ORIGO PARTNERS PLC
REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
PRIVATE EQUITY
INVESTORS IN CHINA
Niklas Ponnert, Director
Shonaid Jemmett-Page, Non Executive Chairman
Lionel de Saint-Exupery, Non Executive Director
Directors
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 and broker
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
Contents
A.
B.
C.
DIRECTORS’ REPORT
Chairman’s statement
Investment consultant’s report
Portfolio overview
Directors’ report
INDEPENDENT AUDITORS’ REPORT
1-11
1-2
3-6
7-8
9-11
12
AUDITED FINANCIAL STATEMENTS
13-64
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
13
14
15
16
17-64
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Highlights
Net asset value declined by 44 per cent. during the year to US$30.6 million
(30 June 2015: US$50.7 million, 31 December 2014: US$54.3 million)
Loss after tax of US$24.4 million (2014: loss after tax of US$61.9 million) reflecting unrealised and realised losses on investments
Total investments in existing investee companies during the year of US$0.58 million (2014: US$2.7 million)
•
Cash position of US$1.3 million as at 31 December 2015 (31 December 2014: US$5.2 million)
Chairman’s Statement
2015 was another challenging year for Origo as we
sought to deal with a number of interrelated issues that
have impacted the Company’s financial position, the
performance of our investment portfolio and our ability to
execute our realisation strategy.
proposals did not receive the necessary approval of a 75
per cent majority of votes cast at the General Meeting and
the Ordinary Share Class Meeting held in February 2016
and therefore the proposals could not be implemented.
We successfully implemented the revised strategy and
governance arrangements which were approved by
shareholders at the end of 2014. Through an orderly
realisation programme, the Company is now seeking to
divest its entire portfolio by November 2018, at such time
and under such conditions as the Board may determine
in order to maximise value on behalf of the Company’s
Shareholders (the “Revised Investing Policy”). Following
the reorganisation of the Company’s governance and
management arrangements, we have been able to
reduce the core operating cost of the business which
amounted to US$4.2 million (2014: US$5.0 million)
(excluding litigation related expenses and on-off items,
such as provisions for loans extended and other
movements in the fair value of the Company’s portfolio).
We expect to achieve further reductions of applicable
costs in 2016 and beyond.
Continued economic uncertainty in China and the
concomitant turbulence in commodities markets have
impeded our ability to dispose of assets and impacted
the value of a number of companies in the portfolio.
Without a material improvement in the macro-economic
environment in general and commodity markets in
particular, we foresee continuous pressure on asset
prices and limited liquidity for the kind of assets the
Company holds. That said, as is further detailed in
the Investment Consultant’s Report below, there are
a number of positive developments at some portfolio
companies, which indicate that there is potential to realise
value for investors in due course.
During 2015, the Board continued to seek an amicable
resolution to the ongoing dispute with Brooks Macdonald
Group plc ("BM") in respect of the terms of the Company’s
convertible zero dividend preference shares (“CZDPs”).
To this end, the Board negotiated a detailed set of CZDP
restructuring proposals which would have served, inter
alia, to settle the ongoing dispute with BM while providing
the Company with greater financial flexibility to achieve
an orderly realisation of its assets. Unfortunately, the
The Company was unable to redeem US$12m CZDPs
which were due for redemption on 8 March 2016. It is
important to point out that, according to the Isle of Man
Companies Act 2006 (“2006 Act”), under which Origo is
organised, and the Company’s Articles of Association (the
“Articles”), (notably articles 4.25 and 4.8), no redemptions
of the CZDPs are allowed by the Company if, immediately
following any such redemption, the Company would be
unable to satisfy the Solvency Test under the 2006 Act.
In other words, the effect of the 2006 Act and the Articles
is to postpone the obligation to redeem any CZDPs which
cannot be redeemed until such time as the Company is
able to pass the Solvency Test. Therefore, the Company’s
inability to redeem US$12 million of CZDPs in March
2016 was not a breach of the Articles. Nonetheless, in
early March 2016, BM issued a claim in the Isle of Man
seeking a Winding-Up Order against the Company on the
grounds that it was just and equitable to do so in view of
the Company’s alleged oppressive conduct and unfairly
prejudicial treatment of the BM as a shareholder (the
“Winding-up Claim”).
Section 167 of the Isle of Man Companies Act 1931
states that any disposition of the property of the Company
after the commencement of the winding up by the Isle
of Man Court is void unless the Court orders otherwise.
Consequently, whilst the Company's daily operations
should remain broadly unaffected, disposals of its assets
without Court approval may be rendered void and
therefore there are likely to be challenges in implementing
the Company's Revised Investing Policy pending the
outcome of the trail. The Company has received legal
advice that the Isle of Man Court is likely to validate
realisations where no person will be prejudiced by them,
and also that the provisions of section 167 of the Isle of
Man Companies Act 1931 may extend to any transfer of
the Company's shares.
As a result, the Board requested that trading in Origo’s
shares on AIM be suspended. Trading in Origo’s shares
(Ordinary shares and CZDPs) has been suspended since
11 March 2016.
01
DIRECTORS' REPORTOrigo Partners PLC December 2015 Following an initial Court Hearing on 7 April 2016, the
Company was notified that the Isle of Man Court has
directed that Pacific Alliance Asia Opportunity Fund L.P. (a
25.6 per cent. ordinary shareholder of the Company) be
joined to the proceedings (at its request) in relation to the
petition. A hearing in respect of a disclosure request in
relation to the Winding-up Claim made by BM has been
set down for Friday 22 July 2016 and Monday 25 July
2016. Dates for a trail are yet to be set but is expected no
earlier than September 2016.
The Company is vigorously contesting the Winding-up
Claim. The Board believes it is an abuse of process being
brought for collateral, improper and self-serving purposes.
However, the Company's opposition to the Winding-
up Claim will inevitably involve significant cost. Further,
pursuant to Rule 41 of the AIM Rules for Companies, the
London Stock Exchange plc will cancel the admission
of an AIM company’s securities to trading on AIM where
trading has been suspended for six months. Accordingly,
the Company faces the risk of cancellation of its
admission to trading on AIM on or about 11 September
2016.
In the year ahead, the Board will continue to work
towards a resolution of the ongoing dispute with BM in
the interests of all shareholders.
Shonaid Jemmett-Page
Non-Executive Chairman
3 July 2016
02
DIRECTORS' REPORTOrigo Partners PLC December 2015 Investment Consultant’s Report
Difficult economic conditions in China and falling
commodity prices in the second half of 2015 provided
a difficult background for many of the companies in the
portfolio. The exploration and development stage mining
companies in which we have invested were particularly
impacted, with opportunities for developing or divesting
such companies being extremely limited. Consequently,
the Company wrote down the value of a number of
investments in the portfolio. On a more positive note,
working closely with the Company’s portfolio investments,
we were able to reach a number of important commercial
milestones. We expect this progress to facilitate
divestments during the course of the Revised Investing
Policy.
Celadon Mining
potential for an introduction on China's National Equities
Exchange and Quotations (generally referred to as
China’s “New Third Board”); and a possible sale to a
strategic player.
Discussions with strategic players have led to a joint-
initiative with a consortium of powerful Chinese State-
Owned Enterprises. The consortium is spearheaded by
a large state owned trading group listed on the Shanghai
Stock Exchange. With a traditional business focus on
commodity trading, this group is seeking to expand into
supply chain management and related financial services
in the agricultural sector, including leasing, guarantee,
and asset management. The second player is another
state owned grain company, with existing interests in the
rice processing industry.
Following a strategic review and discussions with its
key shareholders, including Origo, Celadon Mining Ltd.
(“Celadon”) has commenced a process to dispose of its
main asset – the Chang Tan West – and distribute the
proceeds to its shareholders.
Chang Tan West is a high quality thermal coal deposit
located in the Jungar Banner coal belt, the closest major
coalfield to the coastal areas of Northern China. Chang
Tan West has current coal resources of 603 million MT
(Chinese classification). Celadon owns 80 per cent of
Chang Tan West and is in the process of acquiring the
remaining 20 per cent of the relevant project company.
Being based in south China, both parties have a strategic
interest to expand their business in Jilin province, being
one of the three provinces in north-east China that form
“China’s bread-basket”. The vehicle for doing so would
be a proposed partnership with China Rice and its
founding shareholder. The venture will seek to build and
operate a large logistics hub in the provincial capital of
Changchun, which would serve as the trading platform
of third parties products between Jilin and the rest of the
Chinese market. Beyond storage and logistic services,
the vehicle will provide a range of auxiliary services,
including quality control, financial services, as well as a
trading/clearing platform.
After an active sales process during the second half of
the year, Celadon entered into a Letter of Intent for the
sale of Chang Tan West in November 2015 with a large
Chinese state-owned enterprise. The prospective buyer is
developing a coal-to-natural-gas project as a downstream
project for coal produced at Chang Tan West. In May
2016, we were informed that the proposed Buyer’s
coal-to-gas conversion project was included in China’s
Thirteenth Five Year Plan; final approvals from relevant
central authorities are pending. Once the project receives
these approvals we expect negotiations in respect of the
Chang Tan West deposit to continue.
China Rice
Throughout 2015 and beyond, we worked with China
Rice Ltd (“China Rice”) management on financing and
liquidity options for the business. The initiatives assessed
included a possible reverse merger in Hong Kong; the
While details are yet to be agreed, we expect that
the formation of this new venture will offer Origo an
opportunity to realise its investment in the business within
the time-frame of the Company's Revised Investing
Policy.
Niutech
In May 2016 Jinan Heng Yu Environmental Protection
Technology Co., Ltd. ("Heng Yu"), the operating company
of Niutech Energy Ltd ("Niutech”) received final approval
for a listing on China’s “New Third Board.”
The market introduction was completed later in May
2016 and a placing of new Heng Yu shares to investors
is planned for later this year. The shares of all current
shareholders are subject to lock-up restrictions until
November 2016. As such, the listing will not represent an
opportunity for Origo to realise part or all of its investment
03
DIRECTORS' REPORTOrigo Partners PLC December 2015 in Heng Yu in the short term.
However, by providing access to a domestic Chinese
investor base, Origo expects the New Third Board listing
to facilitate a realisation of this investment over the
course of the Company's Revised Investing Policy period.
Unipower
The performance of Unipower Battery Ltd. (“Unipower”)
during 2015 was negatively impacted by previously
announced issues. On the one hand, China’s EV market,
and those of related systems and components, including
batteries, experienced solid growth. However, Unipower
was unable to take advantage of this positive environment
due to a dispute over a cross-guarantee issued to a local
bank. While the dispute was ongoing, Unipower was
unable to renew its credit facilities. Without sufficient
funding, production and sales fell below the break-even
point. As a result, Origo’s equity position in the business
was written down by 52 per cent.
To enable the business combination and the private
placement, Origo agreed to convert C$2,000,000
of convertible note outstanding into equity on the
same terms as the private placement. Meanwhile, we
have informed the company that we intend to draw-
down escrowed funds in the amount of C$500,000 in
conjunction with the completion of the proposed financing.
Kincora now benefits from a portfolio of contiguous
copper porphyry targets in a highly prospective region,
access to one of the largest regional geophysical
and surface geochemistry datasets, an enhanced,
experienced team with complementary skill sets as well
as increased funding. While the carrying value of Origo’s
investment in Kincora declined by 33 per cent. during the
year, reflecting movements in the price of Kincora’s listed
equity, the market value of the investment has rebounded
significantly in connection with the above mentioned
private placement.
Staur Aqua (Aqualyng)
The dispute was finally resolved in April 2016, paving
the way for the Company to resume normal operation.
Provided sufficient capital in the short-term, we believe
that Unipower will be well positioned for a trade sale,
specifically since the universe of potential suitors is
both broad and deep. Unipower produces large polymer
batteries used primarily in EVs which could make it an
attractive target for players from a wide range of sectors,
including automotive, utilities and industrial.
Aqualyng A/S (“Aqualyng”) radically transformed its
business in 2015. Since Origo’s initial investment in 2008,
Aqualying has pursued an integrated strategy, seeking to
become a one-stop provider and operator of desalination
facilities. Aqualyng was successful in acquiring a number
of build-operate-transfer projects, most importantly a
large-scale desalination operation in north-east China.
