800 square meters of commercial area, 4,100 square meters of residential area, and another 7,800 square meters available for additional commercial development. The commercial part is leased entirely to SBB (AAA rated), the Swiss national transport authority wholly owned by the Swiss Confederation, and serves as the headquarters of their Passenger Traffic division. The commercial lease is 100% linked to inflation and ends in 2019 with two 5 year extension periods thereafter. The annual rental income from the commercial area of the project is CHF 4.26m.

Following the successful development of 39 residential apartments, management has completed renting all of the 39 apartments. The entire property is now fully rented. The annual rental income expected from the residential area is CHF 1.1m.

The property generated net rent of CHF 2.64m during the first half of 2010.

Livermore is the sole owner of Wyler Park through its wholly owned Swiss subsidiary, Livermore Investments AG. The loan outstanding on the project is CHF 79m, which is a non-recourse loan to Livermore Investments AG backed only by this property. The loan matures in July 2014.

Management expects to develop the additional commercial development rights of 7,800 square meters attached to the property in the coming years which could further enhance the value of this property.

SRS Charminar - India

Livermore had invested USD 20m in 2008 in a leading Indian Real Estate company, in association with SRS Private and other investors as part of a total investment of USD 154m. The target company is a top 10 real estate developer in India by land bank value and size.  It controls over 5,000 acres across Southern India, with over 650 acres in Hyderabad.

The deal structure included a put option, which could be exercised if the IPO does not take place within 3 years or if certain terms in the agreement are not met.  The put option is secured by land which was valued at around USD 1.3 billion at the time of investment and guarantees a minimum return of approximately 30% IRR if exercised.

As reported earlier, the Manager (Infinite India Limited) for this investment served a put option exercise notice to the promoters in 2009.  Following a dispute on the grounds of the put option notice between the promoters and the fund, the parties agreed to invoke arbitration to be held in Mumbai.

On 14 August 2009, the arbitration process was completed and the arbitrator ruled in favour of investors. The award entitles the investors to investment plus interest amounting to 30% IRR until 14 August 2009 and 18% IRR thereafter.  However, for prudent reasons, Livermore management decided to stop accruing interest on its investment as of February 2009.

Subsequently, the promoters agreed to settle and transfer land parcels from the company to the investors. The Manager informed investors that the Indian Income Tax authority had frozen some of these assets until the first quarter of 2010.  To expedite the process of settlement, the Manager has approached the relevant Government ministries to enlist their support.

In the meantime, the investors have filed and won an interim order for injunction against the promoters and the company to prohibit sales, transfer or encumbering of the assets of the company. Thereafter, the promoters have filed against the arbitral award and the injunction order. The legal counsel representing the investors believes that the grounds of appeal against the award are limited under applicable laws and that the investors have a strong case to defend. The Manager is confident that the put option will be successfully enforced and that the value of the land is sufficient to secure the put option.

Montana Tech Components ("Montana") - Europe

Montana, based in Austria, is a leading components manufacturer in the fields of Aerospace Components, Metal Tech and Micro Batteries.

The Aerospace Components business segment manufactures specialized components for Airbus and Boeing and is the market leader.  The facilities are currently located in the US and in Switzerland with a new low cost facility in Romania under construction.  The company has over 50% market share in the US with Boeing and is expected to have over 45% in Europe with Airbus after the completion of the Romanian facility.  The certification process with Airbus was concluded in important areas and is expected to be finalised by autumn 2010. The first significant deliveries were carried out in the second quarter of 2010 with an expectation of sales increasing steadily in the second half of the year.

The Micro Batteries business is a market leader in hearing aid batteries and rechargeable batteries with a strong brand (VARTA Micro Power). Recently, VARTA has concluded a significant joint venture with the Volkswagen group to develop batteries for hybrid cars. The business segment registered rising sales during the period due to increasing demand in the OEM business.

The Metal Tech business segment operates in a niche area with 60%-70% of world market share in an otherwise highly fragmented industry.  Sales and results were as expected below the previous year mainly because of reduced order intakes.

Montana successfully managed to improve its competitive position during 2010 through restructuring measures, cost saving effects and optimisations of the value chain. Montana achieved an EBITDA of EUR 24m reflecting a margin of 14.1% and an EBIT of EUR 15.4m reflecting a margin of 9.0% in the first 6 months of 2010. Montana significantly increased net sales in the first half of 2010 compared to the first half of 2009 and surpassed the €170 million threshold. In comparison to the first half of 2009 sales increased by 7% thanks to a favourable sales performance of the biggest two divisions. The order situation within Montana developed positively and this trend has strengthened recently. However, according to Montana's management's appraisal, a real trend reversal and a sustainable and material economic recovery on a global basis is difficult to deduce from the business indicators.

