13 September, 2010

LIVERMORE INVESTMENTS GROUP LIMITED

("Livermore" or "Company")

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2010

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

Highlights

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

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

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

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

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

·      Improved trading environment relating to most investments.

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

Chairman's and Chief Executive's Review

Introduction

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

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

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

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

Financial Review

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

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

Livermore's Strategy

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

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

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

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

Repurchase of shares

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

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

Dividends

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

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

Richard Rosenberg                                            Noam Lanir

Chairman                                                            Chief Executive

13 September 2010

Review of Activities

Economic & Investment Environment

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

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

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

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

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

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

Review of Significant Investments

* Net of related loan.

** Including related interest until February 2009.

Wyler Park - Switzerland

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

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

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

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

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

SRS Charminar - India

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

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

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

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

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

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

Montana Tech Components ("Montana") - Europe

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

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

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

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

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

Private Equity Funds 

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

Financial Investments and Corporate Bond Trading

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

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

*including accrued income

Litigation

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

Livermore Investments Group Limited

Condensed Consolidated Statement of Financial Position

as at 30 June 2010

Livermore Investment Group Limited

Condensed Consolidated Income Statement

for the six months ended 30 June 2010

Livermore Investment Group Limited

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2010

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

Livermore Investments Group Limited

Condensed Consolidated Statement of Changes in Equity

for the period ended 30 June 2010

Livermore Investments Group Limited

Consolidated Statement of Cash Flows   

for the period ended 30 June 2010