However, this business model required large amounts of
capital with returns realised over the long-term.
Based on our introductions and assistance, Unipower
is currently in discussion with a number of parties, both
banks and equity investors, to secure additional capital.
While the immediate focus is on financing the company so
it can return to growth, we believe there are reasonable
prospects for a bundled transaction which would allow a
partial sale and/or refinancing of Origo’s convertible loans
to the business.
Kincora
Kincora Copper Limited ("Kincora"), a TSX Venture
Exchange listed Mongolia focused copper exploration
company, announced the combination of two of its wholly
owned subsidiaries with companies that own contiguous
licences in May 2016. Concurrent with the mergers,
Kincora announced a proposed C$2 million non-brokered
private placement.
In 2015, Aqualyng revamped its strategy to focus on more
asset-light opportunities in order to improve financial
returns. The company also expanded its business scope
to outside of China and from desalination to water-
treatment more generally. In line with its new strategy,
the company entered into an agreement to merge with
Fontus Water Private Ltd, an Indian water treatment
company. The merger is expected to achieve final closing
in July this year.
Having operated on a consolidated basis for the last
year, the enlarged business broke even in 2015 on a pro-
forma business. Guidance for 2016 suggests revenues
in excess of US$100 million with EBITDA margins in
the range of 8-10%. Once the merger is completed,
the enlarged business will be owned by a group of
shareholders that wish to seek a liquidity event over
the coming years and given the enhanced profile of the
04
DIRECTORS' REPORTOrigo Partners PLC December 2015
combined group this could include a trade sale or IPO.
coal price improvements and using assumptions in GCE’s
feasibility study.
Moly World
Moly World Ltd (Moly World), through its subsidiary,
owns an exploration license, covering 2,360 hectares in
the Mandal area of Mongolia (the “Mandal Project”). The
Mandal project holds a JORC resource of 203Mt in situ
material at 0.126% Mo and 0.026%W. Over the last two
years, Moly World has undertaken further exploration
work and discovered that the project has the potential
to significantly expand its resource base. The company
also commissioned a third-party scoping study for a small
mining operation. On this basis, in 2015, the company
initiated a process to convert the exploration license into a
mining license. However, Moly prices are at a level where
the majority of primary producers are producing at a loss.
Taking into account the risks of obtaining the relevant
licenses and raising the required project financing, the
carrying value of the Moly World position was reduced by
38 per cent.
We understand exploration work is intended to continue.
At the same time, the company is exploring opportunities
to expand and diversify across the energy resources
value chain inside and outside of Mongolia.
We have been informed that GCE has maintained
negligible debt and was recently awarded US $11.5
million, plus costs and continuing interest and damages,
by the Hong Kong International Arbitration Centre,
in respect of collateralized loans outstanding to a
Mongolian business vehicle, granted in connection a
power generation business and a mining supply business
focused on the major active Mongolia mines such as Rio
Tinto’s Oyu Tolgoi project.
On the basis of the valuation of a group of traded peers,
the carrying value of the position in Gobi has been
reduced by 51 per cent.
Gobi Coal & Energy
Portfolio summary
Over the past several years, Gobi Coal & Energy Ltd.
("GCE") has successfully preserved its coal assets while
conducting selected exploration and drilling works to
expand and improve the resource during an unusually
weak coking coal market.
In 2015, the company successfully completed a drilling
program at its primary coking coal mine at Shinejinst.
The drilling program consisted of a total of 637.3 meters
of drilling comprised of 8 diamond core boreholes that
enlarged the deposit area to the southeast with an average
coal thickness of 9.3m. One hole returned an exceptional
coal seam of 44m in thickness with low volatile materials.
76 coal quality samples were obtained in 2015 and
submitted for laboratory testing, with subsequent results
confirming hard coking coal properties and the potential
for a new sub-basin at Shinejinst.
Due to the protracted weakness in semi-soft coking coal
prices, GCE’s Shinejinst and Zeegt projects were placed
on and have remained on care and maintenance, except
for minimal mining requirements to local communities,
in order to preserve cash. While the primary mine at
Shinejinst is uneconomic at the current semisoft coking
coal pricing, its long-term Net Present Value is positive
based on the recent and future expected semi-soft coking
At 31 December 2015 the carrying value of our portfolio,
which is comprised of interests in 17 companies,
decreased to US$104.0 million from US$120.2 million
as at the end of 2014. The decrease principally reflects
the downward adjustment in the carrying value of certain
investments.
The composition of the portfolio has changed compared
to the previous year, reflecting the impact of falling
commodity prices. The metals and mining sector
accounted for 38 per cent. in 2015 (2014: 45 per cent.).
Elsewhere, the portion of our portfolio invested in
agriculture was 30 per cent. (2014: 23 per cent.), while
our exposure to cleantech fell to 27 per cent. (2014: 28
per cent.). The consumer, technology and media portion
of our portfolio was at 5 per cent. in 2015 (2014: 4 per cent.).
4.9%
30.2%
37.8%
27.1%
Agriculture
Clean tech
Metals & Mining
TMT
05
DIRECTORS' REPORTOrigo Partners PLC December 2015 cases in point. However, the result of the parliamentary
elections, held on June 29 2016, and approach taken by
the newly elected government, will be another important
test of the country’s attractiveness to foreign investors.
From a macro-economic perspective, while commodity
and equity markets have recouped some of the losses
recorded in 2015, the prospects for a sustained rebound
are dim. The outlook for coal and molybdenum look
particularly bleak.
While less pronounced, and more institutional than
cyclical in nature, the market environment for our Chinese
portfolio companies also remains challenging. Access
to funding in general, and credit in particular, remain
key concerns for most SMEs in China. Over the last few
years, reforms of local equity markets, coupled with the
launch of China’s New Third Board, have been much
welcomed institutional innovations aimed at directing
domestic capital flows from the banking and real-estate
sectors towards the SME sector. The rapid development
of Chinese equity markets has also had important spill-
over effects for private equity investors by creating a
vibrant market for merger and acquisitions. Yet, as the
unprecedented volatility in the Chinese equity markets in
the first half of 2015 clearly demonstrated, these markets
are fickle, and it will take time for them to evolve into
reliable channels for raising capital. Accordingly, while
we have repositioned our Chinese portfolio companies
to take advantage of domestic capital flows, we remain
cautious about the prospects for generating substantial
liquidity in the near-term.
Looking to the remainder of 2016 and beyond, contesting
the Winding-up Claim in the first instance and resolving
the CZDP dispute is a key concern. Meanwhile, we will
continue to work with our portfolio companies to assist
them in their continued development and to review
opportunities for value creating transactions, in line with
the Company's Revised Investing Policy.
Reflecting the Group's strategy of investing in privately
held companies, 97 per cent. of the portfolio (in terms
of fair value) as at 31 December 2015 was invested in
unquoted portfolio companies. The weighted average
holding period for portfolio companies is 5.2 years
compared to 4.2 years in 2014.
Profit and Loss
Total administrative expenses, excluding the provision of
performance incentives, bad debt and financial guarantee
contracts, were US$4.3 million in 2015, a reduction of
US$1.7 million from 2014.
The Group recorded a loss before tax of US$24.8 million,
compared to a loss before tax of US$62.2 million in the
previous year. The loss is primarily due to unrealised and
realised losses of US$15.9 million on investments.
Balance Sheet
At the end of 2015, the Group had total cash and cash
equivalents of US$1.3 million (2014: US$5.2 million).
Besides operating costs, the decline was primarily as
a result litigation related expenses incurred due to the
disputes with Brooks MacDonald.
Net asset value decreased from US$54.3 million in 2014
to US$30.6 million in 2015, representing a net asset value
per share of US$0.09 as at 31 December 2015, a 44 per
cent. decline from US$0.16 per share in 2014. This fall
was primarily due to the revaluation of a number of the
Group’s investments.
Outlook
Economic conditions in China improved during the first
half of the year following measures by the Government to
stimulate economic activity, yet the debate as to whether
the Chinese economy is about to enter a soft or hard
landing persists.
Also the picture for Mongolia is unclear. The country
has certainly made progress in addressing investor
concerns following the introduction of policies to promote
protectionism and resource nationalism in 2012. The
resolution of the long-running dispute with Rio Tinto in
respect of the Oyu Tolgoi project, and the commitment to
proceed with the development of the underground phase
of the project, as announced in May 2016, are both
06
DIRECTORS' REPORTOrigo Partners PLC December 2015
Portfolio Overview*
China Rice Ltd
Celadon Mining Ltd
Unipower Battery Ltd
Abbreviation
Market
Industry Sector
Segment
China Rice
China
Agriculture
Processing
Date of Investment
2010/12/17
Cost of Investment (US$m) 28.00
Celadon
China
Metals & Mining
Coal
2011/03/29
13.07
Unipower
China
Cleantech
Electrical Storage
2010/9/3
13.71
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
Basis of Valuation
Business Description
Preferred Stock & Loan
Common Stock
Preferred Stock & Loan
32.1%
31.42
102.7%
Multiples
9.7%
23.67
77.4%
Multiples
16.5%
14.95
48.9%
Multiples
China Rice, and its subsidiries form
one of China’s leading privately
held rice processing and distribution
groups with an annual production
capacity of approximately 300,000
tons. The Company maintains a
strong resource and procurement
base in the north eastern province
of Jilin, one of China’s largest rice
producing belts.
Celadon is a China-focused thermal and
coking coal mining and development
company. Through its Chinese
subsidiaries, Celadon owns three coal
mines and a substantial exploration
area (39km2) in the eastern sector
of the Qitaihe coal-bearing basin in
Heilongjiang Province, northeast China.
Celadon also owns Chang Tan West
which has total reserves and resources
of approximately 1.05 billion tonnes in
Inner Mongolia Province, northwest
China.
Unipower is a China based provider
of lithium-ion materials and battery
solutions. Producing high-quality
material and batteries solution for
the Electric Vehicle (“EV”) and power
storage industries, Unipower is
supported by patents, facilities and
a technical management team with
more than 20 years of experience.
NiuTech
Niutech Energy Ltd
Gobi Coal & Energy Ltd
Moly World Ltd
Abbreviation
Market
Industry Sector
Segment
Niutech
China/ROW
Cleantech
Gobi
Mongolia
Moly World
Mongolia
Metals & Mining
Metals & Mining
Recycling/Waste to energy Coal
Molybdenum & Tungsten
Date of Investment
2010/06/22
Cost of Investment (US$m) 6.35
2009/11/24
14.96
2011/06/02
10.00
Common Stock
Common Stock
Common Stock
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
19.1%
11.53
37.7%
Basis of Valuation
Multiples
14.0%
6.58
21.5%
Multiples
20.0%
5.42
17.7%
DCF
Business Description
Niutech is a provider and
operator of waste plastic
and scrap-tire recycling
solutions. Niutech provides
patent protected recycling
technology which converts
waste tires and plastics into
valuable products like fuel oil,
carbon black and steel wire.
Gobi is a privately held coking
coal development company
with significant high quality
coal resources in south
western Mongolia, positioned
to supply growing demand
from China.
Moly World is the owner of an
advanced stage molybdenum
exploration project in Mongolia,
known locally as Mandal Moly, which
covers an area of 2,360 hectares
approximately 40 kilometres north
of Tsagaan-Uul Soum, Khuvsgul
Province, in northern Mongolia. The
project has a JORC near surface
compliant resource of 256,000 tons
at 0.126% Mo.
* Top 9 portfolio companies
07
DIRECTORS' REPORTOrigo Partners PLC December 2015 Rising Technology
Corporation Ltd
Kincora Copper Ltd
Six waves Inc
Abbreviation
Market
Industry Sector
Segment
Rising
China
TMT
Kincora Copper Ltd
Six waves Inc
Mongolia
Metals & Mining
China
TMT
Consumer software
Copper-gold & gold
Web service
Date of Investment
2007/01/11
Cost of Investment (US$m) 5.57
2011/07/31
9.86
2011/10/27
0.24
Instrument
Equity Interest
Fair Value (US$m)
% of Net Assets
Common Stock
Common Stock & Loan
Common Stock
1.6%
3.88
12.7%
26.3%
2.97
9.7%
1.1%
1.22
4.0%
Basis of Valuation
Multiples
Market price
Multiples
Business Description
China's anti-virus software
and content security vendor.
