ADAM.L Regulatory News (ADAM)

Adamas Finance Asia Limited

("Adamas Finance Asia", "ADAM" or the "Company")

Final Results for the year ended 31 December 2014

Highlights of the year

· Consolidated net asset value at 31 December 2014 of US$118.9 million (31 December 2013: US$25.5million)

· Loss for the year narrows to US$545,000 (2013: US$1.7 million)

Adamas Finance Asia Chairman John Croft commented: " I believe that we have established a sound platform on which to deliver the transformation in the underlying portfolio to one that ultimately will be entirely income generating and which will thereby enable us to begin to deliver attractive returns to our shareholders."

Enquiries:

CHAIRMAN'S STATEMENT

On behalf of the Directors, I am pleased to present the final results of the Company for the twelve months to 31 December 2014. The year started with a reverse takeover (RTO) which involved a US$87 million asset injection along with fundamental changes to the Company's Investing Policy.

Through the RTO, the Company acquired a portfolio of assets which, together with the existing assets, now comprise a suite of predominantly private equity investments. Also, through the RTO, Adamas Global Alternative Investment Management Inc., an affiliate of Adamas Asset Management (HK) Limited ("Adamas"), was appointed as the Company's investment manager and the Directors and Adamas started working on the disposal of all of the legacy assets, either via redemptions, IPOs or trade sales. As realisations are made, resulting cash will be recycled into income-generating assets in accordance with the Investing Policy. This is a major shift in strategy for the Company, and the Board expects its full realisation to take some time, but overall, it was a year of promising progress towards that objective.

With these changes firmly in mind, I am able to report that while the Company again sustained a pre-tax loss for the year, the loss narrowed sharply from 2013, falling to US$0.5 million, reflecting a net increase in the fair value of portfolio assets, offset by increased operating costs associated with the increase in the scale of the Company's activities. The loss per share narrowed dramatically to US cents 0.34, down from US cents 15.7 for 2013.

Within the portfolio there have been some valuation changes in some of the individual assets which are covered in the Directors' report that follows. In summary, the valuation now attached to Fortel reflects a write down of US$5.8 million offset primarily by a net profit of US$3.1 million on the disposal of our holding in Global Pharm Holdings, and an upward revaluation of our investment in China iEducation of US$2 million. Additionally our listed Malaysian share portfolio showed a book profit of US$1.3 million at the end of the year.

As the Board continues implementing its planned divestment of legacy assets, increasing amounts of cash will become available for re-investment. As an important step towards that goal, following the year end the Company gained approval from shareholders for a change to its Investing Policy, allowing investment to be made into funds such as the Greater China Credit Fund (GCCF) and the BRJ China Credit Fund, both of which have a track record of regular cash distributions.

ADAM is quoted on AIM against a backdrop of deep scepticism over China following a series of market failures and scandals. The Directors believe that the expertise and local knowledge of the Adamas team provides the Company with access to quality financing opportunities in Greater China. As an example and as announced in October 2014, the Company received a 15% dividend distribution from a small investment of US$1 million made a year earlier in Adamas' GCCF. Adamas now has more than US$620 million under management and has shown a consistent track record in providing credit finance for well managed and high-growth SMEs in China. The Adamas team has shown with marked consistency how with proper due diligence, legal safeguards and hands-on participation, it is possible to realise solid, consistent returns from Chinese investments. Adamas funds have, to date, provided finance to 55 SMEs within China. There have been 45 successful exits, and only five delays in repayments of principal or interest. In every one of those five cases, all of the outstanding amounts were subsequently settled in full either ahead of court action or as a result of judicial decisions.

It is this impressive track record of high-yield returns resulting from Adamas's meticulous planning and understanding of the lending environment in China that I believe provides solid ground for confidence in the ADAM strategy. Adamas further strengthened its own team during the course of 2014 with the appointment of two London-based advisers with long and deep experience of the Asian investment market - Andrew Main and Hugh Trenchard. Following the year end, ADAM also announced the appointment as its broker of Edmond de Rothschild Securities (EdR), which has a successful track record of working with Emerging Market Funds. We look forward to working with the team at EdR to improve ADAM's profile amongst the investor community.

Since the Company will have not substantially implemented its Investing Policy within 18 months of the admission of its shares to AIM (admission being 21 February 2014), it will seek the consent of the Shareholders for the Investing Policy to be extended at the annual general meeting of the Company.

