TIDMADAM
RNS Number : 8225W
Adamas Finance Asia Limited
21 August 2020
21 August 2020
ADAMAS FINANCE ASIA LIMITED
(" Adamas Finance Asia ", " ADAM ", the " Company " or the "
Group ")
INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHSED 30 JUNE
2020
Adamas Finance Asia Limited (AIM: ADAM), the London quoted
pan-Asian diversified investment vehicle focused on providing
shareholders with attractive uncorrelated, risk adjusted long-term
returns, is pleased to announce its interim results for the six
months ended 30 June 2020.
Financial Highlights:
-- Total income decreased to US$1.19 million from interest
payments and fair value adjustments (H1 2019: US$1.25 million).
-- Net loss of US$0.70 million (H1 2019: US$0.16 million). The
core drivers of the net loss are a US$322K Expected Credit Loss
("ECL") provision established in relation to the FLM Holdings
investment and a US$179K finance expense, related to the interest
payable on the Company's corporate bond.
-- Consolidated loss per share (basic) of US$0.69 cents (H1 2019: US$0.18 cents).
-- Consolidated NAV at 30 June 2020 decreased 0.69% to US$100.2
million/GBP81.1 million (31 December 2019: US$100.9 million/GBP75.7
million). The decrease in NAV stems from a decrease in cash.
-- NAV per share at 30 June 2020 decreased to US$0.95 (GBP0.75) (30 June 2019 US$1.08/GBP0.84).
-- Period end cash position of US$3.0 million (30 June 2019: US$5.4 million).
Investment and Operational Highlights:
-- Future Metal Holdings Limited ( "Future Metal ")
o A variety of key on-site infrastructure projects were
completed in Q2 2020. This includes land hardening and the
installation of a fully enclosed steel structure.
o Quarry operations resumed in mid-March 2020 after a temporary
pause due to the pandemic. Production resumed in June 2020, which
is expected to continue for the remainder of this year and
beyond.
o The business applied for a new mining licence. Post the
reporting period, on 6 August 2020, the licence was issued by the
local Ministry of Natural Resources. The licence is valid for three
years and permits a maximum annual dolomite production capacity of
300,000 tonnes.
o The local management team is now focused on generating sales
for the quarry's product to domestic construction companies as the
local economy gradually recovers from the effects of recent
events.
o The first financial guidance for the quarry for the 2020 year
is likely to be provided in September as recently announced.
-- DocDoc Pte Ltd (" DocDoc ")
o In June 2020, DocDoc entered a revenue-sharing partnership
with Kaitaming Technology, a leading insurance agent platform, to
expand its reach into China.
-- Meize Energy Industries Holdings Limited (" Meize ")
o The Ningxia wind turbine manufacturing plant has been
operating at full capacity since April 2020.
o The Inner Mongolia wind turbine manufacturing plant has been
operating at full capacity since May 2020.
o During the period, Meize began building a third plant in
Jiangsu province, enabling it to diversify its operations from
supplying onshore wind turbine blades into supplying blades for
offshore wind turbines.
-- Infinity TNP
o In January 2020, Infinity TNP's asset, Tellus Niseko, achieved
an average occupancy of between 80% to 90%, well within
management's expectations. However, as a result of COVID-19,
tourism dropped sharply due to international travel bans. In turn,
management implemented a series of cost-saving measures as well as
safety and hygiene controls at the property. Post the reporting
period, Tellus Niseko is planning to reopen for bookings for the
upcoming Winter season from September.
-- Fundraising
o The Company successfully raised gross proceeds of US$1.7
million through a new subscription to its corporate bond from High
Net Worth Individuals and Family Offices in the Middle East. To
date, total subscriptions to the corporate bond are c.US$3.6
million.
o Post the reporting period, ADAM launched an Open Offer and
placing to raise GBP3.13million (US$3.8 million) through the issue
of new ordinary shares with the net proceeds used to enhance
further its balance sheet and to enable it to pursue a wide range
of investment prospects across a number of sectors which are
currently under review. The Company has received binding
commitments in relation to the placing for the full value of the
offer. The result of the Open Offer is expected to be announced by
the Company on or around 24 August 2020.