6Waves is the leading
publisher of independent
games on social networks
and mobile devices.
Kincora is a mining
exploration and development
company focused on copper
deposits in Mongolia. Its
key asset is the Bronze Fox
copper-gold deposit located
in southeast Mongolia along
the Oyu Tolgoi copper belt.
08
DIRECTORS' REPORTOrigo Partners PLC December 2015 Directors’ Report
The Directors present their report together with the
audited financial statements for the year ended 31
December 2015.
Results and dividends
The result of the Group for the period is set out on page
12 and shows a loss for the year of US$24,364,000
(2014: loss of US$61,891,000). The limited trading history
of the Group neither justifies nor allows the payment
of a dividend. The Directors are therefore not able to
recommend the payment of a dividend (2014: US$nil).
The retained loss of the year of US$24,364,000 (2014:
loss of US$61,891,000) has been transferred to reserves.
Principal activities, review of business and future
developments
On 20 November 2014, Origo's shareholders approved
changes to the Company's investing policy, management
structure and management incentive arrangements as
recommended by the Board.
Consequently, the Company’s Investing Policy has
changed from that of a closed-ended, permanent capital
vehicle to that of a realisation company with the mandate
to return the net proceeds of realisations to shareholders.
The Company will seek to divest the entire Portfolio
over 4 years from the effective date of the changes to
the Company’s investing policy. However, investments
will only be realised when the Independent Directors
believe the terms are appropriate. The review of business
and future developments is covered in the Chairman’s
Statement and Investment Consultant’s Report.
Repurchase of the Convertible Zero Dividend Preference
Shares
The 60 million US$1.00 Convertible Zero Dividend
Preference Shares that were issued in March 2011 have
a maturity date of 8 September 2017. The Company had
previously committed to repurchasing at least 12million
of the Convertible Zero Dividend Preference Shares on
the 8 March 2016 but due to the lack of cash reserves,
this repurchase has been deferred. The Directors are
currently 18 months into a 4 year realisation plan for the
Group and will seek to repay these Convertible Zero
Dividend Preference Shares from the proceeds generated
from the disposal of the investment portfolio. However,
the Articles of the Company state that
“if on any date fixed for redemption the Company
is unable to redeem in full the relevant number of
Convertible Zero Dividend Preference Shares, if as a
result of so doing the Company would be unable to satisfy
the Solvency Test immediately thereafter, on any date
fixed for redemption, the Company shall redeem as many
of such Convertible Zero Dividend Preference Shares as
can lawfully and properly be redeemed and the Company
shall redeem the balance as soon as it is lawfully and
properly able to do so.”
The Directors will continue to monitor cash reserves
and solvency levels with a view to repurchasing the
Convertible Zero Dividend Preference Shares when the
Company and the Group is in a position to do so. Full
disclosure of the Convertible Zero Dividend Preference
Shares has been included in note 22 of the consolidated
financial statements.
Application to Court to wind up the Company
On 11 March 2016 the Company was formally notified
by Brooks Macdonald Asset Management (International)
Limited that it had filed a Claim Form, dated 9 March
2016, at the Isle of Man High Court seeking an order to
wind up the Company on the grounds that it is just and
equitable to do so and/or as relief under Section 180
of the Isle of Man Companies Act 2006 (the “Winding-
up Claim”). The Directors have obtained legal advice
regarding all matters and are continuing to work with all
parties to reach an amicable solution.. The Directors
are hopeful that this will be achieved. Full disclosure
of the ongoing disputes with Brooks Macdonald Asset
Management (International) Limited has been included in
note 29 of the consolidated financial statements.
09
DIRECTORS' REPORTOrigo Partners PLC December 2015
Directors
At 31 December 2015
Mr. Niklas Ponnert
Ms. Shonaid Jemmett-Page
Mr. Lionel de Saint-Exupery
At 31 December 2014
Mr. Wang Chao Yong*
Mr. Chris A Rynning*
Mr. Niklas Ponnert
Mr. Christopher Jemmett*
Options
5,300,000
Options
4,000,000
3,500,000
5,300,000
100,000
Ordinary shares
Shares in
subsidiaries
2,691,009****
1****
560,000******
560,000******
Ordinary shares
Shares in
subsidiaries
3,987,575**
14,570,040***
2,691,009****
-
1***
1****
300,000*****
9,996,500*****
*
**
***
****
Mr. Wang Chao Yong, Mr. Chris A Rynning and Mr. Christopher Jemmett resigned as Directors of the Company in February 2015.
1,507,500 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.
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 2.37% of CCF which is one of subsidiaries of the Group.
******
560,000 Shares have been issued to Ms. Shonaid Jemmett-Page and Mr. Lionel de Saint-Exupery respectively on February 2015.
10
DIRECTORS' REPORTOrigo Partners PLC December 2015 grounds to defer the repurchase of the Convertible Zero
Dividend Preference Shares that were issued in March
2011, until such a time that the Company and the Group
has sufficient cash reserves to make the repurchases.
Further disclosure regarding the going concern has been
included in Note 1 – Basis of preparation.
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.
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.
Auditors
The auditors, Ernst & Young LLC have indicated the
willingness to continue in office.
By order of the Board
Karl Niklas Ponnert
3 July 2016
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;
m a k e j u d g m e n t s a n d e s t i m a t e s t h a t a r e
reasonable and prudent;
state whether International Financial Reporting
Standards have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the company will continue in business.
The Directors are responsible for keeping 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
The Board has concluded that the Company and the
Group is considered to be a going concern and as a result
of this the consolidated financial statements for the year
ended 31 December 2015 have been prepared on the
going concern basis. In concluding that it is appropriate
to t prepare the consolidated financial statements on a
going concern basis, the Board has made assumptions,
based on legal opinion received that the ongoing dispute
with Brooks MacDonald Asset Management (International)
Limited will be resolved in such a way that will allow
the Company and the Group to continue in operation in
its current form. It also believes that it has reasonable
11
DIRECTORS' REPORTOrigo Partners PLC December 2015
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 2015 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 30. The financial
reporting framework that has been applied in their
preparation is applicable law and International Financial
Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB) 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.
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.
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which
is not qualified, we have considered the adequacy of the
disclosure made in note 1.2 to the financial statements,
concerning the Company's and the Group's ability to
continue as a going concern. The conditions described in
note 1.2 indicate the existence of a material uncertainty
which may cast significant doubt about the Company’s
and the Group's ability to continue as a going concern.
The financial statements do not include the adjustments
that would result if the Company and the Group was
unable to continue as a going concern.
Respective responsibilities of Directors and auditor
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 2015 and of the Group’s
loss for the year then ended; and
have been properly prepared in accordance with
IFRS issued by the IASB and adopted for use in
the European Union.
Ernst & Young LLC
Chartered Accountants
Isle of Man
3 July 2016
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
Audited Financial Statements to identify material
12
INDEPENDENT AUDITOR’S REPORTOrigo Partners PLC December 2015 Origo Partners Plc
Consolidated statement of comprehensive income
For the year ended 31 December 2015
Investment loss:
Realised losses on disposal of investments
Unrealised losses on investments
Income from loans
Dividends
Fund consulting fee
Consulting services payable
Other income
Performance fee
- Performance incentive
Other administrative expenses
Share-based payments
Net loss before finance costs and taxation
Foreign exchange losses
Finance income
Finance cost
Loss before tax
Income tax
Loss after tax
Other comprehensive income/(loss)
Other comprehensive income/(loss) to be reclassified to profit
or loss in subsequent periods:
Exchange differences on translating foreign operations
Net other comprehensive income/(loss) to be reclassified to
profit or loss in subsequent periods
Tax on other comprehensive income/(loss)
Other comprehensive income/(loss) 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
5
26
9
9
10
2015
US$'000
(1,526)
(14,365)
721
-
(15,170)
14
(2,054)
113
3,209
(4,748)
(226)
(18,862)
(106)
-
(5,802)
(24,770)
406
(24,364)
5
5
-
5
2014
US$'000
(14,513)
(30,078)
764
4
(43,823)
98
(98)
52
(5,790)
(6,765)
(545)
(56,871)
(43)
18
(5,336)
(62,232)
341
(61,891)
(252)
(252)
-
(252)
(24,359)
(62,143)
(24,340)
(24)
(24,364)
(24,337)
(22)
(24,359)
(62,357)
466
(61,891)
(62,617)
474
(62,143)
11
11
(6.95) cents
(17.89) cents
(6.95) cents
(17.89) cents
The accompanying notes form an integral part of these consolidated financial statements.
13
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Consolidated statement of financial position
At 31 December 2015
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments at fair value through profit or loss
Loans
Derivative financial assets
Current assets
Loans due within one year
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Performance incentive payable within one year
Financial guarantee contracts
Non-current liabilities
Provision
Convertible zero dividend preference shares
Deferred income tax liability
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Share-based payment reserve
Retained earnings
Translation reserve
Equity component of convertible zero
dividend preference shares
Other reserve
Non-controlling interests
Total equity
Total equity and liabilities
Notes
2015
US$'000
2014
US$'000
12
14
15
16
15
17
18
19
19
20
21
22
10
23
22
24
64
4
77,571
350
-
77,989
26,093
4,101
1,272
31,466
109,455
2,701
8
435
3,144
4,262
69,385
2,082
75,729
30,582
56
150,414
7,573
(135,824)
(1,495)
8,297
1,056
30,077
505
30,582
96
6
91,306
653
11
92,072
28,246
3,896
5,185
37,327
129,399
1,249
8
-
1,257
7,701
63,609
2,488
73,798
54,344
55
150,262
7,147
(111,484)
(1,500)
8,297
995
53,772
572
54,344
109,455
129,399
The consolidated financial statements were approved by the Board of Directors and authorised for issue. They were signed on
its behalf by:
Karl Niklas Ponnert
Director
3 July 2016
The accompanying notes form an integral part of these consolidated financial statements
14
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Consolidated statement of changes in equity
For the year ended 31 December 2015
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
55 150,281
6,741 (49,127)
8,297
(2,193)
(1,248) 112,806
22,163 134,969
-
-
-
-
-
-
-
-
-
-
-
(19)
-
-
-
-
-
-
-
406
-
(62,357)
-
(62,357)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,162
26
-
-
- (62,357)
466 (61,891)
(252)
(252)
-
(252)
(252) (62,609)
466 (62,143)
-
-
-
-
3,162
(9,003)
(5,841)
7
406
-
-
7
406
-
(13,054) (13,054)
55 150,262
7,147 (111,484)
8,297
995
(1,500)
53,772
572
54,344
-
-
-
1
-
-
-
-
-
-
184
(32)
-
-
-
-
-
-
-
426
-
(24,340)
-
(24,340)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61
-
-
- (24,340)
(24) (24,364)
5
5
-
5
5 (24,335)
(24) (24,359)
-
-
-
-
185
29
426
-
-
-
-
(43)
185
29
426
(43)
56 150,414
7,573 (135,824)
8,297
1,056
(1,495)
30,077
505
30,582
At 1 January 2014
Loss for the year
Other comprehensive loss
Total comprehensive income/
(loss)
Capital redemption of CCP
fund
Own shares acquired
Share-based payment
expense
Disposal of subsidiaries
At 31 December 2014
Loss for the year
Other comprehensive loss
Total comprehensive income/
(loss)
New issue of shares
Own share acquired
Share-based payment
expense
Minority interests
At 31 December 2015
26
26
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
Translation reserve
Equity created to recognise fair value change of available-for-sale
investments and own shares acquired.
Equity created to recognise foreign currency translation differences.
The accompanying notes form an integral part of these consolidated financial statements.
