REG - Livermore Inv. Group - Final Results
23/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240523:nRSW5434Pa&default-theme=true
RNS Number : 5434P Livermore Investments Group Limited 23 May 2024
Highlights
· Net Profit for the year was USD 13.9m (2022: net loss of USD
24.4m).
· Net Asset Value per share increased by 6.3% to USD 0.82 (2022 USD
0.77) after paying USD 4.9m dividend implying a net return of about 10.2% for
the year.
· The Company is conservatively positioned with over USD 52.9m of
cash deposits and Government bonds.
· On 21 November 2023, the Company announced an interim dividend of
USD 4.9m (USD 0.03 per share) to members on the register on 01 December 2023.
The dividend was paid on 29 December 2023.
· Collateralized Loan Obligations (CLO) portfolio generated USD
21.6m in cash distributions and a total net return of USD 16.2m in 2023 in
addition to the USD 2.0m generated from the cash and bond portfolio.
Chairman's and Chief Executive's Review
Introduction
We are pleased to announce the financial results for Livermore Investments
Group Limited ("Livermore" or "the Company") for the year ended 31 December
2023. References to the Company hereinafter also include its consolidated
subsidiary (note 8). References to financial statements hereinafter are to the
Company's consolidated financial statements.
2023 was a surprisingly robust year for global growth despite higher interest
rates for longer than anticipated. Advanced economies mostly performed well
and avoided forecasted recessions. Businesses and consumers were resilient,
especially in the United States. Inflation rates declined across most
economies although they stayed higher than target levels for their respective
Central Banks. Although the Russia-Ukraine conflict continued, energy markets
were stable and prices lower than in 2022 provided much needed relief to
people around the world. By mid-year, interest rates in the developed world
seemed to have reached their respective peaks. Tightened financial conditions
were generally successful in slowing inflation especially in the latter half
of the year. The failure of Credit Suisse and a regional banking crisis in the
US were the highlights of the year, but optimism related to significant
developments in Artificial Intelligence and safe weight loss drugs boosted
equity markets. Larger and better quality companies easily outperformed
smaller and interest rate sensitive companies in 2023.
Government bonds eventually performed later in the year as economic slowdown
and expectations of several rate cuts in 2024 fuelled buying interest. The US
Dollar and Euro traded sideways for most of the year on a trade-weighted
basis.
CLOs and US senior secured loans performed quite well in 2023 despite higher
rates. Higher carry, short duration, and already lower prices from 2022
overcame concerns over softening credit fundamentals. Still, the economic
environment was precarious in 2023 and remains so until interest rates decline
meaningfully. Over the year, the Company continued to let its CLO equity book
amortize through distributions and instead increased its exposure to CLO
mezzanine bonds. Management traded CLO mezzanine profitably through the year
and ended 2023 with a net exposure of USD 15.7m to CLO mezzanine bonds.
Further, the 2022 year end CLO valuations anticipated extremely negative
scenarios which ultimately did not materialize in 2023 and the CLO portfolio
generated USD 16.2m or 24.3% return over its starting valuation in 2023.
During the course of 2023, management maintained its conservative position and
is well positioned to take advantage of opportunities.
Our investment in Fetcherr continues to surprise positively. Fetcherr is a
dynamic, high-frequency, generative pricing engine focused on the airline
industry. It has received several awards and has been steadily gaining larger
airline clients demonstrating its effectiveness in revenue enhancement for
their clients. We expect Fetcherr to continue to successfully execute on its
large and growing pipeline.
Our net profit for the year was USD 13.9m (2022 net loss: USD 24.4m) and the
year-end NAV was USD 0.82 per share (2022 NAV: USD 0.77 per share) after
paying a dividend payment of USD 4.9m (USD 0.03 per share).
The Company ended the year with over USD 52.9m of cash invested mainly in
deposits and US government debt.
Financial Review
The NAV of the Company on 31 December 2023 was USD 135.8m (2022: USD 127.7m).
Net profit, during the year was USD 13.9m, which represents profit per share
of USD 0.08. Operating expenses were USD 3.3m (2022: USD 3.0m).
The overall change in the NAV is primarily attributed to the following:
31 December 2023 31 December 2022
US $m US $m
Shareholders' funds at beginning of year 127.7 177.7
___________ ___________
Income from investments 24.1 23.7
Other income 0.3 -
Unrealised (losses) / gains on investments (7.5) (46.3)
Operating expenses (3.3) (3.0)
Other expenses (0.3) -
Net finance costs (0.1) (0.2)
Tax charge (0.2) (0.2)
___________ ___________
Increase / (decrease) in net assets from operations 13.0 (26.0)
Dividends paid (4.9) (24.0)
___________ ___________
Shareholders' funds at end of year 135.8 127.7
------ ------
Net Asset Value per share US $0.82 US $0.77
Dividend
On 21 November 2023, the Company announced an interim dividend of USD 4.9m
(USD 0.03 per share) to members on the register as at 01 December 2023. The
dividend was paid on 29 December 2023.
The Board of Directors will decide future dividends based on profitability,
liquidity requirements, portfolio performance, market conditions, and the
share price of the Company relative to its NAV.
Richard B
Rosenberg
Noam Lanir
Chairman
Chief Executive Officer
22 May 2024
Review of Activities
Introduction and Overview
Overall, the Company remained conservatively positioned until inflation
expectations and central bank actions turn towards supporting growth instead
of reducing inflation rates. Our exposure has been primarily towards short
duration through floating rate debt and front-end money-market instruments as
well as treasury bills. Higher rates afford the luxury of getting paid to wait
while excessive valuations and unviable business are corrected through the
cleansing process of fighting inflation. We have seen large US regional banks
and too-big-to-fail entities like Credit Suisse fail in 2023, so caution is
warranted.
The lessons of the Great Financial Crisis in 2008-2009 seem to have been well
learnt by the regulators and central banks, which acted swiftly, decisively
and in unison to support the financial system from buckling under the pressure
of the failure of Credit Suisse and the regional banking crisis in the US.
Equity markets performed extremely well in 2023 as significant innovation in
Artificial Intelligence (AI) and development of novel weight-loss drugs
created optimism about productivity gains and future earnings. Larger US
technology and pharmaceutical companies drove much of the gains whereas
smaller companies and interest rate sensitive sectors continued to struggle
for survival under the weight of higher interest rates.
Developed economies government bond market returns were unattractive in 2023
as higher growth and expansive fiscal policies especially in the US kept rates
higher. The widely forecasted recession did not arrive in the US in 2023
although long-end rates rallied hard in the last quarter of 2023 in hope of
several rate cuts in 2024. Corporate bonds had a much better showing as
spreads narrowed during the year towards historical averages and the Bloomberg
US Corporate Total Return index gained by over 8% while the High Yield Total
Return gained 129% in 2023. The US leveraged loan market also performed very
well with the Credit Suisse Leveraged Loan Index gaining 13%.
CLO equity and mezzanine bonds had a good showing in 2023. The extremely
negative outcomes modelled for year-end 2022 valuations did not materialize
and provided a significant boost to performance in 2023. Still, there were
several credit issues and while the default rates were lower than projected,
the recovery rates were much lower as well. Thus, actual credit losses
incurred through credit events or through trading did materially affect CLO
structures, especially older vintages that had already borne credit stresses
from 2020 and before. New vintage CLO structures weathered the issues much
better. While the Company did not open any warehouses in 2023, management let
older vintage CLOs amortize through their distributions and invested the cash
in deposits and higher quality CLO mezzanine positions. Distributions from the
CLO portfolio were in line with expectations generating over USD 23.6m in
cashflow and USD 16.2m in net gains.
For the 2023 year-end, the Company reported a NAV/share of USD 0.82 after a
dividend payment of USD 4.9m (USD 0.03 per share) and net profit of USD 13.9m.
Interest and distribution income amounted to USD 24.05m, of which, USD 21.6m
was generated from the CLO portfolio. The net gain of the CLO and warehousing
portfolio was USD 16.2m as valuations stayed relatively unchanged from the
beginning of the year.
Management invested an additional USD 0.695m in a secondary transaction
involving Fetcherr shares. Operating expenses amounted to USD 3.3m. The
Company ended the year with over USD 52.9m of cash, deposits, and investments
in US treasury bills after paying an interim dividend of USD 4.9m in December
2023.
The Company does not have an external management company structure and thus
does not bear the burden of external management and performance fees.
Furthermore, the interests of Livermore's management are aligned with those of
its shareholders as management has a large ownership interest in Livermore
shares.
Considering the strong liquidity positions of Livermore, together with its
strong foothold in the US CLO markets as well as the robustness of its
investment portfolio and the alignment of the management's interests with
those of its shareholders, management believes that the Company is well
positioned to benefit from current conditions.
Global Investment Environment
Global economic growth in 2023 remained unexpectedly robust despite challenges
such as Russia's aggression against Ukraine and monetary policy tightening.
However, economic growth varied among regions. Advanced economies, especially
in Europe, experienced significant slowdowns due to tighter monetary policies
and inflation's impact on purchasing power. The US economy, on the other hand,
remained strong. China's recovery from its zero-COVID policy also supported
global trade, although its domestic property and consumer segments remained
weak. Tighter financial conditions affected interest-sensitive expenditures,
but household consumption remained steady due to tight labor markets. Core
inflation remained sticky despite a decline in headline inflation due to
energy price reversals. Internationally, economic growth generally slowed in
the second half of 2023 and most central banks paused policy interest rates,
with expectations that some may start reducing their rates materially in 2024.
Overall, the trade-weighted exchange value of the US dollar slightly
increased, appreciating significantly against the Japanese Yen although it
weakened materially against the Swiss Franc.
Financial conditions remained restrictive, but equity markets recovered
despite temporary disruptions from regional bank collapses and the failure of
Credit Suisse. The equity markets were further boosted by optimism on
advancements in Artificial Intelligence and safer weight loss drugs.
US: In 2023, the US economy demonstrated resilience despite tighter monetary
policy. Consumer price inflation decreased, ending the year at 3.4%, down from
6.5% in December 2022. The Federal Reserve raised the target range for its
policy rate by 1% to 5.25%-5.5% by July and maintained this level throughout
the year, while continuing to reduce its portfolio of Treasury and
mortgage-backed securities. Real GDP growth was robust, increasing by 3.1% in
2023, supported by solid consumer spending and a rebound in housing market
activity.
Euro Zone: In 2023, the GDP growth in the Euro area was weak at 0.5%. Consumer
price inflation decreased significantly but remained above the ECB's 2% target
throughout the year, reaching 2.9% in December, down from 9.2% a year earlier.
The ECB raised key interest rates by 2% until September, reaching a 4% deposit
facility rate, and maintained these rates unchanged afterward. The Euro area's
unemployment rate averaged 6.5% in 2023. Although the failure of Credit Suisse
created significant ripples in the financial markets, Euro area banks
demonstrated increased resilience, with the Common Equity Tier 1 ratio
reaching 15.6% in the third quarter.
China: In 2023, China's GDP grew robustly by 5.2%, exceeding the previous
year's growth rate of 3.0% and meeting the government's target of around 5%.
This growth was fuelled by the relaxation of the zero-COVID policy toward the
end of 2022, leading to a significant economic recovery. Despite this growth,
the economic environment posed challenges, including a deteriorating property
crisis and subdued consumer and business sentiment. To bolster the economy,
authorities implemented measures from mid-2023 onwards, including increased
infrastructure investment and targeted interventions in the property sector.
Commodities: The average price of Brent crude oil in 2023 was $83 per barrel,
down from $101 in 2022. Throughout the year, crude oil prices experienced
fluctuations influenced by factors such as the EU import ban on Russian oil
and interest rate hikes. Brent crude prices ended the year at $78 per barrel,
$4 lower than the start of the year. OPEC+ extended crude oil production cuts
through 2024, with Saudi Arabia implementing additional voluntary cuts in
July. Energy commodity prices, including oil and gas, declined due to lower
demand, despite geopolitical risks and supply cuts. European gas prices
dropped by 58% in 2023, with lower industrial demand and reduced household
consumption contributing to decreased gas consumption. Stable liquefied
natural gas (LNG) supply enabled European countries to enter the heating
season with full gas storage. However, supply risks, such as strikes at
Australian LNG terminals, led to periods of high price volatility,
highlighting the market's sensitivity during the shift away from Russian gas
imports.
