REG - Jade Road Investmnts - INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2022
22/09/2022 12:00
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RNS Number : 3362A Jade Road Investments Limited 22 September 2022
22 September 2022
JADE ROAD INVESTMENTS LIMITED
("Jade Road Investments", "JADE", the "Company" or the "Group")
INTERIM CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
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 2022.
Financial Highlights:
· Total income increased to US$1.56 million from interest income and
profit on partial disposal of one investment (H1 2021: US$1.24 million).
· Net profit of US$1.02 million (H1 2021: US$0.27 million loss).
· Consolidated profit per share (basic) of US$0.88 cents (H1 2021:
US$0.24 cents loss).
· Consolidated NAV at 30 June 2022 increased slightly by 1.5% to US$69.04
million/GBP 56.83million (31 December 2021: US$68.03 million/GBP 50.33
million).
· NAV per share at 30 June 2022 US$0.59 (GBP0.49 ) (30 June 2021
US$0.90/GBP0.65).
· Period end cash position of US$0.44 million (30 June 2021: US$2.56
million).
Investment and Operational Highlights:
· Future Metal Holdings Limited ("Future Metal")
o The Investment Manager and Board of the Company continue to focus on
divestment opportunities for this asset.
o The local management team is actively seeking new sales channels to
enhance the business and also seeking local divestment opportunities as
directed by the Investment Manager.
· Meize Energy Industries Holdings Limited ("Meize")
o The Company partially divested its interest in the period as it entered
into a share sale agreement for 112,500 shares of the Series B Preferred
Equity in Meize for consideration of USD1.2 million, which was settled in
three equal tranches.
o The first tranche was received in June 2022 with the remaining two
tranches received by the end of August 2022.
o The Company maintains an interest of 6.3 per cent in this business.
· DocDoc Pte Ltd ("DocDoc")
o The investee company has continued to develop its 'Neo Insurer' model by
building partnerships with insurance companies in the region. It is also in
discussions with various investors regarding capital raisings to position the
business for its future growth.
Chairman of Jade Road Investments, John Croft, commented:
"The past six months continued to pose a challenging period for the Chinese
economy as it faces the slowest GDP growth forecast in four decades.
Notwithstanding these difficult times, Jade Road successfully completed the
partial divestment of Meize, demonstrating that the Company has the in-country
resources and expertise to work closely with portfolio companies to achieve
investment returns.
The Board of the Company and the Investment Manager's assessment is that Asian
SMEs continue to provide investment opportunities for the Company as strong,
income-generating assets, at an attractive entry point for Jade.
The Board is confident that significant opportunities exist for Jade Road
going forward, particularly investment candidates in the IT, Fintech,
Healthcare, and online commerce sectors in Southeast Asia."
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, and
is 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.
The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the “UK MAR”) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company’s obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
Chairman's Statement
The successful partial disposal of Meize Energy Industries ("Meize), a leading
privately owned wind turbine blade manufacturing company in China, at a 22%
premium to the carrying value as at the 31st of December 2021, helped validate
Jade Road's investment strategy during challenging times for the capital
markets.
The past six months continued to pose a challenging period for the Chinese
economy as it faces the slowest GDP growth forecast in four decades.
Notwithstanding these difficult times, Jade Road successfully completed the
partial divestment of Meize, demonstrating that the Company has the in-country
resources and expertise to work closely with portfolio companies to achieve
investment returns.
Total income increased to USD1.56 million from interest income and profit,
compared to the corresponding period in the previous year (H1 2021: USD1.24
million).
Net profit increased to USD1.02 million (H1 2021: USD0.27 million loss) while
consolidated profit per share (basic) increased to USD0.88 compared to a loss
of USD0.24 (H1 2021).
Investment Portfolio
Jade Road's largest shareholding is an 85% stake in Future Metal Holdings
Limited (FMHL), the largest magnesium dolomite quarry in Shanxi Province. The
gradual removal of travel restrictions in China is helping FMHL to reach out
to new clients with a further geographical radius for its high-end products.
