Livermore Investment Group Limited. : Unaudited Interim Results for six months ended 30 June 2012

LIVERMORE INVESTMENTS GROUP LIMITED

("Livermore" or "Company")

UNAUDITED INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2012

Livermore Investments Group Limited (the "Company" or "Livermore") today announces its interim results for the six months ended 30 June 2012.

For further investor information please go towww.livermore-inv.com .

Enquiries:

Livermore Investments Group Limited                                                          [phone]

Matrix Corporate Capital LLP (NOMAD)                                                       [phone]

Stephen Mischler              

Edmund Glover   

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 2012. 

During the first half of 2012, the Company generated a robust performance despite challenging economic conditions and weakening outlook for global growth. Overall NAV increased by 29.8% to USD 0.74 per share. During the reporting period, management focused on the financial portfolio with increased exposure to the US credit markets, which provided attractive risk adjusted returns.

Wyler Park, our investment property in Bern, Switzerland performed well, generating over CHF 2.7m in rent during the period. The property is fully rented. Market valuation of Wyler Park has remained stable.

There were no significant developments in the private equity portfolio during the period.

Financial Review

 The NAV of the Group as at 30 June 2012 was approximately USD 168.6m. The net profit for the first half of 2012 was USD 19.3m, which represents earnings per share of USD 0.08. The increase in NAV relates largely to gains from the financial portfolio partly offset by write downs on certain investments.

Administrative expenses were USD 3.4m.

	30 June 2012		30 June 2011		31 December 2011
	US $m		US $m		US $m
Shareholders' funds at beginning of period	145.4		142.3		142.3
	___________		___________		___________
Income from investments	10.2		6.7		24.6
Other income	0.5		3.0		3.0
Realised gains on investments	1.9		0.3		0.2
Loss on impairment on investments	(14.0)		(5.0)		(9.9)
Unrealised gains on investments	37.0		13.0		4.5
Unrealised exchange gains	-		3.5		(0.2)
Administrative costs including provisions for legal cases	(3.4)		(3.2)		(5.0)
Finance costs	(2.2)		(3.1)		(5.3)
Tax charge	(0.2)		(0.1)		(1.7)
	___________		___________		___________
Increase in net assets from operations	29.8		15.1		10.2
Purchase of own shares	(6.6)		(2.5)		(7.1)
	___________		___________		___________
Shareholders' funds at end of period	168.6		154.9		145.4
	------		------		------
Net Asset Value per share	US $0.74		US $0.57		US $0.57

Livermore's Strategy

The financial portfolio is focused on fixed income instruments which generate periodic cash flows and include mainly exposure to senior secured and usually broadly syndicated US loans.  This part of the portfolio is geographically focused on the US with some exposure to Europe and emerging markets. In addition, the financial portfolio would include investments in select deep value public equities where management could exert influence.

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

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. 

Repurchase of shares

Between 31 December 2011 and 30 June 2012, the Company repurchased 27,121,532 shares at an average price of US$ 0.243 (£0.155) per share. On 30 June 2012, the Company held 76,454,415 shares in treasury. An additional 28,668,177 shares were purchased between 30 June 2012 and before the beginning of the interim close period.

Given that the Group's shares trade at a significant discount to NAV, the Board of Directors decided to continue with the buyback program. The buyback is being carried out subject to profitability, liquidity constraints and market conditions.

Dividends

No dividends are declared for the period ended 30 June 2012.

The Board of Directors will decide on the Company's dividend policy for 2012 based on profitability, liquidity requirements, portfolio performance, market conditions, and the share price of the Group relative to its NAV.

Richard Rosenberg	Noam Lanir
Chairman	Chief Executive

27 September 2012

Review of Activities

Economic & Investment Environment

In the first quarter of 2012, the global economy continued to grow at a moderate pace, although this varied considerably from one region to another. The emerging economies made a major contribution to global growth. By contrast, overall momentum in the advanced economies was subdued, although there were considerable differences from one country to another. Japan experienced strong growth in the first quarter due to a catch-up effect. In the US, momentum was moderate. In the euro area, a number of countries are in deep recession, while in Germany, GDP continued to expand strongly. Overall, the economy in the euro area stagnated.

