Origo Partners
Annual Report 2016

Plain-text annual report

ORIGO PARTNERS PLC REPORT AND FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2016 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 Auditor BDO Limited 25/F, Wing On Centre 111 Connaught Road Central Hong Kong Nominated adviser and broker Smith & Williamson Corporate Finance Ltd 25 Moorgate London EC2R 6AY UK legal advisers Reynolds Porter Chamberlain LLP Tower Bridge House St. Katharine's Way London E1W 1AA Isle of Man legal advisers DQ Advocates Limited The Chambers 5 Mount Pleasant Douglas, Isle of Man IM1 2PU 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 1-11 1 2-5 7-8 9-11 INDEPENDENT AUDITOR’S REPORT 12-15 AUDITED FINANCIAL STATEMENTS 16-66 Consolidated statement of comprehensive income -- Consolidated statement of financial position ------------- Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the financial statements 16 17 18 19 20-66 ---- --- ----- --- --- --- --- ------ ----- --- -------------- - ------------ Highlights Continued progress in realisation programme with a majority of the portfolio (in terms of fair value) now either publicly listed or subject to indicative merger or disposal terms Net asset value of US$46.0 million as at 31 December 2016 (30 June 2016: US$$26.5 million, 31 December 2015: US$30.6 million) Restructuring of Origo’s share capital and settlement of previous disputes with Brooks Macdonald Group plc ("Brooks Macdonald") during the year Loss after tax of US$12.3 million (2015: loss after tax of US$24.4 million) reflecting unrealised and realised losses on investments Reduction in operating expenses to US$3.6 million in 2016 (2015: US$4.7 million) No investments in existing investee companies during the year (2015: US$0.58 million) Raised unsecured loan facility of US$2.5 million (approximately £2 million) Cash position of US$1.8 million as at 31 December 2016 (31 December 2015: US$1.3 million) Chairman’s Statement The restructuring of the Company's share capital and Investment Consultant. settlement of disputes with Brooks Macdonald was a positive achievement in 2016 and ended a period of We now look forward to working with all shareholders to uncertainty for the Company. continue our work in realising the portfolio. As a result, since the third quarter of 2016, we have been The greater certainty following the implementation of the able to focus on the delivery of Origo’s investing policy to Proposals enabled the Company to raise funds to pay divest the Company's entire portfolio by November 2018. a number of outstanding liabilities and to improve our funding position via a US$2.5 million unsecured loan Following extensive discussions with key shareholders, agreement with a private investor. and further to the restructuring of the Company's share capital proposed in the shareholder circular of January The Board is now working closely with OAL to advance 2016, a revised set of proposals (the "Proposals") to a number of divestment opportunities. However, whilst restructure the Company's share capital, settle the we are cautiously positive about the prospects of partially ongoing disputes with Brooks Macdonald and provide realising a number of positions in the mid-term, there Origo with greater flexibility to implement its investing can be no certainty that all of the portfolio’s interests policy were put to shareholders in September 2016. will be capable of being individually realised within the Following the publication of the Proposals in the is also exploring options in respect of the portfolio and will Company’s circular of 7 September 2016, trading in the report to shareholders, as appropriate, in due course. parameters of the investing policy. As a result, the Board Company's ordinary shares and convertible zero dividend preference shares (“CZDPs”) on the AIM market of the London Stock Exchange resumed. The Proposals were approved by the Company’s ordinary and convertible zero dividend preference shareholders on 26 September 2016 and have now been implemented Shonaid Jemmett-Page Non-Executive Chairman 27 June 2017 in full. Amongst other things, the Proposals removed For further information about Origo please visit www. the Company's obligations in respect of the redemption origoplc.com or contact: of at least 12 million CZDPs, removed any final CZDP redemption and/or maturity date and also made a number of further significant changes to the terms of the CZDPs. The CZDPs were also renamed redeemable preference Origo Partners plc Niklas Ponnert niklas@origoplc.com shares (“RPSs”). Nominated Adviser The carrying amount as at 31 December 2016 of the Smith & Williamson Corporate Finance Limited RPSs has been reduced to approximately US$47.5 million and interest accruals in respect of the RPSs have Azhic Basirov Ben Jeynes been frozen until 1 January 2018. As a result, Origo’s +44 (0)20 7131 4000 net asset value increased by 50 per cent. to US$46.0 million at the end of the year. The Proposals have also effected a reduction in ongoing management fees and an increase in the hurdle for any investment performance Public Relations Aura Financial Andy Mills incentive fee payments to Origo Advisors Ltd ("OAL"), our +44 (0)20 7321 0000 01 DIRECTORS' REPORTOrigo Partners PLC December 2016 Investment Consultant’s Report A f t e r a p e r i o d o f f a l l i n g p r i c e s a n d s i g n i f i c a n t to Celadon shareholders (31 December 2016 carrying underperformance in 2015, commodities markets value: US$20.1 million). In May 2016, we were informed recovered gradually in 2016 as economic fundamentals that the proposed buyer's coal-to-gas conversion project improved. Driven by the Chinese economy and supported was included in China's Thirteenth Five Year Plan; final by improving economic conditions in other regions, we approvals from relevant central authorities for that project expect commodities markets to continue to provide an are pending. However, in view of delays in obtaining improving, yet volatile, backdrop for Origo’s commodity such approvals, we understand that management has investments in 2017. initiated discussions with alternative potential bidders for In addition to traditional stimulus measures, the Chinese government continued to provide significant support to the China Rice cleantech industries during 2016. Supportive fiscal, trade Celadon’s assets. and other policies look likely to provide growing markets Discussions with a group of well-capitalised Chinese for electric battery producers and others in the years state-owned enterprises in respect of a strategic ahead as China seeks to build a dominant position in partnership and a potential merger with the operating cleantech markets. As a result, our cleantech investments subsidiary of China Rice Ltd ("China Rice") began in 2016 also appear well positioned. and remain ongoing (31 December 2016 carrying value: US$31.4 million). While no immediate deal is expected, Reflecting Origo’s revised strategy, other administrative due to ongoing government reform of the sector, we expenses have been significantly reduced, despite the continue to believe that the formation of this new venture significant costs involved in approving and implementing is likely to proceed and offer Origo an opportunity to the Proposals, from US$4.7 million in 2015 to US$3.6 realise its investment in the business within the time- million in 2016. We expect further reductions to be frame of the Company's investing policy. achieved in 2017. In line with Origo’s investing policy, OAL focussed on Niutech pursuing exit opportunities during 2016. We continue to Niutech Energy Ltd ("Niutech") listed its operating make progress in re-positioning the portfolio to facilitate company Jinan Heng Yu Environmental Protection exits either by increasing our exposure to publicly quoted Technology Co., Ltd. ("Heng Yu") on China's "New Third positions or by initiating merger or disposal processes. Board" in May 2016 (31 December 2016 carrying value: Listed positions rose to 5 per cent. of the fair value of the US$14.2 million). The lock-up restrictions on Origo’s portfolio at the end of the year compared to 3 per cent. shares have expired, and we expect that Heng Yu will as at 31 December 2015 and the majority of the portfolio shortly complete a placing of shares to institutional (in terms of fair value as of 31 December 2016) is now investors, which is likely to offer the Company the either listed or subject to indicative terms of merger or opportunity to realise part of its holding in the business. disposals. No investments were made during the year. relationship with a potential new customer with plans In addition, OAL assisted Niutech in building a commercial Celadon Mining to build two major tyre recycling facilities in China. This opportunity alone has the potential to dramatically increase Niutech's sales over the next couple of years. The process for the disposal of Celadon Mining Ltd's In total, Niutech has contracted and indicative orders of ("Celadon") main asset, ChangTan West, remains 280,000 MT of capacity to be fulfilled over the next few ongoing. The net proceeds of any sale will be distributed years, which should be compared to maximum sales 02 DIRECTORS' REPORTOrigo Partners PLC December 2016of 60,000 MT of equipment in any financial year since material at 0.126 per cent. Molybdenum and 0.026 per Origo's initial investment. Unipower cent. Tungsten. A successful conversion of the exploration to a mining license in the third quarter of this year will be a necessary condition to achieve the desired liquidity in the targeted time frame. Unipower Battery Ltd ("Unipower") developed two new significant customer relationships which resulted in Gobi Coal & Energy framework-agreements for the purchase of up to 130 million Ah per annum of batteries during the year. This In line with its stated strategy of becoming a diversified significantly boosted Unipower's sales in 2H of 2016. multi -national energy resources company, Gobi coal & Unipower is now one of few licensed, private suppliers Energy announced the 100 per cent. stock acquisition with a certified and proven product portfolio and has of Zaraiya Holdings Ltd ("Zaraiya") in February 2017. 1,000 buses and 2,500 other vehicles equipped with its Zaraiya wholly owns an advanced in -situ leach uranium batteries running on China's roads. project in Mongolia and following the transaction Gobi Coal plans to rename itself Zaraiya Energy Resources Kincora Limited. Kincora Copper Limited (“Kincora”) is focussing The enlarged company benefits from nearly US$200 exploration work on the two priority targets they have million of investments in three high-grade metallurgical identified on their licences in Mongolia. Following the coal mines in Mongolia containing 318 million tons of completion of a merger towards the end of 2016, Kincora JORC compliant resources and the advanced in-situ now has a dominant landholding in the most prospective leach uranium project with an estimated of 5 million areas of the Mongolian copper belt between and on strike pounds of resource. from Rio Tinto’s largest global expansion project, the Oyu Tolgoi mine, and the private Tsagaan Suvarga Serven The primary metallurgical coal mine in southwest Sukhait development project. We also received C$0.5 Mongolia is pre-stripped and production ready with peak million from Kincora in loan repayments with the balance production potential of more than 6 million tons per of Origo’s convertible notes (C$2.0 million) converted into annum of semi -soft and hard coking coal and coal seams quoted Kincora common shares on value accretive terms. as wide as 44 meters. Moly World With coal prices rebounding strongly in 2016, we have been informed by the Company that it is evaluating During 2016 OAL worked with other shareholders in options for resuming production as well as exploring Moly World Ltd ("MolyWorld”) to address a number of a capital market event to fund the development of its important strategic issues, including the: development business and provide liquidity for its shareholders. and implementation of a short-term financing strategy; application to convert the existing exploration license to Other holdings a mining license; implementation of a new management structure; and the development of a plan for liquidity for We entered into a share transfer agreement to dispose MolyWorld and its shareholders. Moly World, through its all of Origo's interest in Shanghai Evtech New Energy subsidiary, owns an exploration license, covering 2,360 Technology Ltd and its related entities for a consideration hectares in the Mandal area of Mongolia (the "Mandal of US$0.36 million at applicable exchange rates. The deal Project") which holds a JORC resource of 203Mt in situ was completed in November 2016. 