Private Equity Funds 

The other private equity investments held by the Group are incorporated in the form of Managed Funds (mostly closed end funds) mainly in the emerging economies of India and China. The investments of these funds into their portfolio companies were mostly done in 2008 and 2009. Overall, in the first half of 2010 and thereafter the investment environment relating to most funds improved considerably and the Company expects that exits of portfolio companies should materialize between 2011 and 2014.

Name	Book Value US $m
India Blue Mountains (India)	6.7
Elephant Capital (India)	2.8
Panda Capital (China)	1.7
JM Financials & SRS Private (India)	3.4
Blue Ridge (China)	1.4
Evolution Venture (Israel)	1.3
Da Vinci (Russia)	1.1
Total	18.4

Financial Investments and Corporate Bond Trading

The Company manages a financial portfolio of over USD 57m, invested mainly in fixed income securities. During the period, the Company increased its exposure to corporate bonds generally at credit spreads which are wider than current market spreads. Management took advantage of special opportunities such as the sell-off in European markets during the second quarter to increase exposure to high quality credit mainly of large European banks. Interest received from corporate bonds totalled USD 1.46m during the period.

The Company also increased its exposure to the US syndicated loan market through investments into Collateralized Loan Obligations at lower than current market prices and at modelled IRRs and cash-on-cash returns of over 35%. This portfolio has performed extremely well on account of declining default rates and improving credit fundamentals of their underlying loans. During the period, the portfolio generated cash dividends of USD 3.2m. In addition, market prices have increased during and after the reporting period. 

Name	Book Value US $m
Corporate Bonds	30.0
Hedge Funds & Credit Managers*	22.0
Public Equities	5.5
Total	57.5

*including accrued income

Litigation

At the time of this Report, there are two litigation matters that the Company is involved in. Further information is provided in note 22 to the interim condensed consolidated financial statements.

Livermore Investments Group Limited

Condensed Consolidated Statement of Financial Position

as at 30 June 2010

	Note	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
		US $000	US $000	US $000
Assets
Non-current assets
Property, plant and equipment		261	343	274
Intangible assets		-	9	-
Available-for-sale financial assets	2	60,088	54,182	55,862
Financial assets at fair value through profit or loss	3	7,216	9,474	5,885
Investment property	4	102,124	102,757	106,333
Investment in associate	5	-	29,488	10,936
Deferred tax		1,708	-	1,923
		--------	--------	--------
		171,397	196,253	181,213
		--------	--------	--------
Current assets
Trade and other receivables		8,998	10,476	7,788
Cash and cash equivalents	6	12,703	3,184	5,898
Available-for-sale financial assets	2	19,969	24,101	19,914
Financial assets at fair value through profit or loss	3	21,423	23,020	23,602
Derivative financial instruments	9	41	60	-
		--------	--------	--------
		63,134	60,841	57,202
		--------	--------	--------
Total assets		234,531	257,094	238,415
		--------	--------	--------
Equity
Share capital		-	-	-
Share premium and treasury shares	7	204,676	206,492	205,889
Other reserves		(8,310)	(32,011)	(17,530)
Retained earnings		(64,201)	(20,174)	(59,791)
		--------	--------	--------
Total equity		132,165	154,307	128,568
		--------	--------	--------
Liabilities
Non current liabilities
Bank loan		73,437	72,812	76,436
Derivative financial instruments	9	8,191	7,431	8,537
		--------	--------	--------
		81,628	80,243	84,973
		--------	--------	--------
Current liabilities
Bank overdrafts	6	6,684	7,537	5,198
Short term bank loans		10,203	14,096	13,987
Trade and other payables		1,061	744	1,295
Provisions for legal and other cases	21	2,371	-	4,200
Current tax payable		83	138	155
Derivative financial instruments	9	336	29	39
		--------	--------	--------
		20,738	22,544	24,874
		--------	--------	--------
Total liabilities		102,366	102,787	109,847
		--------	--------	--------
Total equity and liabilities		234,531	257,094	238,415
		--------	--------	--------
Net asset valuation per share
Basic and diluted net asset valuation per share (US $)	10	0.46	0.53	0.44
		--------	--------	--------