Equities and Bonds: In 2023, financial markets saw a significant rebound
following losses from the previous year. The S&P 500 surged by 26.3%, and
the MSCI All Country World Index rose by 22.2%. Tech sector performance, led
by companies like NVIDIA, drove this recovery. Despite geopolitical tensions,
the US economy's resilience supported the global outlook. Small-cap stocks
lagged behind large-cap stocks. High-profitability companies outperformed
low-profitability ones in both developed and emerging markets. US Treasuries
rebounded, but yields remained relatively higher, fluctuating significantly
throughout the year. Corporate bond yields declined, with spreads narrowing,
especially for speculative-grade bonds. Treasury market functioning was
orderly, but liquidity was low, particularly in short-term securities.
Loan Market: In 2023, the leveraged loan market, had a strong performance and
its best since 2009. The Credit Suisse Leverage Loan Index (CSLLI) recorded a
total return of 13.04%. The trailing 12-month average default rate ended at
1.53%, up from 0.72% in 2022 but below the long-term average of 2.70%. Average
loan prices rose from 91.89 to 95.32 throughout the year but remained below
pre-Ukraine war levels. Refinancing activity surged, accounting for over 58%
of new supply volume, compared to 26% in 2022. Concerns about the maturity
wall were alleviated, with significant reductions in debt maturing before
2026. The growing private credit asset class actually helped reduce some
stress in the leveraged loan market as some stressed borrowers prepaid and
refinanced into new facilities from private credit funds and business
development companies (BDCs), with around $16 billion refinanced by private
credit managers in 2023 benefitting the leveraged loan and CLO market.
CLO Market: In 2023, the CLO market saw significant activity, with $116
billion in new CLO issuance reported by LCD Pitchbook. Captive CLO funds
represented over 80% of the 208 new BSL CLOs issued during the year. CLO
refinancing and reset volumes decreased, totalling $24.6 billion across 57
transactions, with $14.7 billion occurring in the last three months. By the
end of 2023, CLO AAA discount margins averaged approximately 175 basis points
over SOFR, tightening by 53 basis points since the previous year's end. With
liability spreads still high, management has decided to not participate in new
issue CLO equity and focus on secondary and CLO mezzanine opportunities.
As we look ahead in 2024, we anticipate liability spreads to tighten as high
current carry, short duration, and a soft landing expectation create
attractive risk-reward characteristics.
Sources: Swiss National Bank, Bloomberg, Board of Governors of the Federal
Reserve System, European Central Bank (ECB), Morningstar, JP Morgan, Credit
Suisse
Livermore's Strategy
The financial portfolio is focused on fixed income instruments which generate
regular cash flows and include exposure mainly to senior secured and usually
broadly syndicated US loans and to a limited extent emerging market debt
through investments in CLOs. This part of the portfolio is geographically
focused on the US.
Strong emphasis is given to maintaining sufficient liquidity and low leverage
at the overall portfolio level and to re-invest in existing and new
investments along the economic cycle.
Financial Portfolio
The Company manages a financial portfolio valued at USD 127.2m as of 31
December 2023, which is composed mainly of cash and investments in fixed
income and credit related securities.
The following is a table summarizing the financial portfolio as of year-end
2023.
2023 2022
Name US $m US $m
Investment in the loan market through CLOs 68.3 66.6
Public equities 2.0 2.3
Short term government bonds 28.5 24.6
Long term government bonds 4.2 8.3
Corporate bonds 4.0 4.6
Invested total 107.0 106.4
Cash 20.2 11.0
Total 127.2 117.4
Senior Secured Loans and Collateralized Loan Obligations (CLO):
US senior secured loans are a floating rate asset class with a senior secured
claim on the borrower and with overall low volatility and low correlation to
the equity market. CLOs are managed portfolios invested into diversified pools
of senior secured loans and financed with long term financing.
In 2023, US leveraged loans generated strong returns and the Credit Suisse
Leverage Loan Index ("CSLLI") was up about 13%. It was one of the strongest
annual returns since the Global Financial Crisis. High base rates provided
significant yield and lower prices from 2022 boosted their attractiveness.
Further, strong nominal growth in the US allowed most borrowers to manage
their pricing structures to cover higher costs and interest expenses. Still,
higher rates for longer pose significant threat to several borrowers.
Fortunately, open capital markets since Q4 2023 and the growth in private
credit had made credit available especially for better quality borrowers.
The trailing 12-month default rate in December 2023 increased to 1.53% from
0.72% a year ago. While this is much lower than expected in 2022, lower than
average recoveries point to loss rates similar to higher defaults but higher
recoveries. Nonetheless, it is encouraging that most borrowers were able to
take advantage of nominal growth in the economy and manage their revenues,
costs, and interest expenses. Further, the maturity wall has again been pushed
out with about 7% of the loan market as of year-end 2023 maturing before 2026
and this number has been further reduced in 2024.
While new issue loans were few and far in-between, the CLO market experienced
strong issuance with over USD 116 billion of new issue CLOs pricing in 2023
despite wide liability spreads. Most of this activity was driven by captive
CLO manager funds as the difference between income from loans and liability
costs were unattractive for economic investors such as Livermore. Nonetheless,
this new CLO creation further supported demand for loans in 2023.
In November 2023, the US Federal Reserve indicated expectations for several
rate reductions in 2024 given the decline in inflation. This prompted a
significant rally in risk assets and CLO liability spreads have tightened
sharply into the first quarter of 2024 along with further gains in underlying
loans.
In 2023, CLO equity distributions were in line with expectations. Our
portfolio generated cashflow of USD 23.6m for the year and net gains of USD
16.2m on a starting valuation of USD 66.6m in January 2023. Further,
management profitably traded CLO mezzanine debt and increased exposure to such
bonds given their high current coupons. Management did not open any warehouses
in 2023 and maintained its conservative posture allowing its older vintage CLO
equity positions to amortize through their distributions.
As we look ahead, we expect the interest rates to stay high for longer than
the market does and continue to stay cautious. At the same time, tighter
liability spreads, generous warehouse terms, and few near-term loan maturities
create an attractive risk-reward profile to restart warehousing and CLO
investment activity.
The Company's CLO portfolio is divided into the following geographical areas:
2023 Amount Percentage 2022 Amount Percentage
US $000 US $000
US CLOs 68,284 100% 66,576 100%
------- ------ ------ ------
Fund Investments
The fund investments held by the Company are mainly incorporated in the form
of Managed Funds (mostly closed end funds) in Israel and the emerging
economies. Also, the Company has some direct venture capital investments.
The following summarizes the book value of the private equity funds at 31
December 2023.
Name US $m
Fetcherr Ltd 2.0
Phytech 2.6
Sauce, Inc (formerly Say2eat Inc) 0.8
Other investments 1.1
Total 6.5
Fetcherr Ltd: Fetcherr is the Israeli start-up that has developed proprietary
large market AI models for dynamic pricing systems. Fetcherr is disrupting
traditional revenue systems in the airline industry and has signed-up airlines
such as Virgin Airlines, Azul Air, etc. The Company invested USD 2m in 2021
and another USD 0.695m in a secondary transaction in 2023 at about a USD 67m
valuation. Around the same time in 2023, Fetcherr raised capital in the form
of a SAFE (convertible debt instrument) at a maximum valuation of USD 100m. As
of 31 December 2023, the Company owned 8.3% of Fetcherr issued share capital.
Phytech: Phytech is an agriculture-technology company in Israel providing
end-to-end solutions for achieving higher yields on crops and tree data.
Livermore continues to hold 12.2% in Phytech Global Advisors Ltd, which in
turns now holds 11.95% on a fully diluted basis in Phytech Ltd.
Sauce, Inc (formerly Say2eat, Inc.): is a company that has proved it can
disrupt the existing food delivery (3rd party) marketplace model, with a
first-party, direct delivery model that is commission-free. Sauce has
demonstrated a strong product-market fit by fulfilling a significant 1 million
orders milestone in 2023 across over 1,000 stores. With a workforce of 80
employees across four continents, Sauce, Inc. showcases robust unit economics,
a solid cash position, and is nearing break-even. The company is
well-positioned for further expansion and growth. The Company invested USD
0.750m in Sauce, Inc in 2020.
The following table reconciles the review of activities to the Company's
financial assets at 31 December 2023:
Name US $m
Financial Portfolio 107.0
Fund investments 6.5
Total 113.5
Financial assets at fair value through profit or loss (note 4) 107.0
Financial assets at fair value through other comprehensive income (note 5) 6.5
Total 113.5
Investments in Subsidiaries
The subsidiaries include investments in the fields of real estate and
receivables from the Company itself as well as third parties. The resulting
fair value changes are mainly attributed to changes in the subsidiaries' net
assets including the value of the underlying investments.
Events after the reporting date
Details of material events after the reporting date are disclosed in note 27
to the financial statements.
Litigation
During 2023, there was one matter in litigation that the Company was involved
in. Further information is provided in note 23 to the financial statements. --
Report of the Directors
The Directors submit their annual report and audited financial statements of
the Company for the year ended 31 December 2023.
This report has been prepared on a voluntary basis and it does not contain all
of the information that would have been required had it been prepared in
accordance with the UK Companies Act 2006 guidance.
The Board's objectives
The Board's primary objectives are to supervise and control the management
activities, business development, and the establishment of a strong franchise
in the Company's business lines. Measures aimed at increasing shareholders'
value over the medium to long-term, such as an increase in NAV are used to
monitor performance.
The Board of Directors
Richard Barry Rosenberg (age 68) independent, Non-Executive Director, Chairman
of the Board
Richard joined the Company in December 2004. He became Non-Executive Chairman
on 31 October 2006. He qualified as a chartered accountant in 1980 and in
1988 co-founded the accountancy practice SRLV. He has considerable experience
in giving professional advice to clients in the leisure and entertainment
sector. Richard is a director of a large number of companies operating in a
variety of business segments.
Noam Lanir (age 57), Founder and Chief Executive Officer
Noam founded the Company in July 1998, to develop a specialist online
marketing operation. Noam has led the growth and development of the Company's
operations over the last twenty years which culminated in its IPO in June 2005
on AIM. Prior to 1998, Noam was involved in a variety of businesses mainly
within the online marketing sector. He is also a major benefactor of a number
of charitable organisations.
Ron Baron (age 56), Executive Director and Chief Investment Officer
Ron was appointed as Executive Director and Chief Investment Officer in August
2007. Ron has led the establishment and development of Livermore's investment
platform as a leading specialized house in the credit space. Ron also has wide
investment and M&A experience. From 2001 to 2006 Ron served as a member of
the management at Bank Leumi, Switzerland and was responsible for investment
activity. Prior to this, he spent five years as a commercial lawyer advising
banks and large corporations on corporate transactions, including buyouts and
privatisations. Ron has over 18 years of experience as an investment manager
with particular focus on the US credit market and CLOs. He holds an MBA from
INSEAD Fontainebleau and an LLB (LAW) and BA in Economics from Tel Aviv
University. Ron is also the founder and owner of the Israel Cycling Academy a
non-profit professional cycling team.
Augoustinos Papathomas (age 61) independent, Non-Executive Director
Augoustinos joined the Board in February 2019. He is a trained and qualified
UK Chartered Accountant. He is a Partner of FRP Advisory Cyprus and of APP
Audit in Cyprus with over 30 years of experience in assurance, taxation and
advisory for local and international clients. He is also an insolvency
practitioner with experience in many liquidations and receiverships.
Augoustinos has served as a director in various bodies and organisations.
Directors' responsibilities in relation to the financial statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and International
Financial Reporting Standards as adopted by the European Union.
The Directors are required to prepare financial statements for each financial
year which give a true and fair view of the financial position of the Company,
and its financial performance and cash flows for that period. In preparing
these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and estimates that are reasonable and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions, and at any time
enable the financial position of the Company to be determined with reasonable
accuracy and enable them to ensure that the financial statements comply with
the applicable law and International Financial Reporting Standards as adopted
by the European Union. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the British Virgin Islands governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Disclosure of information to the Auditor
In so far as the Directors are aware:
· there is no relevant audit information of which the Company's
auditor is unaware; and
· the Directors have taken all steps that they ought to have taken
to make themselves aware of any relevant audit information and to establish
that the auditor is aware of that information.