03 DIRECTORS' REPORTOrigo Partners PLC December 2016In May 2016, Beijing Rising Information Technology Ltd Profit and Loss completed a listing on China's New Third Board (31 December, 2016 carrying value: US$1.0 million). We Total other administrative expenses, excluding the expect to be able to complete the disposal of our holding provision for bad debts, were US$2.6 million in 2016, a in the very near term. reduction of US$2.1 million from 2015. We also initiated the disposal of a number of smaller The Group recorded a loss before tax of US$12.3 million, positions, including Aquila Resources Inc and Shanta compared to a loss before tax of US$24.8 million in the Gold Ltd, (aggregate 31 December 2016 carrying value: previous year. The loss is primarily due to unrealised and US$71 k). Portfolio summary realised losses of US$6.1 million on investments and US$5.8 million of financing costs relating to the CZDPs. We expect financing costs to fall in 2017 following the restructuring of the CZDPs in Q3 2016. At 31 December 2016 the carrying value of our portfolio, which is comprised of interests in 15 companies, was Balance Sheet US$96.7 million compared to US$104.0 million as at the end of 2015. At the end of 2016, the Group had total cash and cash equivalents of US$1.8 million (2015: US$1.3 million). The metals and mining sector accounted for 33 per cent. The increase follows the raising of a US$2.5 million in 2016 (2015: 38 per cent.). The portion of our portfolio (approximately £2.0 million) unsecured loan (the invested in agriculture was 32 per cent. (2015: 30 per "Facility"). The Facility carries a rate of return (payable cent.), while our exposure to cleantech was 32 per cent. at repayment) of the higher of 12 per cent. per annum (2015: 27 per cent.). The consumer, technology and (calculated on a non-compounding basis) and 1.5 times media portion of our portfolio was at 3 per cent. in 2016 the amount of the Facility. (2015: 5 per cent.). 3% 33% 32% 32% Agriculture Clean tech Metals & Mining TMT The Facility is repayable on the earlier of (i) 2 December 2020; and (ii) when the Company has distributed US$6 million to the Company's shareholders in accordance with articles 4.10 to 4.12 of the Company's articles of association provided it has sufficient funds to repay the Facility. The Company may at any time prepay the Facility, in whole or in part, without penalty. Net asset value rose to US$46.0 million at the end of 2016 from US$30.6 million in 2015, representing a net Reflecting the Group's revised strategy of seeking exits asset value per share of US$0.13 as at 31 December via sales or liquidity events, 5 per cent. of the portfolio (in 2016, a 46 per cent. increase from US$0.09 per share terms of fair value) as at 31 December 2016 was invested in 2015. This increase was principally the result of the in quoted portfolio companies. The weighted average restructuring of the Company’s capital structure. holding period for portfolio companies is 6.1 years compared to 5.2 years in 2015. 04 DIRECTORS' REPORTOrigo Partners PLC December 2016 Outlook Macro conditions are looking increasingly supportive for the Company and its assets. However, the nature of the portfolio means that concluding transactions on favourable terms may take time and continues to be subject to external risks beyond our control. Hence, we are supporting the Board in evaluating all options available to the Company with regards to meeting the time frame set by the investing policy of divesting all assets by November 2018. 05 DIRECTORS' REPORTOrigo Partners PLC December 201606 DIRECTORS' REPORTOrigo Partners PLC December 2016Portfolio Overview* China Rice Ltd Celadon Mining Ltd Unipower Battery Ltd Abbreviation Market Industry Sector Segment China Rice China Agriculture Processing Date of Investment 2010/12/17 Cost of Investment (US$m) 28.00 Celadon China Metals & Mining Coal 2011/03/29 13.07 Unipower China Cleantech Electrical Storage 2010/9/3 13.46 Preferred Stock & Loan Common Stock Preferred Stock & Loan Instrument Equity Interest Fair Value (US$m) % of Net Assets 32.1% 31.36 68.2% Basis of Valuation Multiples 8.9% 20.06 43.6% Multiples 16.5% 15.79 34.3% Multiples Business Description China Rice, and its subsidiries form one of China’s leading privately held rice processing and distribution groups with an annual production capacity of approximately 300,000 tons. The Company maintains a strong resource and procurement base in the north eastern province of Jilin, one of China’s largest rice producing belts. Celadon is a China-focused thermal and coking coal mining and development company. Through its Chinese subsidiaries, Celadon owns three coal mines and a substantial exploration area (39km2) in the eastern sector of the Qitaihe coal-bearing basin in Heilongjiang Province, northeast China. Celadon also owns Chang Tan West which has total reserves and resources of approximately 1.05 billion tonnes in Inner Mongolia Province, northwest China. Unipower is a China based provider of lithium-ion materials and battery solutions. Producing high-quality material and batteries solution for the Electric Vehicle (“EV”) and power storage industries, Unipower is supported by patents, facilities and a technical management team with more than 20 years of experience. NiuTech Niutech Energy Ltd Kincora Copper Ltd Moly World Ltd Abbreviation Market Industry Sector Segment Niutech China/ROW Cleantech Kincora Copper Ltd Moly World Mongolia Mongolia Metals & Mining Metals & Mining Recycling/Waste to energy Copper-gold & gold Molybdenum & Tungsten Date of Investment 2010/06/22 Cost of Investment (US$m) 6.35 2011/07/31 8.57 2011/06/02 10.00 Common Stock Common Stock & Loan Common Stock Instrument Equity Interest Fair Value (US$m) % of Net Assets 18.4% 14.16 30.8% 30.9% 4.96 10.8% Basis of Valuation Multiples Market price 20.0% 3.78 8.2% DCF Business Description Niutech is a provider and operator of waste plastic and scrap-tire recycling solutions. Niutech provides patent protected recycling technology which converts waste tires and plastics into valuable products like fuel oil, carbon black and steel wire. Kincora is a mining exploration and development company focused on copper deposits in Mongolia. Its key asset is the Bronze Fox copper-gold deposit located in southeast Mongolia along the Oyu Tolgoi copper belt. Moly World is the owner of an advanced stage molybdenum exploration project in Mongolia, known locally as Mandal Moly, which covers an area of 2,360 hectares approximately 40 kilometres north of Tsagaan-Uul Soum, Khuvsgul Province, in northern Mongolia. The project has a JORC near surface compliant resource of 256,000 tons at 0.126% Mo. * Top 9 portfolio companies 07 DIRECTORS' REPORTOrigo Partners PLC December 2016Gobi Coal & Energy Ltd Six waves Inc Staur Aqua AS Abbreviation Market Gobi Mongolia Industry Sector Metals & Mining Segment Coal Date of Investment 2009/11/24 Cost of Investment (US$m) 14.96 Six waves Inc China TMT Web service 2011/10/27 0.24 Staur Norway Cleantech Water desalination 2008/02/29 4.57 Instrument Equity Interest Fair Value (US$m) % of Net Assets Common Stock Common Stock Common Stock & loan 10.8% 2.68 5.8% 1.1% 1.22 2.7% 9.2% 1.06 2.3% Basis of Valuation Multiples Multiples Multiples Business Description 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. 6Waves is the leading publisher of independent games on social networks and mobile devices. Staur is a world-class supplier of desalination technology and desalination plant design. 08 DIRECTORS' REPORTOrigo Partners PLC December 2016Directors’ Report The Directors present their report together with the audited financial statements for the year ended 31 December 2016. Results and dividends The result of the Group for the year is set out on page 16 and shows a loss for the year of US$12,257,000 (2015: loss of US$24,364,000). The performance, and the share capital structure of the Group, neither justifies nor allows the payment of a dividend at the current time. The Directors are therefore not able to recommend the payment of a dividend for 2016 (2015: US$nil). The retained loss of the year of US$12,257,000 (2015: loss of US$24,364,000) 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. 09 DIRECTORS' REPORTOrigo Partners PLC December 2016Directors At 31 December 2016 Mr. Niklas Ponnert Ms. Shonaid Jemmett-Page Mr. Lionel de Saint-Exupery At 31 December 2015 Mr. Niklas Ponnert Ms. Shonaid Jemmett-Page Mr. Lionel de Saint-Exupery Options 4,500,000 Options 5,300,000 Shares in subsidiaries 1* Ordinary shares 2,691,009* 560,000** 560,000** Shares in subsidiaries 1* Ordinary shares 2,691,009* 560,000** 560,000** 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. 560,000 Shares have been issued to Ms. Shonaid Jemmett-Page and Mr. Lionel de Saint-Exupery respectively in February 2015. * ** 10 DIRECTORS' REPORTOrigo Partners PLC December 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: in Note 1 – Basis of preparation. Auditors and disclosure of information to auditor As far as each Director is aware, there is no relevant audit information of which the Company’s auditor are unaware. • • • • select suitable accounting policies and then apply them on a consistent basis; make judgments and estimates that are 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. 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. Auditor The auditor, BDO Limited, has indicated the willingness to continue in office. By order of the Board Karl Niklas Ponnert 27 June 2017 The Directors are responsible for keeping reliable accounting records which correctly explain the 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 2016 have been prepared on a going concern basis. Notably, previous disputes with Brooks Macdonald Asset Management (International) Limited have been settled and the share capital of the Company has been reorganised so that the redemption of the Redeemable Preference Shares (previously Convertible Preference Shares) will be settled with the proceeds of realisations as and when they occur. Further disclosure regarding the going concern has been included 11 DIRECTORS' REPORTOrigo Partners PLC December 2016 Tel: +852 2541 5041 Fax: +852 2815 2239 www.bdo.com.hk 25th Floor Wing On Centre 111 Connaught Road Central Hong Kong TO THE MEMBERS OF ORIGO PARTNERS PLC (incorporated in the Isle of Man with limited liability) OPINION the context of our audit of the consolidated financial statements as a whole, and in forming our opinion We have audited the consolidated financial statements of thereon, and we do not provide a separate opinion on Origo Partners Plc (the “Company”) and its subsidiaries these matters. (together the “Group”) set out on pages 16 to 66, which comprise the consolidated statement of financial position VALUATION OF UNQUOTED INVESTMENTS as at 31 December 2016, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2016 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and adopted for use in the European Union. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (the “IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in Refer to notes 1.4(d), 14 and 15 to the consolidated financial statements The Group’s portfolio of investments makes up 94.3% of the Group’s total assets (by value) of which US$91,635,000 of the total investments have no quoted market price available. Unlisted investments comprise investments at fair value through profit or loss and convertible credit agreements. Unquoted investments are measured at fair value, which is established in accordance with IFRS 13 with reference to the International Private Equity and Venture Capital Valuation Guidelines by using measurement of value such as price of recent investment, multiples, discounted cash flow and industry valuation benchmarks. Investments are subject to annual valuation by management. Due to the significance in the context of the consolidated financial statements as a whole, they are considered to be one of the areas which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit. Our response: Our audit procedures included: • • • Enquiring of management to obtain understanding and assessing the design and implementation of valuation processes and control in place; Assessing investment realisations in the period, comparing actual sales proceeds to prior year- end valuations to understand the reasons for significant variances and determine whether they are indicative of bias or error in the Group’s approach to valuations; Challenging key judgments affecting valuations in the context of observed industry best practice and the provisions of the International Private Equity and Venture Capital Valuation Guidelines. In particular, challenging the appropriateness of the 12 Origo Partners PLC December 2016 KEY AUDIT MATTERS (continued) valuation basis selected as well as the underlying assumptions, such as discount factors, and the chosen of benchmark for multiples; and • Evaluating the appropriateness of valuation methodology used by management and result with the assistance of valuation specialists. OTHER INFORMATION IN THE ANNUAL REPORT The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report, but does not include the consolidated financial statements and our auditor’s report thereon. ACCOUNTING OF REDEEMABLE ZERO DIVIDEND PREFERENCE SHARES Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. Refer to notes 1.4(e) and 22 to the consolidated financial statements In September 2016, the Group revised the terms in zero dividend preference shares, including removal of maturity date and conversion feature, reset of the accreted principal amount per preference shares to US$1.0526 and etc. The convertible zero dividend preference shares were regarded as an extinguishment of financial instrument and a redeemable zero dividend preference shares, with the revised terms, are recognised and its fair value at initial recognition required the assessment of current portfolio value, the Company’s asset realisation plan and expected distribution to settle the preference shares, which involves significant judgement in estimating the assessment factors. Our response: Our audit procedures included: • • • • Obtaining an understanding of the revised terms and those before revision; Assessing the appropriateness of the underlying a c c o u n t i n g t r e a t m e n t s r e g a r d i n g t h e extinguishment of the convertible zero dividend preference shares and the recognition of the redeemable zero dividend preference shares with reference to the applicable accounting standards; Challenging the appropriateness of the valuation b a s i s s e l e c t e d a s w e l l a s t h e u n d e r l y i n g assumptions, such as discount factors, asset realisation plan and etc; and Recalculating and benchmarking of discount rates applied with involvement of valuation specialist. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. D I R E C T O R S ’ R E S P O N S I B I L I T Y F O R T H E CONSOLIDATED FINANCIAL STATEMENTS The directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. The directors are also responsible for overseeing the Group’s financial reporting process. The audit committee of the Group (the “Audit Committee”) assists the directors in discharging their responsibility in this regard. 13 Origo Partners PLC December 2016AUDITOR’S RESPONSIBILITY FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. This report is made solely to you, as a body, in accordance with the terms of our engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • • i d e n t i f y a n d a s s e s s t h e r i s k s o f m a t e r i a l misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. evaluate the appropriateness of accounting p o l i c i e s u s e d a n d t h e r e a s o n a b l e n e s s o f accounting estimates and related disclosures made by the directors. conclude on the appropriateness of the directors’ From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the • • • • 14 Origo Partners PLC December 2016AUDITOR’S RESPONSIBILITY FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. BDO Limited Certified Public Accountants Alfred Lee Practising Certificate Number P04960 Hong Kong, 27 June 2017 15 Origo Partners PLC December 2016Origo Partners Plc Consolidated statement of comprehensive income For the year ended 31 December 2016 Investment loss: Realised losses on disposal of investments Unrealised losses on investments Income from loans Fund consulting fee Consulting services payable Other income Performance fee - Performance incentive Other administrative expenses Share-based payments Foreign exchange gains/(losses) Net loss before finance costs and taxation Finance costs Loss before tax Income tax Loss after tax Other comprehensive income Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translating foreign operations Net other comprehensive income to be reclassified to profit or loss in subsequent periods Tax on other comprehensive income Other comprehensive income net of tax Total comprehensive loss after tax Loss after tax Attributable to: - Owners of the parent - Non-controlling interests Total comprehensive loss Attributable to: - Owners of the parent - Non-controlling interests Basic loss per share Diluted loss per share Notes 2 3 4 5 26 9 10 2016 US$'000 (142) (6,069) 627 (5,584) - (1,769) 134 4,195 (3,618) (67) 178 (6,531) (5,791) (12,322) 65 (12,257) 5 5 - 2015 US$'000 (1,526) (14,365) 721 (15,170) 14 (2,054) 113 3,209 (4,748) (226) (106) (18,968) (5,802) (24,770) 406 (24,364) 5 5 - 5 (12,252) 5 (24,359) (12,244) (13) (12,257) (12,239) (13) (12,252) (24,340) (24) (24,364) (24,335) (24) (24,359) 11 11 (3.49) cents (3.49) cents (6.95) cents (6.95) cents The accompanying notes form an integral part of these consolidated financial statements. 16 Origo Partners PLC December 2016AUDITED FINANCIAL STATEMENTSOrigo Partners Plc Consolidated statement of financial position At 31 December 2016 Assets Non-current assets Property, plant and equipment Intangible assets Investments at fair value through profit or loss Loans Current assets Loans due within one year Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables Performance incentive payable within one year Financial guarantee contracts Non-current liabilities Long-term borrowing Provision Redeemable/convertible zero dividend preference shares Deferred income tax liability Net assets Equity attributable to owners of the parent Issued capital Share premium Share-based payment reserve Accumulated losses Translation reserve Equity component of convertible zero dividend preference shares Other reserve Non-controlling interests Total equity Total equity and liabilities Notes 2016 US$'000 2015 US$'000 12 14 15 15 16 17 18 18 19 20 21 22 10 23 22 24 33 2 72,023 350 72,408 24,290 4,007 1,786 30,083 102,491 3,971 8 435 4,414 2,500 82 47,469 2,017 52,068 46,009 56 150,414 5,048 (109,567) (1,490) - 1,056 45,517 492 46,009 102,491 64 4 77,571 350 77,989 26,093 4,101 1,272 31,466 109,455 2,701 8 435 3,144 - 4,262 69,385 2,082 75,729 30,582 56 150,414 7,573 (135,824) (1,495) 8,297 1,056 30,077 505 30,582 109,455 The consolidated financial statements were approved by the Board of Directors and authorised for issue. They were signed on its behalf by: Karl Niklas Ponnert Director 27 June 2017 The accompanying notes form an integral part of these consolidated financial statements 17 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Consolidated statement of changes in equity For the year ended 31 December 2016 Attributable to equity holders of the parent Issued capital US$'000 Share premium US$'000 Notes Share- based payment reserve US$'000 Accumulated losses US$'000 Translation reserve US$'000 Equity component of CZDP US$'000 Other reserve US$'000 Total US$'000 Non- controlling interests US$'000 Total equity US$'000 At 1 January 2015 Loss for the year Other comprehensive income Total comprehensive income/ (loss) New issue of shares Own shares acquired Share-based payment expense Minority interests 23 23 26 55 150,262 7,147 (111,484) (1,500) 8,297 995 53,772 572 54,344 - - - 1 - - - - - - 184 (32) - - - - - - - 426 - (24,340) - (24,340) - - - - - 5 5 - - - - - - - - - - - - (24,340) (24) (24,364) - 5 - 5 - (24,335) (24) (24,359) - 61 - - 185 29 426 - - - - (43) 185 29 426 (43) At 31 December 2015 56 150,414 7,573 (135,824) (1,495) 8,297 1,056 30,077 505 30,582 Loss for the year Other comprehensive income Total comprehensive income/ (loss) Share-based payment expense Lapse of share-based payment Change of fair value upon extinguishment of convertible zero dividend preference shares Released upon extinguishment of convertible zero dividend preference shares 26 26 22 22 - - - - - - - - - - - - - - - - - (12,244) - (12,244) 52 - (2,577) 2,577 - - - 35,924 - 5 5 - - - - - - - - - - (12,244) (13) (12,257) - 5 - 5 - (12,239) (13) (12,252) - - 52 - - - 52 - 27,627 - 27,627 - 27,627 (35,924) - - - - At 31 December 2016 56 150,414 5,048 (109,567) (1,490) - 1,056 45,517 492 46,009 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. Accumulated losses Cumulative net gains and losses recognised in profit or loss. Translation reserve Equity created to recognise foreign currency translation differences. Equity component of CZDP Difference between the proceeds of the convertible zero dividend preference shares (“CZDP”) issued and the fair value of the liability component of CZDP. Other reserve Own shares acquired and EBT (as defined in Note 24) shares and capital redemption. The accompanying notes form an integral part of these consolidated financial statements. 18 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Consolidated statement of cash flows For the year ended 31 December 2016 Loss before tax Adjustments for: Depreciation and amortisation Release of provision for performance incentive Share-based payments Provision for bad debts Provision for financial guarantee contracts Realised losses on disposal of investments Unrealised losses on investments at FVTPL* Unrealised losses on loans Fair value losses on derivative financial assets Income from loans Gain recognised upon extinguishment of CZDP** Foreign exchange (gains)/losses Interest expenses of RZDP/CZDP** Operating loss before changes in working capital and provisions Purchases of investments at FVTPL* Purchases of loans Proceeds from disposals of investments at FVTPL* Proceeds from repayment of loans (Increase)/decrease in trade and other receivables Increase in trade and other payables Net cash outflow from operations Investing activities Disposal of property, plant and equipment Net cash inflow from investing activities Financing activities Proceeds from long term borrowing Net cash inflow from financing activities Net increase/(decrease) in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Notes 5 4 26 5 5 2 2 2 2 2 22 9 8 15 8 15 20 17 2016 US$'000 (12,322) 26 (4,195) 67 1,008 - 142 6,059 10 - (627) (62) (178) 5,773 (4,299) - - 765 383 (287) 1,270 (2,168) 7 7 2,500 2,500 339 175 1,272 1,786 2015 US$'000 (24,770) 34 (3,209) 226 49 435 1,526 12,357 1,997 11 (721) - 106 5,776 (6,183) (219) (363) 432 459 344 1,452 (4,078) 10 10 - - (4,068) 155 5,185 1,272 * FVTPL refers to fair value through profit or loss ** RZDP refers to redeemable zero dividend preference shares; CZDP refers to convertible zero dividend preference shares The accompanying notes form an integral part of these consolidated financial statements. 