-- Other post-reporting date activities
o ADAM has registered with the Dubai International Financial
Centre, enabling the Company to undertake increased promotional
activities within the United Arab Emirates.
o On 18 August 2020, ADAM announced its intention to utilise its
Share Buyback Programme, originally announced in February 2019, to
enter the market when opportunities arise to purchase shares at
attractive levels.
o On 5 August 2020, the shareholders of the Company approved the
change of its name to Jade Road Investments Limited. The Company is
currently ensuring that the necessary approvals are received from
regulatory bodies and will announce when the name change becomes
effective.
Chairman of Adamas Finance Asia, John Croft, commented:
"The Company's portfolio has remained resilient in the face of
the headwinds created by COVID-19, with the underlying valuations
being mostly unaffected. The Company is confident in the current
valuations moving forward mainly because ADAM's investments are
consistently structured with downside protection, as well as their
diversified nature, and their location in a region which has
learned well from previous outbreaks and is now reopening and
recovering.
Nevertheless, as with most businesses globally, many of the
companies that represent our investment portfolio have in some way
been affected in the first half of 2020 by COVID-19 either by lower
than expected income or delays resulting from lockdown situations
in different countries. Our companies have reacted to protect their
businesses by lowering costs and taking measures to diversify
revenue sources where possible. Notwithstanding these initiatives,
we have observed that the overall impact of the pandemic in Asia
applied across almost all countries and all sectors. Our current
expectation is that as the effects of the pandemic recede across
the region towards the end of 2020 and into 2021, the underlying
investments in our portfolio will in turn experience improved
operating conditions.
The Company's fundraising capabilities were demonstrated during
the period with ADAM successfully raising a further US$1.7 million
through ADAM's corporate bond. The Company also undertook, post the
reporting period, its first equity raise by way of Open Offer and
Placing to raise GBP3.13 million (US$3.8 million) through the issue
of new ordinary shares . The Company has received binding
commitments to the placing for the full value of the offer .
The Company's investment manager, Harmony Capital Investors
Limited, is continuing to see an increasing number of attractive
investment opportunities providing similar yields to previous
investments the Company has made. The Company believes that
COVID-19 further exacerbates the inability for high growth SMEs to
access capital, ultimately reinforcing the Company's ability to
invest in strong, well-managed but capital-starved companies.
The Board remains cautious during the COVID-19 pandemic, but it
is confident in the outlook for the Company and of delivering value
for its shareholders in the longer term.
For further information on ADAM, please visit the Company's
website at http://adamasfinance.com and follow the Company on
Twitter (@ AdamasFinance ).
FOR FURTHER INFORMATION, PLEASE CONTACT:
Adamas Finance Asia Limited +44 (0) 778 531 5588
John Croft
WH Ireland Limited - Nominated
Adviser +44 (0) 20 7220 1666
James Joyce
James Sinclair-Ford
Pello Capital Limited +44 (0) 20 3700 2500
Mark Treharne
Maitland/AMO - Communications
Adviser +44 (0) 20 3700 2500
James Benjamin
Peter Hamid
About Adamas Finance Asia
Adamas Finance Asia Limited is quoted on the AIM Market of the
London Stock Exchange and is committed to providing shareholders
with attractive uncorrelated, risk adjusted long-term returns from
a combination of realising sustainable capital growth and
delivering dividend income.
The Company is focused on providing growth capital and financing
to emerging and established Small and Medium Enterprises (SME)
sector throughout Asia, well diversified by national geographies,
instruments and asset classes. This vital segment of the economy is
underserved by the traditional banking industry for regulatory and
structural reasons.
The Company's investment manager, Harmony Capital, seeks to
capitalise on its team's established investment expertise and broad
networks across Asia. Through rigorous diligence and disciplined
risk management, Harmony Capital is dedicated to delivering
attractive income and capital growth for shareholders with
significant downside protection through selectively investing in
assets and proactively managing them.
Harmony Capital is predominately sourcing private opportunities
and continues to create a strong pipeline of attractive income
generating assets from potential investments in growth sectors
across Asia, including healthcare, fintech, hospitality, IT and
property.
