TIDMADAM
RNS Number : 5031R
Adamas Finance Asia Limited
22 September 2017
Adamas Finance Asia Limited
(AIM: ADAM)
("Adamas Finance Asia", "ADAM", the "Company" or the
"Group")
Interim Consolidated Results for the six months ended 30 June
2017
Repositioning to deliver long-term capital and income growth
Adamas Finance Asia, a London quoted Asian diversified
investment vehicle, announces its interim results for the six
months ended 30 June 2017, after a period of significant progress
in positioning for future growth.
Key Points:
-- Net loss of US$1.03 million (H1 2016: US$454,000)
-- Unrealised fair value gain on asset portfolio of US$337,000 (H1 2016: US$280,000)
-- Consolidated loss per share of US$0.54 (H1 2016: US$0.24)
-- Consolidated NAV at 30 June 2017 of US$76.8 million (31 December 2016: US$77.8 million)
-- Major disposal of legacy asset generating over US$15m of cash available for re-investment
-- Appointment of Harmony Capital as new Investment Manager in May 2017
-- Shareholder approval of changes to Investing Policy
Chairman of Adamas Finance Asia, John Croft, commented: "The
first half of 2017 was one of significant change for the Company as
it started to reposition for future growth following the
appointment of a new Investment Manager in May and a broadening of
the Investing Policy which was approved by shareholders. Activity
included the disposal of the Tian Tong Shan Villa Project,
generating in excess of US$15m in cash now available for
re-investment. Additionally, post the period end, the Company
recently announced the disposal of its investment in Global Pharm
for a cash consideration of US$15.6m. These two disposals represent
a significant step forward and, subject to completion of the Global
Pharm disposal, provide the Company with substantial cash resources
to be deployed into new investments. These proactive actions taken
by the Board have provided us with a much firmer and more positive
platform from which to grow the business.
"As mentioned at the time of our 2016 final results in June, we
have plans to strengthen the Board with some new key appointments.
I was therefore delighted to announce the appointment of Hugh,
Viscount Trenchard to the Board shortly after our 2016 final
results announcement. Hugh brings a wealth of experience in Asia
and a wide network of contacts, as well as insights that will help
shape the Company's new investment strategy and development in the
future.
"I am confident, with our new strategy and Investment Manager in
place, that we will be able to announce further progress during the
remainder of 2017."
Enquiries:
Adamas Finance Asia Limited
John Croft +44 (0) 1825 830587
Nominated Adviser
WH Ireland Limited
Tim Feather
Ed Allsopp
James Sinclair-Ford +44 (0) 113 394 6600
Broker
finnCap Limited +44 (0) 20 7220 0500
William Marle
Grant Bergman
Public Relations Advisers
Buchanan
Charles Ryland
Victoria
Hayns
Henry Wilson +44 (0) 20 7466 5000
About Adamas Finance Asia ("ADAM")
ADAM is a London quoted investment company focusing on
delivering long-term income and capital growth to shareholders
through a diverse portfolio of pan-Asian investments.
ADAM aims to provide uncorrelated returns through a combination
of capital growth and dividend income from a broad spectrum of
national geographies and asset classes.
The Company's recently appointed investment manager Harmony
Capital, which has a dedicated team with real Asian expertise, will
focus on the strategy of creating income and capital growth as well
as addressing the issues of the ongoing legacy portfolio. Harmony
is sourcing predominantly private opportunities and a strong
pipeline already exists. Income generating assets include
investments in property, mining, pharmaceuticals, and telecoms
across Asia.
Chairman's Statement
The first half of 2017 can be characterised as one of
significant change for the Company, which included the disposal of
the Tian Tong Shan Villa Project, generating in excess of US$15m in
cash, now available for re-investment.
Financial results for the period continued to show losses driven
primarily by operating costs, with net portfolio asset valuations
remaining broadly neutral.
The major changes in portfolio asset valuations as compared with
31 December 2016 were as follows:
-- The disposal of the Tian Tong Shan Villa Project resulted in
a write down of US$32.0m in the 2016 accounts. During this
reporting period, the Company announced receipt of US$15.1m in cash
in part settlement of this transaction leaving a balance of US$1.8m
which has been converted into a zero-coupon two-year loan.
-- Post the period end, the Company announced the disposal of
the interest in Global Pharm for a cash consideration of US$15.6m.
The consideration is due to be paid within 120 days of 15 September
2017, the date of the sale agreement. Consequently, the carrying
value of the interest in Global Pharm was written down to US$15.6m
as at 30 June 2017, resulting in a loss of US$1.7m being recognised
in the income statement for the interim results.
-- As at 30 June 2017, the market value of the Company's listed
securities investments had risen by US$1.4m since 31 December
2016.