Livermore Investment Group Limited

Condensed Consolidated Income Statement

for the six months ended 30 June 2010

	Note	Six months  ended 30 June 2010 Unaudited	Six months ended  30 June  2009 Unaudited	Year  ended  31 December 2009 Audited
		US $000	US $000	US $000
Continuing operations
Investment Income
Interest and dividend income	12	4,198	3,427	3,211
Investment property revenue	13	2,166	1,924	4,432
Loss on investments	14	(3,927)	(18,815)	(31,055)
Gain / (loss) from investment in associate	15	495	(5,435)	(26,869)
		------	------	------
Gross profit / (loss)		2,932	(18,899)	(50,281)
Administrative expenses	16	17	(2,328)	(8,931)
		------	------	------
Operating  profit / (loss)		2,949	(21, 227)	(59,212)
Finance cost		(1,137)	(1,920)	(3,782)
		------	------	------
Profit / (loss) before taxation		1,812	(23,147)	(62,994)
Taxation (charge) / credit		(274)	-	204
		------	------	------
Profit / (loss) for period from continuing operations		1,538	(23,147)	(62,790)
Discontinued operations
Gain for the period from discontinued operations		-	1,639	1,665
		------	------	------
Profit / (loss) for period		1,538	(21,508)	(61,125)
		------	------	------
Earnings per share
Basic and diluted earnings / (loss) per share  from continuing operations (US $)	18	0.01	(0.08)	(0.22)
		------	------	------
Basic and diluted  earnings / (loss) per share (US $)	19	0.01	(0.07)	(0.21)
		------	------	------

Livermore Investment Group Limited

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2010

	Note	Six months  ended 30 June 2010 Unaudited	Six months ended  30 June  2009 Unaudited	Year  ended  31 December 2009 Audited
		US $000	US $000	US $000
Profit / (loss) for the period		1,538	(21,508)	(61,125)
Other comprehensive income:
Available for sale financial assets
- Fair value gains / (loss)		191	(575)	(21,873)
- Reclassification to profit or loss due to disposals		544	1,366	6,092
- Reclassification to profit or loss due to significant fall in value		-	-	28,235
Share of other comprehensive loss of associate	5	-	(5,617)	(2,918)
Foreign exchange gains / (loss)
-   Translation of associate	5	(4,856)	427	640
-   Translation of  subsidiaries		229	-	(151)
-  Reclassification to profit or loss due to disposal of associate		7,154	-	-
		------	------	----------
Total comprehensive income / (loss) for the period		4,800	(25,907)	(51,100)
		------	------	------

The total comprehensive income for the period is wholly attributable to the owners of the parent company.

Livermore Investments Group Limited

Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2010

	Note	Share capital	Share premium	Treasury  Shares	Share option reserve	Translation  reserve	Investment revaluation reserve	Retained earnings	Total
		US $000	US $000	US $000	US $000	US $000	US $000	US $000	US $000
Balance at 1 January 2009		-	215,499	(8,969)	5,400	(2,938)	(30,376)	1,334	179,950
Purchase of own shares		-	-	(641)	-	-	-	-	(641)
Share option charge		-	-	-	359	-	-	-	359
		------	------	------	------	------	------	------	------
Transactions with owners		-	-	(641)	359	-	-	-	(282)
		------	------	------	------	------	------	------	------
Loss for the year		-	-		-	-	-	(61,125)	(61,125)
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses		-	-	-	-	-	(21,873)	-	(21,873)
- Reclassification to profit or loss     due to disposals		-	-	-	-	-	6,092	-	6,092
- Reclassification to profit or loss     due to significant fall in value		-	-	-	-	-	28,235	-	28,235
Share of other comprehensive loss of associate		-	-	-	-	-	(2,918)	-	(2,918)
Foreign exchange gain / (loss) from translation of:
- associate		-	-	-	-	640	-	-	640
- subsidiary		-	-	-	-	(151)	-	-	(151)
		------	------	------	------	------	------	------	------
Total comprehensive loss for the year		-	-	-	-	489	9,536	(61,125)	(51,100)
		------	------	------	------	------	------	------	------
Balance at 31 December 2009		-	215,499	(9,610)	5,759	(2,449)	(20,840)	(59,791)	128,568
Purchase of own shares	7	-	-	(1,213)	-	-	-	-	(1,213)
Share option charge	8	-	-	-	10	-	-	-	10
		------	------	------	------	------	------	------	------
Transactions with owners		-	-	(1,213)	10	-	-	-	(1,203)
		------	------	------	------	------	------	------	------
Profit for the period		-	-	-	-	-	-	1,538	1,538
Other comprehensive income:
Available-for-sale financial assets
- Fair value gains		-	-	-	-	-	191	-	191
- Reclassification to profit or loss     due to disposals		-	-	-	-	-	544	-	544
Transfer on disposal of associate		-	-	-	-	-	5,948	(5,948)	-
Foreign exchange gains / (loss)
-  Translation of associate		-	-	-	-	(4,856)	-	-	(4,856)
-  Translation of  subsidiary		-	-	-	-	229	-	-	229
- Reclassification to profit or loss   due to disposal of associate		-	-	-	-	7,154	-	-	7.154
		------	------	------	------	------	------	------	------
Total comprehensive loss for the period		-	-	-	-	2,527	6,683	(4,410)	4,800
		------	------	------	------	------	------	------	------
Balance at 30 June 2010		-	215,499	(10,823)	5,769	78	(14,157)	(64,201)	132,165
		------	------	------	------	------	------	------	------

