This excerpt taken from the ELN 6-K filed Aug 28, 2009.
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.
This excerpt taken from the ELN 6-K filed Mar 30, 2009.
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-
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 Womens 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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