We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Qannas Investments Limited | LSE:QIL | London | Ordinary Share | KYG7306P1037 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.625 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMQIL
RNS Number : 2031C
Qannas Investments Limited
27 September 2018
QANNAS INVESTMENTS LIMITED
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PERIODED 30 JUNE 2018
Qannas (AIM:QIL), the closed-ended investment company listed on the AIM market, is pleased to present its interim report for the period ended 30 June 30 2018.
A copy of these financial statements will be distributed to the shareholders and is also available on the Company's website at www.qannasinvestments.com
For further information please contact:
Qannas Investments Limited Tel: 01534 818 022
Vinod Rajput
ADCM Ltd. (Investment Manager) Tel: +971 2 639 0099
Mustafa Kheriba
finnCap Ltd Tel: 020 7220 0500
Stuart Andrews/James Thompson (Corporate Finance)
CHAIRMAN'S REPORT
It is with great pleasure that I present my report for the first half of the year 2018 on the performance of Qannas Investments Limited (the "Company"). As proposed by the Board, the Company has adopted a new investment policy after approval by the shareholders during the Annual General Meeting held on 19 September 2018 and we look forward to implementing the new policy in the years ahead.
The Company's new strategy centres around investing in listed equities in the GCC region, with a proportion of funds to be allocated in debt instruments and pre-IPO financing. However, the core philosophy of the Company continues to be value investing with an investment objective to achieve long-term and sustainable attractive returns through a combination of income generation and long-term capital appreciation.
While the Company implements the new investment strategy hereon, the Company, in parallel, has continued to exit its investments during H1 2018, with more investments in the final stages of exit post H1-2018. This is in line with the plan of realizing the existing portfolio in an orderly fashion, thus, paving way to making new investments according to the new investment strategy.
Details of the exits are contained in the Investment Manager's Report, but suffice it to say, the Company is on track to realise almost all of its existing investments by early in 2019.
I am pleased to report that proceeds from various exits enabled the Company in Q1 2018 to pay down $5.5 million bank debt, reducing the Company's outstanding debt to $20 million.
Subsequent to H1-2018, Richard Green, who has served on the Board of the Company since June 2014, resigned from his position as a Non-Executive Director of the Company. I would like to thank Richard Green for his invaluable contribution to the Company during his tenure and wish him all the best for his future endeavours. We are seeking a suitably qualified Independent Non-Executive Director to replace Richard.
The Board has chosen to apply the QCA's Corporate Governance Code (the "QCA Code") and has carried out a detailed review of the requirements of the QCA Code and AIM Rule 26, with respect to both its governance arrangements and practices, and its reporting. This area is my responsibility, and my first Corporate Governance Report will shortly be published on the Company's website.
As the Company continues to evolve and deliver value to its shareholders by adapting to the dynamic global environment, I would like to thank shareholders, the board of directors, service providers, and the investment manager for their continued support.
ADCM Ltd. ("ADCM"), the investment manager of the Qannas Investments Limited ("QIL" or "The Company"), is pleased to present the interim Investment Manager's report for the six-month period ended 30 June 2018.
Summary
The Company continued with the realisation of its investment portfolio during the first six months of 2018. Accordingly, during H1 2018, QIL has achieved a partial exit from Project Palace. Subsequent to H1 2018, QIL is in the final stages of exiting from an underlying fund of Project Beast ("ADCM SPEF"), Project Adriatic ("CentreVille"), and Project Integration ("Integrated Financial Group").
Also, in Q1 2018, QIL paid down $5.5 million reducing its outstanding debt to $20 million.
Net Asset Value ("NAV") Summary
As of 30 June 2018, QIL's NAV is $37.5 million or $0.63 per share, including cash of $2.3 million.
Net Asset Value Summary In $,m ====================================== ============= Investments 30-June-18 ====================================== ============= Project Beast (ADCM SPEF) $4.2 Goldilocks $10.6 Project Integration $19.0 Project Adriatic (CentreVille Hotel) $9.4 Project Adriatic (HRC) $3.7 Project Palace $5.2 Project Demeter (IEEF) $3.6 Cash $2.3 Non-current Liabilities ($11.8) Other Net-current Assets ($8.7) NAV $37.5 ====================================== ============= Shares Outstanding 59.9 NAV per share $0.63 -------------------------------------- -------------
Investments update
Project Adriatic (HRC)
Hard Rock Café's sales increased by more than 30% in H1 2018 compared to the same period in 2017. The growth was primarily driven by the opening of a new merchandise store in Kotor, Montenegro.
Project Adriatic (CenterVille Hotel)
The Company is in the final stages of exiting its holding in CentreVille Hotel at EUR 9.5 million which includes EUR 0.7 million in respect of service remuneration , generating a return of 1.2x.
Project Demeter
In 2014, the Company made a debt investment (through a senior secured loan) of EUR7.0 million in Integrated Eastern European Fund ("IEEF") for a term of 2 years.
During Q3-2016, QIL exited 71% of its exposure in a Senior Secured Loan extended to IEEF. The remaining portion of the Loan, EUR2.75 million was extended by two years at an interest rate of 12% per annum (USD based) with a 3% arrangement fee on the extended amount.
Further, during 2017, the IEEF loan interest payment terms were changed from a half-yearly payment schedule to PIK and IEEF made a $0.2 million distribution to the Company as part payment of accrued interest.
Currently, IEEF is in final stages of a sale of one of its underlying land parcels, through which the Company would receive a partial repayment of the total outstanding loan amount.
Project Integration
The Company has invested $18.7 million in 2014 to acquire 47% interest in Integrated Financial Group ("IFG"), a UAE-based holding company with two subsidiaries - Integrated Capital and Integrated Securities.
During 2017, Shuaa Capital - a leading investment bank in the UAE acquired Integrated Capital and Integrated Securities. The transaction has been completed and the sale proceeds are expected to be received in two tranches, the first due by Q4 -2018 and the second payment by Q1-2019.
Project Palace
In Q4 2014, the Company made a commitment of GBP11 million (as part of an overall tranche of GBP50 million) in Palace Preferred Partners L.P., an SPV created for the redevelopment of 1 Palace Street ("1PS").
Of the total commitment of GBP11 million, the Company contributed GBP7.3 million in three tranches with an undrawn commitment of GBP3.7 million.
The Company previously exited GBP3.8 million of the GBP7.3 million contribution by H1 2018.
Subsequent to H1 2018, the Company further exited the remaining portion of its undrawn commitment of GBP3.7 million.
Project Goldilocks
In Q1 2016, the Company had made an equity investment of $6.6 million (in two tranches of $5.5 million and $1.1 million) in Goldilocks Fund, an investment fund primarily focused on publicly listed equities in the UAE.
In FY 2017, the Company has redeemed 25% of its interest in the Goldilocks Fund at a redemption value of $5.8 million, generating an IRR of 160%.
Project Beast
In the first eight months of 2018, ADCM SPEF received $353k distribution from Havenvest and GBP64k final distribution from Lumina.
Hot Features
Premium
NAV of ADCM SPEF (as of 30 June 2018) in $'000
========================================================= ==============
Fund Name Attributed NAV
--------------------------------------------------------- --------------
Havenvest Private Equity Middle East L.P. ("Havenvest") $1,890
TNI Growth Capital Fund, L.P. $1,785
Global Opportunistic Fund II $316
Global Opportunistic Fund I $73
Lumina Real Estate SSF I L.P. ("Lumina") $82
Net Current Assets (Liabilities) $15
NAV $4,161
Corporate Activity
Subsequent to H1 2018, Richard Green, who has served on the Board of the Company since June 2014, resigned from his position as a Non-Executive Director of the Company.
QANNAS INVESTMENTS LIMITED DIRECTORS' REPORT FOR THE HALF YEARED 30 JUNE 2018 =====================================
The Directors present their interim report and the unaudited financial statements of the Company for the half year ended 30 June 2018.
