Biographies of Directors and Senior
Management
Board of
Directors
Mr. John Croft, Executive Chairman
John Croft is an experienced
Chairman, non-executive Director and executive with a successful
international career in the technology and financial services
sectors.
He is also a non-executive
Director at Aura Renewable Acquisitions PLC and Golden Rock Global
PLC, both Special Acquisitions Companies (SPACs) quoted on the
Standard List of the London Stock Exchange and is also a
non-executive Director at Brazilian Nickel PLC. He has previously
held senior Director level positions in Racal Electronics and NCR
Corporation, following an early career in banking with HSBC and
Citibank.
Hugh Viscount Trenchard, Non-executive
Director
Viscount Trenchard began his
career as an investment banker at Kleinwort Benson in 1973. He has
more than 40 years' experience of Japanese business, including 12
years as a resident of Japan. He ran Kleinwort Benson's East Asian
operations for 15 years and was later Head of Japanese Investment
Banking for Robert Fleming & Co. Limited, before working with
Mizuho International plc from 2007 to 2014. He served as a Senior
Adviser for Japan and Korea to Prudential Financial, Inc. from 2002
to 2008. Lord Trenchard is a member of the House of Lords and a
Vice-Chairman of the British-Japanese Parliamentary
Group.
Mr. Charles Stuart Crocker, Non-executive
Director
In 1975 Stuart graduated from the
Royal Military Academy Sandhurst and served for ten years in the
United Kingdom, Northern Ireland and Germany. His second career
began in 1985 in Private Banking, primarily with Merrill Lynch and
HSBC in London, Geneva, and Dubai. Latterly he was CEO HSBC Private
Bank UAE and Oman, and he was concurrently the SEO for HSBC in the
Dubai International Financial Centre (DIFC). He was finally the
Global Head Private Banking Group for Abu Dhabi Islamic
Bank.
During his career Stuart has
accumulated multiple banking and finance qualifications and has
studied at Manchester Business School, Insead and
Duke. Stuart retired from banking in 2013 and has
subsequently held Non-Executive Chairman,
NED, and Trustee appointments in public and private companies and
charities across a variety of industry sectors. He was
admitted into the Freedom of the City of London in 2006 as a
"Citizen and International Banker of London" and was "progressed"
as a Liveryman of the Worshipful Company of International Bankers
in June 2022.
Dr.
Lee George Lam, Non-executive Director
Dr. Lam is Chair of the United
Nations Economic and Social Commission for Asia and the Pacific (UN
ESCAP) Sustainable Business Network (ESBN), Vice Chairman of
Pacific Basin Economic Council (PBEC), Chairman of the Permanent
Commission on Economic and Financial Issues of the World Union of
Small and Medium Enterprises (WUSME), and a member of the Belt and
Road and Greater Bay Area Committee of the Hong Kong Trade
Development Council. A former member of the Hong Kong Bar, Dr. Lam
is a Solicitor of the High Court of Hong Kong, an Accredited
Mediator of the Centre for Effective Dispute Resolution (CEDR), a
Fellow of Certified Management Accountants (CMA) Australia, the
Hong Kong Institute of Arbitrators and the Hong Kong Institute of
Directors, an Honorary Fellow of Certified Public Accountants (CPA)
Australia, the Hong Kong Institute of Facility Management and the
University of Hong Kong School of Professional and Continuing
Education, an International Affiliate of the Hong Kong Institute of
Certified Public Accountants, and a Distinguished Fellow of the
Hong Kong Innovative Technology Development Association.
Key Personnel of the Investment Manager, Heirloom Investment
Management LLC
Mr. Geoff Dover is the founder and
President of Heirloom Family Office, and the President and Chief
Investment Officer of Heirloom Investment Management LLC, a
regulated investment management firm that offers other family
offices the opportunity to co-invest in investments made by
Heirloom Family Office. He has over 25 years' experience of
fundamentals-based investment expertise across asset classes with a
particular expertise in originating, evaluating, structuring and
executing on unique alternative investments.
Directors' Report
The Board (the "Board") of Directors (the "Directors") are pleased to present
their report on the affairs of the Company and its subsidiaries
(collectively referred to as the "Group"), together with the audited
financial statements for the year ended 31 December
2023.
PRINCIPAL ACTIVITIES
The Company was incorporated with
limited liability under the laws of the British Virgin Islands
("BVI"). The Company's
shares were admitted to the AIM Market of the London Stock Exchange
on 19 October 2009 and on the Quotation Board of the Open Market of
the Frankfurt Stock Exchange on 6 December 2012. The company, along
with its subsidiaries, act as an investment group. Since the year
end, the legacy assets have been transferred to an independent
third party company and the investments in Heirloom funds have been
repaid.
RESULTS AND DIVIDENDS
The Company recorded a loss before
taxation of US$17.7 million (2022: loss US$52.9
million).
The loss reflects
fair value decrease on assets in the portfolio of US$17.3 million (2022:
decrease US$47.4
million), net finance cost of US$0.03 million (2022: net finance
income of US$0.8 million) and total operating expenses of US$1.5
million (2022: US$1.8 million). The decrease in the fair value of
the assets is due to the revaluation of the assets to the value at
which they have been transferred to an independent third party on 1
May 2024.
The
Directors are not recommending the payment of a dividend for the
year.
REVIEW OF THE BUSINESS
The Group's audited net asset
value as at 31 December 2023 stood at US$0.1 million (2022: US$15.1
million) equivalent to US$0.00 per share (2022: US$0.13), excluding
the effect of treasury shares held by the Group.
The principal investment assets
held by the Company at the year-end, together with their
valuations are set out in the Chairman's
statement.
EVENTS AFTER THE REPORTING PERIOD
The significant events after the
reporting period are set out in Note 18 of the financial
statements, none of which impact on the results and net assets
reported in these financial statements.
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during
the year and up to the date of this report were as
follows:
Mr. John Croft
Hugh Viscount Trenchard
Dr. Lee George Lam
Mr. Stuart Crocker
Mr. John Batchelor (resigned Mar
2023)
John Batchelor, Non-Executive
Director, has resigned from the Board of Jade Road Investments
on 24 March 2023.
With the exception of the related
party transactions stated in Note 16 to the Financial Statements,
there were no other significant contracts, other than Directors'
contracts of service, in which any Director had a material
interest. The Directors who held office as at 31 December 2023 had
the following beneficial interests in the shares of the Company and
Group companies as follows:
Number of ordinary shares of no par value as at 31
December
|
|
2023
|
2022
|
|
|
|
Direct
|
Indirect
|
Direct
|
Indirect
|
|
Mr. John Croft
|
130,463
|
10,733
|
130,463
|
10,733
|
|
Hugh Viscount Trenchard
|
60,634
|
-
|
60,634
|
-
|
|
Dr. Lee George Lam
|
101,057
|
-
|
101,057
|
-
|
|
Mr. Stuart Crocker
|
80,845
|
-
|
80,845
|
-
|
|
|
|
|
|
|
|
|
|
|
|
| |
Number of warrants over
ordinary shares of no par value as at 31 December
|
|
2023
|
2022
|
|
|
Direct
|
Indirect
|
Direct
|
Indirect
|
|
Mr. John Croft
|
800,000
|
-
|
877,346
|
-
|
|
Hugh Viscount Trenchard
|
400,000
|
-
|
457,634
|
-
|
|
Dr. Lee George Lam
|
400,000
|
-
|
496,057
|
-
|
|
Mr. Stuart Crocker
|
-
|
-
|
76,845
|
-
|
|
Mr. John Batchelor
|
-
|
-
|
-
|
-
|
SUBSTANTIAL SHAREHOLDINGS IN THE COMPANY
As far as the Directors are aware
at 26 June 2024, the following persons were interested in 3% or
more of the issued share capital of the Company:
|
Shareholder
|
Number of
ordinary
shares
|
Percentage
of
issued share
capital
|
|
Heirloom Group
|
191,712,713
|
54.66%
|
|
-
Heirloom SPV 2022 II
|
156,303,842
|
44.57%
|
|
-
Ocorian Singapore Trust Company Pte Ltd as
Trustee of Fidelis Fund
|
21,135,665
|
6.08%
|
|
-
Heirloom Investment Management LLC
|
7,785,192
|
2.22%
|
|
-
Heirloom Fixed Return Fund
-
Geoff Dover
|
4,883,570
1,404,444
|
1.39%
0.40%
|
|
Elypsis Solutions
Limited
|
55,225,127
|
15.75%
|
|
Infinity Capital Group
Limited
|
16,179,310
|
4.61%
|
|
First Equity Limited
|
10,000,000
|
2.85%
|
Heirloom SPV 2022 II, Heirloom
Investment Management LLC, Ocorian Singapore Trust Company Pte Ltd
as Trustee of Fidelis Fund, Heirloom Fixed
Return Fund and Geoff Dover are under one
controlling group - Heirloom Group. The total shareholdings of
Heirloom Group are 54.66%.
FINANCIAL INSTRUMENTS
The Group's use of financial
instruments is described in Note 9 and Note 15.
FINANCIAL RISK MANAGEMENT OBJECTIVES
Management has adopted certain
policies on financial risk management with the objective of
ensuring that appropriate funding strategies are adopted to meet
the Group's short-term and long-term funding requirements, taking
into consideration the cost of funding, gearing levels, and cash
flow projections. The policies are also set to ensure that
appropriate strategies are adopted to manage related interest and
currency risk funding and to ensure that credit risks on
receivables are properly managed. In addition, Note 14 to the
financial statements include the Group's objectives, policies, and
processes for managing its capital, its financial risk management
objectives, details of its financial instruments and its exposures
to credit risk, interest rate risk, liquidity risk, price risk, and
currency risk.
POLICY AND PRACTICE ON PAYMENT OF CREDITORS
The Group seeks to maintain good
terms with all of its trading partners. In particular, it is the
Group's policy to agree appropriate terms and conditions for its
transactions with suppliers and, provided the supplier has complied
with its obligations, to abide by the terms of payment
agreed
SHARE CAPITAL
The Company has a single class of
shares which is divided into ordinary shares of no par
value.
At 31 December 2023, the number of
ordinary shares in issue was 358,193,134, of which 7,480,000 were
held in treasury by the group. Details of movements in the issued
share capital during the year are set out in Note 14 to the
financial statements.
DIRECTORS' INDEMNITY
The Company's Articles of
Association provide, subject to the provisions of BVI legislation,
an indemnity for Directors and officers of the Company in respect
of liabilities they may incur in the discharge of their duties or
in the exercise of their powers, including any liabilities relating
to the defence of any proceedings brought against them which relate
to anything done or omitted, or alleged to have been done or
omitted, by them as officers or employees of the
Company.
Appropriate directors' and
officers' liability insurance cover is in place in respect of all
of the Directors.
EMPLOYEE INFORMATION
As at 31 December 2023, the Group
had Nil (2022: Nil) employees excluding Directors.
CHARITABLE DONATIONS
The Group didn't make any
charitable donations during the year (2022: Nil).
GOING CONCERN
Notwithstanding the operating loss
of US$17.7Mn and operating cash outflows of USD$1.7Mn for the year
ended 31 December 2023 and net current assets of $0.05Mn at
year-end, the group has prepared the financial statements under the
going concern.
Following the recent transfer of
assets the Company is seeking to acquire a business via a Reverse
Take Over (RTO). The Company will need to raise interim capital to
advance discussions for an RTO. The Company also continues to
manage a small number of creditors. The Company is confident that
it will be able to raise the interim capital required, and is in
advanced discussions with a number of parties with respect to this.
In addition, the company has also received a letter of support from
its largest shareholder Heirloom in regard to the Company's
fundraising plans. However, were the company to not obtain this
funding in the short term, and Heirloom unable to financially
support the company in the foreseeable future, then the company
would not be able to meet its liabilities as they fall due. Were
the company not to be considered a going concern, there would be no
material impact on these financial statements as all significant
items are already held at their fair value.
