Notes on the Consolidated Financial Statements

1.    General Information

Incorporation, principal activity and status of the Company

1.1. The Company was incorporated as an international business company and registered in the British Virgin Islands (BVI) on 2 January 2002 under IBC Number 475668 with the name Clevedon Services Limited. The liability of the members of the Company is limited. 

1.2.   The Company changed its name to Empire Online Limited on 5 May 2005 and then to Livermore Investments Group Limited on 28 February 2007.

1.3.   The principal activity of the Company changed to investment activities on 1 January 2007. Before that the principal activity of the Company was the provision of marketing services to the online gaming industry and, since 1 January 2006, the operation of online gaming.

1.4.   The principal legislation under which the Company operates is the BVI Business Companies Act, 2004.

1.5.   During 2019 the Company became a tax resident in the Republic of Cyprus.

1.6.   The registered office of the Company is located at Trident Chambers, PO Box 146, Road Town, Tortola, British Virgin Islands.

 

2.    Basis of preparation

The consolidated financial statements ("the financial statements") of Livermore Investments Group Limited have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.  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 subsidiaries (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 2019, the Company adopted any applicable new or revised IFRS and relevant amendments which became effective, and also were endorsed by the European Union.

The Company has applied IFRS 16 'Leases' since its date of initial application, being 1 January 2019. IFRS 16 replaces IAS 17 'Leases' along with three Interpretations (IFRIC 4 'Determining whether an Arrangement contains a Lease', SIC 15 'Operating Leases-Incentives' and SIC 27 'Evaluating the Substance of Transactions Involving the Legal Form of a Lease').

The Company recognised on 1 January 2019 a right-of-use asset and a related lease liability in connection with a former operating lease, with a remaining lease term at that date of 5 years.  The right-of-use asset at that date has been measured at USD 411,041 equal to the lease liability, without including any initial direct costs. For a second former operating lease that has a short-term lease term, the Company elected to recognise the lease expense on a straight-line basis over the lease term.

 

IFRS 16 has been applied using the modified retrospective approach.  No adjustment to opening retained earnings occurred. Prior periods have not been restated.

The adoption of the above at 1 January 2019, including IFRS 16, did not have any material effect on the financial statements.

The following IFRS (including relevant amendments and interpretations) had been issued by the date of authorisation of these financial statements but are not yet effective, or have not yet been endorsed by the EU, for the year ended 31 December 2019:

	Endorsed by the EU	Effective date (IASB)
·    Amendment to IFRS 3: "Definition of a Business"	No	1 January 2020
·    Amendments to IFRS 9, IAS 39 and IFRS17: "Interest Rate Benchmark Reform"	Yes	1 January 2020
·    Amendment to IFRS 10, and IAS 28: "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture"	No	to be determined
·    IFRS 14: "Regulatory Deferral Accounts"	No	1 January 2016
·    IFRS 17: "Insurance Contracts"	No	1 January 2021
·    Amendment to IAS 1: "Classification of Liabilities as Current or Non-current"	No	1 January 2022
·    Amendments to IAS 1 and IAS 8: "Definition of Material"	Yes	1 January 2020
·    Amendments to References to the Conceptual Framework in IFRS Standards	Yes	1 January 2020

 

The Board of Directors expects that when the above Standards or Interpretations become effective in future periods, they will not have any material effect on the financial statements.

3.2.   Investments in subsidiaries and basis of consolidation

Subsidiaries are entities controlled either directly or indirectly by the Company.

Control is achieved where the Company is exposed, or has right, to variable returns from its involvement with a subsidiary and has the ability to affect those returns through its power over the subsidiary.

The Directors have determined that Livermore meets the definition of an investment entity, as this is defined in IFRS 10 "Financial Statements". As per IFRS 10 an investment entity is an entity that:

(a)    obtains funds from one or more investors for the purpose of providing those investors with investment management services;

(b)   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 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 subsidiaries are prepared using uniform accounting policies.  Where necessary, adjustments are made to the financial statements of consolidated subsidiaries to bring their accounting policies into line with those used by the Company.  All consolidated subsidiaries have a reporting date of 31 December.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The results and cash flows of any consolidated subsidiaries 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.   Current assets are those which, in accordance with IAS 1 Presentation of Financial Statements are:

 • expected to be realised within the Company's normal operating cycle, via sale or consumption, or

• held primarily for trading, or

• expected to be realised within 12 months from the reporting date, or 

• cash and cash equivalents not restricted in their use.

All other assets are non-current.

3.4.   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. 

3.5.   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 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 re-translated. 

Gains and losses arising on the settlement of monetary items and on the re-translation of monetary items are included in the profit or loss for the year.  Those that arise on the re-translation of non-monetary items carried at fair value are included in the profit or loss of the year as part of the fair value gain or loss except for differences arising on the re-translation of non-monetary financial assets designated at fair value through other comprehensive income in respect of which gains and losses are recognised in other comprehensive income.  For such non-monetary items any exchange component of that gain or loss is also recognised in other comprehensive income.      

The results and financial position of consolidated subsidiaries that have a functional currency different from US dollars are translated into the presentation currency as follows:

(a)   assets and liabilities are translated at the closing rate at the reporting date;

(b)   income and expenses and also cash flows are translated at an average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case the items are translated at the rates prevailing at the dates of the transactions); and

(c)   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

3.6.   Taxation

Current tax is the tax currently payable based on taxable profit for the year in accordance with the tax laws applicable and enacted.

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.