In summary, looking back on 2014 I believe that we have established a sound platform on which to deliver the transformation in the underlying portfolio to one that ultimately will be entirely income generating and which will thereby enable us to begin to deliver attractive returns to our shareholders.

John Croft

Chairman

Adamas Asset Management and the Private Credit Market in China

The China Banking Regulatory Commission ("CBRC") has continued to emphasise the importance of micro and small enterprises by stating three points of guidance to financial institutions in the first quarter of 2015, being: 1) the growth rate of total loans made to micro and small enterprises should not be less than other types of enterprises; 2) the number of loan accounts maintained by micro and small enterprises should not be less than last year; and 3) the loan application approval rate to micro and small enterprises should not be lower than last year. Although the outstanding loans to micro and small enterprises increased by 14.9% in 2014 and the balance represented 23.9% of all outstanding loans, the supply is still far short of the demand. According to China's Ministry of Industry and Technology, small and medium enterprises ("SMEs") represent 99% of the total number of domestic enterprises, are responsible for 80% of national employment, drive 60% of its GDP and generate more than 50% of national tax revenue. It is estimated that the funding gap not met by traditional financial institutions is over US$3-5 trillion. The People's Bank of China in 2014 began interest rate cuts and reducing the required reserve rate for banks for the first time since 2012 in light of the voracious liquidity shortage.

We have seen the tremendous growth in the demand for non-bank financing (or sometimes referred to as shadow banking) channels in 2014. For example, peer-to-peer lending ("P2P") is an online financing platform that matches any regular internet users (lenders) with borrowers and yields can be over 15%. Many of these P2P lending platforms are, poorly managed, often highly opaque and difficult to due diligence. There were over 900 newly launched P2P lending platforms in 2014, but in the same year 275 platforms were closed down, most of which were due to fraud and capital shortage.

Meanwhile, China continues to progress to a clear recognition of the function and importance of badly needed foreign investment capital. Among other recent advances, in 2014, China State Administration of Foreign Exchange ("SAFE") issued a notice and operating guidelines that simplified the process for Mainland companies to use onshore assets as collateral when raising funds offshore. For example, no registration or approval with SAFE is required for the creation of outward security for offshore lending if certain criteria are met, which used to be a lengthy process that deterred many borrowers and lenders from using this structure. The experiences of Adamas to date have shown that in the arena of cross-border lending, China has made solid progress towards promised legal reform.

Adamas has recognised the opportunity niche in the Chinese corporate lending market and has over the past five and a half years successfully provided growth capital to growing SMEs by structuring collateralised lending loans backed by solid, accessible collateral. Adamas likes to say its investment policy is industry agnostic, but it favours the consumption story attached to an emerging middle class set to grow to over US$500 million within the next decade. Anybody who has travelled to China's major cities will have witnessed first-hand the desire for higher living standards and improved quality of life. Adamas has provided structured debt for several well-run growth companies in the leisure and health sectors, with several successful exits. Deal flow in this sector is plentiful and it will be the continued focus for Adamas in the coming year.

2014 was a remarkable year for Adamas. It was the winner of the "2014 Lender of the Year (Asia-Pacific) Award" by Private Debt Investor, knocking last year's winner KKR Asset Management off the top spot. Since the first close of the Adamas managed Greater China Credit Fund ("GCCF") in 2013, GCCF exited two deals in 2014 and it has made net cash distribution of 15-16% to its investors.

Adamas also signed an agreement in February 2015 with Ping An Group, one of the most respected Chinese private financial institutions with over RMB 3 trillion in assets under management, to co-manage a US$500 million lending vehicle. A typical loan will range from US$30 million to US$150 million, over 12 to 36 months and is planned to generate gross internal rates of return of 15-18% over the life of the fund.

We expect the demand for non-bank financing to remain strong in 2015 despite the Chinese government's monetary easing policies. There is still huge room for Adamas to grow as we provide SMEs with higher flexibility than traditional banks in China while offering professional due diligence, deal structuring, and collateral assessment to safeguard our investors' capital. On top of bringing growth capital to solid enterprises, Adamas also actively monitors and assists borrowers' business by leveraging our global network and knowledge of the capital markets instead of remaining as a passive lender. We emphasise the importance of both pre-closing investment process and post-funding proactive asset and risk management at asset level, portfolio level and operational level. Adamas seeks for its capital to generate more than monetary return to our investors, but also create sustainable value to the investee and society as a whole.