15
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Consolidated statement of cash flows
For the year ended 31 December 2015
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/written off of investments
Unrealised losses on investments at FVTPL*
Unrealised losses on loans
Fair value losses on derivative financial assets
Income from loans
Foreign exchange losses
Interest expenses of convertible zero dividend preference shares
Purchases of investments at FVTPL
Purchases of loans
Proceeds from disposals of investments at FVTPL
Proceeds from repayment of loans
Operating loss before changes in working capital and provisions
Decrease/ (increase) in trade and other receivables
Decrease in inventories
Increase/(decrease) in trade and other payables
Decrease in financial guarantee contracts
Net cash outflow from operations
Investing activities
Disposal/(purchases) of property, plant and equipment
Disposal of subsidiaries, net of cash impact
Acquisition of subsidiaries, net of cash impact
Net cash inflow/(outflow) from investing activities
Financing activities
Repayment of shareholder loans
Redemption (CCP LP, CCF & MSE)**
Net cash outflow from financing activities
Net 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
2015
US$'000
(24,770)
5
4
26
5
5
2
2
2
2
9
8
15
8
15
20
34
(3,209)
226
49
435
1,526
12,357
1,997
11
(721)
106
5,776
(219)
(363)
432
459
(5,874)
344
-
1,452
-
(4,078)
10
-
-
10
-
-
-
(4,068)
155
5,185
1,272
2014
US$'000
(62,232)
44
5,790
545
803
-
14,513
19,601
10,379
98
(688)
43
5,296
(363)
(2,121)
396
732
(7,164)
(569)
2
(793)
(825)
(9,349)
18
(15,054)
-
(15,036)
(500)
(5,726)
(6,226)
(30,611)
496
35,300
5,185
* FVTPL refers to fair value through profit or loss
** CCP LP, CCF & MSE refer to China Cleantech Partners, L.P., China Commodities Absolute Return Ltd and MSE
Liquidity Fund
The accompanying notes form an integral part of these consolidated financial statements.
16
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 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 2015 were authorised for issue in accordance with a resolution of the
Directors on 27 June 2016. 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 IFRS issued by the IASB 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 2015.
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 IFRS and
International Financial Reporting Interpretations Committee’s interpretations (“IFRIC”) (collectively , “IFRSs”)
issued by 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.
As mentioned in the Directors Report the Company is currently facing a potential court battle over its future due
to the fact that Brooks Macdonald Asset Management (international) Limited have filed a Claim Form (dated
9 March 2016) at the Isle of Man High Court seeking an order to wind up the Company. As also mentioned in
the Directors Report, the Company has deferred the repurchase of at least 12million US$1.00 Convertible Zero
Dividend Preference Shares that the Company had previously committed to repurchasing on the 8 March 2016.
The Directors have also noted that the Convertible Zero Dividend Preference Shares will only be repurchased at
a time when the Company has sufficient reserves to do so and can still satisfy the Solvency Test, as defined in
the Company’s Articles.
The Directors have taken legal advice with regards to the Windingup Claim and are working with Brooks
Macdonald Asset Management (international) Limited and other key shareholders in the Company to reach a
solution that is acceptable to all parties involved. The Directors have assumed, based on legal advice received
and discussions held to date that this can be achieved.
17
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.2 Basis of preparation (continued)
The Company continues with the investment realisation programme that commenced in November 2014 and
the Directors expect that the proceeds generated from the planned divestment of the investment portfolio will be
sufficient, not only to settle all liabilities, but also to fulfil the redemption obligations in respect of the Convertible
Zero Dividend Preference Shares.
However, there is uncertainty as to whether the assumptions will be met which could impact the Company and
the Group’s ability to repay the Convertible Zero Dividend Preference Shares or settle the ongoing dispute.
The Board have concluded that the circumstances surrounding the ability to settle the ongoing dispute with
Brooks Macdonald Asset Management (International) Limited represents a material uncertainty that casts
significant doubt upon the Company’s and the Group’s ability to continue as a going concern. However, whilst
recognising this uncertainty the Board has a reasonable expectation that this ongoing dispute will be resolved
and therefore it is appropriate to prepare the consolidated financial statements on a going concern basis. The
consolidated financial statements do not reflect any adjustments that would have to be made should this not be
the case.
1.3 Significant accounting judgements, estimates and assumptions
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.
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:
Fair value of unquoted equity instruments
(a)
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.
The Group has applied the requirements of IFRS 2 share-based payment in these consolidated financial
statements.
18
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.3 Significant accounting judgements, estimates and assumptions (continued)
(b)
Share-based payments, equity-settled transactions and cash-settled transactions
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
Binominal option pricing 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 the Binominal Tree 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 2015. Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:
•
•
•
Power over the investee (i.e., exiting rights that give it the current ability to direct the relevant activities
of the investee)
Exposure, or rights, to variable returns from its involvement with the investee
The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and when the Group has less than a majority of the voting or similar rights of an investee, the
Group considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
•
•
•
The contractual arrangement(s) with the other vote holders of the investee
Rights arising from other contractual arrangements
The Group’s voting rights and potential voting rights
19
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
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)
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.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having 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 non-controlling 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
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 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)
Foreign currencies
•
Functional and presentation currency
The consolidated financial statements are presented in United States dollar, which is also the parent
company’s functional currency. For each entity the Group determines the functional currency and items
included in the financial statements of each entity are measured using that functional 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.
21
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(b)
Foreign currencies (continued)
• 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.
(c)
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, convertible credit agreements 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 the rights to receive cash flows from the asset have expired or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset. 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.
22
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(c)
Financial assets (continued)
• Investments at fair value through profit or loss
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 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:
(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.
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;
23
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(c)
Financial assets (continued)
• Investments at fair value through profit or loss (continued)
Fair value estimation (continued):
iv.
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.
(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 17.
• 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.
24
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(c)
Financial assets (continued)
• Impairment of financial assets
For amortised cost loans and receivables, the Group assesses, at each reporting date, whether there
is objective evidence that a financial asset or a group of financial assets is impaired. An impairment
exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss
event’), has an impact on the estimated future cash flows of the financial asset or the group of financial
assets that can be reliably estimated. Evidence of impairment may include indications that the debtors
is experiencing significant financial difficulty, default or delinquency in interest or principal payments,
the probability that they will enter bankruptcy or other financial reorganisation and observable data
indicating that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
(d)
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.
• 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 a 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.
25
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(d)
Financial liabilities (continued)
• 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.
(e)
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.
(f)
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.
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 Binominal Tree 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).
26
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(f)
Share-based payments (continued)
Equity-settled transactions (continued)
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 binominal
tree 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).
(g)
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.
27
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(g)
Taxes (continued)
Deferred tax liabilities are recognised for all taxable temporary differences, except:
(I)
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
(II)
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)
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
(II)
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.
Deferred Tax (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.
28
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(h)
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.
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.
(i)
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 measured at fair value between the start and end of the accounting period and the
impairment of amortised cost loans.
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.
(j)
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.
29
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(j)
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.
(k)
New and revised IFRS that are effective or early adopted in 2015 and relevant to the Group
On 1 January 2015, the Group adopted the following new standards, amendments and interpretations.
Amendment to IAS 19 Defined Benefit Plans: Employee Contributions
Annual Improvements 2010-2012 Cycle
Annual Improvements 2011-2013 Cycle
The Group adopted the IAS 19 Amendments — Defined Benefit Plans: Employee Contributions in 2015.
IAS 19 Amendments require an entity to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed
to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions
is independent of the number of years of service, an entity is permitted to recognise such contributions
as a reduction in the service cost in the period in which the service is rendered, instead of allocating the
contributions to the periods of service.
Annual Improvements 2010-2012 Cycle and Annual Improvements 2011-2013 Cycle
IFRS 2 — Share-Based Payment
This improvement is applied prospectively and clarifies various issues relating to the definitions of
performance and service conditions which are vesting conditions.
IFRS 3 — Business Combinations
The amendments are applied prospectively and clarify that: (1) all contingent consideration arrangements
classified as liabilities (or assets) arising from a business combination should be subsequently measured at
fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable);
and (2) IFRS 3 does not apply to the accounting for the formation of any joint arrangement.
30
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(k)
New and revised IFRS that are effective or early adopted in 2015 and relevant to the Group (continued)
IFRS 8 — Operating Segments
The amendments are applied retrospectively and clarify that: (1) an entity must disclose the judgements
made by management in applying the aggregation criteria, including a brief description of operating
segments that have been aggregated and the economic characteristics used to assess whether the
segments are “similar”; and (2) the reconciliation of segment assets to total assets is only required to be
disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required
disclosure for segment liabilities.
IAS 24 — Related Party Disclosures
The amendment is applied retrospectively and clarifies that a management entity (an entity that provides
key management personnel services) is a related party subject to the related party disclosures. In addition,
an entity that uses a management entity is required to disclose the expenses incurred for management
services.
IFRS 13 — Fair Value Measurement
The amendment is applied prospectively and clarifies that the portfolio exception can be applied not only to
financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as
applicable).
IAS 40 — Investment Property
The amendment is applied prospectively and clarifies that the guidance in IFRS 3 is used to determine if the
purchase of investment property is the purchase of an asset or a business combination.
The adoption of the above standards, amendments and interpretations does not have any significant impact
on the operating results, financial position and comprehensive income of the Group. The Group has not
early adopted any other standard, amendment or interpretation that was issued but not yet effective.
31
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
1 Accounting policies (continued)
1.4 Summary of significant accounting policies (continued)
(l)
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, amendments 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.
IFRS 9
Financial Instruments
IAS 27 Amendments
Equity Method in Separate Financial Statements
IFRS 10, IAS 28 Amendments
Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture
IFRS 15
Revenue from Contracts with Customers
IFRS 10, IFRS 12 and
IAS 28 Amendments
Investment Entities: Applying the
Consolidation Exception
IAS 1 Amendments
Disclosure Initiative
IFRS 11 Amendments
Accounting for Acquisitions of
Interests in Joint Operations
IAS 16 and IAS 38
Amendments
Clarification of Acceptable Methods of
Depreciation and Amortisation
IFRS 16
Leases
IAS 7 Amendments
Statement of Cash Flow
Annual Improvements to
IFRSs 2012–2014 cycle
(issued in September 2014)
Effective for
annual periods
beginning on
or after
1 January 2018
1 January 2016
1 January 2016
1 January 2018
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2019
1 January 2017
1 January 2016
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 9 could have a material effect on the classification and measurement of the
Group’s financial assets, but no impact on the classification and measurement of the Group’s financial
liabilities.
32
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
2 Investment loss
Realised losses on disposal of investments
- Investments at FVTPL
- Loans at amortised cost
- Subsidiary
Unrealised losses on investments
- Investments at FVTPL
- Loans at FVTPL
- Loans at amortised cost
- Derivative financial assets
Income from loans
Dividends
Total
3 Consulting services receivable/(payable)
Consulting services receivable
Consulting services payable
Total
2015
US$'000
(1,526)
(1,160)
(363)
(3)
(14,365)
(12,357)
(894)
(1,103)
(11)
721
-
2014
US$'000
(14,513)
(1,233)
(3,867)
(9,413)
(30,078)
(19,601)
(6,851)
(3,528)
(98)
764
4
(15,170)
(43,823)
2015
US$'000
-
(2,054)
(2,054)
2014
US$'000
17
(115)
(98)
33
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
4 Performance incentive
Payable within one year
Provision for performance incentive payable over one year
Total
2015
US$'000
-
3,209
3,209
2014
US$'000
(8)
(5,782)
(5,790)
A balance sheet provision for future performance incentive for the year ended 31 December 2015 was
US$4,194,262 (2014: US$7,404,454). The decrease in balance was derived from the unrealised losses on
investments in 2015.The performance incentives are accrued and payable to Origo Adviser Ltd refer to Note 27
for details on Origo Advisers Ltd.
The amount of performance incentives has been calculated and accrued in accordance with the basis, (i) from
the time the Hurdle has been reached, the next US$1,700,000 of Gross Realisations shall be applied towards
equal payments of performance incentives; and thereafter (ii) 20 per cent of each subsequent Gross Realisation
shall be applied towards an equal further payment of performance incentive.