Principal activities
The Company's principal activity is that of investing, centred around a theme-based investment approach, which has evolved over the years, starting with a focus on distressed / opportunistic investments in the UAE in 2012 and 2013 and broadening to the acquisition of secondary portfolios of regional PE funds and European real estate investments between 2014 and 2018. At the Annual General Meeting held on 19 September 2018, the Company changed its strategy to centre around investing in listed equities in the GCC region, with a proportion of funds to be allocated in debt instruments and pre-IPO financing. The core philosophy of the Company continues to be value investing with an investment objective to achieve long-term and sustainable attractive returns through a combination of income generation and long-term capital appreciation.
Responsibilities of the Directors
The Directors are responsible for preparing the annual report and financial statements in accordance with International Financial Reporting Standards as endorsed for use in the European Union ("IFRS"). In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent;
-- specify which generally accepted accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping accounting records which are sufficient to show and explain the Company's transactions and are such as to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements prepared by the Company comply with the requirements of the Alternative Investment Market listing rules. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that they have complied with the above requirements.
By order of the board
Director
Date: ...............................................
QANNAS INVESTMENTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME - UNAUDITED
FOR THE HALF YEARED 30 JUNE 2018
==============================================
01.01.2018 01.01.2017 01.01.2017
to to to
Notes 30.06.2018 30.06.2017 31.12.2017
$ $ $
Income
Movement in management and performance
fee rebate receivable 16 481,337 (663,051) (3,426,058)
Realised gain on disposal of investments 4 - 1,099,838 1,099,838
Investment income - 566,818 1,107,502
481,337 1,003,605 (1,218,718)
Expenditure
Secretarial and administration
fees (80,333) (80,603) (134,353)
Directors' remuneration 3 (43,678) (41,442) (85,290)
Insurance expense (3,684) (4,194) (7,719)
Investment manager fees (466,952) (661,376) (1,038,624)
Movement in performance fees 16 (109,389) (215,893) 277,707
Legal and professional fees (87,173) (59,458) (284,793)
Audit fees (65,371) (14,649) (51,678)
Sundry expenses (3,833) (1,226) (3,565)
Bank charges (785) (318) (440)
Realised loss on disposal of investments 4 (734,314) - -
(1,595,512) (1,079,159) (1,328,755)
------------ ------------ --------------
Net loss (1,114,175) (75,554) (2,547,473)
Net movement on changes in fair
value of investments 4 637,829 (3,559,798) (16,469,906)
Impairment of loans receivable
and associated interest 7 (71,271) (147,603) (337,422)
Finance costs
Loan interest payable (679,032) (745,146) (1,671,765)
Foreign exchange (losses) / gains
on loans receivable 5 (333,113) 1,132,109 1,592,875
(Loss)/gain on foreign exchange (37,538) 173,290 235,804
Finance income
Interest income - cash and cash
equivalents 788 956 2,625
Interest income - loans receivable 5 457,124 443,767 899,949
------------ ------------ --------------
Loss for the year before taxation (1,139,388) (2,777,979) (18,295,313)
Taxation provision for the year 14 - - -
------------ ------------ --------------
Loss for the year after taxation (1,139,388) (2,777,979) (18,295,313)
Other comprehensive income - - -
Total comprehensive (loss) for
the year (1,139,388) (2,777,979) (18,295,313)
============ ============ ==============
Earnings per share
Basic EPS on (loss) for the year 13 (0.02) (0.04) (0.28)
============ ============ ==============
The notes on pages 11 to 30 form part of these unaudited financial statements
QANNAS INVESTMENTS LIMITED 8.
STATEMENT OF FINANCIAL POSITION - UNAUDITED
AS AT 30 JUNE 2018
============================================= ===
30.06.18 30.06.17 31.12.17
Notes $ $ $
Assets
Non-current assets
Investments at fair value
through profit and loss 4 28,397,786 47,770,660 32,209,713
Loans receivable 5 3,713,576 16,398,595 3,713,576
Property investments 6 - - -
Trade and other receivables 7 - 3,820,246 -
------------- ------------ -------------
Total non-current assets 32,111,362 67,989,501 35,923,289
------------- ------------ -------------
Current assets
Investments at fair value
through profit and loss 4 10,598,520 13,906,975 10,181,714
Loans receivable 5 12,956,158 - 13,110,632
Trade and other receivables 7 2,342,416 708,419 1,978,874
Cash and cash equivalents 8 2,303,956 11,534,486 5,715,713
------------- ------------ -------------
Total current assets 28,201,050 26,149,880 30,986,933
Total assets 60,312,412 94,139,381 66,910,222
============= ============ =============
Equity and liabilities
Equity
Management shares 11 2 2 2
Participating shares 11 59,799,019 67,799,019 59,799,019
Retained earnings 12 (22,268,645) (5,611,923) (21,129,257)
------------- ------------ -------------
Total equity 37,530,376 62,187,098 38,669,764
------------- ------------ -------------
Liabilities
Current liabilities
Trade and other payables 9 992,839 1,236,069 776,883
Loans payable 10 10,000,000 4,500,000 8,000,000
------------- ------------ -------------
Total current liabilities 10,992,839 5,736,069 8,776,883
------------- ------------ -------------
Non-current liabilities
Trade and other payables 9 1,997,994 2,753,231 2,259,631
Loans payable 10 9,791,203 23,462,983 17,203,944
------------- ------------ -------------
11,789,197 26,216,214 19,463,575
Total liabilities and equity 60,312,412 94,139,381 66,910,222
============= ============ =============
Representing net asset value per
participating share $0.63 $0.90 $0.65
============= ============ =============
The notes on pages 11 to 30 form part of these unaudited financial statements
The financial statements were approved and authorised for issue by the Board of Directors of Qannas Investments Limited and signed on their behalf by:
........................................ ........................................
........................................
Director Director Date
QANNAS INVESTMENTS LIMITED 9.
STATEMENT OF CHANGES IN EQUITY - UNAUDITED
FOR THE HALF YEARED 30 JUNE 2018
============================================ ===
Management Participating Retained
share capital share capital earnings Total
$ $ $ $
At 1 January 2017 2 67,799,019 (2,833,944) 64,965,077
Total comprehensive loss - - (2,777,979) (2,777,979)
At 30 June 2017 2 67,799,019 (5,611,923) 62,187,098
-------------- -------------- ------------- -------------
At 1 July 2017 2 67,799,019 (5,611,923) 62,187,098
Purchase of participating
shares under tender offer - (8,000,000) - (8,000,000)
Total comprehensive loss - - (15,517,334) (15,517,334)
At 31 December 2017 2 59,799,019 (21,129,257) 38,669,764
-------------- -------------- ------------- -------------
At 1 January 2018 2 59,799,019 (21,129,257) 38,669,764
Total comprehensive loss - - (1,139,388) (1,139,388)
At 30 June 2018 2 59,799,019 (22,268,645) 37,530,376
============== ============== ============= =============
The notes on pages 11 to 30 form part of these unaudited financial statements
QANNAS INVESTMENTS LIMITED 10.