Accordingly, the financial
statements have been prepared on a going concern basis and do not
include any adjustments that would result if the group was unable
to continue as a going concern.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for
preparing the Annual Report and Financial Statements in accordance
with applicable laws and regulations.
Company Law requires the Directors
to prepare financial statements for each financial year. Under that
law the Directors have prepared the Group financial statements in
conformity with EU-adopted International Financial Reporting
Standards. Under Company Law the directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and the
profit and loss of the Group for that period.
In preparing the financial
statements the Directors are required to:
• Select suitable
accounting policies and then apply them consistently.
• Make judgements and
accounting estimates that are reasonable and prudent;
• Ensure statements are
in conformity with EU-adopted International Financial Reporting
Standards; and
• prepare the financial
statements on the going concern basis unless it is inappropriate to
presume that the Group will continue in business.
The Directors are responsible for
keeping adequate accounting records that are sufficient to show and
explain the Group's transactions and disclose with reasonable
accuracy at any time the financial position of the Group and enable
them to ensure that the Group financial statements comply with
EU-adopted International Financial Reporting Standards. They are
also responsible for safeguarding the assets of the Group and hence
for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Financial Statements are
published on the Group's website https://jaderoadinvestments.com.
The work carried out by the Auditor does not involve consideration
of the maintenance and integrity of this website and accordingly,
the Auditor accepts no responsibility for any changes that have
occurred to the financial statements since they were initially
presented on the website. Visitors to the website need to be aware
that legislation in the United Kingdom covering the preparation and
dissemination of the financial statements may differ from
legislation in their jurisdiction.
The company is compliant with AIM
Rule 26 with regard to the company website.
AUDITOR INFORMATION
The Directors who held office at
the date of approval of the Directors' Report confirm that, so far
as they are each aware, there is no relevant audit information of
which the Group's Auditor is unaware; and each Director has taken
all the steps that he ought to have taken as a director to make
himself aware of any relevant audit information and to establish
that the Group's Auditor is aware of that information.
On behalf of the Board
John Croft
28 June 2024
Chairman of the Board
Corporate Governance Statement
THE BOARD
The Board of Jade Road Investments
Limited, in accordance with the AIM Rules, adopted an appropriate
corporate governance code. It has decided to apply the Quoted
Companies Alliance Corporate Governance Code (the QCA Code).
The QCA Code is a pragmatic and practical corporate governance tool
which adopts a proportionate, principles-based approach which the
Board believes will enable the explanation of how the Company
applies the QCA Code and its overall corporate governance
arrangements. The QCA Code is constructed around 10 broad
principles which are set out below together with an explanation of
how the Company complies with each principle, and where it does not
do so, an explanation for that.
As suggested by the QCA, our
Chairman, John Croft makes the following statement in relation to
corporate governance:
"As Chairman of the Company, I lead
our Board of Directors and have primary responsibility for ensuring
that the Company meets the standards of corporate governance
expected of an AIM investment company of our size. Our over-arching
role as a Board is to monitor the Company's progress with its
investing policy and to ensure that it is being properly pursued.
In pursuing that strategy, our second key focus is to supervise,
manage and objectively assess the performance of our Investment
Manager, Heirloom Investment Management LLC. Given there is no
executive team in the Company and no other employees, this
relationship is critically important in terms of delivering value
to our shareholders.
We set out below how we as a Board
seek to apply the QCA Code, bearing in mind the particular nature
of the Company and its business. Being an investment company means
we are naturally focused on investment strategy and deploying our
cash resources in the most efficient way to produce returns for
shareholders in the medium to long term, balancing the potential
risks and rewards of each investment which our Investment Manager
proposes. We have a rigorous investment process including
third-party legal, commercial, and financial due diligence, site
visits, management meetings, and independent valuations where
relevant. The output of this work is consolidated and presented to
the Board by the Investment Manager in high-quality investment
presentations which are reviewed and discussed at length at
investment board meetings. We are not a large corporate with
multiple stakeholders and, as noted above, our Board is primarily
non-executive as at the year end. We, therefore, intend to take a
pragmatic approach to governance structures and processes and
whilst retaining a high-performance culture at Board level, adopt
policies and procedures which we think are appropriate to an
investment company on AIM."
The Board, the Investment Manager
and Board Committees
The Board is responsible for
reviewing and approving the Company's Investing Policy and for
monitoring the performance of Heirloom Investment Management
LLC in the performance of its obligations under the Services
Agreement. The Company holds board meetings as required and not
less than four times annually. The Board has constituted committees
with responsibility for overseeing audit, remuneration, valuation
and investment matters.
The Board has constituted the
following Committees:
The Remuneration Committee
constituted by Hugh Viscount Trenchard and Dr Lee George
Lam.
The Remuneration Committee reviews
the scale and structure of the Directors' remuneration and the
terms of their service or employment contracts, including warrant
schemes and other bonus arrangements. The remuneration and terms
and conditions of the non-executive Directors are set by the entire
Board, with Directors absenting themselves, at the appropriate
time, from discussions on matters directly reflecting their
remuneration.
The Investment Committee
constituted by John Croft, Hugh Viscount Trenchard, Dr Lee
George Lam, and Stuart Crocker.
The Investment Committee has the
primary authority to develop the Company's investment objectives
and corporate policies on investing. It reviews and approves
investment opportunities presented by the Company's Investment
Manager. The Committee will at all times be constituted by all the
Company's directors.
The Audit Committee
constituted by John Croft and Stuart
Crocker.
The Audit Committee appoints and
determines the terms of engagement of the Group's auditors and will
determine, in consultation with the auditors, the scope of the
audit. The Audit Committee monitors the independence of the Group's
auditor, and the appropriateness of any non-audit services. The
Audit Committee receives and reviews reports from management and
the Group's auditors relating to the interim and annual accounts
and the accounting and internal control systems in use throughout
the Group. The Audit Committee has unrestricted access to the
Group's auditors. The Audit Committee makes recommendations to the
Board.
The Valuation Committee
constituted by Hugh Viscount Trenchard and Dr. Lee George
Lam.
The Valuation Committee is
responsible for reviewing the valuation process for all
investments, including the application of appropriate valuation
standards, based on the input of the Company's Investment Manager
and on the Company's Valuation Policy which was formally adopted in
2020. Its members are sourced from independent directors of the
Board. It retains the authority to engage with independent
3rd parties at any time with respect to valuation
matters. The Committee comprises a minimum of two members,
currently Stuart Crocker and John Croft, and reports directly to
the Board.
DELIVER GROWTH
Principle 1 Establish a strategy and business model which
promote long-term value for shareholders
Principle
The Board must be able to express
a shared view of the Company's purpose, business model and
strategy. It should go beyond the simple description of products
and corporate structures and set out how the company intends to
deliver shareholder value in the medium to long term. It should
demonstrate that the delivery of long term growth is underpinned by
a clear set of values aimed at protecting the company from
unnecessary risk and securing its long-term future.
Compliance
The Company provides equity and
credit funding to companies, principally in the Pan-Asian region or
with a connection to Asia. It will do this through investing in
direct financings, pre-IPO investments, growth private equity,
event driven special situations, opportunistic
special situations, and indirect financing.
The Company is sector agnostic in
its investment activities.
New investments will be managed
actively, including through appropriate investor protections which
will be negotiated on each transaction as appropriate and
relevant.
The Company
will consider using debt to finance transactions on a
case-by-case basis and may assume debt on its own balance
sheet when appropriate to enhance returns to Shareholders and/or to
bridge the financing needs of its investment pipeline.
The Company has completed its
disposal programme post year end for its "legacy"
assets.
The Board, in collaboration with the
Investment Manager, maintains a vigilant watch over the current
investment climate and macro-economic conditions
worldwide.
These factors have the potential to
impact and, at times, pose challenges to the Company's strategic
execution. This includes considerations of regulatory and
governmental policy changes that may arise, requiring the Company
to adapt and navigate accordingly.
Principle 2 Seek to understand and meet shareholder needs and
expectations
Principle
Directors must develop a good
understanding of the needs and expectations of all elements of the
Company's shareholder base. The Board must manage shareholders'
expectations and should seek to understand the motivations behind
shareholder voting decisions.
Compliance
The Board is aware of the need to
protect the interests of minority shareholders and the balancing of
these interests with those of the majority shareholder. The Board
also considers the terms of the relationship agreement the Company
has entered with its largest shareholder and, where necessary, will
enforce any relevant terms.
The Company holds regular investor
events in London, Hong Kong and Dubai, where the Chairman, other
members of the Board and the Investment Manager update attendees on
key developments in the portfolio. All shareholders are invited to
attend these events. The Chairman is principally responsible for
shareholder liaison.
The Company regularly updates the
market via its RNS news feed of any disclosable matters and where
appropriate, also uses social media platforms to engage with a
wider audience.
The Company publishes all relevant
materials, according to QCA definitions, on its website. This
includes annual reports and shareholder circulars.
Principle 3 Take into account wider stakeholder and social
responsibilities and their implications for long-term
success
Principle
Long-term success relies upon good
relations with a range of different stakeholder groups both
internal (workforce) and external (suppliers, customers,
regulators, and others). The Board needs to identify the Company's
stakeholders and understand their needs, interests, and
expectations.
Where matters that relate to the
Company's impact on society, the communities within which it
operates or the environment have the potential to affect the
company's ability to deliver shareholder value over the medium to
long term, then those matters must be integrated into the Company's
strategy and business model.
Feedback is an essential part of
all control mechanisms. Systems need to be in place to solicit,
consider and act on feedback from all stakeholder
groups.
Compliance
The balance of economic value to
the Group and social impact is carefully considered, not only
throughout the due diligence for any potential investments but also
ongoing monitoring by of periodical site visits for the invested
projects, with the maintenance of high environmental standards is a
key priority. The Board is conscious of its responsibilities in
relation to society, particularly in a developing economy such as
China.
The key resources for the Company
are principally the Investment Manager and the Company's advisory
team, including its nominated adviser, brokers, solicitors, and
auditors. The Investment Manager and therefore the Company
rely on a network of intermediaries to originate investment deal
flow. The Board speaks to the advisory team on a regular basis and
takes feedback from it throughout the year. In particular, it seeks
advice in relation to compliance with the AIM Rules and their
impact on its investments from the nominated adviser and solicitors
and from the auditors in relation to accounting matters including
net asset value and the annual audit.
Principle 4 Embed effective risk management, considering both
opportunities and threats, throughout the
organisation
Principle
The Board needs to ensure that the
Company's risk management framework identifies and addresses all
relevant risks in order to execute and deliver strategy; companies
need to consider their extended business, including the Company's
supply chain, from key suppliers to end-customer.
Setting strategy includes
determining the extent of exposure to the identified risks that the
company is able to bear and willing to take (risk tolerance and
risk appetite).
Compliance
Effective risk management in
relation to the Company's portfolio is key to the Board's
assessment of the Investment Manager's performance. Measuring risk
in each investment case, in terms of both how it can be mitigated
and the potential upside of taking on such risk are critical
elements of the analysis produced by the Investment Manager and
reviewed by the Board on each proposed investment. Similarly, in
conducting the managed disposal programme, the Board is focused on
achieving the best possible value for the assets being disposed of.
At the same time, the Board assesses the risk of maintaining those
positions with the potential for further value to be eroded at the
same time as it requires additional time to be spent by the Board
and by the Investment Manager.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
Principle 5 Maintain the Board as a well-functioning,
balanced team led by the Chairman
Principle
The Board members have a
collective responsibility to promote the interests of the company
and are collectively responsible for defining corporate governance
arrangements. Ultimate responsibility for the quality of, and
approach to, corporate governance lies with the
Chairman.
The Board (and any committees)
should be provided with high-quality information in a timely manner
to facilitate proper assessment of the matters requiring a decision
or insight.
The Board should have an
appropriate balance between Executive and Non-Executive Directors
and should have at least two independent Non-Executive Directors.
Independence is a board judgement.