*
**
Hurdle: US$90,000,000 of Gross Realisations
Gross Realisation: cumulative gross cash proceeds received by or on behalf of the Group which are
derived from the realisation of assets in the Portfolio, after having made full provision for repayment of any
third party debt (including any unpaid interest thereon) and any related hedge or other break costs and any
prepayment fees and penalties thereon, but before any related transactional costs, fees and expenses and
any taxes required to be paid by the relevant selling entity that arise directly as a result of completion of the
relevant transaction to dispose of the relevant asset, provided that any amounts of deferred consideration
or earn-out shall not be counted towards such realisations until actually received by the relevant selling
member of the Group.
5 Other administrative expenses
Employee expenses
Professional fees
Including:
- Audit fees
Depreciation expenses
Provision for bad debts*
Provision for financial guarantee contracts
Others
Total
2015
US$'000
(262)
(3,248)
(257)
(22)
(49)
(435)
(732)
(4,748)
2014
US$'000
(2,763)
(2,144)
(291)
(44)
(803)
-
(1,011)
(6,765)
34
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
6 Information regarding directors and employees
Average number of employees of the Group*
Management**
Investment and transaction team
Finance and accounting
Administration and HR
Year ended
31 December 2015
Year ended
31 December 2014
Number
Number
-
-
-
-
-
2
4
5
3
14
The aggregate payroll costs of these employees were as follows:
US$'000
US$'000
Wages and salaries
Share-based payments
Social security costs
262
226
-
488
2,632
545
131
3,308
*
All employees of the Group have been transferred to and employed by Origo Advisors Ltd in January
2015, which is controlled by entities whose ultimate beneficiaries include Niklas Ponnert (Director of the
Company), Chris A Rynning and Luke Leslie.
**
Management includes Mr. Chris A Rynning, the former Chief Executive Officer and Mr. Niklas Ponnert,
the former Chief Financial Officer.
7 Directors’ remuneration
Directors' emoluments
Share-based payment expenses
2015
US$'000
231
191
422
2014
US$'000
1,005
218
1,223
35
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
7 Directors’ remuneration (continued)
Directors’ remuneration for the year 2015 and the number of options held were as follows:
Name
Mr. Wang Chao Yong***
Mr. Chris A Rynning***
Mr. Niklas Ponnert
Mr. Christopher Jemmett***
Mr. Lionel de Saint-Exupery
Mr. Tom Preststulen***
Ms. Shonaid Jemmett Page
Salaries*
US$'000
3
Director Fee
US$'000
-
Share-based
payment**
US$'000
17
Total
US$'000
20
-
-
-
-
-
-
3
-
-
3
72
6
147
228
87
87
-
-
-
-
191
87
87
3
72
6
147
422
Directors’ remuneration for the year 2014 and the number of options held were as follows:
Name
Mr. Wang Chao Yong
Mr. Chris A Rynning
Mr. Niklas Ponnert
Mr. Christopher Jemmett
Mr. Lionel de Saint-Exupery
Mr. Tom Preststulen
Ms. Shonaid Jemmett Page
Salaries*
US$'000
75
Director Fee
US$'000
-
Share-based
payment**
US$'000
(18)
Total
US$'000
57
330
300
-
-
-
-
-
-
75
75
75
75
118
118
-
-
-
-
448
418
75
75
75
75
2015
Number of
options
4,000,000
3,500,000
5,300,000
100,000
-
-
-
12,900,000
2014
Number of
options
4,000,000
3,500,000
5,300,000
100,000
-
-
-
705
300
218
1,223
12,900,000
*
**
***
Short term employee benefits
Share-based payment refers to expenses arising from the Company’s share option scheme (note 26).
Mr. Wang Chao Yong, Mr. Chris A Rynning, Mr. Christopher Jemmett and Mr. Tom Preststulen resigned as
Directors of the Company in February 2015. The remaining directors of the Company are Shonaid Jemmett-
Page (Non-executive Chairman), Lionel de Saint-Exupery (Non-executive Director) and Niklas Ponnert
(Director).
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 Board of Directors. The
Group’s operating segments have been defined based on the types of investments which was equity investment
and debt instrument in 2015 and 2014.
36
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
8 Operating segment information (continued)
For the year ended 31 December 2015
Unlisted
Listed Total
Equity
$'000
Debt
$'000
Total
$'000
Equity
$'000
Debt
$'000
Total
$'000
$'000
(3)
(363)
(366)
(1,160)
-
(1,160)
(1,526)
(12,755)
(1,866)
(14,621)
-
555
555
(12,758)
(1,674)
(14,432)
-
(20)
459
(363)
459
(383)
387
-
(773)
432
(199)
(131)
166
35
256
166
(14,365)
721
(738)
(15,170)
-
-
432
(199)
891
(582)
Investment loss:
Realised losses on disposal of
investments
Unrealised losses on
investments
Income from loans
Total
Net divestment/(investment)
Net proceeds of divestment
Investment
Balance sheet
Investment portfolio
76,125
24,649
100,774
1,446
1,793
3,239
104,013
The Group’s geographical areas based on the location of investment assets (non-current assets), are defined
primarily as China, Mongolia, South Africa and Europe, as presented in the following table.
Investment loss:
Realised losses on disposal of
investments
Unrealised losses on
investments
Income from loans
Total
Net divestment/(investment)
Net proceeds of divestment
Investment
Balance sheet
Europe
$'000
(366)
(415)
-
(781)
-
(383)
China
$'000
-
(2,485)
555
(1,930)
460
-
Mongolia
$'000
(1,160)
(9,831)
166
(10,825)
432
(199)
South
Africa
$'000
Total
$'000
-
(1,526)
(1,634)
(14,365)
-
(1,634)
-
-
721
(15,170)
892
(582)
Investment portfolio
1,100
87,466
15,233
214
104,013
37
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
8 Operating segment information (continued)
For the year ended 31 December 2014
Unlisted
Listed Total
Equity
$'000
Debt
$'000
Total
$'000
Equity
$'000
Debt
$'000
Total
$'000
$'000
(9,751)
(3,867)
(13,618)
(895)
-
(895)
(14,513)
(19,657)
(10,169)
(29,826)
(42)
(210)
(252)
(30,078)
Investment loss:
Realised losses on disposal of
investments
Unrealised losses on
investments
Share of gains of jointly
controlled entity
Income from loans
Dividends
Total
Net divestment/(investment)
-
-
-
-
568
-
-
568
-
-
-
4
(29,408)
(13,468)
(42,876)
(933)
-
196
-
(14)
-
-
-
196
4
-
764
4
(947)
(43,823)
396
(565)
6,539
(2,686)
Net proceeds of divestment
5,411
732
6,143
Investment
Balance sheet
-
(2,121)
(2,121)
396
(565)
Investment portfolio
88,860
26,761
115,621
2,457
2,138
4,595
120,216
Europe
China
Mongolia
$'000
$'000
$'000
Rest
of Asia
$'000
North
America
$'000
South
Africa
$'000
Total
$'000
(3,885)
(9,413)
(1,103)
(32)
(80)
-
(14,513)
-
-
-
-
(32)
294
-
-
-
-
-
-
(8,337)
(30,078)
-
-
-
-
764
4
(80)
(8,337)
(43,823)
87
-
-
-
6,539
(2,686)
-
1,848
120,216
Investment loss:
Realised (losses)/gains on
disposal of investments
Unrealised losses on
investments
Share of gains of jointly
controlled entity
Income from loans
Dividends
Total
(2,137)
(4,647)
(14,957)
-
-
-
-
568
-
196
4
(6,022)
(13,492)
(15,860)
Net proceeds of divestment
-
6,143
Investment
Balance sheet
(981)
(1,140)
15
(565)
Investment portfolio
1,494
90,197
26,677
38
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
9 Finance income and costs
Finance income
Bank interest
Finance costs
Bank charges
Interest expenses of convertible zero
dividend preference shares
10 Income tax
2015
US$'000
2014
US$'000
-
-
(26)
(5,776)
(5,802)
18
18
(40)
(5,296)
(5,336)
As the Company is not in receipt of income from Manx land, certain related business or property and does not
hold a Manx banking licence, it is taxed at the standard rate of 0% on the Isle of Man. The company is resident
for tax purposes in the Isle of Man and subject to corporate income tax at the standard rate of 0% and as such
no provision for tax in the Isle of Man has been made.
Current taxes
Current year
Deferred taxes
Deferred income taxes*
Total income taxes credit in the statement of comprehensive income
2015
US$'000
2014
US$'000
-
406
406
(1)
342
341
*
The deferred income tax liability US$ 2,081,539 relates to fair value gain of Celadon Mining Ltd, China
Rice Ltd, Niutech Energy Ltd, Unipower Battery Ltd and Shanghai Yi Rui Tech New Energy Technology Ltd,
estimated in accordance with the relevant tax laws and regulations in the People’s Republic of China (“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% (2014: 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
2015
US$'000
(24,802)
2014
US$'000
(62,232)
-
406
406
(1)
342
341
39
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
10 Income tax (continued)
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
11 Earnings per share
Numerator
Loss for the period attributable to owners of the parent
2015
US$'000
2014
US$'000
2,488
2,488
(406)
(406)
2,082
2,082
2,830
2,830
(342)
(342)
2,488
2,488
2015
US$'000
2014
US$'000
as used in the calculation of basic loss per share
(24,340)
(62,357)
Loss for the period attributable to owners of the parent
as used in the calculation of diluted loss per share
(24,340)
(62,357)
Denominator
Weighted average number of ordinary shares for basic LPS
Effect of dilution:
Share options
Convertible preference shares
2015
Number of
shares
350,714,047
2014
Number of
shares
348,612,786
-
-
-
-
Weighted average number of ordinary shares adjusted for the effect of dilution
350,714,047
348,612,786
Basic LPS
Diluted LPS
(6.95) cents
(17.89) cents
(6.95) cents
(17.89) cents
40
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
12 Property, plant and equipment
Cost
At 1 January 2014
Additions
Disposal
At 31 December 2014
Additions
Disposal
At 31 December 2015
Accumulated depreciation
At 1 January 2014
Charge for the year 2014
Disposal
At 31 December 2014
Charge for the year 2015
Disposal
At 31 December 2015
Net book value
At 31 December 2014
At 31 December 2015
Fixtures and
fittings
US$'000
Computer
equipment
US$'000
Vehicles
US$'000
Machinery
equipment
US$'000
Total
US$'000
42
1
(43)
-
-
-
-
35
1
(36)
-
-
-
-
-
-
128
3
(116)
15
-
(15)
-
86
9
(81)
14
-
(14)
-
1
-
153
-
-
153
-
(9)
144
31
27
-
58
22
-
80
95
64
48
-
-
48
-
(48)
-
44
4
-
48
-
(48)
-
-
-
371
4
(159)
216
-
(72)
144
196
41
(117)
120
22
(62)
80
96
64
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 2015
100%
Proportion of
ownership interest
at 31 December 2014
100%
Name
Ascend Ventures Ltd
Origo Resource Partners Ltd
PHI International Holding Ltd
PHI International (Bermuda) Holding Ltd*
Ascend (Beijing) Consulting Ltd**
China Cleantech Partners, L.P.
Origo Partners MGL LLC
China Commodities Absolute Return Ltd
Guernsey
Bermuda
Bermuda
China
Cayman
Mongolia
Isle of Man
ISAK International Holding Ltd**
British Virgin Islands
Origo Asset Management Ltd***
China Venture Capital GP Ltd***
Cayman
Cayman
100%
100%
100%
100%
100%
100%
95.3%
71.2%
-
-
100%
100%
100%
100%
100%
100%
95.3%
71.2%
100%
100%
41
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
13 Investments in subsidiaries (continued)
*
**
Owned by Origo Resource Partners Ltd
Owned by Ascend Ventures Ltd
***
Struck off
14 Investments at fair value through profit or loss
As at 31 December 2015
Name*
IRCA Holdings Ltd.
Shanghai Yi Rui Tech New Energy
Technology Ltd
Resources Investment Capital Ltd.