Comparative period	Note	Share capital	Share premium	Treasury  Shares	Share option reserve	Translation  reserve	Investment revaluation reserve	Retained earnings	Total
		US $000	US $000	US $000	US $000	US $000	US $000	US $000	US $000
Balance at 1 January 2009		-	215,499	(8,969)	5,400	(2,938)	(30,376)	1,334	179,950
Purchase of own shares		-	-	(38)	-	-	-	-	(38)
Share option charge		-	-	-	302	-	-	-	302
		------	------	------	------	------	------	------	------
Transactions with owners		-	-	(38)	302	-	-	-	264
		------	------	------	------	------	------	------	------
Loss for the period		-	-	-	-	-	-	(21,508)	(21,508)
Other comprehensive income:
Available-for-sale financial assets
- Fair value losses		-	-	-	-	-	(575)	-	(575)
- Reclassification to profit or loss due to disposal		-	-	-	-	-	1,366	-	1,366
Share of other comprehensive loss of associate		-	-	-	-	-	(5,617)	-	(5,617)
Foreign exchange gain from translation of associate		-	-	-	-	427	-	-	427
		------	------	------	------	------	------	------	------
Total comprehensive loss for the period		-	-	-	-	427	(4,826)	(21,508)	(25,907)
		------	------	------	------	------	------	------	------
Balance at 30 June 2009		-	215,499	(9,007)	5,702	(2,511)	(35,202)	(20,174)	154,307
		------	------	------	------	------	------	------	------

Livermore Investments Group Limited

Consolidated Statement of Cash Flows   

for the period ended 30 June 2010

	Note	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
		US $000	US $000	US $000
Cash flows from operating activities
Loss before tax		1,812	(21,508)	(61,329)
Adjustments for:
Depreciation and amortisation		14	-	132
Provisions for legal and other cases	21	(1,337)	-	4,200
Interest expense		1,640	1,602	3,370
Interest and dividend income	12	(4,198)	(3,427)	(3,211)
Loss on investment in associate	15	(495)	5,435	26,869
Loss on investments	14	3,927	18,815	31,055
Equity settled share options		10	302	359
Exchange differences		(552)	844	327
		------	------	------
		821	2,063	1,772
Changes in working capital
(Increase) / Decrease in trade and other receivables		(287)	(648)	342
Decrease in trade and other payables		(267)	(2,469)	(1,950)
		------	------	------
Cash flows from operations		267	(1,054)	164
Tax paid		(274)	-	(25)
		------	------	------
Net cash generated from operating activities		(7)	(1,054)	139
		------	------	------
Cash flows from investing activities
Purchase of property, plant and equipment		(1)	(5)	(45)
Acquisition of investments		(21,085)	(26,331)	(58,942)
Proceeds from investments		15,998	22,738	62,252
Payments for derivative financial instruments		-	(1,606)	(1,911)
Acquisition of investment property		-	(100)	(152)
Additions to associate		-	(259)	(259)
Proceeds from associate	5	13,729	85	115
Interest and dividend received		3,334	3,427	3,211
		------	------	------
Net cash from investing activities		11,975	(2,051)	4,269
		------	------	------
Cash flows from financing activities
Purchases of own shares	7	(1,213)	(38)	(641)
Proceeds from bank loans		-	6,726	6,617
Repayment of bank loans		(3,784)	-	-
Interest paid		(1,640)	(1,602)	(3,370)
		------	------	------
Net cash from financing activities		(6,637)	5,086	2,606
		------	------	------
Net increase in cash and cash equivalents		5,331	1,981	7,014
Cash and cash equivalents at the beginning of the period		700	(6,050)	(6,050)
Exchange differences on cash and cash equivalents		60	(277)	(327)
Translation differences on foreign operations' cash and cash equivalents		(72)	(7)	63
		------	------	------
Cash and cash equivalents at the end of the period	6	6,019	(4,353)	700
		------	------	------