STATEMENT OF CASH FLOWS - UNAUDITED
FOR THE HALF YEARED 30 JUNE 2018
====================================== ====
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Operating activities
Loss for the period / year before
taxation (1,139,388) (2,777,979) (18,295,313)
Net movement on changes in fair
value of investments (637,829) 3,559,798 15,431,602
Realised (gain) / loss on disposal
of investments 734,314 (1,099,838) (1,099,838)
Interest income (457,912) (444,723) (902,574)
Loan interest payable 679,032 745,146 1,671,765
Foreign exchange (gains) / losses
on loans receivable 333,113 (1,132,109) (1,592,875)
Impairment of loans and interest
receivable 71,271 147,603 337,422
Gain on foreign exchange 37,538 (173,290) (235,804)
(Increase)/decrease in trade receivables (194,982) 666,661 4,467,328
(Decrease) / increase in trade
payables (21,045) 545,528 (404,348)
------------ ------------
Net cash flow from operating activities (595,888) 36,797 (622,635)
------------ ------------ -------------
Investing activities
Interest received - cash and cash
equivalents 786 956 2,625
Interest received - loans receivable - 17,486 182,240
Issue of loans receivable - (35,183) (133,912)
Disposal of property investments - 779,560 779,560
Repayment of loans receivable - 1,168,938 1,204,759
Purchase of investments - - (3,896,899)
Proceeds from disposal of investments 3,298,636 5,847,054 5,847,054
Capital distributions received
from investments - 4,129,549 14,402,547
------------ ------------
Net cash flow from investing activities 3,299,422 11,908,360 18,387,974
------------ ------------ -------------
Financing activities
Repayment of bank loan (5,500,000) (1,500,000) (4,500,000)
Loan interest paid (616,409) (676,567) (1,365,135)
Purchase of own participating shares
under tender offer - - (8,000,000)
------------ ------------
Net cash flow from financing activities (6,116,409) (2,176,567) (13,865,135)
------------ ------------ -------------
Net (decrease) / increase in cash
and cash equivalents (3,412,873) 9,768,590 3,900,204
Effect of foreign exchange movements 1,116 146,885 196,498
Cash and cash equivalents brought
forward 5,715,713 1,619,011 1,619,011
Cash and cash equivalents carried
forward 2,303,956 11,534,486 5,715,713
============ ============ =============
The notes on pages 11 to 30 form part of these unaudited financial statements
QANNAS INVESTMENTS LIMITED 11. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE HALF YEARED 30 JUNE 2018 ============================================= ==== 1. GENERAL INFORMATION
The Company is an exempt closed-end investment company listed on London's Alternative Investment Market ("AIM"), with an unlimited life, incorporated in the Cayman Islands. The registered office of the Company is that of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, George Town, Grand Cayman KY1-1111, Cayman Islands.
The Company's principal activity is that of investing, centred around a theme-based investment approach, which has evolved over the years, starting with a focus on distressed / opportunistic investments in the UAE in 2012 and 2013 and broadening to the acquisition of secondary portfolios of regional PE funds and European real estate investments between 2014 and 2018. At the Annual General Meeting held on 19 September 2018, the Company changed its strategy to centre around investing in listed equities in the GCC region, with a proportion of funds to be allocated in debt instruments and pre-IPO financing. The core philosophy of the Company continues to be value investing with an investment objective to achieve long-term and sustainable attractive returns through a combination of income generation and long-term capital appreciation.
The information presented within these unaudited interim financial statements (the 'financial statements') is in compliance with International Accounting standard ('IAS') 34 'Interim Financial Reporting'. This requires the use of certain accounting estimates and requires that management exercise judgement in the process of applying the Company's accounting policies. The areas involving a high degree of judgement or complexity, or areas where the assumptions and estimates are significant to the interim financial statements are disclosed below in note 2.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial instruments and investments which are included at fair value, and in accordance with applicable International Financial Reporting Standards as endorsed for use in the European Union ("IFRS") and, where applicable, the Association of Investment Companies Statement of Recommended Practice ("AIC SORP"). The principal accounting policies are set out below.
In the current period, the Company has applied IFRS 9 Financial Instruments (as revised in July 2014) and the related consequential amendments to other IFRSs for the first time. IFRS 9 introduces new requirements for 1) the classification and measurement of financial assets and financial liabilities, 2) impairment of financial assets and 3) general hedge accounting. Details of these new requirements as well as their impact on the Company's financial statements are described below.
Impact of transition to IFRS 9
a) Classification and measurement of financial assets
The date of initial application (ie the date on which the Company has assessed its existing financial assets and financial liabilities in terms of the requirements of IFRS 9) is 1 January 2018. Accordingly, the Company has applied the requirements of IFRS 9 to instruments that have not been derecognised as at 1 January 2018 and has not applied the requirements to instruments that had already been derecognised as at 1 January 2018. Comparative amounts have not been restated.
All recognised financial assets that are within the scope of IFRS 9 are required to be subsequently measured at amortised cost or fair value on the basis of the entity's business model for managing the financial assets and the contractual cash flow characteristics of the financial assets.
The Company has not designated any debt investments that meet the amortised cost criteria as measured at FVTPL.
Debt instruments that are subsequently measured at amortised cost are subject to impairment. See (b) below.
The directors of the Company reviewed and assessed the Company's existing financial assets as at 1 January 2018 based on the facts and circumstances that existed at that date and concluded that the initial application of IFRS 9 has no impact on the Company's financial assets as regards their measurement.
QANNAS INVESTMENTS LIMITED 12. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Impact of transition to IFRS 9 - continued
a) Classification and measurement of financial assets - continued
-- Financial assets classified as loans and receivables under IAS 39 that were measured at amortised cost continue to be measured at amortised cost under IFRS 9 as they are held within a business model to collect contractual cash flows and these cash flows consist solely of payments of principal and interest on the principal amount outstanding.
-- Financial assets that were measured at FVTPL under IAS 39 continue to be measured as such under IFRS 9.
Note (c) below tabulates the change in classification of the Company's financial assets upon application of IFRS 9.
b) Impairment of financial assets
In relation to the impairment of financial assets, IRFS 9 requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires the Company to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised.
As at 1 January 2018, the directors of the Company reviewed and assessed the Company's existing financial assets for impairment using reasonable and supportable information that is available without undue cost or effort in accordance with the requirements of IFRS 9 to determine the credit risk of the respective items at the date they were initially recognised.
No additional credit loss as at 1 January 2018 has been recognised against retained earnings. Furthermore, no credit loss has been recognised during the six months to 30 June 2018.
Impairment of financial assets other than trade receivables
For the purpose of impairment assessment, loans receivable are considered to have low credit risk as the Directors expect the loans to be repaid within the next 6 months.
In determining the expected credit losses for these assets, the Directors of the Company have taken into account the historic default experience, the financial position of the counterparties, and considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of these financial assets occurring within their respective loss assessment time horizon, as well as the loss upon default in each case.
QANNAS INVESTMENTS LIMITED 13. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ====
2. SIGNIFICANT ACCOUNTING POLICIES - continued
Impact of transition to IFRS 9 - continued
c) Disclosures in relation to the initial application of IFRS 9
The table below illustrates the classification and measurement of financial assets and financial liabilities under IFRS 9 and IAS 39 at the date of initial application, 1 January 2018.
Loans and receivables Amortised
cost
$ $
Closing balance 31 December 2017 16,824,208 -
(IAS 39)
Reclassification of loans receivable (16,824,208) 16,824,208
Opening balance 1 January 2018
(IFRS 9) - 16,824,208
---------------------- -----------
The change in measurement category of the different financial assets has had no impact on their respective carrying amounts on their initial application.
d) Financial impact of initial application of IFRS 9
The application of IFRS 9 has had no impact on each financial statement line item or on the cash flows of the Company.
Basis of measurement
Financial assets
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.
(a) Classification of financial assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost:
-- The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
-- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured at FVTPL.
(i) Amortised cost and effective interest method
At initial recognition financial assets are measured at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. The amortised cost of a financial asset is the financial amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised costs of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset. For financial assets that have subsequently become credit impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset.
QANNAS INVESTMENTS LIMITED 14. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ====
2. SIGNIFICANT ACCOUNTING POLICIES - continued
Basis of measurement - continued
Financial assets - continued
(i) Amortised cost and effective interest method - continued
For purchased or originated credit impaired financial assets, the Company recognises interest income by applying the credit adjusted effective interest rate to the amortised cost of the financial asset from initial recognition. The calculation does not revert to the gross basis even if the credit risk of the financial asset subsequently improves so that the financial asset is no longer credit impaired.
Interest income is recognised in profit or loss and is included in the 'interest income' line item.
