TIDMJADE
RNS Number : 2753M
Jade Road Investments Limited
20 September 2021
20 September 2021
JADE ROAD INVESTMENTS LIMITED
(" Jade Road Investments ", " JADE ", the " Company " or the "
Group ")
INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHSED 30 JUNE
2021
Jade Road Investments Limited (AIM: JADE), 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 2021.
Financial Highlights:
-- Total income increased to US$1.25 million from interest
payments and fair value adjustments (H1 2020: US$1.19 million).
-- Net loss of US$0.27 million (H1 2020: US$0.70 million). The
core drivers of the net loss are a US$259k finance expense, mainly
related to the interest payable on the Company's corporate
bond.
-- Consolidated loss per share (basic) of US$0.24 cents (H1 2020: US$0.69 cents).
-- Consolidated NAV at 30 June 2021 decreased slightly by 0.25%
to US$106.2 million/GBP76.8 million (31 December 2020: US$106.5
million/GBP77.9 million). The decrease in NAV stems from a decrease
in cash.
-- NAV per share at 30 June 2021 US$0.90 (GBP0.65) (30 June 2020 US$0.95/GBP0.75).
-- Period end cash position of US$2.56 million (30 June 2020: US$3.2 million).
Investment and Operational Highlights:
-- Future Metal Holdings Limited ( "Future Metal ")
o In March 2021, a new contractor was appointed to further
enhance the efficiency of the operation and reach customers with a
further geographical radius.
o Sales have seen an upward trend in the first half of 2021
compared to 2020.
-- Fook Lam Moon (" FLM ")
o FLM's business was impacted by the COVID-19 pandemic in 2020,
which severely limited inbound tourism, particularly from Mainland
China.
o As the Hong Kong government eases COVID-19 restrictions on
restaurants and some air travellers in 2021, the food and beverage
industry is gradually recovering to pre-pandemic levels.
-- DocDoc Pte Ltd (" DocDoc ")
o In November 2020, DocDoc partnered with SpesNet Global Group,
a leading healthcare technology provider, to integrate its digital
third-party administrator ("TPA") technology and provide a
first-of-its-kind complete digital health ecosystem to insurers,
supporting their policyholders through the continuum of care.
o Under this agreement, DocDoc will receive exclusive access to
SpesNet's platform to include Singapore, Malaysia, Thailand, Hong
Kong, India, and the People's Republic of China.
-- Meize Energy Industries Holdings Limited (" Meize ")
o Meize has maintained a full order book from its clients in
2021 due to the strong market demand, especially the offshore wind
market.
o The Jiangsu plant initiated an expansion in early 2021 to meet
the rising demand, which was completed and commenced operation in
June 2021.
Chairman of Jade Road Investments, John Croft, commented:
"The Company's portfolio has continued to weather the pandemic
storm with the Company's investment manager, Harmony Capital,
driving phase two of a three-phase investment strategy focused on
exits, restructuring our legacy assets and seeking investments in
smaller fast growing companies at IPO or pre-IPO stages.
Harmony Capital set out a three-phase strategy to reposition
Jade Road. This has involved rehabilitating legacy assets, such as
Future Metal Holdings Limited (FMHL) and Meize Energy, towards a
full or partial exit and reinvesting the resulting cash into new
income-generating assets, prioritising high-growth Asian SMEs in
the Healthtech, Medtech and Fintech sectors.
With Asian SMEs increasingly starved of capital, Jade Road is
assessing an exceptionally strong pipeline of investee candidates
which, with an emphasis on credit instruments such as secured debt
or non-mandatory convertible bonds, will result in a
well-constructed portfolio with near-term downside protection.
The Board believes Jade Road's new investment strategy is well
positioned to construct a solid base of exciting, income generating
assets for high-quality growth, promoting long-term value for our
shareholders."
For further information on JADE, please visit the Company's
website at www.jaderoadinvestments.com and follow the Company on
Twitter (@ JadeFinance ).