 

3.7.   Equity instruments

Equity instruments issued by the Company are recorded at proceeds received, net of direct issue costs.

The share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from the premium received.

3.8.   Financial assets

Financial assets are recognised when the Company becomes a party to the contractual provisions of the financial instrument.

A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire or the financial asset is transferred, and that transfer qualifies for derecognition.  A financial asset is transferred if the contractual rights to receive the cash flows of the asset have been transferred or the Company retains the contractual rights to receive the cash flows of the asset but assumes a contractual obligation to pay the cash flows to one or more recipients.  A financial asset that is transferred qualifies for derecognition if the Company transfers substantially all the risks and rewards of ownership of the asset, or if the Company neither retains nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset.

The Company classifies its financial assets in the following measurement categories:

(a)   those to be measured at fair value (either through other comprehensive income, or through profit or loss), and

(b)   those to be measured at amortised cost.

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets at fair value through profit or loss

The Company classifies the following financial assets at fair value through profit or loss:

(a)   equity investments that are held for trading;

(b)   other equity investments for which the Directors have not elected to recognise fair value gains and losses through other comprehensive income; and

(c)   debt investments that do not qualify for measurement at either amortised cost or at fair value through other comprehensive income.

All financial assets within this category are measured at their fair value, with changes in value recognised in the profit or loss when incurred.

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income (OCI) comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value through OCI rather than profit or loss.

Where the Company's management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments continue to be recognised in profit or loss when the Company's right to receive payments is established.

Financial assets at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. A gain or loss on a financial asset that is measured at amortised cost is recognised in profit or loss when the asset is derecognised or impaired. Interest income from these financial assets is recognised based on the effective interest rate method.

The classification of debt instruments depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash 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.

3.9.   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 are measured initially at fair value plus transaction costs, except for financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Financial liabilities at amortised cost

After initial recognition financial liabilities are measured at amortised cost using the effective interest rate method.

3.10. 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.  

3.11. 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 the Company's activities fall under a single operating segment.

3.12. Critical accounting judgments and key sources of estimation uncertainty

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Company's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

 

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Critical accounting judgements

(i)        Classification of financial assets

Management exercises significant judgement in determining the appropriate classification of the financial assets of the Company. The Directors determine the appropriate classification of the Company's financial assets based on Livermore's business model. An entity's business model refers to how an entity manages its financial assets in order to generate cash flows, considering all relevant and objective evidence.  The factors considered include the contractual terms and characteristics which are very carefully examined, and also the Company's intentions and expected needs for realisation of the financial assets.

 

All investments (except from certain equity instruments that are designated at fair value through other comprehensive income) are classified as financial assets at fair value through profit or loss, because this reflects more fairly the way these assets are managed by the Company. The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed, and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company's Board of Directors and other key management personnel.

 

(ii)       Consolidation of subsidiaries

Management exercised significant judgment in determining which of the subsidiaries that are not investment entities themselves, provide services that relate to the Company's investment activities and therefore need to be consolidated rather than included within the investments in subsidiaries measured at fair value through profit or loss.

 

Estimation uncertainty

                    Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments, where active market quotes are not available. Details of the bases used for financial assets and liabilities are disclosed in note 7.  In applying the valuation techniques management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable (level 3), management uses its best estimates which may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. Further information on level 3 valuations of financial assets is provided in note 7.2.

 

4.        Financial assets at fair value through profit or loss

	2019	2018
	US $000	US $000
Non-current assets
Fixed income investments (CLOs)	98,418	97,081
	------	------
	98,418	97,081
	------	------
Current assets
Fixed income investments	1,127	39,590
Public equity investments	1,710	1,477
	------	------
	2,837	41,067
	------	------

For description of each of the above categories, refer to note 6.

The above investments represent financial assets that are mandatorily measured at fair value through profit or loss.

The Company treats its investments in the loan market through CLOs as non-current investments as the Company generally intends to hold such investments over a period longer than twelve months.

 

5.        Financial assets at fair value through other comprehensive income

	2019	2018
	US $000	US $000
Non-current assets
Private equities	6,204	6,387
	------	------
Current assets
Hedge funds	-	1,117
	------	------

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.

 

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.

·      Private equities relate to investments in the form of equity purchases in both high growth opportunities in emerging markets and deep value opportunities in mature markets. The Company generally invests directly in prospects where it can exert influence. Main investments under this category are in the fields of real estate. 

·      Public equity investments relate to investments in shares of companies listed on public stock exchanges.

·      Hedge funds relate to equity investments in funds managed by sophisticated investment managers that pursue investment strategies with the goal of generating absolute returns.

 

7.        Fair value measurements of financial assets and liabilities

The table in note 7.2 presents financial assets and liabilities measured at fair value in the consolidated statement of financial position in accordance with the fair value hierarchy.  This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

 

-       Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

-       Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

-       Level 3: unobservable inputs for the asset or liability.

 

The level within which the financial asset is classified is determined based on the lowest level of significant input to the fair value measurement.

 

7.1          Valuation of financial assets

·      Fixed Income Investments and Public Equity Investments are valued per their closing market prices on quoted exchanges, or as quoted by market maker. Investments in open warehouse facilities that have not yet been converted to CLOs, are valued based on an adjusted net asset valuation.   

The Company values the CLOs based on the valuation reports provided by market makers. CLOs are typically valued by market makers using discounted cash flow models. The key assumptions for cash flow projections include default and recovery rates, prepayment rates and reinvestment assumptions on the underlying portfolios (typically senior secured loans) of the CLOs.