Roshini International Bio Energy
Corporation
China Rice Ltd
Kincora Copper Ltd***
R.M.Williams Agricultural Holdings Pty Ltd
Moly World Ltd
Niutech Energy 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
Marula Mines Ltd
Fram Exploration AS
Other quoted investments***
Country of
incorporation
British Virgin Islands
Fair
Value
hierarchy
level
3
Proportion
of ownership
interest
Fair
value
Cost
US$’000
US$’000
49.1% 9,505 -
China
British Virgin Islands
3
3
49.0% 675
287
38.5%
793
-
British Virgin Islands
British Virgin Islands
3
3
Canada
Australia
British Virgin Islands
British Virgin Islands
Cayman Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
Norway
Mongolia
Germany
British Virgin Islands
Cayman Islands
British Virgin Islands
South Africa
Norway
1
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
1
35.9% 17,050 -
16,417
32.1% 13,000
26.1% 6,728
1,180
24.0% 20,214
-
20.0% 10,000
5,419
19.1%
6,350
11,531
16.5% 4,301
5,795
14.3%
2,360 -
14.0% 14,960
6,575
9.7% 13,069 23,674
9.2% 719
373
5.0% 148
60
-
-
2.5%
2%/
1.6%
1.2%
1.1%
0.9%
5,565
3,884
25
-
240
1,218
250
0.6% 1,223
1,569
214
232
266
The shares held in China Rice and Unipower are all convertible preference shares whilst the remaining
investments held in the other entities are all ordinary equity shares. The 'proportion of ownership interest'
represents the percentage of the shares held by the Group in all share classes.
128,298
77,571
42
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
As at 31 December 2014
Name*
IRCA Holdings Ltd.
Shanghai Yi Rui Tech New Energy
Technology Ltd
Resources Investment Capital Ltd.
Country of
incorporation
British Virgin Islands
Fair
Value
hierarchy
level
3
Proportion
of ownership
interest
Cost
US$’000
49.1% 9,505
Fair
value
US$’000
-
China
British Virgin Islands
3
3
49.0%
38.5%
675
287
695
-
Roshini International Bio Energy Corporation British Virgin Islands
3
35.9% 17,050
-
China Rice Ltd
Kincora Copper Ltd***
R.M.Williams Agricultural Holdings Pty Ltd
Niutech Energy Ltd
Moly World Ltd
Unipower Battery Ltd
Fans Media Co., Ltd
Gobi Coal & Energy Ltd***
Celadon Mining Ltd
Staur Aqua AS
Ares Resources
Bach Technology GmbH
Rising Technology Corporation Ltd/Beijing
Rising Information Technology Ltd **
Kooky Panda Ltd
Six Waves Inc
Marula Mines Ltd
Fram Exploration AS
Other quoted investments***
British Virgin Islands
Canada
Australia
British Virgin Islands
British Virgin Islands
Cayman Islands
British Virgin Islands
British Virgin Islands
British Virgin Islands
Norway
Mongolia
Germany
British Virgin Islands
Cayman Islands
British Virgin Islands
South Africa
Norway
3
1
3
3
3
3
3
3
3
3
3
3
3
3
3
3
3
1
32.1% 13,000
12,027
26.3% 7,389
1,755
24.0% 20,214
-
21.1% 6,350
11,891
20.0% 10,000
8,688
16.5% 4,301
12,053
14.3% 2,360
-
14.0% 14,960
13,394
9.7% 13,069
24,634
9.2% 719
43
5.0% 148
-
2.5%
2%/
60
-
1.6% 5,565
25
1.2%
3,174
-
1.1% 240
804
0.9%
250
501
0.6% 1,202
956
2,296
691
129,665
91,306
*
**
***
There are no significant restrictions that will have an impact on ability to transfer of these investments.
2% equity stake in Rising Technology Corporation Ltd and 1.6% beneficial interest in Beijing Rising
Information Technology Ltd, a company incorporated in the PRC, under a nominee agreement.
Investments held partially by China Commodities Absolute Return Ltd (”CCF”), the fund managed by
the Group.
43
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
As at 31 December 2015 the proportion of ownership interest held by CCF in investments is as follows:
Name*
Kincora Copper Ltd
Gobi Coal & Energy Ltd
Proportion of ownership interest
1.38%
0.2%
Cost
US$’000
254
252
Fair value
US$’000
63
111
In accordance with IFRS 13-Fair Value Measurement, financial instruments recognised at fair value are required
to be analysed between those whose fair value is based on:
a)
b)
c)
Quoted prices in active markets for identical assets or liabilities (Level 1);
Those involving inputs other than quoted prices included in level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and
Those with inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (Level 3).
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period. There have been no transfers between Levels during the period of 2015.
Statement of changes in Investments at fair value through profit or loss based on level 3:
Opening balance
Acquisitions
Proceeds from disposals of investments
Realised losses on disposals of investments
Realised losses on write-off of investments
Net exchange difference
Movement in unrealised losses on investments
- In profit or loss
Transfers out of Level 3
Closing balance
2015
US$’000
88,860
20
-
-
-
(1,327)
(11,428)
-
76,125
2014
US$’000
110,750
-
(294)
(32)
(306)
(1,692)
(17,965)
(1,601)
88,860
The fair value decrease on investments categorised within Level 3 of US$12,754,500 (2014: US$19,994,687),
was recorded in the statement of profit or loss.
44
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
Description of significant unobservable inputs to valuation:
as at 31 December 2015
Investments in unquoted equity shares -
metal & mining sector
Valuation
technique
DCF method
Investments in unquoted equity shares -
metal & mining sector
Investments in unquoted equity shares -
cleantech sector
Investments in unquoted equity shares -
agriculture sector
Investments in unquoted equity shares -
TMT sector
Multiples method
Multiples method
Multiples method
Multiples method
as at 31 December 2014
Investments in unquoted equity shares -
metal & mining sector
Valuation
technique
DCF method
Investments in unquoted equity shares -
metal & mining sector
Investments in unquoted equity shares -
cleantech sector
Investments in unquoted equity shares -
agriculture sector
Investments in unquoted equity shares -
TMT sector
Multiples method
Multiples method
Multiples method
Multiples method
Significant
unobservable inputs
WACC
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Significant
unobservable inputs
WACC
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Discount for lack of
marketability
Range
19%
20% - 30%
20% - 30%
30%
30%
30%
Range
13.85% - 15%
20% - 30%
20% - 30%
30%
30%
30%
45
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
14 Investments at fair value through profit or loss (continued)
Risk management activities
Fair value risk
The Group’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 does not hedge the market risk inherent in the portfolio but manage 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. The Group believes that the carrying amount is a
reasonable approximation of fair value for their financial assets and liabilities.
Valuation techniques
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 closing price.
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques. 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. Valuation methodologies mainly include
the price of recent investments, multiples, discounted cash flows or earnings, 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 reporting
period.
Sensitivity risk of investments at fair value through profit or loss 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$1,882,986 (2014:
US$2,310,225) or 2.47% (2014: 2.60%) of total investments at fair value through profit or loss based at level 3.
15 Loans
The Group has entered into convertible credit agreements and has the right to convert the outstanding
principal balance of relevant loans into borrower’s shares according to certain conversion conditions, and loan
agreements with certain investee companies as set forth in the table below.
46
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
15 Loans (continued)
As at 31 December 2015
Borrower
Convertible credit agreements*
China Rice Ltd
Unipower Battery Ltd
IRCA Holdings Ltd
R.M. Williams Agricultural Holdings Pty Ltd
Staur Aqua AS
Kincora Copper Ltd
Roshini International Bio
Energy Corporation
Sub-total
Borrower
Loan agreements*
IRCA Holdings Ltd
TPL GmbH
R.M.William Agricultural Holdings Pty Ltd
Shanghai Evtech New Energy Technology Ltd
China Silvertone Investment Co Ltd
Unipower Battery Ltd
View Step Corporation Ltd
Sub-total
Total
Fair
value
hierarchy
level
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
3
3
3
3
3
3
3
4
6
1.5-8
8-20
0-15
15,000
15,000
9,000
9,000
11,645
3,090
3,848
-
-
145
1,793
8.7
2,254
-
424
-
-
-
-
-
350
-
-
Fair
value
US$'000
15,000
9,000
-
-
495
1,793
-
45,261
25,938
350
26,288
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
Amortised
cost
US$'000
6-10
10
15.5+RBA
cash rate
-
-
12
-
8,909
3,807
1,725
510
478
164
25
15,618
60,879
-
-
-
-
-
155
-
155
-
-
-
-
-
-
-
-
-
-
-
-
-
155
-
155
26,093
350
26,443
*
Loans in relation to convertible credit agreements are measured at fair value. Loans in relation to loan
agreements are measured at amortised cost using the effective interest rate method less any identified
impairment losses.
47
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
15 Loans (continued)
As at 31 December 2014
Borrower
Convertible credit agreements*
China Rice Ltd
Unipower Battery Ltd
IRCA Holdings Ltd
R.M. Williams Agricultural Holdings Pty Ltd
Staur Aqua AS
Kincora Copper Ltd
Roshini International Bio Energy
Corporation
Sub-total
As at 31 December 2014
Borrower
Loan agreements*
IRCA Holdings Ltd
TPL GmbH
R.M.William Agricultural Holdings Pty Ltd
Shanghai Evtech New Energy
Technology Ltd
China Silvertone Investment Co Ltd
Unipower Battery Ltd
View Step Corporation Ltd
Sub-total
Total
Fair
value
hierarchy
level
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
3
3
3
3
3
3
3
4
6
1.5-8
8-20
0-15
15,000
15,000
9,000
9,000
11,645
3,090
3,848
764
-
267
8.7
2,469
2,138
-
424
-
-
-
-
-
228
-
-
Fair
value
US$'000
15,000
9,000
764
-
495
2,138
-
45,476
27,169
228
27,397
Loan
rates
%
Loan
principal
US$'000
6-10
10
15.5+RBA
cash rate
-
-
12
-
8,909
3,807
1,725
510
478
409
25
Loans
due
within
one year
US$'000
Loans
due
after
one year
US$'000
Amortised
cost
US$'000
158
425
583
-
-
510
-
409
-
-
-
-
-
-
-
-
-
510
-
409
-
15,863
61,339
1,077
28,246
425
653
1,502
28,899
48
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
15 Loans (continued)
Statement of changes in loans:
Opening balance
Additions
Repayment
Write-offs
Revaluation
Impairment
Closing balance
Statement of changes in convertible credit agreements based on level 3:
Opening balance
Repayment
Write-offs
Movement in unrealised losses on investments
- In profit or loss
Closing balance
2015
US$’000
28,899
363
(459)
(363)
(894)
(1,103)
26,443
2015
US$’000
27,397
(215)
-
(894)
26,288
2014
US$’000
41,756
2,121
(732)
(3,867)
(6,851)
(3,528)
28,899
2014
US$’000
34,248
-
-
(6,851)
27,397
The fair value decrease on convertible credit agreements categorised within level 3 of US$893,533 (2014:
US$6,851,090), was recorded in the statement of profit or loss.
Description of significant unobservable inputs to valuation:
The valuation technique of convertible credit agreements includes DCF method for the liability component and
Binomial Model for the option embedded. The significant unobservable input is the discount rate In accordance
with the expected level of risk, which moves opposite towards the fair value of convertible credit agreements.
Convertible loans issued to China Rice Ltd and Unipower Batteries Ltd are structured as “bundled investments”,
i.e. they have been extended along-side of equity investments. Substantial repayments of loans outstanding are
expected to negatively affect the Company’s ability to realise the full value of its combined investment in relevant
companies. Consequently, except smaller amounts, the bulk of convertible loan investments are expected to be
realised (whether through repayment in cash or conversion into and subsequent sale of equity) with the disposal
of the relevant portfolio company as a whole, or through divestments of Origo’s equity positions. The Company
has a reasonable expectation to be in a position to realise the full value of these loans over next 12 months;
however, substantial balances may remain outstanding beyond such period.
49
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
16 Derivative financial assets
Warrants
Total
Fair Value
hierarchy level
3
2015
US$’000
-
-
2014
US$’000
11
11
In accordance with the fair value hierarchy described in note 14, derivative financial instruments are measured
using level 3 for warrants.