In the second quarter of 2012, economic growth slowed worldwide, and while the emerging economies continued to support global expansion, their growth rates were lower than expected. In advanced economies, growth more or less ground to a halt, with recessionary tendencies intensifying in the euro area. Southern member states of the euro area reported a substantial decline in their GDP, and Germany lost considerable momentum.

Financial markets experienced some respite in the early months of 2012 from the significant market turmoil late last year. This relative calm, however, proved to be fragile and renewed pressures again emerged since April. Volatility continued to afflict the euro area and global financial system in the second quarter. The EuroStoxx 50 Index was up 6.9% in the first quarter but eventually ended down 2.2% for the first half of the year. The S&P 500 Index, however, recorded an 8.3% advance in the first half with most of the gains coming in the first quarter.

Corporate 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 steady credit fundamentals, low default rates, and increased inflows into funds. As of 30 June 2012, the U.S. last 12-month institutional loan default rate by principal amount increased marginally to 1.04% from 0.84% last year. During the first quarter and second quarter of 2012, U.S. S&P/LSTA Index issuers repaid or extended approximately 21.2% and 23.2% of loan maturities due by the end of 2014 respectively. The S&P/LSTA Leveraged Loan Total Return Index was up 4.5% in the first half of the year.

The international financial markets continue to be dominated by uncertainties emanating from Europe's financial and sovereign debt crisis as well as the slowing Chinese growth and the uncertainty over fiscal tightening in the US. Nonetheless, the situation in September 2012 has improved in large part due to additional monetary policy easing measures in the euro area and the US.

EURO ZONE: Growth developments in the euro area have been weaker than expected with flat growth in the first quarter of 2012 and further weakening of economic activity in the second quarter. Euro area total unemployment as of March 2012 rose to 10.9% - the highest rate since mid-1997. Considerable country-level dispersion continued to persist around the aggregate euro area outlook, with 2012 growth forecasts from Consensus Economics ranging from 0.7% for Germany and Austria to -5.4% for Greece. Monetary policy was loose with the ECB lowering rates and conducting additional Longer Term Refinancing Operations to support Euro zone economies and banks. Risks to the baseline economic outlook for the euro area remain tilted to the downside amid high uncertainty around the growth outlook.

SWITZERLAND:  In Switzerland, real GDP rose faster than expected 2.8% in the first quarter of 2012 driven mainly by the banking sector, domestic trade and corporate services. The stabilising effect of the minimum exchange rate against the euro also played a major role in this development. By contrast, value added in manufacturing declined and the downward trend in hospitality continued. Robust GDP growth in the first quarter was followed by a decline in the second quarter of 0.2%. The drop in value added in manufacturing and trade had a major dampening effect. Value added in the banking industry also dropped, following a temporary recovery in the previous quarter. Furthermore, after a prolonged period of growth, transport and communication services and business-related services all weakened. Construction, however, offered a positive stimulus, as did insurance and the energy industry.

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

Review of Significant Investments

Name	Book Value US$m
Wyler Park*	37.8
SRS Charminar	13.9
Montana Tech Components	4.1
Other Real Estate Assets	1.4
Total	57.2

* Net of related loan.

Wyler Park - Switzerland

Wyler Park is a top quality mixed-use property located in Bern, 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, the entire property is now fully rented. The annual rental income expected from the residential area is CHF 1.1m.

The property generated rent of CHF 2.7m during the first half of 2012.

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 continues to evaluate the potential development of the additional commercial development rights of 7,800 square meters attached to the property.

SRS Charminar - India

Livermore 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 investment in the investee company was in the form of compulsorily convertible debt and included a put option, which can be exercised if the investee company does not have an IPO 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 previously, 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. 

Meanwhile, 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.  As at 30 June 2012 there was no change in the status of this case.

On January 13, 2011 the Company Law Board ("CLB") passed an order and allowed Infrastructure Leasing & Financial Services Limited ("IL&FS") to become 80% shareholder and control the management of the company. In 2012, the Manager has reported a finalization of settlement negotiations with IL&FS and the investee company which is subject to certain court and regulatory approvals.