Default and recovery rates: The amount and timing of defaults in the underlying collateral and the amount and timing of recovery upon a default are key to the future cash flows a CLO will distribute to the CLO equity tranche. All else equal, higher default rates and lower recovery rates typically lead to lower cash flows. Conversely, lower default rates and higher recoveries lead to higher cash flows.

Prepayment rates: Senior loans can be pre-paid by borrowers. CLOs that are within their reinvestment period may, subject to certain conditions, reinvest such prepayments into other loans which may have different spreads and maturities. CLOs that are beyond their reinvestment period typically pay down their senior liabilities from proceeds of such pre-payments. Therefore, the rate at which the underlying collateral prepays impacts the future cash flows that the CLO may generate.

Reinvestment assumptions: A CLO within its reinvestment period may reinvest proceeds from loan maturities, prepayments, and recoveries into purchasing additional loans. The reinvestment assumptions define the characteristics of the loans that a CLO may reinvest in. These assumptions include the spreads, maturities, and prices of such loans. Reinvestment into loans with higher spreads and lower prices will lead to higher cash flows. Reinvestment into loans with lower spreads will typically lead to lower cash flows.

Discount rate: The discount rate indicates the yield that market participants expect to receive and is used to discount the projected future cash flows. Higher yield expectations or discount rates lead to lower prices and lower discount rates lead to higher prices for CLOs.  

·      Private Equities are valued using market valuation techniques as determined by the Directors, mainly on the basis of valuations reported by third-party managers of such investments.  Real Estate entities are valued by independent qualified property valuers with substantial relevant experience on such investments. Underlying property values are determined based on their estimated market values.    

·      Hedge Funds are valued per reports provided by the funds on a periodic basis, and if traded, per their closing bid market prices on quoted exchanges, or as quoted by market maker.

·      Investments in subsidiaries are valued at fair value as determined on an adjusted net asset valuation basis.

 

 

7.2 Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into the fair value hierarchy as follows:           

	2019 US $000	2019 US $000	2019 US $000	2019 US $000	2018 US $000	2018 US $000	2018 US $000	2018 US $000
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Assets
Fixed income investments	1,127	98,418	-	99,545	1,100	97,081	38,490	136,671
Private equities	-	-	6,204	6,204	-	-	6,387	6,387
Public equity investments	1,710	-	-	1,710	1,477	-	-	1,477
Hedge funds	-	-	-	-	-	1,117	-	1,117
Investments in subsidiaries	-	-	5,787	5,787	-	-	5,205	5,205
	------	------	------	------	------	------	------	------
	2,837	98,418	11,991	113,246	2,577	98,198	50,082	150,857
	------	------	------	------	------	------	------	------
Liabilities	-	-	-	-	-	-	-	-
	------	------	------	------	------	------	------	------

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting year.

 

No financial assets or liabilities have been transferred between different levels. 

 

Financial assets within level 3 can be reconciled from beginning to ending balances as follows:

	At fair value through OCI - Private equities	At fair value through profit or loss - Fixed Income investments	Investments in subsidiaries	Total
	US $000	US $000	US $000	US $000
As at 1 January 2018	7,129	25,515	5,426	38,070
Purchases	-	75,000	-	75,000
Settlement	(1,055)	(62,500)	-	(63,555)
Gains / (losses) recognised in:
-Profit or loss	-	475	(221)	254
-Other comprehensive income	313	-	-	313
	------	------	------	------
As at 1 January 2019	6,387	38,490	5,205	50,082
Purchases	-	23,000	-	23,000
Settlement	(33)	(60,500)	-	(60,533)
Gains / (losses) recognised in:
-Profit or loss		(990)	582	(408)
-Other comprehensive income	(150)	-	-	(150)
	------	------	------	------
As at 31 December 2019	6,204	-	5,787	11,991
	------	------	------	------

 

The above gains and losses recognised can be allocated as follows:

	At fair value through OCI - Private equities	At fair value through profit or loss - Fixed Income investments	Investments in subsidiaries	Total
2018	US $000	US $000	US $000	US $000
Profit or loss
- Financial assets held at year-end	-	990	(221)	769
- Financial assets not held at year-end	-	(515)	-	(515)
	------	------	------	------
Other comprehensive income
- Financial assets held at year-end	313	-	-	313
	------	------	------	------
Total gains / (losses) for 2018	313	475	(221)	567
	------	------	------	------
	At fair value through OCI - Private equities	At fair value through profit or loss - Fixed Income investments	Investments in subsidiaries	Total
2019	US $000	US $000	US $000	US $000
Profit or loss
- Financial assets held at year-end	-	-	582	582
- Financial assets not held at year-end	-	(990)	-	(990)
	------	------	------	------
Other comprehensive income
- Financial assets held at year-end	(150)	-	-	(150)
	------	------	------	------
Total gains / (losses) for 2019	(150)	(990)	582	(558)
	------	------	------	------

 

The Company has not developed any quantitative unobservable inputs for measuring the fair value of its level 3 financial assets at 31 December 2019 and 2018.  Instead the Company used prices from third-party pricing information without adjustment.

Fixed income investments within level 3 represent open warehouses that have been valued based on their net asset value.  The net asset value of a warehouse is primarily driven by the fair value of its underlying loan asset portfolio (as determined by the warehouse's manager) plus received and accrued interest less the nominal value of the financing and accrued interest on the financing. In all cases, due to the nature and the short life of a warehouse, the carrying amounts of the warehouses' underlying assets and liabilities are considered as representative of their fair values.