Substantial Shareholdings
As at 15 May 2024, the Directors are aware of the following interests in 3 per
cent or more of the Company's issued ordinary share capital:
Number of Ordinary Shares Percentage of issued ordinary share capital Percentage of voting rights*
Groverton Management Ltd 123,048,011 70.39% 74.41%
Livermore Management Limited 25,456,903 14.56% 15.40%
* after consideration of the treasury shares.
Save as disclosed in this report and in the remuneration report, the Company
is not aware of any other person or entity that is interested directly or
indirectly in 3% or more of the issued share capital of the Company or could,
directly or indirectly, jointly or severally, exercise control over the
Company.
Details of transactions with Directors are disclosed in note 22 to the
financial statements.
Corporate Governance Statement
Introduction
The Company recognises the importance of the principles of good Corporate
Governance and the Board is pleased to accept its commitment to such high
standards throughout the year.
The Board Constitution and Procedures
The Company is controlled through the Board of Directors, which comprises of
two independent Non-Executive Directors (one of which is the Board's Chairman)
and two Executive Directors. The Chief Executive's responsibility is to
focus on co-ordinating the company's business and implementing Company
strategy.
A formal schedule of matters is reserved for consideration by the Board, which
meets approximately four times each year. The Board is responsible for
implementation of the investing strategy as described in the circular to
shareholders dated 29 December 2006 and adopted pursuant to shareholder
approval at the Company's EGM on 17 January 2007. It reviews the strategic
direction of the Company, its codes of conduct, its annual budgets, its
progress towards achievement of these budgets and any capital expenditure
programmes. In addition, the Directors have access to advice and services of
the Company Secretary and all Directors are able to take independent
professional advice if relevant to their duties. The Directors receive
training and advice on their responsibilities as necessary. All Directors
submit themselves to re-election at least once every three years.
Board Committees
The Board delegates clearly defined powers to its Audit and Remuneration
Committees. The minutes of each Committee are circulated by the Board.
Remuneration Committee
The Remuneration Committee comprises of the Non-Executive Chairman of the
Board and a Non-Executive Director. The Remuneration Committee considers the
terms of employment and overall remuneration of the Executive Directors and
key members of Executive management regarding share options, salaries,
incentive payments and performance related pay. The remuneration of
Non-Executive Directors is determined by the Board.
Audit Committee
The Audit Committee comprises of the Non-Executive Chairman of the Board and a
Non-Executive Director and is chaired by the Chairman of the Board. The
duties of the Committee include monitoring the auditor's performance and
reviewing accounting policies and financial reporting procedures.
The Audit Committee's key objectives are the provision of effective governance
over the appropriateness of the Group's financial reporting, including the
adequacy of related disclosures, the performance of external audit function,
and the management of the Group's systems of internal control and business
risks.
The primary roles and responsibilities delegated to, and discharged by, the
Committee include:
• monitoring and challenging the effectiveness of internal control
and associated functions;
• approving and amending Group accounting policies;
• reviewing, monitoring, and ensuring the integrity of interim and
annual financial statements, and any formal announcements relating to the
Company's financial performance;
• providing advice (where requested by the Board) on whether the
Annual Report and Accounts, taken, is fair, balanced, and understandable, and
provides the information necessary for shareholders to assess the Company's
position and performance;
• reviewing and monitoring the external auditor's independence,
objectivity, and effectiveness of the audit services; and
• monitoring and approving the scope and costs of audit.
The Quoted Company Alliance (QCA) Code
The Directors of Livermore recognize the importance of good corporate
governance in facilitating Livermore to achieve its goals in our
accountability to our stakeholders, and have chosen to apply the Quoted
Companies Alliance Corporate Governance Code (the 'QCA Code').
In the statements that follow, we explain our approach to governance, and how
the Board and its committees operate.
1. Establish a strategy and business model which promote long-term value
for shareholders
Livermore's strategy is focused primarily on investments which generate
regular cash flows and where the team has considerable investment experience
and skills. These investments generally include exposure mainly to senior
secured and usually broadly syndicated US loans through structures such as
Collateralized Loan Obligations.
Strong emphasis is given to maintaining sufficient liquidity and low leverage
at the overall portfolio level and to re-invest in existing and new
investments along the economic cycle.
Core pillars of investment strategy are:
- Investing with discipline and patience
- Using data and technology to continuously improve, analyze, and
- Building strong relationships with its counterparties and
employees.
The key challenges to the business and how these are mitigated are detailed in
the "Review of the Business and Risks" section of our Annual Report and
Accounts.
2. Seek to understand and meet shareholder needs and expectations
Livermore encourages two-way communication with its investors. The Chairman
talks regularly with the Group's major shareholders and ensures that their
views are communicated fully to the Board.
The Board recognizes the AGM as an important opportunity to meet private
shareholders. The Chairman and key management are available to listen to the
views of shareholders informally immediately following the AGM.
Where voting decisions are not in line with the Company's expectations the
Board will engage with those shareholders to understand and address any
issues. The Company Secretary is the main point of contact for such matters.
3. Take into account wider stakeholder and social responsibilities and
their implications for long-term success
Livermore is committed to sustainably deliver long term success and creating a
win-win environment for all its stakeholders. It does so by fostering strong
relations and a sense of loyalty and integrity in all aspects of our business.
The Directors receive feedback from its major stakeholders:
1. Shareholders: Generate strong, consistent returns, encourage open
dialogue and continue reporting on investments and business activities
2. Employees: Continue to encourage independent thinking and development,
institute employee engagement feedback to listen and address issues, and
reward competitively and based on performance.
3. Investment and Transaction Counterparties: Active engagement through
individual meetings as well as regular calls and conference attendances.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organization:
Audit, risk and internal control: The Company has an established framework of
internal financial controls, which are designed to ensure that risk of
mis-statement or loss is kept to a minimum. The controls are reviewed
regularly by the Executive Management and the Audit Committee, as well as our
external independent auditors. The external auditors include their review of
internal controls in their "Key Issues Memorandum" and report to the Audit
Committee.
Given the Company's size and the nature of its business, the Board does not
consider that it is necessary to have an internal audit function.
"Review of the Business and Risks" section of our Annual Report and Accounts
details risks to the business and how these are mitigated.
The Board considers risk to the business at every Board meeting (at least 4
meetings are held each year). Both the Board and senior managers are
responsible for reviewing and evaluating risk. The Executive Directors receive
regular reports on trading performance, and quarterly discuss budgets and
forecasts and new risks associated with ongoing trading.
5. Maintain the board as a well- functioning, balanced team led by the chair
Livermore is controlled by the Board of Directors. Richard Rosenberg, the
Non-executive Chairman, is responsible for the running of the Board and Noam
Lanir, the Chief Executive, has executive responsibility for running the
Group's business and implementing Group strategy. Ron Baron, the Chief
Investment Officer, is responsible for the investment implementations and
risks.
All Directors receive regular and timely information of the Group's
operational and financial performance. Relevant information is circulated to
the Directors in advance of meetings. In addition, minutes of the meetings of
the Directors are circulated to the Board of Directors. All Directors have
direct access to the advice and services of the Company Secretary and are able
to take independent professional advice in furtherance of their duties, if
necessary, at the company's expense.
The Board comprises two Executive Directors and two Non-Executive Directors.
The Board considers that all Non- executive Directors bring an independent
judgement to bear notwithstanding the varying lengths of service.
The Board is supported by the Audit and Remuneration Committee. The role of
these Committees is detailed in the "Corporate Governance Statement" section
of our Annual Accounts and Reports.
The Board is committed to maintaining appropriate standards for all the
Company's business activities and ensuring that these standards are set out in
written policies. Key examples of such standards and policies include the
'Market Abuse Regulation Policy" and 'Anti-Bribery and Anti-Corruption Policy"
and our "AIM Rules Compliance Policy".
The Group maintains appropriate insurance cover in respect of actions taken
against the Directors because of their roles, as well as against material loss
or claims against the Group. The insured values and type of cover are
comprehensively reviewed on a periodic basis.
6. Ensure that between them the directors have the necessary up-to-date
experience, skills and capabilities
The Board of Directors' biographies are set out on our website and in the
Annual Report.
The Board is satisfied that, between the Directors, it has an effective and
appropriate balance of skills and experience, including in areas of
investment, business management, corporate governance, tax, and accounting.
With two Non-executive Board members and two Executive Board members, the
Board believes it has the desired balance between independence and alignment
of interest.
All of the Directors are subject to election by shareholders at the first
Annual General Meeting following their appointment to the Board. In accordance
with the Company's Articles of Association Directors are required to seek
re-election at least once every three years.
The Board is responsible to the shareholders for the proper management of the
Group and meetings are held on a regular basis to set the overall direction
and strategy of the Group, to review operational and financial performance and
to discuss the investment environment as well as opportunities and risks. The
Board is provided with key information in a timely manner to enable a proper
assessment of all matters requiring a decision or insight. All key operational
and investment decisions are subject to Board approval.
The Board is supported by Audit and Remuneration Committees which are
considered to have the appropriate skills and knowledge to discharge their
duties and responsibilities effectively.
There were 8 Board or Committee meetings held during the year ended 31
December 2023. Directors' attendance at these meetings was a follows:
Number of meetings attended Board Audit Remuneration
Richard Barry Rosenberg 5 of 5 2 of 2 1 of 1
Noam Lanir 5 of 5 - -
Ron Baron 5 of 5 - -
Augoustinos Papathomas 5 of 5 2 of 2 1 of 1
The Company has effective procedures in place to monitor and deal with
conflicts of interest. The Board is aware of the other commitments and
interests of its Directors, and changes to these commitments and interests are
reported to and, where appropriate, agreed with the rest of the Board.
The Board oversees the process and makes recommendations on all new Board
appointments. Where new Board appointments are considered the search for
candidates is conducted, and appointments are made, on merit, against
objective criteria and with due regard for the benefits of diversity on the
Board, including gender.
The Company Secretary and our Nominated Advisors support the Chairman in
addressing the training and development needs of Directors.
7. Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement
Richard Rosenberg, as Chairman of the Board, has been assessing the individual
contributions of each of the members of the team to ensure that:
- Their contribution is relevant and effective
- That they are committed
- Where relevant, they have maintained their independence.
The performance of board members is currently monitored on an ad-hoc basis and
through individual mentoring and training sessions with the assistance of our
Nominated Adviser. The Company seeks continuous improvement as part of its
considerations for evaluating the performance of the Board.
8. Promote a corporate culture that is based on ethical values and
behaviors
Livermore is committed to good practice and ethical behaviour and we fully
recognize our responsibilities to all of our stakeholders. The Board firmly
believes that sustained success will best be achieved by adhering to our
corporate culture of treating all our stakeholders fairly and with respect.
Accordingly, in dealing with each of the Company's principal stakeholders, we
encourage our staff to operate in an honest and respectful manner.
Livermore is committed to providing a safe and congenial environment that
promotes accountability, respect, and independent thought for its employees
and consultants. As well, the Company has a whistleblower policy that supports
and encourages ethical behavior.
The Board members of the Company lead by example in their personal lives and
to do what is in the best interest of the Company and the community that they
live in.
Richard Rosenberg, Chairman of the Board, is a trustee of a Teenage Cancer
Trust, and regularly cycles and runs to raise funds for the charities he
supports.
Noam Lanir, the CEO and executive director, has been actively involved in
philanthropic activities including working with the Sh'erit ha-Pletah and the
Foundation for the Welfare of Holocaust survivors in Israel.
Ron Baron, the CIO and executive director, founded the Israel Cycling Academy,
a philanthropic venture for the development of cycling in Israel as well as a
professional Pro-continental cycling team.
The Company tries to embody the ethical values of its Board members and
actively looks to contribute to and engage with institutions and people that
share its ethical values and behaviours
9. Maintain governance structures and processes that are fit for purpose
and support good decision- making by the board
The "Corporate Governance Statement" in our Annual Report & Accounts
details the company's governance structures and why they are appropriate and
suitable for the company to support good decision-making by the Board members.
The Board meets in person at least four times a year and at additional times
via teleconference. At each meeting, the members discuss if the current
corporate governance structures are sufficient and what improvements may be
required to be in line with the needs of the Company and the regulatory
environment.
10. Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders.