Due to the legal complexity and the receipt of the regulatory and court approvals required for the implementation of the proposed settlement as well as the various counterparties involved, the outcome remains uncertain.

The carrying amount of the investment is based on discounted expected cash flows.

Montana Tech Components AG ("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 recently built-out.  The company has a large market share in the US with Boeing and in Europe with Airbus. The build-out of the Romanian facility was completed as planned. The certification process with Airbus was concluded in significant areas.

The Micro Batteries business is a market leader in hearing aid batteries and rechargeable batteries with a strong brand (VARTA Micro Power). VARTA has formed a significant joint venture with the Volkswagen group to develop batteries for hybrid cars.

Metal Tech business segment operates in a niche area and is a market leader in an otherwise highly fragmented industry.  This business segment produces tools for identification and marking of steel products. Revenues from Metal Tech increased in H1 2012 due to the delivery of single, large orders.

Due to an excellent market position, ongoing expansion and productivity-enhancing measures, MTC increased EBITDA by 32% to EUR 34.8m (H1 2011: EUR 26.4m) and EBIT increased 45% to EUR 26m (H1 2011: EUR 17.9m) in the first half of 2012. The Company's equity capital increased to EUR 244m (2011: EUR 225m).

The order intake within Montana is developing positively in most business units except Industrial Components and this trend has been strengthening recently. The company expects positive development of order income especially in the Aerospace and Energy Storage division.

In June 2012 Montana issued a 5 year corporate bond with a notional value of T€ 55,000 paying 5% annually. Proceeds from the corporate bond will be partially used to refinance existing bank loans and finance the growth project of the group.

Livermore and certain other minority shareholders in MTC have raised concerns about related party transactions between MTC and its majority shareholder as well as the unequal treatment of minority shareholders by the Board of MTC. Livermore is pursuing an activist role in order to increase transparency, ensure equal treatment of minority shareholders, and potentially gain representation on the Board of MTC. At the Annual General Meeting of Montana, the Board of Directors of Montana was denied discharge for the last two years. In addition, a case against Montana and its Board of Directors concerning an incorrect allocation of shares in the last capital increase is currently pending in court in Switzerland.

Private Equity Funds

The other private equity investments held by the Group are 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. The Company expects that substantial exits of portfolio companies should materialize between 2013 and 2015.

Name	Book Value US$m
SRS Private (India)	3.9
India Blue Mountains (India)	2.3
Evolution Venture (Israel)	1.8
Elephant Capital (India)	1.5
Da Vinci (Russia)	1.2
Blue Ridge  Capital (China)	0.8
Panda Capital (China)	0.7
Total	12.2

SRS Private Fund:SRS Private is a private equity fund focused on real estate in India. The fund has invested in residential and commercial projects as well as directly in certain real estate companies. The assets are primarily located in and around major cities of India such as Mumbai and Hyderabad.

India Blue Mountains: India Blue Mountains is a leading hotel and hospitality development fund that is developing 4 star and 5 star hotels in India. The fund has acquired land and is in the process of developing three hotels in prime areas of Mumbai, Pune and Goa. All hotels will be managed by the Accor Group (Novotel brands). Accor has also invested equity and holds a 26% stake in all of the hotels.

The Pune hotel is being built on a land area of 70,200 sq ft with a total built-up area of approximately 343,297 sq ft. The hotel is expected to be a Novotel brand hotel with 223 rooms and two floors have been earmarked for commercial office space.

The Mumbai hotel is on a 82,609 sq ft land site with a built-up area of approximately 550,216 sq ft. The hotel will be a Novotel brand hotel with 543 rooms. As reported earlier, the contract with the general contractor was terminated due to delays caused by the contractor. The existing loan facility was repaid and a bridge loan due in February 2012 was undertaken. This bridge loan has been partly paid down and the remaining extended until July 2012. The manager is currently in process of syndicating a new construction loan.

For the Goa hotel, land measuring 20 acres was purchased at Majorda beach in Goa having 200 meters of sea front with a white sandy beach from nearly 40 parcels of land. Notification of the land for settlement is a government process and it has not been concluded so far despite expectations and is currently pending with the Town Planning department.

