ORIGO PARTNERS PLC
REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2013
PRIVATE EQUITY
INVESTORS IN CHINA
Directors
Wang Chao Yong, Executive Chairman
Chris Rynning, Chief Executive Officer
Niklas Ponnert, Chief Financial Officer
Shonaid Jemmett-Page, Non Executive Director and Vice Chairman
Christopher Jemmett, Non Executive Director
Lionel de Saint-Exupery, Non Executive Director
Tom Preststulen, Non Executive Director
Country of incorporation of parent company
Isle of Man
Legal form
Public limited company
Company number
005681V
Auditors
Ernst & Young LLC
Rose House, 51-59 Circular Road
Douglas, ISLE OF MAN
IM1 1AZ, United Kingdom
Nominated adviser
Smith & Williamson Corporate Finance Ltd
25 Moorgate
London EC2R 6AY
Solicitors to the company
Charles Russell LLP
5 Fleet Place
London, EC4M 7RD
Public relations advisers
Aura Financial LLP
33 St James's Square
London, SW1Y 4JS
Broker
Investec Bank plc
2 Gresham Street
London, EC2V 7QP
Contents
A.
B.
C.
DIRECTORS’ REPORT
Chairman’s statement
Chief Executive's statement
Portfolio overview
Investment policy statement
ESG and sustainability statement
Directors’ report
INDEPENDENT AUDITORS’ REPORT
1-12
1
2-5
7-8
9
10
11-12
13
AUDITED FINANCIAL STATEMENTS
14-60
Consolidated statement of comprehensive income
--
Consolidated statement of financial position
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Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
14
15
16
17
18-60
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Highlights
Net asset value: declined by 21 per cent. to US$135.0 million (2012: US$171.5 million), primarily due to the 50 per cent.
reduction in the carrying value of our stake in Gobi Coal & Energy
Loss after tax of US$57.9 million (2012: loss after tax of US$69.0 million) reflecting unrealised
and realised losses on investments
Total investments in existing investee companies during the period of US$9.1 million (2012: US$21.3 million)
Cash position of US$35.3 million as at 31 December 2013 (2012: US$25.1 million)
DIRECTORS' REPORT
Chairman’s Statement
2013 was a challenging year for Origo with a difficult
economic background preventing us from delivering on
the objectives we set ourselves for the year.
system will be achieved in a controlled and successful
fashion.
Towards the end of 2013, China also announced a
number of significant policies to address social and
environmental issues. In March 2014 the National
Development and Reform Commission announced
detailed plans to tackle pollution and water scarcity by
closing inefficient plants, investing in new infrastructure,
punishing polluters and investing in new green
technologies.
Furthermore, China is gradually opening its economy
and promoting the role of market forces, for example
by encouraging private-sector participation in industries
previously controlled by the Central Government.
Steps to improve the functioning of capital markets are
also underway, a recent move to allow cross border
investment between the Shanghai Stock Exchange and
the Hong Kong Stock Exchange has the potential to boost
the performance of Chinese listed companies.
Therefore, despite the difficult short term circumstances
the Company has experienced in 2013, there remain
significant grounds for optimism over the longer term. The
key challenge remains the positioning of our portfolio and
being able to realise the value of our assets in an optimal
and timely fashion.
Wang Chao Yong
Executive Chairman
16 June 2014
As a result, in the summer of 2013 the Board completed
a detailed review of Origo’s strategy and operations with
the aim of ensuring that the Company is well positioned
to weather current uncertainties without compromising its
ability to deliver long-term value to shareholders.
The conclusions of the review, which were announced
on 14 August 2013, resulted in a number of significant
steps to reposition the Company. As a result we have
significantly reduced our overheads, made no further
investments outside of the existing portfolio in the year,
postponed initiatives in Myanmar and reduced our
activities in Mongolia.
Whilst I am convinced that these changes will help us
to create a stronger, leaner company, they have been
difficult and we have lost many valued team members. I
would therefore like to thank my colleagues at Origo for
their hard work and commitment during the year, in what
have proved to be difficult circumstances.
Our underlying thesis of investing to capture the
growth opportunities created by the urbanisation and
industrialisation of China remains unchanged.
China’s economy grew by 7.7 per cent. in 2013, in line
with 2012 and slightly ahead of expectations. Whilst
this figure is lower in percentage terms than the growth
achieved in previous years it is from a higher base and,
therefore, demand for many items is higher in absolute
terms.
Importantly, China’s economic transformation from an
economy driven by exports and fixed asset investment
continued apace in 2013, with the service sector’s 46 per
cent. share of overall gross domestic product exceeding
that of industry for the first time. This represents a major
milestone in the Chinese Government’s plan to rebalance
the Chinese economy and recent data suggests that this
trend is continuing, with the service sector comprising 49
per cent. of GDP in Q1 2014 according to official data.
The Chinese Government is addressing issues relating to
the build-up of debt in certain parts of its financial system.
Whilst this has the potential to impact growth in certain
sectors I am confident that the rebalancing of the financial
Origo Partners PLC December 2013
01
DIRECTORS' REPORT
Chief Executive's Statement
Despite indications of an improving global economy,
Origo was again impacted by poor market conditions in
2013. In particular, generally flat or declining commodity
prices in the year impacted our natural resource
investments, a number of which were further affected by
political uncertainty in Mongolia. In addition, concern over
the short term outlook for the Chinese economy has also
negatively impacted sentiment.
As a result our net asset value declined by 21 per cent.
to US$135.0 million as at 31 December 2013. The largest
contributor to this decline was a significant reduction in
the valuation of our investment in Gobi Coal & Energy Ltd
(“Gobi”), which we reduced by 50 per cent. in line with
similar reductions in the value of listed peers.
Although not as financially significant, I am also very
disappointed with the outcome for our investment in RM
Williams Agricultural Holdings Ltd (“RMWAH”). Despite
making promising steps to refinance the business, in July
2013 the senior debt holders decided to place RMWAH
into receivership. We subsequently wrote the value of our
investment down to zero.
Our portfolio company Celadon Mining Limited (“Celadon”)
made great progress during the course of the year, by
further developing its advanced Chang Tan West thermal
coal project in Inner Mongolia ("Chang Tan West").
Chang Tan West, in which Celadon acquired a 23 per
cent. equity stake in mid-2012, was included in the Inner
Mongolian Government's 'Mining Permit Distribution
Plan' (the "Plan"). The Plan sets out a list of priority coal
mining projects that have been selected for the granting
of future mining licenses. As part of its inclusion in the
Plan, Chang Tan West’s mining territory was expanded
from 20.35 square kilometres to 30.81 square kilometres,
increasing coal resources from 602 million tonnes to 1.05
billion tonnes according to Chinese specifications. At the
same time, the phase one mining production permit to be
allocated was increased from 4 million tonnes per annum
to 6 million tonnes per annum. Meanwhile, Celadon
completed a feasibility study on and received approval
from the Inner Mongolia Government to establish a Coal-
to-Olefins Project which could utilise coal from Chang Tan
West.
high return operation for a low initial investment with the
option to expand production in the future.
Similarly, Kincora Copper Limited (“Kincora”) continued
to deliver promising exploration results at its flagship
and wholly owned Bronze Fox deposit in Mongolia with
a number of new high priority large, potentially world-
class, copper gold porphyry targets identified in 2013.
Following discussions with various existing large-scale
copper producers attracted by Bronze Fox’s potential,
Kincora have entered into an exclusivity agreement
with a third party. The agreement, which is confidential,
grants exclusive rights to the third party to carry out
due diligence with respect to a potential joint venture,
earn-in, strategic alliance, equity investment or other
transaction in respect to the Bronze Fox project. Kincora’s
significant potential was further highlighted in February
2014 when Cameron McRae, the former President and
Chief Executive Officer of Oyu Tolgoi and Rio Tinto’s
Country Director for Mongolia, joined its Advisory Board.
In May 2014, Kincora closed an oversubscribed private
placement to raise a total of CAN$5 million, in which
Origo invested CAN$400,000. Funds from the capital
raising are being used for high priority drilling and other
exploration activities at Kincora's Bronze Fox license in
the 2014 field season. After the year end, the Mongolian
Mining Ministry proposed a process to return 106 licenses
which were previously revoked following a criminal court
case involving former Government officials. Kincora could
therefore have two previously revoked licenses returned,
although the process is subject to Parliamentary approval
and therefore some uncertainties remain.
While substantially smaller in size, our cleantech portfolio
and china based agriculture related assets broadly
continue to develop in line with expectations. Our
cleantech companies are all early stage growth ventures
which address small, but developing, markets. As such,
these companies still require time and further capital to
fulfill their potential, yet I believe that companies such as
Aqualyng, Niutech, Unipower Batteries and China Rice
all have the potential to exceed expectations on the back
of compelling product offerings and strong government
support for the sectors in which they operate.
Revised strategy
We were also pleased to announce today the results
of a scoping study carried out on the Mandal Moly
molybdenum and tungsten project in North West Mongolia
which confirmed the potential to develop a small scale,
The ongoing market uncertainty has affected our ability
to exit investments and raise new capital. We have
therefore taken a number of proactive steps to respond
02
Origo Partners PLC December 2013
DIRECTORS' REPORT
to this situation and adjust our strategy and operations to
the changing environment.
Streamlining the business
In March 2013 the maturity date of our convertible zero-
dividend preference shares ("C-ZDPs") was extended to
September 2017, ensuring that the Company had no near
term financing needs. Subsequently, in August 2013, we
completed a comprehensive review of Origo's strategy
and operations - the conclusions of which informed the
development of a new strategy.
As a result the Board committed to: making no new
investments and focussing attention on our existing
portfolio; reducing operating costs; achieving value
accretive divestments; and postponing activities in both
Myanmar and Mongolia.
In line with this strategy, we continue to work closely
with our investee companies, supporting their continued
development and have made no new investments in the
year. We do consider follow on investments in cases
where it demonstrably creates value, such as in the
case of the recent financing of Kincora, or in situations
where we need to maintain our funding commitments to
preserve the value of our investment.
Cost control is a key focus and we have taken a number
of steps to reduce ongoing costs and overheads,
including via a significant reduction in headcount and
the closure of our offices in Mongolia and Myanmar. The
effects of these cost-savings will be evident in 2014,
but were offset in the period under review by one off
administrative charges in respect of certain investments.
These charges included bad debt provisions in respect
of loans made to certain portfolio companies, notably
RMWAH and IRCA Holdings Ltd, and costs incurred
in responding to a previously announced complaint by
Brooks Macdonald Group plc ("Brooks Macdonald") in
respect of the revised terms of the C-ZDPS. Although
the changes to the terms of the C-ZDPS were approved
by all shareholders in March 2013 we continue to seek a
mutually acceptable resolution to the dispute with Brooks
Macdonald.
Market conditions in the second half of 2013 and the
first quarter of 2014 following our strategic review have
not improved and therefore we have not concluded
any exits during this period. We will continue to pursue
opportunities which provide good value for Origo
shareholders in the year ahead.
In line with the strategic changes set out above, we have
taken a number of further steps to simplify our business
and to return capital to the Company.
Towards the end of 2013 we decided to wind up our
MSE Liquidity Fund. The Fund’s performance had been
impacted by political uncertainty in Mongolia and we
expect investor sentiment for this kind of product to be
muted well into 2015. For similar reasons, we have closed
our China Commodity Fund, the China Commodities
Absolute Return Fund Ltd (the “CCF”) to new investors.
The CCF is a commodity long/short hedge fund with a
strong focus on Mongolia based assets and we are now
seeking to gradually unwind this portfolio in an orderly
fashion and return capital to CCF investors.
After the end of the year we agreed to end our partnership
with Ecofin Ltd ("Ecofin") and cease marketing our joint
cleantech fund - China Cleantech Partners LP ("CCP"). In
2011, Origo and Ecofin Water and Power Trust ("EWPO"),
a UK investment trust managed by Ecofin, each funded a
commitment of US$15 million to CCP. In addition, Origo
secured further commitments of, in aggregate, RMB185
million from Chinese state sponsored investment vehicles.
Following the end of the period, EWPO's interest in CCP
was redeemed in full. Origo is now the sole partner of
CCP and holds a majority limited partnership interest in
the associated RMB denominated sub-fund. As a result
Origo now controls CCP, improving our ability to deliver
a return on our investment, while exploring options for
accelerating capital distribution to Origo and our Chinese
partners.
Investments and divestments
In 2013, the Group’s total investments to existing investee
companies decreased to US$9.1 million compared to
US$21.3 million in 2012 reflecting our conservative
approach in current markets. There was no divestment of
unlisted investments in the period.
Investment activities
2011 2012 2013
9.1
21.3
m
$
:
t
i
n
U
83.6
Origo Partners PLC December 2013
03
DIRECTORS' REPORT
Portfolio summary
Portfolio at fair value – by holding period
At 31 December 2013 the carrying value our portfolio,
which comprises interests in 18 companies, decreased
to US$153.8 million from US$209 million as at the end
of 2012. The decrease principally reflects the downward
adjustment in the carrying value of certain of our mining
related investments.
0.3%
3%
48%
49%
Less than 1 year
1-2 years
2-3 years
More than 3 years
As a result of our cautious approach to realisations and
investments, coupled with the revaluation of a number
of holdings, the composition of the portfolio has not
significantly changed compared to the previous year. The
metals and mining sector accounted for 52 per cent. in
2013 (2012: 53 per cent.). Elsewhere, the portion of our
portfolio invested in agriculture increased to 21 per cent.
(2012: 18 per cent.), while our exposure to cleantech
rose to 24 per cent. (2012: 15 per cent.). The consumer,
technology and media portion of our portfolio was at 3 per
cent. in 2013 (2012: 4 per cent.).
Portfolio at fair value – by sector
3%
21%
52%
24%
TMT
Clean tech
Metals & Mining
Agriculture
Reflecting the Group's strategy of investing in privately
held companies, 96 per cent. of the portfolio (in terms
of fair value) as at 31 December 2013 was invested in
unquoted portfolio companies.
The Company's direct holdings in listed companies
included stakes in HaloSource Inc. (LSE: HAL), Kincora
Copper Limited (TSXV: KCC) and Rex International
Holdings Limited (SGX: REXI). The Group also has
indirect interests in quoted stocks through its investments
in China Commodities Absolute Return Ltd managed by
the Group.
Assets under management
The Group defines its assets under management as total
assets of the Group plus the net asset value of (and the
aggregate commitments to) third party funds and other
pools of investments advised by the Group (net of any
commitments to or ownership of the Group in such funds).
Assets under management equalled US$200.9 million.
Total assets of the Group equalled US$200.9 million
compared to US$242.1 million in the previous year.
Profit and Loss
Total administrative expenses, excluding the provision of
performance incentives, bad debt and financial guarantee
contracts, reached US$8.0 million in 2013, which is the
same as 2012.
The Group recorded a loss before tax of US$57.9 million,
compared to a loss before tax of US$67.8 million in the
previous year. The loss is primarily due to unrealised and
realised losses of US$47.6 million on investments.
Balance Sheet
At the end of 2013, the Group had total cash and cash
equivalents of US$35.3 million (2012: US$25.1 million).