CHAIRMAN'S STATEMENT
As with most businesses globally, the first half of 2020 has
been dominated by COVID-19 and its effect on businesses and
peoples' lives. Many of the companies that represent our investment
portfolio have in some way been affected either by lower than
expected income, or delays resulting from lockdown situations in
different countries.
However our view is that the long term values of the underlying
businesses and the carrying value of our investments remain largely
unaffected either due to how an investment may have been
structured, specifically with downside protection in mind, or
because a business can mitigate against short term adverse market
conditions.
We continue to monitor each of our portfolio companies closely,
which reflects our hands on approach to investment management, and
will take appropriate steps to protect our position when and where
appropriate.
FLM Holdings, the high end restaurant business in Hong Kong, has
suffered from reduced income caused by last year's protests and now
the imposed lockdowns, which have affected all hospitality
businesses in the region to varying degrees. FLM has faced some
periods of complete closure, and others of restricted operations.
Currently restaurants in Hong Kong may only open until 6 p.m.,
meaning no dinner trade, and when open, only groups of 2 diners may
sit together. This has clearly affected cash flows and the
business's ability to service its debts to the extent that some
interest payments are now well overdue.
We are working closely with the business owners to provide
additional security coverage for our exposure. In the meantime, we
remain confident that this very well-known 70 year old family run
business, which has faced many past crises like SARS and Bird Flu,
will emerge from the current crisis in good shape, but in the
meantime, in line with our policy on taking provisions on overdue
payments, we have made a provision of US$322K against our half year
income.
Future Metal Holdings Limited, our dolomite quarry in northern
China, had some delays in production caused by the total lockdown
in China in the early months of 2020, but has now resumed
operations. Progress has been made in the interim on improving the
infrastructure at the site, and recently the Chinese authorities
granted a three year renewal to the mining license.
Our projects in Niseko, Japan, have also experienced lower than
normal revenues owing to regional and global travel restrictions
but we are confident that the underlying value of our investments
remain unaffected as we anticipate Niseko will remain a popular
destination for upmarket travel once tourism levels return to
normal.
A fuller description of progress at our principal portfolio
companies is provided later in this statement.
We have taken a very cautious approach to new investments during
the first half of the year, because of the prevailing uncertainty,
however we are seeing a high number of very high quality investment
opportunities, as a lot of great businesses in the SME space with
exciting growth prospects continue to be starved of capital from
traditional sources like the banking sector, which leaves us well
placed to negotiate very attractive terms for new investments to
the benefit of our shareholders.
Underpinning this cautious approach, has seen us focusing on
improving the Company's cash position to take advantage of some of
the best investment opportunities presented to us. During the
period, we raised a further US$1.7 million via our corporate bond
offering. After the reporting period, in July we announced that we
had launched a fully underwritten Open Offer and Placement to raise
approximately GBP3.13 million (US$3.8 million), which represents
the Company's first ever equity raise since its re-admission to AIM
in early 2014. The Company has received binding commitments to the
placing for the full value of the offer, with the results expected
to be announced by the Company on 24 August 2020 .
Our focus for the remainder of 2020 will be on closely
monitoring progress at our portfolio companies, which we expect to
start to benefit from the gradual reduction of the effects of
COVID-19. The economies in Asia generally and China in particular
have begun to move back towards normality and we hope that this
will provide a basis for a return to economic growth in the region
in 2021.
The Board remains cautious during the COVID-19 pandemic, but it
is confident in the outlook for the Company and of delivering value
for its shareholders in the longer term.