(ii) Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortised cost (see (i) above) are measured at FVTPL with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss includes any dividend or interest earned on the financial assets. Fair value is determined in the manner described as follows:
Investments are recognised and de-recognised on the trade date; the date on which the Company commits to purchase or sell an investment. Investments are initially recognised at cost. Transaction costs are expensed as incurred in the Statement of Comprehensive Income. Investments are de-recognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.
Subsequent to initial recognition, investments are measured at their fair value. Gains and losses arising from changes in the fair value are presented in the Statement of Comprehensive Income in the period in which they arise.
Dividend income is recognised in the Statement of Comprehensive Income when the Company's right to receive payments is established.
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.
The fair value of financial assets and liabilities traded in active markets (such as publicly traded securities) are based on quoted market prices at the close of trading on the reporting date. The Company utilises the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Directors will determine the point within the bid-ask spread that is most representative of fair value.
The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent arm's length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity-specific inputs.
The Company's investments in underlying funds are ordinarily valued using the values (whether final or estimated) as advised to the Investment Manager by the managers, general partners or administrators of the relevant underlying fund. The valuation date of such investments may not always be coterminous with the valuation dates of the Company and in such cases the valuation of the investments as at the last valuation date is used. The net asset value reported by the administrator may be unaudited and, in some cases, the notified asset values are based upon estimates. The Company or the Investment Manager may depart from this policy where it is considered such valuation is inappropriate and may, at its discretion, permit any other method of valuation to be used if it considers that such method of valuation better reflects value generally or in particular markets or market conditions and is in accordance with good accounting practice. In the event that a price or valuation
QANNAS INVESTMENTS LIMITED 15. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ====
2. SIGNIFICANT ACCOUNTING POLICIES - continued
Basis of measurement - continued
Financial assets - continued
(ii) Financial assets at FVTPL - continued
estimate accepted by the Company or by the Investment Manager in relation to an underlying fund subsequently proves to be incorrect or varies from the final published price by an immaterial amount, no retrospective adjustment to any previously announced Net Asset Value or Net Asset Value per Share will be made.
(b) Impairment of financial assets
The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost. No impairment loss is recognised for investment in equity instruments. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Company always recognises lifetime expected credit losses for trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company's historical credit loss experience, adjusted for any factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.
Cash and cash equivalents
Cash and cash equivalents comprises deposits held on call with banks.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently carried at amortised cost; their carrying values are a reasonable approximation of fair value.
Trade receivables include the contractual amounts for the settlement of trades and other obligations due to the Company.
Financial liabilities
All financial liabilities are subsequently measured at amortised cost using the effective interest method.
Trade and other payables
Trade and other payables are initially recognised at fair value and subsequently carried at amortised cost; their carrying values are a reasonable approximation of fair value.
Trade and other payables represent contractual amounts and obligations due by the Company.
Loans payable
Loans payable are measured initially at cost. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. These financial liabilities are recognised when the Company enters into a loan agreement and are de-recognised when the loan agreement is terminated.
The effective interest rate method is a method of calculating the amortised cost of a financial liability and of allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument, in order that the present value of the future cash flows, including fees or transaction costs, is equal to the carrying amount of the financial instrument.
Finance costs associated with loans payable have been spread on an effective interest rate constant basis over the life of the loan.
QANNAS INVESTMENTS LIMITED 16. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial liabilities- continued
Loans payable- continued
The Company classifies its investments in the following categories: investments at fair value through profit or loss, and loans and receivables. The classification depends on the nature and purpose of each investment. The Directors determine the classification of its investments at initial recognition.
Functional and presentational currency
The performance of the Company is measured and reported to the investors in US dollars. The Board of Directors considers the US dollar as the currency that most faithfully represents the economic effects of the underlying transactions, events and conditions. The financial statements are presented in US dollars, which is the Company's functional and presentation currency.
Use of estimates and judgements
The preparation of the financial statements in conformity with IFRS and applicable law requires the Directors to make judgements, estimates and assumptions that affect the application of policies and 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. Actual results may differ from these estimates. The estimates with the most significant effects on the carrying amounts of the assets and liabilities in the financial statements are outlined below:
(i) Valuation of unquoted investments - The fair value of these is determined via valuation techniques. For further details of the judgements and assumptions made see note 4. Particular reference is drawn to the write down in values of the company's investments in SPE Qannas C Limited and ADCM Second Private Equity Fund L.P., which arises on their holdings in funds managed by Abraaj Investment Management Limited (further details on this matter can be found in the Chairman's Report and the Investment Manager's Report).
(ii) Valuation of loans receivable - Loans receivable are held at amortised cost. The Directors undertake regular impairment reviews of loans receivable to ensure that they remain recoverable.
Foreign currencies
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the Statement of Financial Position date.
Foreign exchange gains and losses arising from translation are included in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to cash and cash equivalents are presented in the Statement of Comprehensive Income. Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value through profit or loss are presented in the Statement of Comprehensive Income within 'net movement on changes in fair value of investments'.
Shares in issue
Management Shares are not redeemable, do not participate in the net income or dividends of the Company and are recorded at $1.00 per share.
Participating shares in issue are not redeemable at the shareholder's option.
Participating shares which are acquired by the Company are recognised at cost and deducted from equity. No gain or loss is recognised in the Statement of Comprehensive Income on the purchase, sale, issue or cancellation of the Company's own equity instruments.
QANNAS INVESTMENTS LIMITED 17. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 2. SIGNIFICANT ACCOUNTING POLICIES - continued
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable in the normal course of business. The Company recognises revenue when the amount of revenue can be reliably measured and when it is probable that the future economic benefits will flow into the Company.
Taxation
The Company is tax resident in Jersey, on the basis that board meetings and strategic decisions are undertaken in Jersey. Provision has been made in these financial statements for Jersey income tax at the rate of 0%.
Expenditure and transaction costs
All items of expenditure, including the performance and management fees, are recognised on an accruals basis.
The Company receives rebates for performance and management fees in respect of certain investments. These are included in the Statement of Comprehensive Income on an accrual basis.
Distributions payable
The payment of dividends will depend on the availability of distributable reserves, cash resources and the working capital requirements of the Company. Dividends paid are included in the Company financial statements in the period in which the related dividends are declared.
Non consolidation
The Company fulfils the definition of an investment entity under IFRS 10 ("Consolidated Financial Statements") and as a result does not consolidate investments in subsidiaries but instead measures its investment at fair value through profit and loss. IFRS 10 defines an investment entity as one that obtains funds from investors for the purpose of providing investors with investment management services, commits to its investors that its purpose is to invest funds solely for returns from capital appreciation, investment income or both and measures and evaluates the performance of substantially all its investments on a fair value basis.
Going concern
The Directors, after making due enquiries, continue to adopt the going concern basis in preparing the financial statements which assumes that the Company will continue in operation for the foreseeable future. The Company is in the process of realising existing investments in an orderly fashion pending a decision on a new investment strategy, as further detailed in the Chairman's Report. As disclosed in note 10, the Company is due to repay $10,000,000 of loans payable during the next 12 months. These repayments will be financed by way of existing cash reserves and the continued realisation of the Company's investments.
Segmental reporting
The Company is operated as one segment by the Board of Directors (which is considered to be the Chief Operating Decision Maker).
Operating segments are reported in a manner consistent with the internal reporting used by the Chief Operating Decision Maker. The Board of Directors is responsible for allocating resources and assessing performance of the operating segments.
The Directors make the strategic resource allocations on behalf of the Company. The Company has determined the operating segments based on the reports reviewed by the Board of Directors, which are used to make strategic decisions.
The Board of Directors is responsible for the Company's entire portfolio. The Board of Directors asset allocation decisions are based on a single, integrated investment strategy, and the Company's performance is evaluated on an overall basis.
The Company trades in a diversified portfolio of securities with the objective of generating value for shareholders.
The internal reporting provided to the Board of Directors for the Company's assets, liabilities and performance is prepared on a consistent basis with the measurement and recognition principles of IFRS.
There were no changes in the reportable segments during the period.