Net asset value decreased from US$171.5 million in 2012
to US$135.0 million in 2013, representing a net asset
value per share of US$0.39 as at 31 December 2013, a
20 per cent. decrease from US$0.49 per share in 2012.
Outlook
The weighted average holding period for portfolio
companies is 3.4 years compared to 2.5 years in 2012.
52 per cent. of the portfolio has been held for less than 3
years.
We remain focused In the year ahead on reversing the
negative trend in the value of our assets and realising
our investments as the portfolio matures. Our ability to do
so is, to a great extent, dependent upon four factors: the
04
Origo Partners PLC December 2013
DIRECTORS' REPORT
said, we continue to engage in an ongoing dialogue with
shareholders around the Company’s optimal structure
and strategy.
Chris Andre Rynning
Chief Executive Officer
16 June 2014
economic situation in China; developments in Mongolia;
developments in the international commodity markets;
and our ability to create a sustainable corporate structure
that enables us to focus on carrying out our investment
strategy.
While there are clearly significant challenges facing
Chinese policy makers in the short term, we believe
there is much reason for optimism with regards to
the Chinese economy over the medium to long-term.
Unlike many other countries, China has the capability
to make rapid and significant interventions in markets to
ensure its targets are met. China’s ratio of government
debt to gross domestic product is low and therefore,
in the event of a significant crisis, the Government has
considerable financial firepower to maintain the economy
in a healthy state. It could be argued that, equity markets
have partially priced in a soft-landing as shown by
improving ratings of Chinese companies across the
world. Nonetheless, the market for small cap offerings, in
particular for natural resource related companies, is still
extremely soft and will take time to recover.
There were a number of positive developments in
Mongolia in 2013, which have normalised the political
situation after a turbulent 2011 and 2012. The new
Government, voted into power in first half of 2013, has
taken a more pragmatic and balanced approach with
regards to foreign investment. The implementation of
the New Security Law, the removal of the controversial
Mining Law, and progress with regards to the 106
licenses previously revoked are all to be welcomed.
Yet, while positive developments are being made on the
ground, investor sentiment towards the resource sector
in general, and in respect of Mongolia based assets in
particular, is muted. We remain cautiously optimistic that
this may change, in particular if a resolution is found in
respect of the Oyu Tolgoi dispute.
Our revised strategy recognises that our investments in
private companies are currently priced at the bottom of
the cycle. By their very nature, such assets are illiquid
and the achievement of value accretive exits requires
a favourable market environment coupled with a well-
considered approach to portfolio management that
recognises the specific circumstances of each individual
portfolio investment. While we cannot control the macro
environment, we believe the revised strategy we set out
in August 2013 provides the foundation for us to deliver
the nascent value in our investments. That having been
Origo Partners PLC December 2013
05
DIRECTORS' REPORT
06
Origo Partners PLC December 2013
Portfolio Overview*
DIRECTORS' REPORT
China Rice Ltd
Gobi Coal & Energy Ltd
Celadon Mining Ltd
Abbreviation
Market
Industry Sector
Segment
China Rice
China
Agriculture
Processing
Date of Investment
2010/12/17
Cost of Investment (US$m) 28.00
Gobi
Mongolia
Celadon
China
Metals & Mining
Metals & Mining
Coal
2009/11/24
14.96
Coal
2011/3/29
13.07
Preferred Stock & Loan
Common Stock
Common Stock
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
32.1%
32.26
23.9%
Basis of Valuation
Multiples
14.0%
26.79
19.8%
DCF
9.7%
25.69
19.0%
DCF
Business Description
China Rice, and its subsidiries form
Gobi is a privately held coking
one of China’s leading privately
coal development company
held rice processing and distribution
with significant high quality coal
groups with an annual production
resources in south western
capacity of approximately 300,000
Mongolia, positioned to supply
tons. The Company maintains a
growing demand from China.
strong resource and procurement
base in the north eastern province
of Jilin, one of China’s largest rice
producing belts.
Celadon is a China-focused thermal and
coking coal mining and development
company. Through its Chinese
subsidiaries, Celadon owns three coal
mines and a substantial exploration
area (39km2) in the eastern sector
of the Qitaihe coal-bearing basin in
Heilongjiang Province, northeast China.
Celadon also owns Chang Tan West
which has total reserves and resources
of approximately 1.05 billion tonnes in
Inner Mongolia Province, northwest
China.
Unipower Battery Ltd
Niutech Energy Ltd
Moly World Ltd
NiuTech
Abbreviation
Market
Industry Sector
Segment
Unipower
China
Cleantech
Niutech
China/ROW
Cleantech
Moly World
Mongolia
Metals & Mining
Electrical Storage
Recycling/Waste to energy Molybdenum & Tungsten
Date of Investment
2010/9/3
Cost of Investment (US$m) 13.30
2010/6/22
6.35
2011/6/2
10.00
Preferred Stock & Loan
Preferred Stock
Common Stock
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
16.5%
18.98
14.1%
Basis of Valuation
Multiples
21.1%
12.08
9.0%
Multiples
20.0%
10.00
7.4%
DCF
Business Description
Unipower is a China based provider
Niutech is a provider and operator
of lithium-ion materials and battery
of waste plastic and scrap-
solutions. Producing high-quality
tire recycling solutions. Niutech
material and batteries solution for
provides patent protected recycling
the Electric Vehicle (“EV”) and power
technology which converts waste
storage industries, Unipower is
tires and plastics into valuable
supported by patents, facilities and
products like fuel oil, carbon black
a technical management team with
and steel wire.
more than 20 years of experience.
Moly World is the owner of an
advanced stage molybdenum
exploration project in Mongolia,
known locally as Mandal Moly, which
covers an area of 2,360 hectares
approximately 40 kilometres north
of Tsagaan-Uul Soum, Khuvsgul
Province, in northern Mongolia. The
project has a JORC near surface
compliant resource of 256,000 tons
at 0.126% Mo.
* Top 9 portfolio companies
Origo Partners PLC December 2013
07
DIRECTORS' REPORT
IRCA Holdings Ltd
Kincora Copper Ltd
Rising Technology
Corporation Ltd
Abbreviation
IRCA
Kincora Copper Ltd
Market
Africa/China/India
Mongolia
Industry Sector
Metals & Mining
Metals & Mining
Rising
China
TMT
Segment
Mining services
Copper-gold & gold
Security software
Date of Investment
2007/11/20
Cost of Investment (US$m) 30.00
2011/7/31
9.29
2007/1/11
5.57
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
Common Stock & Loan
Common Stock
Common Stock
49.1%
9.49
7.0%
34.0%
4.06
3.0%
1.6%
3.01
2.2%
Basis of Valuation
Multiples
Adjusted market price
Multiples
Business Description
IRCA provides safety, health,
Kincora is a mining exploration and
Rising is China's dominant anti-
environment, and quality and risk
development company focused on
virus software and content security
management (“SHERQ”) solutions,
copper deposits in Mongolia. Its key
vendor.
focused particularly on the mining,
asset is the Bronze Fox copper-
transport and energy sectors.
gold deposit located in southeast
Mongolia along the Oyu Tolgoi
copper belt.
08
Origo Partners PLC December 2013
DIRECTORS' REPORT
the investee company on matters such as building
and augmenting the management team, implementing
relevant corporate governance and financial control
procedures, defining and executing a growth and
financing strategy, introducing suitable partners and
business opportunities and matters related to future fund-
raisings, acquisitions or exit considerations.
The holding period for investments is expected to vary
depending on the type of investment, the particular
circumstances of the relevant investee company, and
the intended exit route. The holding period for pre-IPO
and expansion stage investments is targeted at between
9 and 24 months and for earlier stage investments at
between 24 and 48 months.
Investment Policy Statement
Origo invests predominantly in privately held companies
across various sectors of China's economy, and in
companies and assets with connections to the Chinese
market, with objective being to provide shareholders
with above market returns, primarily through capital
appreciation.
In terms of stage, Origo generally pursues three kinds of
opportunities:
•
•
•
investments in pre-IPO opportunities, where the
Group can add value through providing assistance
in relation to restructuring, international expansion
and the listing on a domestic or foreign stock
exchange;
profitable, expansion stage companies requiring
financing to meet working capital requirements,
expansion capital and/or as capital to finance
merger and acquisition opportunities; and
s e l e c t e d e a r l i e r - s t a g e c o m p a n i e s , w h i c h
demonstrate compelling prospects for fast-growth
and paths to profitability.
At its present level of capitalisation, Origo is unlikely to
commit in excess of $20 million to any single investee
company at the time of investment. For early-stage
opportunities, initial commitments may be less than $1
million. While Origo does not have any set of gearing
policy investee companies, directly or indirectly, may
themselves have outstanding borrowings.
In addition to investing predominantly in privately held
companies, Origo may, in its absolute discretion, hold or
invest in publicly traded shares, quasi-equity and/or debt
instruments, including convertible or non-convertible debt
securities coupled with warrants and/or options, which
may or may not represent shareholding or management
control. Origo plans to allocate no more than 20 per cent
of available cash resources to investment in publicly
traded equities.
Origo seeks to be an active investor. To the extent
possible, minority investments are structured so as to
ensure adequate minority protection rights, including but
not limited to board participation (via a board director/
observer), membership of supervisory, audit and
oversight committees, as well as specific veto rights over
key corporate decisions. In addition, Origo generally
dedicates at least one other nominee who, together with
the board director/observer, is responsible for assisting
Origo Partners PLC December 2013
09
Officer of CDC Group plc, the UK Government's
development finance institution, Mrs Jemmett-Page
oversaw the implementation and development of ESG
standards across CDC’s extensive emerging markets
private equity portfolio.
Together, these activities underline our commitment to
implementing sustainable and responsible business
practices across our business.
DIRECTORS' REPORT
ESG and Sustainability Statement
Origo takes a responsible approach to business and we
believe we can achieve our financial goals while making a
positive contribution to the communities in which we and
our portfolio companies operate through a commitment
to social and environmental responsibility. Our increasing
activity in the renewable and cleantech sectors reflects
this position. We have a substantial exposure to green
and sustainable companies, and a number of our portfolio
companies such as Niutech Energy, Unipower Battery,
Staur Aqua AS (Aqualyng), HaloSource, and IRCA
provide commercial solutions to environmental and social
problems.
We recognize the importance of retaining our reputation
as a responsible investor, both with potential investee
companies and government authorities in order to ensure
continued access to investment opportunities and create
long-term shareholder value. Therefore, in everything we
do, we seek to further our reputation as a good corporate
citizen that behaves responsibly and complies with all
legal and regulatory requirements.
To this end, in 2012 we developed an Environment, Social
and Governance policy to apply across our business. It
reflects the diverse activities of our investee companies
and is in line with international codes and standards,
including the United Nations Principles for Responsible
Investment. This policy codifies processes we have used
in the past governing areas such as: the protection of
human rights; occupational health and safety standards;
labour relations; environmental protection; and ethical
business practice. We will engage with our shareholders,
Limited Partners and other stakeholders to ensure that
our initiatives in these areas are consistent with best
practice.
Origo is also looking continuously to improve and
educates employees about responsible business practice
in areas including anti-corruption, anti-discrimination and
sustainability. We have adopted a new Diversity Charter
which demonstrates a commitment to cultural, ethnic
and social diversity within our organization. The charter
ensures that we raise awareness of non-discrimination
and diversity issues amongst our employees and promote
pluralism and diversity through our recruitment and career
development processes.
Furthermore, we have strengthened our Board expertise
in this area through the appointment of Shonaid Jemmett-
Page in 2012. In her former role as Chief Operating
10
Origo Partners PLC December 2013
DIRECTORS' REPORT
Directors’ Report
The Directors present their report together with the
audited financial statements for the year ended 31
December 2013.
Principal activities, review of business and future
developments
Results and dividends
The result of the Group for the period is set out on page
14 and shows a loss for the year of US$57,914,000
(2012: profit of US$69,033,000). The limited trading
history of the Group neither justifies nor allows the
payment of a dividend. The Directors are therefore not
able to recommend the payment of a dividend (2011:
US$nil). The retained loss of the year of US$57,914,000
(2012: profit of US$69,033,000) has been transferred to
reserves.
The Group invests predominately in privately held
companies across various sectors of China’s economy,
and in companies and assets with connections to the
Chinese market. The Group’s objective is to provide
shareholders with above market returns, primarily
through capital appreciation, and to generate fees from
consultancy services related to further fundraisings,
M&A and strategic development. The review of business
and future developments is covered in the Chairman’s
Statement and Chief Executive’s Statement.
Directors
At 31 December 2013
Mr. Wang Chao Yong
Mr. Chris A Rynning
Mr. Niklas Ponnert
Mr. Christopher Jemmett
At 31 December 2012
Mr. Wang Chao Yong
Mr. Chris A Rynning
Mr. Niklas Ponnert
Mr. Christopher Jemmett
Options
4,000,000
3,500,000
5,300,000
100,000
Options
4,000,000
3,500,000
5,300,000
100,000
Ordinary shares
Shares in
subsidiaries
3,987,575*
14,570,040**
2,691,009***
300,000****
-
1**
1***
9,996,500****
Ordinary shares
3,987,575*
14,570,040**
2,691,009***
300,000****
Shares in
subsidiaries
-
12,500,001**
1***
9,996,500****
*
**
***
1,047,500 Shares are held in Wang Chao Yong’s name, 1,625,451 Shares are held through ChinaEquity International Holding Company Ltd
and 1,314,624 Shares are held jointly with the EBT pursuant to the Company’s Joint Share Ownership Plan.
12,970,416 Shares are held through Amalie International Holdings Ltd and 1,599,624 Shares are held jointly with the EBT pursuant to the
Company’s Joint Share Ownership Plan.
1 Ordinary share with voting right accounted for 50% of CCF which is one of subsidiaries of the Group is held in Chris Rynning’s name,
12,500,000 Redemption shares without voting right accounted for 2.5% of CCF are held through Amalie International Holdings Ltd, which have
been redeemed in April 2013.
400,000 Shares are held in Niklas Ponnert’s name, 691,385 Shares are held through Paracelsus Holdings Ltd, and 1,599,624 Shares are held
jointly with the EBT pursuant to the Company’s Joint Share Ownership Plan.
1 Ordinary share with voting right accounted for 50% of CCF which is one of subsidiaries of the Group is held in Niklas Ponnert’s name.
****
250,000 Shares are beneficially owned by Mr. Jemmett’s wife, Jessie Kathleen Jemmett.
9,996,500 Redemption shares without voting right accounted for 2.25% of CCF which is one of subsidiaries of the Group.
Origo Partners PLC December 2013
11
DIRECTORS' REPORT
Directors’ responsibilities in respect of the financial
statements
The Directors are responsible for the preparation of
the financial statements. The Directors have elected
to prepare the financial statements in accordance with
applicable law and International Financial Reporting
Standards as adopted by the European Union. In
preparing these financial statements, the Directors are
required to:
select suitable accounting policies and then apply
them on a consistent basis;
Financial statements are published on the Group’s
website in accordance with legislation in the Isle of
Man governing the preparation and dissemination of
financial statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the
Group’s website is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Each of the Directors has taken all the steps they ought
to have taken individually as a Director in order to make
themselves aware of any relevant audit information and
to establish that the Company’s auditors are aware of that
information.