The principal assets as at 30 June 2020 are detailed below:
Principal Effective Instrument Valuation Credit Credit Cash Equity Fair value Provision Valuation
assets interest type at 31 income investment receipts investment/ adjustment US$ at 30
% December US$ US$ million US$ million other US$ million million June
2019 million movement 2020
US$ million US$ million US$ million
Convertible
FLM Holdings - Bond 27.5 0.6 - - - - (0.3) 27.8
Future
Metal
Holdings Structured
Limited 84.8 Equity 44.7 0.3 0.2 - 0.1 - - 45.3
Meize Energy Redeemable
Industrial convertible
Holdings preference
Ltd 7.9 shares 8.2 - - - - - - 8.2
DocDoc Convertible
Pte Ltd - Bond 2.2 0.1 - - - - - 2.3
Infinity
Capital Secured
Group - Loan Notes 2.1 0.2 - (0.1) - - - 2.2
Infinity
TNP 40 Equity 7.3 - - - - - - 7.3
GCCF &
Other
investments - 8.9 - - - (0.1) - - 8.8
Corporate
debt - (1.9) - - (1.7) 0.1 - - (3.5)
Other
liabilities - (2.2) - - - 1.0 - - (1.2)
Cash 4.1 - (0.2) 1.8 (2.7) - - 3.0
Total N et Asset
Value 100.9 1.2 - - (1.6) - (0.3) 100.2
------------------------- ------------ ------------ -------- ------------ ------------ ------------ ------------ ---------- ------------
Future Metal Holdings Limited ("FMH")
FMH recommenced production at the end of December 2019. In early
2020, quarry operations paused temporarily due to the COVID-19
pandemic. During Q1 2020, the Quarry commenced the construction of
a steel structure to enclose its stockpile site as well as the
process of land hardening to comply with the local environmental
requirements. Both the land hardening and the enclosed structure
construction were completed around the end of Q2 2020.
Due to the two construction projects, production had been
suspended between April and May 2020. The Quarry resumed production
on 10 June 2020.
The existing Mining Licence was originally scheduled to be
renewed during Q1 2020. However, due to COVID-19, the Linfen City
Ministry of Natural Resources granted a 3-month extension. The
renewed Mining Licence was subsequently issued on the 6 August
2020.
The local management team also initiated an application for the
Work Safety Permit from the Ministry of Emergency Management. After
an initial on-site assessment by a group of emergency management
experts on 27 April 2020 and the subsequent implementation of the
feedback by the local management team, the application for the Work
Safety Permit was submitted to the Linfen City Ministry of
Emergency Management in May 2020. The application process has been
completed and the permit is expected to be issued in Q3 2020.
As of 30 June 2020, including loan disbursements provided by the
Company to FMH and its subsidiaries as well as accrued PIK
interest, the estimated fair value of its investment is US$45.3
million.
FLM Holdings ("FLM")
After receiving its One Michelin Star in late 2019, Fook Lam
Moon was subsequently named in the Top 10 Chinese Restaurants of
the World in a dining guide published by author and wine critic,
Ch'ng Poh Tiong, in late March 2020.
Although Fook Lam Moon and its branch restaurants have been
affected by the COVID-19 pandemic and the resulting social
distancing measures in most public places across Hong Kong,
management has taken active steps to safeguard the health of guests
and staff, including regular disinfection of all dining rooms and
dining utensils as well as the installation of additional private
dining areas for guests' usage. The restaurants have also since
engaged online food distribution channels in an effort to increase
guests' accessibility to its food and beverage offerings.
Meize Energy Industries Holdings Limited ("Meize")
Meize is a privately-owned company that designs and manufactures
blades for wind turbines. Meize has two production plants in China,
located in Inner Mongolia and Ningxia Province respectively. As
affected by the outbreak of the COVID-19 pandemic in Mainland
China, the Inner Mongolia plant operated at a low capacity in
February 2020 and raised to full capacity in May and June 2020. The
Ningxia plant resumed operations at the end of February 2020 and
has continued to operate at full capacity since April 2020. Meize
is also building a third plant in Jiangsu Province. The
construction of the necessary infrastructure and power for the new
plant is on schedule and it is expected to start production in
August 2020.
Infinity TNP
The residential section of Tellus Niseko begun welcoming guests
in January 2020. During January, average occupancy at the property
was between 80% and 90%, which was in line with management's
expectations.
However, occupancy levels at Tellus Niseko after January 2020
were negatively impacted by the spread of COVID-19 in Japan and as
tourism from Greater China and other parts of the world dropped
sharply due to international travel bans.