19 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements 1 Accounting policies 1.1 Corporate information The consolidated financial statements of Origo Partners Plc (“Origo” or the “Company”) and its subsidiaries (together the “Group”) for the year ended 31 December 2016 were authorised for issue in accordance with a resolution of the Directors on 27 June 2017. The Company is a limited liability company incorporated and domiciled in the Isle of Man whose shares are publicly traded on the Alternative Investment Market (“AIM”) 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’s consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standard Board (“IASB”) and adopted for use in the European Union (“EU”) 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 for the year ended 31 December 2016. 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. 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 redeemable zero dividend preference shares as further described in Note 22. 20 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.3 Significant accounting judgements, estimates and assumptions The preparation of consolidated financial information in conformity with IFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial information and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results may differ from those estimates. The following is a list of accounting policies which cover areas that the Directors consider require estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year: (a) Fair value of unquoted equity instruments The Group has estimated the value of each of its unquoted equity instruments by using judgement to select the most appropriate valuation methodology for each investment based on the recommendations of the International Private Equity and Venture Capital Valuation Guidelines (the “Guidelines”). Valuation methodologies mainly include the price of recent investments, multiples, discounted cash flow, 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. 21 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.3 Significant accounting judgements, estimates and assumptions (continued) (b) Assessment as investment entity Entities that meet the definition of an investment entity within IFRS 10 are required to account for most investments in controlled entities as held at fair value through profit or loss. Subsidiaries that provide investment related services or engage in permitted investment related activities with investees continue to be consolidated unless they are also investment entities. The Board has concluded that the Company meets the definition of an investment entity. (c) Share-based payments The Group has applied the requirements of IFRS 2 “Share-based payment” in these consolidated financial statements. The Group has issued share options, which are 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 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, equity-settled 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 upper share rights, which are cash-settled share-based payments, to certain directors, executives and key employees under the Company’s JSOS (as defined in Note 26). 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 share options and the upper share rights, significant assumptions such as the expected life of the share options and the upper share rights, and expected volatility of the shares have been applied based on management’s best estimates. 22 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 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 consolidated financial information. (a) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2016. 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., existing 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; and 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; and The Group’s voting rights and potential voting rights. 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. 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. 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. 23 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (b) Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. The Group elects to measure investments in associates at fair value through profit or loss as, in the opinion of the Directors, the Company meets the definition of venture capital organisation. This treatment is permitted under IAS 28 “Investments in Associates and Joint Ventures”. (c) 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 group entity the Group determines 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. 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. 24 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (c) 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 of 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. (d) 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 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 investments at fair value through profit or loss 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, 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. Investment fair value through profit or loss 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. Investments at fair value through profit or loss is derecognised and corresponding receivables from the buyer for the payment are recognised as of the date the Group commits to sell the assets. 25 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (d) Financial assets (continued) • Investments at fair value through profit or loss Measurement: Investment 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 financial assets at fair value through profit or loss is recognised in the profit or loss within investment loss 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) 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; 26 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (d) 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: Fair value is estimated by deriving the present value of the investment using reasonable assumptions of expected future cash flows of the underlying business 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 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 16. • Derivative financial instruments Derivative financial instruments are held at fair value and changes in fair value are recognised in profit or loss of the consolidated statement of comprehensive income. 27 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (d) 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 have occurred since the initial recognition of the asset (an incurred ‘loss event’), have 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 debtor 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. (e) 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 liabilities at amortised cost Financial liabilities (including trade and other payables and long-term borrowing) are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or where appropriate a shorter period, to the net carrying amount on initial recognition. • 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. 28 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (e) Financial liabilities (continued) • Preference shares Convertible zero dividend preference shares Convertible zero dividend preference shares 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 convertible zero dividend preference shares issued and the fair value of the liability component of convertible zero dividend preference shares is assigned to the equity component of convertible zero dividend preference shares 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 convertible zero dividend preference shares and the derivative financial assets based on their relative carrying amounts at the date of issue. The interest charges on convertible zero dividend preference shares liability component is computed using the prevailing market interest rate for a similar bond without early redemption or equity conversion option. When the Group extinguishes a compound instrument before maturity through revision of terms, the Group allocates the consideration paid and any transaction costs for the revision of terms to the liability and equity components of the instrument at the date of the transaction. The method used in allocating the consideration paid and transaction costs to the respective components is consistent with that used in the original allocation to the respective components of the proceeds received by the Group when the convertible instrument was issued. Once the allocation of the consideration is made, any resulting gain or loss is treated in accordance with accounting principles applicable to the related component, as follows: (a) the amount of gain or loss relating to the liability component is recognised in profit or loss; and (b) the amount of consideration relating to the equity component is recognised in equity. Redeemable zero dividend preference shares On initial recognition, redeemable zero dividend preference shares are recognised at the fair value, which are determined using the prevailing market interest of similar non-convertible debts, net of issue costs incurred. In subsequent periods, redeemable zero dividend preference shares are carried at amortised cost using the effective interest method. 29 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (e) 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. (f) Cash and bank and short-term borrowings Cash and bank 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 consolidated statement of financial position, 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 financial liabilities at amortised cost and are initially measured at fair value, net of directly attributable costs incurred. It is subsequently measured at amortised cost, using the effective interest method. The related interest expense is recognised in profit or loss. (g) Share-based payments Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions (i.e. share options), 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 (including upper share rights and contingent share awards), 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 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 26. Equity-settled transactions The cost of equity-settled transactions (share options) 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). 30 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (g) 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. 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 (upper share rights and contingent share awards) is measured initially at fair value at the grant date using binominal tree model, further details of which are given in Note 26. 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). (h) 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. 31 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (h) 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 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. 32 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (i) 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 performance fee in the consolidated statement of comprehensive income in which the expense establishing the provision was originally recorded. (j) Investment Income /Loss Investment income/loss derived from the investment activities is equivalent to “revenue” for the purposes of IAS 1. 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. (k) 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. 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. 33 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (l) New and revised IFRS that are effective or early adopted in 2016 The following new and revised IFRSs have been applied by the Group in the current year and have affected the presentation and disclosures set out in these consolidated financial statements. IFRSs (Amendments) IFRSs (Amendments) Annual Improvements 2010–2012 Cycle Annual Improvements 2012–2014 Cycle Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception Amendments to IAS 1 Disclosure Initiative Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to IAS 19 Amendments to IAS 27 Defined Benefit Plans : Employee Contributions Equity Method in Separate Financial Statements Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations The application of the above new and revised IFRSs in the current year had no material impact on the Group’s financial performance and financial position for the current and prior years and/or on the disclosures set out in these consolidated financial statements. 