The investment team's focus is on achieving a partial or complete sale of this
asset and a formal sales process has been initiated with this objective in
mind.
In June 2022, the Company announced the partial divestment via a share
purchase agreement (SPA) for 112,500 shares of the Series B Preferred Equity
in Meize for a consideration of USD1.2 million. The consideration for the
disposal was to be received in three equal tranches of USD400,000. The first
of these tranches was received in June, the second and third tranche payments
of USD400,000 were received in July and August, thereby completing the
transaction.
The core investment strategy remains to pivot away from China and focus on the
broader Asian SME subsector, which is showing greater resilience than larger
companies in terms of recovery and build a base of income generating assets
that covers overheads, management fees and finance costs, with a growing
surplus to fund dividends.
The Board is confident that significant opportunities exist for Jade Road
going forward, particularly investment candidates in the IT, Fintech,
Healthcare and online commerce sectors in Southeast Asia.
A good example is Jade Road's investment in Singapore-based DocDoc, which
continues to develop its Neo Insurer model.
ESG
Environmental, Social and good corporate Governance is integral to Jade Road's
responsible investment approach., which is executed through its Investment
Manager, Harmony Capital.
Post Balance Sheet Events
The partial disposal of the Company's interest in Meize Energy for $1.2m was
announced in June 2022. $800k of the total $1.2m consideration was received
in two tranches in July and August. As reported, the partial divestment of
Meize implies a valuation of USD10 million and a premium of 22.0% to the
carrying value as at the 31st of December 2021 (USD8.2 million). Following
this transaction, Jade retains a 6.3% stake in Meize.
The Board remains confident in the longer term prospects of this and its other
portfolio investments.
Summary
Whilst China falters, the Asian Development Bank has reported that "developing
Asia's economies are forecast to grow 5.2% this year and 5.3% in 2023, thanks
to a robust recovery in domestic demand and continued expansion in exports".
The Board of the Company and the Investment Manager's assessment is that Asian
SMEs continue to provide investment opportunities for the Company as strong,
income-generating assets, at an attractive entry point for Jade. Given the
stage of growth of many of these SMEs, the Investment Manager continues to
pursue a strategy of structuring investments through credit instruments where
possible. Coupled with continued divestments from our Chinese legacy assets,
the Company believes this investment strategy will create a better constructed
portfolio with near-term downside protection.
I would like to take this opportunity to thank the investment team for the
successful completion of the partial divestment in Meize, proving that with
patience and perseverance, deals can still be done.
I would also like to thank our shareholders for your continued support, and I
look forward to updating you on progress.
*Asian Development Bank, 'Developing Asia Economies Set to Grow 5.2% this Year Amid Global Uncertainty', 6 April 2022.
The principal assets as of 30 June 2022 are detailed below:
Principal assets Effective interest % Instrument type Valuation at 31 December 2021 Credit income US$ million Cash receipts Equity investment/ other movement US$ million Fair value adjustment US$ million Valuation at 30 June 2022
US$ million US$ million US$ million
FLM Holdings - Convertible Bond - 0.7 - - -
(0.7)
Future Metal Holdings Limited 84.8 Structured Equity 50.4 0.3 - - 50.7
-
Meize Energy Industrial Holdings Ltd 6.3 Redeemable convertible preference shares 8.2 0.3 (1.2) 8.8
1.5
DocDoc Pte Ltd - Convertible Bond 2.6 - 0.1 2.7
-
Infinity Capital Group - Secured Loan Notes 1.4 0.2 - - 1.5
-
Infinity TNP 40 Equity 3.6 - - - - 3.6
Project Nicklaus 1.8 - - - 1.8
-
Loan to HKMH 3.7 - - - 3.7
-
Other receivables - - - - 0.8 0.8
-
Corporate debt - (3.6) - - (0.2) (3.8)
-
Other liabilities - (1.0) - - (0.3) (1.3)
-
Cash 0.8 - 0.4 (0.8) 0.4
Total Net Asset Value 68.0 1.5 0.4 (1.6) 0.8 69.0
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.