The Company encourages two-way communication with its investors and aims to
respond to queries received in a timely manner. The Chairman is regularly
available to communicate with the Company's major shareholders and ensures
that their views are communicated fully to the Board.
The Board recognizes the AGM as an important opportunity to meet private
shareholders. The Directors are available to listen to the views of
shareholders informally immediately following the AGM.
A complete index of the disclosures required by the QCA Code, including those
on the Company's website, can be found at
http://www.livermore-inv.com/CorporateGovernance
(http://www.livermore-inv.com/CorporateGovernance) .
Richard Rosenberg, Non-executive Chairman
Communication with Investors
The Directors are available to meet with shareholders throughout the year.
In particular the Executive Directors prepare a general presentation for
analysts and institutional shareholders following the interim and preliminary
results announcements of the Company. The chairman, Richard Rosenberg, is
available for meetings with shareholders throughout the year. The Board
endeavours to answer all queries raised by shareholders promptly.
Shareholders are encouraged to participate in the Annual General Meeting at
which the Chairman will present the key highlights of the Company's
performance. The Board will be available at the Annual General Meeting to
answer questions from shareholders.
Internal Control
The Board is responsible for ensuring that the Company has in place a system
of internal controls and for reviewing its effectiveness. In this context,
control is defined in the policies and processes established to ensure that
business objectives are achieved cost effectively, assets and shareholder
value safeguarded, and that laws and regulations are complied with. Controls
can provide reasonable but not absolute assurance that risks are identified
and adequately managed to achieve business objectives and to minimise material
errors, frauds and losses or breaches of laws and regulations.
The Company operates a sound system of internal control, which is designed to
ensure that the risk of misstatement or loss is kept to a minimum.
Given the Company's size and the nature of its business, the Board does not
consider that it is necessary to have an internal audit function. An internal
audit function will be established as and when the Company is of an
appropriate size.
The Board undertakes a review of its internal controls on an ongoing basis.
Going Concern
The Directors have reviewed the current and projected financial position of
the Company, making reasonable assumptions about interest and distribution
income, future trading performance, valuation projections and debt
requirements. On the basis of this review, the Directors have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the Annual Report and accounts.
Independence of Auditor
The Board undertakes a formal assessment of the auditor's independence each
year, which includes:
· a review of non-audit related services provided to the Company
and related fees;
· discussion with the auditor of a written report detailing all
relationships with the Company and any other parties which could affect
independence or the perception of independence;
· a review of the auditor's own procedures for ensuring
independence of the audit firm and partners and staff involved in the audit,
including the rotation of the audit partner;
· obtaining written confirmation from the auditor that it is
independent; and
· a review of fees paid to the auditor in respect of audit and
non-audit services.
Remuneration Report
The remuneration report has been formed in accordance with the requirements of
AIM rule 19 and is not intended to comply with the UK statutory
requirements.
The Directors' emoluments, benefits and shareholdings during the year ended 31
December 2023 were as follows:
Directors' Emoluments
Each of the Directors has a service contract with the Company.
Director Date of Fees Benefits Total emoluments
agreement US $000 US $000
2023 2022
US $000 US $000
Richard Barry Rosenberg 10 June 2005 56 - 56 90
Noam Lanir 10 June 2005 400 45 445 445
Ron Baron 1 September 2007 350 - 350 350
Augoustinos Papathomas 1 February 2019 33 - 33 46
Directors' Interests
Interests of Directors in ordinary shares
At 31 December 2023 At 31 December 2022
Number of Ordinary Shares Percentage of ordinary share capital Percentage of voting rights * Number of Ordinary Shares Percentage of ordinary share capital Percentage of voting rights *
Noam Lanir 123,048,011 70.39% 74.41% 123,048,011 70.39% 74.41%
Ron Baron 25,456,903 14.56% 15.40% 25,456,903 14.56% 15.40%
Richard Barry Rosenberg 16,046 0.01% 0.01% 16,046 0.01% 0.01%
* after consideration of the treasury shares
Noam Lanir has his interest in ordinary shares through direct or indirect
ownership of the whole issued share capital of Groverton Management Limited.
Further information is provided in note 22 to the financial statements. -
Ron Baron has his interest in ordinary shares through ownership of the whole
issued share capital of Livermore Management Limited.
Remuneration Policy
The Company's policy has been designed to ensure that the Company has the
ability to attract, retain and motivate executive Directors and other key
management personnel to ensure the success of the organization.
The following key principles guide its policy:
· Policy for the remuneration of executive Directors will be
determined and regularly reviewed independently of executive management and
will set the tone for the remuneration of other senior executives.
· The remuneration structure will support and reflect the Company's
stated purpose to maximize long-term shareholder value.
· The remuneration structure will reflect a just system of rewards
for the participants.
· The overall quantum of all potential remuneration components will
be determined by the exercise of informed judgement of the independent
remuneration committee, taking into account the success of the Company and the
competitive global market.
· A significant personal shareholding will be developed in order to
align executive and shareholder interests.
· The assessment of performance will be quantitative and
qualitative and will include exercise of informed judgement by the
remuneration committee within a framework that takes account of sector
characteristics and is approved by shareholders.
· The committee will be proactive in obtaining an understanding of
shareholder preferences.
· Remuneration policy and practices will be as transparent as
possible, both for participants and shareholders
· The wider scene, including pay and employment conditions
elsewhere in the Company, will be taken into account, especially when
determining annual salary increases.
Review of the Business and Risks
Risks
The Board considers that the risks the Shareholders face can be divided into
external and internal risks.
External risks to shareholders and their returns are those that can severely
influence the investment environment within which the Company operates, and
include economic recession, declining corporate profitability, higher
corporate default rates and lower than historical recoveries, rising inflation
and interest rates and excessive stock-market speculation.
The Company's portfolio is exposed to credit risk, interest rate changes,
liquidity risk and volatility particularly in the US. In addition, the
portfolio is exposed to currency risks as some of the underlying portfolio is
invested in assets denominated in non-US currencies while the Company's
functional currency is USD. Investments in certain emerging markets are
especially exposed to governmental and regulatory risks.
The mitigation of these risks is achieved by following micro and macroeconomic
trends and changes, regular monitoring of underlying assets and price
movements and investment diversification. The Company also engages from time
to time in certain hedging activities to mitigate these risks.
As of the date of this report, although inflation rates seem to have come down
towards central bank targets, they are still too high for comfort and
therefore most developed economies remain in a high interest rate environment.
High interest rates for a longer period of time can create increased credit
risk and lead to higher defaults and potential underperformance of our
investments in Collateralized Loan Obligations in the US. The Company has
mitigated risk by limiting reinvestment and retaining higher amounts of cash
in recent years. The Company continues to be conservatively positioned with
52.9m of cash, deposits, and investments in US treasury bills as of 31
December 2023 and plans to maintain strong liquidity and stay debt free.
Recent geopolitical events, especially the 7 October 2023 attack on Israel and
its subsequent response, create heightened risk for the overall investment
environment.
Internal risks to shareholders and their returns are related to Portfolio
risks (investment and geography selection and concentration), balance sheet
risk (gearing) and/or investment mismanagement risks. The Company's portfolio
has a significant exposure to senior secured loans of US companies and
therefore has a concentration risk to this asset class.
A periodic internal review is performed to ensure transparency of Company
activities and investments. All service providers to the Company are regularly
reviewed. The mitigation of the risks related to investments is effected by
investment restrictions and guidelines and through reviews at Board Meetings.
As the portfolio of the Company is currently invested in USD denominated
assets, movements in other currencies are expected to have a limited impact on
the business.
On the asset side, the Company's exposure to interest rate risk is limited to
the interest-bearing deposits and portfolio of bonds and loans in which the
Company invests. Currently, the Company is primarily invested in
sub-investment grade corporate loans through CLOs, which exposes the Company
to credit risk (defaults and recovery rates, loan spreads over base rate) as
well as liquidity risks in the CLO market.
Management monitors liquidity to ensure that sufficient liquid resources are
available to the Company. The Company's credit risk is primarily attributable
to its fixed income portfolio, which is exposed to corporate bonds with a
particular exposure to the financial sector and to US senior secured loans.
Further information on financial risk management is provided in note 25 of the
financial statements.
Share Capital
There was no change in the authorised share capital during the year to 31
December 2023. The authorised share capital is 1,000,000,000 ordinary shares
with no par value.
Related party transactions
Details of any transactions of the Company with related parties during the
year to 31 December 2023 are disclosed in note 22 to the financial statements.
By order of the Board of Directors
Chief Executive Officer
22 May 2024
Independent Auditor's Report to the Members of Livermore Investments Group Limited
Opinion
We have audited the consolidated financial statements of Livermore Investments
Group Limited and its subsidiary Livermore Capital AG (the ''Group''), which
are presented in pages 26 to 55 and comprise the Consolidated Statement of
Financial Position as at 31 December 2023, and the Consolidated Statement of
Profit or Loss, Consolidated Statement of Comprehensive Income, Consolidated
Statement of Changes in Equity and Consolidated Statement of Cash Flows for
the year then ended, and notes to the consolidated financial statements,
including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true
and fair view of the consolidated financial position of the Group as at 31
December 2023, and of its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European
Union.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(ISAs). Our responsibilities under those standards are further described in
the ''Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements'' section of our report. We are independent of the Group in
accordance with the International Ethics Standards Board for Accountants' Code
of Ethics for Professional Accountants (IESBA Code) together with the ethical
requirements that are relevant to our audit of the consolidated financial
statements in Cyprus, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the IESBA Code. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the consolidated financial statements of
the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
Investments' valuation Level 3
The key audit matter How the matter was addressed in our audit
Our audit work included, but was not restricted to:
As per note 7.2 of the consolidated financial statements, the Group has Fund Investments:
financial assets of $12,3m (2022: $14m) classified within the fair value
hierarchy at level 3, as disclosed in note 7, where $6,5m relates to fund In responding to the key audit matter, we performed the following audit
investments and $5,8m to investments in subsidiaries. The fair value of level procedures:
3 financial assets is generally determined on a basis of either third party
valuations, or when not
• obtained an understanding of the valuation methodologies applied
by the Board of directors and assessed their appropriateness for each
investment.
available, adjusted Net Asset (NAV) calculations using inputs from third • obtained third party confirmations indicating either the NAV or
parties. fair value of the financial assets and compared to recorded values and fund's
financial statements.
Due to the use of significant judgments by the Board of Directors, the
existence of unobservable inputs and the significant total value of financial
assets within the level 3 hierarchy, we consider the valuation of these • evaluated the independent professional valuer's competence,
investments as a key audit matter. capabilities and objectivity.
• in cases where the valuations were performed by the Board of
Directors, evaluated the reasonableness of the methodology applied and
verified the inputs used by comparing them to third party sources; and
considered the adequacy of consolidated financial statement disclosures in
relation to the valuation methodologies used for each class of level 3
financial assets.
Investments in Subsidiaries:
In responding to the key audit matter, we performed the following audit
procedures:
• obtained management accounts of the subsidiaries to identify
their NAV; and evaluated any significant change in the fair value of
investment.
• assessed the management accounts of the subsidiaries to
determine whether the disclosed NAV is fairly stated by obtaining portfolio
statements and land valuations from independent valuers.
• evaluated and assessed the valuers' competence, capabilities and
objectivity.
• considered the adequacy of consolidated financial statement
disclosures in relation to the valuation methodologies used for each class of
level 3 financial assets.
Key observations
We concluded that the judgements and estimates used by the management in
determining the fair value of investments were reasonable and the disclosures
made in relation to these matters in the consolidated financial statements
were appropriate.
Other Information
The Board of Directors is responsible for the other information. The other
information comprises the information included in the Highlights, Chairman's
and Chief Executive's Review, Review of Activities, Report of the Directors,
Corporate Governance Statement, Remuneration report, Review of the Business
and Risks, but does not include the consolidated financial statements and our
auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other
information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our
responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated
financial statements, or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors for the Consolidated Financial
Statements
The Board of Directors is responsible for the preparation of consolidated
financial statements that give a true and fair view in accordance with
International Financial Reporting Standards as adopted by the European Union,
and for such internal control as the Board of Directors determines is
necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Board of Directors either intends
to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Group's
financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment
and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material
misstatement of the consolidated financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
· Obtain an understanding of internal control
relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group's internal control.
· Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates and related disclosures
made by the Board of Directors.
· Conclude on the appropriateness of the Board of
Directors' use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group's ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the
related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor's report.
However, future events or conditions may cause the Group to cease to continue
as a going concern.
· Evaluate the overall presentation, structure and
content of the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves a true and fair view.
· Obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Other Matter
This report, including the opinion, has been prepared for and only for the
Group's members as a body and for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for any other purpose or to any other
person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor's
report is Mr Polyvios Polyviou.
Polyvios Polyviou
Certified Public Accountant and Registered Auditor
for and on behalf of
Grant Thornton (Cyprus) Ltd
Certified Public Accountants and Registered Auditors
Limassol, ---22 May 2024
Livermore Investments Group Limited
Consolidated Statement of Financial Position at 31 December 2023
Note 2023 2022
Assets US $000 US $000
Non-current assets
Property, plant and equipment 46 43
Right-of-use assets - 87
Financial assets at fair value through profit or loss 4 68,284 66,576
Financial assets at fair value through other comprehensive income 5 6,498 7,596
Investments in subsidiaries 8 5,780 6,546
--------- ---------
80,608 80,848
Current assets --------- ---------
Trade and other receivables 9 102 72
Financial assets at fair value through profit or loss 4 38,750 39,800
Cash and cash equivalents 10 20,169 10,971
--------- ---------
59,021 50,843
--------- ---------
Total assets 139,629 131,691
--------- ---------
Equity
Share capital 11 - -
Share premium and treasury shares 11 163,130 163,130
Other reserves (22,027) (21,214)
Accumulated losses (5,266) (14,191)
--------- ---------
Total equity 135,837 127,725
--------- ---------
Liabilities
Current liabilities
Trade and other payables 12 3,629 3,733
Lease liability - current portion - 87
Current tax payable 163 146
--------- ---------
3,792 3,966
--------- ---------
Total equity and liabilities 139,629 131,691
--------- ---------
Net asset value per share
Basic and diluted net asset value per share (US $) 14 0.82 0.77
--------- ---------
These financial statements were approved by the Board of Directors on 22 May
2024.
The notes 1 to 27 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Profit or Loss for the year ended 31 December 2023
Note
2023 2022
US $000 US $000
Investment income
Interest and distribution income 16 24,054 23,665
Fair value changes of investments 17 (6,671) (44,637)
------ ------
17,383 (20,972)
Other income 294 -
Operating expenses 18 (3,369) (3,000)
Other expenses 23 (270) -
------ ------
Operating profit / (loss) 14,038 (23,972)
Finance costs 19 (75) (265)
Finance income 19 156 42
------ ------
Profit / (loss) before taxation 14,119 (24,195)
Taxation charge 20 (231) (167)
------ ------
Profit / (loss) for the year 13,888 (24,362)
------ ------
Earnings / (loss) per share
Basic and diluted earnings / (loss) per share (US $) 21 0.08 (0.15)
------ ------
The profit / (loss) for the year is wholly attributable to the owners of the
parent.
The notes 1 to 27 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 December 2023
Note
2023 2022
US $000 US $000
Profit / (loss) for the year 13,888 (24,362)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Foreign exchange gains / (losses) on translation of consolidated subsidiary 59 (29)
Items that are not reclassified subsequently to profit or loss
Financial assets designated at fair value through other comprehensive income - (875) (1,606)
fair value losses
5
------ ------
Total comprehensive income / (loss) for the year 13,072 (25,997)
------ ------
The total comprehensive income / (loss) for the year is wholly attributable to
the owners of the parent.
The notes 1 to 27 form part of these consolidated financial statements.
Livermore Investment Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 December 2023
Note Share Treasury Shares Translation Investments Retained
premium reserve revaluation earnings Total
reserve
US $000 US $000 US $000 US $000 US $000 US $000
Balance at 1 January 2022 169,187 (6,057) 84 (18,110) 32,618 177,722
------- ------- ------ ------ ------ -------
Dividends - - - - (24,000) (24,000)
------- ------- ------ ------ ------ -------
Transactions with owners - - - - (24,000) (24,000)
------- ------- ------ ------ ------ -------
Loss for the year - - - - (24,362) (24,362)
Other comprehensive income:
Financial assets at fair value through other comprehensive income - fair value - - (1,606) - (1,606)
losses
-
Foreign exchange losses on translation of consolidated subsidiary - (29) - - (29)
-
Transfer of realised gains 17 - - - (1,553) 1,553 -
------- ------- ------ ------ ------ -------
Total comprehensive loss for the year - - (29) (3,159) (22,809) (25,997)
------- ------- ------ ------ ------ -------
Balance at 31 December 2022 169,187 (6,057) 55 (21,269) (14,191) 127,725
------- ------- ------ ------ ------ -------
Dividends 13 - - - - (4,960) (4,960)
------- ------- ------ ------ ------ -------
Transactions with owners - - - - (4,960) (4,960)
------- ------- ------ ------ ------ -------
Profit for the year - - - - 13,888 13,888
Other comprehensive income:
Financial assets at fair value through other comprehensive income - fair value - - (875) - (875)
losses
5 -
Foreign exchange gains on translation of consolidated subsidiary - 59 - - 59
-
Transfer of realised losses 17 - - - 3 (3) -
------- ------- ------ ------ ------ -------
Total comprehensive income for the year - - 59 (872) 13,885 13,072
------- ------- ------ ------ ------ -------
Balance at 31 December 2023 169,187 (6,057) 114 (22,141) (5,266) 135,837
------- ------- ------ ------ ------ -------
The notes 1 to 27 form part of these consolidated financial statements.
Livermore Investments Group Limited
Consolidated Statement of Cash Flows for the year ended 31 December 2023
Note 2023 2022
US $000 US $000
Cash flows from operating activities
Profit / (loss) before tax 14,119 (24,195)
Adjustments for
Depreciation 18 98 102
Interest expense 19 55 36
Interest and distribution income 16 (24,054) (23,665)
Bank interest income 19 (156) (42)
Fair value changes of investments 17 6,671 44,637
Exchange differences 19 20 229
---------- ----------
(3,247) (2,898)
Changes in working capital
Increase in trade and other receivables 9 (30) (62)
Decrease in trade and other payables 12 (104) (2,928)
---------- ----------
Cash flows used in operations (3,381) (5,888)
Interest and distributions received 16,19 24,210 23,707
Tax paid (201) (32)
---------- ----------
Net cash from operating activities 20,628 17,787
---------- ----------
Cash flows from investing activities
Acquisition of investments 4,5 (55,237) (74,283)
Proceeds from sale of investments 4,5 48,973 46,729
---------- ----------
Net cash used in investing activities (6,264) (27,554)
---------- ----------
Cash flows from financing activities
Lease liability payments (131) (127)
Interest paid 19 (55) (36)
Dividends paid 13 (4,960) (24,000)
---------- ----------
Net cash used in financing activities (5,146) (24,163)
---------- ----------
Net increase / (decrease) in cash and cash equivalents 9,218 (33,930)
Cash and cash equivalents at the beginning of the year 10,971 45,130
Exchange differences on cash and cash equivalents 19 (20) (229)
---------- ----------
Cash and cash equivalents at the end of the year 10 20,169 10,971
---------- ----------
The notes 1 to 27 form part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
1. General Information
1.1. The Company was incorporated as an international business company and
registered in the British Virgin Islands (BVI) on 2 January 2002 under IBC
Number 475668. The principal legislation under which the Company operates is
the BVI Business Companies Act, 2004. The liability of the members of the
Company is limited.
1.2. The registered office of the Company is located at Trident Chambers,
PO Box 146, Road Town, Tortola, British Virgin Islands.
1.3. The Company is tax resident in the Republic of Cyprus.
1.4. The principal activity of the Company is to carry out investment
activities.
2. Basis of preparation
The consolidated financial statements ("the financial statements") of
Livermore Investments Group Limited have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by the
European Union (EU). The financial statements have been prepared on an
accrual basis (other than for cash flow information) using the significant
accounting policies and measurement bases summarised in note 3, and also on a
going concern basis.
The financial information is presented in US dollars because this is the
currency in which the Company primarily operates (i.e., the Company's
functional currency).
References to the Company hereinafter also include its consolidated subsidiary
(note 8).
The Directors have reviewed the accounting policies used by the Company and
consider them to be the most appropriate.
3. Accounting Policies
The significant accounting policies applied in the preparation of the
financial statements are as follows:
3.1. Adoption of new and revised IFRS
As from 1 January 2023, the Company adopted any applicable new or revised IFRS
and relevant amendments and interpretations which became effective, and also
were endorsed by the EU. This adoption did not have any material impact on the
Company's financial statements.
The following IASB documents were issued by the date of authorisation of these
financial statements but are not yet effective for the year ended 31 December
2023, or have not yet been endorsed by the EU by 31 December 2023:
Endorsed by EU IASB Effective date
· IFRS 19 "Subsidiaries without Public Accountability: Disclosures" No 1 January 2027
· IFRS 18 "Presentation and Disclosure in Financial Statements" No 1 January 2027
· Amendments to IAS 21: "The Effects of Changes in Foreign Exchange No 1 January 2025
Rates: Lack of Exchangeability"
· Amendments to IAS 7 and IFRS 7: "Supplier Finance Arrangements" No 1 January 2024
· Amendments to IFRS 16: "Lease Liability in a Sale and Leaseback" Yes 1 January 2024
· Amendments to IAS 1: "Classification of Liabilities as Current or Yes 1 January 2024
Non-current"
· Amendments to IAS 1: "Non-current Liabilities with Covenants" Yes 1 January 2024
· Amendment to IFRS 10, and IAS 28: "Sale or Contribution of Assets No postponed indefinitely
between an Investor and its Associate or Joint Venture"
· IFRS 14: "Regulatory Deferral Accounts" No 1 January 2016
IFRS 18 is expected to affect the presentation of the Company's financial
statements when becomes effective, however the Directors have not yet assessed
the magnitude of its impact. The remaining pronouncements when become
effective are not expected to 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 one of its subsidiaries
providing such services (note 8 shows further details of the consolidated and
unconsolidated subsidiaries).
Investments in unconsolidated subsidiaries are initially recognised at their
fair value and subsequently measured at fair value through profit or loss.
Subsequently, any gains or losses arising from changes in their fair value are
included in profit or loss for the year.
Dividends and other distributions from unconsolidated subsidiaries are
recognised as income when the Company's right to receive payment has been
established.
A subsidiary that is not an investment entity itself and which provides
services that relate to the Company's investment activities is consolidated
rather than included within the investments in subsidiaries measured at fair
value through profit or loss.
The financial statements of the consolidated subsidiary are prepared using
uniform accounting policies. Where necessary, adjustments are made to the
financial statements of consolidated subsidiary to bring its accounting
policies into line with those used by the Company. The consolidated subsidiary
has a reporting date of 31 December.
All transactions between the Company and its consolidated subsidiary and all
resulting balances, income and expenses are eliminated on consolidation.
The results and cash flows of any consolidated subsidiary acquired or disposed
of during the year are consolidated from the effective date of acquisition or
up to the effective date of disposal.
3.3. Interest and distribution income
· Interest income is recognised based on the effective interest
method.
· Distribution income is recognised on the date that the Company's
right to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
3.4. Foreign currency
The financial statements of the Company are presented in USD, which is the
currency of the primary economic environment in which it operates (its
functional currency).
Transactions in foreign currencies are recorded at the rates of exchange
prevailing on the dates of the transaction. Monetary assets and liabilities
denominated in non-functional currencies are translated into functional
currency using year-end spot foreign exchange rates. Non-monetary assets and
liabilities are translated upon initial recognition using exchange rates
prevailing at the dates of the transactions. Non-monetary assets that are
measured in terms of historical cost in foreign currency are not subsequently
re-translated.
Gains and losses arising on the settlement of monetary items and on the
re-translation of monetary items are included in the profit or loss for the
year. Those that arise on the re-translation of non-monetary items carried at
fair value are included in the profit or loss of the year as part of the fair
value gain or loss except for differences arising on the re-translation of
non-monetary financial assets designated at fair value through other
comprehensive income in respect of which gains and losses are recognised in
other comprehensive income. For such non-monetary items any exchange
component of that gain or loss is also recognised in other comprehensive
income.