The local management team at Tellus Niseko has been monitoring
the situation in Japan closely and has implemented a series of
cost-saving measures as well as safety and hygiene controls at the
property. A gradual reopening of Japan's borders for international
travel is currently being prepared, focussed towards countries
where the COVID-19 has been contained or which have important ties
to Japan. In line with this, the management expects the revival of
local tourism once travellers are able to return to the region. The
local team has already been planning marketing campaigns in
preparation for the 2020/2021 winter season.
Infinity Capital Group Limited ("ICG")
As the COVID-19 pandemic continues to impact Japan and the
Hokkaido region, ICG is working closely with the local management
to monitor the domestic property market and the local market's
response to the pandemic, including construction project planning
as well as potential movements in property prices. Management has
also put in place a series of inspection and monitoring measures
similar to most other hotel properties in the region due to the
impact of the global pandemic.
DocDoc Pte Ltd. ("DocDoc")
DocDoc is a Singapore-headquartered online network of over
23,000 doctors, 600 clinics and 100 hospitals serving a wide array
of specialties. It uses artificial intelligence, cutting-edge
clinical informatics and proprietary data to connect patients to
doctors which fit their needs at an affordable price. In June 2020,
DocDoc announced a partnership with Kaitaiming Technology ("KTM"),
an insurance agent platform, to expand its reach into China. The
partnership is the gateway into the lucrative Chinese market for
DocDoc where, through the KTM platform, it will offer its doctor
discovery services to the policyholders of China's leading
insurance companies.
As of 30 June 2020, the carrying value of the Convertible Bond
was US$2.3 million. An annual coupon of 8% (4.0% cash and 4%
Payment-in-Kind) was converted to (8% Payment-in-Kind) as part of
negotiation with new investors who entered the business.
John Croft
Chairman
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note US$000 US$000 US$000
Income from unquoted
financial assets 525 571 902
Finance income from
loans 668 677 1,341
Realised loss on disposal
of investments - - -
------------- ------------- -------------
Gross portfolio income 1,193 1,248 2,243
Fair value changes on
financial assets at
fair value through profit
or loss (14) (166) 201
Expected credit loss
provision (322) - (237)
Net portfolio income 857 1,082 2,207
Management fees (900) (925) (1,679)
Incentive fees (40) - (1,907)
Administrative expenses (436) (314) (1,296)
Operating loss (519) (157) (2,675)
Finance expense (179) - (98)
Loss before taxation (698) (157) (2,773)
------------- ------------- -------------
Taxation 5 - - -
Other comprehensive
expense
Foreign currency translation
differences - - (81)
Loss and total comprehensive
expense for the year (698) (157) (2,854)
============= ============= =============
Loss per share 7
Basic (0.69)cents (0.18) cents (3.11) cents
============= ============= =============
(0.18)
Diluted (0.69)cents cents (3.11) cents
============= ============= =============
The results above relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note US$000 US$000 US$000
----------------------------- ----- ----------- ------------ --------------
Assets
Unquoted financial assets
at fair value through
profit or loss 8 68,054 58,119 67,172
Loans and other receivables 8 33,885 33,258 33,720
Cash and cash equivalents 2,996 5,375 4,071
Right of use asset - - 34
----------- ------------ --------------
Total assets 104,935 96,752 104,997
----------- ------------ --------------
Liabilities
Other payables and accruals 1,227 231 2,211
Current liabilities 1,227 231 2,211
----------- ------------ --------------
Loans & borrowings 3,472 - 1,909
----------- ------------ --------------
Total liabilities 4,699 231 4,120
----------- ------------ --------------
Net assets 100,236 96,521 100,877
=========== ============ ==============
Equity and reserves
Share capital 10 145,084 137,684 145,027
Treasury share reserve (671) - (671)
Share based payment reserve 2,937 2,555 2,936
Accumulated losses (47,113) (43,718) (46,415)
----------- ------------ --------------
Total equity and reserves
attributable to owners
of the parent 100,236 96,521 100,877
=========== ============ ==============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