34 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 1 Accounting policies (continued) 1.4 Summary of significant accounting policies (continued) (m) Standards issued but not yet effective Standards issued but not yet effective up to the date of issuance of the Group’s consolidated 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. Amendments to IFRSs IFRS 9 IFRS 15 IFRS 16 Amendments to IFRS 2 Amendments to IFRS 4 Amendments to IFRS 15 Amendments to IAS 7 Amendments to IAS 12 Amendments to IAS 40 IFRIC 22 Annual Improvements 2014-2016 Cycle1,2* Financial instruments2 Revenue from Contracts with Customers2 Leases3* Classification and Measurement of Share-based Payment Transactions2* Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts2* Revenue From Contracts with Customers (Clarification to IFRS 15)2* Disclosure Initiative1* Recognition of Deferred Tax Assets for Unrealised Losses1* Transfer of Investment Property2* Foreign Currency Transactions and Advance Consideration2* 1 2 3 * Effective in the EU for annual periods beginning on or after 1 January 2017 Effective in the EU for annual periods beginning on or after 1 January 2018 Effective in the EU for annual periods beginning on or after 1 January 2019 Not yet endorsed by the European Union The Group is in process of making an assessment of the potential impact of these new or revised IFRSs and the directors are not yet in a position to quantity the effects on the Group’s financial statements. 2 Investment loss Realised (losses)/gains on disposal of investments - Investments at FVTPL - Loans 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 Total 2016 US$'000 (142) (269) 127 - - (6,069) (6,059) - (10) - 627 2015 US$'000 (1,526) (1,160) - (363) (3) (14,365) (12,357) (894) (1,103) (11) 721 (5,584) (15,170) 35 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 3 Consulting services payable Consulting services payable Total 4 Performance incentive Release of provision for performance incentive payable over one year Total 2016 US$'000 (1,769) (1,769) 2016 US$'000 4,195 4,195 2015 US$'000 (2,054) (2,054) 2015 US$'000 3,209 3,209 A provision at consolidated statement of financial position for future performance incentive for the year ended 31 December 2016 was US$Nil (2015: US$4,195,000) (Note 21). The performance incentives are accrued and payable to Origo Advisors Ltd. Refer to Note 27 for details on Origo Advisors Ltd. The release of provision was derived from the amendment agreement of Asset Realisation Support Agreement (the “Amendment Agreement”) signed between the Group and Origo Advisors Ltd. on 6 September 2016. The amount of performance incentives has been calculated and accrued in accordance with the basis, (i) from the time the Hurdle (see below *) has been reached, the next US$1,700,000 of Gross Realisation (see below **) 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: Pursuant to the Amendment Agreement, the hurdle revised to US$90,000,000 of distribution in accordance with articles 4.10 to 4.12 of the Company's articles of association ("Articles") being made in the period until the termination of the Amendment Agreement (2015: US$90,000,000 of Gross Realisation). Gross Realisation: cumulative gross cash proceeds received by or on behalf of the Group which are derived from the realisation of assets in the portfolio investment companies, after having made full provision for repayment of any third party debt (including any unpaid interest thereon) and any related hedge or other break costs and any prepayment fees and penalties thereon, but before any related transactional costs, fees and expenses and any taxes required to be paid by the relevant selling entity that arise directly as a result of completion of the relevant transaction to dispose of the relevant asset, provided that any amounts of deferred consideration or earn-out shall not be counted towards such realisations until actually received by the relevant selling member of the Group. 36 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 5 Other administrative expenses Employee expenses Professional fees Audit fees - Current year - Over-provision in respect of prior years Depreciation expenses Amortisation expenses Provision for bad debts Provision for financial guarantee contracts Others Total 6 Information regarding directors and employees The aggregate payroll costs of these employees were as follows: Wages and salaries Share-based payments 2016 US$'000 (161) (1,769) (139) (158) 19 (24) (2) (1,008) - (515) (3,618) 2016 US$'000 (161) (67) (228) 2015 US$'000 (262) (2,991) (257) (257) - (22) (12) (49) (435) (720) (4,748) 2015 US$'000 (262) (226) (488) * Most employees of the Group have been transferred to and employed by Origo Advisors Ltd. in January 2015, which is controlled by entities whose ultimate beneficiaries include Niklas Ponnert (Director of the Company) and Chris A Rynning (former Director of the Company). 7 Directors’ remuneration Directors' emoluments Share-based payment expenses 2016 US$'000 (153) (33) (186) 2015 US$'000 (231) (191) (422) 37 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 7 Directors’ remuneration (continued) Directors’ remuneration for the year 2016 and the number of options held were as follows: Name Mr. Niklas Ponnert Mr. Lionel de Saint-Exupery Ms. Shonaid Jemmett Page Salaries* US$'000 - Director Fee US$'000 - Share-based payment** US$'000 33 - - - 78 75 153 - - 33 Total US$'000 33 78 75 186 2016 Number of options 4,500,000 - - 4,500,000 Directors’ remuneration for the year 2015 and the number of options held were as follows: Name Mr. Wang Chao Yong*** Mr. Chris A Rynning*** Mr. Niklas Ponnert Mr. Christopher Jemmett*** Mr. Lionel de Saint-Exupery Mr. Tom Preststulen*** Ms. Shonaid Jemmett Page Salaries* US$'000 3 Director Fee US$'000 - Share-based payment** US$'000 17 Total US$'000 20 - - - - - - 3 - - 3 72 6 147 228 87 87 - - - - 191 87 87 3 72 6 147 422 2015 Number of options 4,000,000 3,500,000 5,300,000 100,000 - - - 12,900,000 * ** *** Short term employee benefits. Share-based payment refers to expenses arising from the Company’s share option scheme (Note 26). Mr. Wang Chao Yong, Mr. Chris A Rynning, Mr. Christopher Jemmett and Mr. Tom Preststulen resigned as Directors of the Company in February 2015. The remaining directors of the Company are Shonaid Jemmett- Page (Non-executive Chairman), Lionel de Saint-Exupery (Non-executive Director) and Niklas Ponnert (Director). 8 Operating segment information Operating segments are components of the entity whose results are regularly reviewed by the entity’s chief operating decision-maker to make decisions about resources to be allocated to the segment and to assess its performance. The chief operating decision-maker for the Group is considered to be the Board of Directors. The Group’s operating segments have been defined based on the types of investments which was equity investment and debt instrument in 2016 and 2015. 38 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Origo Partners Plc Notes to the financial statements (continued) 8 Operating segment information (continued) For the year ended 31 December 2016 Unlisted Listed Total Equity US$'000 Debt US$'000 Total US$'000 Equity US$'000 Debt US$'000 Total US$'000 US$'000 Investment loss: Realised (losses)/gains on disposal of investments Unrealised (losses)/gains on investments Income from loans Total Unallocated corporate expense Loss before tax Income tax Loss for the year Net divestment (440) - (440) 171 (10) 542 532 (8,347) 542 (8,245) 2,278 - 2,449 (8,337) - (8,777) 65 127 - 85 212 298 (142) 2,278 85 2,661 (6,069) 627 (5,584) (6,738) (12,322) - - 65 - - - 65 (12,257) 353 412 383 795 1,148 Net proceeds of divestment 353 Statement of financial position Investment portfolio 66,995 24,640 91,635 5,028 - 5,028 96,663 The Group’s geographical areas based on the location of investment assets, are defined primarily as China, Mongolia, South Africa and Europe, as presented in the following table. Investment loss: Realised (losses)/gains on disposal of investments Unrealised gains/(losses) on investments Income from loans Total Unallocated corporate expense Loss before tax Income tax Loss for the year Net divestment Net proceeds of divestment Statement of financial position Investment portfolio Europe China Mongolia South Africa Total US$'000 US$'000 US$'000 US$'000 US$'000 - 102 - 102 - - (440) 298 (2,833) (3,255) 542 (2,731) 85 (2,872) 65 - 353 795 - (83) - (83) - - (142) (6,069) 627 (5,584) (6,738) (12,322) 65 (12,257) 1,148 1,202 83,840 11,490 131 96,663 39 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 8 Operating segment information (continued) For the year ended 31 December 2015 Investment loss: Realised losses on disposal of investments Unlisted Listed Total Equity US$'000 Debt US$'000 Total US$'000 Equity US$'000 Debt US$'000 Total US$'000 US$'000 (3) (363) (366) (1,160) - (1,160) (1,526) Unrealised losses on investments (12,755) (1,866) (14,621) Income from loans - 555 555 Total (12,758) (1,674) (14,432) 387 - (773) (131) 166 35 256 166 (14,365) 721 (738) (15,170) Unallocated corporate expense Loss before tax Income tax Loss for the year Net divestment/(investment) Net proceeds of divestment Investment Statement of financial position 406 - 406 - - (20) 459 (363) 459 (383) 432 (199) (9,600) (24,770) - 406 (24,364) 432 (199) 891 (582) - - - Investment portfolio 76,125 24,650 100,775 1,446 1,793 3,239 104,014 Europe China Mongolia South Africa Total US$'000 US$'000 US$'000 US$'000 US$'000 Investment loss: Realised losses on disposal of investments Unrealised losses on investments Income from loans Total Unallocated corporate expense Loss before tax Income tax Loss for the year Net divestment/(investment) Net proceeds of divestment Investment Statement of financial position (366) (415) - (781) - (1,160) - (1,526) (2,485) (9,831) (1,634) (14,365) 555 (1,930) 166 (10,825) - (1,634) - 406 - - (383) 459 - 432 (199) - - - 721 (15,170) (9,600) (24,770) 406 (24,364) 891 (582) Investment portfolio 1,100 87,467 15,233 214 104,014 40 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 9 Finance costs Finance costs Bank charges Interest expenses of redeemable/convertible zero dividend preference shares 2016 US$'000 (18) (5,773) (5,791) 2015 US$'000 (26) (5,776) (5,802) 10 Income tax As the Company is not in receipt of income from Manx land, certain related business or property and does not hold a Manx banking licence, it is taxed at the standard rate of 0% on the Isle of Man. The Company is resident for tax purposes in the Isle of Man and subject to corporate income tax at the standard rate of 0% and as such no provision for tax in the Isle of Man has been made. Current tax Current year Deferred tax Deferred income tax* Total income tax credit in the consolidated statement of comprehensive income 2016 2015 US$'000 US$'000 - 65 65 - 406 406 * As at 31 December 2016, the deferred income tax liability US$ 2,017,000 (2015: US$2,082,000) relates to fair value gain of Celadon Mining Ltd., China Rice Ltd., Niutech Energy Ltd. and Unipower Battery Ltd., estimated in accordance with the relevant tax laws and regulations in the People’s Republic of China (“PRC”) based on a tax rate of 10%. The income tax for the year can be reconciled per the consolidated statement of comprehensive income as follows: Loss before tax Loss before tax multiplied by rate of corporate income tax in the Isle of Man of 0% (2015: 0%) Effects of: Deferred tax on unrealised gains on investments Total income tax credit in the consolidated statement of comprehensive income 2016 US$'000 (12,322) 2015 US$'000 (24,770) - 65 65 - 406 406 41 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 10 Income tax (continued) Deferred income tax Opening deferred income tax liability Income in accounts taxable in the future Recognised through consolidated statement of comprehensive income Income in accounts taxable in the future Closing deferred income tax liability Income in accounts taxable in the future 11 Loss per share (“LPS”) Numerator Loss for the year attributable to owners of the parent as used in the calculation of basic loss per share Loss for the year attributable to owners of the parent as used in the calculation of diluted loss per share Denominator Weighted average number of ordinary shares for basic LPS Effect of dilution*: Share options Convertible zero dividend preference shares 2016 US$'000 2,082 2,082 (65) (65) 2,017 2,017 2015 US$'000 2,488 2,488 (406) (406) 2,082 2,082 2016 US$'000 2015 US$'000 (12,244) (24,340) (12,244) (24,340) 2016 Number of shares 351,035,389 2015 Number of shares 350,714,047 - - - - Weighted average number of ordinary shares adjusted for the effect of dilution 351,035,389 350,714,047 Basic LPS Diluted LPS (3.49) cents (6.95) cents (3.49) cents (6.95) cents * Diluted loss per share for the years ended 31 December 2016 and 31 December 2015 is the same as the basic loss per share, as the Company’s outstanding share options and convertible zero dividend preference shares had an anti-dilutive effect on the basic loss per share for the years ended 31 December 2016 and 31 December 2015. 