The Board should be supported by
committees (e.g., audit, remuneration) that have the necessary
skills and knowledge to discharge their duties and responsibilities
effectively.
Directors must commit the time
necessary to fulfil their roles.
Compliance
The Board consists of the
Executive Chairman and three Non-Executive Directors.
The Executive Chairman has been
involved with the Company since its predecessor company, China
Private Equity Investment Holdings Limited was admitted to AIM in
2009. Viscount Trenchard, Dr. Lee George Lam, Mr. Stuart Crocker,
and Mr. John Batchelor were all appointed to the Board in 2017 or
later. These four individuals serve as Non-Executive Directors and
are regarded as independent members. However, it is important to
note that as of March 2023, Mr. John Batchelor has departed from
the Board.
Each Non-Executive Director is
engaged on a 12-month contract with three months' notice on either
side and is required to commit to a minimum of two days per
calendar month.
The Executive Chairman's roles and
responsibilities include but are not limited to engaging potential
clients across Jade Road's domain in the APAC region, initiating
and agreeing Terms of Engagement with clients, providing the lead
consultancy services to clients and support the business
development of the Company, liaising with the Company's NOMAD and
other advisors in London, and being the main contact between the
Board and the Investment Manager, approving public announcements,
engaging with Shareholders, Investors and other Stakeholders to
promote the Company and its business objectives.
As explained above, the Board
receives detailed investment papers from the Investment Manager in
relation to any asset which is either recommended for investment or
disposal, including an executive summary of the due diligence
findings, results of site visits and management meetings (including
an assessment of the investee company's management team), key
financial metrics, key risk factors, the potential returns
available, security for the investment and the type of instrument
to be used.
Principle 6 Ensure that between them the directors have the
necessary up-to-date experience, skills, and
capabilities.
Principle
The Board must have an appropriate
balance of sector, financial and public markets skills and
experience, as well as an appropriate balance of personal qualities
and capabilities. The Board should understand and challenge its own
diversity, including gender balance, as part of its
composition.
The Board should not be dominated
by one person or a group of people. Strong personal bonds can be
important but can also divide a board.
As companies evolve, the mix of
skills and experience required on the board will change, and board
composition will need to evolve to reflect this change.
Compliance
Directors who have been appointed
to the Company have been chosen because of the skills and
experience they offer. The identity of each Director and his full
biographical details are provided on the website, which include
each Director's relevant experience, skills, personal qualities,
and capabilities. The current team of Directors offer a mix of
investment, quoted company, sector and geographical expertise and
exposure.
The Board has not taken any
specific external advice on a specific matter, other than in the
normal course of business as an AIM-quoted company and in pursuit
of the investment policy. There are no internal advisors to the
Board. The Directors rely on the Company's advisory team to keep
their skills up to date and through attending market updates and
other seminars provided by the advisory team, the London Stock
Exchange plc, and other intermediaries.
The Investment Manager is the key
external adviser to the Board.
Principle 7 Evaluate Board performance based on clear and
relevant objectives, seeking continuous
improvement
Principle
The Board should regularly review
the effectiveness of its performance as a unit, as well as that of
its committees and the individual Board members.
The Board performance review may
be carried out internally or, ideally, externally facilitated from
time to time. The review should identify development or mentoring
needs of individual directors or the wider senior management
team.
It is healthy for membership of
the Board to be periodically refreshed. Succession planning is a
vital task for Boards. No member of the Board should become
indispensable.
Compliance
The Board consists predominantly
of Non-Executive Directors, the Company having no employees. In
this regard, Board performance and oversight lies predominantly
with the Chairman and other stakeholders, particularly
shareholders. In early 2020, it was determined by the Remuneration
Committee that John Croft be designated as Executive Chairman to
align with his time commitment and contribution to the Company's
affairs.
Events are held with shareholders
where feedback on the Company's progress is sought on a regular
basis, and this interaction provides valuable input on Board
performance. Advice is also sought on Board composition on an
ongoing basis from the Company's NOMAD.
The composition of the Board is
reviewed regularly, and changes made where appropriate. As
the Company recently disposed of its entire asset
portfolio and is now seeking to raise new capital to invest in
and/or a business via a RTO, the Company
may look to broaden its skills and experience base by the
appointment of additional Directors and/or advisors in due
course.
The Board does not carry out a
formal review process.
Principle 8 Promote a corporate culture that is based on
ethical values and behaviours
Principle
The Board should embody and
promote a corporate culture that is based on sound ethical values
and behaviours and use it as an asset and source of competitive
advantage.
The policy set by the Board should
be visible in the actions and decisions of the chief executive and
management team. Corporate values should guide the objectives and
strategy of the company.
The culture should be visible in
every aspect of the business, including recruitment, nominations,
training, and engagement. The performance and reward system should
endorse the desired ethical behaviours across all levels of the
company.
Compliance
The Board is focused on investment
returns for its shareholders and will at all times seek to make
ethical investments, but this is not an investment focus or
determinant for an asset being included in the portfolio. As
discussed above, given the Company is an investment company with no
employees or other internal stakeholders, the Board does not drive
a corporate culture within the business.
Principle 9 Maintain governance structures and processes that
are fit for purpose and support good decision-making by the
Board
Principle
The Company should maintain
governance structures and processes in line with its corporate
culture and appropriate to its:
- size and complexity;
and
- capacity, appetite, and
tolerance for risk. The governance structures should evolve over
time in parallel with the company's objectives, strategy, and
business model to reflect the development of the
company.
Compliance
This section provides full
disclosure on the Company's corporate governance. There are no
immediate plans to make any changes to the governance processes and
framework which are described in the commentary above.
The Chairman has overall
responsibility for shareholder liaison.
There are no specific matters
reserved for the Board.
BUILD TRUST
Principle 10 Communicate how the company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders
Principle
A healthy dialogue should exist
between the Board and all of its stakeholders, including
shareholders, to enable all interested parties to come to informed
decisions about the Company.
In particular, appropriate
communication and reporting structures should exist between the
Board and all constituent parts of its shareholder base. This will
assist:
- the communication of
shareholders' views to the Board; and
- shareholders' understanding of
the unique circumstances and constraints faced by the
Company.
Compliance
The Board attaches great
importance to providing shareholders with clear and transparent
information on the Group's activities, strategy, and financial
position. Details of all shareholder communications are provided on
the Company's website, including historical annual reports and
governance-related material together with notices of all general
meetings for the last five years. The Company discloses outcomes of
all general meeting votes.
The Company has appointed a
professional Financial Public Relations firm with an office in
London to advise on its communications strategy and to assist in
the drafting and distribution of regular news and regulatory
announcements. Regular announcements are made regarding the
Company's investment portfolio as well as other relevant market and
regional news.
The Company lists contact details
on its website and on all announcements released via RNS, should
shareholders wish to communicate with the Board.
Independent Auditor's Report to the Members of Jade Road
Investments Limited
We have audited the financial
statements of Jade Road Investments Limited (the 'group') for the
year ended 31 December 2023 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, the Consolidated Statement of Cash Flows and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion, the financial
statements:
·
give a true and fair view of the state of the
group's affairs as at 31 December 2023 and of its loss for the year
then ended; and
·
have been properly prepared in
accordance with IFRSs as adopted by the European Union.
Basis for opinion
We conducted our audit in
accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities
for the audit of the financial statements section of our report. We
are independent of the group in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty related to going
concern
We draw attention to note 2(c) in
the financial statements, which indicates that the group is reliant
on securing further financing alongside the realisation of the
carrying value of investments to meet working capital needs as they
fall due. Whilst management is confident that they can secure
funding based on advance discussions with investors, there is
no guarantee that such funding would be secured within the required
timelines. As stated in Note 2(c), these events or conditions,
indicate that a material uncertainty exists that may cast
significant doubt on the group's ability to continue as a going
concern.
Our opinion is not modified in
respect of this matter.
In auditing the financial
statements, we have concluded that the directors' use of the going
concern basis of accounting in the preparation of the financial
statements is appropriate.
Our evaluation of the directors'
assessment of the group's ability to continue to adopt the going
concern basis of accounting included:
·
reviewing management's assessment of going
concern and discussing with management the future strategic plans
of the group and sources of funding that are expected to be
available, as well as plans for cash preservation;
·
reviewing management-prepared cash flow forecasts
up to Dec 2025, including checking the mathematical accuracy, and
assessing their reasonableness through reference to current year
actual financial information;
·
obtaining corroborative evidence for, and
providing appropriate challenge to, the key assumptions and inputs
used in the cashflow forecast; and
·
reviewing the adequacy and completeness of
disclosures surrounding going concern in the financial
statements.
Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
For the purposes of determining
whether the financial statements are free from material
misstatement, we define materiality as a magnitude of misstatement,
including omission, that makes it probable that the economic
decisions of a reasonably knowledgeable person, relying on the
financial statements, would be changed, or influenced. We have also
considered those misstatements including omissions that would be
material by nature and would impact the economic decisions of a
reasonably knowledgeable person based our understanding of the
business, industry and complexity involved.
We apply the concept of
materiality both in planning and throughout the course of our
audit, and in evaluating the effect of misstatements. Materiality
is used to determine the financial statements areas that are
included within the scope of our audit and the extent of sample
sizes during the audit.
We also determine a level of
performance materiality which we use to assess the extent of
testing needed to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a
whole.
In determining materiality and
performance materiality, we considered the following
factors:
·
our cumulative knowledge of the group and its
environment;
·
the change in the level of judgement required in
respect of the key accounting estimates;
·
significant transactions during the
year;
·
the stability in key management personnel;
and
·
the level of misstatements identified in prior
periods
Materiality for the financial
statements as a whole was set at $63,200 (2022: $422,000)
based on the draft financial statements. We set
the materiality threshold at 1.5% of total asset for the group in
line with the prior year.
The benchmark used is the one which we
determined, in our professional judgment, to be the principal
benchmark within the financial statements relevant to shareholders
in assessing financial performance of the group as the principal
activity is to invest in quoted and unquoted financial assets for
capital appreciation.
Performance materiality for the
financial statements was set at $47,400 (2022: $253,200) being 75%
(2022: 60%) of the materiality for the financial statements as a
whole. This threshold was considered appropriate in light of the
current size and level of complexity of the group, and our
assessment of inherent risk.
We agreed to report to those
charged with governance all corrected and uncorrected misstatements
we identified through our audit with a value higher than $3,160
(2022: $21,100) for the group. We also agreed to report any other
audit misstatements below that threshold that we believe warranted
reporting on qualitative grounds.
Due to audit adjustments, the
materiality benchmark set at the planning stage of the audit has
increased significantly. As all the audit adjustments and
significant transactions have been tested using lower materiality,
the risk of material misstatement based on the planning materiality
has not increased. We therefore believe that the materiality
determined at the planning stage is still applicable as the audit
evidence we have obtained through audit procedures is sufficient
and appropriate to provide a basis for our
opinion.
Our approach to the audit
Our audit was risk based and was
designed to focus our efforts on the areas at greatest risk of
material misstatement, as well as aspects subject to significant
management judgement or greatest complexity, risk and size. In
designing our audit, we determined materiality, as above, and
assessed the risk of material misstatement in the financial
statements. We tailored the scope of our audit to ensure that we
performed sufficient work to be able to give an opinion on the
financial statements, having regard to the structure of the
group.
The group includes the listed
parent company, Jade Road Investments Limited ('Jade BVI'), and its
subsidiary, Jade Road Investments (HK) Limited ('Jade
HK').
The scope of our audit was
based on the materiality and significance
of component operations. Each component was assessed as to whether
they were significant to the group on the basis of size and risk.
The parent company was identified as a significant component due to
its size and identified risks.
Due to Jade BVI being a significant
component of the group, we performed a full scope audit on the
parent company as part of the group audit. The work on this
significant component of the group was performed by us as group
auditor. Jade HK is a non-significant component of the group and we
performed analytical review procedures over the financial
information of this component only.