In 2012, the major shareholders took over control of the investment vehicle from the manager and agreed to exit the existing investments in an orderly fashion. The previous manager of the investment vehicle will still be involved in an advisory role but it will no longer control the board of the vehicle.

Livermore management believes that there are significant uncertainties with respect to delivery timelines and financing possibilities for the Mumbai project in the current environment. In addition, the Goa project rezoning has not been concluded. As a result, Livermore has decided to impair the valuation of the investment by USD 2.7m.

Evolution Venture:Evolution is an Israel focused Venture Capital fund. It invests in early stage technology companies. Its investments include a carrier-class Mobile Broadband Wireless (MBW) Wi-Fi solutions company, a language enhancement products company, a software company operating in the digital radio market, a software testing tool, and a virtualization technology company.

Elephant Capital: India-focused private equity fund, which is AIM quoted (formerly called Promethean India plc).  (Ticker: ECAP).  Its portfolio investments include a leading tiles manufacturer in India, an established automotive components manufacturer, a media business with an exclusive content library, a clinical research organization, a m-commerce player, and an online venture to distribute cricket related content. 

As of 29 February 2012, the NAV of the fund was 40 pence per share. Additional information about the fund is available at www.elephantcapital.com

Da Vinci:The fund is primarily focused on Russia and CIS countries. The main investments of the fund are RTS, the leading Russian stock exchange (now merged with MiCex), and EPAM, a leading Eastern European software company.  In 2011, RTS merged with MiCex stock exchange to form the largest financial exchange in Russia and distributed a dividend from the partial exit. The board of the merged company has announced a further dividend of USD 0.31 per share on 30 June 2012. EPAM conducted a successful initial public offering on NASDAQ in February 2012. The fund expects to exit the investment in the Eastern European software company over the next year subject to market conditions.

Blue Ridge:Blue Ridge is a China focused private equity fund. The fund has made investments in six portfolio companies. Portfolio companies include a distressed real estate turnaround company, a plastic and chemicals manufacturer, a higher education company, an innovative bio-pesticide company, a software company specializing in Oil & Gas applications and a refinery. In 2011, the fund realized partial exits from the plastic and chemicals manufacturer and the distressed real estate turnaround company at valuations higher than cost.

Panda Capital: China-based private equity fund focused on early-stage industrial operations in China and Taiwan, which represent strong growth opportunities. The fund's main investment is in a bamboo flooring company in China, which provides an innovative low cost alternative to hardwood flooring in shipping containers.  The manager is in the process of building up operational capacity for product manufacturing. This investment could generate attractive returns once the shipping industry recovers from the current downturn.

Financial Investments and Corporate Bond Trading

The Group manages a financial portfolio valued at USD 99m (net of leverage) as at 30 June 2012, which is invested mainly in fixed income securities and special situation equity opportunities.

Fixed income:

During H1 2012 the Group increased its activity in the US syndicated loan market mainly through investment into US Collateralized Loan Obligations (CLO) of 2006 and 2007 issues as well as investments into newly issued transactions. These are managed portfolios invested into diversified pools of senior secured loans and financed with long term financing pre-fixed at the respective pre-crisis levels. On absolute and relative value basis the loan market continued to offer remarkable value as an undervalued, diversified inflation linked asset class with a senior secured claim on the borrower and with overall low volatility and low correlation to equity market.

The fundamentals of the US corporate credit market continued to show resilience during H1 2012. Trailing 12 month default rate for the S&P/LTSA index was 1.04% for Q2 2012 and 0.21% for Q1 2012 and corporate earnings and balance sheets continued to improve during the period. The S&P/LTSA index of issuers managed to gain 4.5% for the first half of 2012.