Statement of changes in derivative financial assets based on level 3:
Opening balance
Expired
Movement in unrealised losses on investments
- In profit or loss
Closing balance
2015
US$’000
11
-
(11)
-
2014
US$’000
109
-
(98)
11
The fair value decreases on derivative financial instruments categorised within level 3 of US$11,092 (2014:
US$97,701), was recorded in the statement of profit or loss.
2015
US$’000
5
1,378
2,676
42
4,101
0-30 days
US$'000
-
31-60
days
US$'000
-
61-90
days
US$'000
-
181-365
days
US$'000
1
Over 365
days
US$'000
4
-
18
42
-
60
1%
-
37
-
-
37
1%
-
24
-
-
24
1%
200
552
-
-
-
753
18%
3,762
10,214
-
(8,169)
(2,584)
3,227
79%
2014
US$’000
4
1,382
2,127
383
3,896
Total
US$'000
5
3,962
10,845
42
(8,169)
(2,584)
4,101
100%
17 Trade and other receivables
Trade debtors
Other debtors
Loan interest receivables
Prepayments
Total
2015 Aging for the Group
Aging for the Group
Trade debtors
Other debtors
Loan interest receivables
Other
Provision against loan
interest receivables
Provision of bad debts
Total
Percentage
50
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
17 Trade and other receivables
2014 Aging for the Group
Aging for the Group
Trade debtors
Other debtors
Loan interest receivables
Other
Provision against loan
interest receivables
Provision of bad debts
Total
Percentage
0-30
days
US$'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$'000
4
645
136
273
(25)
-
1,029
27%
10
124
-
(79)
(10)
45
1%
-
127
7
(81)
-
53
1%
104
404
37
(238)
(27)
280
7%
312
721
7
(451)
(5)
584
15%
2,895
8,784
59
(7,295)
(2,542)
1,905
49%
Total
US$'000
4
3,966
10,296
383
(8,169)
(2,584)
3,896
100%
The Group identified an impairment of US$ 48,887 (2014: US$ 802,505) on trade and other receivables, and the
impairment is recognised within the other administrative expenses.
18 Cash and cash equivalents
Current account
Total cash and cash equivalents
19 Trade and other payables
Trade payables
Other payables
Performance incentive payable within one year*
Total
*
Refer to note 4 for total performance incentive expenses.
20 Financial guarantee contracts
Financial guarantee contracts*
Total
2015
US$’000
1,272
1,272
2015
US$’000
5
2,696
8
2,709
2014
US$’000
5,185
5,185
2014
US$’000
2
1,247
8
1,257
2015
US$’000
435
435
2014
US$’000
-
-
*
In July 2013, the Group entered into a guarantee agreement with IRCA Holdings Ltd and ABSA Bank
Limited to guarantee the repayment of loan facilities of up to Rand 6,769,000 extended by ABSA Bank
Limited to IRCA Holdings Ltd, which has applied for the liquidation, so the Group recognised it as a liability.
The payment request related to this provision is expected in the next year.
51
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
21 Provision
USR/contingent share awards *
Performance incentive provision**
Total
Opening balance
Movement in USR/contingent share awards *
Movement in performance incentive provision**
Total
2015
US$’000
67
4,195
4,262
2015
US$’000
7,701
(230)
(3,209)
4,262
2014
US$’000
297
7,404
7,701
2014
US$’000
1,787
132
5,782
7,701
*
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 26. The provision is expected to be utilised in
the next 9 years when the operation are exercised.
**
Refer to note 4 for total performance incentive expenses. The provision is expected to be utilised when
investments are realised and the hurdle is reached.
22 Liability component of convertible zero dividend preference shares
Balance at 1 January 2014
Interest expenses on convertible zero dividend
preference shares
Fair value movement of early redemption option
derivative
Balance at 31 December 2014
Interest expenses on convertible zero dividend
preference shares
Fair value movement of early redemption option
derivative
Number of
shares
57,000,000
Liability
component
US$'000
58,313
Equity
component
US$'000
8,297
-
-
5,296
-
-
-
57,000,000
63,609
8,297
-
-
5,776
-
-
-
Balance at 31 December 2015
57,000,000
69,385
8,297
Early
redemption
option
derivative
US$'000
-
-
-
-
-
-
-
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).
52
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
22 Liability component of convertible zero dividend preference shares (continued)
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.
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
repurchased 3 million Convertible Preference Shares from holders at a price of US$1.00 per Convertible
Preference Shares in 2013.
23 Issued capital
Authorised
Ordinary shares of £ 0.0001 each
2015
Number of
shares
500,000,000
2014
Number of
shares
500,000,000
£'000
50
£'000
50
Issued and fully paid
At beginning of the year
New issue of shares
Buyback shares
At end of the year
Number of
shares
356,706,814
US$'000
55
Number of
shares
356,706,814
2,390,000
(350,000)
US$'000
55
1
358,746,814
56
356,706,814
-
-
55
53
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
24 Other reserve
Included within the other reserve are 7,711,425 shares of the Company held by Employee Benefit Trust (“EBT”)
and the amounts of US$ 3,162,677 credited from the capital redemption of CCP fund in 2014.
25 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
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates is
relatively small as the Group’s outstanding debt is fixed rate. Meanwhile, the interest income is not material in
the context of the total portfolio return as a whole.
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.
2015
2014
Increase/
(decrease) in
USD rate
+10%
-10%
+10%
-10%
Effect on
profit
before tax
US$'000
2,784
(2,784)
3,125
(3,125)
Effect on
NAV
US$'000
2,784
(2,784)
3,125
(3,125)
The assumed movement for currency rate sensitivity analysis is based on the currently observable market
environment.
54
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
25 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:
2015
Cash and bank balances
GBP
US$'000
-
NOK
US$'000
-
RMB
US$'000
84
AUD
US$'000
10
HKD
US$'000
50
CAD
US$'000
6
ZAR
US$'000
-
Total
US$'000
150
Investment at FVTPL
23,757
(154)
-
(67)
(1,060)
(1,281)
GBP
US$'000
29
24,802
37
-
-
Loans
Trade and other receivables
Total Assets
Trade and other payables
Financial guarantee contracts
Provision
Deferred income tax liability
Total Liabilities
2014
Cash and bank balances
Investment at FVTPL
Loans
Trade and other receivables
Derivative assets
Total Assets
Trade and other payables
Provision
Deferred income tax liability
Total Liabilities
Credit risk
605
495
-
793
154
380
-
-
-
-
-
-
1,362
1,793
80
-
-
23,757
1,100
1,411
10
50
3,241
-
-
-
-
-
-
-
-
(12)
(12)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(435)
-
-
26,517
2,442
460
29,569
(154)
(435)
(67)
(1,072)
(435)
(1,728)
NOK
US$'000
50
RMB
US$'000
38
AUD
US$'000
12
HKD
US$'000
50
CAD
US$'000
13
Total
US$'000
192
999
495
-
-
24,868
1,544
(171)
(297)
(1,157)
(1,625)
-
-
-
-
695
930
317
1,980
(101)
-
(2)
(103)
-
-
-
-
-
-
-
-
2,279
2,138
83
12
28,775
3,600
400
12
12
50
4,525
32,979
-
-
-
-
-
-
-
-
-
-
-
-
(272)
(297)
(1,159)
(1,728)
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$26.4 million. Directors consider cash and receivables do not expose to
significant credit risk, because the cash is held at reputable banks. The credit risk exposure is managed on an
asset-specific basis by management.
2015
not
past due
US$'000
-
-
-
2015
up
to 12
months
past due
US$'000
350
2015
more
than 12
months
past due
US$'000
25,938
2015
2014
Total
US$'000
26,288
not
past due
US$'000
2,366
2014
up
to 12
months
past due
US$'000
-
2014
more
than 12
months
past due
US$'000
25,031
2014
Total
US$'000
27,397
-
155
155
425
350
26,093
26,443
2,791
556
556
521
1,502
25,552
28,899
Convertible loan
Working capital loan
Total
55
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
25 Financial instruments - Risk management (continued)
Liquidity risk
The table below analyses the Group’s financial assets and liabilities into relevant maturity groupings based on
the remaining period at the balance sheet date to the contractual maturity date or, if earlier, the expected date on
which the financial assets will be realised and the financial liabilities will be settled. The amounts in the table are
the contractual undiscounted cash flows.
Assets
31 December 2015
Cash and cash equivalents
Trade receivables
Other receivables
Loan interest receivables
Loans
Investments at fair value through profit or loss
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000
1,272
-
988
2,630
24,300
-
US$'000 US$'000 US$'000
-
-
-
-
220
46
-
-
-
-
-
1,793
5
170
-
350
-
77,571
Total
US$'000
1,272
5
1,378
2,676
26,443
77,571
Total
29,190
266
1,793
78,096
109,345
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000 US$'000 US$'000
-
-
-
Total
US$'000
5
US$'000
5
-
67
-
-
1,912
281
-
-
-
-
1,984
281
8
-
-
-
-
8
4,195
4,203
-
503
67
2,696
57,000
23,608
57,000
23,608
85,306
87,579
Liabilities
31 December 2015
Trade payables
Performance incentive payable
USR/Contingent share awards
Other payables
Liability component of convertible zero
dividend preference shares
Contractual interest payable
Total
56
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Total
US$'000
5,185
4
1,382
2,127
11
28,899
91,306
128,914
Total
US$'000
2
7,412
297
1,247
Origo Partners Plc
Notes to the financial statements (continued)
25 Financial instruments - Risk management (continued)
Liquidity risk (continued)
Assets
31 December 2014
Cash and cash equivalents
Trade receivables
Other receivables
Loan interest receivables
Derivative financial assets
Loans
Investments at fair value through profit or loss
Total
Liabilities
Less than 1
month
1-3
months
3-12
months
over 12
months
US$'000
5,185
-
1,225
2,044
11
26,107
535
35,107
US$'000 US$'000 US$'000
-
-
-
-
1
-
-
-
1,756
1,757
-
-
83
-
2,139
-
2,222
4
156
-
-
653
89,015
89,828
Less than 1
month
1-3
months
3-12
months
over 12
months
31 December 2014
Trade payables
Performance incentive payable
USR/Contingent share awards
Other payables
Liability component of convertible zero
dividend preference shares
Contractual interest payable
US$'000
2
-
297
361
-
-
US$'000 US$'000 US$'000
-
-
-
-
-
378
-
-
8
-
-
-
-
8
7,404
-
508
57,000
57,000
16,843
81,755
16,843
82,801
Total
660
378
Concentration risk
The main concentration risk for Origo is that the largest investments are concentrated in China for the amount of
US$ 87,466,071, 84% out of the total portfolio value of US$ 104,012,816.
57
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
26 Share-based payments
The Group has a number of share schemes that allow employees to acquire shares in the Company, as detailed
in note 1.3 (b).
The total cost recognised in the statement of comprehensive income is shown below:
Equity-settled option
USR/contingent share awards
Total
2015
US$'000
(426)
200
(226)
2014
US$'000
(406)
(139)
(545)
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 2015 and 31 December 2014.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2015
No.
21,451,932
-
2015
WAEP
26.97p
-
2014
No.
23,001,932
-
2014
WAEP
27.32p
-
(500,000)
(31.00p)
(1,550,000)
(31.00p)
-
-
-
-
-
-
-
-
Outstanding at 31 December
20,951,932
26.87p
21,451,932
26.97p
Exercisable at 31 December
11,451,932
23.45p
11,451,932
23.45p
The weighted average remaining contractual life for the share options outstanding as at 31 December 2015 was
3.56 years (31 December 2014: 4.56 years).
The range of exercise prices for options outstanding at the end of the year was 20 pence to 59.85 pence (31
December 2014: 20 pence to 59.85 pence).
Outstanding options include 6,800,000, 3,500,000, 500,000 and 13,600,000 equity-settled options granted on
26 October 2006, 13 March 2008, 6 February 2009 and 2 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 from 2007 to 2015, except as described above.
58
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
26 Share-based payments (continued)
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 2015 and 31 December
2014.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2015
No.
8,061,425
-
-
2015
WAEP
9.07p
-
-
2014
No.