Notes to the Financial Statements

1.     Accounting policies

The interim condensed consolidated financial statements of Livermore have been prepared on the basis of the accounting policies and basis of consolidation stated in the 2009 Annual Report, available on www.livermore-inv.com.  

Basis of preparation

These results have been prepared on the basis of the accounting policies expected to be adopted in the Company's full year financial statements, which are expected to be prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The financial information for the year ended 31 December 2009 is extracted from the Company's consolidated financial statements for the year ended 31 December 2009 which contained an unqualified audit report.

These interim condensed consolidated financial statements are for the six months ended 30 June 2010. They have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. They do not include all of the information required for full annual consolidated financial statements, and should be read in conjunction with the consolidated financial statements of the group for the year ended 31 December 2009.

The accounting policies have been applied consistently throughout the group for the purpose of the presentation of these interim condensed consolidated financial statements.

Critical accounting judgments and key sources of estimation uncertainties are unchanged from the year end.

2.     Available-for-sale financial assets*

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Non-current assets
Fixed income investments	15,070	6,538	10,426
Private equities	17,729	14,219	18,193
Financial and minority holdings**	22,179	27,773	22,092
Other investments	5.110	5,652	5,151
	------	------	------
	60,088	54,182	55,862
	------	------	------
Current assets
Fixed Income investments	11,219	12,920	10,177
Public Equities investments	5,984	7,460	5,635
Hedge Funds	2,766	3,721	4,102
	------	------	------
	19,969	24,101	19,914
	------	------	------

* Financial assets relate to investments in bonds and equity classified as available-for-sale. Financial assets are measured at fair value.

Available-for-sale financial assets, comprising principally marketable equity securities, are fair valued at the close of business at each reporting date. For investments traded in active markets, fair value is determined by reference to Stock Exchange quoted bid prices. For other investments, fair value is estimated by reference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying assets. Equity investments for which fair values cannot be measured reliably are recognised at cost less impairment.

Available-for-sale financial assets are classified as non-current, unless they are expected to be realised within twelve months of the reporting date or unless they will need to be sold to raise operating capital.

** Financial and minority holdings relate to significant investments (of over USD 5m) which are strategic for the Company and are done in the form of equity purchases or convertible loans. Main investments under this category are in the fields of real estate and media.

3.     Financial assets at fair value through profit or loss

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Non-current assets
Fixed income investments	1,965	-	-
Private equities	2,615	6,187	2,903
Real estates	2,636	3,287	2,982
	------	- -----	------
	7,216	9,474	5,885
	------	------	------
Current assets
Fixed income investments	18,161	21,414	22,062
Public equity investments	2,461	1,012	742
Hedge funds	801	594	798
	------	------	------
	21,423	23,020	23,602
	------	------	------

4.     Investment property

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Valuation as at 1 January	106,333	104,520	104,520
Additions	-	100	152
Change in fair value	-	-	(1,358)
Exchange differences translation value	(4,209)	(1,863)	3,019
	------	------	------
As at 30 June / 31 December	102,124	102,757	106,333
	------	------	------

The investment property which is revalued at each year-end was last valued by Wuest & Partners as at 31 December 2009 on the basis of open market value in accordance with the appraisal and valuation guidelines of the Royal Institute of Certified Surveyors, and the European Group of Valuers' Associations.

Wyler Park property investment loan is secured on the property itself.