FOR FURTHER INFORMATION, PLEASE CONTACT:
Jade Road Investments Limited +44 (0) 778 531 5588
John Croft
WH Ireland Limited - Nominated
Adviser +44 (0) 20 7220 1666
James Joyce
Andrew de Andrade
Hybridan LLP - Corporate Broker +44 (0) 203 764 2341
Claire Noyce
Lionsgate Communications - Communications
Adviser +44 (0) 779 189 2509
Jonathan Charles
About Jade Road Investments
Jade Road Investments 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
For the first half of 2021, Jade Road has been progressing phase
two of a three-phase investment strategy focused on rehabilitating
legacy assets, exits and seeking investments in smaller, IPO and
pre-IPO investments.
Jade Road has delivered a stable financial performance in the
period. Total income increased to US$1.24 million from interest
earned and fair value adjustments for the first six months of the
year (H1 2020: US$1.19 million).
Investment Strategy
I am pleased to report that in spite of the long shadow that
COVID-19 has cast over the world in the past 18 months, the
Company's existing portfolio has largely avoided any major
impairments successfully navigating the challenges presented by the
pandemic.
Jade Road is currently undergoing phase two of a three-phase
investment strategy focused on the portfolio restructuring of its
legacy assets which are not fully aligned with the Company's
revised investment approach by exiting either through full or
partial sales, or IPOs. In addition, the Company is aiming to build
a new portfolio of pan-Asian investments providing income and
capital gain.
Jade's large legacy assets in China: Future Metal Holdings
Limited (FMHL), the largest magnesium dolomite quarry in Shanxi
Province, and Meize Energy Industries, one of the largest wind
turbine blade manufacturing companies with factories in Inner
Mongolia, Ningxia Province, and Jiangsu Province, both reported
significant progress for the first six months of 2021.
On our website you can find SRK Consulting's updated Competent
Persons Report (CPR) for FMHL, which includes JORC Mineral
Resources and Ore Reserves estimates totalling 113 million tonnes
of dolomite as measured by Proved and Probable Reserves, and 149
million tonnes of dolomite as calculated by Measured, Indicated and
Inferred Resource. As magnesium prices recover from recent
weakness, we expect demand for FMHL's products to increase as the
year progresses.
Meize Energy initiated an expansion of its third
state-of-the-art turbine blade manufacturing plant in Jiangsu,
commencing operations in June 2021. The factories are operating at
full capacity, producing internationally certified blades for both
onshore and offshore wind turbines.
Our Michelin-starred Fook Lam Moon restaurants in Hong Kong are
recovering to pre-pandemic levels and our luxury resort projects in
Niseko, Japan are accepting bookings for this upcoming skiing
season, although uncertainty remains over the exact timing of a
full opening of the resort.
The core strategy is to build a base of income generating assets
that covers overheads, management fees and finance costs, with a
growing surplus to fund dividends.
As part of this core strategy, Jade Road will look to invest in
Asian High Growth Companies via equity (in listed companies and/or
pre-IPO investments) as part of its existing investment policy.
While Jade Road will consider opportunities in all sectors as they
arise, potential opportunities in Technology, including Healthtech,
Medtech and Fintech will be prioritised. The Total Allocation under
this expanded investment focus will be no more than 10% of Jade
Road's present NAV, as of 30 June at US$106.2 million, down
slightly from US$106.4 million (31 December 2020) and no more than
20% once the NAV exceeds US$150 million. Investments in each
company will not exceed 5% of the total allocation, in order to
mitigate risk through diversification.
At the same time, we aim to limit single country and industry
exposures to 20% of the overall portfolio and reduce portfolio
exposure to China towards 30-40% in the near term.
By targeting the broad Asian SME subsector, Jade Road can access
an immense market in which it can leverage both its capital, and
its investment manager's direct relevant experience.
From a corporate perspective, Jade Road sees strong appeal in
the vibrant start-up environment in regions such as Hong Kong and
Singapore, typified by our investment in Singapore-based DocDoc, a
leading pan-Asian virtual network of physicians, clinics and
hospitals.
Investment candidates are undergoing detailed review from a
pipeline of potential opportunities in IT, Fintech, Healthcare and
online commerce.