•
•
•
•
make judgments and estimates that are reasonable
and prudent;
Auditors
state whether International Financial Reporting
Standards have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
In accordance with S12(2) of the Isle of Man Companies
Act 1982, Ernst & Young LLC have expressed their
willingness to continue in office and a resolution to
reappoint Ernst & Young LLC will be proposed at the
forthcoming Annual General Meeting.
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the company will continue in business.
By order of the Board
Karl Niklas Ponnert
Chief Financial Officer
16 June 2014
The Directors are responsible for keeping reliable
a c c o u n t i n g r e c o r d s w h i c h c o r r e c t l y e x p l a i n t h e
transactions of the company, and which enable the
financial position of the company to be determined with
reasonable accuracy. 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.
Going concern
After making enquiries, the Directors have a reasonable
expectation that the Company and the Group have
adequate resources to continue in operational existence
for the foreseeable future. Accordingly, they continue to
adopt the going concern basis in preparing the annual
report and accounts.
Auditors and disclosure of information to auditors
As far as each Director is aware, there is no relevant
audit information of which the Company’s auditors are
unaware.
12
Origo Partners PLC December 2013
INDEPENDENT AUDITOR’S REPORT
audited financial statements to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Opinion on financial statements
In our opinion the financial statements:
•
give a true and fair view of the state of the group’s
affairs as at 31 December 2013 and of the group’s
loss for the year then ended; and
•
have been properly prepared in accordance with
International Financial Reporting Standards issued
by the Accounting Standards Board and adopted
for use in the European Union.
Ernst & Young LLC
Chartered Accountants
Isle of Man
16 June 2014
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
We have audited the consolidated financial statements
of Origo Partners Plc (“the group”) for the year ended
31 December 2013 which comprise the consolidated
statement of comprehensive income, consolidated
statement of financial position, consolidated statement
of changes in equity, consolidated statement of cash
flows and the related report notes 1 to 31. The financial
reporting framework that has been applied in their
preparation is applicable law and International Financial
Reporting Standards issued by the Accounting Standards
Board and adopted for use in the European Union.
This report is made solely to the group’s members, as a
body. Our audit work has been undertaken so that we
might state to the group’s members those matters we are
required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other
than the group’s members as a body for our audit work,
for this report or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors’
Responsibilities set out in the directors’ report, the
directors are responsible for the preparation of the
financial statements and for being satisfied that they
give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements
in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards
require us to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the group’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the
overall presentation of the financial statements. In
addition, we read all the financial and non-financial
information in the independent auditors’ report and
Origo Partners PLC December 2013
13
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Consolidated statement of comprehensive income
For the year ended 31 December 2013
Investment loss:
Realised losses on disposal of investments
Unrealised losses on investments
Share of gains/(losses) of jointly controlled entity
Income from loans
Dividends
Fund consulting fee
Consulting services payable
Other income
Performance fee
- Performance incentive
Share-based payments
Other administrative expenses
Net loss before finance costs and taxation
Foreign exchange (losses)/gains
Finance income
Finance cost
Loss before tax
Income tax
Loss after tax
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in
subsequent periods:
Exchange differences on translating foreign operations
Net other comprehensive income to be reclassified to profit
or loss in subsequent periods
Tax on other comprehensive income
Other comprehensive income net of tax
Total comprehensive loss after tax
Loss after tax
Attributable to:
- Owners of the parent
- Non-controlling interests
Total comprehensive loss
Attributable to:
- Owners of the parent
- Non-controlling interests
Basic loss per share
Diluted loss per share
Notes
2
3
4
27
5
9
9
10
2013
US$'000
(7,976)
(39,603)
7
945
80
2012
US$'000
(294)
(64,919)
(13)
2,227
58
(46,547)
(62,941)
35
(151)
32
3,091
(443)
(13,301)
(57,284)
(476)
431
(562)
(57,891)
(24)
(57,915)
129
129
-
129
72
(417)
67
8,311
559
(9,527)
(63,876)
1
529
(4,424)
(67,770)
(1,263)
(69,033)
50
50
-
50
(57,786)
(68,983)
(57,533)
(382)
(57,915)
(57,404)
(382)
(57,786)
(68,249)
(784)
(69,033)
(68,199)
(784)
(68,983)
11
11
(16.51) cents
(19.31) cents
(16.51) cents
(19.31) cents
The accompanying notes form an integral part of these consolidated financial statements.
14
Origo Partners PLC December 2013
Origo Partners Plc
Consolidated statement of financial position
At 31 December 2013
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments at fair value through profit or loss
Loans
Investment in jointly controlled entities
Derivative financial assets
Current assets
Inventories
Trade and other receivables
Loans due within one year
Other current assets
Cash and cash equivalents
Total assets
Current liabilities
Short-term borrowings
Trade and other payables
Performance incentive payable within one year
Financial guarantee contracts
Non-current liabilities
Convertible zero dividend preference shares
Provision
Deferred income tax liability
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Share-based payment reserve
Retained earnings
Translation reserve
Equity component of convertible zero
dividend preference shares
Other reserve
Non-controlling interests
Total equity
Total equity and liabilities
AUDITED FINANCIAL STATEMENTS
Notes
2013
US$'000
2012
US$'000
12
14
15
16
18
15
17
19
19
20
20
21
23
22
10
24
23
25
175
11
111,972
10,030
-
109
122,297
2
3,404
31,726
8,205
35,300
78,637
200,934
160
1,817
233
825
3,035
58,313
1,787
2,830
62,930
134,969
55
150,281
6,741
(49,127)
(1,248)
8,297
(2,193)
112,806
22,163
134,969
200,934
124
11
164,587
7,199
53
927
172,901
-
7,823
36,263
-
25,064
69,150
242,051
-
1,552
233
-
1,785
60,877
5,080
2,809
68,766
171,500
55
150,379
6,109
9,241
(1,377)
7,462
(2,244)
169,625
1,875
171,500
242,051
The consolidated financial statements were approved by the Board of Directors and authorised for issue. They were signed on
its behalf by:
Wang Chao Yong
Executive Chairman
16 June 2014
Chris Andre Rynning
Chief Executive Officer
16 June 2014
Karl Niklas Ponnert
Chief Financial Officer
16 June 2014
The accompanying notes form an integral part of these consolidated financial statements.
Origo Partners PLC December 2013
15
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Consolidated statement of changes in equity
For the year ended 31 December 2013
Attributable to equity holders of the parent
Issued
capital
Share
premium
Share-
based
payment
reserve
Retained
earnings
Equity
component
of CZDP
Other
reserve
Translation
reserve
Total
Non-
controlling
interests
Total
equity
Notes US$'000 US$'000 US$'000 US$'000
US$'000 US$'000
US$'000 US$'000
US$'000 US$'000
56 151,023
5,528
77,490
7,462 (1,950)
(1,427) 238,182
2,388 240,570
At 1 January 2012
Loss for the year
Other comprehensive income
Total comprehensive loss
-
-
-
-
-
-
Own shares acquired
(1)
(644)
Unrealised losses reversed
Share-based payment
expense
26
Minority interests
-
-
-
-
-
-
-
-
-
-
-
581
-
(68,249)
-
(68,249)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(418)
124
-
-
- (68,249)
(784) (69,033)
50
50
-
50
50 (68,199)
(784) (68,983)
-
-
-
-
(1,063)
124
581
-
-
-
-
271
(1,063)
124
581
271
At 31 December 2012
55 150,379
6,109
9,241
7,462
(2,244)
(1,377) 169,625
1,875 171,500
Loss for the year
Other comprehensive income
Total comprehensive income
Restructure CZDP
Own share acquired
Share-based payment
expense
Minority interests
23
26
-
-
-
-
-
-
-
-
-
-
-
(57,533)
-
-
-
(57,533)
-
-
-
-
(98)
-
-
-
-
632
-
(835)
835
-
-
-
-
-
-
-
-
-
-
51
-
-
- (57,533)
(382) (57,915)
129
129
-
129
129 (57,404)
(382) (57,786)
-
-
-
-
-
(47)
632
-
-
-
-
(47)
632
-
20,670
20,670
At 31 December 2013
55 150,281
6,741 (49,127)
8,297 (2,193)
(1,248) 112,806
22,163 134,969
The following describes the nature and purpose of each reserve within parent’s equity:
Reserve
Share premium
Description and purpose
Amounts subscribed for share capital in excess of nominal value.
Share-based payment reserve
Equity created to recognise share-based payment expense.
Equity component of CZDP
Convertible zero dividend preference shares.
Other reserve
Equity created to recognise fair value change of available-for-sale
investments and own share acquired.
Translation reserve
Equity created to recognise foreign currency translation differences.
The accompanying notes form an integral part of these consolidated financial statements.
16
Origo Partners PLC December 2013
Origo Partners Plc
Consolidated statement of cash flows
For the year ended 31 December 2013
Loss before tax
Adjustments for:
Depreciation and amortisation
Performance incentive
Share-based payments
Provision for bad debts
Provision for financial guarantee contracts
Realised losses on disposal of investments
Unrealised losses on investments at FVTPL*
Unrealised losses/(gains) on loans
Fair value losses on derivative financial assets
Share of (gains)/losses of jointly controlled entity
Income from loans
Foreign exchange losses/(gains)
Interest expenses of convertible zero dividend preference shares
Purchases of investments at FVTPL
Purchases of loans
Proceeds from disposals of investments at FVTPL
(Purchase)/disposal of other current assets
Operating loss before changes in working capital and provisions
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
(Increase)/decrease in inventories
Net cash outflow from operations
Investing activities
Purchases of property, plant and equipment
Disposal of a subsidiary
Acquisition of subsidiaries, net of cash acquired
Net cash inflow/(outflow) from investing activities
Financing activities
Repayment of short-term borrowings
Buyback ordinary shares
Transaction costs of buyback shares
Redemption of convertible zero dividend preference shares
Subscription (CCF & MSE)**
Redemption (CCF &MSE)
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Notes
5
4
26
5
21
2
2
2
2
2
2
9
15
12
19
AUDITED FINANCIAL STATEMENTS
2013
US$'000
(57,891)
50
(3,091)
443
4,428
825
7,976
33,404
5,381
818
(7)
(945)
476
434
(476)
(8,626)
1,498
(42)
(15,345)
1,341
265
(2)
2012
US$'000
(67,770)
50
(8,311)
(559)
1,491
-
294
58,946
(90)
6,063
13
(2,227)
(1)
4,282
(11,249)
(10,055)
6,661
11
(22,451)
(568)
753
1
(13,741)
(22,265)
(101)
6,064
21,359
27,322
-
-
-
(3,000)
324
(698)
(3,374)
10,207
29
25,064
35,300
(17)
-
-
(17)
(8,544)
(706)
(1)
-
-
-
(9,251)
(31,533)
(258)
56,855
25,064
* FVTPL refers to fair value through profit or loss
** CCF & MSE refer to China Commodities Absolute Return Ltd and MSE Liquidity Fund
The accompanying notes form an integral part of these consolidated financial statements.
Origo Partners PLC December 2013
17
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements
1 Accounting policies
1.1 Corporate information
The consolidated financial statements of Origo Partners Plc (‘the Company”) and its subsidiaries (together “the
Group”) for the year ended 31 December 2013 were authorised for issue in accordance with a resolution of the
Directors on 16 June 2014. The Company is a limited liability company incorporated and domiciled in the Isle of
Man whose shares are publicly traded on the AIM market of the London Stock Exchange. The registered office is
located at 33-37 Athol Street, Douglas, Isle of Man IM1 1LB. The principal activities of the Group are described
in Note 8.
1.2 Basis of preparation
The Group financial statements are prepared in accordance with International Financial Reporting Standards
issued by the Accounting Standards Board and adopted for use in the European Union and also to comply with
relevant Isle of Man law.
The principal accounting policies applied in the preparation of the consolidated financial information are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
(a)
(b)
The financial information set out below, is based on the financial statements of the Company and its
subsidiaries and associates for the year ended 31 December 2013.
The consolidated financial information has been prepared under the historical cost convention except for
certain financial instruments, which have been measured at fair value, and in accordance with International
Financial Reporting Standards and International Financial Reporting Interpretations Committee’s
interpretations (“IFRIC”) (collectively , “IFRSs”) issued by the International Accounting Standards Board (the
“IASB”).
(c)
Non-controlling interests represent the portion of profit or loss and net assets that is not held by the Group
and are presented separately in the consolidated statement of comprehensive income and within equity in
the consolidated statement of financial position, separately from parent shareholders’ equity.
1.3 Significant accounting judgements, estimates and assumptions
The preparation of consolidated financial information in conformity with IFRSs requires the use of certain critical
accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the consolidated financial information and the reported amounts
of revenue and expenses during the reporting period. Although these estimates are based upon management’s
best knowledge of current events and actions, actual results may differ from those estimates.
The following is a list of accounting policies which cover areas that the Directors consider require estimates and
judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year:
18
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.3 Significant accounting judgements, estimates and assumptions (continued)
(a)
Fair value of unquoted equity instruments
The Group has estimated the value of each of its unquoted equity instruments by using judgement to
select the most appropriate valuation methodology for each investment based on the recommendations
of the International Private Equity and Venture Capital Valuation Guidelines (the “Guidelines”). Valuation
methodologies mainly include the price of recent investments, earnings multiples, industry valuation
benchmarks, available market prices and so on, which may apply individually or in combination. Key
assumptions and judgements of each methodology concerning the future and other key sources of
estimation uncertainty will have a significant risk of causing a material adjustment to the fair value of the
instruments within the next financial year.
(b)
Share-based payments, equity-settled transactions and cash-settled transactions
The Group has applied the requirements of IFRS 2 share-based payment in these consolidated financial
statements.
The Group has issued equity-settled share-based payments to certain directors and employees, and to its
advisors for services provided in respect of the admission of the Company to trading on the AIM market of the
London Stock Exchange. Equity-settled share-based payments to directors and employees are measured
at the fair value of equity instruments awarded at the date of grant. Equity-settled share-based payments to
non-employees are measured at the fair value of goods or services rendered at the date when the goods
or services are received. Where equity investments are granted subject to vesting conditions, share-based
payments are expensed to the profit or loss on a straight-line basis over the vesting period, based on the
Group’s estimate of the number of shares that will eventually vest. Fair value is measured by use of the Black-
Scholes model.
The Group has granted cash-settled share-based payments to certain directors, executives and key
employees under the Company’s joint share ownership scheme ("JSOS"). The cost of cash-settled share-
based payments is measured initially at fair value at the grant date using Black-Scholes option pricing model.
This fair value is expensed over the period until the vesting date with recognition of a corresponding liability.
The liability is remeasured to fair value at each reporting date up to and including the settlement date, with
changes in fair value recognised in employee expense.
When estimating the value of the options and the upper share rights ("USR"), significant assumptions such as
the expected life of the option and the USR, and expected volatility of the share have been applied based on
management’s best estimates.
1.4 Summary of significant accounting policies
The following principal accounting policies have been applied consistently throughout the year in dealing with
items which are considered material in relation to the financial information.
(a)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries as at 31 December 2013.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date when such control ceases. The financial statements
of the subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-
group transactions and dividends are eliminated in full.