In designing our audit approach, we
considered those areas which were deemed to involve significant
judgement by the directors, such as the key audit matters relating
to the fair valuation of unquoted financial assets and assets held
for sale. Other judgemental areas were the consideration of future
events that are inherently uncertain impacting going concern. We
also addressed the risk of management override of controls,
including evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement due to
fraud.
The group's key accounting function
is based in both Hong Kong and the United Kingdom and our audit was
performed by our team in London with regular contact maintained
with group management throughout.
Key audit matters
Key audit matters are those matters
that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including
those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in the Material
uncertainty related to going concern section, we have determined
the matters described below to be the key audit matters to be
communicated in our report.
We have determined the matters
described below to be the key audit matters to be communicated in
our report
|
Key Audit Matter
|
How our scope addressed this matter
|
|
Fair value unquoted financial
assets and assets held for sale (Notes 9 and 11)
The financial statements include
investments in unquoted financial assets at fair value through
profit and loss amounting to $500k and assets held for sale
amounting to $4,290k.
The unquoted investments are held
in a private fund.
Due to a change in the Group's
investment strategy, the Group decided to divest its legacy assets.
The transaction to dispose of the assets was consummated post year
end and the assets were classified as being held for sale at the
year end.
All of these investments and assets
held for sale are measured at fair value based on Level 3
inputs.
The valuation of investments and
assets held for sale requires the exercise of considerable
judgement and use of estimates which increases the risk that
valuation and presentation may be misstated, and therefore has been
determined to be a Key Audit Matter.
|
Our work in this area
included:
• Understanding the process adopted
by management in relation to valuation of investments and assets
held for sale;
• Reviewing documentation in
respect of the ownership of investments and assets held for
sale;
• Reviewing management's assessment
and accounting for assets held for sale;
• Obtaining direct Net Asset Value
(NAV) statements from the investee funds;
• Challenging key assumptions in
management's valuation models used to determine fair value and/or
recoverable amount, including sensitivity of valuations to changes
in assumptions and inputs;
• Reviewing purchase and
sale/potential sale transactions used for fair valuation
determination to ensure that such transactions are at arm's
length;
• Considering any subsequent events
or developments that may impact the valuation or classification of
the assets held for sale; and
• Reviewing the classification of
investments, disclosure and presentation of assets held for sale
and valuation inputs within the financial statements
|
Other information
The other information comprises
the information included in the annual report, other than the
financial statements and our auditor's report thereon. The
directors are responsible for the other information. Our opinion on
the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. In
connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that
fact.
We have nothing to report in this
regard.
Responsibilities of directors
As explained more fully in the
Statement of directors' responsibilities, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial
statements that are free from material
misstatement, whether due to fraud or error.
In preparing the
financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain
reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and
to issue an auditor's report that includes our opinion. Reasonable
assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud,
are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures
are capable of detecting irregularities, including fraud is
detailed below:
·
We obtained an understanding of the group and the
sector in which it operates to identify laws and regulations that
could reasonably be expected to have a direct effect on the
financial statements. We obtained our understanding in this regard
through discussions with management, industry research, application
of cumulative audit knowledge and experience of the sector. We also
selected a specific audit team with experience of auditing entities
facing similar audit and business risks.
·
We determined the principal laws and regulations
relevant to the group in this regard to be those arising
from:
-
AIM rules;
-
General Data Protection Regulations;
-
Anti-Bribery Act;
-
Anti Money Laundering Regulations; and
-
Local tax laws and regulations.
The audit team remained alert to
instances of non-compliance with laws and regulations throughout
the audit.
·
We designed our audit procedures to ensure the
audit team considered whether there were any indications of
non-compliance by the group with those laws and regulations. These
procedures included, but were not limited to:
-
Making enquiries of management;
-
Reviewing Board meeting minutes;
-
Reviewing the nature of legal professional
fees;
-
Reviewing Regulatory News Service
announcements.
·
We also identified the risks of material
misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls and revenue
recognition, inappropriate application of the going concern
assessment in the financial statements and management bias in
determining key accounting estimates and judgements used in
relation to the fair valuation of unquoted financial assets and
assets held for sale. We addressed this by challenging the
estimates/judgements made by management when auditing these
significant accounting estimates/judgements (refer to the key audit
matter and going concern sections above).
·
As in all of our audits, we addressed the risk of
fraud arising from management override of controls by performing
audit procedures, which included, but were not limited to testing
of journals, reviewing key accounting judgements for evidence of
bias (refer to the key audit matter and going concern sections
above) and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of
business.
·
Our review of non-compliance with laws and
regulations incorporated the listed parent company. The risk of
actual or suspected non-compliance was not sufficiently significant
to our audit to result in our response being identified as a key
audit matter.
Because of the inherent
limitations of an audit, there is a risk that we will not detect
all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law
or regulation is removed from the events and transactions reflected
in the financial statements, as we will be less likely to become
aware of instances of non-compliance. The risk is also greater
regarding irregularities occurring due to fraud rather than error,
as fraud involves intentional concealment, forgery, collusion,
omission or misrepresentation.
A further description of our
responsibilities for the audit of the financial statements is
located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Use of our report
This report is made solely to the
company's members, as a body, in accordance with our engagement
letter dated 2 May 2024. Our audit work has been undertaken
so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone, other than the company
and the company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
Nicholas Joel (Engagement
Partner)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Registered Auditor
London E14 4HD
28 June 2024
Consolidated Statement of Comprehensive
Income
For the year ended 31 December
2023
|
|
|
2023
|
|
2022
|
|
|
|
Notes
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
Income from unquoted financial
assets
|
|
1,090
|
|
1,174
|
|
|
Finance income from
loans
|
|
545
|
|
1,359
|
|
|
Realised (losses) /
gains
|
|
(1)
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross portfolio income
|
3
|
1,634
|
|
2,833
|
|
|
|
|
|
|
|
|
|
Fair value changes on financial
assets at fair value through profit or loss
|
4
|
(17,295)
|
|
(47,409)
|
|
|
Investment provisions
|
|
-
|
|
(6,003)
|
|
|
|
|
|
|
|
|
|
Net portfolio loss
|
3
|
(15,661)
|
|
(50,579)
|
|
|
|
|
|
|
|
|
|
Management fees
|
|
(350)
|
|
(1,200)
|
|
|
Incentive fees
|
16
|
43
|
|
158
|
|
|
Administrative expenses
|
|
(1,171)
|
|
(763)
|
|
|
|
|
|
|
|
|
|
Operating loss
|
5
|
(17,139)
|
|
(52,384)
|
|
|
|
|
|
|
|
|
|
Finance expense
|
6
|
(577)
|
|
(520)
|
|
|
|
|
|
|
|
|
|
Loss before taxation
|
|
(17,716)
|
|
(52,904)
|
|
|
|
|
|
|
|
|
|
Taxation
|
8
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year
|
|
(17,716)
|
|
(52,904)
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
|
Basic and diluted loss per
share
|
17
|
(5.94)
cents
|
|
(45.89)
cents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The results reflected above relate
to continuing operations.
The accompanying notes on pages 40
to 59 are an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
For the year ended 31 December
2023
|
|
Share
capital
|
|
Treasury share
reserve
|
|
Share based payment
reserve
|
|
Accumulated
losses
|
|
Total
|
|
|
US$'000
|
|
US$'000
|
|
US$'000
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
Group balance at 1 January
2022
|
148,903
|
|
(615)
|
|
2,936
|
|
(83,196)
|
|
68,028
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
-
|
|
-
|
|
-
|
|
(52,904)
|
|
(52,904)
|
|
Other comprehensive
income
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Total comprehensive loss for the
year
|
-
|
|
-
|
|
-
|
|
(52,904)
|
|
(52,904)
|
|
|
|
|
|
|
|
|
|
|
|
|
Group balance at 31 December 2022
and 1 January 2023
|
148,903
|
|
(615)
|
|
2,936
|
|
(136,100)
|
|
15,124
|
|
Loss for the year
|
-
|
|
-
|
|
-
|
|
|
|
|
|
Other comprehensive
income
|
-
|
|
-
|
|
-
|
|
(17,716)
|
|
(17,716)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the
year
|
-
|
|
-
|
|
-
|
|
(17,716)
|
|
(17,716)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares net of issue
costs
|
2,783
|
|
-
|
|
-
|
|
-
|
|
2,783
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of shares
|
-
|
|
(139)
|
|
-
|
|
-
|
|
(139)
|
|
|
|
|
|
|
|
|
|
|
|
|
Group balance at 31 December
2023
|
151,686
|
|
(754)
|
|
2,936
|
|
(153,816)
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
The following describes the nature
and purpose of each reserve within owners' equity.
|
Share capital
|
Amount subscribed for share capital
at no par value
|
|
|
|
|
Treasury share reserve
|
Cost of the Company's shares
re-purchased and held by the Group
|
|
|
|
|
Share based payment
reserve
|
The share-based payment reserve
represents amounts in previous and the current periods, relating to
share-based payment transactions granted as options/warrants and
under the Group's share option scheme (Note 15)
|
|
|
|
|
Accumulated losses
|
Represents the cumulative net gains
and losses recognised in the statement of comprehensive
income
|
The accompanying notes on
pages 40 to 59 are an integral part of these financial
statements.
Consolidated Statement of
Financial Position
As at 31 December 2023
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
Notes
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unquoted financial assets at fair
value through profit or loss
|
9
|
500
|
|
18,227
|
|
|
Other receivables at fair value
through profit or loss
|
10
|
19
|
|
1,769
|
|
|
Investments held for
sale
|
11
|
4,290
|
|
-
|
|
|
Cash and cash
equivalents
|
|
77
|
|
321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
4,886
|
|
20,317
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other payables and
accruals
|
12
|
991
|
|
1,334
|
|
|
Loans & borrowings
|
13
|
3,843
|
|
3,859
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
4,834
|
|
5,193
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
52
|
|
15,124
|
|
|
|
|
|
|
|
|
|
Equity and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
14
|
151,686
|
|
148,903
|
|
|
Treasury share reserve
|
14
|
(754)
|
|
(615)
|
|
|
Share based payment
reserve
|
|
2,936
|
|
2,936
|
|
|
Accumulated losses
|
|
(153,816)
|
|
(136,100)
|
|
|
|
|
|
|
|
|
|
Total equity and reserves attributable to owners of the
parent
|
|
52
|
|
15,124
|
|
|
|
|
|
|
|
|
The financial statements were
approved by the Board of Directors and authorised for issue
on
28 June 2024 and signed on its
behalf by:
John Croft
Executive Chairman
The accompanying notes on
pages 40 to 59 are an integral part of these financial
statements.
Consolidated Cash Flow Statement
For the year ended 31 December
2023
|
|
|
2023
|
|
|
2022
|
|
|
|
|
US$'000
|
|
|
US$'000
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before taxation
|
|
(17,716)
|
|
|
(52,904)
|
|
|
|
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Finance income
|
|
(545)
|
|
|
(1,359)
|
|
|
Finance expense
|
|
577
|
|
|
520
|
|
|
Foreign exchange
|
|
47
|
|
|
83
|
|
|
Fair value changes on unquoted
financial assets at fair value through profit or loss
|
|
13,938
|
|
|
47,074
|
|
|
Fair value changes on loans and
receivables at fair value through profit or loss
|
|
2,236
|
|
|
5,059
|
|
|
Realised gain on
investments
|
|
-
|
|
|
(300)
|
|
|
Decrease in other
receivables
|
|
13
|
|
|
28
|
|
|
(Decrease)/increase in other
payables and accruals
|
|
(323)
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
(1,773)
|
|
|
(1,477)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale proceeds of unquoted
financial assets at fair value through
profit or loss
|
|
250
|
|
|
1,200
|
|
|
Purchase of unquoted financial
assets at fair value
|
|
(750)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
(500)
|
|
|
1,200
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares net of issue
costs
|
|
2,763
|
|
|
-
|
|
|
Purchase of treasury
shares
|
|
(139)
|
|
|
-
|
|
|
Payment of interest
|
|
(594)
|
|
|
(228)
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from/(used in) financing
activities
|
|
2,030
|
|
|
(228)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
(243)
|
|
|
(505)
|
|
|
Cash and cash equivalents and net
debt at the beginning of the year
|
|
321
|
|
|
848
|
|
|
Foreign exchange on cash
balances
|
|
(1)
|
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and net debt at the end of
the
year
|
|
77
|
|
|
321
|
|
The accompanying notes on
pages 40 to 59 are
an integral part of these financial statement
JADE ROAD INVESTMENTS LTD
Notes to the Financial Statements
For the year ended 31 December
2023
1. GENERAL
INFORMATION
The Company is a limited (by
shares) 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, PO Box 3140,
Road Town, Tortola, British Virgin Islands VG1110 and its principal
place of business is c/o Harmony Capital, 20/F, Infinitus Plaza,
199 Des Voeux Road Central, Hong Kong.
The Company is the holding company
of a group of companies comprising a subsidiary, Jade Road
Investments (HK) Limited. The address of the registered office and
its principal place of business is c/o Harmony Capital, --20/F,
Infinitus Plaza, 199 Des Voeux Road Central, Hong Kong and a number
of wholly owned special purpose vehicles ("SPV") each of which holds
investments.