In terms of ESG (Environmental, Social, Corporate Governance),
Jade Road has been incorporating ESG principles into our risk
management and due diligence processes. All potential investment
candidates must demonstrate that they are taking ESG seriously and
working towards being as fully ESG compliant for the stage of
company, taking proportionality into account.
It is my strong belief that government policy to encourage more
sustainable business models, technologies and consumption patterns
in Asia is likely to create greater demand for private capital.
Summary
Our focus throughout 2021 is on exits, restructurings and
investing in smaller, exciting IPO and pre-IPO investments that
potentially possess substantial upside. Some of these smaller
investments could have a disproportionate interest to our retail
investors.
In a market in which Asian SMEs are increasingly starved of
capital, Jade Road has seen opportunities to negotiate and invest
in structured instruments. Its preference for income-generating
assets puts an emphasis on credit instruments such as secured debt
or non-mandatory convertible bonds when structuring investments,
which the Company believes will result in a better constructed
portfolio with near-term downside protection.
The Board would like to take this opportunity to thank the
investment teams for their hard work and commitment during these
challenging times.
Jade Road is well positioned for the future with an experienced
investment management team, the development of a constructed base
of income generating assets for high quality growth, and a
resilient liquidity position and balance sheet. I hope to report
further progress against this strategy by the end of 2021.
The principal assets as of 30 June 2021 are detailed below:
Principal Effective Instrument Valuation Credit Cash receipts Equity Valuation
assets interest type at 31 income US$ million investment/ at 30
% December US$ other June
2020 million movement 2021
US$ million US$ million US$ million
Convertible
FLM Holdings - Bond 28.4 0.7 - - 29.1
Future
Metal Holdings Structured
Limited 84.8 Equity 50.4 0.3 - - 50.7
Meize Energy Redeemable
Industrial convertible
Holdings preference
Ltd 7.9 shares 8.2 - - - 8.2
DocDoc Convertible
Pte Ltd - Bond 2.4 0.1 - - 2.5
Infinity
Capital Secured
Group - Loan Notes 2.3 0.2 - - 2.5
Infinity
TNP 40 Equity 7.3 - - - 7.3
GCCF &
Other
investments - 8.3 - - - 8.3
Corporate
debt - (3.5) - - - (3.5)
Other
liabilities - (1.5) - - - (1.5)
Cash 4.1 - - (1.5) 2.6
Total N et Asset
Value 106.4 1.3 - (1.5) 106.2
----------------------------- ------------- ------------- --------- -------------- ------------- -------------
Future Metal Holdings Limited ("FMH")
Our largest asset by value is the dolomite quarry project
("Quarry") in China, Future Metal Holdings Limited ("FMHL"), which
was previously known as Hong Kong Mining Holdings. The Company has
an 85% shareholding in FMHL.
Starting from March 2021, a new contractor was appointed to
further enhance the efficiency of the operation and reach customers
with a further geographical radius. In line with the wide-ranging
industrial activities in China, sales have seen an upward trend.
The management of the Quarry is now in contact with external
parties regarding a potential business collaboration of highway
construction. Together with the potential demand growth from the
construction sector, the local team also noted the recovery in the
magnesium market. In August 2021, magnesium prices reached a 13
year high surging from RMB21,200 (USD3,270) to RMB22,500 (USD3,470)
per tonne due to a lack of supply in the market. The local team is
actively looking for potential smelters in the local region to
establish additional sales channels. JADE has been exploring the
option of a partial or full exit of this investment by actively
engaging with interested parties on the ground in the Shanxi
Province as well as with brokers in Mainland China, Hong Kong and
Singapore.
Including loan disbursements provided by the Company to FMHL and
its subsidiaries and accrued PIK interest, the estimated fair value
of the Company's investment is US$50.7 million as of 30 June
2021.
FLM Holdings ("FLM")
Our second largest investment by value is in the controlling
shareholder of a Hong Kong-based restaurant group Fook Lam Moon
("FLM").