Origo Partners PLC December 2013
19
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(a)
Basis of consolidation (continued)
Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit
balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If the Group loses control over a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary
• Derecognises the carrying amount of any non-controlling interest
• Derecognises the cumulative translation differences, recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in other comprehensive income to
profit or loss or retained earnings, as appropriate.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at acquisition date fair value and
the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer
measures the noncontrolling interest in the acquiree at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously
held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss,
this will cease to apply when control is achieved.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed
to be an asset or liability, will be recognised in accordance with IAS 39 in profit or loss. If the contingent
consideration is classified as equity, it should not be remeasured until it is finally settled within equity.
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and
the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the
difference is recognised in profit or loss.
20
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(a)
Basis of consolidation (continued)
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating
unit retained.
(b)
Associates
Associates are all entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights except where the entity has
been classified as held for trading and measured at fair value through profit or loss according to IAS
39 based on the significance the investments are to the Group. This treatment is permitted by IAS 28
investment in Associate, which requires investments held by venture capital organisations to be excluded
from its scope.
Investments in associates are accounted for using the equity method of accounting and are initially
recognised at cost. The Group’s investments in associates include goodwill (net of any accumulated
impairment loss) identified on acquisition.
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the statement
of comprehensive income, and its share of post-acquisition movements in reserves are recognised
in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of
the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group does not recognise further losses, unless
it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the
Group’s interests in the associate. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of associates have been changed
where necessary to ensure consistency with the policies adopted by the Group.
(c)
Jointly controlled entities
Interests in jointly controlled entities which are held for operating activity are accounted for in accordance
with IAS 31 using the equity method of accounting. Interest in jointly controlled entities that are held as
part of Group’s investment portfolio are carried in the balance sheet at fair value through profit or loss in
accordance with IAS39, with changes in fair value recognised in the statement of comprehensive income in
the period of the change.
Origo Partners PLC December 2013
21
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(d)
Foreign currencies
• Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (the “functional currency”). The
consolidated financial statements are presented in United States dollar, which is the Group’s presentation
currency.
• Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the statement of comprehensive
income.
Changes in the fair value of monetary securities denominated in foreign currencies classified as available
for sale are analysed between translation differences resulting from changes in the amortised cost of the
security, and other changes in the carrying amount of the security. Translation differences are recognised
in profit or loss, and other changes in the carrying amount are recognised in other reserve.
Non-monetary financial assets and liabilities that are carried at historic cost are translated using the
exchange rate as at the dates of initial transactions and are not re-measured. Translation differences on
non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are
recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary
financial assets, such as equities classified as available for sale, are included in the fair value reserve in
equity.
• Group companies
The results and financial position of all Group entities, none of which has the currency of a
hyperinflationary economy that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(I)
assets and liabilities for each statement of financial position presented are translated at the closing
rate at the date of that statement of financial position;
(II)
income and expenses for each statement of comprehensive income are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated at the
dates of the transactions); and
(III)
all resulting exchange differences are recognised in the statement comprehensive income as other
comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
22
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(e)
Financial assets
The Group classifies its financial assets, at initial recognition, into one of the following categories:
investments at fair value through profit or loss, loans and receivables, derivative financial instruments and
other financial assets, as appropriate, depending on the purpose for which the asset was acquired. The
Group’s accounting policy for each category is as follows:
• Investments at fair value through profit or loss
These financial assets are designated by the Board of Directors at fair value through profit or loss at
inception, which include debt and equity securities, and derivatives, upon initial recognition on the basis
that they are part of a group of financial assets which are managed and have their performance evaluated
on a fair value basis, in accordance with the risk management and investment strategies of the Group.
Recognition / Derecognition:
Regular acquisitions and disposals of investments are recognised on the trade date on which the Group
received acquisitions of investments or delivered disposals of investments. A fair value through profit or
loss asset is derecognised when the Group loses control over the contractual rights that comprise that
asset. This occurs when rights are realised, expire or are surrendered and the rights to receive cash
flows from the investment have expired or the Group has transferred substantially all risks and rewards of
ownership. Fair value through profit or loss assets that are derecognised and corresponding receivables
from the buyer for the payment are recognised as of the date the Group commits to sell the assets.
Measurement:
Financial assets held at fair value through profit or loss is initially recognised at fair value. Transaction
costs are expensed in the profit or loss. Subsequent to initial recognition, all financial assets and financial
liabilities are measured at fair value. Gains and losses arising from changes in the fair value of the
financial assets held at fair value through profit or loss are presented in the profit or loss in the period in
which they arise.
Dividend income from investments at fair value through profit or loss is recognised in the profit or loss
within other income when the Group’s right to receive payments is established.
Fair value estimation:
The fair value of financial instruments traded in active markets (such as publicly traded securities) is
based on quoted market prices at the reporting date. The quoted market price used for financial assets
held by the Group is the current bid price. The fair value of financial instruments that are not traded in an
active market (for example, PLUS listed securities and unlisted private companies) is determined by using
valuation techniques in accordance with the Guidelines. Pursuant to the Guidelines, the Group believes
the following techniques applied individually, or in combination, are the most suitable ones for the Group’s
current portfolios:
Origo Partners PLC December 2013
23
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(e)
Financial assets (continued)
• Investments at fair value through profit or loss (continued)
Fair value estimation (continued):
(I)
Price of recent investments: When valuing investments on the basis of the price of recent
investments, the cost of the investment itself or the price at which a significant amount of new
investment into the relevant investee company was made to estimate the fair value of the
investment, but only for a limited period following the date of the relevant transaction. During the
limited period following the date of the relevant transactions, changes or events subsequent to the
relevant transaction which would imply a change in the investment’s fair value have been assessed.
(II)
Earnings multiples: When valuing investments on a multiple basis, the Group has abided by the
following principles:
i.
apply a multiple that is appropriate and reasonable (giving the risk profile and earnings growth
prospects of the underlying company) to the maintainable earnings of the underlying company;
ii.
adjust the amount derived in (i) above for surplus assets or excess liabilities and other relevant
factors to derive the enterprise value for the underlying company;
iii.
iv.
deduct from the enterprise value all amounts relating to financial instruments ranking ahead of
the highest ranking instrument of the Group in a liquidation and taking into account the effect of
any instrument that may dilute the Group’s investments in order to derive the gross attributable
enterprise value;
apply an appropriate marketability discount to the gross attributable enterprise value derived
in (iii) above in order to derive the net attributable enterprise value. The marketability discount
relates to an investment rather than to the underlying business. Marketability discounts will vary
from situation to situation and is a question of judgement. When a discount is applied, relevant
factors in determining the appropriate marketability discount in each particular situation will be
considered. A discount in the range of 20% to 30% (in steps of 5%) is generally used in practice,
depending upon the particular circumstances; and
v.
apportion the net attributable enterprise value appropriately between the relevant financial
instruments.
(III)
Discounted cash flow (“DCF”): Fair value is estimated by deriving the present value of the investment
using reasonable assumptions of expected future cash flows and the terminal value and date, and
the appropriate risk-adjusted discount rate that quantifies the risk inherent to the investment. The
discount rate is estimated with reference to the market risk-free rate, a risk adjusted premium and
information specific to the investment or market sector.
24
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(e)
Financial assets (continued)
Fair value estimation (continued):
(IV)
Industry valuation benchmarks: The use of industry benchmarks is only likely to be reliable and
therefore appropriate as the main basis of estimating fair value in limited situations, and is more
likely to be useful as a sense of check of values produced using other methodologies. The Group
has primarily relied on such metrics to validate the outcome produced by other valuation techniques.
• Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted
on an active market. Income from loans and receivables is recognised as it accrues by reference to the
principal outstanding and the effective interest rate applicable, which is the rate that exactly discounts the
estimated future cash flows through the expected life of the financial asset to the asset’s carrying value.
The losses arising from impairment are recognised in the statement of comprehensive income.
This category generally applies to trade and other receivables. For more information on receivables, refer
to Note 18.
• Derivative financial instruments
Derivative financial instruments are held at fair value and changes in fair value are recognised in profit or
loss of the statement of comprehensive income.
(f) Financial liabilities
The Group’s financial liabilities include trade and other payables, financial guarantee contracts and
preference shares.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The measurement of financial liabilities depends on their classification, as described below:
• Financial guarantee contracts
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made
to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due
in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially
as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the
guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure
required to settle the present obligation at the reporting date and the amount recognised less cumulative
amortisation.
Origo Partners PLC December 2013
25
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(f)
Financial liabilities (continued)
• Preference shares
Convertible Zero Dividend Preference Shares (“CZDP”) are regarded as a compound financial instrument,
consisting of a liability component and an equity component. The fair value of the liability component
is estimated at the date of issue using the prevailing market interest rate for similar bond without early
redemption or equity conversion option. The difference between the proceeds of the CZDP issue and
the fair value of the liability component of the CZDP is assigned to the equity component of the CZDP
representing the embedded equity conversion option, and the derivative financial assets representing the
embedded early redemption option.
Issue costs were allocated among the liability, and equity components of the CZDP and the derivative
financial assets based on their relative carrying amounts at the date of issue.
The interest charges on the CZDP liability component is computed using the prevailing market interest
rate for similar bond without early redemption or equity conversion option.
• Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of profit or loss.
(g)
Cash and cash equivalents and short-term borrowings
Cash and cash equivalents are defined as cash in hand, demand deposits, time deposit and short-
term, highly liquid investments that are readily convertible into known amounts of cash, are subject to an
insignificant risk of changes in value, and have a short maturity, generally less than three months, less bank
overdrafts which are repayable on demand and form an integral part of the Group’s cash management. For
the purpose of the statement of financial positions, cash and bank balances comprise cash on hand and at
banks, including term deposits, which are not restricted as to use.
Short-term borrowings are made for varying periods of between three months and twelve months,
depending on the immediate cash requirements of the Group, and pay interest at the respective short-term
borrowing rates.
(h)
Share-based payments
Employees (including senior executives) of the Group receive remuneration in the form of share-based
payment transactions, whereby employees render services as consideration for equity instruments (“equity-
settled transactions”). Certain directors, executives and key employees of the Group are granted share
appreciation rights, which can only be settled in cash (“cash-settled transactions”). Advisors receive equity-
settled options in relation to the Company’s admission to trading on the AIM market of the London Stock
Exchange.
26
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(h)
Share-based payments (continued)
The cost of these options with employees are measured by reference to the fair value of the equity
instruments awarded at the date of grant, whereas those with non-employees are measured at the fair
value of goods or services received at the date when the goods or services have been received. The fair
value is determined by using Black-Scholes model, further details of which are given in note 27.
Equity-settled transactions
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award (the “vesting date”). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the Group’s best estimate of the number of equity instruments that
will ultimately vest. The profit or loss charge of credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period and is recognised in employee expense (see
Note 6).
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether
or not the market condition is satisfied, provided that all other performance and/or service conditions are
satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense
as if the terms had not been modified. An additional expense is recognised for any modification, which
increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award, and designated as a replacement award on the date that it is granted,
the cancelled and new awards are treated as if they were a modification of the original award, as described
in the previous paragraph.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of
earnings per share.
Cash-settled transactions
The cost of cash-settled transactions is measured initially at fair value at the grant date using Black-Scholes
option pricing model, further details of which are given in Note 27. This fair value is expensed over the
period until the vesting date with recognition of a corresponding liability. The liability is remeasured to fair
value at each reporting date up to and including the settlement date, with changes in fair value recognised
in employee expense (see Note 6).
Origo Partners PLC December 2013
27
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(i)
Taxes
Current Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted at the reporting date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the
statement of comprehensive income. Management periodically evaluates positions taken in the tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred Tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between
the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(I)
(II)
where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries and associates
where the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax credits and unused tax
losses can be utilised, except:
(I)
(II)
where the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries and
associates, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted at the reporting date.
28
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(i)
Taxes (continued)
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Income taxes are recognised in the profit or loss or directly in equity except when a tax exemption has been
granted.
(j)
Performance incentive payable
Performance incentive payable is only accrued on those investments (classified as investments at fair value
through profit or loss and loans) in which the investment’s performance conditions, measured at the end
of each reporting period, would be achieved if those investments were realised at fair value. Fair value is
determined using the Group’s valuation methodology and is measured at the end of each reporting period.
A provision is made based on the Group’s share of profits, taken into account, the overall performance of
the Company’s portfolio and return to shareholders, subject to the discretion of the Board of Directors.
Any changes in the performance incentive provision will be reflected in the line item of the statement of
comprehensive income in which the expense establishing the provision was originally recorded.
(k)
Investment Income (Loss)
Investment income (loss) derived from the investment activities is equivalent to “revenue” for the purposes
of IAS1. Investment income (loss) is analysed into the following components:
•
•
•
•
•
Realised gains (losses) on the disposal of investments are the difference between the fair value of the
consideration received less any directly attributable costs, on the sale of equity and the repayment of
loans and receivables, and its carrying value at the start of the accounting period.
Unrealised gains (losses) on the revaluation of investments are the movement in the carrying value of
investments between the start and end of the accounting period.
Share of profit (loss) of the associate and joint controlled entity are the Group’s share of the net profit (loss)
of the associate and joint controlled entity accounted for using the equity method as per its ownership
interest in the associate and joint controlled entity.
Income (Loss) from loans is recognised on a time proportion basis as it accrues by reference to the
principal outstanding and the effective interest rate applicable.
Dividends earned on equity investments are recognised when the shareholders’ rights to receive payment
have been established.
(l)
Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when the Group has a legal or
constructive obligation arising as a result of a past event, which will probably result in an outflow of
economic benefits that can be reasonably estimated.
Origo Partners PLC December 2013
29
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(l)
Provisions and contingent liabilities (continued)
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be
estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of an outflow
of economic benefits is remote. Possible obligations, the existence of which will only be confirmed by the
occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities
unless the probability of an outflow of economic benefits is remote.
(m)
New and revised international financial reporting standards that are effective or early adopted in
2013 and relevant to the Group
The IASB has issued the following new and revised IFRSs (including International Accounting Standards
(“IASs”)) and IFRIC interpretations that are effective as of 1 January 2013:
IAS 1 Presentation of Financial Statements
IFRS 7 Amendment to offsetting financial assets and liabilities
IFRS 13 Fair value measurement
IAS 19 Amendment to employee benefits
The amendments to IAS 1 introduce a grouping of items presented in other comprehensive income (OCI).
Items that could be reclassified (or recycled) to profit or loss at a future point in time (e.g., net gain on
hedge of net investment, exchange differences on translation of foreign operations, net movement on
cash flow hedges and net loss or gain on available –for-sale financial assets) now have to be presented
separately from items that will never be reclassified (e.g., actuarial gains and losses on defined benefit plan
and revaluation of land and building). The amendment affected presentation only and had no impact on the
Group’s financial position or performance.
IFRS 13 establishes a single source of guidance under IFRS for all fair value measures. IFRS 13 does not
change when an entity is required to use fair value, but rather provides guidance on how to measure fair
value under IFRS when fair value is required and permitted. IFRS 13 defines fair value as an exit price.