EXTRACT FROM THE DIRECTORS' REPORT

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 ("AIM") 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. Formerly known as China Private Equity Investment Holdings Limited, the Company changed its name to Adamas Finance Asia Limited on 18 February 2014 immediately following a reverse takeover ("RTO"). During the course of 2014, the Group began implementing a key strategic shift of focus, planning to dispose of its entire asset portfolio to realise cash for investment in revenue-generating assets.

Results and Dividends

The loss on ordinary activities of the Group for the year ended 31 December 2014 after taxation was US$545,000 (2013 restated: loss US$1.7 million).

The Directors are not recommending the payment of a dividend for the year.

Review of the Business

The Group's audited total comprehensive expense for the year ended 31 December 2014 amounted US$589,000 (2013 restated expense: US$1,728,000), largely as a result of the cost of the asset injection arising from the RTO. The Group's audited net asset value as at 31 December 2014 stood at US$118.9 million (2013 restated: US$25.5 million) equivalent to US$0.62 per share (2013 restated: US$0.20).

The narrowed loss for the year largely reflected a net increase in fair value on financial assets of US$2.0 million. Administrative expenses rose to US$3.3 million (2013 restated: US$1.7 million). The main reason for this increase was the costs associated with the RTO which totalled US$1.1 million. Net finance and dividend income rose to US$629,000 (2013 restated: US$202,000). Measured over the course of the year, separately from the value increases achieved directly as a result of the RTO asset injections, the Company's asset portfolio showed an increase in fair value of US$1.9million (2013 restated: US$0.9 million decrease). The improvement reflects a number of valuation adjustments for portfolio assets which are detailed below along with a brief update on progress for each:

Fortel Technology Holdings Ltd ("Fortel")

Fortel has been trading satisfactorily with year on year revenue and profit increases in the last two years. The company is having audits for the last three years completed in advance of seeking a listing on Hong Kong's junior market. The Directors of ADAM commissioned an independent valuation of Fortel and have decided to take a cautious view in the light of the uncertainties over the timing and achievable valuation at IPO and have therefore recommended a write down in value equivalent to US$5.8 million.

China iEducation

China iEducation develops and distributes digital education content to elementary and middle schools in China, and is projecting continued growth in its business. An independent valuation was commissioned at the year end and based on the revised numbers the Directors have agreed to an increase in the book valuation of US$2.0 million.

Changtai Jinhongbang Real Estate Development Co. Ltd ("CJRE")

CJRE is a luxury resort and residential development project in Fujian Province, Eastern China. CJRE is making good progress with the sale of luxury villas, and a highway linking the resort directly with the regional centre of Xiamen has now been opened. Adamas is actively seeking potential buyers for the holding in this project.

Hong Kong Mining Holdings Limited ("HKMH")

HKMH is a resources company whose primary asset is a large dolomite magnesium limestone mine in the province of Shanxi, China. HKMH is currently preparing for a Hong Kong Main Board IPO. Since year end ADAM has agreed to extend its put option in return for being issued with 90,000 additional shares taking its holding from 5.68% to 10.95% in advance of the IPO.

Meize Energy Industrial Holdings Ltd ("Meize")

Meize is a wind turbine manufacturer based in Beijing with operations in Inner Mongolia and Ningxiain which enjoyed a very successful 2014 and carried a strong order book into 2015. Revenues achieved in 2014 were approximately six times those generated in 2013. Adamas is actively seeking buyers for the stake in this business.

Global Pharm Holdings Group Inc ("Global Pharm")

Global Pharm is involved in the production and distribution of pharmaceuticals, Traditional Chinese Medicines and ginseng. Just before the year end, the Company announced an agreement to dispose of its interest in Global Pharm for US$25 million. A gain of US$3.1 million was booked for the year on the disposal. Although the initial payment in settlement was received on time, subsequent payments that were scheduled have not been received on time. However Adamas is in discussions with the company and they are committed to repaying the facility along with penalties for late payment. Two further payments of US$750,000 each were received in May and June, and we are anticipating receiving additional payments in due course.

Malaysian Listed Securities ("Malaysian")

At year end, the book value of the portfolio of Malaysian listed securities showed an increase of US$ 1.3 million.