42 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 12 Property, plant and equipment Cost At 1 January 2015 Disposal At 31 December 2015 Disposal At 31 December 2016 Accumulated depreciation At 1 January 2015 Charge for the year 2015 Disposal At 31 December 2015 Charge for the year 2016 Disposal At 31 December 2016 Net book value At 31 December 2015 At 31 December 2016 Computer equipment US$'000 Vehicles US$'000 Machinery equipment US$'000 Total US$'000 15 (15) - - - 14 - (14) - - - - - - - 153 (9) 144 (59) 85 58 22 - 80 24 (52) 52 64 33 48 (48) - - - 48 - (48) - - - - - - 216 (72) 144 (59) 85 120 22 (62) 80 24 (52) 52 64 33 13 Investments in subsidiaries The principal subsidiaries of the Group are as follows: Country of incorporation Malaysia Proportion of ownership interest at 31 December 2016 100% Proportion of ownership interest at 31 December 2015 100% Name Ascend Ventures Ltd Origo Resource Partners Ltd PHI International Holding Ltd PHI International (Bermuda) Holding Ltd* Ascend (Beijing) Consulting Ltd** Guernsey Bermuda Bermuda China China Cleantech Partners, L.P. (“CCP Fund”) Cayman Islands ISAK International Holding Ltd** British Virgin Islands Origo Partners MGL LLC*** China Commodities Absolute Return Ltd*** Mongolia Isle of Man 100% 100% 100% 100% 100% 71.2% - - 100% 100% 100% 100% 100% 71.2% 100% 95.3% 43 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 13 Investments in subsidiaries (continued) * ** Owned by Origo Resource Partners Ltd Owned by Ascend Ventures Ltd *** Struck off 14 Investments at fair value through profit or loss As at 31 December 2016 Name* China Rice Ltd (Note d) Country of incorporation British Virgin Islands Fair Value hierarchy level 3 Proportion of ownership interest Fair value Cost US$’000 US$’000 32.1% 13,000 16,364 Kincora Copper Ltd (Notes c and d) Canada Moly World Ltd (Note d) Niutech Energy Ltd Unipower Battery Ltd (Note d) British Virgin Islands British Virgin Islands Cayman Islands Gobi Coal & Energy Ltd (Note c) British Virgin Islands Staur Aqua AS Celadon Mining Ltd Rising Technology Corporation Ltd/Beijing Rising Information Technology Ltd (Note b) Six Waves Inc Marula Mines Ltd Fram Exploration AS Other quoted investments (Note c) Norway British Virgin Islands British Virgin Islands British Virgin Islands South Africa Norway 1 3 3 3 3 3 3 3 3 3 3 1 30.9% 8,571 20.0% 10,000 4,957 3,783 18.4% 6,350 14,160 16.5% 4,301 10.8% 14,960 9.2% 719 6,648 2,679 562 8.9% 13,069 20,059 2%/1.6% 5,565 1,000 240 1,464 1.1% 0.9% 250 0.6% 1,223 685 131 145 71 72,023 The shares held in China Rice Ltd and Unipower Battery Ltd 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. 44 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 14 Investments at fair value through profit or loss (continued) As at 31 December 2015 Name* Shanghai Yi Rui Tech New Energy Technology Ltd (Note d) China Rice Ltd (Note d) Kincora Copper Ltd (Notes c and d) Moly World Ltd (Note d) Niutech Energy Ltd Unipower Battery Ltd (Note d) China British Virgin Islands Canada British Virgin Islands British Virgin Islands Cayman Islands Gobi Coal & Energy Ltd (Note c) British Virgin Islands Celadon Mining Ltd Staur Aqua AS Rising Technology Corporation Ltd/Beijing Rising Information Technology Ltd (Note b) Six Waves Inc Marula Mines Ltd Fram Exploration AS Other quoted investments (Note c) British Virgin Islands Norway British Virgin Islands British Virgin Islands South Africa Norway Fair Value hierarchy level Country of incorporation Proportion of ownership interest Cost US$’000 Fair value US$’000 3 3 1 3 3 3 3 3 3 3 3 3 3 1 49.0% 675 32.1% 13,000 793 16,417 26.1% 6,728 20.0% 10,000 1,180 5,419 19.1% 6,350 11,531 16.5% 4,301 14.0% 14,960 5,795 6,575 9.7% 13,069 23,674 9.2% 719 373 2%/1.6% 5,565 3,884 1.1% 240 1,218 0.9% 250 0.6% 1,223 1,569 214 232 266 77,571 Notes a. b. c. d. There are no significant restrictions that will have an impact on ability to transfer 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, one of the subsidiaries of the Group in 2015. During the year, the investments had been transferred and held by the Company. These investments are associates of the Group measured at fair value through profit or loss. 45 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 14 Investments at fair value through profit or loss (continued) In accordance with IFRS 13 “Fair Value Measurement”, investments 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 recognised in the consolidated 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 years of 2016 and 2015. The following table provides an analysis of investments carried at fair value by level of fair value hierarchy: Investments at fair value through profit or loss - Listed equity investments - Unlisted equity investments Investments at fair value through profit or loss - Listed equity investments - Unlisted equity investments 2016 Level 1 US$’000 Level 2 US$’000 Level 3 US$’000 Tota US$’000 5,028 - 5,028 - - - - 66,995 66,995 5,028 66,995 72,023 2015 Level 1 US$’000 Level 2 US$’000 Level 3 US$’000 Tota US$’000 1,446 - 1,446 - - - - 76,125 76,125 1,446 76,125 77,571 Changes in investments at fair value through profit or loss based on Level 3: Opening balance Acquisitions Proceeds from disposals of investments Realised losses on disposals of investments Net exchange difference Movement in unrealised losses on investments - In profit or loss Closing balance 2016 US$’000 76,125 - (353) (440) (4,657) (3,680) 66,995 2015 US$’000 88,860 20 - - (1,327) (11,428) 76,125 The fair value decrease on investments categorised within Level 3 of US$8,337,000 (2015: US$12,755,000) was recorded in the consolidated statement of comprehensive income. 46 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016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 2016 Investments in unquoted equity shares - metal & mining sector* Valuation technique Discounted cash flow 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 Weighted average cost of capital (“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 as at 31 December 2015 Investments in unquoted equity shares - metal & mining sector* Valuation technique Discounted cash flow 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 * Sector disclosed in the portfolio overview in Directors' report. Range 23% 20% - 30% 20% - 30% 30% 30% 30% Range 20% 20% - 30% 20% - 30% 30% 30% 30% 47 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016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 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. 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 Guidelines. Valuation methodologies mainly include the price of recent investments, multiples, discounted cash flow, 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$2,442,000 (2015: US$1,883,000) or 3.70% (2015: 2.47%) of total investments at fair value through profit or loss based at level 3. Increase in WACC by 1% would decrease/increase the fair value by US$282,000 (2015: US$356,000). 15 Loans The Group has entered into convertible credit agreements and has the right to convert the outstanding principal balance of relevant loans into borrower’s shares according to certain conversion conditions, and loan agreements with certain investee companies as set forth in the table below. 48 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 15 Loans (continued) As at 31 December 2016 Borrower Convertible credit agreements* China Rice Ltd Unipower Battery Ltd Staur Aqua AS Sub-total Loan agreements* Unipower Battery Ltd Sub-total Total Fair value hierarchy level Loan rates % Loan principal US$'000 Loans due within one year US$'000 Loans due after one year US$'000 Fair value US$'000 3 3 3 4 6 0-15 15,000 15,000 9,000 3,848 9,000 145 24,145 - - 350 350 15,000 9,000 495 24,495 12 164 145 145 - - 145 145 24,290 350 24,640 * Loans in relation to convertible credit agreements are measured at fair value. Loans in relation to loan agreements are measured at amortised cost using the effective interest rate method less any identified impairment losses. As at 31 December 2015 Borrower Convertible credit agreements* China Rice Ltd Unipower Battery Ltd Staur Aqua AS Kincora Copper Ltd Sub-total Loan agreements* Unipower Battery Ltd Sub-total Total Fair value hierarchy level Loan rates % Loan principal US$'000 Loans due within one year US$'000 Loans due after one year US$'000 Fair value US$'000 3 3 3 3 4 6 0-15 8.7 15,000 15,000 9,000 3,848 2,254 9,000 145 1,793 - - 15,000 9,000 350 495 - 1,793 25,938 350 26,288 12 164 155 155 - - 155 155 26,093 350 26,443 49 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 15 Loans (continued) Statement of changes in loans: Opening balance Additions Repayment Write-offs Impairment Converted into ordinary shares Net exchange difference Movement in realised and unrealised losses on investments - In profit or loss Closing balance Changes in convertible credit agreements based on Level 3: Opening balance Repayment Converted into ordinary shares Net exchange difference Movement in realised and unrealised losses on investments - In profit or loss Closing balance 2016 US$’000 26,443 - (383) - - (1,532) (5) 117 24,640 2016 US$’000 26,288 (383) (1,532) (5) 127 24,495 2015 US$’000 28,899 363 (459) (363) (1,103) - - (894) 26,443 2015 US$’000 27,397 (215) - - (894) 26,288 The fair value decrease on convertible credit agreements categorised within Level 3 of US$212,000 (2015: US$894,000), was recorded in the consolidated statement of comprehensive income. Description of significant unobservable inputs to valuation: The valuation technique of convertible credit agreements includes discounted cash flow method for the liability component and Binomial Model for the embedded option. The significant unobservable input is the discount rate. Convertible loans issued to China Rice Ltd and Unipower Battery Ltd are structured as “bundled investments”, i.e. they have been extended along-side of equity investments. Substantial repayments of loans outstanding are expected to negatively affect the Company’s ability to realise the full value of its combined investment in relevant companies. Consequently, except smaller amounts, the bulk of convertible loan investments are expected to be realised (whether through repayment in cash or conversion into and subsequent sale of equity) with the disposal of the relevant portfolio company as a whole, or through divestments of the Company’s equity positions. The Company has a reasonable expectation to be in a position to realise the full value of these loans over next 12 months; however, substantial balances may remain outstanding beyond such period. 