The principal assets as at 30 June 2017 are detailed below:
Current portfolio
Principal Assets Effective Instrument type Valuation
Interest as at 30
June 2017
US$ million
Global Pharm Holdings Group Redeemable convertible
Inc. - bond 15.6
Fortel Technology Holdings/I-Buying - Interest bearing loan 11.5
Hong Kong Mining Holdings
Limited 10.95% Structured equity 8.7
Meize Energy Industrial Redeemable convertible
Holdings Ltd 7.9% preference shares 8.2
GCCF Investment Fund - 2.7
Listed Securities - 3.4
Other Investments - 10.2
Cash - 15.0
75.4
-------------
Global Pharm Holdings Group Inc. ("Global Pharm") is involved in
pharmaceuticals, the cultivation of herbs for Traditional Chinese
Medicine ("TCM") and TCM processing and distribution. As announced
previously, Global Pharm did not meet the original redemption
payment plan agreed in December 2014. Global Pharm has been
investing in the planned launch of an online Ginseng Exchange in
Jilin Province which resulted in its cash flow being adversely
impacted as it invested in building a stockpile of ginseng in
readiness for the launch of the exchange. At 31 December 2016, an
impairment amounting to US$1.9m was recognised, equivalent to 10%
of the previous US$19.2 million carrying value. The Company
recently announced the disposal of its interest for a cash
consideration of US$15.6m which resulted in a further impairment
charge of US$1.7m being reflected in the interim results. Payment
of the consideration is due within 120 days of 15 September
2017.
Fortel Technology Holdings Limited ("Fortel") During 2016 the
Group agreed to convert its equity holding in Fortel to an
interest-bearing loan in order to facilitate the IPO for its
Chinese subsidiary on the NEEQ exchange in Beijing. The conversion
was completed in October 2016.
Hong Kong Mining Holdings Limited ("HKMH") is a resources
company whose primary asset is a large dolomite magnesium limestone
mine in the province of Shanxi, China. HKMH's application to list
on the Hong Kong Exchange was rejected by the exchange as
previously announced. ADAM's Investment Manager is exploring
various alternatives for restructuring this asset and/or seeking
buyers for its stake. The Company recently provided a small
additional loan amounting to US$400,000 to facilitate the first
stage of a proposed restructuring of this investment. Further
details of this will be announced in due course.
Meize Energy Industries Holdings Limited ("Meize") is a
privately-owned company that designs and manufactures blades for
wind turbines. It has a strong order book and its financial
performance has been in line with expectations. Negotiations
regarding the partial sale and restructuring of this investment are
ongoing.
Investment Manager Appointment
During the reporting period, we announced the appointment of a
new, highly-experienced Investment Manager, Harmony Capital
("HCIL"). HCIL, with affiliates in Singapore, Hong Kong and London,
has its own investment platform and team managed by Mr. Suresh
Withana. The team's focus is the growth and management of ADAM's
business including, but not limited to, assessing investment
opportunities, managing portfolio investments and expanding the
Company's capital base for investment in middle-market companies
across Asia.
Mr. Withana was most recently Global Head of Special Situations
and Co-Head of Asia at Tikehau Capital, the listed investment
management company with approximately EUR10 billion in assets.
Previously he was the co-founder and Chief Investment Officer at
Harmony Capital Partners which deployed US$275 million in Asian
special situations investments. Prior to that, he was a Director of
the Global Special Situations Group at Mizuho International Plc in
London and Vice President, Investment Banking at Merrill Lynch
International. In total, he has accumulated 23 years of experience,
including over 13 years of special situations investing primarily
focused on Asia.
In addition to the appointment of a new Investment Manager, the
shareholders recently approved amendments to the Investing Policy
which is intended to broaden ADAM's activities and provide more
flexibility for the Manager to build a portfolio of investments
producing income and capital gains. These two significant recent
changes have provided us with a much firmer and more positive
platform from which to grow the business.
Board Appointment
As mentioned at the time of our 2016 final results, we also have
plans to strengthen the Board with some key new appointments. I was
therefore delighted to have been able to announce the appointment
of Hugh, Viscount Trenchard to the Board shortly after our final
results announcement. Hugh brings a wealth of experience of the
region and a wide network of contacts, as well as insights that
will help shape the Company's investment strategy and development
in the future.
Outlook
Our objectives are now clearly focused on providing our
shareholders with access to income generating and capital growth
opportunities throughout Asia. With a new Investment Manager in
place, I am confident we can build a strong and diverse pan-Asian
focused portfolio, whilst generating cash from the sale of legacy
holdings.
Asset disposals announced during 2017 will, subject to
completion of the Global Pharm disposal, generate in excess of
US$30m in cash. This will provide the Company for the first time
with significant resources enabling new investments to be made. The
Company's new Investment Manager is working on a strong pipeline of
opportunities and I look forward to announcing details of new
investments in due course."