QANNAS INVESTMENTS LIMITED 18. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 2. DIRECTORS' REMUNERATION AND INTERESTS
The remuneration of the individual Directors who served in the half year to 30 June 2018 was:
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Richard John Stobart Prosser 13,289 12,747 26,210
Christopher Ward 16,432 15,630 32,277
Richard Green 13,957 13,065 26,803
Mustafa Kheriba - - -
------------ ------------
43,678 41,442 85,290
============ ============ ============
Directors' interests in the shares of the Company, including family interest, at 30 June 2018 were:
Share Nominal % Held
Participating
Christopher Ward shares 100,000 0.14%
Participating
Richard Green shares 100,000 0.14%
Participating
Mustafa Kheriba shares 531,278 0.76%
3. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Fair value brought forward 42,391,427 74,114,197 74,114,197
Additions - - 3,896,899
Disposals (3,298,636) (5,847,054) (5,847,054)
Realised (losses) / gains (734,314) 1,099,838 1,099,838
Capital distributions - (4,129,548) (14,402,547)
Unrealised gain/(losses) on the
revaluation of investments 637,829 (3,559,798) (16,469,906)
------------ ------------
Fair value carried forward 38,996,306 61,677,635 42,391,427
============ ============ =============
Investments comprise: 30.06.2018 30.06.2017 31.12.2017
Fair Value Fair Value Fair Value
$ $ $
Non-current assets
SPE Qannas C Limited - 5,785,992 -
ADCM Secondary Private Equity
Fund L.P. 4,160,834 18,599,512 4,439,078
EE F&B Holding Limited 1 1 1
Palace Preferred Partners
L.P. 5,210,255 3,777,037 8,743,938
Integrated Financial
Group, LLC 19,026,696 19,608,118 19,026,696
------------
28,397,786 47,770,660 32,209,713
------------ ------------ -------------
Current assets
Goldilocks Fund 10,598,520 13,906,975 10,181,714
10,098,520 13,906,975 10,181,714
------------ ------------ -------------
Total 38,996,306 61,677,635 42,391,427
============ ============ =============
QANNAS INVESTMENTS LIMITED 19.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued
FOR THE HALF YEARED 30 JUNE 2017
========================================================= ====
4. INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS - continued
The fair values of the investments are based on the latest available net asset value reports and / or financial information available of the underlying companies.
Investments at 30 June 2018 comprise:
Class of No. of Percentage Book
shares shares holding Cost
held
$
SPE Qannas C Limited Preference 8,039,559 74.3% 7,930,886
ADCM Secondary Private
Equity Fund L.P. - - 96.5% 28,549,556
EE F&B Holding Limited Ordinary 1,000 100% 1,006,904
Palace Preferred Partners
L.P. - - 10.57% 1,801,247
Goldilocks Fund Units 17,341,475 7.7% 4,094,938
Integrated Financial
Group, LLC Ordinary 73,908 47.4% 18,667,177
62,050,708
===========
During the half year ended 30 June 2018, the Company undertook the following transactions: -
-- The Company transferred a proportion of the amounts contributed to date in Palace Preferred Partners L.P. to Reem Finance PJSC for gross proceeds of $3,298,636 (GBP2,334,656).
After the period end, the Company entered into a further agreement with Reem Finance PJSC, whereby the Company transferred its entire right, title and interest as a limited partner in Palace Preferred Partners L.P., in respect of its remaining outstanding commitment of GBP3,652,816.
The loan due to First Gulf Bank PJSC (as detailed in note 10) is secured by way of a charge over the Company's investment in ADCM Secondary Private Equity Fund L.P., SPE Qannas C Limited and Palace Preferred Partners L.P.
5. LOANS RECEIVABLE
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Brought forward 16,824,208 16,220,609 16,220,609
Additions - 35,183 133,912
Capitalised loan interest 178,639 179,632 180,001
Disposals - (1,168,938) (1,204,759)
Impairment - - (98,430)
(Losses) / gains on foreign exchange (333,113) 1,132,109 1,592,875
------------ ------------
Carried forward 16,669,734 16,398,595 16,824,208
============ ============ ============
QANNAS INVESTMENTS LIMITED 20.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued
FOR THE HALF YEARED 30 JUNE 2018
========================================================= ====
5. LOANS RECEIVABLE - continued
At 30 June 2018, loans receivable comprise: -
Interest Maturity Carrying Carrying
rate Date value Value
CCY $
Quarter 4
Capital Hotel d.o.o. 4% 2018 EUR8,140,501 9,418,067
EE F&B Holding Limited 4% Not defined EUR3,480,170 3,713,576
Integrated Eastern Quarter 4
European Fund 12% 2018 EUR1,386,490 1,521,950
Integrated Eastern Quarter 4
European Fund 12% 2018 EUR1,103,457 1,211,265
Lucice Montenegro Quarter 4
d.o.o. 12% 2018 EUR23,177 25,441
Quarter 4
Arqutino EAD 12% 2018 EUR236,876 260,019
Capitalised interest 519,415
16,669,734
===========
Each of the loans is denominated in EUR with movements arising on revaluation included within the Statement of Comprehensive Income as foreign exchange losses on loans receivable. However, certain loans which are denominated in Euros are repayable in a fixed amount of US Dollars.
Loan interest in respect of the above loans totalling $457,124 (half year ended 30 June 2017: $443,767; year ended 31 December 2017 $899,949) is included in the Statement of Comprehensive Income for the period.
The loans to Integrated Eastern European Fund (formerly European Injaz Eastern Property Development Company Limited), Lucice Montenegro d.o.o. and Arqutino EAD are secured by way of share pledges and mortgage agreements in the underlying companies.
6. PROPERTY INVESTMENTS
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Fair value brought forward - 779,560 779,560
Disposals - (779,560) (779,560)
--------------
Fair value carried forward - - -
============== ============ ============
This represented the deposit paid by the Company to acquire 2 premium units (the 'units') in the development Marina 101 at Dubai Marina. The units each have three bedrooms and are located on the 88th floor, one with a seaside view and one with a view over the Sheikh Zayed Road. The units are 3,653 square feet in size and come with underground parking spaces.
The units were disposed of during the half year ended 30 June 2017 for $779,560, which is equivalent to their cost and the fair value at 31 December 2016.
QANNAS INVESTMENTS LIMITED 21.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued
FOR THE HALF YEARED 30 JUNE 2018
========================================================= ====
7. TRADE AND OTHER RECEIVABLES
30.06.2018 30.06.2017 31.12.2017
$ $ $
Non-current
Performance fee rebate receivable - 3,820,246 -
(note 16)
=========== =================== ==============
Current
Sundry debtors 34 34 34
Management fee rebate receivable
(note 16) 533,096 278,893 404,229
Performance fee rebate receivable
(note 16) 1,005,456 - 931,903
Loan interest and income receivable 793,454 412,322 624,894
Prepayments 10,376 17,170 17,814
----------- -------------------
2,342,416 708,419 1,978,874
=========== =================== ==============
The management and performance fee rebate receivable will become due at the time of completion of the liquidation of the funds of ADCM Secondary Private Equity Fund L.P. and SPE Qannas C Limited.
An impairment loss in the amount of $71,271 (half year ended 30 June 2017: $147,603; year ended 31 December 2017: $337,422) was recognised in the period in respect of loan interest receivable from EE F&B Holding Limited as the Directors have concerns over the recoverability of the interest.
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
8. CASH AND CASH EQUIVALENTS
30.06.2018 30.06.2017 31.12.2017
$ $ $
First Gulf Bank 803,956 11,479,413 5,660,640
Royal Bank of Scotland International - 55,073 55,073
ADCORP Ltd 1,500,000 - -
----------- ----------- -----------
2,303,956 11,534,486 5,715,713
=========== =========== ===========
The Company entered into an agreement with ADCORP Ltd to deposit $1,500,000 which matures on 11 October 2018 with an anticipated profit rate of 7% p.a.