50 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016 Origo Partners Plc Notes to the financial statements (continued) 16 Trade and other receivables Trade debtors Other debtors Loan interest receivables Prepayments Total 2016 Aging for the Group Aging for the Group Trade debtors Other debtors Loan interest receivables Provision against loan interest receivables Provision of bad debts Total Percentage 2015 Aging for the Group Aging for the Group Trade debtors Other debtors Loan interest receivables Other Provision against loan interest receivables Provision of bad debts Total Percentage 2016 US$’000 5 889 3,113 - 4,007 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 5 2015 US$’000 5 1,378 2,676 42 4,101 Total US$'000 5 3,226 8,161 19 46 - - 65 2% 240 44 - - 284 7% 2 46 - - 48 1% 10 136 - - 146 4% 14 223 - - 237 6% 2,941 7,666 (5,048) (5,048) (2,337) (2,337) 3,227 80% 4,007 100% 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$'000 4 - 18 42 - 60 1% - 37 - - 37 1% - 24 - - 24 1% 200 552 - - - 753 18% 3,762 10,214 - (8,169) (2,584) 3,227 79% Total US$'000 5 3,962 10,845 42 (8,169) (2,584) 4,101 100% 51 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 16 Trade and other receivables (continued) The below table reconciled the impairment loss of trade debtors for the year: At 1 January Impairment loss recognised Bad debts written off Total 2016 US$’000 10,753 1,008 (4,376) 7,385 2015 US$’000 10,753 49 (49) 10,753 The Group identified an impairment of US$1,008,000 (2015: US$49,000) on trade and other receivables, and the impairment is recognised within the other administrative expenses. 17 Cash and cash equivalents Current account Total cash and cash equivalents 18 Trade and other payables Trade payables Other payables Performance incentive payable within one year Total * Refer to note 4 for total performance incentive expenses. 19 Financial guarantee contracts Financial guarantee contracts* Total 2016 US$’000 1,786 1,786 2016 US$’000 5 3,966 8 3,979 2015 US$’000 1,272 1,272 2015 US$’000 5 2,696 8 2,709 2016 US$’000 435 435 2015 US$’000 435 435 * In July 2013, the Group entered into a guarantee agreement with IRCA Holdings Ltd and ABSA Bank Limited to guarantee the repayment of loan facilities of up to Rand 6,769,000 extended by ABSA Bank Limited to IRCA Holdings Ltd, which has applied for liquidation, so the Group recognised it as a liability. The payment request related to this provision is expected in the next year. 52 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 20 Long term borrowing Long term borrowing * Total long term borrowing 2016 US$’000 2,500 2,500 2015 US$’000 - - * On 2 December 2016, the Company entered into an unsecured loan agreement with an independent third party for an unsecured loan US$2,500,000 (the "Facility"). The Facility carries a rate of return (payable at repayment) of the higher of 12% per annum (calculated on a non-compounding basis) and 1.5 times the amount of the Facility. The proceeds of the Facility will be applied in accordance with article 13.1.1 of the Company’s Articles. The Facility is repayable on the earlier of (i) 2 December 2020; and (ii) when the Company has distributed US$6,000,000 to the Company's shareholders in accordance with articles 4.10 to 4.12 of the Company's Articles provided it has sufficient funds to repay the Facility. The Company may at any time prepay the Facility, in whole or in part, without penalty. As at 31 December 2016, no distribution had been made in accordance with articles 4.10 to 4.12 of the Company’s Articles. 53 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 21 Provision Upper Share rights/contingent share awards * Performance incentive provision** Total Opening balance Movement in upper share rights/contingent share awards * Movement in performance incentive provision** Total 2016 US$’000 82 - 82 2016 US$’000 4,262 15 (4,195) 82 2015 US$’000 67 4,195 4,262 2015 US$’000 7,701 (230) (3,209) 4,262 * The provision relates to the fair value of upper share rights and contingent share awards granted to certain directors, executives and key employees under the Company's joint share ownership scheme. Further details about the upper share rights and contingent share awards are included in Note 26. The provision is expected to be utilised in the next 9 years provided the upper share rights are exercised. ** Refer to Note 4 for total performance incentive expenses. The provision is expected to be utilised when investments are realised and the hurdle is reached. 22 Redeemable / convertible zero dividend preference shares Balance at 1 January 2015 Interest expense on convertible zero dividend preference shares Balance at 31 December 2015 Interest expense on convertible zero dividend preference shares Interest expense on redeemable zero dividend preference shares Gain recognised upon extinguishment* Change in fair value upon extinguishment Released upon extinguishment Recognition of redeemable preference shares Number of shares 57,000,000 - 57,000,000 - - - - - Balance at 31 December 2016 57,000,000 Liability component US$'000 63,609 Equity component US$'000 8,297 Early redemption option derivative US$'000 - 5,776 69,385 4,674 1,099 (62) - - 8,297 - - - 27,627 (73,997) (35,924) 46,370 47,469 - - - - - - - - - - - * Gain recognised upon extinguishment was recognised in other income during the year (2015: US$Nil). On 8 March 2011, the Company issued 60 million convertible zero dividend preference shares at a price of US$1.00 per share. Convertible zero dividend 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). 54 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 22 Redeemable / convertible zero dividend preference shares (continued) Convertible zero dividend 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 convertible zero dividend 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 zero dividend preference shares 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 convertible zero dividend preference shares being redeemed; (c) at any time, if less than 15% of remain outstanding, for a cash sum equal to the accreted principal amount in respect of convertible zero dividend preference shares being redeemed. The convertible zero dividend 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 zero dividend preference shares, the principal terms of restructure include: i) extension of the maturity date of the convertible zero dividend 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 zero dividend 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 zero dividend 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 zero dividend preference shares by 8 March 2016, the original maturity date; and iv) the Company to set aside, for the funding of convertible zero dividend 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 zero dividend preference shares from holders at a price of US$1.00 per convertible zero dividend preference shares in 2013. In September 2016, the Company further restructured the terms of its existing convertible zero dividend preference shares, where the conversion feature has been removed, which revised as redeemable zero dividend preference shares. The principal terms of restructure includes: i) removal of redemption and/or maturity date; ii) reset of the accreted principal amount per preference shares to US$1.0526 each; iii) no rate of return on the outstanding amount will begin to accrete until 1 January 2018 and, iv) in respect of each preference share still in issue on 1 January 2018, its principal amount of US$1.0526 shall be subject to the accretion of a rate of return equal to 4 per cent per annum from (and including) 1 January 2018 to (and including) the date on which such amount is redeemed, with such return accruing on a simple and not compound basis. Due to the revised terms, the convertible zero dividend preference shares were regarded as an extinguishment and redeemable zero dividend preference shares were therefore recognised. The redeemable zero dividend preference shares are now subject to the distribution in accordance with articles 4.10 to 4.12 of the revised Articles. In summary, the distribution is mandatory to distribute when the Company’s available funds, which is the aggregate amount of the Company’s net cash less (i) working capital requirements for the following 12 months and (ii) comply with the solvency test under the Companies Act 2006 (“Solvency Test”). The redeemable zero dividend preference shares only have a liability component and the new effective interest rate of the liability component is 9.18% per annum. 55 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 23 Issued capital Authorised Ordinary shares of £ 0.0001 each 2016 Number of shares 500,000,000 2015 Number of shares 500,000,000 £'000 50 £'000 50 Issued and fully paid At beginning of the year New issue of shares* Buyback shares At end of the year Number of shares 358,746,814 US$'000 56 - - - - Number of shares 356,706,814 2,390,000 (350,000) 358,746,814 56 358,746,814 US$'000 55 1 - 56 * Included in the new issue of shares, a total of 2,040,000 new ordinary shares were issued at an effective issue price of 5.875 pence per ordinary share to the Non-executive Directors, Shonaid Jemmett-Page and Lionel de Saint-Exupery, and former Non-executive Directors, Wang Chao Yong and Christopher Jemmett in February 2015. 24 Other reserve Included within the other reserve mainly comprised 7,711,425 shares of the Company held by Employee Benefit Trust (“EBT”) and the amounts of US$ 3,162,677 credited from the capital redemption of CCP fund in 2014. 56 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 25 Financial instruments - Risk management The Group 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 - Price risk 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’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 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 consolidated 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. 2016 2015 Increase/ (decrease) in US$ rate +10% Effect on profit before tax US$'000 2,739 Effect on net asset value US$'000 2,739 -10% (2,739) (2,739) +10% -10% 2,784 (2,784) 2,784 (2,784) The assumed movement for currency rate sensitivity analysis is based on the currently observable market environment. 57 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016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: 2016 Cash and bank balances GBP US$'000 176 NOK US$'000 - RMB US$'000 141 AUD US$'000 - HKD US$'000 50 CAD US$'000 - ZAR US$'000 - Total US$'000 367 Investments at FVTPL* 20,065 Loans Trade and other receivables - - 707 495 - Total Assets 20,241 1,202 Trade and other payables Financial guarantee contracts Provision Total Liabilities - - (82) (82) - - - - - 145 385 671 (78) - - (78) - - - - - - - - - - - 5,023 - - 50 5,023 - - - - - - - - - - - - - (435) - (435) 25,795 640 385 27,187 (78) (435) (82) (595) 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 Investments at FVTPL* 23,757 Loans Trade and other receivables - - 605 495 - 793 154 380 - - - - - - 1,362 1,793 80 Total Assets 23,757 1,100 1,411 10 50 3,241 Trade and other payables Financial guarantee contracts Provision Total Liabilities (154) - (67) (221) - - - - - - - - - - - - - - - - - - - - - - - - - (435) - 26,517 2,442 460 29,569 (154) (435) (67) (435) (656) * Included investments in associates of US$5,023,000 (2015: US$1,362,000) that nominated in CAD and measured at fair value through profit or loss. 58 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 25 Financial instruments - Risk management (continued) Credit risk The Group is primarily exposed to credit risk from the loans including convertible credit agreements and loan agreements extended to unquoted portfolio companies, loan interest receivables and other debtors, in which the Directors consider the maximum credit risk to be the carrying value of the convertible credit agreements, loan agreements, loan interest receivables and other debtors which amounted to US$28,647,000 (2015: US$30,544,000). Directors consider cash and receivables do not expose to significant credit risk, because the cash is held at reputable banks. The credit risk exposure is managed on an asset-specific basis by management. 