The Company holds a Convertible Bond of US$26.5 million in Fook
Lam Moon Holdings. The Convertible Bond has a maturity of 5 years
and pays a coupon of 5.0% per annum (3.0% paid in cash with the
remainder rolled up with the principal amount outstanding).
FLM's business was impacted by the COVID-19 pandemic in 2020,
which severely limited inbound tourism, particularly from Mainland
China. However, FLM is an over 70-year-old business that has
weathered many past crises such as SARS and the Company is
confident in FLM's resilience and ability to ensure its long-term
future. As the Hong Kong government eases COVID-19 restrictions on
restaurants and some air travellers in 2021, the food and beverage
industry is gradually recovering to the pre-pandemic levels.
As of 30 June 2021, the carrying value of the Convertible Bond
was US$29.1 million taking into account the current face value of
the instrument, accrued PIK interest and cash interest receivable,
less an Expected Credit Loss ("ECL") provision of US$0.7 million
against aged cash interest receivables.
Meize Energy Industries Holdings Limited ("Meize")
Swift Wealth Investments Limited, a 100% (2019: 100%) owned
subsidiary of the Company incorporated in the British Virgin
Islands, holds a 7.2% stake in Meize through a redeemable
preference share structure.
Meize is a privately owned company that designs and manufactures
blades for both onshore and offshore wind turbines.
In the second half of 2020, Meize completed a third plant in
Jiangsu Province, which commenced operations in August 2020. The
Jiangsu Plant will be solely focused on producing offshore blades
due to demand in the market for this product. In terms of
production, it is the largest production site and produces 24 sets
of blades each month. The Jiangsu site is looking to double its
production by the middle of 2021.
Meize has maintained a full order book from its clients in 2021
due to the strong market demand, especially the offshore wind
market, and driven by their largest existing customer. The Jiangsu
plant initiated an expansion in early 2021 to meet the rising
demand, which was completed and commenced operation in June
2021.
As of 30 June 2021, the Company's interest in Meize had a fair
value of US$8.2 million based on a Discounted Cash Flow analysis.
The carrying amount represents a discount of over 50% to the full
redemption value of the Company's investment.
Infinity TNP
The Company maintains a 40% equity stake of Infinity Capital
Group Limited's ("ICG") wholly-owned subsidiary Infinity TNP, which
holds units in a luxury hotel-condominium called Tellus Niseko.
Tellus Niseko is a unique development in Hirafu Village, with
its high-end concierge service, an in-house Michelin star
chef-managed restaurant, in-room onsen (hot spring) baths, and
prime location just minutes away from the Grand Hirafu ski
lifts.
Tellus Niseko is in late stage discussions with several buyers
in the Asia-Pacific region to sell a number of units in the
development. The management team has been monitoring the local
market performance to ensure prices are reflected
appropriately.
As of 30 June 2021, the carrying value of its investment was
US$7.3 million.
Infinity Capital Group Limited ("ICG")
Ultimate Prosperity Limited, a 100% owned subsidiary of the
Company incorporated in the British Virgin Islands, holds a Secured
Loan to ICG.
ICG develops premium residential projects in Hirafu Village, a
world-class ski village in Niseko, Japan - one of the most popular
winter travel destinations in the world. The Company agreed to
provide a US$4.0 million Secured Loan note facility to ICG in
December 2018. The facility included two equal tranche drawdowns,
carrying a coupon of 17.5% per annum in cash. The first tranche and
second tranche were drawn on 31 January 2019 and 30 August 2019,
respectively. The Company was also issued detachable warrants,
which give it the right to purchase shares in ICG or its parent
company should either undertake a liquidity event, such as an
Initial Public Offering.
ICG has been closely monitoring the local tourism market to
decide on the winter operation plan. As soon as the pandemic
restrictions are lifted in Niseko, ICG shall recommence the
operations immediately.
As of 30 June 2021, the carrying value of the Secured Loan was
US$2.5 million taking into account the current face value of the
instrument and cash interest receivable, less an Expected Credit
Loss ("ECL") provision of US$47.2k against aged cash interest
receivables.