9. TRADE AND OTHER PAYABLES
30.06.2018 30.06.2017 31.12.2017
$ $ $
Non-current
Performance fees 1,997,994 2,753,321 2,259,631
=========== =========== ===========
Current
Secretarial, administration and
accountancy fees 82,391 45,286 60,249
Director fees 40,523 20,797 41,823
Investment manager fees 700,428 987,738 466,952
Legal and professional fees 8,889 13,298 36,397
Audit fees 46,405 29,246 33,728
Sundry expenses 2,910 865 1,805
Loan interest payable 112,292 138,838 135,928
Participating shares 1 1 1
----------- ----------- -----------
992,839 1,236,069 776,883
=========== =========== ===========
The Directors consider that the carrying amount of trade and other payables approximate to their fair value.
QANNAS INVESTMENTS LIMITED 22.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued
FOR THE HALF YEARED 30 JUNE 2018
========================================================= ====
10. LOANS PAYABLE
01.01.2018 01.01.2017 01.01.2017
to to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Loan Capital
Brought forward 25,500,000 30,000,000 30,000,000
Repaid (5,500,000) (1,500,000) (4,500,000)
Issue Costs
Brought forward (296,056) (603,607) (603,607)
Incurred in the period - - -
Amortised during the period 87,259 66,590 307,551
------------ ------------
19,791,203 27,962,983 25,203,944
============ ============ ===================
The Company has a loan facility with First Gulf Bank which bears interest at the rate of LIBOR + 3.5% per annum and is repayable in quarterly instalments, with the final instalment due on 31 December 2019. Amounts due within the next 12 months total $10,000,000.
The loan is secured by way of a pledge with First Gulf Bank PJSC in respect of the receivable accounts held by the Company and by way of a charge over the Company's investments in ADCM Second Private Equity Fund L.P., SPE Qannas C Limited, Palace Preferred Partners L.P. and Integrated Financial Group LLC.
11. SHARE CAPITAL
30.06.2018 30.06.2017 31.12.2017
Management shares $ $ $
Authorised:
2 ordinary non-participating shares
of no par value 2 2 2
=============== ============== ===============
$ $ $
Issued and fully paid:
2 shares of $1 each 2 2 2
=============== ============== ===============
Participating shares
Authorised:
Unlimited participating shares - - -
of no par value
=============== ============== ===============
Issued and fully paid:
79,331,354 participating shares
of
no par value at various issue
prices 76,638,587 76,638,587 76,638,587
=============== ============== ===============
Treasury shares:
19,391,642 (30 June 2017: 10,502,749)
participating shares of no par
value redeemed at various prices (16,839,568) (8,839,568) (16,839,568)
=============== ============== ===============
In addition to the above, the Company has two further share classes - redeemable 'B' and redeemable 'C'. Both of these share classes have an unlimited number of participating shares of no par value authorised for issue. At 30 June 2018, 30 June 2017 and 31 December 2017 no redeemable 'B' shares and redeemable 'C' shares were in issue.
QANNAS INVESTMENTS LIMITED 23. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 11. SHARE CAPITAL - continued
Management shares
The Management Shares carry no right to receive any dividends, whether by way of finance costs, return of capital or otherwise, other than the return (on a winding up) of the issue price paid on such shares, are non-redeemable and are recorded at $1.00 per share.
Participating shares
Participating Shares carry the right to receive a dividend out of the income of the Company in such amounts and at such times that the Directors shall determine, and to receive a dividend on a return of capital of the assets of the Company on a winding up, in proportion to the number of shares held. Participating shares in issue are redeemable at the option of the Company.
During 2017, the company redeemed 8,888,889 $1 participating shares at a price of $0.90 per share. These shares are held as treasury shares and as such are not entitled to any dividends paid by the Company or any rights to vote at meetings of the Company.
During 2016, the Company redeemed 889,840 $1 participating shares at a price of $0.95 per share. These shares are held as treasury shares and as such are not entitled to any dividends paid by the Company or any rights to vote at meetings of the Company.
During 2015, the Company redeemed 8,414,964 $1 participating shares as part of a tender offer at a price of $0.95 per share. These shares are held as treasury shares and as such are not entitled to any dividends paid by the Company or any rights to vote at meetings of the Company.
B Shares
This class of share has no rights to receive dividends, to receive notice of or vote at general meetings of the Company or to receive amounts available for distribution on a winding up, for the purpose of a reorganisation or otherwise or upon any distribution of capital.
C Shares
The Directors are authorised to issue C Shares of different classes which are convertible into Participating Shares. If the shares were converted into Participating Shares, then these shares would rank equal to, and hold the same rights attaching to, Participating Shares currently in issue at the date of conversion.
This class of share will be entitled to receive such dividends as the Directors may resolve to pay to such shares out of the assets attributable to this class of share. This class of share carries no right to attend or vote at any general meeting of the Company. The capital and assets of the Company on a winding up or on a return of capital attributable to this class of share shall be divided amongst the shareholders of this class of share according to their holding.
QANNAS INVESTMENTS LIMITED 24. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 12. RETAINED EARNINGS - UNREALISED AND REALISED SPLIT
Retained earnings at 30 June 2018 comprise the following revenue items, split between realised and unrealised income: -
Unrealised Realised Total
$ $ $
Balance at 1 January 2018 (11,324,463) (9,804,794) (21,129,257)
Income 481,337 - 481,337
Expenditure - (1,595,512) (1,595,512)
Net gains and losses on investments 637,829 - 637,829
Loan interest payable - (679,032) (679,032)
Foreign exchange loss on loans
receivable (333,113) - (333,113)
Loss on foreign exchange - (37,538) (37,538)
Interest income - cash and cash
equivalents - 788 788
Interest income - loans receivable - 457,124 457,124
Impairment of loan interest
receivable - (71,271) (71,271)
------------- ------------- -------------
Balance at 30 June 2018 (10,538,410) (11,730,235) (22,268,645)
============= ============= =============
The retained earnings are distributable to the investors at the discretion of the Directors if, in their opinion, the profits of the Company justify such payments. The Directors consider the future requirements of the Company when making such distributions.
13. LOSS PER SHARE
Loss per share is calculated by dividing the loss attributable to the participating shareholders of the Company by the weighted average number of participating shares in issue during the year, excluding the average number of participating shares purchased by the Company and held as treasury shares.
On 15 August 2017, the Company repurchased 8,888,889 participating shares which are held in equity as treasury shares. The average number of shares in issue during the period ended 30 June 2018 was 65,279,303 (30 June 2017: 69,013,416).
30.06.18 30.06.17 31.12.17
Total loss for the year after
taxation ($) (1,139,388) (2,777,979) (18,295,313)
Weighted average number of participating
shares in issue 59,939,712 69,013,416 65,279,303
Basic and diluted earnings per
share ($ per share) (0.02) (0.04) (0.28)
The Company has not issued any shares or other instruments that are considered to have dilutive potential and hence basic and diluted earnings per share are the same.
14. TAXATION
The Company is tax resident in Jersey, on the basis that board meetings and strategic decisions are undertaken in Jersey. Provision has been made in these financial statements for Jersey income tax at the rate of 0%.
15. DISTRIBUTIONS
Distributions of $nil (half year ended 30 June 2017: $nil; year ended 31 December 2017: $nil) were paid during the period.
QANNAS INVESTMENTS LIMITED 25. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 16. INVESTMENT MANAGER AND PERFORMANCE FEES
The Investment Manager is entitled to a quarterly management fee equal to 0.4375% of the net asset value of the company at each quarter end (being 31 March, 30 June, 30 September and 31 December).
In addition to the management fee, the Investment Manager is entitled to a fee based upon the performance of the investments (the "Performance Fee"). The calculation for this fee changed in 2014 following the acquisition of interests in ADCM SPEF and SPE Qannas C Limited.