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 2022.
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, held 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 June 2022, the Company entered into a share purchase agreement for 112,500
shares of the Series B Preferred Equity in Meize for consideration of USD1.2
million. The transaction price implies a valuation of USD10.0 million for the
Company's investment in Meize.
The partial divestment was completed by the end of August 2022. The Company
held approximately 6.3% interest in Meize post this divestment.
As of 30 June 2022, the Company's interest in Meize had a fair value of US$
8.8 million based on an implied valuation following the divestment of 112,500
shares.
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.
The local team has been closely monitoring the local condition, the
reservation for this winter is available now. The Investment Manager and
Board of the Company is also evaluating its options for recovering its initial
investment with all options under consideration.
As of 30 June 2022, the carrying value of its investment was US$ 3.6 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.
As the COVID-19 pandemic continues to impact Japan and the Hokkaido region,
ICG has been 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 and potential movements in property prices.
As of 30 June 2022, the carrying value of the Secured Loan was US$ 1.5 million
taking into account the current face value of the instrument and cash interest
receivable, less an Expected Credit Loss ("ECL") provision of US$ 38k against
aged cash interest receivables. The Company has decided to escalate its
efforts to ensure an exit from this position including taking legal action
while also pursuing consensual avenues.
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.
DocDoc pivoted its business model to become a "Neo Insurer" and attempts to
partner with insurance companies to enhance their policy offerings. DocDoc is
working to offer fully-digitised insurance products to consumers or
businesses, exclusively through digital channels, with end-to-end digital
service delivery. These offerings will include quoting, binding, issuing of
policies, documentation, proof of insurance, electronic billing, payment and
real time policy management all digitally.
As of 30 June 2022, the carrying value of the Convertible Bond was US$ 2.7
million. An annual coupon of 8% (4.0% cash and 4% Payment-in-Kind was
converted to 8% Payment-in-Kind).
Greater China Credit Fund LP (the "GCCF") & Other investments
As of 31 December 2021, we have applied a 100% provision against GCCF. Given
there is no GCCF number in this item, we separated the two primary components
namely Project Nicklaus and Loan to HKMH.
John Croft
Chairman
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Year ended
30 June 30 June 31 December
2022 2021 2021
Note Unaudited Unaudited Audited
US$000 US$000 US$000
Income from unquoted financial assets 580 575 1,162
Finance income from loans 679 673 1,347
Gain on disposal 300 - -
Gross portfolio income 4 1,559 1,248 2,509
Fair value changes on financial assets at fair value through profit or (loss) 737 48 (38,893)
Expected credit (loss) provision 9 (3) - 731
Net portfolio income/(loss) 4 2,293 1,296 (35,653)
Management fees 13 (674) (914) (1,861)
Incentive fees - - 424
Administrative expenses (344) (394) (812)
Operating profit/(loss) 1,275 (12) (37,902)
Finance expense (259) (259) (522)
Profit/(Loss) before taxation 1,016 (271) (38,424)
Taxation 5 - - -
1,016 (271) (38,424)
Profit/(Loss) and total comprehensive expense for the period
Earnings per share 7
Basic 0.88 cents (0.24)cents (33.33) cents
Diluted 0.76 cents (0.24)cents (33.33) cents