Private equities within level 3 represent investments in private equity funds.  Their value has been determined by each fund manager based on the funds' net asset value. Each fund's net asset value is primarily driven by the fair value of its underlying investments. In all cases, considering that such investments are measured at fair value, the carrying amounts of the funds' underlying assets and liabilities are considered as representative of their fair values.

Investments in subsidiaries have been valued based on their net asset position. The main assets of the subsidiaries represent investments measured at fair value and receivables from the Company itself.  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

	2019	2018
Unconsolidated subsidiaries	US $000	US $000
As at 1 January	5,205	5,426
Fair value gain / (loss)	582	(221)
	------	------
As at 31 December	5,787	5,205
	------	------

 

Details of the investments in which the Company has a controlling interest as at 31 December 2019 are as follows:

 

Name of Subsidiary	Place of incorporation	Holding	Voting rights and shares held	Principal activity
Consolidated subsidiaries
Livermore Capital AG	Switzerland	Ordinary shares	100%	Administration services
Livermore Investments Cyprus Ltd	Cyprus	Ordinary shares	100%	Administration services Under liquidation - see below
Unconsolidated subsidiaries
Livermore Properties Ltd	British Virgin Islands	Ordinary shares	100%	Holding of investments
Mountview Holdings Ltd	British Virgin Islands	Ordinary shares	100%	Investment vehicle
Sycamore Loan Strategies Ltd	Cayman Islands	Ordinary shares	100%	Investment vehicle
Livermore Israel Investments Ltd	Israel	Ordinary shares	100%	Holding of investments
Sandhirst Ltd	Cyprus	Ordinary shares	100%	Holding of investments

Livermore Investments Cyprus Ltd during the period ceased its activities, and as a result has been deconsolidated by 30 June 2019.  The Directors' intention is to dissolve it after the reporting date.  The fair value and the net asset value (no assets or liabilities) at 30 June 2019 is nil, therefore upon deconsolidation no amount has been added to the investment in subsidiaries.

 

9.        Trade and other receivables

	2019	2018
	US $009	US $000
Financial items
Accrued interest and distribution income	80	1
Amounts due by related parties (note 23)	8,091	3,104
	------	------
	8,171	3,105
Non-financial items
Prepayments	71	60
VAT receivable	9	3
	------	------
	8,251	3,168
	------	------

 

For the Company's receivables of a financial nature, no lifetime expected credit losses and no corresponding allowance for impairment have been recognised, as their default rates have been determined to be close to 0%.

 

No receivable amounts have been written-off during either 2019 or 2018.

 

10.      Cash and cash equivalents

Cash and cash equivalents included in the consolidated statement of cash flows comprise the following at the reporting date:

	2019	2018
	US $000	US $000
Demand deposits	41,499	26,214
Short-term fixed deposits	15,000	-
	------	------
Cash at bank	56,499	26,214
	------	------

 

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	Number of shares	Share premium US $000
Ordinary shares with no par value
As at 31 December 2019 and 2018	174,813,998	169,187
	----------	----------

 

12.      Share options

The Company had a share option scheme under which it granted share options to employees for acquiring ordinary shares of the Company.  The options lapsed at the earliest of the expiry date of exercise period or the termination of the corresponding employee's service. The last tranche of options lapsed unexercised during 2018.

 

13.      Trade and other payables

	2019	2018
	US $000	US $000
Financial items
Trade payables	23	44
Amounts due to related parties (note 23)	4,468		5,488
Accrued expenses	416		395
	------		------
	4,907		5,927
	------		------

 

14.      Dividend

At 30 December 2019, the Board announced an interim dividend of USD 6m (USD 0.0343 per share) to members on the register on 24 January 2020. The dividend was paid on 21 February 2020.

 

15.      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. 

	2019	2018
Net assets attributable to ordinary shareholders (USD 000)	173,080	174,333
	-------------	-------------
Closing number of ordinary shares in issue	174,813,998	174,813,998
	-------------	-------------
Basic net asset value per share (USD)	0.99	1.00
	-------------	-------------

The diluted net asset value per share equals the basic net asset value per share since no potentially dilutive shares exist as at 31 December 2019 and 2018.

 

16.      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:

	2019	2018
Investment Income	US $000	US $000
Other European countries	(463)	(217)
United States	5,096	15,411
India	(171)	(89)
Asia	(792)	(944)
	------	------
	3,670	14,161
	------	------
Investments
Other European countries	2,215	2,209
United States	100,235	138,310
India	716	712
Asia	10,080	9,626
	------	------
	113,246	150,857
	------	------

Investment income, comprising interest and distribution income as well as 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.

 

17.      Interest and distribution income

	2019	2018
	US $000	US $000
Interest from investments	695	101
Distribution income	28,333	31,440
	------	------
	29,028	31,541
	------	------

 

 

 

Interest and distribution income is analysed between different categories of financial assets, as follows:

		2019			2018
	Interest from investments	Distribution income	Total	Interest from investments	Distribution income	Total
Financial assets at fair value through	US $000	US $000	US $000	US $000	US $000	US $000
profit or loss
Fixed income investments	695	28,002	28,697	75	29,728	29,803
Public equity investments	-	331	331	-	868	868
	------	------	------	------	------	------
	695	28,333	29,028	75	30,596	30,671
	------	------	------	------	------	------
Financial assets at fair value through other comprehensive income
Private equities	-	-	-	-	844	844
	------	------	------	------	------	------
Financial assets at amortised cost
Loan receivable (note 23)	-	-	-	26	-	26
	------	------	------	------	------	------
	695	28,333	29,028	101	31,440	31,541
	------	------	------	------	------	------

The Company's distribution income derives from multiple issuers.  The Company does not have concentration to any single issuer. 