As a result of the guidance in IFRS 13, the Group reassessed its policies for measuring fair value. The
application of IFRS 13 has not materially impacted the fair value measurements carried out by the Group.
The IFRS 13 also requires additional disclosures, and these are provided in Note 14.
Other amendments apply for the first time in 2013. However, they do not impact the financial statement of
the Group.
30
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(n)
Standards issued but not yet effective
Standards issued but not yet effective up to the date of issuance of the Group’s financial statements are
listed below. This listing is of standards and interpretations issued that the Group reasonably expects to be
have an impact on disclosures, financial position or performance when applied at a future date.
Effective for period beginning on or after
IFRS 9 Financial instruments-classification and measurement
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interest in other entities
IAS 27 Amendment to separate financial statements
IAS 28 Amendment to Investments in associates and joint ventures
IAS 32 Amendment to offsetting financial assets and financial liabilities
possibly 1 January 2018
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
With the exception of IFRS 10, 11, 12 and IAS 27 and 28 the Directors do not anticipate that the adoption of
these standards and interpretations will have a material impact on the financial statements in the period of
initial application and have decided not to adopt early.
The initial application of IFRS 10, 11, 12 and IAS 27 and 28 could have a material effect on the financial
statements of the Group. The key impact will be on the consolidation of portfolio investments and funds
managed by Origo in the Group financial statements. The development of these standards and industry
interpretation is being closely monitored including the recent issue of an Investment Entity which exempts
qualifying entities from consolidation under IFRS 10.
2 Investment loss
Realised losses on disposal of investments
- Investments at FVTPL
- Loans
- Subsidiary
- Associate
- Available-for-sale investments
Unrealised losses on investments
- Investments at FVTPL
- Loans
- Derivative financial assets
Share of profits/(losses) of jointly controlled entity
Income from loans
Dividends
Total
2013
US$'000
(7,976)
(3,002)
(4,791)
(268)
85
-
(39,603)
(33,404)
(5,381)
(818)
7
945
80
2012
US$'000
(294)
28
(180)
-
-
(142)
(64,919)
(58,946)
90
(6,063)
(13)
2,227
58
(46,547)
(62,941)
Origo Partners PLC December 2013
31
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
3 Consulting services receivable/(payable)
Consulting services receivable
Consulting services payable
Total
4 Performance incentive
Payable within one year
Provision for performance incentive payable over one year
Total
2013
US$'000
26
(177)
(151)
2013
US$'000
-
3,091
3,091
2012
US$'000
311
(728)
(417)
2012
US$'000
(333)
8,644
8,311
For the year ended 31 December 2013, performance incentive accruals of US$1,622,083 were approved by
the board of directors of the Company (other than Chris Rynning and Niklas Ponnert) at the board meeting held
on 16 June 2014. The performance incentive are accrued and paid to Origo Advisers Ltd. Refer to Note 28 for
details on Origo Advisers Ltd.
In determining the amount to be accrued, the board (i) assessed the amount of performance incentives arising
on each and every individual investment under the terms of the Scheme; and (ii) capped the total amount to
be accrued at the higher of a) 20 per cent of the accumulated gain (realised and unrealised) of the Company’s
portfolio of investments taking into account write-offs, realisations, and movements in the fair value of all
investment completed from the time of admission until the balance sheet date and previous payments made
under the Scheme; and b) 10 per cent of the accumulated gain (realised and unrealised) over the 10% hurdle on
applicable companies in the Company’s portfolio of Investments.
5 Other administrative expenses
Employee expenses
Professional fees
Including:
- Audit fees
Depreciation expenses
Provision for bad debts*
Provision for financial guarantee contracts
Others
Total
2013
US$'000
(3,952)
(2,133)
(288)
(50)
(4,428)
(825)
(1,913)
2012
US$'000
(4,418)
(1,405)
(261)
(50)
(1,491)
-
(2,163)
(13,301)
(9,527)
*
Provision for bad debts of US$3.4 million of US$4.4 million of other receivables due from R.M.Williams
Agricultural Holdings Pty Ltd. Provision has been recognised only on receivables where it is considered
there is a greater than 50% risk of failure.
32
Origo Partners PLC December 2013
Origo Partners Plc
Notes to the financial statements (continued)
6 Information regarding directors and employees
Average number of employees of the Group
Management*
Investment and transaction team
Finance and accounting
Administration and HR
Design and IT
Trading sales
Geologists
AUDITED FINANCIAL STATEMENTS
Year ended
31 December 2013
Year ended
31 December 2012
Number
Number
2
8
7
6
-
1
1
25
2
23
12
9
2
1
3
52
The aggregate payroll costs of these employees were as follows:
US$'000
US$'000
Wages and salaries
Share-based payments
Social security costs
3,724
443
228
4,395
4,196
(559)
222
3,859
* Management includes Mr. Chris A Rynning, the Chief Executive Officer and Mr. Niklas Ponnert, the Chief
Financial Officer.
7 Directors’ remuneration
Directors' emoluments
Share-based payment expenses
2013
US$'000
2012
US$'000
1,094
1,444
146 (712)
1,240
732
Directors’ remuneration for the year 2013 and the number of options held were as follows:
Name
Mr. Wang Chao Yong
Mr. Chris A Rynning
Mr. Niklas Ponnert
Mr. Christopher Jemmett
Mr. Lionel de saint Exupery
Mr. Tom Preststulen
Ms. Shonaid Jemmett Page
Salaries*
US$'000
150
Director Fee
US$'000
-
Share-based
payment**
US$'000
(36)
Total
US$'000
114
330
290
-
-
-
-
770
-
-
111
75
75
63
324
91
91
-
-
-
-
421
381
111
75
75
63
2013
Number of
options
4,000,000
3,500,000
5,300,000
100,000
-
-
-
146
1,240
12,900,000
Origo Partners PLC December 2013
33
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
7 Directors’ remuneration (continued)
Directors’ remuneration for the year 2012 and the number of options held were as follows:
Name
Mr. Wang Chao Yong
Mr. Chris A Rynning
Mr. Niklas Ponnert
Mr. Christopher Jemmett
Mr. Lionel de Saint Exupery
Mr. Tom Preststulen
Ms. Shonaid Jemmett Page
* Short term employee benefits
Salaries*
US$'000
150
Director Fee
US$'000
-
Share-based
payment**
US$'000
(356)
Total
US$'000
(206)
610
465
-
-
-
-
1,225
-
-
114
41
39
25
219
(178)
(178)
-
-
-
-
432
287
114
41
39
25
2012
Number of
options
4,000,000
3,500,000
5,300,000
100,000
-
-
-
(712)
732
12,900,000
** Share-based payment refers to expenses arising from the Company’s share option scheme (note 27).
8 Operating segment information
Operating segments are components of the entity whose results are regularly reviewed by the entity’s chief
operating decision-maker to make decisions about resources to be allocated to the segment and to assess its
performance. The chief operating decision-maker for the Group is considered to be the Chief Executive Officer.
The Group’s operating segments have been defined based on the types of investments which was equity
investment, debt instrument and partnership interest in 2013 and 2012.
For the year ended 31 December 2013
Unlisted
Listed
Equity
$'000
Debt
$'000
Partnership
$'000
Total
$'000
Equity
$'000
Debt Partnership
$'000
$'000
Total
$'000
Total
$'000
Investment loss:
Realised losses on disposal of
investments
Unrealised losses on
investments
Share of gains of jointly
controlled entity
Income from loans
Dividends
Total
7
-
-
-
734
-
(32,231)
(9,520)
Net divestment/(investment)
Net proceeds of divestment
-
-
Investment
Balance sheet
(232)
(8,626)
Investment portfolio
108,449
39,408
(2,218)
(4,791)
-
(7,009)
(967)
-
-
(967)
(7,976)
(30,020)
(5,463)
-
(35,483)
(3,979)
(141)
-
(4,120)
(39,603)
-
-
-
-
-
-
7
734
-
-
-
80
(41,751)
(4,866)
-
211
-
70
-
1,498
(8,858)
(244)
-
-
-
-
-
-
-
-
-
211
80
7
945
80
(4,796)
(46,547)
1,498
1,498
(244)
(9,102)
147,857
3,632
2,348
-
5,980
153,837
The Group’s geographical areas based on the location of investment assets (non-current assets), are defined
primarily as China, Mongolia and South Africa, as presented in the following table.
34
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
8 Operating segment information (continued)
For the year ended 31 December 2013 (continued)
Europe
China
Mongolia Rest of Asia
North
America
$'000
$'000
$'000
$'000
$'000
South
Africa
$'000
Australia
Total
$'000
$'000
-
85
(1,041)
-
(594)
-
(6,426)
(7,976)
(695)
(3,128)
(30,976)
327
(91)
(5,040)
-
(39,603)
-
194
-
7
540
63
211
17
-
-
-
-
-
-
-
-
-
-
-
-
7
945
80
(501)
(2,433)
(31,789)
327
(685)
(5,040)
(6,426)
(46,547)
-
(1,808)
-
-
818
(244)
-
-
680
-
-
1,498
-
(5,111)
(1,939)
(9,102)
Investment income/(losses):
Realised (losses)/gains on
disposal of investments
Unrealised (losses)/gains on
investments
Share of gains of jointly
controlled entity
Income from loans
Dividends
Total
Net divestment/(investment)
Net proceeds of divestment
Investment
Balance sheet
Investment portfolio
6,535
94,434
42,889
327
167
9,485
-
153,837
For the year ended 31 December 2012
Unlisted
Listed
Equity
$'000
Debt
$'000
Partnership
$'000
Total
$'000
Equity
$'000
Debt Partnership
$'000
$'000
Total
$'000
Total
$'000
Investment loss:
Realised (losses)/gains on
disposal of investments
Unrealised (losses)/gains on
investments
Share of loss of jointly
controlled entity
Income from loans
Dividends
Total
(209)
(180)
(49,568)
(3,914)
(13)
-
-
58
2,130
-
(49,732)
(1,964)
Net divestment/(investment)
Net proceeds of divestment
-
-
-
-
-
-
-
-
-
(389)
95
-
(53,482)
(11,196)
20
(13)
2,130
58
-
-
-
-
97
-
(51,696)
(11,101)
117
-
6,672
-
Investment
(992)
(7,586)
(2,500)
(11,078)
(7,757)
(2,469)
Balance sheet
Investment portfolio
140,233
41,196
15,000
196,429
10,111
2,489
-
-
-
-
-
-
-
-
-
95
(294)
(11,176)
(64,658)
-
(13)
97
-
2,227
58
(10,984)
(62,680)
6,672
6,672
(10,226)
(21,304)
12,600
209,029
Origo Partners PLC December 2013
35
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
8 Operating segment information (continued)
For the year ended 31 December 2012 (continued)
Europe
China
Mongolia Rest of Asia
North
America
$'000
$'000
$'000
$'000
$'000
South
Africa
$'000
Australia
Total
$'000
$'000
Investment income/(losses):
Realised (losses)/gains on
disposal of investments
Unrealised (losses)/gains on
investments
Share of loss of jointly
controlled entity
Income from loans
Dividends
Total
(327)
1,579
(1,546)
(789)
11,209
(43,505)
-
(13)
204
-
895
53
-
97
5
(912)
13,723
(44,949)
Net divestment/(investment)
Net proceeds of divestment
11
3,905
2,756
Investment
(1,037)
(10,785)
(8,092)
Balance sheet
Investment portfolio
5,423
112,686
75,484
-
-
-
-
-
-
-
-
-
-
-
-
(294)
(1,154)
98
(30,517)
(64,658)
-
-
-
-
-
-
-
(13)
1,031
2,227
-
58
(1,154)
98
(29,486)
(62,680)
-
-
-
(1,390)
-
-
6,672
(21,304)
1,535
9,414
4,487
209,029
9 Finance income and costs
Finance income
Bank interest
Finance costs
Bank charges
Interest expenses of convertible zero
dividend preference shares
10 Income tax
2013
US$'000
2012
US$'000
431
529
431
529
(128)
(142)
(434)
(4,282)
(562)
(4,424)
As the Company is not in receipt of income from Manx land or property and does not hold a Manx banking
licence, it is taxed at the standard rate of 0% on the Isle of Man. The company is resident for tax purposes in the
Isle of Man and subject to corporate income tax at the standard rate of 0% and as such no provision for tax in
the Isle of Man has been made.
36
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
10 Income tax (continued)
Current taxes
Current year
Deferred taxes
Deferred income taxes*
Total income taxes in the statement of comprehensive income
2013
US$'000
(3)
(21)
(24)
2012
US$'000
-
(1,263)
(1,263)
*
The deferred income tax relates to fair value gain of Celadon Mining Ltd, Niutech Energy Ltd, Unipower
Battery Ltd and China Rice Ltd, estimated in accordance with the relevant tax laws and regulations in the
PRC based on a tax rate of 10%.
The tax expense for the year can be reconciled per the statement of comprehensive income as follows:
Loss before tax
Profit before tax multiplied by rate of corporate income tax in the Isle
of Man of 0% (2012: 0%)
Effects of:
Current tax on realised gains on investments
Deferred tax on unrealised gains on investments
Total income taxes in the statement of comprehensive income
Deferred income taxes
Opening deferred income tax liability
Income in accounts taxable in the future
Recognised through statement of comprehensive income
Income in accounts taxable in the future
Closing deferred income tax liability
Income in accounts taxable in the future
2013
US$'000
(57,891)
2012
US$'000
(67,770)
-
(3)
(21)
(24)
-
-
(1,263)
(1,263)
2013
US$'000
2,809
2,809
2012
US$'000
1,546
1,546
21
21
1,263
1,263
2,830
2,830
2,809
2,809
Origo Partners PLC December 2013
37
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
11 Earnings per share
Numerator
Loss for the period attributable to owners of the parent
2013
US$'000
2012
US$'000
as used in the calculation of basic loss per share
(57,533)
(68,249)
Loss for the period attributable to owners of the parent
as used in the calculation of diluted loss per share
(57,533)
(68,249)
Denominator
Weighted average number of ordinary shares for basic LPS
Effect of dilution:
Share options
Convertible preference shares
2013
Number of
shares
348,560,156
2012
Number of
shares
353,368,474
-
-
-
-
Weighted average number of ordinary shares adjusted for the effect of dilution
348,560,156
353,368,474
Basic LPS
Diluted LPS
(16.51) cents
(19.31) cents
(16.51) cents
(19.31) cents
12 Property, plant and equipment
Fixtures and
fittings
US$'000
Computer
equipment
US$'000
Vehicles
US$'000
Machinery
equipment
US$'000
Total
US$'000
Cost
At 1 January 2012
Additions
Disposal
At 31 December 2012
Additions
Disposal
At 31 December 2013
Accumulated depreciation
At 1 January 2012
Charge for the year 2012
Disposal
At 31 December 2012
Charge for the year 2013
Disposal
At 31 December 2013
Net book value
At 31 December 2012
At 31 December 2013
39
-
-
39
3
-
42
26
5
-
31
4
-
35
8
7
102
17
-
119
11
2
128
54
17
-
71
16
1
86
48
42
64
48
- -
-
64
89
-
153
-
48
-
-
48
4
12
12 16
- -
16 28
16
15
-
31
48
122
-
44
20
4
253
17
-
270
103
2
371
96
50
-
146
51
1
196
124
175
38
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
13 Investments in subsidiaries
The principal subsidiaries of the Group, all of which have been included in these consolidated financial
statements are as follows:
Country of
incorporation
Malaysia
Proportion of
ownership interest
at 31 December 2013
100%
Proportion of
ownership interest
at 31 December 2012
100%
Name
Ascend Ventures Ltd
Origo Resource Partners Ltd
PHI International Holding Ltd
Origo Partners MGL LLC
PHI International (Bermuda) Holding Ltd*
Ascend (Beijing) Consulting Ltd**
Origo Asset Management Ltd
China Venture Capital GP Ltd
Guernsey
Bermuda
Mongolia
Bermuda
China
Cayman
Cayman
China Commodities Absolute Return Ltd
Isle of Man
ISAK International Holding Ltd**
British Virgin Islands
China Venture Capital AMC Ltd
China Cleantech Partners, L.P.