The results and financial position of the consolidated subsidiary, which has a
functional currency of Swiss Francs, are translated into the presentation
currency as follows:
(a) assets and liabilities are translated at the closing rate at the
reporting date;
(b) income and expenses and also cash flows are translated at an average
exchange rate (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which
case the items are translated at the rates prevailing at the dates of the
transactions); and
(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.
3.5. Taxation
Current tax is the tax currently payable based on taxable profit for the year
in accordance with the applicable tax laws.
Current and deferred tax assets and liabilities are calculated at tax rates
that are expected to apply to their respective period of realisation, provided
they are enacted or substantively enacted as at the reporting date.
3.6. Equity instruments
Equity instruments issued by the Company are recorded at proceeds received,
net of direct issue costs.
The share premium account includes any premiums received on the initial
issuing of the share capital. Any transaction costs associated with the
issuing of shares are deducted from the premium received.
Own equity instruments purchased by the Company, or its consolidated
subsidiary are recorded as treasury shares at the consideration paid,
including transaction costs, and they are deducted from total equity until
they are sold or cancelled. Where such shares are subsequently sold, any
consideration received is included in total equity.
3.7. Financial assets
Financial assets are recognised when the Company becomes a party to the
contractual provisions of the financial instrument.
A financial asset is derecognised only where the contractual rights to the
cash flows from the asset expire or the financial asset is transferred, and
that transfer qualifies for derecognition. A financial asset is transferred
if the contractual rights to receive the cash flows of the asset have been
transferred or the Company retains the contractual rights to receive the cash
flows of the asset but assumes a contractual obligation to pay the cash flows
to one or more recipients. A financial asset that is transferred qualifies
for derecognition if the Company transfers substantially all the risks and
rewards of ownership of the asset, or if the Company neither retains nor
transfers substantially all the risks and rewards of ownership but does
transfer control of that asset.
The Company classifies its financial assets in the following measurement
categories:
(a) those to be measured at fair value through profit or loss;
(b) those to be measured at fair value through other comprehensive
income; and
(c) those to be measured at amortised cost.
At initial recognition, the Company measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at fair
value through profit or loss are expensed in profit or loss.
Financial assets at fair value through profit or loss
The Company classifies the following financial assets at fair value through
profit or loss:
(a) equity investments that are held for trading;
(b) other equity investments for which the Directors have not elected to
recognise fair value gains and losses through other comprehensive income; and
(c) debt investments that do not qualify for measurement at either
amortised cost or at fair value through other comprehensive income.
All financial assets within this category are measured at their fair value,
with changes in value recognised in the profit or loss when incurred.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (OCI)
comprise equity securities which are not held for trading, and for which the
Company has made an irrevocable election at initial recognition to recognise
changes in fair value through OCI rather than profit or loss.
Where the Company's management has elected to present fair value gains and
losses on equity investments in other comprehensive income, there is no
subsequent reclassification of fair value gains and losses to profit or loss.
Dividends from such investments continue to be recognised in profit or loss
when the Company's right to receive payments is established.
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at
amortised cost. A gain or loss on a financial asset that is measured at
amortised cost is recognised in profit or loss when the asset is derecognised
or impaired. Interest income from these financial assets is recognised based
on the effective interest rate method.
The classification of debt instruments depends on the entity's business model
for managing the financial assets and the contractual terms of the cash flows.
Financial assets with embedded derivatives are considered in their entirety
when determining whether their cash flows are solely payment of principal and
interest.
Impairment
The Company assesses the expected credit losses associated with its assets
carried at amortised cost, on a forward-looking basis. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk. For trade and other receivables only, the Company applies the
simplified approach permitted by IFRS 9, which permits expected lifetime
losses to be recognised from initial recognition of the receivables.
Write offs
The Company writes off a financial asset when there is information indicating
that the counterparty is in severe financial difficulty and there is no
realistic prospect of recovery, e.g., when the counterparty has been placed
under liquidation or has entered into bankruptcy proceedings. Financial assets
written off may still be subject to enforcement activities, taking into
account legal advice where appropriate. Any recoveries made are recognised in
profit or loss.
3.8. Financial liabilities
Financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the financial instrument.
A financial liability is derecognised when it is extinguished, discharged,
cancelled or expires.
Financial liabilities at amortised cost
Financial liabilities are measured initially at fair value plus transaction
costs.
After initial recognition financial liabilities are measured at amortised cost
using the effective interest rate method.
3.9. Cash and cash equivalents
Cash comprises cash in hand and on demand deposits with banks. Cash
equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash. They include unrestricted short-term
bank deposits originally purchased with maturities of three months or less.
3.10. Segment reporting
In making investment decisions, Management assesses individual investments and
then, in analysing their performance, it receives and uses information for
each investment product separately rather than based on any segmental
information. Given that, Management regards that all the Company's activities
fall under a single operating segment.
3.11. Critical accounting judgments and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the
use of accounting estimates and requires management to exercise its judgement
in the process of applying the Company's accounting policies. It also requires
the use of assumptions that affect the reported amounts of assets and
liabilities and disclosures at the reporting date and the reported amounts of
revenues and expenses during the reporting period. Although these estimates
are based on management's best knowledge of current events and actions, actual
results may ultimately differ.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Critical accounting judgements
(i) Classification of financial assets
Management exercises significant judgement in determining the appropriate
classification of the financial assets of the Company. The Directors determine
the appropriate classification of the Company's financial assets based on
Livermore's business model. An entity's business model refers to how an entity
manages its financial assets in order to generate cash flows, considering all
relevant and objective evidence. The factors considered include the
contractual terms and characteristics which are very carefully examined, and
also the Company's intentions and expected needs for realisation of the
financial assets.
All investments (except from certain equity instruments that are designated at
fair value through other comprehensive income) are classified as financial
assets at fair value through profit or loss, because this reflects more fairly
the way these assets are managed by the Company. The Company's business is
investing in financial assets with a view to profiting from their total return
in the form of income and capital growth. This portfolio of financial assets
is managed, and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy, and information about the portfolio is
provided internally on that basis to the Company's Board of Directors and
other key management personnel.
(ii) Consolidation of subsidiary
Management exercised significant judgment in determining which of the
subsidiaries that are not investment entities themselves, provide services
that relate to the Company's investment activities and therefore need to be
consolidated rather than included within the investments in subsidiaries
measured at fair value through profit or loss.
Estimation uncertainty
Management, in preparing these financial statements, has not made any
significant estimates with a risk of material change in value in the next
financial period.
4. Financial assets at fair value through profit or loss
2023 2022
US $000 US $000
Non-current assets
Fixed income investments (CLOs) 68,284 66,576
------ ------
Current assets
Fixed income investments 36,718 37,519
Public equity investments 2,032 2,281
------ ------
38,750 39,800
------ ------
For description of each of the above categories, refer to note 6.
The above investments represent financial assets that are mandatorily measured
at fair value through profit or loss.
The Company treats its investments in the loan market through CLOs as
non-current investments as the Company generally intends to hold such
investments over a period longer than twelve months.
The movement in financial assets at fair value through profit or loss during
the year was as follows:
2023 2022
US $000 US $000
At 1 January 106,376 119,220
Purchases 53,463 73,963
Sales (46,976) (19,662)
Settlements - (23,514)
Fair value losses (5,829) (43,631)
------ ------
At 31 December 107,034 106,376
------ ------
Credit Suisse, the second-largest bank in Switzerland, collapsed in March 2023
and Switzerland's regulatory authorities approved its takeover by the largest
Swiss bank UBS. At that time Livermore owned USD 0.8m nominal of Credit Suisse
Additional Tier 1 bonds purchased at a cost of USD 0.675m (included within
Fixed income investments). As a result of the takeover, the bonds were
permanently written down and the Company suffered a loss in 2023 of USD 0.578m
(included within fair value losses above).
5. Financial assets at fair value through other comprehensive
income
2023 2022
US $000 US $000
Non-current assets
Fund investments 6,498 7,596
------ ------
For description of the above category, refer to note 6.
The above investments are non-trading equity investments that have been
designated at fair value through other comprehensive income.
The movement in financial assets at fair value through other comprehensive
income during the year was as follows:
2023 2022
US $000 US $000
At 1 January 7,596 12,435
Purchases 1,774 320
Settlements (1,997) (3,553)
Fair value losses (875) (1,606)
------ ------
At 31 December 6,498 7,596
------ ------
6. Financial assets at fair value
The Company allocates its non-derivative financial assets at fair value (notes
4 and 5) as follows:
· Fixed income investments relate to fixed and floating rate bonds,
perpetual bank debt, investments in the loan market through CLOs, and
investments in open warehouse facilities.
· Public equity investments relate to investments in shares of
companies listed on public stock exchanges.
· Fund investments relate to investments in the form of equity
purchases in both high growth opportunities in emerging markets and deep value
opportunities in mature markets. The Company generally invests directly in
prospects where it can exert influence. Main investments under this category
are in the fields of real estate.
7. Fair value measurements of financial assets and liabilities
The table in note 7.2 presents financial assets and liabilities measured at
fair value in the consolidated statement of financial position in accordance
with the fair value hierarchy. This hierarchy groups financial assets and
liabilities into three levels based on the significance of inputs used in
measuring the fair value of the financial assets and liabilities. The fair
value hierarchy has the following levels:
· Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement
date;
· Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or indirectly;
and
· Level 3: unobservable inputs for the asset or liability.
The level within which the financial asset is classified is determined based
on the lowest level of significant input to the fair value measurement.
7.1 Valuation of financial assets
· Fixed Income Investments (other than CLOs) and Public Equity
Investments are valued per their closing market prices on quoted exchanges, or
as quoted by market maker.
· CLOs are valued 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.
Investments in open warehouse facilities that have not yet been converted to
CLOs, are valued based on an adjusted net asset valuation.
· Fund investments are valued using market valuation techniques as
determined by the Directors, mainly on the basis of valuations reported by
third-party managers of such investments. Real Estate entities are valued by
independent qualified property valuers with substantial relevant experience on
such investments. Underlying property values are determined based on their
estimated market values.
· Investments in subsidiaries are valued at fair value as determined on
a net asset valuation basis. The Company has determined that the reported net
asset value of each subsidiary represents its fair value at the end of the
reporting period.
7.2 Fair value hierarchy
Financial assets measured at fair value are grouped into the fair value
hierarchy as follows:
2023 2023 2023 2023 2022 2022 2022 2022
US $000 US $000 US $000 US $000 US $000 US $000 US $000 US $000
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Fixed income investments 36,718 68,284 - 105,002 37,519 66,576 - 104,095
Fund investments - - 6,498 6,498 - - 7,596 7,596
Public equity investments 2,032 - - 2,032 2,281 - - 2,281
Investments in subsidiaries - - 5,780 5,780 - - 6,546 6,546
------ ------ ------ ------ ------ ------ ------ ------
38,750 68,284 12,278 119,312 39,800 66,576 14,142 120,518
------ ------ ------ ------ ------ ------ ------ ------
The Company has no financial liabilities measured at fair value.
The methods and valuation techniques used for the purpose of measuring fair
value are unchanged compared to the previous reporting year.
No financial assets have been transferred between different levels.
Financial assets within level 3 can be reconciled from beginning to ending
balances as follows:
At fair value At fair value Investments Total
through OCI - Fund investments through in subsidiaries
profit or loss - Fixed Income
investments
US $000 US $000 US $000 US $000
At 1 January 2022 12,435 7,584 7,196 27,215
Purchases 320 15,930 356 16,606
Settlement (3,553) (23,514) - (27,067)
Losses recognised in:
- Profit or loss - - (1,006) (1,006)
- Other comprehensive income (1,606) - - (1,606)
------ ------ ------ ------
At 1 January 2023 7,596 - 6,546 14,142
Purchases 1,774 - 76 1,850
Settlement (1,997) - - (1,997)
Losses recognised in:
- Profit or loss - - (842) (842)
- Other comprehensive income (875) - - (875)
------ ------ ------ ------
At 31 December 2023 6,498 - 5,780 12,278
------ ------ ------ ------
The above losses recognised can be allocated as follows:
At fair value Investments Total
through OCI - Fund investments in subsidiaries
2022 US $000 US $000 US $000
Profit or loss
- Financial assets held at year-end - (1,006) (1,006)
Other comprehensive income
- Financial assets held at year-end (1,606) - (1,606)
------ ------ ------
Total losses for 2022 (1,606) (1,006) (2,612)
------ ------ ------
At fair value Investments Total
through OCI - Fund investments in subsidiaries
2023 US $000 US $000 US $000
Profit or loss
- Financial assets held at year-end - (842) (842)
Other comprehensive income
- Financial assets held at year-end (875) - (875)
------ ------ ------
Total losses for 2023 (875) (842) (1,717)
------ ------ ------
The Company has not developed any quantitative unobservable inputs for
measuring the fair value of its level 3 financial assets at 31 December 2023
and 2022. Instead, the Company used prices from third-party pricing
information without adjustment.