The results above relate to continuing operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note 30 June
2022 30 June 31 December
Unaudited 2021 2021
US$000 Unaudited Audited
US$000 US$000
Assets
Unquoted financial assets at fair value through profit or loss 8 67,344 73,991 66,202
Loans and other receivables 9 6,347 34,681 5,556
Cash and cash equivalents 437 2,560 848
Total assets 74,128 111,232 72,606
Liabilities
Other payables and accruals 1,257 1,515 1,010
Current liabilities 1,257 1,515 1,010
Loans & borrowings 10 3,827 3,536 3,568
Total liabilities 5,084 5,051 4,578
Net assets 69,044 106,181 68,028
Equity and reserves
Share capital 11 148,903 148,903 148,903
Treasury share reserve (615) (615) (615)
Share based payment reserve 2,937 2,936 2,936
Accumulated losses (82,181) (45,043) (83,196)
Total equity and reserves attributable to owners of the parent 69,044 106,181 68,028
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Treasury share reserve Share Accumulated losses US$000 Total
capital US$'000 based US$000
US$000 payment
reserve
US$000
Group balance at 1 January 2021 148,903 (615) 2,936 (44,772) 106,452
Loss for the period - - - (271) (271)
Other comprehensive income - - - - -
Total comprehensive income for the period - - - (271) (271)
Group balance at 30 June 2021 148,903 (615) 2,936 (45,043) 106,181
Loss for the period - - - (38,153) (38,153)
Other comprehensive income - - - - -
Total comprehensive income for the period - - - (38,153) (38,153)
Group balance at 31 December 2021 and 1 January 2022 148,903 (615) 2,936 (83,196) 68,028
Profit/(Loss) and total comprehensive expense for the period - - - 1,016 1,016
Total comprehensive income for the period - - - 1,016 1,016
Group balance at 30 June 2022 148,903 (615) 2,936 (82,180) 69,044
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year ended
30-Jun 30-Jun 31 December
2022 2021 2021
Unaudited Unaudited Audited (Restated)
US$'000 (Restated) US$'000
US$'000
Cash flow from operating activities
Profit/(Loss) before taxation 1,016 (271) (38,424)
Adjustments for:
Finance income (679) (673) (1,347)
Finance expense 259 259 522
Exchange (gain)/loss 29 (58) 23
Fair value changes on unquoted financial assets at fair value through profit (2,043) (566) 7,222
or loss
Share-based expenses - -
Fair value changes on loans and receivables at fair value through profit or 679 - 30,459
loss
Realised (gain) on disposal of investments (300) - -
Increase in other receivables (21) (16) (295)
Increase/(Decrease) in other payables and accruals 247 (15) (520)
Net cash used in operating activities (812) (1,340) (2,360)
Cash flow from investing activities
Sale proceeds of unquoted financial assets at fair value through profit or 400 - -
loss
Purchase of unquoted financial assets at fair value through profit and loss - -
Net cash generated from investing activities 400 - -
Issue of Shares - - -
Sale of treasury shares - - -
Purchase of treasury shares - - -
Proceeds from loans and borrowings - - -
Payment of interest on loans and borrowings - (228) (459)
Net cash used in financing activities - (228) (459)
Net (decrease) in cash & cash equivalents during the period (412) (1,568) (2,819)
Cash and cash equivalents and net debt at the beginning of the period 848 4,093 3,673
Foreign exchange on cash balances 1 35 (6)
Cash & cash equivalents and net debt at the end of the period 437 2,560 848
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 22(nd) September 2022.
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 2022 are
the same as those followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2021 and are those the Group expects
to apply into financial statements for the year ending 31 December 2022.