China CleanTech AMC Ltd
China CleanTech GP Ltd
MSE Liquidity Fund
* Owned by Origo Resource Partners Ltd
** Owned by Ascend Ventures Ltd
Cayman
Cayman
Cayman
Cayman
Bermuda
100%
100%
100%
100%
100%
100%
100%
90.7%
71.2%
70%
62%
50%
50%
-
100%
100%
100%
100%
100%
100%
100%
80.3%
71.2%
70%
50.1%
50%
50%
81.5%
• Consolidation of China Cleantech Partners, L.P. (“CCP”), China CleanTech GP Ltd (“GP”) and China
CleanTech AMC Ltd (“AMC”)
CCP is a private equity fund focusing on China's cleantech sectors, jointly formed and co-managed by the
Group and EFMI Limited on 50/50 basis via GP and AMC, the management companies for CCP.
On 7 November 2013, the Group’s ownership increased to 62% following the partial redemption by Ecofin
Water & Power Opportunities Plc ("EWPO"), and the Group’s exercisable call options to purchase all of EFMI
Limited’s interests in GP and AMC as at 31 December 2013. The Group has consolidated the separate assets
and liabilities of CCP, GP and AMC from 7 November 2013 and has consolidated the transactions of CCP,
GP and AMC for the period from 7 November 2013 to 31 December 2013. For details on the exercisable call
options refer to Note 31.
The Group has elected to measure the non-controlling interests in CCP, GP and AMC at the proportionate
share of the acquiree’s identifiable net assets.
Origo Partners PLC December 2013
39
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
13 Investments in subsidiaries (continued)
The assets and liabilities of CCP, GP and AMC at the date of consolidation on 7 November 2013 and at 31
December 2013 were as follows:
7 November 2013
31 December 2013
US$’000
US$’000
CCP
GP
AMC
CCP
GP
AMC
Non-current assets
Investments at fair value through profit or loss
Property, plant and equipment
Intangible assets
Current assets
Cash and cash equivalents
Other receivables
Other current assets
Total assets
Current liabilities
Other payables
Short-term borrowings
Total liabilities
Total identifiable net assets at fair value
Non-controlling interest
Goodwill arising on acquisition
Interest in subsidiaries at fair value
-
-
-
30,081
-
8,140
38,221
(637)
-
(637)
37,584
13,314
-
24,270
312
-
-
11
-
-
-
3
3
-
-
-
26
158
30,150
-
-
8,201
312
-
-
11
-
-
323
190
38,351
323
(30)
(220)
(250)
73
36
-
37
(41)
(100)
(141)
49
24
-
25
(763)
-
(763)
37,588
13,315
-
-
(30)
(220)
(250)
73
36
-
-
From 7 November 2013 to 31
December 2013
US$’000
GP
AMC
CCP
2013
US$’000
GP
CCP
Investment income:
Dividends
Other administrative expenses
Net loss before finance costs and taxation
Foreign exchange losses
Finance cost
Loss before tax
Income tax
Loss after tax
Other comprehensive income:
Exchange differences on translating foreign
operations
Other comprehensive income net of tax
Total comprehensive income/(loss) after tax
Attributable to:
- Owners of the parent
- Non-controlling interests
63
63
(162)
(99)
(160)
(18)
(277)
-
(277)
281
281
4
3
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(52)
(52)
-
-
(52)
-
(52)
-
-
(52)
(26)
(26)
252
252
(257)
(5)
(380)
(354)
(739)
-
(739)
1,153
1,153
414
-
-
-
-
(3)
(3)
-
(1)
(4)
-
(4)
-
-
(4)
-
-
-
5
3
16
120
-
144
(47)
(100)
(147)
(3)
(1)
-
-
AMC
162
162
(193)
(31)
-
(1)
(32)
-
(32)
5
5
(27)
-
-
40
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss
As at 31 December 2013
Name*
TPL GmbH******
Trafigura Origo Joint Venture LLC*****
Country of
incorporation
Germany
Mongolia
IRCA Holdings Ltd.
British Virgin Islands
Shanghai Yi Rui Tech New Energy
Tecnology Ltd
China
Resources Investment Capital Ltd.
British Virgin Islands
Roshini International Bio Energy
Corporation
Kincora Copper Ltd***
China Rice Ltd
British Virgin Islands
Canada
British Virgin Islands
R.M.Williams Agricultural Holdings Pty Ltd
Australia
Fair
Value
hierarchy
level
3
Proportion
of ownership
interest
54.8%
Cost
US$’000
18
Fair
value
US$’000
19
3
3
3
3
3
3
3
3
50.0%
400
49.1% 9,505
49.0%
675
38.5%
287
35.9% 17,050
-
-
697
287
-
34.0%
6,824
1,601
32.1% 13,000 17,259
24.0% 20,214
-
Niutech Energy Ltd
Moly World Ltd
Unipower Battery Ltd
Fans Media Co., Ltd
Gobi Coal & Energy Ltd***
Celadon Mining Ltd
Staur Aqua AS
Ares Resources
Bach Technology GmbH
Rising Technology Corporation Ltd/
Beijing Rising Information Technology Ltd **
Kooky Panda Ltd
Six Waves Inc
Fram Exploration AS
HaloSource, INC.
Rex International Holding
Other quoted investments***
Total
British Virgin Islands 3
21.1%
6,350 12,083
British Virgin Islands
Cayman Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
Norway
Mongolia
Germany
British Virgin Islands
Cayman Islands
British Virgin Islands
Norway
USA
Singapore
3
3
3
3
3
3
3
3
3
3
3
3
1
3
1
20.0% 10,000 10,000
16.5%
14.3%
4,301
9,984
2,360
-
14.0% 14,960 26,788
9.7% 13,069 25,689
9.2%
4.8%
2.5%
2%/
1.6%
1.2%
1.1%
0.7%
0.3%
0.1%
719
148
60
245
-
-
5,565
25
3,009
-
240
1,203
1,202
525
217
860
167
326
3,510
1,755
131,224 111,972
Origo Partners PLC December 2013
41
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
As at 31 December 2012
Name*
China Cleantech Partners, L.P.****
Trafigura Origo Joint Venture LLC *****
IRCA Holdings Ltd
Shanghai Yi Rui Tech New Energy
Tecnology Ltd
Resources Investment Capital Ltd
Roshini International Bio Energy
Corporation
Kincora Copper Ltd***
China Rice Ltd
Niutech Energy Ltd
Moly World Ltd
Country of
incorporation
Cayman
Mongolia
British Virgin Islands
China
British Virgin Islands
British Virgin Islands
Canada
British Virgin Islands
British Virgin Islands
British Virgin Islands
R.M. Williams Agricultural Holdings Pty Ltd
Australia
Unipower Battery Ltd
Fans Media Co., Ltd
Gobi Coal & Energy Ltd***
Celadon Mining Ltd
Staur Aqua AS
Ares Resources
Bach Technology GmbH
Cayman Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
Norway
Mongolia
Germany
HaloSource, INC.
Rising Technology Corporation Ltd/
Beijing Rising Information Technology Ltd** British Virgin Islands
Australia
Voyager Resource Ltd***
USA
Kooky Panda Ltd
Fram Exploration AS
Six Waves Inc
Qinghai Fund
Other quoted investments***
Total
Cayman Islands
Norway
British Virgin Islands
China
Fair
Value
hierarchy
level
3
Proportion
of ownership
interest
Cost
US$’000
50.1% 15,000
Fair
value
US$’000
15,000
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
1
3
1
3
3
3
3
1
50.0%
49.1%
49.0%
38.5%
400
9,505
675
287
35.9% 17,050
400
-
676
287
-
32.6%
6,824
4804
32.1% 13,000
18,631
21.1%
6,350
12,246
20.0% 10,000
10,000
17.0% 20,000
16.5%
14.3%
4,301
2,360
1,421
8,971
2,143
14.0% 14,960
53,576
9.7% 13,069
24,710
9.2%
3.1%
2.5%
2.0%
2%/
1.6%
1.5%
1.2%
1.1%
1.1%
1.0%
719
148
60
265
156
-
3,121
1,535
5,565
2,037
25
1,495
240
318
3,919
303
-
1,361
1,099
318
4,648
2,766
152,157 164,587
42
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
*
**
***
****
There are no significant restrictions that will have an impact on ability to transfer of these investments,
except a lock up of the shares of Kincora Copper Ltd and Rex International Holdings which will expire
in July 2014.
2% equity stake in Rising Technology Corporation Ltd and 1.6% beneficial interest in Beijing Rising
Information Technology Ltd, a company incorporated in the PRC, under a nominee agreement.
Investments held partially by China Commodities Absolute Return Ltd (”CCF”) and/or MSE Liquidity
Fund (“MSE Fund”), the funds managed by the Group.
A private equity fund focusing on China's cleantech sectors, jointly formed and co-managed by the
Group and EFMI Limited on 50/50 basis. The Group ceased to recognised China Cleantech Partners,
L.P. (“CCP”) as an investment at FVTPL on 7 November 2013 when its ownership in CCP increased
to 62 per cent and instead recognised its separate assets and liabilities.
*****
A company focusing on mineral and metal exploration, jointly formed and co-managed by the Group
and Eltrana LLC on 50/50 basis.
******
A company focusing on cleantech sectors, jointly formed and co-managed by the Group and Niutech
Energy Solutions B.V.
As at 31 December 2013 the proportion of ownership interest held by CCF in investments is as follows:
Name*
Kincora Copper Ltd
Gobi Coal & Energy Ltd
Proportion of ownership interest
3.4%
0.2%
Cost
1,063
252
US$'000
156
451
In accordance with IFRS 7: Financial Instruments: Disclosures, financial instruments recognised at fair value are
required to be analysed between those whose fair value is based on:
a)
b)
c)
Quoted prices in active markets for identical assets or liabilities (Level 1);
Those involving inputs other than quoted prices included in level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and
Those with inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (Level 3).
In accordance with IFRS 13: For assets and liabilities that are recognized in the financial statements on a
recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-
assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period. There have been no transfers between Levels during the period of 2013.
Statement of changes in Investments at fair value through profit or loss based on level 3:
Opening balance
Acquisitions
Proceeds from disposals of investments
Decrease upon the consolidation of CCP LP and Qinghai Fund
Realised losses on write-off of investments
Net exchange difference
Movement in unrealised gains on investments
- In profit or loss
Closing balance
2013
US$’000
159,983
456
-
(14,911)
(2,035)
516
(33,959)
110,050
Origo Partners PLC December 2013
2012
US$’000
210,242
5,891
(22)
-
(209)
1,745
(57,664)
159,983
43
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
15 Loans
The Group has entered into convertible credit agreements and has the right to convert the outstanding
principal balance of relevant loans into borrower’s shares according to certain conversion conditions, and loan
agreements with certain investee companies as set forth in the table below.
As at 31 December 2013
Borrower
Convertible credit agreements*
China Rice Ltd
Unipower Battery Ltd
IRCA Holdings Ltd
R.M. Williams Agricultural Holdings Pty Ltd
Staur Aqua AS
Kincora Copper Ltd
Roshini International Bio Energy Corporation
Fair
value
hierarchy
level
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
3
3
3
3
3
3
3
4
6
1.5-8
8-20
0-15
8.7
-
15,000
15,000
9,000
11,645
3,090
3,848
2,469
424
9,000
5,374
-
740
-
-
-
-
-
-
1,786
2,348
-
Fair
value
US$'000
15,000
9,000
5,374
-
2,526
2,348
-
Sub-total
45,476
30,114
4,134
34,248
Borrower
Loan agreements*
IRCA Holdings Ltd
R.M.William Agricultural Holdings Pty Ltd
TPL GmbH
Shanghai Evtech New Energy Technology Ltd
China Silvertone Investment Co Ltd
View Step Corporation Ltd
Sub-total
Total
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
Amortised
cost
US$'000
6-10
8,909
1,102
3,009
4,111
15.5%+RBA
cash rate
1,725
10
2,827
-
-
-
510
478
25
14,474
59,950
-
-
510
-
-
-
-
2,887
2,887
-
-
-
510
-
-
1,612
5,896
7,508
31,726
10,030
41,756
44
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
15 Loans (continued)
As at 31 December 2012
Borrower
Convertible credit agreements*
China Rice Ltd
Unipower Battery Ltd
IRCA Holdings Ltd
R.M. Williams Agricultural Holdings Pty Ltd
Staur Aqua AS
Kincora Copper Ltd
China CleanTech GP Ltd
China CleanTech AMC Ltd
Dragon Ports Ltd
Roshini International Bio Energy
Corporation
Sub-total
Fair
value
hierarchy
level
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
3
3
3
3
3
3
3
3
3
3
4
6
1.5-8
8-20
0-15
8.7
1+1Y
LIBOR
1+1Y
LIBOR
-
-
15,000
15,000
9,000
11,645
3,090
3,848
2,469
110
50
174
424
9,000
7,019
3,066
1,343
-
110
50
-
-
-
-
-
-
1,398
2,515
-
-
-
-
Fair
value
US$'000
15,000
9,000
7,019
3,066
2,741
2,515
110
50
-
-
45,810
35,588
3,913
39,501
Borrower
Loan agreements*
IRCA Holdings Ltd
TPL GmbH
Shanghai Evtech New Energy Technology Ltd
China Silvertone Investment Co Ltd
View Step Corporation Ltd
Sub-total
Total
Loan
rates
%
Loan
principal
US$'000
6-10
10
-
-
-
3,798
1,037
510
478
25
5,848
51,658
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
Amortised
cost
US$'000
165
-
510
-
-
2,231
1,055
-
-
-
2,396
1,055
510
-
-
675
36,263
3,286
7,199
3,971
43,462
Origo Partners PLC December 2013
45
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
15 Loans (continued)
*
Loans in relation to convertible credit agreements are measured at fair value, the fair value of the
associated optional rights and obligations are recorded under derivatives note 16. Loans in relation to loan
agreements are measured at amortised cost using the effective interest rate method less any identified
impairment losses. There are no breaches under the terms and conditions of loan agreements.