During H1 2012, the Group increased its exposure to performing CLOs at lower than current market prices and at modelled IRRs of over 17%.  The CLO portfolio has performed extremely well on account of low default rates and improving credit fundamentals of their underlying loans which is evident by lower weighted average rating factor (WARF) levels in our deals and low DEBT/EBITDA multiples. At the end of the reporting period all of our US investments were passing their coverage tests (thereby making dividend distributions), which outperformed the general market average. During H1 2012, the portfolio generated USD 12.5m in cash distributions. CLO payments remained strong thanks to low credit losses and prevalence of Libor floors and healthy pre-payments, which in turn allowed managers to reinvest into wider spreads.

The excess spread of these CLOs, namely the difference between the interest income generated by a CLO's assets and the cost of financing through its liabilities as well as certain fees (which are locked-in at closing), increased substantially from original levels. Volatility in loan prices provided a good entry point for CLO's within their reinvestment period to build additional par and increase coverage ratios. This combination of improving coverage ratios and increasing excess spread availability also continued in H1 2012 and led to increased payments to CLO income notes. Furthermore, the cushions built up within the portfolios are expected to insulate the portfolio from moderate potential future credit losses, implying that performance should remain strong even in the absence of a significant improvement in macroeconomic conditions, so long as another dramatic fundamental downturn or financial market crisis is avoided.

During 2011 management concentrated on purchases of income notes in the secondary market as the IRRs and cash on cash returns offered better value than primary market offerings. During H1 2012, secondary market prices for CLOs rose, legacy CLOs reinvestment periods continued to shorten and the IRRs and cash returns offered by primary CLO issuances became attractive on relative basis. Livermore examined carefully the new issue market with the intention to extend the reinvestment period of its current portfolio and successfully launched as an anchor investor a new issue cash flow CLO called Venture X managed by MJX Asset Management LLC in June 2012.

As US interest rates are expected to remain low until 2015, corporate defaults are expected to remain low in the medium term and loan spreads are forecast to remain wide by historical standard, we believe that the environment should remain attractive for investments in CLO income notes.  The investment team is evaluating investing in additional primary issue CLOs with the aim of acquiring a controlling or significant equity stake. 

While management maintains a positive view, mid-long term performance may be negatively impacted by a pull back into a substantial double dip recession in US and/or Europe involving a spike in defaults.  Despite positive developments in the overall health of the US economy we acknowledge the potential headwinds posed by continued weakness in the US housing market, high unemployment and the continued EU sovereign debt crisis as well the headwinds the economy may face in 2013 relating to the possible austerity measures following the US debt ceiling discussions and geopolitical risks.

Public Equities:

Babylon Ltd ("Babylon"): Babylon is an International Internet Company based in Israel and listed on the Tel-Aviv Stock Exchange (TASE: BBYL).  It is a leading translation and language tools provider and its language translation software product is a recognized name in the industry. The company generates revenues through Search and Advertising, Online Sales, Corporate Sales, and Telesales. 

In Q1 2012, Livermore acquired an additional 1.039m shares of Babylon. As of 30 June 2012, Livermore's investment in Babylon was valued at USD 33.5m.

Babylon has achieved exceptional growth in its Search and Advertising business since 2009. In its Q2 2012 results, it reported a 183% increase revenues to USD 41.3m as compared to USD 14.6m for the corresponding quarter in the previous year and net profit increased 714% to USD 5.7m from USD 0.7m in the corresponding quarter. Babylon declared a dividend of USD 12.5m to be paid on 8 August 2012.

In September 2012, Babylon announced that it had filed a draft prospectus with the Securities and Exchange Commission for a listing on one of the main US stock exchanges.

Noam Lanir, the majority shareholder of the Group, is also a major shareholder in Babylon (note 21).

The following is a table summarizing the financial portfolio as of month-end June 2012 

Name	Book Value US $m
Investment in the loan market through CLOs	68.7
Babylon	33.5
Corporate Bonds	27.6
Hedge Funds	3.4
Other Public Equities	2.3
Total	135.5
Total net of leverage	99.0

Events after the reporting date

Following the end of the first half of 2012, the Company purchased additional 28,668,177 of its own shares, to be held in treasury, for a total cost of USD 9.7m.

In September 2012, Babylon (a related company - refer to note 21) announced that it had filed a draft prospectus with the Securities and Exchange Commission for a listing on one of the main US stock exchanges.