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 Company is targeting delivery
of income and capital gain from a diversified mix of pan-Asian
investments in the Small- and Medium-Sized Enterprise
("SME") sector.
The Groups
investment policy is stated in pages 4-5 of the annual
report.
2. ACCOUNTING
POLICIES
a) Basis of
Preparation
The principal accounting policies
adopted in the preparation of the financial statements are set out
below.
The Group's financial statements
have been prepared in accordance with International Financial
Reporting Standards (IFRSs and IFRIC interpretations) as adopted by
the EU. The financial statements have been prepared under the
historical cost convention. Financial instruments are measured at
fair value at the end of each reporting period.
Historical cost is generally based
on the fair value of the consideration given in exchange for goods
and services.
Fair Value Measurements:
Fair Value is the price that would
be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date under current market conditions.
The fair value of investments is
first based on quoted prices, where available. Where quoted prices
are not available, the fair value is estimated using consistent
valuation techniques across periods of measurement.
The Group's private credit and
equity investments are recorded at fair value or at amounts whose
carrying values approximate fair value. Net gains and losses,
including any interest or dividend income, are recognised in its
profit or loss statement.
In accordance with IFRS 13, fair
value measurements are categorised into Level I, II or III based on
the degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety. These are described as
follows:
Level I Fair value
measurements are those derived from quoted prices (unadjusted) in
active markets for identical assets or liabilities.
Level II Fair value
measurements are those derived from inputs other than quoted prices
included within Level I that are observable for the assets or
liability, either directly or indirectly.
Level III Fair value
measurements are those derived from inputs that are not based on
observable market data.
b) Basis of
Consolidation
The consolidated financial
statements incorporate the financial statements of the Company and
entities (other than structured entities) controlled by the
Company. Control is achieved where the Company:
§ has the
power over the investee;
§ is
expected, or has rights, to variable returns from its involvement
with the investee; and
§ has the
ability to use its power to affect its returns.
The Company reassesses whether or
not it controls a subsidiary if facts and circumstances indicate
that there are changes to one or more of the three elements of
control listed above.
The Company holds investments
through a number of unlisted wholly owned special purpose vehicles
("SPVs"). The directors
have considered the definition of an investment entity in IFRS10
and the associated application guidance and consider that the
Company meets that definition. Consequently, the Group's
investments in SPVs and the underlying investments are accounted
for at fair value through profit and loss and the SPVs are not
consolidated as subsidiaries. Please see
Note 4(o) Critical accounting
estimates and judgements for description of fair value
methodology.
Consolidation of a subsidiary
other than those held for investment purposes begins when the
Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and
expenses of a subsidiary acquired or disposed of during the year
are included in the consolidated statement of profit or loss and
other comprehensive income from the date the Company gains control
until the date when the Company ceases to control the
subsidiary.
The results of subsidiaries
acquired or disposed of during the year are included in the
consolidated statement of comprehensive income from the effective
date of acquisition and up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are
made to the financial statements of subsidiaries to bring their
accounting policies into line with those used by other members of
the Group.
All intra-group transactions,
balances, income and expenses are eliminated in full on
consolidation. Associates are those entities in which the Group has
significant influence, but not control, over the financial and
operating activities.
Investments that are held as part
of the Group's investment portfolio are carried in the balance
sheet at fair value even though the Group may have significant
influence over those companies. This treatment is permitted by IAS
28 - Investment in Associates, which requires investment held by
venture organisations to be excluded from its scope where those
investments are designated, upon initial recognition, as at fair
value through profit or loss and accounted for in accordance with
IFRS 9, with changes in fair value recognised in the statement of
comprehensive income in the period of change. The Group has no
interests in associates through which it carries on its
business.
c) Going
Concern
Notwithstanding the operating loss
of US$17.7Mn and operating cash outflows of USD$1.7Mn for the year
ended 31 December 2023 and net current assets of $0.05Mn at
year-end, the group has prepared the financial statements under the
going concern.
Following the recent transfer of
assets the Company is seeking to acquire a business via a Reverse
Take Over (RTO). The Company will need to raise interim capital to
advance discussions for an RTO. The Company also continues to
manage a small number of creditors. The
Company is confident that it will be able to raise the interim
capital required, and is in advanced discussions with a number of
parties with respect to this. In addition, the company has also
received a letter of support from its largest shareholder Heirloom
in regard to the Company's fundraising plans. However, were the
company to not obtain this funding in the short term, and Heirloom
unable to financially support the company in the foreseeable
future, then the company would not be able to meet its liabilities
as they fall due. Were the company not to be considered a going
concern, there would be no material impact on these financial
statements as all significant items are already held at their fair
value.
Accordingly, the financial
statements have been prepared on a going concern basis and do not
include any adjustments that would result if the group was unable
to continue as a going concern.
d) Segment
Reporting
Operating segments are reported in
a manner consistent with the internal reporting provided to the
senior management and Board members. The senior management and
Board members, who are responsible for allocating resources and
assessing performance of the operating segments, have been
identified as the senior management and Board members that make
strategic decisions. The Group is principally engaged in investment
business, the Directors consider there is only one business
activity significant enough for disclosure. This activity consists
of entities which operate in two geographical locations, i.e., BVI
and Hong Kong.
e) Revenue
Recognition
Revenue is recognised when it is
probable that the economic benefits will flow to the Group and when
the revenue and costs, if applicable, can be measured reliably and
on the following basis:
§ Dividend
income is recognised when the Company's right to receive payment is
established.
§ Interest
revenue is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to that asset's
net carrying amount.
§ Fair
value changes on financial assets represents the overall changes in
net assets from the investment portfolio net of deal-related
costs.
Other
income comprised management recharges from the parent company to
its subsidiary which are eliminated on consolidation.
f) Impairment of
Non-Financial Assets
At each balance sheet date, the
Group reviews internal and external sources of information to
determine whether its fixtures, fittings and equipment and
investment in subsidiaries have suffered an impairment loss or
impairment loss previously recognised no longer exists or may be
reduced. If any such indication exists, the recoverable amount of
the asset is estimated, based on the higher of its fair value less
costs to sell and value in use. Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the smallest group of assets
that generates cash flows independently (i.e., cash-generating
unit).
If the recoverable amount of an
asset or a cash-generating unit is estimated to be less than its
carrying amount, the carrying amount of the asset or
cash-generating unit is reduced to its recoverable amount.
Impairment losses are recognised as an expense
immediately.
A reversal of impairment loss is
limited to the carrying amount of the asset or cash-generating unit
that would have been determined had no impairment loss been
recognised in prior years. Reversal of impairment loss is
recognised as income immediately.
g) Financial
Instruments
Financial assets and financial
liabilities are recognised on the balance sheet when a group entity
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured
at fair value. Financial assets at fair value through profit or
loss includes loans and receivables.
Transaction costs that are
directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial
recognition.
Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
Financial assets are classified,
at initial recognition, as subsequently measured at amortised cost
or fair value through profit or loss. The classification of
financial assets at initial recognition depends on the financial
asset's contractual cash flow characteristics and the Group's
business model for managing them.
Unquoted Financial Assets:
Classification
The Group classifies its unquoted
financial assets as financial assets at fair value through profit
or loss. These financial assets are designated by the directors as
at fair value through profit or loss at inception.
Financial assets designated as at
fair value through profit or loss at inception are those that are
managed as part of an investment portfolio and their performance
evaluated on a fair value basis in accordance with the Group's
Investment Strategy.
Recognition/Derecognition
Regular-way purchases and sales of
investments are recognised on the trade date - the date on which
the Group commits to purchase or sell the investment.
A fair value through profit or
loss asset is derecognised when the Group loses control over the
contractual rights that comprise that asset. This occurs when
rights are realised, expire or are surrendered and the rights to
receive cash flows from the investments have expired or the Group
has transferred substantially all risks and rewards of ownership.
Realised gains and losses on fair value through profit or loss
assets sold are calculated as the difference between the sales
proceeds and cost. Fair value through profit or loss assets that
are derecognised and corresponding receivables from the buyer for
the payment are recognised as of the date the Group has transacted
an unconditional disposal of the assets.
Measurement
Financial assets at fair value
through profit or loss are initially recognised at fair value.
Transaction costs are expensed through the profit or loss.
Subsequent to initial recognition, all financial assets at fair
value through profit or loss are measured at fair value in
accordance with the Group's valuation policy, as the Group's
business is to invest in financial assets with a view to profiting
from their total return in the form of capital growth and income.
Gains and losses arising from changes in the fair value of the
financial assets at fair value through profit or loss are presented
in the period in which they arise. For more information on
valuation principles applied, please see section 4(o) Critical
Accounting Estimates.
Quoted Financial Assets:
The fair values of financial
assets with standard terms and conditions and traded on active
liquid markets are determined with reference to quoted market bid
prices and are classified as current assets. Purchases and sales of
quoted investments are recognised on the trade date where a
contract of sale exists whose terms require delivery within a time
frame determined by the relevant market.
In the opinion of the Directors,
cash flows arising from transactions in equity investments
represent cash flows from investing activities.
Allowance for Expected Credit Losses:
An allowance for ECLs may be
established for amounts due from credit contracts within Loans and
Receivables where evidence of credit deterioration is observed. In
order to assess credit deterioration, the Group considers
reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both
quantitative and qualitative information and analysis, based on its
historical experience and informed credit assessment, that includes
forward-looking information. The main factors considered include
material financial deterioration of the borrower, breach of
contract such as default or delinquency in interest or principal
repayments, probability that a borrower will enter bankruptcy or
financial re-organisation and material decline in the value of the
underlying applicable security. ECL allowances are distinguished
from Likely Credit Loss ("LCL") allowances based on the
expectation of a loss. An LCL reserve is established when a loss is
both probable and the amount is known.
ECLs are a probability-weighted
estimate of lifetime credit losses. Under the ECL model, the Group
calculates the allowance for credit losses by considering on a
discounted basis the cash shortfalls it would incur in various
default scenarios for prescribed future periods and multiplying the
shortfalls by the probability of each scenario occurring. The
allowance is the sum of these probability weighted outcomes. Credit
losses are measured as the present value of all cash shortfalls
(i.e., the difference between the cash flows due to the entity in
accordance with the contract and the cash flows that the Group
expects to receive) with a discount factor applied.
Cash and Cash Equivalents:
For the purpose of the cash flow
statement, cash equivalents represent short-term highly liquid
investments which are readily convertible into known amounts of
cash, and which are subject to an insignificant risk of change in
value, net of bank overdrafts.
Financial Liabilities
The Group's financial liabilities
include other payables and accruals and amounts due to related
parties. All financial liabilities except for derivatives are
recognised initially at their fair value and subsequently measured
at amortised cost, using effective interest method, unless the
effect of discounting would be insignificant, in which case they
are stated at cost.