Performance Fee calculation to 27 March 2014
Up until 27 March 2014, the Performance Fee was payable once the Company had made aggregate distributions in cash to the shareholders, in accordance with the following methodology:
The Company firstly had to make distributions to shareholders equivalent to:
i) their gross share subscription price paid (the "contributed capital"); and
ii) a premium of "simple" interest of 7% per annum on the contributed capital (the "preferred return").
When the thresholds had been met then:
i) on the event of any further cash distributions to shareholders the Investment Manager was entitled to an equal amount until they have received payments which in total are equivalent to 20% of the amounts distributed to the shareholders in excess of the contributed capital.
ii) when the 20% has been achieved, the Investment Manager is entitled to 20% of any further cash distributions.
The above calculation was replaced by a new method of calculation that was applied from 27 March 2014.
Performance Fee calculation since 27 March 2014
Under the new method of calculation, the Investment Manager is entitled to be paid a performance fee in respect of each asset in the Company's portfolio from time to time.
On the disposal by the Company of the whole or part of its interest in any Asset, the Investment Manager shall be entitled to a Performance Fee equal to 15 percent of the amount by which the net disposal proceeds (after deducting the costs incurred and any taxes payable in connection with such disposal) together with the net proceeds of any previous disposal of interests in such Asset (together, the "Total Proceeds") are greater than the cost (including any fees and expenses) of acquiring the Asset (the "Acquisition Cost").
For the unquoted investments of ADCM SPEF and SPE Qannas C Limited, acquired in March 2014, each of their underlying fund investments will be considered as separate Assets. As such the Acquisition Cost in respect of each underlying fund investment shall be deemed to be such proportion of the ADCM SPEF and SPE Qannas C Limited consideration (after being adjusted for the net receivables from ADCM SPEF and SPE Qannas C Limited investors (on an individual basis)) as is attributable to such ADCM SPEF and SPE Qannas C Limited Assets. Similarly, the date of acquisition of any ADCM SPEF and SPE Qannas C Limited asset shall be deemed to be the effective date of 27 March 2014 relating to ADCM SPEF and SPE Qannas C Limited.
Any Performance Fee payable by the Company to the Investment Manager shall be reduced to the extent required to ensure that, in respect of the Asset to which the Performance Fee relates, an amount equal to a simple 7 per cent per annum return on the Acquisition Cost of such Asset from the date of its acquisition to the date on which the Total Proceeds first exceed the Acquisition Cost has been retained by the Company before the payment of any Performance Fee to the Investment Manager.
Any Performance Fee payable by the Company to the Investment Manager shall be paid to the Investment Manager within 10 days of the receipt by the Company of the relevant disposal proceeds.
QANNAS INVESTMENTS LIMITED 26. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 16. INVESTMENT MANAGER AND PERFORMANCE FEES - continued
As a result of the above mentioned change in Performance Fee structure, the Performance Fee accrual was reduced by $1,149,109.69 during 2014. The Investment Manager also returned 1,197,945 participating shares for an aggregate price of $1 which were issued under original agreement to the Investment Manager in lieu of management fee before 27 March 2014.
Rebates
In order to prevent the double-charging of Management and Performance Fees, ADCM Ltd (in its capacity as Investment Manager to ADCM SPEF) and ADCM SPEF GP Limited (in its capacity as general partner of ADCM SPEF) entered into an agreement with the Company, such that they shall rebate to the Company any Management Fee or Performance Fee that they receive from ADCM SPEF, which is attributable to the Company's percentage ownership of ADCM SPEF.
In order to prevent the double-charging of Performance Fees, ADCM Ltd (in its capacity as Investment Manager to SPE Qannas C Limited) entered into an agreement with the Company, such that they shall rebate to the Company any Performance Fee that they receive from SPE Qannas C Limited.
The timing of receipt of the Performance Fee rebate is uncertain and is dependent on the realisation of the underlying investments held by ADCM SPEF and SPE Qannas C Limited. As such, the Performance Fee rebate has been classified as a non-current asset within the Statement of Financial Position.
The Company has accrued Management Fee rebate income in respect of ADCM SPEF of $349,004 at 30 June 2018 (30 June 2017: $278,893 and 31 December 2017: $297,828). The Company has accrued Performance Fee rebate income in respect of ADCM SPEF and SPE Qannas C Ltd of $Nil at 30 June 2018 (30 June 2017: $3,820,246 and 31 December 2017: $Nil). These are settled when investments are sold and are based on the fair value gains realised on the disposal.
Abu Dhabi Financial Group, the investment manager of Goldilocks Fund, provide a rebate to the company in respect of Management and Performance Fees it charges to Goldilocks Fund. At 30 June, $184,092 (30 June 2017: $nil and 31 December 2017: $106,401) was due in respect of Management Fees and $1,005,456 (30 June 2017: $nil and 31 December 2017: $931,903) in respect of Performance Fees. These are included in trade and other receivables and are considered a current asset, in line with the investment itself.
A reconciliation of the rebate recognised in the statement of comprehensive income can be seen below:
01.01.2018 01.01.2017 01.01.2017
To to to
30.06.2018 30.06.2017 31.12.2017
$ $ $
Opening performance fee rebate
receivable (note 7) (931,903) (4,663,572) (4,663,572)
Opening management fee rebate
receivable (note 7) (404,229) (98,618) (98,618)
Management fee rebate received 278,917 - -
in the year
Closing performance fee rebate
receivable (note 7) 1,005,456 3,820,246 931,903
Closing management fee rebate
receivable (note 7) 533,096 278,893 404,229
----------- ------------
481,337 (663,051) (3,426,058)
=========== ============ ============
17. FINANCIAL RISK MANAGEMENT
The Company's activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk and foreign currency risk), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.
QANNAS INVESTMENTS LIMITED 27. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 17. FINANCIAL RISK MANAGEMENT - continued
The management of these risks is performed by the Board of Directors. The policies for managing each of these risks are summarised below.
Management of market risk
Price risk
The Company is exposed to market price risk in respect of its portfolio of investments via equity securities price risk. The risk arises from investments held by the Company for which prices in the future are uncertain. Where non-monetary financial instruments are denominated in currencies other than the US dollar, the price initially expressed in foreign currency and then converted into US dollar will also fluctuate because of changes in foreign exchange rates (further details on the foreign exchange risk can be seen later in this note).
The Company mitigates price risk by having established investment appraisal processes and asset monitoring procedures which are subject to overall review by the board. The Company also manages the risk by appropriate diversification of its assets.
Details of the Company's investments are given in notes 4, 5 and 6.
Interest rate risk
The Company's interest rate risk principally arises from borrowings in the form of the loan payable (see note 10) and receivables in the form of loans receivable (see note 5).
The Company relies on receipt of investment income and realised gains on investments to meet interest obligations due on the loan payable. The loan payable bears interest at 3.5% plus US LIBOR. The board has, in consultation with the Investment Manager, reviewed the terms of the loan and are satisfied that the risk of significant movements in US LIBOR over the term of the loan is low. Through cash flow projections and the structuring of the Company, the Board of Directors believe the Company will have sufficient cash available to meets its obligations as they fall due and therefore, there is no material interest rate risk.
The loans receivable carry fixed rates of interest and so there is no risk arising from movement in interest rates on income receivable by the Company.
Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures.
Foreign exchange risk is the risk that the fair value of future transactions, recognised monetary and non-monetary assets and liabilities denominated in other currencies fluctuate due to changes in foreign exchange rates. Trade payables are settled within short time periods in order to minimise the fluctuation between expected and actual expenditure.
The Company's investments in financial instruments are valued in US dollars. The Company holds cash deposits denominated in currencies other than US dollars, the functional and presentational currency. Some of the Company's payables are transacted in currencies other than US dollars.
The significant currency assets of the Company are held in AED, GBP and EUR. The Board considers that its exposure to foreign exchange risk is limited. The AED is 'pegged' to USD and the Investment Manager monitors EUR and GBP currency movements and proposes any action deemed appropriate.
