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This excerpt taken from the ELN 6-K filed Aug 28, 2009. Investment
Losses
Net investment losses were $Nil for the first half of 2009
(2008: $2.8 million). The net investment loss for the first
half of 2008 related to an impairment charge of
$2.8 million.
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This excerpt taken from the ELN 6-K filed Mar 30, 2009. Investment
Losses
In 2008, we recorded a net impairment charge of
$10.9 million (2007: $Nil) related to the fund described
below and a further impairment charge of $6.0 million
(2007: $5.0 million) related to an investment in auction
rate securities (ARS). The remaining impairment charges of
$3.2 million (2007: $1.1 million) were related to
various investments in emerging pharmaceutical and biotechnology
companies.
At 31 December 2008 and 2007, all of our liquid investments
were invested in bank deposits and funds. In December 2007,
due to the dislocations in the capital markets, one of these
funds was closed. As a result, at 31 December 2007, the
carrying value of our investment in this fund of
$274.8 million was no longer included in cash and cash
equivalents and was presented as an available-for-sale
investment. In conjunction with the closure of the fund, a
charge of $3.8 million (comprised of an impairment charge
of $3.6 million and a realised loss of $0.2 million)
was incurred and netted against a portion of the interest income
earned from the fund in 2007. An additional charge of
$12.3 million (comprised of an impairment charge of
$10.9 million, net of interest income of $2.2 million
earned from the fund in 2008, and realised losses of
$1.4 million) was incurred in 2008.
At 31 December 2008, we had, at face value,
$11.4 million (2007: $11.4 million) of principal
invested in ARS, held at a carrying value of $0.4 million
(2007: $6.3 million), which represents interests in
collateralised debt obligations with long-
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term maturities through 2043 supported by U.S. residential
mortgages, including sub-prime mortgages. The ARS, which
historically had a liquid market and had their interest rates
reset monthly through dutch auctions, have continued to fail at
auction since September 2007 as a result of the ongoing
dislocations experienced in the capital markets. In addition,
the ARS, which had AAA/Aaa credit ratings at the time of
purchase, were downgraded to CCC-/B1*- ratings in 2008. At
31 December 2008, the estimated fair value of the ARS was
$0.4 million (2007: $6.3 million). While interest
continues to be paid by the issuers of the ARS, due to the
significant and prolonged decline in the fair value of the ARS
below their carrying value, we concluded that these securities
were impaired and recorded a charge of $6.0 million in 2008
(2007: $5.0 million). Given that the ARS are illiquid,
until there is a successful auction for them, the timing of
which is presently unknown, the net carrying value has been
classified as long-term available-for-sale investments in our
Consolidated Balance Sheets at 31 December 2008 and 2007.
The $1.0 million in losses on the sale of investment
securities in 2008 is primarily related to realised losses of
$1.4 million related to the fund described above. The
$6.6 million in gains on the sale of investment securities
in 2007 includes gains on sale of securities of Adnexus
Therapeutics, Inc. of $3.0 million and Women’s First
Healthcare, Inc. of $1.3 million.
For additional information on our available-for-sale
investments, please refer to Note 15.
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