5.     Investment in associate

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
As at 1 January	10,936	39,939	39,939
Share of loss  for the period	(2,141)	(3,905)	(14,530)
Additions for the period	-	174	1,668
Sales for the period	(3,939)	-	(550)
Share of other comprehensive loss for the period	-	(5,617)	(2,918)
Exchange differences	(4,856)	427	640
Impairment charge	-	(1,530)	(13,313)
	------	------	------
As at 30 June / 31 December	-	29,488	10,936
	------	------	------

The Company disposed of its 21.71% interest in Atlas Estates Limited after taking the opportunity of a public cash offer.  The disposal has the following impact in the results of the Group for the six months ended 30 June 2010:

	US $000
Proceeds received	13,729
Carrying amount of investment in associate	(3,939)
Translation losses reclassified to profit or loss	(7,154)
	------
Net gain on disposal of associate	2,636
	------

6.     Cash and cash equivalents

Cash and cash equivalents included in the cash flow statement comprise the following at the reporting date:

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Cash at bank	12,703	3,184	5,898
Bank overdraft used for cash management purposes	(6,684)	(7,537)	(5,198)
	------	------	------
Cash and cash equivalents	6,019	(4,353)	700
	------	------	------

7.     Share Premium and treasury shares

Livermore Investments Group Limited (the "Company") is an investment company incorporated under the laws of the British Virgin Islands.  The Company has an issued share capital of 304,120,401 ordinary shares of no par value.

As at 31 December 2009 the Company had 13,425,966 ordinary shares held in treasury.  During the period from 1 January to 30 June 2010 the Company purchased an additional 5,000,000 ordinary shares at an average price of US$0.24 (£0.16) per share to be held in treasury.  On 30 June 2010 the Company held 18,425,966 shares in treasury.

8.     Share options

The Company has 12,045,555 outstanding share options at the end of the period.  Options are normally exercisable in three equal tranches, on the first, second and third anniversary of the grant.  There have been no changes to the term of the options in issue during the period.  No options have been exercised during the period.  

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Number of outstanding options
At 1 January	12,045,555	12,045,555	12,045,555
	---------	---------	---------
At 30 June / 31 December	12,045,555	12,045,555	12,045,555
	---------	---------	---------

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Number of exercisable options
At 1 January	11,712,221	8,162,221	8,162,221
Exercisable during the period	166,667	166,667	3,550,000
	---------	---------	---------
At 30 June / 31 December	11,878,888	8,328,888	11,712,221
	---------	---------	---------

9.     Derivative financial instruments

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Current assets
Forward contracts	33	60	-
Share options	8	-	-
	------	------	------
	41	60	-
	------	------	------
Non-current liabilities
Interest rate swaps	(8,191)	(7,431)	(8,537)
	------	------	------
Current liabilities
Forward contracts	(336)	(29)	(39)
	------	------	------

10.  Net asset value per share

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
Net assets attributable to ordinary share holders  (US $000)	132,165	154,307	128,658
	---------	---------	---------
Closing number of ordinary share in issue	285,694,435	291,767,440	290,694,435
	---------	---------	---------
Basic net assets value per share (US $)	0.46	0.53	0.44
	---------	---------	---------
Closing number of ordinary share including the effect of potentially diluted shares*	285,694,435	291,767,440	290,694,435
	---------	---------	---------
Diluted net assets value per share (US $)	0.46	0.53	0.44
	---------	---------	---------

*The Share options do not impact the diluted net asset value per share for 2010 as their exercise price was higher than the average market price of the Company's shares on the London Stock Exchange (AIM division) during the six months ended 30 June 2010.

11.  Segment information

Management consider investment activity to be a single class of business.

12.  Interest and dividend income

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Interest from investments	830	1,661	1,172
Dividend income	3,368	1,766	2,039
	------	------	------
	4,198	3,427	3,211
	------	------	------

13.  Investment property revenue

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Gross rental income	2,776	2,113	4,751
Direct expenses	(610)	(189)	(319)
	------	------	------
	2,166	1,924	4,432
	------	------	------

14.  Losses on investments

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Loss on sale of available-for-sale financial assets	(544)	(1,392)	(6,092)
Investment property revaluation	-	-	(1,358)
Foreign exchange (loss) / gain	(1,770)	152	3,480
Loss due to significant fall in value of available-for-sale financial assets	-	(16,403)	(28,235)
Fair value (losses) / gains on financial assets through profit or loss	(1,271)	(63)	3,064
Fair value losses on derivative instruments	(342)	(1,109)	(1,914)
	------	------	------
	(3,927)	(18,815)	(31,055)
	------	------	------

The investments disposed of during the period resulted in the following realised gains/ (losses) (i.e. in relation to their original acquisition cost):

 