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 specialities. 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 November
2020, DocDoc partnered with SpesNet Global Group, a leading
healthcare technology provider, to integrate its digital
third-party administrator ("TPA") technology and provide a
first-of-its-kind complete digital health ecosystem to insurers,
supporting their policyholders through the continuum of care.
Under this agreement, DocDoc will receive exclusive access to
SpesNet's platform to include Singapore, Malaysia, Thailand, Hong
Kong, India, and the People's Republic of China. Going forward,
DocDoc will integrate SpesNet's digital TPA technology with
DocDoc's telemedicine platform and AI-powered doctor discovery
platform, HOPE (Heuristic for Outcome, Price and Experience), which
matches policyholders to relevant healthcare providers, to power a
holistic offering.
As of 30 June 2021, the carrying value of the Convertible Bond
was US$2.5 million. An annual coupon of 8% (4.0% cash and 4%
Payment-in-Kind was converted to 8% Payment-in-Kind).
John Croft
Chairman
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Note US$000 US$000 US$000
Income from unquoted
financial assets 575 525 1,137
Finance income from
loans 673 668 1,337
Gross portfolio income 4 1,248 1,193 2,474
Fair value changes on
financial assets at
fair value through profit
or loss 48 (14) 5,045
Expected credit loss
provision 9 - (322) (779)
------------ ------------- ------------
Net portfolio income 4 1,296 857 6,740
Management fees 13 (914) (900) (1,888)
Incentive fees - (40) (1,750)
Administrative expenses (394) (436) (1,017)
Operating (loss)/profit (12) (519) 2,085
Finance expense (259) (179) (442)
(Loss)/profit before
taxation (271) (698) 1,643
------------ ------------- ------------
Taxation 5 - - -
Other comprehensive
income
Foreign currency translation
differences - - -
Profit/(Loss) and total
comprehensive expense
for the year (271) (698) 1,643
============ ============= ============
Earnings per share 7
Basic (0.24)cents (0.69)cents 1.56 cents
============ ============= ============
Diluted (0.24)cents (0.69)cents 1.34 cents
============ ============= ============
The results above relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 31 December
30 June 2020 2020
2021 Unaudited Audited
Unaudited (Restated) (Restated)
Note US$000 US$000 US$000
----------------------------- ----- ----------- ------------- --------------
Assets
Unquoted financial assets
at fair value through
profit or loss 8 73,991 68,054 73,423
Loans and other receivables 9 34,681 33,691 33,970
Cash and cash equivalents 2,560 3,190 4,093
Total assets 111,232 104,935 111,486
----------- ------------- --------------
Liabilities
Other payables and accruals 1,515 1,227 1,530
Current liabilities 1,515 1,227 1,530
----------- ------------- --------------
Loans & borrowings 10 3,536 3,472 3,504
----------- ------------- --------------
Total liabilities 5,051 4,699 5,034
----------- ------------- --------------
Net assets 106,181 100,236 106,452
=========== ============= ==============
Equity and reserves
Share capital 11 148,903 145,084 148,903
Treasury share reserve (615) (671) (615)
Share based payment reserve 2,936 2,937 2,936
Accumulated losses (45,043) (47,113) (44,772)
----------- ------------- --------------
Total equity and reserves
attributable to owners
of the parent 106,181 100,236 106,452
=========== ============= ==============
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$000
Group balance at 1
January 2020 145,027 (671) 2,936 (46,415) 100,877
Loss for the period - - - (698) (698)
Other comprehensive
income - - - - -
--------- --------- --------- ------------ --------
Total comprehensive
expense for the period - - - (698) (698)
Transactions with
owners:
Issue of shares 57 - - - 57
Share buybacks - - - - -
Group balance at 30
June 2020 145,084 (671) 2,936 (47,113) 100,236
--------- --------- --------- ------------ --------
Profit for the period - - - 2,341 2,341
Other comprehensive
income - - - - -
--------- --------- --------- ------------ --------
Total comprehensive
income for the period - - - 2,341 2,341
Transactions with
owners:
Issue of shares 3,819 - - - 3,819
Treasury shares acquired - (201) - - (201)
Treasury shares sold - 257 - - 257
Share-based payments - - - - -
Group balance at 31
December 2020 and
1 January 2021 148,903 (615) 2,936 (44,772) 106,452
--------- --------- --------- ------------ --------
Loss for the period - - - (271) (271)