 

18.  Changes in value of investments

	2019	2018
	US $000	US $000
Fair value losses on financial assets through profit or loss	(25,940)	(17,159)
Fair value gain / (loss) on investment in subsidiaries	582	(221)
	------	------
	(25,358)	(17,380)
	------	------

 

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 2019			Disposed in 2018
	Realised (losses)/ gains*	Cumulative distribution or interest	Total financial impact	Realised (losses)/ gains*	Cumulative distribution or interest	Total financial impact
	US $000	US $000	US $000	US $000	US $000	US $000
Financial assets at fair value through profit or loss
Fixed income investments	(9,926)	19,839	9,913	(7,703)	31,875	24,172
Public equities	-	-	-	622	1	623
	------	------	------	------	------	------
	(9,926)	19,839	9,913	(7,081)	31,876	24,795
	------	------	------	------	------	------
Financial assets at fair value through OCI
Private equities	147	301	448	(16,051)	1,777	(14,274)
	------	------	------	------	------	------
	(9,779)	20,140	10,361	(23,132)	33,653	10,521
	------	------	------	------	------	------

* difference between disposal proceeds and original acquisition cost

 

19.      Operating expenses

	2019	2018
	US $000	US $000
Directors' fees and expenses	2,307	5,730
Other salaries and expenses	202	156
Professional fees	1,360	1,896
Legal expenses	18	27
Bank custody fees	111	104
Office costs	221	382
Depreciation	98	8
Other operating expenses	726	588
Audit fees	89	82
	------	------
	5,132	8,973
	------	------

Throughout 2019 the Company employed 4 members of staff (2018: 4). Two of those members are the Company's executive Directors. 

 

Other salaries and expenses include USD 10,708 of social insurance and similar contributions (2018: USD 13,445), as well as USD 4,898 of defined contributions plan costs (2018: USD 3,252).   

 

20.      Finance costs and income

	2019	2018
	US $000	US $000
Finance costs
Bank interest expense	18	30
Foreign exchange loss	-	215
	------	------
	18	245
	------	------
Finance income
Bank interest income	437	233
Foreign exchange gain	113	-
	------	------
	550	233
	------	------

 

21.      Taxation

	2019	2018
	US $000	US $000
Current tax charge	151	14
	------	------

The Company is a British Virgin Islands (BVI) international business company and until early 2019 was not subject to corporation tax, under the BVI laws.  During 2019 the Company became a tax resident in the Republic of Cyprus and since then it is subject to taxation under the tax law and regulations in Cyprus.

The current tax charge relates to the results of the Company for 2019, as explained above, and the Company's consolidated subsidiaries in Switzerland and Cyprus (note 8).

 

22.      (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. 

 

	2019	2018
(Loss) / profit for the year attributable to ordinary shareholders of the parent (USD 000)	(1,081)	5,162
	-------------	-------------
Weighted average number of ordinary shares outstanding	174,813,998	174,813,998
	-------------	-------------
Basic earnings per share (USD)	(0.006)	0.03
	-------------	-------------

The diluted (loss) / earnings per share equals the basic (loss) / earnings per share since no potentially dilutive shares were in existence during 2019 and 2018.

 

23.      Related party transactions

The Company is controlled by Groverton Management Ltd, an entity owned by Noam Lanir, which at 31 December 2019 held 76.62% (2018: 76.62%) of the Company's voting rights.

	2019	2018
	US $000	US $000
Amounts receivable from unconsolidated subsidiaries
Sandhirst Ltd	161	104	(1)
	------	------
Amounts receivable from key management
Loan receivable	1,000	-	(2)
	------	------
Amounts receivable from parent company
Loan receivable	6,930	3,000	(3)
	------	------
Amounts payable to unconsolidated subsidiaries
Livermore Israel Investments Ltd	(3,522)	(3,522)	(4)
	------	------
Amounts payable to other related party
Loan payable	(149)	(149)	(5)
	------	------
Amounts payable to key management
Directors' current accounts	(7)	(1,105)	(4)
Other key management personnel	(790)	(712)	(6)
	------	------
	(797)	(1,817)
	------	------
Key management compensation
Short term benefits
Executive Directors' fees	795	795	(7)
Executive Directors' reward payments	1,400	4,804
Non-executive Directors' fees	87	60
Non-executive Directors' reward payments	25	71
Other key management fees	890	1,084	(8)
	------	------
	3,197	6,814
	------	------

  

(1)   The amounts receivable from unconsolidated subsidiaries and any Director's current accounts with debit balances are interest free, unsecured, and have no stated repayment date.

(2)   A loan with a balance at 31 December 2019 of USD 1m was made during the year to a key management employee and a Company's Director. The loan is free of interest, is unsecured and is repayable on demand. This loan is included within trade and other receivables (note 9).

(3)   A loan with a balance at 31 December 2019 of USD 6.93m was made to the Company's parent, Groverton Management Ltd. The loan is free of interest, is unsecured and is repayable on demand. This loan is included within trade and other receivables (note 9).

(4)   The amounts payable to unconsolidated subsidiaries and Director's current accounts with credit balances are interest free, unsecured, and have no stated repayment date. 