Equity Instruments
Equity instruments issued by the
Group are recorded at the proceeds received, net of direct issue
costs.
h) Investment in
Subsidiaries
Investments in subsidiaries are
stated at cost less provision for any impairment in value. Under
IFRS 10, where the parent company is qualified as an investment
entity, the subsidiaries have been deconsolidated from the Group
financial statements.
i)
Taxation
The charge for current income tax
is based on the results for the period as adjusted for items that
are non-assessable or disallowed. It is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is provided, using
the liability method, on all temporary differences at the balance
sheet date between the tax bases of assets and liabilities and
their carrying amounts in the financial statements. However, if the
deferred tax arises from initial recognition of an asset or
liability in a transaction other than a business combination that
at the time of the transaction affects neither the accounting
profit nor taxable profit or loss, it is not accounted
for.
The deferred tax liabilities and
assets are measured at the tax rates that are expected to apply to
the period when the asset is recovered or the liability is settled,
based on tax rates and tax laws that have been enacted or
substantively enacted at the balance sheet date. Deferred tax
assets are recognised to the extent that it is probable that future
taxable profit will be available against which the deductible
temporary differences, tax losses and credits can be
recognised.
j)
Dividends
Dividends payable are recorded in
the financial statements in the period in which they meet the IAS
32 definition of having been declared.
k) Share Based
Payments
The Group has applied the
requirements of IFRS 2 "Share Based Payments". The Group issues
share options/warrants as an incentive to certain key management
and staff (including Directors) and its Investment Manager. The
fair value of options/warrants granted to Directors, management
personnel, employees and Investment Manager under the Company's
share option/warrant scheme is recognised as an expense with a
corresponding credit to the share-based payment reserve. The fair
value is measured at grant date and spread over the period during
which the awards vest. The fair value is measured using the Black
Scholes Option pricing model.
The Group, on special occasions as
determined by the Directors, may issue options/warrants to key
consultants, advisers and suppliers in payment or part payment for
services or supplies provided to the Group. The fair value of
options/warrants granted is recognised as an expense with a
corresponding credit to the share-based payment reserve. The fair
value is measured at grant date and spread over the period during
which the options/warrants vest. The fair value is measured at the
fair value of receivable services or supplies.
The options/warrants issued by the
Group are subject to both market-based and non-market based vesting
conditions.
Non-market vesting conditions are
not taken into account when estimating the fair value of awards as
at grant date; such conditions are taken into account through
adjusting the equity instruments that are expected to
vest.
The proceeds received, net of any
attributable transaction costs, are credited to share capital when
options/warrants are converted into ordinary shares.
l) Earnings Per
Share
The Group calculates both basic
and diluted earnings per share in accordance with IAS 33 "Earnings
per Share". Under IAS 33, basic earnings per share is computed
using the weighted average number of shares outstanding during the
period. Diluted earnings per share is computed using the weighted
average number of shares during the period plus the period dilutive
effect of options outstanding during the period. Potential ordinary
shares are only treated as dilutive if their conversion to shares
would decrease earnings per share or increase loss per share from
continuing operations.
m)
Share Issue Expenses
Share issue expenses are written
off against the share capital account arising on the issue of share
capital.
n) Critical Accounting
Estimates and Judgements
Preparation of financial
statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets,
liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily
apparent from other sources.
In particular, significant areas
of estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the
amount recognised in the Financial Statements are in the following
areas:
Assessment of accounting treatment under IFRS 10, IFRS 12,
and IAS 27 - Investment entities
The directors have concluded that
the Company meets the definition of an Investment Entity because
the Company:
a.
obtains funds from one or more investors for the purpose of
providing those investor(s) with investment management
services;
b.
commits to its investor(s) that its business purpose is to invest
funds solely for returns from capital appreciation, investment
income, or both; and
c.
measures and evaluates the performance of substantially all of its
investments on a fair value basis.
The investment objective of the
Company is to produce returns from capital growth and to pay
shareholders a dividend. The Group has multiple unrelated investors
and indirectly holds multiple investments. Investment positions are
in the form of structured loans or equity instruments in private
companies operating which is valued on a fair value
basis.
As a result, the unlisted
open-ended investments, also referred to as SPVs, and in which the
Company invests in are not consolidated in the Group financial
statements.
Assessment of Accounting Treatment under IAS 28 - Investment
in Associates
The Group has taken advantage of
the exemption under IAS28 Investments in Associates whereby IAS
28's requirements do not apply to investments in associates held by
venture capital organisations. This exemption is conditional on the
investments being designated as at fair value through profit and
loss or being classified as held for trading upon initial
recognition. Such investments are measured at fair value with
changes in fair value being recognised in the statement of
comprehensive income.
Valuation of Investments
The Group's investment portfolio
includes a number of investments in the form of structured loans or
equity instruments in private companies operating in emerging
markets. In the second half of 2023, the Board took the decision to
restructure the Company by disposing of all of its legacy Asian
assets, the loan note, and the payable to the Company's previous
Investment Manager Harmony Capital Investors Limited, and
transferring them to a separate privately held company whose
shareholders would be a mirror of the shareholders in
JADE.
As the legacy assets are
transferred for no consideration, the US$3.62m loan notes plus the
value of the payable to Harmony Capital Investors Limited US$670k
are considered to represent the fair value of the Legacy Assets to
be transferred between Jade and the SPV. Therefore, the Board
has decided to write down the fair value of the Legacy Assets equal
to the liabilities transferred to the SPV.
o) Foreign currency
translation
- Functional and Presentation
Currency
Both the functional and
presentational currency of the Group's entities are the United
States Dollar. The financial statements are presented in United
States Dollars and rounded to the nearest thousand dollars, except
when otherwise indicated.
Transactions in foreign currencies are converted into the
functional currency on initial recognition, using the exchange
rates approximating those ruling at the transaction dates. Monetary
assets and liabilities at the end of the reporting period are
translated at the rates ruling as of that date. Non-monetary assets
and liabilities are translated using exchange rates that existed
when the values were determined. All exchange differences are
recognised in profit or loss.
p) Assets held for
sale
During the year, the Group reached
an agreement to dispose of legacy assets held by the Group. These
assets, along with the convertible loan note issued by the Group,
will be transferred to an independent third party for nil
consideration. The agreement was signed on 29 December 2023,
however conditions required for the sale completed had not all been
met at this date, and therefore it cannot be considered an
adjusting event for the purposes of IAS 10 Events after the reporting period.
However, as the sale was highly probably and a buyer for the assets
had already been agreed, these assets meet the criteria to be
considered assets held for sale under IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.
The assets held for sale are being
transferred at nil consideration. However, the convertible loan
notes issued by the Group are also being transferred. Therefore,
the value of the loan notes is considered to represent the fair
value of the legacy assets, and therefore the assets are impaired
to this value.
New Standards, Amendments to
Standards or Interpretations adopted in these financial
statements:
No standards, amendments or
interpretations which became effective from 1 January 2023 had an
impact on the Group Financial Statements.
Standards, amendments and
interpretations to existing standards that are not yet effective
and have not been early adopted by the Company in the 31 December
2023 financial statements
Amendments to IAS 1: Presentation of
Financial Statements: Classification of Liabilities as Current of
Non-current 1 January 2024
Amendments to IAS 1 Presentation of
Financial Statements: Non-current
Liabilities with Covenants 1 January
2024
Lease Liability in a Sale and
Leaseback (Amendments to IFRS 16) 1 January 2024
The Directors do not expect that
their adoption will have a material impact on the financial
statements of the company in future years. The Directors continue
to monitor the impact of future changes to the reporting
requirements but do not believe the proposed changes will
significantly impact the financial statements.
3.
SEGMENT INFORMATION
The operating segment has been
determined and reviewed by the senior management and Board members
to be used to make strategic decisions. The senior management and
Board members consider there to be a single business segment, being
that of investing activity. The reportable operating segment
derives its revenue primarily from structured equity and debt
investment in several companies and unquoted
investments.:
4. FAIR VALUE CHANGES ON
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Unquoted Financial Assets
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Income through profit or
loss
|
|
|
|
|
1,090
|
|
1,174
|
|
|
Equity fair value
adjustments:
|
|
|
|
|
|
|
|
|
|
- Meize/ Swift Wealth
|
|
|
|
|
(8,801)
|
|
1,500
|
|
|
- FMHL
|
|
|
|
|
(1,538)
|
|
(45,146)
|
|
|
- ICG
|
|
|
|
|
(1,659)
|
|
-
|
|
|
- Infinity TNP
|
|
|
|
|
-
|
|
(3,650)
|
|
|
- DocDoc
|
|
|
|
|
(3,016)
|
|
|
|
|
- Other
|
|
|
|
|
(15)
|
|
|
|
|
|
|
|
|
|
(15,029)
|
|
(47,296)
|
|
|
|
|
|
|
|
|
|
|
|
|
Realised Gain
|
|
|
|
|
-
|
|
300
|
|
|
Expected credit loss
provision:
|
|
|
|
|
|
|
|
|
|
- ICG
- FMHL
|
|
|
|
|
-
-
|
|
(363)
(581)
|
|
|
Foreign exchange on unquoted
financial assets at fair value through profit or loss
|
|
|
|
|
2
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value changes on
unquoted financial assets at fair value through profit or
loss
|
|
|
|
|
(13,937)
|
|
(46,774)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
Loans & Receivables financial assets
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Income through profit or
loss
|
|
|
|
|
545
|
|
1,359
|
|
|
Fair value adjustments:
|
|
|
|
|
|
|
|
|
|
- FMHL (loan principal)
|
|
|
|
|
-
|
|
-
|
|
|
- FMHL (Accrued
interest)
|
|
|
|
|
(532)
|
|
-
|
|
|
- CJRE (Project
Nichlaus)
|
|
|
|
|
(1,736)
|
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected credit loss
provision:
|
|
|
|
|
|
|
|
|
|
- FLMHL (Accrued
interest)
|
|
|
|
|
-
|
|
(1,359)
|
|
|
- HKMH (Loan principal)
|
|
|
|
|
-
|
|
(3,700)
|
|
|
Foreign exchange on Loans &
Receivables at fair value through profit or loss
|
|
|
|
|
-
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value changes on Loans
& Receivables at fair value through profit or loss
|
|
|
|
|
(1,723)
|
|
(3,805)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected Credit Loss Provision
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
|
|
|
|
|
6,038
|
|
35
|
|
|
ECL charged (utilitised) to profit
or loss
|
|
|
|
|
(6,038)
|
|
6,003
|
|
|
Balance at 31 December
|
|
|
|
|
-
|
|
6,038
|
|
The impact of foreign exchange on
the investments in the portfolio is as follows:
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
FMHL
|
|
|
|
|
2
|
|
(8)
|
|
|
Foreign exchange on unquoted
financial assets at fair value through profit or loss
|
|
|
|
|
2
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
CJRE
|
|
|
|
|
(44)
|
|
(83)
|
|
|
Foreign exchange on loans and
receivables
|
|
|
|
|
(44)
|
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
(1)
|
|
(22)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange on
portfolio
|
|
|
|
|
(43)
|
|
(113)
|
|
5.
OPERATING LOSS
Operating loss is stated after
charging expenses:
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Investment Manager fee
|
|
|
|
|
350
|
|
1,200
|
|
|
Investment Manager incentive
fee
|
|
|
|
|
(43)
|
|
(158)
|
|
|
Fees to the Group's auditor for
audit of the
Company and its
subsidiaries
|
|
|
|
|
51
|
|
53
|
|
|
Directors' remuneration
|
|
|
|
|
321
|
|
260
|
|
|
Professional fees
|
|
|
|
|
727
|
|
414
|
|
|
Business travel
expenses
|
|
|
|
|
19
|
|
4
|
|
|
Bank charges
|
|
|
|
|
11
|
|
9
|
|
|
Foreign exchange
|
|
|
|
|
-
|
|
1
|
|
|
Other expenses
|
|
|
|
|
67
|
|
22
|
|
The Investment Manager's incentive
fee is only payable in any given year depending on the performance
of the Company's net asset value. The charge above is a result of
warrants owed (not yet issued) revalued to their prevailing share
price at 31 December 2023. (Also see Note 16).