John Croft

Chairman

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

Company Statement of Comprehensive Income

For the year ended 31 December 2014

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

Consolidated Statement of Financial Position

As at 31 December 2014

Consolidated Cash Flow Statement

For the year ended 31 December 2014

Notes

1. Board Approval and 2014 Annual Report and Financial Statements

The financial information included in this report has been extracted from the Group Financial Statements for the year ended 31 December 2014 which were approved by the Board of Directors on 18 June 2015. The Group Financial Statements have been prepared in accordance with the accounting policies set out therein and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The auditors have reported on the 2014 Financial Statements and their report is unqualified. The information included does not constitute the Company's statutory accounts. The full financial statements will be included in the Group's annual report.

2. Loss per Share - Continuing Operations

The calculation of the basic and diluted loss per share attributable to the ordinary equity holders of the Group is based on the following:

For the year ended 31 December 2014 and 2013, the share options are anti-dilutive and therefore the weighted average shares in issue are 160,128,000 and 109,984,000 respectively.

3. Unquoted Financial Assets at Fair Value Through Profit or Loss

The Group adopted the investment methodology prescribed in the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines to value its investments at fair value through profit and loss.

Changtai Jinhongbang Real Estate Development Co. Ltd ("CJRE")

Lead Winner Limited, a fully owned subsidiary of ADAM, holds a 15% stake in CJRE and a loan of US$2.4 million to CJRE. CJRE is the owner of a luxury resort and residential development project in Fujian Province, Eastern China.

An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in CJRE as of 31 December 2014 and the fair value as US$48.6 million.

Global Pharm Holdings Group Inc. ("Global Pharm")

Blazer Delight Limited, a fully owned subsidiary of ADAM, which holds a redeemable convertible bond of Global Pharm. Global Pharm is a pharmaceutical company involved in pharmaceuticals, the cultivation of herbs for Traditional Chinese Medicine ("TCM") herb cultivation, and TCM processing and distribution. Headquartered in Shenzhen, Southern China, and has positioned itself in a strong position within China's high-margin ginseng business.

Under the redemption agreement announced on 18 December 2014, the Company was due to receive an initial payment of US$2.4 million on 31 December 2014, a further US$9 million on 31 March 2015 and a final payment of US$13.6 million on 30 April 2015, an aggregate of US$25.0 million.

Hong Kong Mining Holdings Limited ("HKMH")

Dynamite Win Limited, a fully owned subsidiary of ADAM, which holds a 5.68% stake in HKMH. HKMH is a resources company whose primary asset is a large dolomite magnesium limestone mines in the province of Shanxi, China.

An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in HKMH as of 31 December 2014 and the fair value as US$10.5 million.

Meize Energy Industries Holdings Limited ("Meize")

Swift Wealth Investments Limited, a fully owned subsidiary of ADAM, which holds a 7.9% stake in Meize. Meize is a privately-owned company that designs and manufactures blades for wind turbines.

An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in Meize as of 31 December 2014 and the fair value as US$6.8 million.

Fortel Technology Holdings Limited ("Fortel")

CPE TMT Holdings Limited, a fully owned subsidiary of ADAM, which holds a 33.6% stake in Fortel. Fortel, a company incorporated in Hong Kong, is a platform provider for online content distribution in China and has developed an integrated content distribution platform - Fortel Online Content Utility System (''FOCUS'') - which provides a one-stop solution for both content providers and consumers to sell and purchase premium digital content in China.

An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in Fortel as of 31 December 2014 and the fair value as US$11.3 million.

China iEducation Holdings Limited ("iEducation")

CPE EDU Holdings Limited, a fully owned subsidiary of ADAM, which holds a 40% stake in iEducation. In 2014, the Company injected its investment in iEducation into its wholly owned subsidiary, CPE EDU Holdings Limited. China iEducation develops and distributes digital education content to elementary and middle schools within a market that receives substantial annual funding from the Chinese government to upgrade education resources.

An independent professional qualified valuer has performed a valuation in accordance with IPEVCV guidelines for the valuation of our interest in iEducation as of 31 December 2014 and the fair value as US$4.0 million.

Greater China Credit Fund LP (the "GCCF")

The Company invested US$1 million in the GCCF managed by Adamas Global Alternative Investment Management Inc. The investment was valued at US$1 million as at 31 December 2014 with a dividend distribution of US$151,000 during the year.

BRJ China Credit Fund Limited (the "BRJ")

The Company invested US$800,000 in the BRJ managed by BRJ Asset Management Limited. The investment was valued at US$846,000 as at 31 December 2014 with a dividend distribution of US$54,000 during the year.

4. Posting of Annual Report

The Annual Report and Accounts will be made available on the Company's website at www.adamasfinance.com on 22 June 2015 and will be posted to shareholders in the same week.