Credit risk
The Company's principal financial assets are trade and other receivables, receivable from investment manager, cash & cash equivalents and loans receivable.
Credit risk on trade and other receivables is managed by regular review by the Board of Directors of the positions with debtors to ensure that amounts included remain recoverable. The Board of Directors is satisfied that amounts
QANNAS INVESTMENTS LIMITED 28. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 17. FINANCIAL RISK MANAGEMENT - continued
Credit risk - continued
included within trade and other receivables are recoverable. The Company's maximum exposure in respect of trade & other receivables is detailed in note 7.
The Company seeks to limit the level of credit risk on the cash balances by only depositing surplus liquid funds with counterparty banks with high credit ratings. The Company does not hold any derivative financial instruments.
The credit risk associated with trading and portfolio investments is considered minimal.
The Company has significant loans receivable at the year end. The Board of the Directors reviews the position of the counterparty prior to entering into any loan arrangement and the Investment Manager provides subsequent quarterly updates. The Investment Manager's review includes review of external ratings, where available, and financial information in respect of the counterparty. Further disclosure in respect of loans receivable can be seen in note 5.
Further, Goldilocks Fund is managed by Integrated Capital, a central bank licensed investment firm in Abu Dhabi, UAE. The Investment Manager's review includes review of external ratings, where available, and financial information in respect of the counterparty.
The Company does not consider that any changes in fair value of financial assets in the year are attributable to credit risk.
Liquidity risk
The Company seeks to manage liquidity risk to ensure that sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Company deems there is sufficient liquidity for the foreseeable future. The Company has a strong relationship with various financial institutions and has utilised these relationships to borrow funds when necessary. The Board of Directors is comfortable that the Company has sufficient resources to meet the requirements of the Company.
During 2014 the Company entered into a facility for $30 million from First Gulf Bank and drew down the full loan during 2015. The loan was refinanced in November 2016 and is being repaid in quarterly instalments. (see note 10). The Directors are confident that, if required, a new loan facility can be obtained before the existing loan facility expires.
Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders.
The capital of the Company is represented by the share capital of the Company. The Company has sufficient assets to cover the Company's liabilities at the Statement of Financial Position date and for the foreseeable future. As such the Company had $37,530,376 of share capital at 30 June 2018, 30 June 2017: $62,187,098 and 31 December 2017: $38,669,764.
To maintain or adjust the capital structure, the Company may propose dividend payment to the shareholders, buy back shares or issue new shares.
Concentration risk
The Company aims to mitigate concentration risk through investing in companies that operate in a variety of different markets.
QANNAS INVESTMENTS LIMITED 29. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 18. RELATED PARTY TRANSACTIONS
Richard John Stobart Prosser, a Director of the Company, is also an officer of Estera Fund Administrators (Jersey) Limited, which acts as administrator. Secretarial and administration fees incurred by the Company with Estera Fund Administrator (Jersey) Limited for the half year ended 30 June 2018 were $80,333 (half year ended 30 June 2017: $80,603; year ended 31 December 2017: $134,353), of which $82,391 was outstanding at 30 June 2018 (30 June 2017: $45,286; 31 December 2017: $60,249).
ADCM Ltd, the Investment Manager, owns 2 (30 June 2017: 2; 31 December 2017: 2) management shares in the Company.
Richard John Stobart Prosser, a Director of the Company, is also a director of Palace Investors Holdings Limited and Mustafa Kheriba, a Director of the Company, is also a director of Palace Real Estate Partners GP Ltd. The Company has an investment of $5,210,255 in Palace Preferred Partners LP at 30 June 2018 (30 June 2017: $3,777,037; 31 December 2017: $8,743,938) which hold shares indirectly in Palace Investors Holdings Limited and of which Palace Real Estate Partners GP is the general partner. The undrawn commitment as at 31 December 2017 was divested during the half year ended 30 June 2018.
Mustafa Kheriba, a Director of the Company, is also a director of SPE Qannas C Limited. The Company has an investment of $nil at 30 June 2018 (30 June 2017: $5,785,992; 31 December 2017: $nil) in SPE Qannas C Limited.
Mustafa Kheriba, a Director of the Company, is also a director of ADCM SPEF GP Ltd. ADCM SPEF GP Ltd is the general partner of ADCM SPEF, an investment of the Company. As at 30 June 2018 this was held at fair value of $4,160,834 (30 June 2017: $18,599,512; 31 December 2017: $4,439,078). Dividends totalling $nil were received from ADCM SPEF during the half year (half year ended 30 June 2017: $566,818; year ended 31 December 2017: $1,107,502).
Mustafa Kheriba, a Director of the Company, is also a director of EE F&B Holding Limited. The Company has loan of $3,713,576 at 30 June 2018 (30 June 2017: $3,748,759; 31 December 2017: $3,713,576) and an investment of $1 (30 June 2017: $1; 31 December 2017: $1) in EE F&B Holding Limited. Interest totalling $83,087 (half year ended 30 June 2017: $75,565; year ended 31 December 2017: $158,265) was receivable from EE F&B Holding Limited during the period of which $nil (30 June 2017: $nil; 31 December 2017: $158,265) remained outstanding at the period end. An impairment expense was recognised during the period in the amount of $71,271 (half year ended 30 June 2017: $147,603; year ended 31 December 2017: $238,992) in respect of the interest receivable from EE F&B Holding Limited as the Directors have concerns over its recoverability.
The loans receivable from Integrated Eastern European Fund, Lucice Montenegro d.o.o. and Arqutino EAD (the "IEEF") which totalled $3,538,089 at 30 June 2018 (30 June 2017: $3,359,082; 31 December 2017: $3,359,451), were arranged by Integrated Alternative Finance ("IAF"), a wholly owned subsidiary of Abu Dhabi Financial Group (which is the ultimate parent company of ADCM Ltd, the Company's Investment Manager) and regulated by the Dubai Financial Services Authority. IEEF will pay a fee to IAF of 3% of the value of the Loan on completion. Interest of $178,639 (half year ended 30 June 2017: $179,632; year ended 31 December 2017: $362,241) was recognised in the Statement of Comprehensive Income of the Company in respect of loans to IEEF.
The Company operates an investment account with IC valued at $10,598,520 at 30 June 2018 (30 June 2017: $13,906,975; 31 December 2017: $10,181,714), shown as an investment in Goldilocks Fund in note 4. ADFG holds no units in Goldilocks Fund and charges 1.5% management fee and 15% performance fee on Goldilocks through its wholly owned subsidiary, ADCM Altus. Part of the holding in Goldilocks Fund was divested during the half year ended 30 June 2017 realising proceeds of $5,765,378.
Integrated Capital owned 787,408 participating shares in the Company as at (30 June 2017 907,030 and 31 December 2017: 787,408).
ADFG, the ultimate controlling shareholder of the Company's Investment Manager, has a 10% shareholding in Integrated Financial Group, LLC. At 30 June 2018, the Company's investment in Integrated Financial Group, LLC was carried at $19,026,696 (30 June 2017: $19,608,118; 31 December 2017: $19,026,696). No dividends were received from Integrated Financial Group, LLC during the current or prior period.
ADFG owned 11,283,125 participating shares in the Company as at 30 June 2018 (30 June 2017:12,997,235 and 31 December 2017: 11,283,125).
QANNAS INVESTMENTS LIMITED 30. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS - continued FOR THE HALF YEARED 30 JUNE 2018 ========================================================= ==== 19. IMMEDIATE HOLDING COMPANY AND ULTIMATE CONTROLLING PARTY
In the Directors' opinion there is no controlling or ultimate controlling party.
20. SUBSEQUENT EVENTS
As further detailed in the Chairman's and Investment Manager's report, the Company is in the process of exiting a number of its investments at 30 June 2018.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR XDLFLVKFBBBD
(END) Dow Jones Newswires
September 27, 2018 09:24 ET (13:24 GMT)
1 Year Qannas Investments Chart |
1 Month Qannas Investments Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