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
2022 2021
US$000 US$000 US$000
Income on unquoted financial assets 580 575 1,162
Financial income on loans & receivables 679 673 1,347
Gain on disposal 300 - -
Gross portfolio income 1,559 1,248 2,509
Expected credit loss provision (3) - 731
Other provisions - -
Foreign exchange (84) 48 (53)
Equity fair value adjustments 821 - (38,840)
Portfolio income through profit or loss (2,293) 1,296 (35,653)
Net assets:
FMHL 50,666 50,696 50,400
Meize 8,801 8,201 8,200
GCCF - 2,745 -
DocDoc 2,696 2,491 2,592
ICG 1,515 2,522 1,343
Infinity TNP 3,650 7,320 3,650
Other 16 16 17
Unquoted assets at fair value through profit or loss 67,344 73,991 66,202
Loans and other receivables at fair value through the profit or loss (third 6,347 34,681 5,556
party)
Cash 437 2,560 848
Liabilities (5,084) (5,051) (4,578)
Net assets 69,044 106,181 68,028
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
2022 2021
US$000 US$000 US$000
Income on unquoted financial assets through profit or loss 580 575 1,162
Equity fair value adjustments:
- FMHL - (583)
- Meize 1,500 - -
- GCCF - - (2,745)
- ICG - - (1,384)
- Infinity TNP - - (3,670)
- 1,500 - (8,382)
Expected credit loss provision:
- ICG (3) 27
Foreign exchange on unquoted financial assets at fair value through profit or (34) (9) (29)
loss
Total fair value changes on financial assets at fair value through profit or 2,043 566 (7,222)
loss
5. TAXATION
The Company is incorporated in the BVI and is not subject to any income tax.
6. DIVIDEND
The Board does not recommend the payment of an interim dividend in respect of
the six months ended 30 June 2022 (30 June 2021: 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
2022 2021 2021
US$000 US$000 US$000
Numerator
Basic/Diluted: Net profit/(loss) 1,016 (271) (38,424)
Number of shares
'000 '000 '000
Denominator
Basic: Weighted average shares 115,278 115,278 115,278
Dilutive effect of warrants 17,568 - -
Diluted: Adjusted weighted average shares 132,846 115,278 115,278
Earnings per share
Basic (cents) 0.88 (0.24) (33.33)
Diluted (cents) 0.76 (0.24) (33.33)
For the year ended 31 December 2021, the warrants issued to the Investment
Manager were anti-dilutive and therefore there is no impact on the weighted
average shares in issue. No warrants were issued during the period to 30 June
22.
8. UNQUOTED FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
At the beginning of the period 66,202 73,423 73,423
Fair value changes through profit and loss 2,045 568 (7,248)
Expected credit loss provision through profit and loss (3) - 27
Disposals (900) - -
Payment of cash interest - - -
At the end of the period 67,344 73,991 66,202
During the period, the Company entered into a share purchase agreement of
112,500 shares of the series B Preferred Equity in Meize for the consideration
of US$1.2 million. The Transaction Price implies a valuation of US$10.0
million, a 22% premium to the carrying value as at the 31(st) December 2021.
In accordance with company accounting policies, the fair value of the
remaining shares was adjusted upwards by US$1.5m.
9. LOANS AND OTHER RECEIVABLES AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
At the beginning of the period 5,556 33,970 34,390
Additions - Meize consideration 14 800 - -
Cash receipts - - (417)
Fair value changes through profit and loss (688) 38 (30,468)
Expected credit loss provision through profit and loss - - 704
Finance income on loans 679 673 1,347
At the end of the period 6,347 34,681 5,556
Note 30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
Loans - 29,081 -
Due in respect of Meize divestment 14 800 - -
Other receivables 5,547 5,600 5,556
Amounts receivable from related parties - - -
Total loans and borrowings 6,347 34,681 5,556
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 at year-end 31 December 21 applied a 100%
provision against this investment such that the carrying value of the
Convertible Bond was US$0.0m. The circumstances remain unchanged as at 30 June
2022 and a further provision of US$0.68m has been taken against the bond
interest accrued in the period. The breakdown of Loans is as follows:
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
Loan principal 26,500 26,500 26,500
Accrued PIK interest 1,966 1,408 1,685