Fund investments within level 3 represent investments in private equity funds.
Their value has been determined by each fund manager based on the funds' net
asset value. Each fund's net asset value is primarily driven by the fair value
of its underlying investments. In all cases, considering that such investments
are measured at fair value, the carrying amounts of the funds' underlying
assets and liabilities are considered as representative of their fair values.
Investments in subsidiaries have been valued based on their net asset
position. The main assets of the subsidiaries represent investments in the
fields of real estate which are measured at fair value and receivables from
the Company itself as well as third parties. Their net asset value is
considered as a fair approximation of their fair value.
A reasonable change in any individual significant input used in the level 3
valuations is not anticipated to have a significant change in fair values as
above.
8. Investments in subsidiaries
2023 2022
Unconsolidated subsidiaries US $000 US $000
At 1 January 6,546 7,196
Additions 76 356
Fair value losses (842) (1,006)
------ ------
At 31 December 5,780 6,546
------ ------
Additions in both 2023 and 2022 relate to the fair value of amounts receivable
from the Company's unconsolidated subsidiary Sandhirst Ltd, that were waived
by the Company (note 22).
Details of the investments in which the Company has a controlling interest at
31 December 2023 are as follows:
Name of Subsidiary Place of incorporation Holding Voting rights and shares held Principal activity
Consolidated subsidiary
Livermore Capital AG Switzerland Ordinary shares 100% Administration services
Unconsolidated subsidiaries
Livermore Properties 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
PNG Trading Limited Cyprus Ordinary shares 100% Trading in investments
PNG Trading Limited was established on 11 October 2023 as a wholly owned
subsidiary of the Company. Until 31 December 2023 the subsidiary remained
inactive. It became active in 2024.
9. Trade and other receivables
2023 2022
US $000 US $000
Financial items
Amounts due from related parties (note 22) 16 -
Non-financial items
Prepayments 78 66
VAT receivable 8 6
------ ------
102 72
------ ------
No receivable amounts have been written-off during either 2023 or 2022.
10. Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows
comprise the following at the reporting date:
2023 2022
US $000 US $000
Demand deposits 20,169 10,971
------ ------
Cash at bank 20,169 10,971
------ ------
The Company does not have any bank overdraft balances either at 31 December
2023 or 2022.
11. Share capital
Authorised share capital
The Company has authorised share capital of 1,000,000,000 ordinary shares with
no par value, and no restrictions.
Issued share capital Number of shares Share premium
US $000
Ordinary shares with no par value
At 31 December 2023 and 2022 174,813,998 169,187
---------- ----------
Treasury shares Number of shares
US $000
At 31 December 2022 and 2023 9,458,577 6,057
---------- ----------
In the consolidated statement of financial position, the amount included as
share premium and treasury shares comprises of:
2023 2022
US $000 US $000
Share premium 169,187 169,187
Treasury shares (6,057) (6,057)
-------- --------
163,130 163,130
-------- --------
12. Trade and other payables
2023 2022
US $000 US $000
Financial items
Trade payables 229 63
Amounts due to related parties (note 22) 3,058 3,283
Legal settlement due (note 23) 270 -
Accrued expenses 72 387
------ ------
3,629 3,733
------ ------
13. Dividend
On 21 November 2023, the Company announced an interim dividend of USD 4.9m
(USD 0.03 per share) to members on the register as at 01 December 2023. The
dividend was paid on 29 December 2023.
The Board of Directors will decide future dividends based on profitability,
liquidity requirements, portfolio performance, market conditions, and the
share price of the Company relative to its NAV.
14. Net asset value per share
Net asset value per share has been calculated by dividing the net assets
attributable to ordinary shareholders by the closing number of ordinary shares
in issue during the relevant financial periods.
2023 2022
Net assets attributable to ordinary shareholders (USD 000) 135,837 127,725
------------- -------------
Closing number of ordinary shares in issue 165,355,421 165,355,421
------------- -------------
Basic net asset value per share (USD) 0.82 0.77
------------- -------------
Number of Shares
Ordinary shares 174,813,998 174,813,998
Treasury shares (9,458,577) (9,458,577)
------------- -------------
Closing number of ordinary shares in issue 165,355,421 165,355,421
------------- -------------
The diluted net asset value per share equals the basic net asset value per
share since no potentially dilutive shares exist at 31 December 2023 and 2022.
15. Segment reporting
The Company's activities fall under a single operating segment.
The Company's investment income and its investments are divided into the
following geographical areas:
2023 2022
Investment income / (losses) US $000 US $000
Other European countries (132) (2,956)
United States 18,423 (16,320)
India (7) -
Asia (901) (1,696)
------- -------
17,383 (20,972)
------- -------
Investments
Other European countries 5,989 6,850
United States 105,854 105,577
India 140 -
Asia 7,329 8,091
------- -------
119,312 120,518
------- -------
Investment income / (losses), comprising interest and distribution income as
well as fair value gains or losses on investments, is allocated on the basis
of the issuer's location. Investments are also allocated based on the issuer's
location.
The Company has no significant dependencies, in respect of its investment
income, on any single issuer.
16. Interest and distribution income
2023 2022
US $000 US $000
Interest from investments 1,921 1,207
Distribution income 22,133 22,458
------ ------
24,054 23,665
------ ------
Interest and distribution income is analysed between different categories of
financial assets, as follows:
2023 2022
Interest Distribution income Total Interest Distribution income Total
Financial assets at fair value US $000 US $000 US $000 US $000 US $000 US $000
through profit or loss
Fixed income investments 1,921 21,690 23,611 1,207 22,282 23,489
Public equity investments - 443 443 - 176 176
------ ------ ------ ------ ------ ------
1,921 22,133 24,054 1,207 22,458 23,665
------ ------ ------ ------ ------ ------
The Company's distribution income derives from multiple issuers. The Company
does not have concentration to any single issuer.
17. Fair value changes of investments
2023 2022
US $000 US $000
Fair value losses on financial assets through profit or loss (5,808) (43,782)
Fair value losses on investments in subsidiaries (842) (1,006)
Fair value (losses) / gains on derivatives (21) 151
------ ------
(6,671) (44,637)
------ ------
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 2023 Disposed in 2022
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 513 972 1,485 (5) 524 519
Public equities 41 - 41 1,430 62 1,492
Derivatives (21) - (21) 151 - 151
------ ------ ------ ------ ------ ------
533 972 1,505 1,576 586 2,162
------ ------ ------ ------ ------ ------
Financial assets at fair value through OCI
Private equities (3) - (3) 1,553 - 1,553
------ ------ ------ ------ ------ ------
530 972 1,502 3,129 586 3,715
------ ------ ------ ------ ------ ------
* difference between disposal proceeds and original acquisition cost
18. Operating expenses
2023 2022
US $000 US $000
Directors' fees and expenses 884 932
Other salaries and expenses 234 237
Professional fees 1,156 822
Legal expenses 6 13
Bank custody fees 156 139
Office costs 276 237
Depreciation 98 102
Other operating expenses 479 441
Audit fees 78 75
Tax fees 2 2
------ ------
3,369 3,000
------ ------
Throughout 2023 the Company employed 4 members of staff (2022: 4). Two of
those members are the Company's executive Directors.
Other salaries and expenses include USD 20,034 of social insurance and similar
contributions (2022: USD 18,802), as well as USD 5,002 of defined
contributions plan costs (2022: USD 4,508).
19. Finance costs and income
2023 2022
US $000 US $000
Finance costs
Bank interest expense 55 36
Foreign exchange losses 20 229
------ ------
75 265
------ ------
Finance income
Bank interest income 156 42
------ ------
20. Taxation
2023 2022
US $000 US $000
Current tax charge 231 167
------ ------
The Company is a tax resident in the Republic of Cyprus and is subject to
taxation under the tax laws and regulations in Cyprus.
The current tax charge relates to the results of the Company for 2023, as
explained above, and the Company's consolidated subsidiary in Switzerland
(note 8).
21. Earnings / (loss) per share
The basic earnings / (loss) per share has been calculated by dividing the
profit / (loss) for the year attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares in issue of the
Company during the relevant financial year.
2023 2022
Profit / (loss) for the year attributable to ordinary shareholders of the 13,888 (24,362)
parent (USD 000)
------------- -------------
Weighted average number of ordinary shares outstanding 165,355,421 165,355,421
------------- -------------
Basic earnings / (loss) per share (USD) 0.08 (0.15)
------------- -------------
The diluted earnings / (loss) per share equals the basic earnings / (loss) per
share since no potentially dilutive shares were in existence during 2023 and
2022.
22. Related party transactions
The Company is controlled by Groverton Management Ltd, an entity owned by Noam
Lanir, which at 31 December 2023 held 74.41% (2022: 74.41%) of the Company's
voting rights.
2023 2022
US $000 US $000
Amounts receivable from key management
Directors' current accounts 16 - (1)
------ ------
Amounts payable to unconsolidated subsidiary
Livermore Israel Investments Ltd (3,046) (3,046) (2)
------ ------
Amounts payable to key management
Directors' current accounts (12) (88) (2)
------ ------
Amounts payable to other related party
Loan payable - (149) (3)
------ ------
Key management compensation
Short term benefits
Executive Directors' fees 795 795 (4)
Non-executive Directors' fees 89 87
Non-executive Directors' reward payments - 50
Other key management fees 408 385 (5)
------ ------
1,292 1,317
------ ------
(1) The Directors' current accounts with debit balances are interest free,
unsecured, and have no stated repayment date.
(2) The amounts payable to unconsolidated subsidiary and Directors current
accounts with credit balances are interest free, unsecured, and have no stated
repayment date.
(3) A loan of USD 0.149m was payable to a related company (under common
control) Chanpak Ltd. During 2023, the right to receive the loan amount was
assigned by Chanpak Ltd to Noam Lanir. At the same time, the Company agreed
with Noam Lanir to transfer the outstanding loan amount to his Director
current account. This loan in 2022 was included within trade and other
payables (note 12).
(4) These payments were made directly to companies which are related to
the Directors.
(5) Other key management fees are included within professional fees (note
18).
During 2023, the Company waived a receivable amount of USD 0.076m from its
subsidiary Sandhirst Ltd, as a means of capital contribution to the
subsidiary. Similarly in 2022, the Company waived a receivable amount of USD
0.356m, as a means of capital contribution to the subsidiary (note 8).
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 2023 or 2022.
23. Litigation
Fairfield Sentry Ltd vs custodian bank and beneficial owners
One of the custodian banks that the Company used faced a litigation in a US
court with a claim up to USD 2.1m plus interest 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 proved to
be successful, Livermore would have to compensate the custodian bank since the
transaction was carried out on Livermore's behalf. The same case was also
filed in BVI where the Privy Council ruled against the plaintiffs.
In December 2023, Livermore came into an out-of-court settlement agreement for
USD 0.27m, which was fully paid in January 2024.
24. Commitments
The Company has expressed its intention to provide financial support to its
subsidiaries, where necessary, to enable them to meet their obligations as
they fall due.
Other than the above, the Company has no capital or other commitments at 31
December 2023.
25. 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 26.
Risk objectives and policies
The objective of the Company is to achieve growth of shareholder value, in
line with reasonable risk, taking into consideration that the protection of
long-term shareholder value is paramount. The policy of the Board is to
provide a framework within which the investment manager can operate and
deliver the objectives of the Company.
Risks associated with financial instruments
Foreign currency risk
Foreign currency risks arise in two distinct areas which affect the valuation
of the investment portfolio:
1) where an investment is denominated and paid for in a foreign currency; and
2) where an investment has substantial exposure to non-US Dollar underlying
assets or cash flows denominated in a foreign currency.