5,688,067
2,423,358
-
(350,000)*
0.00p
(50,000)**
-
-
-
Outstanding at the end of the year
7,711,425
9.48p
8,061,425
2014
WAEP
12.85p
0.00p
-
0.00p
-
9.07p
Exercisable at the end of the year
7,711,425
9.48p
8,061,425
9.07p
* The weighted average share price at the date of exercise of these options was 5.70 pence.
** The weighted average share price at the date of exercise of these options was 7.88 pence.
The weighted average remaining contractual life for the share options outstanding as at 31 December 2015 was
5.51 years (2014: 6.64 years).
The range of exercise prices for options outstanding at the end of the year was zero to 15.5 pence (2014: zero to
15.5 pence).
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 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 vested 197 days from the date of grant. The contractual life of
each contingent share awards granted is 10 years.
On 30 December 2014, 2,423,358 of share awards were granted to certain key employees under the Company’s
JSOS, which vested immediately at the date of grant. The contractual life of each share offers granted is 10
years.
The following table lists the inputs to the model used to calculate the fair value of USRs for the year.
Underlying stock price (pence)
Exercise price (pence)
Expected life of option (years)
Expected volatility (%)
Expected dividend yield (%)
Risk-free interest rate (%)
2015
1.50
15.5
2
34.53
-
0.50
2014
6.13
15.5
2
45.82
-
1.18
59
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
26 Share-based payments (continued)
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 2013 to 31 December 2015 using source
data from Reuters.
The carrying amount of the liability relating to the USR and the contingent share award as at 31 December 2015
is US$66,895 and the credit expense recognized as share-based payments during the period is US$200,495.
27 Related party transactions
Identification of related parties
The Group has a related party relationship with its subsidiaries, jointly controlled entity, associates and
key management personnel. The Company receives and pays certain debtors and creditors on behalf of
its subsidiaries and the amounts are recharged to the entities. Transactions between the Company and its
subsidiaries have been eliminated on consolidation.
Transactions with key management personnel
The Group’s key management personnel are the Executive and Non-executive Directors as identified in the
director’s report.
Trading transactions
The following table provides the total amount of significant transactions and outstanding balance
Amounts due from/(to) related parties*
Key management personnel:
Wang Chao Yong***
Christopher Jemmett***
Lionel de Saint-Exupery***
Shonaid Jemmett Page***
Luke Leslie***
Other:
Origo Advisers Ltd**
2015
US$'000
2014
US$'000
-
-
(25)
(100)
-
(47)
(47)
(47)
(47)
(12)
(4,203)
(7,117)
60
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
27 Related party transactions (continued)
Transactions
Key management personnel:
Luke Leslie****
Other:
Origo Advisers Ltd**
2015
US$'000
2014
US$'000
-
(17)
3,209
(5,790)
*
**
***
The amounts are unsecured, non-interest bearing and have no fixed terms of repayment.
Origo Advisers Ltd is controlled by entities whose ultimate beneficiaries include Niklas Ponnert (Director
of the Company), Chris A Rynning and Luke Leslie.
Wang Chao Yong and Christopher Jemmett were former Non-executive Directors of the Company;
Lionel de Saint-Exupery (Non-executive Director of the Company); Shonaid Jemmett Page (Non-
executive, Chairman of the Company); and Luke Leslie is a Director of CCF which is one of
subsidiaries of the Group.
****
The amount is the management fee according to the advisory agreement between CCF and the
Group.
28 Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue
as a going concern and to maintain healthy capital ratios in order to support its business and maximise
shareholders’ value.
The Group manages and makes appropriate adjustments to its capital structure on an ongoing basis in
light of changes in economic conditions and the risk characteristic of the underlying assets. To maintain
or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital
to shareholders and/or issue new shares. The Group is not subject to any externally imposed capital
requirements. No changes were made in the objectives, policies or processes during the years ended 31
December 2015 and 31 December 2014.
The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net
debt includes current liabilities less cash and bank balances. Capital includes equity attributable to equity
holders of the parent company. The gearing ratios as at the reporting dates were as follows:
Current liabilities
Less: Cash and bank balances
Net debt
2015
US$'000
3,144
(1,272)
1,872
2014
US$'000
1,257
(5,185)
(3,928)
61
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
28 Capital management (continued)
Liability component of convertible zero dividend
preference shares
Equity attributable to equity holders of the parent
Capital
Capital and net debt
Gearing ratio
29 Commitments and contingencies
2015
US$'000
69,385
30,077
99,462
2014
US$'000
63,609
53,772
117,381
101,334
113,453
2%
(3%)
•
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”) (the "First Complaint"). 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 on a reference in a short-form term sheet (the "CZDP Term Sheet") that was appended to
the placing letter entered into between Origo’s Broker and NOMAD (on behalf of Origo) and Spearpoint (now
part of the Brook MacDonald group) 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 argues 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 purported 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 also sought
legal advice in respect of the First Complaint. On the basis of that legal advice, Board considers that a legal
claim against Origo, in respect of the First Complaint if initiated by Brooks Macdonald, would be unlikely to
succeed.
62
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners Plc
Notes to the financial statements (continued)
29 Commitments and contingencies (continued)
To date, no legal proceedings have been commenced by Brooks MacDonald in relation to the First
Complaint, although Brooks MacDonald has not withdrawn its threat to bring such legal proceedings.
Separately, Brooks MacDonald, through its lawyers in the Isle of Man (where the Company is incorporated),
has raised a further complaint (the "Second Complaint"). Brooks MacDonald asserted that the resolution
passed on 8 March 2011 ("March 2011 Resolution") to amend the Company's Articles to reflect the creation
of the CZDP shares was not validly passed. This assertion rested on an argument that a "75% Resolution"
(as defined in the Articles), which is required in order to amend the Company's Articles, requires a majority
of holders of 75% of all issued and outstanding shares to have voted in favour of it rather than a majority
of 75% of votes cast. Brooks MacDonald, therefore, contended that if the March 2011 Resolution was not
validly passed it would have a legal claim for the return from the Company of the consideration paid for the
purchase of the CZDP.
On July 9, 2015, the Isle of Man Court handed down judgment in favour of the Company in respect of the
Second Complaint, confirming that the Articles bear the meaning propounded by the Company.
Following the hearings of the Second Complaint, Brooks MacDonald has notified the Company of a claim
in relation to the construction of a provision of the Company's Articles (the “Third Complaint”). This claim is
in relation to article 4.17 of the Articles, which primarily addresses a conversion mechanism relating to the
Company's convertible zero dividend preference shares.
On 29 September 2015, after extensive consultations with Brooks MacDonald, and other shareholders, the
Company announced a set of proposals which would restructure the CZDPs and provide Origo with greater
flexibility to implement its orderly realisation strategy. The proposals, if approved by Shareholders, would
also have served to settle the ongoing dispute with Brooks Macdonald. At the relevant general meeting of
the Company held on 4 February 2016, the proposals were voted down by the Company's shareholders by
way of poll.
On 10 February 2016, Brooks MacDonald issued proceedings in the Isle of Man Court in respect of the
Third Complaint, seeking a declaration as to the correct interpretation of article 4.17. Those proceedings
were subsequently stayed by consent and Brooks MacDonald has made no attempt to prosecute that claim.
The Company announced on 8 March 2016 that, whilst the Company's Articles include a requirement for the
Company to have redeemed US$12 million of CZDP by 8 March 2016, it was not in a position to redeem
US$12 million of CZDPs at the current time. The 8 March 2016 announcement went on to confirm that the
Company remains under a continuing obligation to undertake the redemption of US$12 million of CZDPs as
and when it is legally able to do so.
The Articles expressly envisage the possibility that the Company will not have the available funds to redeem
CZDP shares on the relevant redemption date (whether 8 March 2016 or later). Articles 4.8 provides:
“If on any date fixed for redemption the Company is unable to redeem in full the relevant number of
Convertible Preference Shares [CZDPs], if as a result of so doing the Company would be unable to satisfy
the Solvency Test immediately thereafter, on any date fixed for redemption, the Company shall redeem as
many of such Convertible Preference Shares as can lawfully and properly be redeemed and the Company
shall redeem the balance as soon as it is lawfully and properly able to do so.”
63
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015
Origo Partners Plc
Notes to the financial statements (continued)
29 Commitments and contingencies (continued)
Further, under the Isle of Man Companies Act of 2006, no Redemption of the CZDP may be made by
the Company if, immediately following any such redemption, the Company would be unable to satisfy
the Solvency Test under the 2006 Act, the effect of the 2006 Act is to postpone the obligation to redeem
those CZDP which cannot be redeemed due to the Solvency Test until such time as the Company can
redeem and pass the Solvency Test, and to avoid the Company becoming insolvent by converting CZDP
shareholders to creditors when the Company cannot afford to redeem.
On 10 March 2016, the Company was notified by Brooks Macdonald Asset Management (International)
Limited that it has filed a Claim Form, dated 9 March 2016, at the Isle of Man High Court seeking an order
to wind-up the Company on the grounds that it is just and equitable to do so and/or as relief under section
180 of the Isle of Man Companies Act 2006.
On 7 April 2016, the first hearing of this Winding-up Claim was heard in the Isle of Man Courts of Justice
and certain directions were made.The presentation of Brooks Macdonald's claim to the Isle of Man Court
for winding up is deemed to have commenced a winding up by the Isle of Man Court, under section 169(2)
of the Isle of Man Companies Act 1931. Section 167 of the Isle of Man Companies Act 1931 states that
any disposition of the property of the Company after the commencement of the winding up by the Isle of
Man Court is void unless the court orders otherwise. Consequently, whilst the Company judged that its
daily operations should remain broadly unaffected, disposals of its assets without Court approval may
be rendered void.. The Company has received legal advice that the Isle of Man Court is likely to validate
realisations where no person will be prejudiced by them which are for fair value and on arms length, and
also that the provisions of section 167 of the Isle of Man Companies Act 1931 may extend to any transfer of
the Company's shares.
As a result, the Board requested that trading in the Company’s shares on AIM be suspended. Trading in the
Company’s shares has been suspended since 11 March 2016.
Following an initial Court Hearing on 7 April 2016, the Company was notified that the Isle of Man Court
has directed that Pacific Alliance Asia Opportunity Fund L.P. (a 25.6 per cent. ordinary shareholder of the
Company) be joined to the proceedings (at its request) in relation to the Winding-up Claim. A hearing in
respect of a disclosure request made by Brooks Macdonald Asset Management (International) Limited in
relation to the Winding-Up Claim has been set down for Friday 22 July 2016 and Monday 25 July 2016.
These dates were originally set down as the trial dates to consider the Winding-Up Claim. Revised dates
for a trail are yet to be determined but the trial is now not expected to occur no earlier than September
2016. Pursuant to Rule 41 of the AIM Rules for Companies, the London Stock Exchange plc will cancel
the admission of an AIM company’s securities to trading on AIM where trading has been suspended for
six months. Accordingly, the Company faces the risk of cancellation of its admission to trading on AIM in
September 2016.
Having sought and considered relevant legal advice provided, it is the Directors’ view that, on balance, if
the matter goes to Court, the Winding up Claim will not succeed. Further, the Board holds a a reasonable
expectation that the parties may be able to reach an agreement in respect of a restructuring of the CZDP
and a related legal settlement which, if finalisd and agreed, would result in the Winding-up Claim being
dropped and all related disputes among the parties being settled.
There were no other material contracted commitments or contingent assets or liabilities at 31 December
2015 (31 December 2014: none) that have not been disclosed in the consolidated financial statements.
30 Events after the reporting period
In June 2016, Origo announced that it has agreed with Kincora to convert the C$2,000,000 convertible note
principal and interest outstanding (net of C$500,000 escrowed funds to be paid to Origo) into equity, subject to
a Placement of not less than C$500,000, with conversion being on the same terms as the Placement. The loan
note is due and payable on 21 October 2016 with interest at 8.7% per annum, payable on maturity in cash or
shares of Kincora, at Origo's election. Prior to the conversion of the loan note and its associated interest, Origo
holds 85,883,786 common shares of Kincora.
64
AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2015 Origo Partners PLC
33-37 Athol Street, Douglas,
Isle of Man,IM1 1LB
www.origoplc.com