Accrued interest payable in cash 2,672 1,877 2,274
Fair Value Adjustments - Principal (26,500) - (26,500)
Fair Value Adjustments - Accrued Interest (4,638) - (3,959)
Gross loans receivable - 29,785 -
Lifetime ECL allowance recognised - (704) -
Net loans receivable - 29,081 -
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
At the beginning of the period - 704 704
ECL allowance charged to profit or loss - - (704)
At the end of the period - 704 -
10. LOANS AND BORROWINGS
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
Corporate debt 3,827 3,536 3,568
Total loans and borrowings 3,827 3,536 3,568
The movement in loans and borrowings is as follows:
30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
Opening balance 3,568 3,504 3,504
Borrowing costs amortised 31 32 63
Interest expense accrued 228 228 459
Payment of interest liability - (228) (459)
Closing balance 3,827 3,536 3,568
11. SHARE CAPITAL
Number of Amount
Shares US$000
Authorised, called-up and fully paid ordinary shares of no-par value each at 115,277,869 148,288
30 June 2021
Authorised, called-up and fully paid ordinary shares of no-par value each at 115,277,869 148,288
31 December 2021 and at 30 June 2022
Consisting of:
Authorised, called-up and fully paid ordinary shares of no-par value each at 117,925,673 148,903
30 June 2022
Authorised, called-up and fully paid ordinary shares of no-par value held as (2,647,804) (615)
treasury shares by the Company at 30 June 2022
(i) Under the BVI corporate laws and regulations, there is no
concept of "share premium", and all proceeds from the sale of no-par value
equity shares are deemed to be share capital of the Company.
12. FINANCIAL INSTRUMENTS
Financial assets
As at As at As at
30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Unquoted financial assets at fair value 67,344 73,991 66,202
Loans at fair value - 29,081 -
Other receivables at fair value 6,291 5,559 5,521
Cash and cash equivalents at amortised cost 437 2,560 848
Financial assets 74,073 111,191 72,571
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 1,257 1,515 1,010
Corporate debt at amortised cost 3,827 3,536 3,568
Financial liabilities 5,084 5,051 4,578
The Corporate Bond is due for repayment in October 2022 and 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 As at
30 June 2022 30 June 31 December
US$000 2021 2021
US$000 US$000
Level 3
Unquoted financial assets at fair value 8 67,344 73,991 66,202
Loans at fair value 9 - 29,081 -
Other receivables at fair value 9,14 6,291 5,559 5,556
73,635 108,631 71,757
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:
Notes 30 June 30 June 31 December
2022 2021 2021
US$000 US$000 US$000
Remuneration payable to Directors 117 159 309
Harmony Capital
Management fee (i) 674 914 1,861
Incentive fee - - (424)
Amount due to Harmony Capital at period end 1,089 1,289 865
(i) Harmony Capital has been appointed as the Investment Manager of
the Group. The management fee, which was calculated and paid bi-annually in
advance calculated at a rate of 0.875% of the net asset value of the Company's
portfolio of assets at 30 June and 31 December in each calendar year.
Harmony Capital is entitled to receive an incentive fee from the Company in
the event that the audited net asset value for each year is (1) equal to or
greater than the audited net asset value for the last year in relation to
which an incentive fee became payable ("High Water Mark"); and (2) in excess
of 105% of the audited net asset value as at the last calendar year-end ("the
Hurdle"). Subject to the High Water Mark and Hurdle being exceeded in respect
of any calendar year, the incentive fee will be equal to 20% of the difference
between the current year-end NAV and the previous year-end NAV. 50% of the
incentive fee shall be paid in cash and the remaining 50% of the incentive fee
shall be paid by ordinary shares.
14. EVENTS AFTER THE REPORTING PERIOD
On the 20th July 2022 the Company received the Second Tranche Price of US$
400,000 from its partial divestment in Meize. On the 18th August 2022 the
Company received the final Tranche Price of US$ 400,000 from its partial
divestment in Meize.
15. COPIES OF THE INTERIM REPORT
The interim report is available for download from
www.jaderoadinvestments.com.
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