Statement of changes in loans:
Opening balance
Additions
Write-offs
Revaluation
Decrease upon the consolidation of CCP
Closing balance
Statement of changes in convertible credit agreements based on level 3:
Opening balance
Additions
Write-offs
Movement in unrealised (losses)/gains on investments
- In profit or loss
Decrease upon the consolidation of CCP
Closing balance
16 Derivative financial assets
2013
US$’000
43,462
8,626
(4,791)
(5,381)
(160)
41,756
2013
US$’000
39,501
-
(3,066)
(2,027)
(160)
34,248
2012
US$’000
33,497
10,055
(180)
90
-
43,462
2012
US$’000
31,974
7,629
(155)
53
-
39,501
Warrants
Derivative from convertible options
Total
Fair Value
hierarchy level
3
3
2013
US$’000
109
-
109
2012
US$’000
704
223
927
In accordance with the fair value hierarchy described in note 14 and 15, derivative financial instruments are
measured using level 3 for warrants and convertible options.
46
Origo Partners PLC December 2013
Origo Partners Plc
Notes to the financial statements (continued)
16 Derivative financial assets (continued)
Statement of changes in derivative financial assets based on level 3:
Opening balance
Additions
Expired
Movement in unrealised loss on investments
- In profit or loss
Transfers out of Level 3
Closing balance
17 Other current assets
AUDITED FINANCIAL STATEMENTS
2013
US$’000
927
-
(249)
(569)
-
109
2012
US$’000
6,730
678
(209)
(6,272)
-
927
Other financial assets
Short-term investment*
Structured deposits**
Others
Total
Fair value
hierarchy
level
3
3
2013
2012
Cost
US$’000
Fair value
US$’000
Cost
US$’000
Fair value
US$’000
3,280
4,921
4
8,205
3,280
4,921
4
8,205
-
-
-
-
-
-
-
-
*
**
A 38 days short term investment of RMB20 million placed with Bank of Communications by Origo (Xinxiang)
Renewable Energy Investment Center LP which is one of subsidiaries of the Group, with the interest rate at
5.1 per cent p.a, the maturity date is January 20, 2014.
A 66 days structured deposit of RMB30 million placed with China MinSheng Bank by Origo (Xinxiang)
Renewable Energy Investment Center LP, with the interest rate linked to USD 3 Month Libor rate, the
maturity date is February 7, 2014.
18 Trade and other receivables
Trade debtors
Other debtors
Loan interest receivables
Prepayments
Total
2013
US$’000
4
1,023
2,204
173
3,404
2012
US$’000
262
2,014
5,282
265
7,823
Origo Partners PLC December 2013
47
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
18 Trade and other receivables (continued)
2013 Aging for the Group
Aging for the Group
Trade debtors
Other debtors
Loan interest receivables
Other
Provision against loan
interest receivables
Provision of bad debts
Total
Percentage
2012 Aging for the Group
Aging for the Group
Trade debtors
Other debtors
Loan interest receivables
Other
Provision against loan
interest receivables
Provision of bad debts
Total
Percentage
0-30
days
US$'000
-
31-60
days
US$'000
-
61-90
days
US$'000
-
91-180
days
US$'000
-
181-365
days
US$'000
-
Over 365
days
US$'000
254
18
98
-
174
101
-
236
386
88
253
645
4
2,384
7,423
80
Total
US$'000
254
3,076
8,874
173
(54)
(55)
(159)
(309)
(6,042)
(6,670)
-
62
2%
(153)
(134)
(104)
(1,912)
(2,303)
67
2%
417
12%
489
14%
2,187
64%
3,404
100%
11
221
1
(51)
-
182
5%
0-30
days
US$'000
-
31-60
days
US$'000
-
61-90
days
US$'000
-
91-180
days
US$'000
5
181-365
days
US$'000
5
Over 365
days
US$'000
252
491
232
215
-
(27)
911
12%
22
140
-
-
(21)
141
2%
121
137
-
-
(21)
237
3%
70
939
-
(4)
(59)
951
12%
Total
US$'000
262
3,523
7,690
265
2,553
5,293
50
266
949
-
-
(2,404)
(2,408)
(152)
1,068
14%
(1,229)
(1,509)
4,515
57%
7,823
100%
2013
US$’000
35,300
-
35,300
2013
US$’000
160
160
2012
US$’000
14,718
10,346
25,064
2012
US$’000
-
-
19 Cash and cash equivalents and Short-term borrowings
Current account
Fixed deposit
Total cash and cash equivalents
Short-term borrowings
Total short-term borrowings
48
Origo Partners PLC December 2013
Origo Partners Plc
Notes to the financial statements (continued)
20 Trade and other payables
Trade payables
Other payables
Performance incentive payable within one year*
Total
*
Refer to note 4 for total performance incentive expenses.
AUDITED FINANCIAL STATEMENTS
2013
US$’000
2
1,815
233
2,050
2012
US$’000
2
1,550
233
1,785
21 Financial guarantee contracts
Financial guarantee contracts*
Total
Fair value
hierarchy leve
3
2013
US$’000
825
825
2012
US$’000
-
-
*
In May 2011, the Company entered into a guarantee agreement maturing in April 2014 with IRCA Holdings
Ltd and Mr. Malcolm Stephen Paul to guarantee the repayment of loans of up to GBP500,000 extended by
Mr. Malcolm Stephen Paul to IRCA Holdings Ltd. The Company has settled GBP250,000 of guarantee to
Mr. Malcolm Stephen Paul 1 April 2014, and agreed to settle the remaining GBP250,000 of guarantee to
Mr. Malcolm Stephen Paul on or before 30 June 2014.
22 Provision
USR/contingent share awards *
Performance incentive provision**
Total
Opening balance
Movement in USR/contingent share awards *
Movement in performance incentive provision**
Total
2013
US$’000
165
1,622
1,787
2013
US$’000
5,080
(202)
(3,091)
1,787
2012
US$’000
367
4,713
5,080
2012
US$’000
14,852
(1,128)
(8,644)
5,080
*
The provision relates to the fair value of USR and contingent share awards granted to certain directors,
executives and key employees under the Company's joint share ownership scheme. Further details about
the USR and contingent share awards are included in note 27 to the consolidated financial statements.
**
Refer to note 4 for total performance incentive expenses.
Origo Partners PLC December 2013
49
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
23 Liability component of convertible zero dividend preference shares
Balance at 1 January 2012
Interest expenses on convertible zero dividend
preference shares
Fair value movement of early redemption option
derivative
Balance at 31 December 2012
Interest expenses on convertible zero dividend
preference shares
Balance at 18 March 2013
Restructure
Interest expenses on convertible zero dividend
preference shares
Fair value movement of early redemption option
derivative
Number of
shares
60,000,000
Liability
component
US$'000
56,595
Equity
component
US$'000
7,462
-
-
4,282
-
-
-
60,000,000
60,877
7,462
-
60,000,000
(3,000,000)
-
-
950
61,827
(7,195)
3,681
-
-
7,462
835
-
-
Balance at 31 December 2013
57,000,000
58,313
8,297
Early
redemption
option
derivative
US$'000
(261)
-
261
-
-
-
(2)
-
2
-
On 8 March 2011, the Company issued 60 million Convertible Zero Dividend Preference Shares (“Convertible
Preference Shares” or “CZDP”) at a price of US$1.00 per share. The Convertible Preference Shares have a
maturity period of five years from the issue date and can be converted into 1 ordinary share of the Company
at the conversion price of US$0.95 per share at the holder’s option at any time between more than 40 dealing
days after 8 March 2011 up to 5 dealing days prior to the maturity date and, if it has not been converted, it will
be redeemed on maturity at the redemption price of US$1.28 per share (representing a gross redemption yield
of 5% per annum at issue).
The Convertible Preference Shares contain a redemption feature which allows for early redemption at the
option of issuer. The issuer has the option to redeem all or some of the Convertible Preference Shares subject
to the restrictions on redemption described below:
(a)
(b)
at any time after the second anniversary of 8 March 2011, for a cash sum of US$1.28 per Convertible
Preference Share redeemed;
at any time after the second anniversary of 8 March 2011, if in any period of 30 consecutive dealing days
the closing middle market price of the ordinary shares of the Company exceeds US$1.235 per ordinary
share of the Company on 20 or more of those days, for a cash sum equal to the Accreted Principal
Amount in respect of the Convertible Preference Shares being redeemed;
(c)
at any time, if less than 15% of the Convertible Preference Shares remain outstanding, for a cash sum
equal to the Accreted Principal Amount in respect of the Convertible Preference Shares being redeemed.
50
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
23 Liability component of convertible zero dividend preference shares (continued)
The Convertible Preference Shares contain three components, a liability component, an equity component
and the early redemption option derivative. The effective interest rate of the liability component is 6.5%. The
early redemption option derivative is presented as derivative financial assets in the consolidated statement
of financial position and is measured at fair value subsequent to initial recognition with changes in fair value
recognised in profit and loss.
In March 2013, the Company restructured the terms of its existing Convertible Preference Shares, the
principal terms of restructure includes: i) extension of the maturity date of the Convertible Preference Shares
by 18 months from 8 March 2016 to 8 September 2017 (the “Extended Period”); ii) amendment of the final
capital value (“FCV”) of the Convertible Preference Shares to US$1.41 each, with the accrued rate of return
for the Extended Period equivalent to 10 per cent of the accrued value of the Convertible Preference Shares at
the start of the Extended Period; iii) a commitment by the Company to repurchase, by means of tender offers
to holders, at least 12 million Convertible Preference Shares by 8 March 2016, the original maturity date; and
iv) the Company to set aside, for the funding of Convertible Preference Shares tender offers, 50 per cent of
the next US$24 million of net proceeds (post transaction costs and management incentives) from investment
realisations by the Company. The new effective interest rate of the liability component is 9.0%. In addition to
the restructure, the Company has repurchased 3 million Convertible Preference Shares from holders at a price
of US$1.00 per Convertible Preference Shares. Finance cost of US$4.2 million was credited to reverse the
liability component after the payoff of US$3 million of cash for repurchase.
24 Issued capital
Authorised
Ordinary shares of £ 0.0001 each
2013
Number of
shares
500,000,000
2012
Number of
shares
50 500,000,000
£'000
£'000
50
Issued and fully paid
At beginning of the year
Buyback shares*
At end of the year
Number of
shares US$'000
55
356,986,814
(280,000)
356,706,814
-
55
Number of
shares
360,168,501
(3,181,687)
356,986,814
US$'000
56
(1)
55
*
3,461,687 ordinary shares were repurchased by the company in 2012, of which 3,181,687 ordinary shares
have been cancelled in 2012 and 280,000 have been cancelled in the reporting period, and will not carry
voting and dividend distribution rights.
25 Other reserve
Included within the other reserve are 8,111,425 shares of the Company held by Employee Benefit Trust (“EBT”).
Origo Partners PLC December 2013
51
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
26 Financial instruments - Risk management
The Group and the Company are exposed through their operations to one or more of the following risks:
- Fair value risk
- Cash flow interest rate risk
- Currency risk
- Credit risk
- Liquidity risk
- Concentration risk
- Sensitivity risk of financial assets based at level 3
The policy for managing these risks is set by the board. The policy for each of the above risks is described in
more detail below:
Fair value risk
The Group and Company’s financial assets are predominantly investments in unquoted companies, and the fair
value of each investment depends upon a combination of market factors and the performance of the underlying
asset. The Group and the Company do not hedge the market risk inherent in the portfolio but manages asset
performance risk on an asset-specific basis by continuously monitoring each asset’s performance and charging
the change of each asset’s fair value to the statement of comprehensive income as necessary.
Cash flow interest rate risk
The directors currently view interest rate risk as low since the fixed rate return from interest generating assets is
not material in the context of the portfolio return as a whole and the Group’s investments are financed mainly by
shareholders’ funds with investment needs being met ahead of planned investments.
Currency risk
Some of the Group’s assets, liabilities, income and expenses are effectively denominated in currencies other
than US Dollars (the Group’s presentation currency). Fluctuations in the exchanges rates between these
currencies and US Dollars will have an effect on the reported value of those items.
The following table demonstrates the sensitivity of the Group’s profit before tax due to a change in the fair value
of monetary assets and liabilities resulting from a reasonably possible change in the US dollar exchange rate,
with all other variables held constant.
2013
2012
Increase/
(decrease) in
USD rate
+10%
Effect on
profit
before tax
US$'000
5,025
Effect on
NAV
US$'000
5,025
-10%
+10%
-10%
(5,025)
(5,025)
4,526
4,526
(4,526)
(4,526)
The assumed movement for currency rate sensitivity analysis is based on the currently observable market
environment.
52
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
26 Financial instruments - Risk management (continued)
Currency risk (continued)
The Group’s assets and liabilities that are effectively denominated in currencies other than US Dollars are:
2013
Cash and bank balances
Investment at FVTPL
Loans
Other current assets
Trade and other receivables
Derivative assets
Total Assets
GBP
US$'000
429
NOK
US$'000
64
RMB
US$'000
5,045
AUD
US$'000
19
HKD
US$'000
51
CAD
US$'000
116
EUR
US$'000
-
Total
US$'000
5,724
25,984
254
1,431
2,526
697
622
-
-
-
-
8,204
416
-
380
-
-
-
-
-
-
-
-
-
-
-
2,362
2,348
-
90
109
19
30,493
1,587
-
66
-
7,337
8,204
952
109
26,667
4,437
14,948
19
51
5,025
1,672
52,819
Trade and other payables
Financial guarantee contracts
Provision
Deferred income tax liability
Total Liabilities
(180)
(825)
(165)
(1,262)
(2,432)
-
-
-
-
-
(140)
-
-
-
(140)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(320)
(825)
(165)
(1,262)
-
(2,572)
2012
Cash and bank balances
GBP
US$'000
135
NOK
US$'000
72
RMB
US$'000
308
AUD
US$'000
534
HKD
US$'000
4
CAD
US$'000
232
EUR
US$'000
-
Total
US$'000
1,285
Investment at FVTPL
24,710
1,361
Loans
Trade and other receivables
3,504
3,147
-
416
676
165
226
1,724
-
-
Total Assets
31,496
1,849
1,375
2,258
Trade and other payables
Total Liabilities
(160)
(160)
-
-
(171)
(171)
-
-
-
-
-
4
-
-
4,804
2,515
-
-
33,275
1,055
-
7,239
3,789
7,551
1,055
45,588
-
-
-
-
(331)
(331)
Credit risk
The Group is primarily exposed to credit risk from the convertible loans extended to unquoted portfolio
companies, in which the Directors consider the maximum credit risk to be the carrying value of the convertible
loans and loans which amounted to US$41.8 million. Directors consider cash and receivables do not expose to
significant credit risk, because the cash is held at reputable banks. The credit risk exposure is managed on an
asset-specific basis by management.
2013
not
past due
US$'000
4,134
2013
up
to 12
months
past due
US$'000
1,200
2013
more
than 12
months
past due
US$'000
28,914
2013
2012
Total
US$'000
34,248
not
past due
US$'000
18,545
2012
up
to 12
months
past due
US$'000
14,015
2012
more
than 12
months
past due
US$'000
6,941
2012
Total
US$'000
39,501
Convertible loan
Working capital loan
6,919
49
540
7,508
3,389
117
455
3,961
Total
11,053
1,249
29,454
41,756
21,934
14,132
7,396
43,462
Origo Partners PLC December 2013
53
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
26 Financial instruments - Risk management (continued)
Liquidity risk
The table below analyses the Group’s financial assets and liabilities into relevant maturity groupings based on
the remaining period at the balance sheet date to the contractual maturity date or, if earlier, the expected date on
which the financial assets will be realised and the financial liabilities will be settled. The amounts in the table are
the contractual undiscounted cash flows.