Treasury based
Share share payment Accumulated
capital reserve reserve losses Total
US$000 US$'000 US$000 US$000 US$000
Group balance at 1 (43 ,561
January 2019 134,054 - 2,555 ) 93,048
Loss for the period - - - (157) (157)
Other comprehensive
income
--------- --------- --------- ------------ --------
Total comprehensive
expense for the period - - - (157) (157)
Issue of shares 3,759 - - - 3,759
Share buy backs (129) - - - (129)
Group balance at 30
June 2019 137,684 - 2,555 (43,718) 96,521
--------- --------- --------- ------------ --------
Loss for the period - - - (2,616) (2,616)
Other comprehensive
income - - - (81) (81)
--------- --------- --------- ------------ --------
Total comprehensive
income for the period - - - (2,854) (2,854)
Issue of shares 7,343 - - - 7,343
Treasury shares acquired - (671) - - (671)
Share-based payments - - 381 - 381
Group balance at 31
December 2019 and
1 January 2020 145,027 (671) 2,936 (46,415) 100,877
--------- --------- --------- ------------ --------
Loss for the period - - - (698) (698)
Other comprehensive
income - - - - -
--------- --------- --------- ------------ --------
Total comprehensive
income for the period - - - (698) (698)
Issue of shares 57 - - - 57
Share buy backs - - - - -
Group balance at 30
June 2020 145,084 (671) 2,936 (47,113) 100,236
========= ========= ========= ============ ========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30-Jun 30-Jun 31 December
2020 2019 2019
Unaudited Unaudited Audited
US$'000 US$'000 US$'000
------------------------------------- ----------- ----------- ------------
Cash flow from operating activities
Loss before taxation (698) (157) (2,773)
Adjustments for:
Finance income (668) (677) (1,341)
Finance expense 179 - 98
Exchange (gain)/loss 19 - (57)
Depreciation of right of use
assets - - 4
Fair value changes on unquoted
financial assets at fair value
through profit or loss (511) (571) (1,103)
Share-based expenses - - 381
Decrease/(Increase) in other
receivables 408 (3,259) 603
(Decrease)/Increase in other
payables and accruals (1,072) 34 1,925
----------- ----------- ------------
Net cash used in operating
activities (2,343) (4,630) (2,263)
----------- ----------- ------------
Cash flow from investing activities
Purchase of unquoted financial
assets at fair value through
profit and loss (207) (2,453) (1,723)
Loans granted - - (2,000)
Net cash (used in)/generated
from investing activities (207) ( 2 ,453) (3,723)
----------- ----------- ------------
Issue of Shares - 3,759 -
Share buy backs - 129 -
Purchase of treasury shares - - (671)
Proceeds from loans and borrowings 1,720 - 1,900
Payment of interest on loans
and borrowings (245) - -
----------- ----------- ------------
Net cash (used in)/generated
from financing activities 1,475 3,630 1,229
----------- ----------- ------------
Net (decrease)/increase in
cash & cash equivalents during
the period (1,075) (3,453) (4,757)
Cash and cash equivalents and
net debt at the beginning of
the period 4,071 8,828 8,828
Cash & cash equivalents and
net debt at the end of the
period 2,996 5,375 4,071
=========== =========== ============
NOTES TO THE FINANCIAL INFORMATION
1. CORPORATE INFORMATION
The Company is a limited company incorporated in the British
Virgin Islands ("BVI") under the BVI Business Companies Act 2004 on
18 January 2008. The address of the registered office is Commerce
House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British
Virgin Islands VG 1110 and its principal place of business is
19/F., CMA Building, 64 Connaught Road Central, Central, Hong
Kong.
The Company is quoted on the AIM Market of the London Stock
Exchange (code: ADAM) and the Quotation Board of the Open Market of
the Frankfurt Stock Exchange (code: 1CP1).
The principal activity of the Company is investment holding. The
Company is principally engaged in investing primarily in unlisted
assets in the areas of mining, power generation, health technology,
telecommunications, media and technology ("TMT"), and financial
services or listed assets driven by corporate events such as
mergers and acquisitions, pre-IPO, or re-structuring of state-owned
assets.
The condensed consolidated interim financial information was
approved for issue on 21 August 2020.
2. BASIS OF PREPARATION
The condensed consolidated interim financial information has
been prepared in accordance with International Accounting Standard
("IAS") 34 "Interim Financial Reporting".
3. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated interim financial information has
been prepared on the historical cost convention, as modified by
revaluation of certain financial assets and financial liabilities
at fair value through the income statement.
The accounting policies and methods of computation used in the
condensed consolidated financial information for the six months
ended 30 June 2020 are the same as those followed in the
preparation of the Group's annual financial statements for the year
ended 31 December 2019 and are those the Group expects to apply
into financial statements for the year ending 31 December 2020.
The seasonality or cyclicality of operations does not impact on
the interim financial information.
4. SEGMENT INFORMATION
The operating segment has been determined and reviewed by the
Board to be used to make strategic decisions. The Board considers
there to be a single business segment, being that of investing
activity.
The reportable operating segment derives its revenue primarily
from debt investment in several companies and unquoted
investments.
The Board assesses the performance of the operating segments
based on a measure of adjusted Earnings Before Interest, Taxes,
Depreciation and Amortisation ("EBITDA"). This measurement basis
excludes the effects of non-recurring expenditure from the
operating segments such as restructuring costs. The measure also
excludes the effects of equity-settled share-based payments and
unrealised gains/losses on financial instruments.
The segment information provided to the Board for the reportable
segment for the periods are as follows:
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Income on unquoted financial
assets 525 571 902
Financial income on loans
& receivables 668 677 1,341
Realised gain/(loss) on
disposal - - -
Gross portfolio income 1,192 1,248 2,243
--------- -------- ------------
Expected credit loss provision (322) - (237)
Foreign exchange (14) (166) 67
Equity fair value adjustments - - 134
Portfolio income through
profit or loss 857 1,082 2,207
--------- -------- ------------
The impact of fair value changes on the investments in the
portfolio are as follows:
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Income on unquoted financial
assets through profit or
loss 525 571 902
Equity fair value adjustments:
* FMHL - - 14
* ICG - - 120
--------- -------- ------------
- - 134
Foreign exchange (14) (166) 67
Total fair value changes
on financial assets at
fair value through profit
or loss 511 405 1,103
========= ======== ============
5. TAXATION
The Company is incorporated in the BVI and is not subject to any
income tax.
6. DIVID
The Board does not recommend the payment of an interim dividend
in respect of the six months ended 30 June 2020 (30 June 2019:
Nil).
7. PROFIT/(LOSS) PER SHARE
The calculation of the basic and diluted profit/(loss) per share
attributable to owners of the Group is based on the following:
Six months ended Year ended
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Numerator
Basic/Diluted: Net profit/(loss) (698) (157) (2,773)
------------ ------------ -------------
Number of shares
'000 '000 '000
Denominator
Basic: Weighted average shares 101,618 86,581 89,219
Effect of diluted securities:
Incentive fee-50% in ordinary shares (Note 12
(i)) - - -
------------ ------------ -------------
Diluted: Adjusted weighted average shares 101,618 86,581 89,219
------------ ------------ -------------
Profit/(Loss) per share
Basic
Diluted (0.69)cents (0.18)cents (3.11) cents
(0.69)cents (0.18)cents (3.11) cents
------------ ------------ -------------
For the six months ended 30 June 2020 and 2019, the warrants
issued to the Investment Manager are anti-dilutive and therefore
there is no impact on the weighted average shares in issue.