6. NET FINANCE
INCOME
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Interest from financial assets
measured at fair value through profit and loss
|
|
|
|
|
545
|
|
1,359
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income
|
|
|
|
|
545
|
|
1,359
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest payable on
debt
|
|
|
|
|
(577)
|
|
(520)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance cost
|
|
|
|
|
(577)
|
|
(520)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net finance income
|
|
|
|
|
(32)
|
|
839
|
|
|
Finance income in the year is
from the Convertible Bond issued by FLMH
which has been fully provided against.
7. DIRECTORS'
REMUNERATION
|
Short term employment
benefits
|
|
|
|
|
2023C
|
|
2022
|
|
|
|
|
|
|
|
US$
|
|
US$
|
|
|
John Croft
|
|
|
|
|
167,000
|
|
120,755
|
|
|
Hugh Trenchard
|
|
|
|
|
44,795
|
|
44,223
|
|
|
Lee George Lam
|
|
|
|
|
46,000
|
|
45,971
|
|
|
Stuart Crocker
|
|
|
|
|
63,000
|
|
49,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
320,795
|
|
260,061
|
|
Directors' remuneration includes
all applicable social security payments. There was no pension cost
incurred during 2023 (2022:US$ Nil).
There are no employees within the
group other than the Directors (2022: Nil)
8. TAXATION
The Group companies are
incorporated in the BVI and Hong Kong. Not subject to any income
tax in the BVI. The company does not
engage in any business activities or generate income in Hong Kong;
therefore it is not subject to taxation in Hong Kong.
9.
UNQUOTED FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR
LOSS
|
|
2023
Unquoted financial
assets
|
2023
Loans and
receivables
|
2022
Unquoted
financial assets
|
2022
Loans
and
receivables
|
|
|
US$'000
|
US$'000
|
US$'000
|
US$'000
|
|
|
|
|
|
|
|
Balance as at 1 January
|
18,227
|
1,769
|
66,202
|
5,556
|
|
|
|
|
|
|
|
Additions
|
750
|
-
|
-
|
-
|
|
Reclassification
|
-
|
-
|
-
|
-
|
|
Fair value changes through profit
or loss
|
(13,937)
|
(2,314)
|
(46,131)
|
(87)
|
|
Transferred to held for
sale
|
(4,290)
|
-
|
-
|
-
|
|
Disposal
|
(250)
|
-
|
(1,200)
|
-
|
|
Realised gain
|
-
|
-
|
300
|
-
|
|
ECL
|
-
|
-
|
(944)
|
(5,059)
|
|
Finance income on loans
|
-
|
545
|
-
|
1,359
|
|
Balance as at 31
December
|
500
|
-
|
18,227
|
1,769
|
The Group values its investments at
fair value through profit or loss, as prescribed by the investment
methodology
adopted by the Board which is
summarised in Note 2(o) Critical
accounting estimates and judgements, for non-legacy
assets.
SPVs
The unlisted open-ended investments
below are defined as SPVs and are reported at the fair value of
their underlying investments described above at 31 December
2023.
|
Name of SPV
|
Country of
Incorporation
|
Percentage
owned
|
Principal
activities
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
|
Lead Winner Limited
|
BVI
|
100%
|
100%
|
Investment Holdings
|
|
Dynamite Win Limited
|
BVI
|
100%
|
100%
|
Investment Holdings
|
|
Future Metal Holdings
Limited
|
BVI
|
100%
|
100%
|
Investment Holdings
|
|
Swift Wealth Investments
Limited
|
BVI
|
100%
|
100%
|
Investment Holdings
|
|
Ultimate Prosperity
Limited
|
BVI
|
100%
|
100%
|
Investment Holdings
|
|
TNP Asia Limited
Eastern Champion
Limited
|
BVI
BVI
|
100%
100%
|
100%
100%
|
Investment Holdings
Investment Holdings
|
Further details of financial
assets are set out in Note 15, and investment valuation
methodologies are set out in Note 2(o) Critical accounting estimates and
judgements.
10. LOANS AND OTHER RECEIVABLES AT FAIR
VALUE THROUGH PROFIT OR LOSS
|
|
2023
|
|
2022
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Other receivables
|
19
|
|
1,769
|
|
|
|
|
|
|
|
|
|
19
|
|
1,769
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
US$'000
|
|
US$'000
|
|
|
FLMHL
|
|
|
|
|
|
Loan principal
|
-
|
|
26,500
|
|
|
Accrued PIK interest
|
532
|
|
2,248
|
|
|
Accrued interest payable in
cash
|
-
|
|
3,070
|
|
|
Fair Value Adjustments -
Principal
|
-
|
|
(26,500)
|
|
|
Fair Value Adjustments - Accrued
Interest
|
(532)
|
|
(5,318)
|
|
|
|
|
|
|
|
|
Gross loans receivable
|
-
|
|
-
|
|
|
|
|
|
|
|
|
HKMH
|
|
|
|
|
|
Loan principal
|
-
|
|
3,700
|
|
|
Fair Value Adjustments -
Principal
|
-
|
|
(3,700)
|
|
|
|
|
|
|
|
|
Gross loans receivable
|
-
|
|
-
|
|
|
|
|
|
|
|
As at 31 December 2022, Loans
represent the Convertible Bond issued by Fook Lam Moon Holdings
plus accrued Paid-in-Kind ("PIK") and cash interest. This balance
is included within the legacy assets that will be transferred post
year-end and, as described in note 9, the value of this asset is
considered to be zero. The remaining balance represents
prepayments.
11.
ASSETS HELD FOR SALE
|
|
2023
|
|
2022
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Opening balance
|
-
|
|
-
|
|
|
Transferred from unquoted
investments at fair value through profit or loss (Future Metal
Holdings Limited)
|
4,290
|
|
-
|
|
|
|
|
|
|
|
|
Assets available for
sale
|
4,290
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The assets held for sale represent
the legacy assets of the group. The assets and the basis of their
valuation is described in Note 2(n).
12.
OTHER PAYABLES AND ACCRUALS
|
|
2023
|
|
2022
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Accounts payable
|
794
|
|
1,254
|
|
|
Accruals
|
197
|
|
80
|
|
|
|
|
|
|
|
|
Other payables and
accruals
|
991
|
|
1,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
13.
LOANS AND BORROWINGS
|
|
2023
|
|
2022
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
Corporate debt
|
3,843
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
Loans and borrowings
|
3,843
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
The movement in loans and
borrowings is as follows
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
Opening balance
|
3,859
|
|
3,568
|
|
|
|
Borrowing costs
amortised
|
-
|
|
52
|
|
|
|
Interest expense
accrued
|
577
|
|
467
|
|
|
|
Payment of interest
liability
|
(594)
|
|
(228)
|
|
|
|
|
|
|
|
|
|
|
Closing balance
|
3,843
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
i. Terms and
conditions of the outstanding debt is as follows:
|
|
|
|
|
|
|
Currency
|
Interest
rate
|
Year of
maturity
|
|
|
|
|
|
|
|
|
Secured loan notes
|
US$
|
17%
|
2024
|
|
The corporate debt US$3.8 million
are proceeds from loan notes issued to a family office investor,
with a related debenture which constitutes a fixed over the assets
and undertakings of the Company. Capitalised debt issue costs have
been fully amortised.
In December 2022 the Company agreed
an extended maturity of the loan notes issued to 31 December 2023
and an increased interest rate of 15% from December 2022. The
interest rate payable on the principal amount of the loan notes
ranged between 16%-18% per annum as US$1.8m or more of the
principal amount remained outstanding. This bond will be
transferred as part of the 'Legacy Asset' transfer after the year
end.
ii. Reconciliation of
movements of liabilities & equity to cashflows arising from
financing activities
|
|
Loans &
borrowings
|
|
Share capital/
premium
|
|
Treasury
reserve
|
|
|
US$'000
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Opening balance at 1 January
2023
|
3,859
|
|
148,903
|
|
(615)
|
|
|
|
|
|
|
|
|
Changes from cashflows
|
|
|
|
|
|
|
Issue of shares
|
-
|
|
2,763
|
|
-
|
|
Purchase of treasury
shares
|
|
|
|
|
(139)
|
|
Payment of interest
|
(594)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total changes from financing cashflows
|
(594)
|
|
2,763
|
|
(139)
|
|
|
|
|
|
|
|
|
Other changes:
|
|
|
|
|
|
|
Issue of shares to settle
liability
|
-
|
|
20
|
|
-
|
|
Interest expense
|
577
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total other changes to liabilities
|
(17)
|
|
2,783
|
|
(139)
|
|
|
|
|
|
|
|
|
Closing balance at 31 December 2023
|
3,843
|
|
15,666
|
|
(754)
|
|
|
Loans &
borrowings
|
|
Share capital/
premium
|
|
Treasury
reserve
|
|
|
US$'000
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
Opening balance at 1 January
2022
|
3,568
|
|
148,903
|
|
(615)
|
|
|
|
|
|
|
|
|
Changes from cashflows
|
|
|
|
|
|
|
Payment of interest
|
(228)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total changes from financing cashflows
|
(228)
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Other changes:
|
|
|
|
|
|
|
Interest expense
|
519
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total other changes to liabilities
|
519
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Closing balance at 31 December 2022
|
3,859
|
|
148,903
|
|
(615)
|
For non-cash movement on account of
investing activities refer note 4.
14. SHARE CAPITAL AND TREASURY SHARE
RESERVE
|
|
Share
capital
|
|
|
Number of
shares
|
|
Amount
|
|
|
|
|
US$'000
|
|
Issued share capital excluding
treasury shares at 31 December 2022
|
115,277,869
|
|
148,288
|
|
|
|
|
|
|
Issued share capital excluding
treasury shares at 31 December 2023
|
350,713,130
|
|
150,922
|
|
|
|
|
|
|
Consisting of:
|
|
|
|
|
Authorised, called-up and fully
paid ordinary shares of no par value each at 31 December
2023
|
358,193,134
|
|
151,686
|
|
Authorised, called-up and fully
paid ordinary shares of no par value held as treasury shares by the
Company at 31 December 2023
|
(7,480,004)
|
|
(754)
|
15. FINANCIAL INSTRUMENTS
Financial Risk Management Objectives and
Policies
Management has adopted certain
policies on financial risk management with the objective of
ensuring that:
(i)
appropriate funding strategies are adopted to meet the Company's
and Group's short-term and long-term funding requirements taking
into consideration the cost of funding, gearing levels, and cash
flow projections;
(ii) appropriate
strategies are also adopted to manage related interest and currency
risk funding; and
(iii) credit risks on
receivables are properly managed.
Financial instruments by category
The accounting policies for
financial instruments have been applied to the line items
below:
Financial assets
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unquoted financial assets at fair
value through P&L
|
|
|
|
|
500
|
|
18,227
|
|
|
|
Other receivables at fair value
through P&L
|
|
|
|
|
-
|
|
1,738
|
|
|
|
Cash and cash equivalents at
amortised cost
|
|
|
|
|
77
|
|
321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets
|
|
|
|
|
577
|
|
20,286
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other payables and accruals at
amortised cost
|
|
|
|
|
991
|
|
1,334
|
|
|
|
Corporate debt at amortised
cost
|
|
|
|
|
3,843
|
|
3,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
4,834
|
|
5,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
The Company has agreed an extended
maturity of the loan notes issued to 31 December 2023. Capitalised
debt issue costs have been fully amortised. 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 Levels 1, 2, or 3
based on the degree to which the fair value is observable as
described in Note 2(a) Basis of
preparation:
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Level 3
|
|
|
|
|
|
Unquoted financial assets at fair
value through profit or loss (Note 9)
|
500
|
|
18,227
|
|
|
Other receivables at fair value
through the profit or loss (Note 9)
|
-
|
|
1,769
|
|
|
|
|
|
|
|
|
|
500
|
|
19,996
|
|
There were no transfers between
levels in the current period. Carrying values of all financial
assets and liabilities (not measured at fair value through profit
or loss) are approximate to their fair values.
