NOTE 4: STRATEGIC INVESTMENTS

At December 31, 2012, we owned 16,644,640 ordinary shares of Albemarle & Bond Holdings, PLC ("Albermarle & Bond"), representing almost 30% of its total outstanding shares. Our total cost for those shares was approximately $27.6 million. Albemarle & Bond is primarily engaged in pawnbroking, retail jewelry sales, check cashing and lending in the United Kingdom. We account for the investment using the equity method. Since Albemarle & Bond’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Albemarle & Bond files semi-annual financial reports for its fiscal periods ending December 31 and June 30. The income reported for our three months ended December 31, 2012 represents our percentage interest in the results of Albemarle & Bond’s operations from July 1, 2012 to September 30, 2012.

Conversion of Albemarle & Bond’s financial statements into U.S. GAAP resulted in no material differences from those reported by Albemarle & Bond following IFRS.

In its functional currency of British pounds, Albemarle & Bond’s total assets increased 14% from June 30, 2011 to June 30, 2012 and its net income improved 2% for the year ended June 30, 2012. The following table presents summary financial information for Albemarle & Bond’s most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):



	As of June 30,
	2012		2011
	(in thousands)
Current assets	$	141,880	$	125,862
Non-current assets	69,282		64,325
Total assets	$	211,162	$	190,187
Current liabilities	$	15,772	$	18,620
Non-current liabilities	70,016		57,016
Shareholders’ equity	125,374		114,551
Total liabilities and shareholders’ equity	$	211,162	$	190,187



	Year ended June 30,
	2012		2011
	(in thousands)
Gross revenues	$	186,479	$	162,002
Gross profit	109,474		97,197
Profit for the year (net income)	24,835		24,324

At December 31, 2012, we owned 136,848,000 shares, or approximately 33% of Cash Converters International Limited ("Cash Converters International"), a publicly traded company headquartered in Perth, Australia. Cash Converters International franchises and operates a worldwide network of over 700 specialty financial services and retail stores that provide pawn loans, short-term unsecured loans and other consumer finance products, and buy and sell second-hand goods, with significant store concentrations in Australia and the United Kingdom. Those shares include 12,430,000 shares that we acquired in November 2012 for approximately $11.0 million in cash as part of a share placement. Our total investment in Cash Converters International was acquired between November 2009 and November 2012 for approximately $68.8 million.

We account for our investment in Cash Converters International using the equity method. Since Cash Converters International’s fiscal year ends three months prior to ours, we report the income from this investment on a three-month lag. Cash Converters International files semi-annual financial reports for its fiscal periods ending December 31 and June 30. Due to the three-month lag, income reported for our three months ended December 31, 2012 and 2011 represents our percentage interest in the results of Cash Converters International’s operations from July 1, 2012 to September 30, 2012 and July 1, 2011 to September 30, 2011, respectively.

Conversion of Cash Converters International’s financial statements into U.S. GAAP resulted in no material differences from those reported by Cash Converters following IFRS.

In its functional currency of Australian dollars, Cash Converters International’s total assets increased 17% from June 30, 2011 to June 30, 2012 and its net income improved 6% for the year ended June 30, 2012. The following table presents summary financial information for Cash Converters International’s most recently reported results after translation to U.S. dollars (using the exchange rate as of June 30 of each year for balance sheet items and average exchange rates for the income statement items for the periods indicated):



	As of June 30,
	2012		2011
	(in thousands)
Current assets	$	137,646	$	119,633
Non-current assets	129,274		117,301
Total assets	$	266,920	$	236,934
Current liabilities	$	45,392	$	38,105
Non-current liabilities	31,928		19,180
Shareholders’ equity	189,600		179,649
Total liabilities and shareholders’ equity	$	266,920	$	236,934



	Year ended June 30,
	2012		2011
	(in thousands)
Gross revenues	$	241,924	$	184,315
Gross profit	162,598		126,628
Profit for the year (net income)	30,366		27,385

The table below summarizes the recorded value and fair value of each of these strategic investments at the dates indicated. These fair values are considered Level 1 estimates within the fair value hierarchy of FASB ASC 820-10-50, and were calculated as (a) the quoted stock price on each company’s principal market multiplied by (b) the number of shares we owned multiplied by (c) the applicable foreign currency exchange rate at the dates indicated.



	December 31,				September 30,
	2012		2011		2012
	(in thousands of U.S. dollars)
Albemarle & Bond:
Recorded value	$	54,559	$	49,616	$	51,812
Fair value	57,402		84,622		65,109
Cash Converters International:
Recorded value	$	89,673	$	68,204	$	74,254
Fair value	164,633		68,355		100,705