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Available-for-sale	(544)	(1,392)	(6,092)
At fair value through profit or loss	164	(3,696)	433
	------	------	------
	(380)	(5,088)	(5,659)
	------	------	------

 

 

15.  Gain / (loss) from investment in associate

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Atlas Estates Limited.	495	(5,435)	(26,869)
	------	------	------
Share of loss for the period	(2,141)	(3,905)	(14,530)
Gain on bargain purchase	-	-	1,409
Gain / (loss) on disposal	9,790	-	(435)
Impairment charge	-	(1,530)	(13,313)
Foreign exchange loss reclassified from translation reserve	(7,154)	-	-
	------	------	------
	495	(5,435)	(26,869)
	------	------	------

 

 

 

 

 

 

 

 

16.  Administrative expenses

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
	US $000	US $000	US $000
Operational expenses	131	409	675
Legal expenses	264	509	1,384
Directors' fees	432	454	913
Share option expense	10	302	359
Consultants' fees and expenses	70	176	259
Other salaries and expenses	204	185	408
Office cost	127	126	247
Other administration costs	51	98	198
Depreciation and amortization of assets	14	-	132
Provision for legal and other maters- (Reversal) / charge	(1,337)	-	4,200
Audit fees	17	-	72
Audit fees prior year	-	69	84
	------	------	------
	(17)	2,328	8,931
	------	------	------

17.  Dividends

The Board of Directors will decide on the Company's dividend policy for 2010 based on market conditions and portfolio performance over the current financial year. 

18.  Earnings / (loss) per share from continuing operations

Basic profit / loss per share has been calculated by dividing the net profit/(loss) for the period from continuing operations by the weighted average number of ordinary shares in issue of the parent during the relevant financial periods. 

Diluted profit / loss per share is calculated after taking into consideration other potentially dilutive shares in existence during the period.

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
Net profit / (loss) from continuing operations ($000)	1,538	(21,508)	(62,790)
	---------	---------	---------
Weighted average number of ordinary shares in issue	290,667,113	291,778,342	291,602,250
	---------	---------	---------
Basic and diluted earnings / (loss) per share (US $)	0.01	(0.08)	(0.22)
	---------	---------	---------
Weighted average number of ordinary shares including the effect of diluted potential ordinary shares*	290,667,113	291,778,342	291,602,250
	---------	---------	---------
Diluted earnings / (loss) per share (US $)	0.01	(0.08)	(0.22)
	---------	---------	---------

* The share options do not impact the diluted earnings per share for 2010 as their exercise price was higher than the average market price of the company's shares on the London Stock Exchange  (AIM division) during the six months ended 30 June 2010. 

19.  Earnings / (loss) per share

Basic profit / loss per share has been calculated by dividing the net profit/(loss) attributable to ordinary shareholders of the parent by the weighted average number of shares in issue of the parent during the relevant financial periods. 

Diluted profit / loss per share is calculated after taking into consideration other potentially dilutive shares in existence during the period.

	Six months ended 30 June 2010 Unaudited	Six months ended 30 June 2009 Unaudited	Year ended 31 December 2009 Audited
Net profit / (loss) attributable to ordinary shareholders ($000)	1,538	(21,508)	(61,125)
	---------	---------	---------
Weighted average number of ordinary shares in issue	290,667,113	291,778,342	291,602,250
	---------	---------	---------
Basic and diluted earnings / (loss) per share (US $)	0.01	(0.07)	(0.21)
	---------	---------	---------
Weighted average number of ordinary shares including the effect of diluted potential ordinary shares*	290,667,113	291,778,342	291,602,250
	---------	---------	---------
Diluted earnings / (loss) per share (US $)	0.01	(0.07)	(0.21)
	---------	---------	---------

* The share options do not impact the diluted earnings per share for 2010 as their exercise price was higher than the average market price of the company's shares on the London Stock Exchange  (AIM division) during the six months ended 30 June 2010. 

20.  Related party transactions

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Amounts owed by key management	5,000	5,500	5,000
	-------	-------	-------
Amounts owed to Directors	(62)	37	(38)
	-------	-------	-------
Key management compensation (including executive directors)
Fees for the period *	375	351	797
Share option expense	-	276	321
Non-executive directors compensation
Fees for the period	34	57	118
Share option expense	10	26	38
	-------	-------	-------
	419	710	1,274
	-------	-------	-------

*These payments were made either directly to them or to companies to which they are related.