(5)   A loan with a balance at 31 December 2019 of USD 0.149m (31 December 2019: USD 0.149m) has been received from a related company (under common control), Chanpak Ltd. The loan is free of interest, is unsecured and is repayable on demand. This loan is included within trade and other payables (note 13). 

(6)   The amount payable to other key management personnel relates to payments made on behalf of the Company for investment purposes and accrued consultancy fees. 

(7)   These payments were made directly to companies which are related to the Directors.   

(8)   Other key management fees are included within professional fees (note 19).  

 

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 2019 or 2018.

Noam Lanir, through an Israeli partnership, is the major shareholder of Babylon Ltd, an Israel based Internet Services Company. The Company as of 31 December 2019 held a total of 1.941m shares at a value of USD 1.199m (2018: 0.618m shares at a value of USD 0.845m) which represents 4% of its effective voting rights. The investment in Babylon Ltd is held through the Company's subsidiary Livermore Israel Investments Ltd.

 

24.      Litigation

Fairfield Sentry Ltd vs custodian bank and beneficial owners

One of the custodian banks that the Company used faces a contingent claim up to USD 2.1m, and any interest as will be decided by a US court and related legal fees, with regards to the redemption of shares in Fairfield Sentry Ltd, which were bought in 2008 at the request of Livermore and on its behalf. If the claim proves to be successful Livermore will have to compensate the custodian bank since the transaction was carried on Livermore's behalf. The same case was also filed in BVI where the Privy Council ruled against the plaintiffs.

As a result of the surrounding uncertainties over the existence of any obligation for Livermore, as well as for the potential amount of exposure, the Directors cannot form an estimate of the outcome for this case and therefore no provision has been made.

No further information is provided on the above case as the Directors consider it could prejudice its outcome.

 

25.      Commitments

The Company has expressed its intention to provide financial support to its subsidiaries, where necessary, to enable them to meet their obligations as they fall due.

Other than the above, the Company has no capital or other commitments as at 31 December 2019.

 

26.  Events after the reporting date

In March 2020, the World Health Organisation recognised that coronavirus (COVID-19) was in the state of pandemic.  The Company continues to monitor the COVID-19 pandemic situation closely, with a focus on the impact on the Company's CLO and US senior secured loan portfolios. The spread of the virus, government policy responses and changing demand patterns are expected to have a negative impact on the operations and earnings of some of the borrowers in the CLO portfolio. The Company has been in close contact with managers of its individual CLO positions and is tracking the level of rating downgrades of underlying loans to CCC+/Caa rating and a worsening default outlook. A significant concentration of CCC+/Caa rated loans can turn off the distributions to the equity and lower mezzanine tranches of CLOs and would result in significant drop in the market values of those CLO portfolio constituents. The full extent of the impact will depend on the length and severity of the crisis and is expected to vary widely between sectors and companies.

The Company has been positioned very conservatively for several months with high liquidity and cash reserves (in excess of USD 60m as of 31 March 2020) and a CLO portfolio that consists largely of CLOs with long reinvestment periods, which should benefit somewhat from the volatility in the market. The Company has no debt.

In 2020 the Company invested an amount of USD 15m to a warehouse facility. Livermore's investment amount plus net carry amounting to a total of USD 16.5m became receivable in March 2020.  

There were no other material events after the end of the reporting year, which have a bearing on the understanding of these financial statements.

 

27.  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 28.

 

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 level of financial instruments denominated in foreign currencies held by the Company at 31 December 2019 is the following:

 

 

 

	2019 US $000	2019 US $000	2019 US $000	2018 US $000	2018 US $000	2018 US $000
	Financial assets	Financial liabilities	Net value	Financial assets	Financial liabilities	Net value
British Pounds (GBP)	2,850	(138)	2,712	2,690	(140)	2,550
Euro	537	(62)	475	482	(27)	455
Swiss Francs (CHF)	3,592	(129)	3,463	3,507	(50)	3,457
Israel Shekels (ILS)	5,153	(3,522)	1,631	5,814	(3,522)	2,292
	------	------	------	------	------	------
Total	12,132	(3,851)	8,281	12,493	(3,739)	8,754
	------	------	------	------	------	------

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 2019 would have the following impact.  A 10% decrease of the following currencies against USD would have an approximately equal but opposite impact.

	2019 US $000	2019 US $000	2018 US $000	2018 US $000
	Profit or loss	Other comprehensive income	Profit or loss	Other comprehensive income
British Pounds (GBP)	200	72	184	71
Euro	47	-	46	-
Swiss Francs (CHF)	346	-	346	-
Israel Shekels (ILS)	163	-	229	-
	------	------	------	------
Total	756	72	805	71
	------	------	------	------

The above analysis assumes that all other variables in particular, interest rates, remain constant. 

 

Interest rate risk

The Company is exposed to interest rate risk on its interest-bearing instruments which are affected by changes in market interest rates.

As at 31 December 2019 the Company had no financial liabilities that bore an interest rate risk.

Interest rate changes will also impact equity prices. The level and direction of changes in equity prices are subject to prevailing local and world economics as well as market sentiment all of which are very difficult to predict with any certainty.

The Company has fixed and floating rate financial assets including bank balances that bear interest at rates based on the banks floating interest rates.  In particular, the fair value of the Company's fixed rate financial assets is likely to be negatively impacted by an increase in interest rates.  The interest income of the Company's floating rate financial assets is likely to be positively impacted by an increase in interest rates.