The Company in general does not hedge its currency exposure. The Company
discretionally and partially hedges against foreign currency movements
affecting the value of the investment portfolio based on its view on the
relative strength of certain currencies. Any hedging transactions represent
economic hedges; the Company does not apply hedge accounting in any case.
Management monitors the effect of foreign currency fluctuations through the
pricing of the investments. The Company's exposure to financial instruments
denominated in foreign currencies is the following:
2023 2023 2023 2022 2022 2022
US $000
US $000
US $000
US $000
US $000
US $000
Financial assets Financial Net Financial assets Financial Net value
liabilities value liabilities
British Pounds (GBP) 2,867 - 2,867 2,624 (122) 2,502
Euro 2,083 (58) 2,025 127 (89) 38
Swiss Francs (CHF) 10 (88) (78) 1,509 (70) 1,439
Israel Shekels (ILS) 4,690 (3,046) 1,644 5,451 (3,046) 2,405
Japanese Yen (JPY) 4,661 - 4,661 - - -
Others 21 - 21 - - -
------ ------ ------ ------ ------ ------
Total 14,332 (3,192) 11,140 9,711 (3,327) 6,384
------ ------ ------ ------ ------ ------
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 2023 would have the following impact. A 10%
decrease of the following currencies against USD would have an approximately
equal but opposite impact.
2023 2023 2023 2022 2022 2022
US $000
US $000
US $000
US $000
US $000
US $000
Profit or loss Other comprehensive income Equity Profit or loss Other comprehensive income Equity
British Pounds (GBP) 194 93 287 250 - 250
Euro 202 - 202 4 - 4
Swiss Francs (CHF) (8) - (8) 144 - 144
Israel Shekels (ILS) 164 - 164 240 - 240
Japanese Yen (JPY) 466 - 466 - - -
------ ------ ------ ------ ------ ------
Total 1,018 93 1,111 638 - 638
------ ------ ------ ------ ------ ------
The above analysis assumes that all other variables in particular, interest
rates, remain constant.
Interest rate risk
The Company is exposed to interest rate risk on its interest-bearing
instruments which are affected by changes in market interest rates.
At 31 December 2023 and 31 December 2022, 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 affected by interest rate changes are as
follows:
2023 2022
US $000
US $000
Financial assets - subject to:
- fair value changes 4,067 4,616
- interest changes 20,169 10,971
------ ------
Total 24,236 15,587
------ ------
An increase of 1% (100 basis points) in interest rates would have the
following impact in profit or loss and consequently to equity as well. An
equivalent decrease would have an approximately equal but opposite impact.
There would be no impact in other comprehensive income.
2023 2022
US $000
US $000
Profit or loss Profit or loss
Financial assets
- fair value changes (533) (657)
- interest changes 202 110
------ ------
Total (331) (547)
------ ------
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 would result in a 8.35% change in the net asset value at 31 December
2023 (2022: 6.67%), and would have the following impact in profit or loss and
consequently to equity as well (either positive or negative, depending on the
corresponding sign of the change). There would be no impact in other
comprehensive income.
2023 2023 2022 2022
US $000
US $000
US $000
US $000
Profit or loss Other comprehensive income Profit or loss Other comprehensive income
Financial assets at fair value through other comprehensive income
- 650 - 760
Financial assets at fair value through profit or loss
10,699 - 7,758 -
------ ------ ------ ------
10,699 650 7,758 760
------ ------ ------ ------
Derivatives
The Investment Manager may use derivative instruments in order to mitigate
market risk or to take a directional investment. These provide a limited
degree of protection and would not materially impact the portfolio returns if
a large market movement did occur.
No derivatives were held either at 31 December 2023 or 2022.
Credit risk
The Company invests in a wide range of securities with various credit risk
profiles including investment grade securities and sub investment grade
positions. The investment manager mitigates the credit risk via
diversification across issuers. However, the Company is exposed to a migration
of credit rating, widening of credit spreads and default of any specific
issuer.
The Company only transacts with regulated institutions on normal market terms
which are trade date plus one to three days. The levels of amounts outstanding
from brokers are regularly reviewed by the management. The duration of credit
risk associated with the investment transactions is the period between the
date the transaction took place, the trade date and the date the stock and
cash are transferred, the settlement date. The level of risk during the period
is the difference between the value of the original transaction and its
replacement with a new transaction.
The Company is mainly exposed to credit risk in respect of its fixed income
investments (mainly CLOs) and to a lesser extend in respect of its financial
assets at amortised cost, and other instruments held for trading (perpetual
bonds).
The Company has exposure to US senior secured loans and to a lesser degree
emerging market loans through CLO equity tranches as well as warehouse first
loss tranches. These loans are primarily non-investment grade loans or
interests in non-investment grade loans, which are subject to credit risk
among liquidity, market value, interest rate, reinvestment and certain other
risks. It is anticipated that these non-investment grade loans generally will
be subject to greater risks than investment grade corporate obligations.
A non-investment grade loan or debt obligation or an interest in a
non-investment grade loan is generally considered speculative in nature and
may become a defaulted security for a variety of reasons. A defaulted security
may become subject to either substantial workout negotiations or
restructuring, which may entail, among other things, a substantial reduction
in the interest rate, a substantial write-down of principal, and a substantial
change in the terms, conditions and covenants with respect to such defaulted
security. In addition, such negotiations or restructuring may be quite
extensive and protracted over time, and therefore may result in substantial
uncertainty with respect to the ultimate recovery on such defaulted security.
Bank loans have historically experienced greater default rates than has been
the case for investment grade securities.
The Company has no investment in sovereign debt at 31 December 2023 or 2022.
No collaterals are held by the Company itself in relation to the Company's
financial assets subject to credit risk.
The Company's maximum credit risk exposure at 31 December 2023 and 2022 is as
follows:
2023 US $000 2022 US $000
Financial assets:
At amortised cost:
Trade and other receivables 16 -
Cash at bank 20,169 10,971
At fair value through profit or loss 104,955 104,099
------ ------
125,140 115,070
------- -------
The fair values of the above financial assets at fair value through profit or
loss are also affected by the credit risk of those instruments. However, it is
not practical to provide an analysis of the changes in fair values due to the
credit risk impact for the year or previous periods, nor to provide any
relevant sensitivity analysis.
At 31 December 2023 and 2022 the credit rating distribution of the Company's
asset portfolio subject to credit risk was as follows:
Rating 2023 2022
US $000 Percentage US $000 Percentage
AA+ 32,651 26.1% 28,800 25.0%
AA 11,932 9.5% 9,812 8.5%
A 6,266 5.0% 446 0.5%
B 3,979 3.2% 5,347 4.6%
B+ 765 0.6% 735 0.6%
BB 2,466 2.0% 6,108 5.3%
BB+ 845 0.7% 842 0.7%
BBB 1,746 1.4% 908 0.8%
BB- 10,402 8.3% 805 0.7%
BBB- 4,999 4.0% 618 0.6%
Not Rated 49,089 39.2% 60,649 52.7%
------- ------ ------- ------
125,140 100% 115,070 100%
------- ------ ------- ------
Included within "not rated" amounts are investments in loan market through
CLOs (equity tranches) of USD 49.073m (2022: CLOs of USD 60.649m).
The modelled internal rates of return on the CLO portfolio as well as the
warehouse first loss tranches are in low teens percentage points.
Liquidity risk
The following table summarizes the contractual cash outflows in relation to
the Company's financial liabilities according to their maturity.
Carrying amount Less than 1 year
31 December 2023
US $000 US $000
Trade and other payables 3,629 3,629
------ ------
Carrying amount Less than 1 year
31 December 2022
US $000 US $000
Trade and other payables 3,733 3,733
------ ------
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.
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 2023, the Company had liquid investments totalling USD 127.2m,
comprising of USD 20.2m in cash and cash equivalents, USD 68.3m in investments
in loan market through CLOs, USD 36.7m in other fixed income investments, USD
2.0m 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 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. As at 2023 the
Company has no borrowings. During 2022, the Company's only borrowing is a loan
payable to a related party of USD 0.149m (note 22) and therefore to a
significant extent it is capital funded.
Net debt to equity ratio is calculated using the following amounts as included
on the consolidated statement of financial position, for the reporting periods
under review:
2023 2022
US $000 US $000
Borrowings - 149
Cash at bank (20,169) (10,971)
------ ------
Net Debt (20,169) (10,822)
------ ------
Total equity 135,837 127,725
------ ------
Net debt to equity ratio (0.15) (0.08)
------- -------
26. Financial assets and liabilities by class
Note 2023 US $000 2022 US $000
Financial assets:
Financial assets at amortised cost 9, 10 20,185 10,971
Financial assets at fair value through profit or loss 4 107,034 106,376
Financial assets designated at fair value through other comprehensive income
5 6,498 7,596
------- -------
133,717 124,943
------- -------
Financial liabilities:
Financial liabilities at amortised cost 12 3,629 3,733
------- -------
The carrying amount of the financial assets and liabilities at amortised cost approximates to their fair value.
27. Events after the reporting date
The following non-adjusting event occurred after 31 December 2023:
· During 2024 the Company invested an amount of USD 24.7m to two new
warehouse facilities. Both warehouses are still open as at the date of
approval of these financial statements.
There were no other material events after the end of the reporting year, which
have a bearing on the understanding of these financial statements.
Shareholder Information
Registrars
All enquiries relating to shares or shareholdings should be addressed to:
Link Asset Services
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: 0871 664 0300
Facsimile: 020 8639 2342
Change of Address
Shareholders can change their address by notifying Link Asset Services in
writing at the above address.
Website
www.livermore-inv.com
The Company's website provides, amongst other things, the latest news and
details of the Company's activities, share price details, share price
information and links to the websites of our brands.
Direct Dividend Payments
Dividends can be paid automatically into shareholders' bank or building
society accounts. Two primary benefits of this service are:
· There is no chance of the dividend cheque going missing in the
post; and
· The dividend payment is received more quickly because the cash
sum is paid directly into the account on the payment date without the need to
pay in the cheque and wait for it to clear.
As an alternative, shareholders can download a dividend mandate and complete
and post to Link Asset Services.
Lost Share Certificate
If your share certificate is lost or stolen, you should immediately contact
Link Asset Services on 0871 664 0300 who will advise on the process for
arranging a replacement.
Duplicate Shareholder Accounts
If, as a shareholder, you receive more than one copy of a communication from
the Company you may have your shares registered in at least two accounts. This
happens when the registration details of separate transactions differ
slightly. If you wish to consolidate such multiple accounts, please call
Link Asset Services on 0871 664 0300.
Please note that the Directors of the Company are not seeking to encourage
shareholders to either buy or sell the Company's shares.
Corporate Directory
Secretary Principal Bankers
Chris Sideras
Banque J. Safra Sarasin (Luxembourg) SA
Registered Office 17 - 21, Boulevard Joseph II L-1840
Trident Chambers Luxembourg
PO Box 146
Road Town CBH Compagnie Bancaire Helvétique SA
Tortola Löwenstrasse 29 Zurich 8021
British Virgin Islands Switzerland
Company Number Credit Suisse AG
475668 Seeefldstrasse 1
Zurich 8070
Registrars Switzerland
Link Asset Services
34 Beckenham Road UBS AG
Beckenham Paradeplatz 6
CH-8098 Zürich
Kent BR3 4TU
Switzerland
England
Auditor Bank Julius Baer & Co. Ltd.
Grant Thornton (Cyprus) Ltd Bahnhofstrasse 36,
41-49, Agiou Nicolaou Street CH-8010 Zurich,
Nemeli Court - Block C Switzerland
2408 Engomi Nicosia
Solicitors
Travers Smith
10 Snow Hill
London
EC1A 2AL
England
Broker
Zeus Capital Limited
125 Old Broad Street
London
EC2N 1AR
England
Nominated And Financial Adviser
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
England
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR SEMFWEELSEFIRecent news on Livermore Investments
See all newsREG - Livermore Inv. Group - Posting of Accounts and Notice of AGM
AnnouncementREG - Livermore Inv. Group - Final Results
AnnouncementREG - Livermore Inv. Group - Interim dividend exchange rate
AnnouncementREG - Livermore Inv. Group - Further re Interim Dividend
AnnouncementREG - Livermore Inv. Group - Interim Dividend
Announcement