Assets
31 December 2013
Cash and cash equivalents
Other current assets
Trade receivables
Other receivables
Loan interest receivables
Derivative financial assets
Loans
Investments at fair value through profit or loss
Total
Liabilities
31 December 2013
Trade payables
Short-term borrowing/Convertible loan
Performance incentive payable
USR/Contingent share awards
Other payables
Liability component of convertible zero
dividend preference shares
Contractual interest payable
Financial guarantee contracts*
Total
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000
35,300
US$'000 US$'000 US$'000
-
-
-
3,284
4,921
-
-
-
90
-
-
4
66
209
-
-
-
-
-
Total
US$'000
35,300
8,205
4
1,023
2,204
109
-
1,102
10,030
41,756
1,928
6,849
-
108,278
111,972
1,192
118,587
200,573
-
957
1,905
109
30,624
1,766
73,945
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000
2
-
-
165
315
-
-
-
US$'000 US$'000 US$'000
-
-
-
-
-
-
989
-
-
-
-
233
-
-
-
-
825
160
1,622
-
511
57,000
5,130
645
482
989
1,058
65,068
Total
US$'000
2
160
1,855
165
1,815
57,000
5,130
1,470
67,597
*
Based on the maximum amount that can be called for under a payment guarantee agreement (note 21
and note 30).
54
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
26 Financial instruments - Risk management (continued)
Liquidity risk (continued)
Assets
31 December 2012
Cash and cash equivalents
Trade receivables
Other receivables
Loan interest receivables
Loans
Investments at fair value through profit or loss
Total
Liabilities
31 December 2012
Trade payables
Performance incentive payable
USR
Deferred tax
Other payables
Liability component of convertible zero
dividend preference shares
Contractual interest payable
Less than 1
month
1-3
months
3-12
months
over 12
months
Total
US$'000
14,718
US$'000 US$'000 US$'000
10,346
US$'000
- 25,064
-
-
-
250
12
262
1,026 42
-
946
2,014
1,437
22,934
4,603
-
-
-
3,414
431
5,282
13,329
7,199 43,462
-
159,984
164,587
44,718
42
27,339 168,572 240,671
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000 US$'000 US$'000
-
-
-
Total
US$'000
2
US$'000
2
-
-
-
-
-
-
295
739
-
-
-
-
233
4,713
4,946
-
-
-
-
-
367
367
2,809 2,809
516
1,550
60,000 60,000
5,563
73,968
5,563
75,237
Total
297
739
233
Concentration risk
The main concentration risk for Origo is that the largest investments are concentrated in Mongolia for the
amount of US$36,787,984 (Gobi US$26,787,984 and Moly US$10,000,000), 33% out of the total portfolio value
of US$111,971,692.
Sensitivity risk of financial assets based at Level 3
Level 3 inputs are sensitive to assumptions made when ascertaining fair value of financial assets. A reasonable
alternative assumption would be to apply a standard marketability discount of 25% for all assets rather than
the specific approach adopted. This would have a positive impact on the portfolio of US$ 3,934,845 (2012:
(US$6,093,199)) or 2.72% (2012: (3.04%)) of total financial assets based at Level 3.
Origo Partners PLC December 2013
55
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
27 Share option scheme
The Group has a number of share schemes that allow employees to acquire shares in the Company, as detailed
in note 1.4 (h).
The total cost recognised in the statement of comprehensive income is shown below:
Equity-settled option
USR/contingent share awards
Total
2013
US$'000
(632)
189
(443)
2012
US$'000
(581)
1,140
559
The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and
movements in, share options during the years ended 31 December 2013 and 31 December 2012.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2013
No.
23,501,932
2013
WAEP
27.32p
2012
No.
11,451,932
-
-
13,600,000
2012
WAEP
23.45p
31.22p
(500,000)
(31.00p)
(1,550,000)
(32.94p)
-
-
-
-
-
-
-
-
Outstanding at 31 December
23,001,932
27.24p
23,501,932
27.32p
Exercisable at 31 December
11,451,932
23.45p
11,451,932
23.45p
Outstanding options include 6,800,000, 3,500,000, 500,000 and 13,600,000 equity-settled options granted on
06 October 2006, 13 March 2008, 06 February 2009 and 02 February 2012 respectively to certain directors
and employees of the Company and 651,932 equity-settled options granted on 21 December 2006 to Seymour
Pierce Ltd, the Company’s former nominated adviser. The Company did not enter into any share-based
transactions with parties other than employees during the years ended 31 December 2013, 2012, 2011,2010,
2009, 2008 and 2007, except as described above.
The following table illustrates the number (“No.”) and weighted average exercise prices (“WAEP”) of, and
movements in USRs and contingent share awards during the years ended 31 December 2013 and 31 December
2012.
Outstanding at 1 January
Granted during the period/year
Forfeited during the period/year
Exercised during the period/year
Expired during the period/year
2013
No.
5,788,067
-
-
(100,000)
-
2013
WAEP
12.63p
-
-
-
-
2012
No.
4,847,099
1,120,000
(50,000)
(129,032)
-
2012
WAEP
15.50p
-
-
15.50p
-
Outstanding at the end of the period/year
5,688,067
12.85p
5,788,067
12.63p
Exercisable at the end of the period/year
5,688,067
12.85p
4,718,067
15.50p
56
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
27 Share option scheme (continued)
On 16 October 2009, 4,847,099 of USR were granted to certain directors, executives and key employees under
the Company’s joint share ownership scheme ("JSOS"). 50% of USR vested 12 months from the date of grant
and 50% of USR vested 24 months from the date of grant. The exercise price of the USR granted is 15.50 pence
compounded at 3.5% per annum over the year from the grant date to the exercise date of USR. The fair value
of the USRs is estimated at the end of each reporting period using the Binomial Tree option pricing model. The
contractual life of each USR granted is 10 years.
On 20 July 2012, 1,120,000 of contingent share awards were granted to certain directors, executives and key
employees under the Company’s JSOS, which will vest 197 days from the date of grant. The contractual life of
each contingent share awards granted is 10 years.
The following table lists the inputs to the model used to calculate the fair value of USRs for the year.
Weighted average share price (pence)
Exercise price (pence)
Expected life of option (years)
Expected volatility (%)
Expected dividend yield (%)
Risk-free interest rate (%)
2013
7.38
15.5
2
45.05
-
1.20
2012
13.38
15.5
2
34.81
-
1.31
The volatility assumption, measured at the standard deviation of expected share price returns, was based on a
statistical analysis of the Company’s daily share prices from 1 January 2011 to 31 December 2013 using source
data from Reuters.
The carrying amount of the liability relating to the USR and the contingent share award as at 31 December 2013
is US$164,574 and the expense recognized as share-based payments during the period is (US$188,685).
28 Related party transactions
Identification of related parties
The Group has a related party relationship with its subsidiaries, jointly controlled entity, associates and key
management personnel. Transactions between the Company and its subsidiaries have been eliminated on
consolidation and are not disclosed in this note.
Transactions with key management personnel
The Group’s key management personnel are the Executive and Non-executive directors as identified in the
director’s report.
Origo Partners PLC December 2013
57
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
28 Related party transactions (continued)
Trading transactions
The following table provides the total amount of significant transactions and outstanding balances which have
been entered into with related parties during the years ended 31 December 2013 and 31 December 2012.
Amounts due from/(to) related parties*
Origo Advisers Ltd**
Chris A Rynning***
Niklas Ponnert***
Wang Chao Yong***
Christopher Jemmett***
Lionel de saint Exupery***
Tom Preststulen***
Shonaid Jemmett Page***
Luke Leslie***
Performance incentive
Origo Advisers Ltd**
Transactions with personnel
Luke Leslie****
Shonaid Jemmett Page*****
2013
US$'000
2012
US$'000
(1,853)
(4,793)
(316)
(322)
(38)
(29)
(19)
(19)
(40)
(22)
(276)
(240)
-
-
-
-
-
-
3,091
8,311
22
92
55
-
*
**
***
****
*****
The amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Origo Advisers Ltd is controlled by entities whose ultimate beneficiaries include two Directors of the
Company (Mr. Rynning and Mr. Ponnert).
Chris A Rynning and Niklas Ponnert are directors of the Company, Wang Chao Yong, Christopher
Jemmett, Lionel de saint Exupery, Tom Preststulen and Shonaid Jemmett Page are non-executive
directors of the Company, and Luke Leslie is a director of CCF which is one of subsidiaries of the
Group.
The amount is the management fee according to the advisory agreement between CCF and the
Group.
The amount disclosed relates to the consultancy services provided by Shonaid Jemmett Page to the
Company in respect of IRCA Holdings Ltd.
58
Origo Partners PLC December 2013
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
29 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue
as a going concern and to maintain healthy capital ratios in order to support its business and maximise
shareholders’ value.
The Group manages and makes appropriate adjustments to its capital structure on an ongoing basis in
light of changes in economic conditions and the risk characteristic of the underlying assets. To maintain
or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital
to shareholders and/or issue new shares. The Group is not subject to any externally imposed capital
requirements. No changes were made in the objectives, policies or processes during the years ended 31
December 2013 and 31 December 2012.
The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net
debt includes current liabilities less cash and bank balances. Capital includes equity attributable to equity
holders of the parent company. The gearing ratios as at the reporting dates were as follows:
Current liabilities
Less: Cash and bank balances
Net debt
Liability component of convertible zero dividend
preference shares
Equity attributable to equity holders of the parent
Capital
Capital and net debt
Gearing ratio
30 Commitments and contingencies
2013
US$'000
3,035
(35,300)
(32,265)
2012
US$'000
1,785
(25,064)
(23,279)
58,313
112,806
171,119
60,877
169,625
230,502
138,845
207,223
(23%)
(11%)
•
•
•
In May 2011, the Company entered into a guarantee agreement maturing in April 2014 with IRCA Holdings
Ltd and Mr. Malcolm Stephen Paul to guarantee the repayment of loans of up to GBP500,000 extended by
Mr. Malcolm Stephen Paul to IRCA Holdings Ltd.
In August 2013, the Company entered into a payment guarantee agreement with ABSA Bank Ltd (“ABSA”) to
guarantee IRCA’s repayment obligation under the facilities extended from ABSA, for an aggregate amount up
to R6,769,000.
A Claim form which named Origo as the third defendant was issued in the High Court on 6 February 2013.
The claim relates to the Company’s holding in Roshini International Bio Energy Corporation an investment
which was written off as 31 December 2009. With the following update in the Claim form, Origo has been
named as the second defendant and the date for service of the Claim Form is extended until 19 September
2014. The Company, having taken advice from its solicitors, Charles Russell LLP, consider that, at present,
the risk of an adverse judgment against Origo is remote and estimates the total liabilities being £ nil.
There were no other material contracted commitments or contingent assets or liabilities at 31 December 2013 (31
December 2012: none) that have not been disclosed in the interim consolidated financial statements.
Origo Partners PLC December 2013
59
AUDITED FINANCIAL STATEMENTS
Origo Partners Plc
Notes to the financial statements (continued)
31 Events after the reporting period
•
•
•
•
•
In January, April and May 2014, the Company disbursed further working capital loans of EUR350,000 to TPL
GmbH.
In February 2014, the Company made an announcement regarding a complaint raised by Brooks Macdonald
with the Company in respect of the terms of Convertible Zero Dividend Preference Shares (“Convertible
Preference Shares” or the "CZDP”). Brooks Macdonald contends that the change of control provisions should
have included an option exercisable by the holders of the CZDP to redeem the CZDP upon a change of
control in respect of Origo (a "CZDP COC Redemption Option"). This is on the basis of what was mentioned
in a short-form term sheet (the "CZDP Term Sheet") that was appended to the placing letter entered into
between Liberum (on behalf of Origo) and Spearpoint for the subscription by Spearpoint of the CZDP (the
CZDP Admission Document and Articles, as amended, having not yet been prepared when the placing
letter was signed). The CZDP Term Sheet contained a provision that Brooks Macdonald suggest should be
interpreted as indicating that Spearpoint would have a CZDP COC Redemption Option.
The CZDP Term Sheet contained only brief details of the CZDP and Spearpoint's subscription was
subject (amongst other things) to detailed documentation being produced and approved (i.e. the CZDP
Admission Document and the Articles, as amended). Spearpoint had the opportunity to review this detailed
documentation prior to its acquisition of the CZDP and should have made its actual subscription for the
CZDP based on the final information contained in the CZDP Admission Document and the Articles. No query
regarding the non-inclusion in the terms of the CZDP of a CZDP COC Redemption Option was raised by
Spearpoint at the time of issue of the CZDP in 2011 or subsequently (including at the time of the 2013 CZDP
Amendment), until the communication by Brooks Macdonald of its complaint.
Brooks Macdonald has indicated that it may commence legal proceedings if the terms of the CZDP are
not amended to provide a CZDP COC Redemption Option. Such an amendment could only be made if
shareholders approve the relevant changes to the Articles at a general meeting. Origo has consulted a limited
number of its key shareholders to discuss the complaint and understands that shareholders would be unlikely
to approve the amendments to the Articles proposed by Brooks Macdonald if they were put to shareholders.
Origo has also sought legal advice in respect of Brooks Macdonald's complaint. On the basis of that legal
advice, Origo considers that a legal claim against Origo, if initiated by Brooks Macdonald, would be unlikely to
succeed.
Origo intends to work with Brooks Macdonald to achieve a mutually acceptable resolution to the complaint
that Brooks MacDonald has raised.
In February 2014, the Company announced the restructuring of China Cleantech Partners Ltd ("CCP"). Under
an agreement that came into effect on 21 February 2014, Ecofin Water & Power Opportunities Plc's interest in
CCP has been redeemed in full. As a result, Origo is now the sole partner of CCP and holds a majority limited
partnership interest in the associated RMB denominated sub-fund. Separately, Origo has exercised the call
options to purchased EFMI Limited’s interests in China CleanTech GP Ltd (“GP”) and China CleanTech AMC
Ltd (“AMC”) in February 2014. Origo repaid a total of US$260,000 advanced by EMFI Ltd to AMC, GP and
related entities in the form of equity subscription and loans in consideration for obtaining a 100% ownership of
AMC and GP.
In March 2014, the Company extended a short term working capital loan of RMB4,000,000 to Unipower
Battery Ltd.
In March 2014, the Company subscribed for CAD400,000 worth of common shares in Kincora Copper Limited
(“Kincora”), at a price of CAD0.05 per unit. Each Unit consists of 1 common share in the capital of Kincora,
and 1 transferable common share purchase warrant (“Warrant Share”), which entitles the holder to purchase
1 common share in the capital of Kincora for a period of 24 months from the subscription date at a price of
CAD0.105 per Warrant Share.
60
Origo Partners PLC December 2013
Origo Partners PLC
33-37 Athol Street, Douglas,
Isle of Man,IM1 1LB
www.origoplc.com