The Company has exposure to US bank loans through CLO equity tranches as well as through warehousing facilities. An investment in the CLO equity tranche or first loss tranche of a warehouse represents a leveraged investment into such loans. As these loans (assets of a CLO) and the liabilities of a CLO are floating rate in nature (typically 3 month LIBOR as the base rate), the residual income to CLO equity tranches and warehouse first loss tranches is normally linked to the floating rate benchmark and thus normally do not carry substantial interest rate risk.

The Company's financial assets and liabilities affected by interest rate changes are as follows:            

	2019 US $000	2018 US $000
Financial assets - subject to:
- fair value changes	1,128	1,100
- interest changes	56,499	26,214
	------	------
Total	57,627	27,314
	------	------

 

An increase of 1% (100 basis points) in interest rates would have the following impact.  An equivalent decrease would have an approximately equal but opposite impact.

	2019 US $000	2019 US $000	2018 US $000	2018 US $000
	Profit or loss	Other comprehensive income	Profit or loss	Other comprehensive income
Financial assets
- fair value changes	(2)	-	(160)	-
- interest changes	565	-	262	-
	------	------	------	------
	563	-	102	-
	------	------	------	------

The above analysis assumes that all other variables, in particular currency rates, remain constant.  

 

Market price risk

By the nature of its activities, most of the Company's investments are exposed to market price fluctuations. The Board monitors the portfolio valuation on a regular basis and consideration is given to hedging or adjusting the portfolio against large market movements.

The Company had no single major financial instrument that in absolute terms and as a proportion of the portfolio could result in a significant reduction in the NAV and share price.  Due to the very low exposure of the Company to public equities, and having no specific correlation to any market, the equity price risk is low.  The portfolio as a whole does not correlate exactly to any Index.

Management of risks is primarily achieved by having a diversified portfolio to spread the market price risk. The Company mainly has investments in CLO equity tranches as well as first loss tranches of warehouse facilities. Investments in the equity tranche of US CLOs represent a levered exposure to senior secured corporate loans in the US, and are thus subject to many risks including but not limited to lack of liquidity, credit or default risk, and risks related to movements in market prices as well as the variations of risk premium in the market.

Prices of these CLO investments may be volatile and will generally fluctuate due to a variety of factors that are inherently difficult to predict, including but not limited to changes in prevailing credit spreads and yield expectations, interest rates, underlying portfolio credit quality and market expectations of default rates on non-investment grade loans, general economic conditions, financial market conditions, legal and regulatory developments, domestic and international economic or political events, developments or trends in any particular industry, and the financial condition of the obligors that constitute the underlying portfolio.

A 10% uniform change in the value of the Company's portfolio of financial assets (excluding level 3 investments) would result in a 5.85% change in the net asset value as at 31 December 2019 (2018: 7.99%), and would have the following impact (either positive or negative, depending on the corresponding sign of the change):

 

 

	2019 US $000	2019 US $000	2018 US $000	2018 US $000
	Profit or loss	Other comprehensive income	Profit or loss	Other comprehensive income
Financial assets at fair value through other comprehensive income	-	-	-	112
Financial assets at fair value through profit or loss	10,125	-	13,815	-
	------	------	------	------
	10,125		13,815	112
	------	------	------	------

 

Derivatives

The Investment Manager may use derivative instruments in order to mitigate market risk or to take a directional investment. These provide a limited degree of protection and would not materially impact the portfolio returns if a large market movement did occur.

 

Credit risk

The Company invests in a wide range of securities with various credit risk profiles including investment grade securities and sub investment grade positions. The investment manager mitigates the credit risk via diversification across issuers. However, the Company is exposed to a migration of credit rating, widening of credit spreads and default of any specific issuer.

The Company only transacts with regulated institutions on normal market terms which are trade date plus one to three days. The levels of amounts outstanding from brokers are regularly reviewed by the management. The duration of credit risk associated with the investment transactions is the period between the date the transaction took place, the trade date and the date the stock and cash are transferred, the settlement date. The level of risk during the period is the difference between the value of the original transaction and its replacement with a new transaction.

The Company is mainly exposed to credit risk in respect of its fixed income investments (mainly CLOs) and to a lesser extend in respect of its financial assets at amortised cost, and other instruments held for trading (perpetual bonds).  

The Company's maximum credit risk exposure at 31 December 2019 is as follows:

	2019     US $000	2018     US $000
Financial assets:
At amortised cost:
Trade and other receivables	8,172	3,105
Cash at bank	56,499	26,214
	------	------
	64,671	29,319
Financial assets at fair value through profit or loss	99,545	136,671
	------	------
	164,126	165,990
	-------	-------

No collaterals are held by the Company itself in relation to the Company's financial assets subject to credit risk.

The fair values of the above financial assets at fair value through profit or loss are also affected by the credit risk of those instruments.  However, it is not practical to provide an analysis of the changes in fair values due to the credit risk impact for the year or previous periods, nor to provide any relevant sensitivity analysis.

The Company has exposure to US senior secured loans and to a lesser degree emerging market loans through CLO equity tranches as well as warehouse first loss tranches. These loans are primarily non-investment grade loans or interests in non-investment grade loans, which are subject to credit risk among liquidity, market value, interest rate, reinvestment and certain other risks. It is anticipated that these non-investment grade loans generally will be subject to greater risks than investment grade corporate obligations.