Other comprehensive
income - - - - -
--------- --------- --------- ------------ --------
Total comprehensive
income for the period - - - (271) (271)
Group balance at 30
June 2021 148,903 (615) 2,936 (45,043) 106,181
========= ========= ========= ============ ========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30-Jun 31 December
30-Jun 2020 2020
2021 Unaudited Audited
Unaudited (Restated) (Restated)
US$'000 US$'000 US$'000
------------------------------------- ----------- ------------ ------------
Cash flow from operating activities
Profit/(Loss) before taxation (271) (698) 1,643
Adjustments for:
Finance income (673) (668) (1,336)
Finance expense 259 179 442
Exchange (gain)/loss (58) 19 (197)
Fair value changes on unquoted
financial assets at fair value
through profit or loss (566) (511) (5,923)
Share-based expenses - - 479
Decrease in other receivables (16) 398 992
(Decrease)/Increase in other
payables and accruals (15) (1,072) 202
----------- ------------ ------------
Net cash used in operating
activities (1,340) (2,353) (3,698)
----------- ------------ ------------
Cash flow from investing activities
Purchase of unquoted financial
assets at fair value through
profit and loss - (207) (207)
Net cash (used in)/generated
from investing activities - (207) (207)
----------- ------------ ------------
Issue of Shares - 2,367
Sale of treasury shares - - 257
Purchase of treasury shares - - (201)
Proceeds from loans and borrowings - 1,720 1,720
Payment of interest on loans
and borrowings (228) (245) (476)
----------- ------------ ------------
Net cash (used in)/generated
from financing activities (228) 1,475 3,667
----------- ------------ ------------
Net (decrease)/increase in
cash & cash equivalents during
the period (1,568) (1,085) (238)
Cash and cash equivalents and
net debt at the beginning of
the period 4,093 4,275 4,275
Foreign exchange on cash balances 35 - 56
Cash & cash equivalents and
net debt at the end of the
period 2,560 3,190 4,093
=========== ============ ============
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: JADE) 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 20 September 2021.
2. BASIS OF PREPARATION
The condensed consolidated interim financial information has
been prepared in accordance with International Accounting Standard
("IAS") 34 "Interim Financial Reporting" and presented in US
Dollars.
3. PRINCIPAL ACCOUNTING POLICIES
The condensed consolidated interim financial information has
been prepared on the historical cost convention, as modified by the
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 2021 are the same as those followed in the
preparation of the Group's annual financial statements for the year
ended 31 December 2020 and are those the Group expects to apply
into financial statements for the year ending 31 December 2021.
The seasonality or cyclicality of operations does not impact 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
2021 2020 2020
US$000 US$000 US$000
Income on unquoted financial
assets 575 525 1,137
Financial income on loans
& receivables 673 668 1,336
Gross portfolio income 1,248 1,192 2,473
--------- -------- ------------
Expected credit loss provision - (322) (529)
Other provisions - - (250)
Foreign exchange 48 (14) 215
Equity fair value adjustments - - 4,831
Portfolio income through
profit or loss 1,296 857 6,740
--------- -------- ------------
Net assets:
FMHL 50,696 45,263 50,400
Meize 8,201 8,201 8,200
GCCF 2,745 2,745 2,745
DocDoc 2,491 2,301 2,395
ICG 2,522 2,207 2,346
Infinity TNP 7,320 7,320 7,320
Other 16 17 17
--------- -------- ------------
Unquoted assets at fair
value through profit or
loss 73,991 68,054 73,423
Loans and other receivables
at fair value through the
profit or loss (third party) 34,681 33,691 33,970
Cash 2,560 3,190 4,093
Liabilities (5,051) (4,699) (5,034)
Net assets 106,181 100,236 106,452
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
2021 2020 2020
US$000 US$000 US$000
Income on unquoted financial
assets through profit or
loss 575 525 1,137
Equity fair value adjustments:
* FMHL - - 4,831
* ICG - - -
--------- -------- ------------
- - 4,831
Expected credit loss provision:
- ICG - (62)
Foreign exchange on unquoted
financial assets at fair
value through profit or
loss (9) (14) 17
Total fair value changes
on financial assets at
fair value through profit
or loss 566 511 5,923
========= ======== ============
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 2021 (30 June 2020:
Nil).
7. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share
attributable to owners of the Group is based on the following:
Six months ended Year ended
30 June 30 June 31 December
2021 2020 2020
US$000 US$000 US$000
Numerator
Basic/Diluted: Net profit/(loss) (271) (698) 1,643
--------- -------- ------------
Number of shares
'000 '000 '000
Denominator
Basic: Weighted average shares 115,278 101,618 105,518
Dilutive effect of warrants - - 17,568
Diluted: Adjusted weighted average shares 115,278 101,618 123,086
--------- -------- ------------
Earnings per share
Basic (cents) (0.24) (0.69) 1.56
Diluted (cents) (0.24) (0.69) 1.34
For the six months ended 30 June 2021 and 2020, 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
2021 2020 2020
US$000 US$000 US$000
At the beginning of the period 73,423 67,172 67,172
Fair value changes through
profit and loss 568 544 5,975
Expected credit loss provision
through profit and loss - - (62)
Additions - 182 264
Reclassification - 156 156
Payment of cash interest - - (81)
At the end of the period 73,991 68,054 73,423
======== ======== ============
9. LOANS AND OTHER RECEIVABLES AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June 31 December
2021 2020 2020 (Restated)
US$000 US$000 US$000
At the beginning of the
period 33,970 33,516 33,516
Additions - 364 64
Reclassification - (156) (156)
Fair value changes through
profit and loss 38 (33) (324)
Expected credit loss provision
through profit and loss - - (467)
Finance income on loans 673 - 1,337
At the end of the period 34,681 33,691 33,970
======== ======== =================
Note 31 December
30 June 30 June 2020
2021 2020 (Restated) (Restated)
US$000 US$000 US$000
Loans 29,081 27,820 28,408
Other receivables 14 5,600 5,442 5,562
Amounts receivable from - 429 -
related parties
Total loans and borrowings 34,681 33,691 33,970
======== ================= ============
Loans represent the Convertible Bond issued by Fook Lam Moon
Holdings plus accrued interest. The Group has assessed the
recoverability of Loans in accordance with its policy, and
determined that an ECL allowance is required in respect of accrued
cash interest relating to its fixed interest credit investment. The
breakdown of Loans is as follows:
30 June 30 June 31 December
2021 2020 2020
US$000 US$000 US$000
Loan principal 26,500 26,500 26,500
Accrued PIK interest 1,408 860 1,132
Accrued interest payable in
cash 1,877 1,019 1,480
-------- -------- ------------
Gross loans receivable 29,785 28,379 29,112
-------- -------- ------------
Lifetime ECL allowance recognised (704) (559) (704)
Net loans receivable 29,081 27,820 28,408
======== ======== ============
30 June 30 June 31 December
2021 2020 2020
US$000 US$000 US$000
At the beginning of the period 704 237 237
ECL allowance charged to profit
or loss - 322 467
At the end of the period 704 559 704
======== ======== ============
10. LOANS AND BORROWINGS
30 June 30 June 31 December
2021 2020 2020
US$000 US$000 US$000
Corporate debt 3,536 3,472 3,504
Total loans and borrowings 3,536 3,472 3,504
======== ======== ============
The movement in loans and borrowings is as follows:
30 June 30 June 31 December
2021 2020 2020
US$000 US$000 US$000
Opening balance 3,504 1,909 1,909
Proceeds from issue of loan
notes - 1,720 1,720
Termination of lease - (34) (34)
Capitalised borrowing costs - (57) (57)
Borrowing costs amortised 32 24 56
Interest expense accrued 228 155 386
Payment of interest liability (228) (245) (476)
Closing balance 3,536 3,472 3,504
======== ======== ============
11. SHARE CAPITAL
Number of Amount
Shares US$000
Authorised, called-up and fully paid
ordinary shares of no-par value each
at 30 June 2020 101,755,422 144,413
Sale of treasury shares 1,264,000 257
Purchase of treasury shares (595,000) (201)
Share issue - open offer and placement 8,356,663 2,699
Share issue - HCIL incentive fees 4,496,784 1,453
Share issue costs - (333)
Authorised, called-up and fully paid
ordinary shares of no-par value each
at 31 December 2020 and at 30 June 2021 115,277,869 148,288
------------ --------
Consisting of:
Authorised, called-up and fully paid
ordinary shares of no-par value each
at 30 June 2021 117,925,673 148,903
Authorised, called-up and fully paid
ordinary shares of no-par value held
as treasury shares by the Company at
30 June 2021 (2,647,804) (615)
(i) Under the BVI corporate laws and regulations, there is no
concept of "share premium", and all proceeds from the sale of
no-par value equity shares are deemed to be share capital of the
Company.