Significant unobservable inputs used in measuring fair value -
Level 3
|
Description
|
Fair value at 31 Dec 2023 US$'000
|
Fair value hierarchy
|
Valuation technique
|
Significant unobservable input(s)
|
Relationship of unobservable inputs to fair
value
|
|
|
|
|
|
|
|
|
|
|
Heirloom Investment Fund
SPC
|
$250
|
Level 3
|
Net asset value of fund
|
Not applicable
|
Not applicable
|
|
Heirloom Litigation
Funding
|
$250
|
|
|
|
|
|
|
|
|
|
| |
The above table sets out
information about significant unobservable inputs used at 31
December 2023 in measuring material financial instruments
categorised as Level 3 in the fair value hierarchy.
Credit
Risk
The Group's credit risk is
primarily attributable to other receivables. Management has a
credit policy in place and the exposure to credit risks are
monitored on an ongoing basis.
The Group's maximum exposure to
credit risk is represented by the total financial assets held by
the Group.
Interest Rate
Risks
The Group currently operates with
positive cash and cash equivalents as a result of issuing share
capital and corporate debt in anticipation of future funding
requirements.
The Group has a US$10 million debt
facility with a private family office investor, under which the
Company has issued US$3.6 million loan notes, with an associated
fixed interest rate of 15.0% and a maturity date of 31 December
2023. The interest rate payable on the principal amount of the loan
notes ranged between 16%-18% per annum as US$1.8m or more of the
principal amount remained outstanding. As the interest rate has
been fixed for the term of the facility, there is no interest rate
risk associated with the instruments.
Liquidity
Risk
The Group manages its liquidity
requirements by the use of both short-term and long-term cash flow
forecasts. The Group's policy to ensure facilities are available as
required is to issue equity share capital and/or loan notes in
accordance with long-term cash flow forecasts.
The Group's financial liabilities
are primarily operational costs and debt instruments. All
operational costs are due for payment in accordance with agreed
settlement terms with professional firms, and all are due within
one year. Debt principal and related interest are due for
settlement in December 2023.
Market (Price and valuation)
Risk
The Group's investment portfolio is
susceptible to risk arising from uncertainties about future values
of the investment securities, either in relation to market prices
(for quoted securities) or fair values (for unquoted securities).
This risk is that the fair value or future cash flows will
fluctuate because of changes in market prices or valuations,
whether those changes are caused by factors specific to the
individual investment or financial instrument or its holder or
factors affecting all similar financial instruments or investments
traded in the market. The Group's investment committee provides the
Board of Directors with investment recommendations that are
consistent with the Group's objectives. The investment committee
recommendations are carefully reviewed by the Board of Directors
before the investment decisions are implemented.
During the year under review, the
Group did not hedge against movements in the value of its
investments. A 10% increase/decrease in the fair value of
investments would result in a US$0.05m
(2022: US$2m) increase/ decrease in the net
asset
value.
While investments in companies
whose business operations are based in China may offer the
opportunity for significant capital gains, such investments also
involve a degree of business and financial risk, in particular for
unquoted investment.
Generally, the Group prepares to
hold the unquoted investments for a middle to long term time frame,
in particular, if admission to trading on a stock exchange is
considered likely in the future. Sales of securities in unquoted
investments may result in a discount to the book value at the time
of future disposal.
Currency
Risks
Management considers that foreign
currency exposure is not significant to the Group and as such,
there is no hedging of foreign currencies.
Capital
Management
The Group's financial strategy is
to utilise its resources to further grow the Group's portfolio. The
Group keeps investors and the market informed of its progress with
its portfolio through regular announcements and raises additional
equity finance at appropriate times when market conditions
allow.
The Company regularly reviews and
manages its capital structure for the portfolio companies to
maintain a balance between the higher shareholder returns that
might be possible with certain levels of borrowings for the
portfolio and the advantages and security afforded by a sound
capital position, and makes adjustments to the capital structure of
the portfolio in the light of changes in economic
conditions.
The capital structure of the
Company and the Group consists of cash and cash equivalents, loans
and equity comprising issued capital and reserves.
15. SHARE BASED PAYMENTS
15.1
Ownership-Based Compensation
Scheme for Senior Management
The Group has an ownership-based
compensation scheme for senior management of the Group. In
accordance with the provisions of the plan, senior management may
be granted warrants to purchase ordinary shares. Each warrant
converts into one ordinary share of Jade Road Investments Limited
on exercise. No amounts are paid or payable by the recipient of the
warrants. The warrants carry neither rights to dividends nor voting
rights. Warrants may be exercised at any time from the date of
vesting to the date of their expiry.
At 31 December 2023, there were
1,600,000 (2022: 1,907,882) warrants outstanding, issued to the
Company's Directors in previous periods in respect of services
provided to the Group. 1,600,000 warrants have an exercise price of
US$1.21 per share, equivalent to £1.00 at 31 December 2022. The
warrants will expire in 2027, 10 years after the date of
grant.
In the event that a Director's
appointment is terminated for any reason, then in such
circumstances each Director's subscription rights shall, to the
extent he/she has not been issued or exercised either (i) prior to
the date of termination (Date of Termination); or (ii) within the
period of 60 days immediately following the Date of Termination, be
immediately cancelled.
15.2
Equity Compensation Scheme for
Harmony Capital Investors Limited (the
"Investment
Manager")
The Group has an equity
compensation scheme for Investment Manager of the Group. In
accordance with the provision of the scheme, the Investment Manager
is granted warrants to subscribe for 20 million (before share
consolidation undertaken by the Company on 20 September 2017)
ordinary shares, which is to be issued in five equal tranches. No
amounts are paid or payable by the recipient of the warrants. The
warrants carry neither rights to dividends nor voting rights.
Warrants may be exercised at any time from the date of vesting to
the date of their expiry. Any equity compensation shares issued to
or acquired by Investment Manager are subject to an orderly market
period, which is 12 months after each date of issue. During each
orderly market period, the Investment Manager undertakes to the
Company and the broker not to effect a disposal of the relevant
shares unless the Investment Manager gives written notice to do
so.
All warrants are equity-settled,
the only conditions for all warrants granted is that the warrants
holder remains in the office when the warrant is
exercised.
The number of warrants due to the
Investment Manager to subscribe for ordinary shares in respect of
services provided to the Group were recalculated pursuant to
paragraph 2 of Section 2 of the warrant instruction to reflect the
share consolidation undertaken by the Company on 20 September 2017.
The warrants have an exercise price of US$1.21 per share,
equivalent to £0.89 at 31 December 2022. The warrants will expire
10 years after the date of grant. In total Harmony Capital
Investors Limited owns 8,000,000 warrants as at 31 December 2023
(2022: 8,000,000).
During the year, the Company issued
11,004,064 warrants to bond holders, shareholders and underwriters
at an exercise price ranging from 0.75p-1.1p with an expiry of 3
years.
|
|
2023
|
|
2022
|
|
|
|
Number of
options
|
Number of
warrants
|
Weighted average exercise
price US$
|
Number of
options
|
Number of
warrants
|
Weighted
average exercise price US$
|
|
|
|
|
|
|
|
|
|
Balance at beginning of the
financial year
|
-
|
17,567,663
|
0.84
|
-
|
17,567,663
|
0.84
|
|
|
|
|
|
|
|
|
|
Issuance during the financial
year
|
|
|
|
|
|
|
|
-Investment manager
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-Directors
|
-
|
-
|
-
|
-
|
-
|
-
|
|
-Shareholders
|
-
|
11,004,063
|
0.01
|
-
|
-
|
-
|
|
Expired during the financial
year
|
-
|
(7,967,663)
|
0.80
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Balance at end of financial
year
|
-
|
20,604,063
|
0.55
|
-
|
17,567,663
|
0.84
|
|
|
|
|
|
|
|
|
|
Exercisable at end of financial
year
|
-
|
20,604,063
|
0.55
|
-
|
17,567,663
|
0.84
|
|
|
|
|
|
|
|
|
The weighted-average remaining
contractual life of outstanding warrants at 31 December 2023 was 3
years and 2 months (2022: 3 years and 3 months). During the
year there has been a credit of $ Nil m (2022: $0.2m) relating to
share-based compensation of the Investment Manager.
15.3
Equity-Settled Share-Based
Payment for Investment Manager as Incentive Fee
Investment Manager 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.
The remaining 50% of incentive fee
("Equity Compensation
Amount") shall be satisfied by the Company issuing to
Investment Manager such number of ordinary shares as have a Fair
Market Value which in aggregate is equal to the Equity Compensation
Amount. The Fair Market Value is the closing Volume Weighted
Average Price ("VWAP") for
the ordinary shares trading on AIM for the ninety prior trading
days as at the relevant calculation period year end, i.e., 31
December 2017. The shares issued to or acquired as incentive fee by
Investment Manager is subject to an orderly market period, which is
12 months after each date of issue. During each orderly market
period, Investment Manager undertakes to the Company and the broker
not to effect a disposal of the relevant shares unless the
Investment Manager gives written notice to do so.
No incentive fee was
accrued in 2023 (2022: $0.0m).
16.
RELATED PARTY
TRANSACTIONS
During the year, the Company and
the Group entered into the following transactions with related
parties and connected parties under existing contracts:
|
|
|
2023
|
|
2022
|
|
|
|
Notes
|
US$'000
|
|
US$'000
|
|
|
|
|
|
|
|
|
|
Remuneration payable to Directors
(see Note 7)
Re-imbursement of expenses to
directors
Heirloom Investment Management
LLC*
Administration Fee
Harmony Capital Investors
Ltd**
Management Fee
Incentive Fee
Amount due to
Harmony Capital Investors
Limited
Heirloom Investment Management
LLC
Directors
*9,964,952 shares were issued to
Heirloom Investment Management LLC for underwriting fees netted of
with share capital
**2,179,011 shares were issued to
Harmony Capital Investors Ltd to settle prior year incentive
fees
|
(i)
|
321
26
47
350
(43)
745
16
75
|
|
260
-
|
-
1,200
(158)
1,234
-
-
|
|
|
|
|
|
|
|
17. LOSS
PER SHARE
The calculation of the basic and
diluted loss per share attributable to the ordinary equity holders
of the Company is based on the following:
|
|
|
2023
|
|
2022
|
|
|
|
|
US$'000
|
|
US$'000
|
|
|
Numerator
|
|
|
|
|
|
|
Basic/Diluted:
|
Net loss
|
(17,716)
|
|
(52,904)
|
|
|
|
|
|
|
|
|
|
|
|
No. of
shares
|
|
No. of
shares
|
|
|
|
|
'000
|
|
'000
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic/Diluted:
|
Weighted average shares
|
298,477
|
|
115,278
|
|
|
|
|
|
|
|
|
|
Loss per share:
|
|
|
|
|
|
|
Basic/Diluted
|
|
(5.94)
cents
|
|
(45.89)
cents
|
|
Treasury shares issued by the
company totalling 7,480,004 as at the reporting date, have been
excluded from the weighted average shares calculation.
18.
EVENTS AFTER THE REPORTING PERIOD
On 1 May 2024 the transfer of the
'Legacy Assets' consisting of the holdings in DocDoc Pte Limited,
Future Metal Holdings Limited, Meize Energy Industrial Holdings
Limited, Infinity Capital Group Infinity TNP, Project Nicklaus and
Fook Lam Moon Holdings was approved by the shareholders at the
annual general meeting. The corporate bond issued by the Group was
also transferred. All assets and liabilities have been transferred
to an independent third party company which is not owned or
controlled by the Group. The Group received no consideration in
return for the transfer. As the transfer had been
substantially agreed at the year-end date, the assets had been
included within assets held for sale.