John Croft
Chairman
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note US$000 US$000 US$000
Realised gain on disposal
of investments - 5 5
Fair value changes on
financial assets at fair
value through profit
or loss 337 280 (34,094)
Loan Written Off - - (2,238)
Administrative expenses (1,435) (1,075) (1,948)
-------------- ----------- ------------
Operating Loss (1,098) (790) (38,275)
Net finance income /
(expense) 40 136 (18)
Dividend income - 200 911
Other income 28 - 220
Loss before taxation (1,030) (454) (37,162)
Taxation 5 - - -
Loss for the period (1,030) (454) (37,162)
-------------- ----------- ------------
Total comprehensive loss
for the period (1,030) (454) (37,162)
Loss per share 7
(0.24) (19.36)
Basic (0.54) cents cents cents
(0.24) (19.36)
Diluted (0.54) cents cents cents
The results above relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note US$000 US$000 US$000
----------------------------- ----- ----------- ------------ --------------
Assets
Unquoted financial assets
at fair value through
profit or loss 8 60,344 110,091 75,044
Loans and other receivables 1,455 3,749 1,514
Cash and cash equivalents 15,025 869 1,308
----------- ------------ --------------
Total assets 76,824 114,709 77,866
----------- ------------ --------------
Liabilities
Loan payables and interest - -
payables
Other payables and accruals 65 211 77
--------------
Total liabilities 65 211 77
----------- ------------ --------------
Net assets 76,759 114,498 77,789
=========== ============ ==============
Equity and reserves
Share capital 9 129,543 129,543 129,543
Share based payment reserve - 1 -
Accumulated losses (52,784) (15,046) (51,754)
----------- ------------ --------------
Total equity and reserves
attributable to owners
of the parent 76,759 114,498 77,789
=========== ============ ==============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
based Foreign
Share payment translation Accumulated
capital reserve reserve losses Total
US$000 US$000 US$000 US$000 US$000
Group balance at 1 January
2016 129,543 1 - (14,592) 114,952
Loss for the period - - - (454) (454)
Other comprehensive
income
Total comprehensive
expense for the period - - - (454) (454)
Group balance at 30
June 2016 129,543 1 - (15,046) 114,498
--------- --------- ------------- ------------ ----------
Loss for the period - - - (36,708) (36,708)
Other comprehensive
income - - - - -
Total comprehensive
expense for the period - - - (36,708) (36,708)
--------- --------- ------------- ------------ ----------
Share-based payments - (1) - - (1)
Group balance at 31
December 2016 129,543 - - (51,754) 77,789
--------- --------- ------------- ------------ ----------
Loss for the period - - - (1,030) (1,030)
Other comprehensive
income - - - - -
Total comprehensive
expense for the period - - - (1,030) (1,030)
--------- --------- ------------- ------------ ----------
Group balance at 30
June 2017 129,543 - - (52,784) 76,759
--------- --------- ------------- ------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30-Jun 30-Jun 31 December
2017 2016 2016
Unaudited Unaudited Audited
US$'000 US$'000 US$'000
-------------------------------------- ----------- ----------- ------------
Cash flow from operating activities
Loss before taxation (1,030) (454) (37,162)
Adjustments for:
Dividend Income - (200) (911)
Net finance (income) / expense (40) (136) 18
Loan Written Off - - 2,238
Fair value changes on unquoted
financial assets at fair value
through profit or loss (337) (280) 34,094
Realised gain on disposal of
investment - (5) (5)
Share-based expenses - - (1)
Decrease in other receivables (12) 65 (12)
(Decrease)/ increase in other
payables and accruals 99 (52) (186)
Net cash used in operating
activities (1,320) (1,062) (1,927)
Cash flow from investing activities
Dividend income received - 200 1,611
Proceed received from unquoted
financial assets at fair value
through profit or loss 15,001 3,263 756
Purchase of unquoted financial
assets at fair value through
profit and loss - (2,560) (2,560)
Loans granted 36 - -
Proceeds from repayment of
loan granted - - 2,400
----------- ----------- ------------
Net cash generated from investing
activities 15,037 903 2,207
----------- ----------- ------------
Cash flows from financing activities
Net finance income received - (216) (216)
Loans repaid - (2,400) (2,400)
Net proceeds from issue of
shares - - -
----------- ----------- ------------
Net cash used in financing
activity - (2,616) (2,616)
----------- ----------- ------------
Net (decrease)/ increase in
cash & cash equivalents during
the period 13,717 (2,775) (2,336)
Cash & cash equivalents at
the beginning of the period 1,308 3,644 3,644
Cash & cash equivalents at
the end of the period 15,025 869 1,308
=========== =========== ============
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
811-817, 8/F, Bank of America Tower, 12 Harcourt Road, 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
Group is principally engaged in investing primarily in unlisted
assets in the areas of luxury resorts real estate, pharmaceutical,
mining, power generation, 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 22 September 2017.