Loans with a balance at 30 June 2010 of USD 5m (31 December 2009: USD 5m) were made to key management during the year ended 31 December 2007 for the acquisition of shares in the Company. Interest is payable on these loans at US LIBOR plus 0.25% and the loans are secured on the shares acquired. The loans are repayable on the earlier of the employee leaving the Company or November 2010. These loans are classified as financial assets available for sale in the consolidated statement of financial position.

21.  Provisions    

Corporate guarantee

The Company provided a corporate guarantee to DTH Boom TV in the amount of €2.1m as part of a shareholders' guarantee required by a financing bank as a condition to a loan facility provided to DTH-Boom. DTH-Boom is currently under administration.

No further information is provided as the Directors consider it could prejudice the outcome of any claim.

Litigation

For litigation refer to note 22.

The movement in the provisions for the period is as follows:

	30 June 2010 Unaudited	30 June 2009 Unaudited	31 December 2009 Audited
	US $000	US $000	US $000
Legal and other matters
At 1 January	4,200	-	-
Exchange differences	(492)	-	-
Provided for the period	-	-	4,200
Amounts reversed	(1,337)	-	-
	-------	-------	-------
At 30 June / 31 December	2,371	-	4,200
	-------	-------	-------

22.  Litigation

Ex employee vs Empire Online Ltd

In Q3 2007 an ex employee of Empire Online Limited (the Company's former name) filed a law suit against one of its Directors and the Company in the Labor Court in Tel Aviv. According to the lawsuit the plaintiff claims compensation relating to the sale of all commercial activities of Empire Online Limited until the end of 2006, and the dissolution of the company and the terms of termination of his employment with Empire Online Limited.

Prior to the filing of the lawsuit in Israel, the Company filed a claim against the plaintiff in the Court in Cyprus based upon claims concerning breach of faith of the plaintiff towards his employers. Both litigation procedures are in progress in Israel and in Cyprus.

Secretline vs Livermore

In Q3 2009, Secretline Investments Ltd. ("Secretline"), a supplier of DTH Boom, filed a claim against the Company and certain other DTH Boom shareholders in the District Court in Tel Aviv. The claim is related to guarantees provided by Livermore and certain other DTH Boom shareholders to Secretline to secure a payment from DTH Boom to Secretline.

No further information is provided on the above cases as the Directors consider it could prejudice the outcome of any claim.

23.  Commitments

The Group has no capital or other commitments as at 30 June 2010.

24.  Events after the reporting date

There were no significant events after the reporting date.

25.  Preparation of interim statements

Interim condensed consolidated financial statements do not constitute statutory accounts within the meaning of The BVI Business Companies Act 2004. Consolidated Financial Statements for Livermore Investments Group Limited for the year ended 31 December 2009, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, on which the auditors gave an unqualified audit report are available from the Company's website www.livermore-inv.com.

ACCOUNTANT'S REVIEW REPORT TO LIVERMORE INVESTMENTS GROUP LIMITED

Independent Review Report on the Interim Condensed Consolidated Financial Statements

We have reviewed the accompanying interim condensed consolidated financial statements of Livermore Investments Group Limited (the ''Company'') and its subsidiaries (''the Group'') on pages 8 to 23, which comprise the condensed consolidated statement of financial position as at 30 June 2010 and the condensed consolidated income statement, and condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six months then ended, and other explanatory notes. We have reviewed the Chairman's and Chief Executive's Review and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim condensed consolidated financial statements.

Board of Directors' Responsibility for the Interim Condensed Consolidated Financial Statements

The Company's Board of Directors is responsible for the preparation and fair presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union.

Accountant's Responsibility

Our responsibility is to issue a report to the Company on these interim condensed consolidated financial statements, based on our review. We conducted our review in accordance with International Standard on Auditing 2410 ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity''. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the interim condensed consolidated financial statements are free of material misstatement.

A review of interim financial information is limited primarily to making inquiries of Company personnel and applying analytical and other review procedures to financial data. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements of Livermore Investments Group Limited and its subsidiaries for the six months ended 30 June 2010 are not prepared, in all material respects, in accordance with International Accounting Standard 34 ''Interim Financial Reporting'' as adopted by the European Union.

Other Matter

This report, including the conclusion, has been prepared for and only for the Company.  Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to.

Grant Thornton
Certified Public Accountants (Cy)
Nicosia, 13 September 2010

 

END

 

 

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