12. FINANCIAL INSTRUMENTS
Financial assets
As at As at
30 June 30 June As at
2021 2020 31 December
(Restated) 2020 (Restated)
US$'000 US$'000 US$'000
Unquoted financial assets
at fair value 73,991 68,054 73,423
Loans at fair value 29,081 27,820 28,408
Other receivables at fair
value 5,559 5,831 5,536
Cash and cash equivalents
at amortised cost 2,560 3,190 4,093
--------- --- ------------ --- -----------------
Financial assets 111,191 104,895 111,460
========= === ============ === =================
Financial liabilities
As at As at As at
30 June 30 June 31 December
2021 2020 2020
US$'000 US$'000 US$'000
Other payables and accruals
at amortised cost 1,515 1,227 1,530
Corporate debt at amortised
cost 3,536 3,472 3,504
--------- --------- -------------
Financial liabilities 5,051 4,699 5,034
========= ========= =============
The Corporate Bond has a remaining term of over 1 year, due for
repayment in October 2022. All other financial liabilities are due
within 12 months.
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:
Note As at As at
30 June 31 December
As at 2020 2020
30 June (Restated)
2021 (Restated)
US$000 US$000 US$000
Level 3
Unquoted financial assets at
fair value 8 73,991 68,054 73,423
Loans at fair value 9 29,081 27,820 28,408
Other receivables at fair value 9,14 5,559 5,831 5,536
108,631 101,705 107,367
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.
13. 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
2021 2020 2020
Notes US$000 US$000 US$000
Remuneration payable to Directors 159 122 256
Harmony Capital
Management fee (i) 914 900 1,888
Incentive fee - 40 1,750
Amount due to Harmony Capital at period end 1,289 974 1,289
(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 the incentive fee shall be paid in cash and
the remaining 50% of the incentive fee shall be paid by ordinary
shares.
14. PRIOR YEAR ERROR
In the previous financial year, cash held on account by
investment brokers was presented as part of the other receivables
balance. This was an error, as the balances were held for the
purposes of meeting short term cash commitments rather than for
investment. The broker accounts were not subject to restrictions
and were readily convertible into cash at short notice. Therefore,
the accounts met the definition of cash equivalents detailed in the
Company's accounting policies and should be reclassified from loans
and other receivables to cash and cash equivalents. The impact of
the restatement at the beginning and the end of the prior period is
as follows:
(Reported) (Restated) (Restated)
1 January
31 December 31 December 1 January 2020
2020 2020 2020 US$000
US$000 US$000 US$000
Loans and other receivables
at fair value through
profit or loss 34,390 33,970 33,720 33,516
Cash and cash equivalents 3,673 4,093 4,071 4,275
15. EVENTS AFTER THE REPORTING PERIOD
The Management Team at the Quarry is in late stage discussions
for a large off-take agreement for a construction project that is
underway.
16. COPIES OF THE INTERIM REPORT
The interim report is available for download from
www.jaderoadinvestments.com.
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END
IR EAKNEAELFEEA
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