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 2017 are the same as those followed in the
preparation of the Group's annual financial statements for the year
ended 31 December 2016 and are those the Group expects to apply
into financial statements for the year ending 31 December 2017.
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, which is reportable in two cash generating units.
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
segments for the periods are as follows:
BVI
Six months ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
US$000 US$000 US$000
-
Realised gain on disposal of investments 0 5 5
Fair value changes on financial assets
at fair value through profit or loss 337 280 (34,094)
Financial income 40 136 80
Dividend income - 200 911
Other income 28 - 220
Note: There is no activity for the business segment in HK.
5. TAXATION
No charge to taxation arises for the six months ended 30 June
2017 and 2016 as there were no taxable profits in either
period.
Tax reconciliation:
Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
US$000 US$000 US$000
Loss before taxation (1,030) (454) (37,162)
----------- -------- ------------
Effective tax charge at 16.5%
(2015:16.5%) (170) (221) (6,132)
Effect of:
Differences in overseas taxation
rates 170 221 6,132
----------- -------- ------------
Effective tax rate - - -
----------- -------- ------------
The effective tax charge is calculated based on the rate of
corporate tax in Hong Kong. As at 30 June 2017, the Group has no
unused tax losses (30 June 2016: Nil) available for offset against
future profits.
6. DIVID
The Board does not recommend the payment of an interim dividend
in respect of the six months ended 30 June 2017 (30 June 2016:
Nil).
7. LOSS PER SHARE
The calculation of the basic and diluted 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
2017 2016 2016
US$000 US$000 US$000
Numerator
Basic / Diluted: Net Gain/ (loss) (1,030) (454) (37,162)
--------- -------- ------------
Number of shares
'000 '000 '000
Denominator
Basic: Weighted average shares 191,967 191,967 191,967
Effect of diluted securities:
Share options - 150 -
Warrant - - -
--------- -------- ------------
Adjusted weighted average
Diluted: shares 191,967 192,117 191,967
--------- -------- ------------
For the six months ended 30 June 2017 and 2016, the share
options are anti-dilutive and therefore the weighted average shares
in issue are 191,967,084 and 191,967,084 respectively.
8. UNQUOTED FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June 31 December
2017 2016 2016
US$000 US$000 US$000
At the beginning of the period 75,044 110,593 110,593
Fair value changes through
profit and loss 337 280 (34,094)
Addition - 2,560 2,480
Disposals (15,037) (3,342) (3,935)
At the end of the period 60,344 110,091 75,044
========= ========= ============
9. SHARE CAPITAL
Number of Amount
Shares US$000
Authorised, called-up and fully paid
ordinary shares of no par value each
at 31 December 2016 and 30 June 2017 191,967,084 129,543
============ ========
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.
10. 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:
l Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
l 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
l 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
2017 2016 2016
US$000 US$000 US$000
Level 3
Unquoted financial assets at
fair value through profit or
loss (note 8) 60,344 110,091 75,044
--------- --------- -------------
60,344 110,091 75,044
--------- --------- -------------
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.
11. 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
2017 2016 2016
Note US$000 US$000 US$000
Amount due to Directors (i)
* John Croft 12 7 -
* Ernest Wong Yiu Kit 3 2 2
* Conor MacNamara 6 3 3
Amount due from
Adamas Global Alternative Investment
Management Inc. 309 49 292
Period-end balance arising
from sales/ purchases of services
Management fee to Investment
Manager (ii) 735 609 1,182
(i) The amounts due thereto are unsecured, interest free and
have no fixed term of repayment. There are no other contracts of
significance in which any director has or had a material interest
during the current period.
(ii) Adamas Global Alternative Investment Management Inc. was
the Investment Manager of the Group until 1 May 2017. The
management fee which is calculated and paid bi-annually in advance
calculated at an annual rate of 1% of the higher of the net asset
value of the Company's portfolio of assets or market
capitalisation.
(iii) Harmony Capital Investors Limited is the current
Investment Manager of the Group and the appointment starts from 1
May 2017. The management fee which is calculated and paid
bi-annually in advance calculated at an annual rate of 1.75% of the
net asset value of the Company's portfolio of assets. Management
fees of US$235,000 and US$500,000 were incurred for Harmony Capital
and Adamas Global Alternative Investment Management Inc.
respectively during the reporting period.
12. COPIES OF THE INTERIM REPORT
The interim report is available for download from
www.adamasfinance.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DGGDCRSDBGRB
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