8. UNQUOTED FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
At the beginning of the period 67,172 55,519 55,519
Fair value changes through
profit and loss 544 571 1,103
Additions 182 2,453 10,550
Reclassification 156 - -
Asset disposal/swap - (424) -
At the end of the period 68,054 58,119 67,172
======== ======== ============
LOANS AND OTHER RECEIVABLES AT FAIR VALUE THROUGH PROFIT OR
LOSS
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
At the beginning of the period 33,720 28,902 28,902
Additions 354 3,932 4,818
Reclassification (156) - -
Fair value changes through (33) - -
profit and loss
Disposals - - -
Asset disposal/swap - 424 -
At the end of the period 33,885 33,258 33,720
======== ======== ============
9. LOANS AND BORROWINGS
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Corporate debt 3,472 - 1,875
Lease liability - - 34
Total loans and borrowings 3,472 - 1,909
======== ======== ============
The movement in loans and borrowings is as follows:
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Opening balance 1,909 - -
Proceeds from issue of loan
notes 1,720 - 1,900
New lease - - 34
Termination of lease (34) - -
Capitalised borrowing costs (57) - (122)
Interest expense accrued 179 - 97
Payment of interest liability (245)
Closing balance 3,472 - 1,909
======== ======== ============
10. SHARE CAPITAL
Number of Amount
Shares US$000
Authorised, called-up and fully paid
ordinary shares of no par value each
at 30 June 2019 88,733,069 137,684
Share issuance - ICG for equity investment
in TNP Infinity 16,179,310 7,200
Purchase of treasury shares (3,316,804) (671)
------------ --------
Authorised, called-up and fully paid
ordinary shares of no par value each
at 31 December 2019 101,595,575 144,356
------------ --------
Share issuance - to a minority shareholder
of Future Metal Holdings Limited 159,847 57
Authorised, called-up and fully paid
ordinary shares of no par value each
at 30 June 2020 101,755,422 144,413
============ ========
Consisting of:
Authorised, called-up and fully paid
ordinary shares of no par value each
at 30 June 2020 105,072,226 145,084
Authorised, called-up and fully paid
ordinary shares of no par value held
as treasury shares by the Company at
30 June 2020 (3,316,804) (671)
(i) Under the BVI corporate laws and regulations, there is no
concept of "share premium", and all proceeds from the sale of no
par value equity shares is deemed to be share capital of the
Company.
11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Level 1, 2 or 3 based on the degree to
which the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the assets or liability, either directly or
indirectly; and
-- Level 3 fair value measurements are those derived from inputs
that are not based on observable market data.
As at As at As at
30 June 30 June 31 December
2020 2019 2019
US$000 US$000 US$000
Level 3
Unquoted financial assets at
fair value (Note 8) 68,054 58,119 67,172
Loans at fair value (Note 8) 27,820 27,059 27,474
Other receivables at fair value
(Note 8) 6,065 6,199 6,246
Cash and cash equivalents 2,996 5,375 4,071
--------- --------- -------------
104,935 96,752 104,963
========= ========= =============
There is no transfer between levels in the current period.
Carrying values of all financial assets and liabilities are
approximate to fair values. The value of level 3 investments has
been determined using the yield capitalisation (discounted cash
flow) method.
12. RELATED PARTY TRANSACTIONS
During the period under review, the Group entered into the
following transactions with related parties and connected
parties:
30 June 30 June 31 December
2020 2019 2019
Notes US$000 US$000 US$000
Remuneration payable to Directors 122 74 185
Harmony Capital
Management fee (i) 900 907 1,679
Incentive fee 40 - 1,907
Amount due to Harmony Capital at period end 974 - 1,907
(i) Harmony Capital has been appointed as the Investment Manager
of the Group. The management fee, which was calculated and paid
bi-annually in advance calculated at a rate of 0.875% of the net
asset value of the Company's portfolio of assets at 30 June and 31
December in each calendar year.
Harmony Capital is entitled to receive an incentive fee from the
Company in the event that the audited net asset value for each year
is (1) equal to or greater than the audited net asset value for the
last year in relation to which an incentive fee became payable
("High Water Mark"); and (2) in excess of 105% of the audited net
asset value as at the last calendar year end ("the Hurdle").
Subject to the High Water Mark and Hurdle being excessed in respect
of any calendar year, the incentive fee will be equal to 20% of the
difference between the current year end NAV and the previous year
end NAV. 50% of incentive fee shall be paid in cash and the
remaining 50% of incentive fee shall be paid by ordinary
shares.
13. EVENTS AFTER THE REPORTING PERIOD
The Group is closely monitoring the impact of the COVID-19 virus
on the valuation of the Company's investments portfolio, but to
date there has not been any material adverse effect.
On 17 July 2020, the Company announced it is proposing to
undertake an open offer and placing to raise GBP3.13 million
(US$3.8 million) through the issue of new ordinary shares. The
Company has received binding commitments to the placing for the
full value of the offer.
14. COPIES OF THE INTERIM REPORT
The interim report is available for download from
www.adamasfinance.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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