A non-investment grade loan or debt obligation or an interest in a non-investment grade loan is generally considered speculative in nature and may become a defaulted security for a variety of reasons. A defaulted security may become subject to either substantial workout negotiations or restructuring, which may entail, among other things, a substantial reduction in the interest rate, a substantial write-down of principal, and a substantial change in the terms, conditions and covenants with respect to such defaulted security. In addition, such negotiations or restructuring may be quite extensive and protracted over time, and therefore may result in substantial uncertainty with respect to the ultimate recovery on such defaulted security. Bank loans have historically experienced greater default rates than has been the case for investment grade securities. 

The Company has no investment in sovereign debt as at 31 December 2019 or 2018.

 

At 31 December the credit rating distribution of the Company's asset portfolio subject to credit risk was as follows:

Rating	2019 Amount	Percentage	2018 Amount	Percentage
	US $000		US $000
AA	48,143	29.3%	18,632	11.2%
A	6,433	3.9%	2,703	1.6%
A-	-	-	3,570	2.2%
B	874	0.5%	2,073	1.2%
BB+	1,127	0.7%	1,101	0.7%
BBB	1,936	1.2%	1,309	0.8%
B-	4,239	2.6%	-	-
Not Rated	101,464	61.8%	136,602	82.3%
	------	------	------	------
	164,189	100%	165,990	100%
	------	------	------	------

Included within "not rated" amounts are investments in loan market through CLOs (equity tranches) of USD 98.417m and open warehouses of USD 0.0m (2018: CLOs of USD 97.080m and open warehouses of USD 38.490m). 

The modelled IRRs 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.

31 December 2019	Carrying amount	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
	US $000	US $000	US $000	US $000	US $000
Trade and other payables	4,907	4,907	-	-	-
	------	------	------	------	------
Total	4,907	4,907	-	-	-
	------	------	------	------	------

 

31 December 2018	Carrying amount	Less than 1 year	Between 1 and 2 years	Between 2 and 5 years	Over 5 years
Trade and other payables	5,927	5,927	-	-	-
	------	------	------	------	------
Total	5,927	5,927	-	-	-
	------	------	------	------	------

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 2019, the Company had liquid investments totalling USD 157.7m, comprising of USD 56.5m in cash and cash equivalents, USD 98.4m in investments in loan market through CLOs, USD 1.1m in other fixed income investments, USD 1.7m 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.

 

Capital management

The Company considers its capital to be its issued 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.

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:

	2019	2018
	US $000	US $000
Cash at bank	(56,499)	(26,214)
	------	------
Net Debt	(56,499)	(26,214)
	------	------
Total equity	173,080	174,333
	------	------
Net debt to equity ratio	(0.33)	(0.15)
	-------	-------

 

28.      Financial assets and liabilities by class

	Note	2019     US $000	2018     US $000
Financial assets:
Financial assets at amortised cost	9, 10	64,750	29,382
Financial assets at fair value through profit or loss	4	101,255	138,148
Financial assets designated at fair value through other comprehensive income	5	6,204	7,504
		-------	-------
		172,209	175,034
		-------	-------
Financial liabilities:
Financial liabilities at amortised cost	13	4,907	5,927
		-------	-------

 

The carrying amount of the financial assets and liabilities at amortised cost approximates to their fair value.

 

Shareholder Information

Registrars

All enquiries relating to shares or shareholdings should be addressed to:

Link Asset Services

34 Beckenham Road

Beckenham

Kent BR3 4TU

Telephone: 0871 664 0300

Facsimile: 020 8639 2342

Change of Address

Shareholders can change their address by notifying Link Asset Services in writing at the above address.

 

Website

www.livermore-inv.com

The Company's website provides, amongst other things, the latest news and details of the Company's activities, share price details, share price information and links to the websites of our brands.

 

Direct Dividend Payments

Dividends can be paid automatically into shareholders' bank or building society accounts. Two primary benefits of this service are:

·      There is no chance of the dividend cheque going missing in the post; and

·      The dividend payment is received more quickly because the cash sum is paid directly into the account on the payment date without the need to pay in the cheque and wait for it to clear.

As an alternative, shareholders can download a dividend mandate and complete and post to Link Asset Services.

 

Lost Share Certificate

If your share certificate is lost or stolen, you should immediately contact Link Asset Services on 0871 664 0300who will advise on the process for arranging a replacement.

 

Duplicate Shareholder Accounts

If, as a shareholder, you receive more than one copy of a communication from the Company you may have your shares registered in at least two accounts.  This happens when the registration details of separate transactions differ slightly.  If you wish to consolidate such multiple accounts, please call Link Asset Services on 0871 664 0300.

Please note that the Directors of the Company are not seeking to encourage shareholders to either buy or sell the Company's shares.

 

Corporate Directory
Secretary Chris Sideras   Registered Office Trident Chambers PO Box 146 Road Town Tortola British Virgin Islands   Company Number 475668   Registrars   Link Asset Services34 Beckenham Road Beckenham Kent  BR3 4TU England   Auditor Grant Thornton (Cyprus) Ltd 143, Spyrou Kyprianou Avenue Limassol 3083 Cyprus   Solicitors Travers Smith 10 Snow Hill London EC1A 2AL England   Nominated Adviser & Broker Arden Partners plc 125 Old Broad Street London EC2N 1AR England		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

Enquiries

Livermore Investments Group Limited           +41 43 344 3200

Gaurav Suri

 

Nominated Adviser and Broker                        +44 (0)207 614 5900

Arden Partners plc

Richard Johnson / Benjamin Cryer