2016 up to 12 months past due US$'000 2016 more than 12 months past due US$'000 2016 not past due US$'000 2016 Total US$'000 2015 not past due US$'000 2015 up to 12 months past due US$'000 2015 more than 12 months past due US$'000 2015 Total US$'000 - - - - - - 24,495 24,495 145 145 780 3,227 4,007 780 27,867 28,647 - - - - 350 25,938 26,288 - 155 155 874 3,227 4,101 1,224 29,320 30,544 Convertible credit agreements Loan agreements Trade and other receivables Total Liquidity risk The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the end of reporting period to the contractual maturity date or, if earlier, the expected date on which the financial liabilities will be settled. The amounts in the table are the contractual undiscounted cash flows. Liabilities 31 December 2016 Trade payables Other payables Performance incentive payable Upper share rights /contingent share awards Long-term borrowing Redeemable zero dividend preference shares Contractual interest payable Total Financial guarantees issued Carrying amount Less than 1 month 1-3 months 3-12 months over 12 months US$'000 US$'000 US$'000 US$'000 - 5 - - 3,966 - - - - - 3,971 - - - - - - - - 8 - - - - 8 Total US$'000 5 3,966 8 82 - - 82 2,500 2,500 57,000 13,777 57,000 13,777 73,359 77,338 US$'000 5 3,966 8 82 2,500 47,469 - 54,030 Maximum amount guaranteed 435 - - 435 - 435 59 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 25 Financial instruments - Risk management (continued) Liquidity risk (continued) Liabilities 31 December 2015 Trade payables Other payables Performance incentive payable Upper share rights /contingent share awards Liability component of convertible zero dividend preference shares Contractual interest payable Total Financial guarantees issued Maximum amount guaranteed Total Concentration risk Carrying amount Less than 1 month 1-3 months 3-12 months over 12 months US$'000 US$'000 US$'000 US$'000 - - - 5 1,912 281 503 - - - - - - - - 8 - - - Total US$'000 5 2,696 4,203 - 4,195 67 67 57,000 23,608 57,000 23,608 US$'000 5 2,696 4,203 67 69,385 - 76,356 1,917 281 511 84,870 87,579 435 435 - - 435 435 - 435 435 The main concentration risk for Origo is that the largest investments are concentrated in China for the amount of US$83,840,000 (2015: US$87,467,000), 87% (2015: 84%) out of the total portfolio value of US$96,663,000 (2015: US$104,014,000). 60 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 25 Financial instruments - Risk management (continued) Price risk Price risk may affect the value of listed and unlisted investments as a result of changes in market prices (other than arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all instruments traded in the market. As the majority of financial instruments are carried at fair value, with fair value changes recognised in the consolidated statement of comprehensive income, all changes in market conditions will directly affect reported portfolio returns. Price risk is managed by constructing a diversified portfolio of instruments traded on various markets and hedging where appropriate. The following table details the sensitivity to a 10% variation in equity prices. The sensitivity analysis includes all equity investments held at fair value through profit or loss and adjusts their valuation at the year end for a 10% change in value. Increase in price Decrease in price 2016 US$’000 7,202 (7,202) 2015 US$’000 7,757 (7,757) The sensitivity to equity and fund investments has increased during the year due to net investments and investment portfolio gains in the year. In management’s opinion, the sensitivity analysis is unrepresentative of the inherent price risk as the year end exposure does not reflect the exposure throughout the year as a whole. 61 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 26 Share-based payments The Group has a number of share schemes that allow employees to acquire shares in the Company, as detailed in Note 1.3(c). The total cost recognised in the consolidated statement of comprehensive income is shown below: Equity-settled option Upper share rights/contingent share awards Total 2016 US$'000 (52) (15) (67) 2015 US$'000 (426) 200 (226) 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 2016 and 31 December 2015. Outstanding at 1 January Granted during the year Forfeited during the year Exercised during the year Expired during the year 2016 No. 20,951,932 2016 WAEP 26.87p 2015 No. 21,451,932 - - - - - - (7,451,932) (22.62p) - (500,000) (31.00p) - - - - 2015 WAEP 26.97p - Outstanding at 31 December 13,500,000 29.22p 20,951,932 26.87p Exercisable at 31 December 13,500,000 29.22p 11,451,932 23.45p The weighted average remaining contractual life for the share options outstanding as at 31 December 2016 was 2.56 years (31 December 2015: 3.56 years). The range of exercise prices for options outstanding at the end of the year was 20 pence to 59.85 pence (31 December 2015: 20 pence to 59.85 pence). During the year, options including 6,800,000 equity-settled options granted on 26 October 2006 and 651,932 equity-settled options granted on 21 December 2006 have expired. Outstanding options include 3,500,000, 500,000 and 13,600,000 equity-settled options granted on 13 March 2008, 6 February 2009 and 2 February 2012 respectively to certain directors and employees of the Company. The Company did not enter into any share-based transactions with parties other than employees during the years from 2007 to 2016, except as described above. 62 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016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 upper share rights and contingent share awards during the years ended 31 December 2016 and 31 December 2015. Outstanding at 1 January Granted during the year Forfeited during the year Exercised during the year Expired during the year 2016 No. 7,711,425 2016 WAEP 9.48p 2015 No. 8,061,425 - - - - - - - - - - (350,000)* - Outstanding at the end of the year 7,711,425 9.48p 7,711,425 2015 WAEP 9.07p - - 0.00p - 9.48p Exercisable at the end of the year 7,711,425 9.48p 7,711,425 9.48p * The weighted average share price at the date of exercise of these options was 5.70 pence. The weighted average remaining contractual life for the share options outstanding as at 31 December 2016 was 4.51 years (2015: 5.51 years). The range of exercise prices for options outstanding at the end of the year was zero to 15.5 pence (2015: zero to 15.5 pence). On 16 October 2009, 4,847,099 of upper share rights were granted to certain directors, executives and key employees under the Company’s joint share ownership scheme ("JSOS"). 50% of upper share rights vested 12 months from the date of grant and 50% of upper share rights vested 24 months from the date of grant. The fair value of the upper share rights is estimated at the end of each reporting period using the binomial tree option pricing model. The contractual life of each upper share rights 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 award 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 offer granted is 10 years. The following table lists the inputs to the model used to calculate the fair value of upper share rights for the year. Underlying stock price (pence) Exercise price (pence) Expected life of option (years) Expected volatility (%) Expected dividend yield (%) Risk-free interest rate (%) 2016 2.125 15.4 2 373.64 - 0.50 2015 1.50 15.5 2 34.53 - 0.50 63 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016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 2014 to 31 December 2016 using source data from Reuters. The carrying amount of the liability relating to the upper share rights and the contingent share award as at 31 December 2016 is US$82,000 (2015: US$67,000) and the credit expense recognised as share-based payments during the year is US$15,000 (2015: reversal of expense of US$230,000). 27 Related party transactions Identification of related parties The Group has a related party relationship with its subsidiaries, associates and key management personnel. The Company receives and pays certain debtors and creditors on behalf of its subsidiaries and the amounts are recharged to the entities. Transactions between the Company and its subsidiaries have been eliminated on consolidation. Transactions with key management personnel The Group’s key management personnel are the Executive and Non-executive Directors as identified in the director’s report (Note 7). Trading transactions The following table provides the total amount of significant transactions and outstanding balances which have been entered into with related parties during the years ended 31 December 2016 and 31 December 2015. Amounts due to related parties* Key management personnel: Lionel de Saint-Exupery*** Shonaid Jemmett Page*** Other: Origo Advisors Ltd** 2016 US$'000 2015 US$'000 (66) (138) (25) (100) (2,422) (4,203) 64 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 27 Related party transactions (continued) Transactions Origo Advisors Ltd** - Consulting services payable - Release of provision for performance incentive 2016 US$'000 2015 US$'000 (1,769) 4,195 (2,054) 3,209 As at 31 December 2016 and 31 December 2015, the Group is committed to pay Origo Advisors Ltd for consulting services fee as below: 2016 US$'000 1,200 1,000 2,200 2015 US$'000 1,800 2,650 4,450 Within 1 year After 1 year but within 5 years Total * ** Other than the amount due to Origo Advisors Ltd that is unsecured, 8% interest bearing and has no fixed terms of repayment, the other amounts are unsecured, non-interest bearing and have no fixed terms of repayment. Origo Advisors Ltd is controlled by entities whose ultimate beneficiaries include Niklas Ponnert (Director of the Company) and Chris A Rynning (former Director of the Company). The transactions were mutually agreed by both parties at a fixed sum or charged based on cost incurred. The agreement was signed for four years up to 31 December 2018. *** Lionel de Saint-Exupery (Non-executive Director of the Company) and Shonaid Jemmett-Page (Non- executive Chairman of the Company) are directors of the Company. 28 Capital management The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders’ value. The Group manages and makes appropriate adjustments to its capital structure on an ongoing basis in light of changes in economic conditions and the risk characteristic of the underlying assets. To maintain or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital to shareholders and/or issue new shares. The Group is not subject to any externally imposed capital requirements. No changes were made in the objectives, policies or processes during the years ended 31 December 2016 and 31 December 2015. The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net debt includes current liabilities less cash and bank balances. Capital includes equity attributable to equity holders of the parent company. The gearing ratios as at the reporting dates were as follows: Current liabilities Less: Cash and bank balances Net debt 2016 US$'000 4,414 (1,786) 2,628 2015 US$'000 3,144 (1,272) 1,872 65 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners Plc Notes to the financial statements (continued) 28 Capital management (continued) Liability component of convertible zero dividend preference shares Equity attributable to equity holders of the parent Capital Capital and net debt Gearing ratio 29 Summary of financial assets and financial liabilities by category Financial assets Loans and receivables Fair value through profit or loss – designated* Financial liabilities Financial liabilities measured at amortised cost Financial guarantee contracts 2016 US$'000 47,469 45,517 92,986 2015 US$'000 69,385 30,077 99,462 95,614 101,334 3% 2% 2016 US$'000 5,938 96,518 102,456 53,940 435 54,375 2015 US$'000 5,486 103,859 109,345 72,086 435 72,521 * Included investments in associates of the Group that measured at fair value through profit or loss of $31,752,000 (2015: US$29,604,000). 30 Commitments and contingencies During the year, the Company was notified by Brooks Macdonald Asset Management (International) Limited (“Brooks Macdonald”) that it has filed a claim form 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 claim was settled during the year. Please refer to the announcement dated 7 September 2016 for details. There were no other material contracted commitments or contingent assets or liabilities at 31 December 2016 (31 December 2015: none) that have not been disclosed in the consolidated financial statements. 66 AUDITED FINANCIAL STATEMENTSOrigo Partners PLC December 2016Origo Partners PLC 33-37 Athol Street, Douglas, Isle of Man,IM1 1LB www.origoplc.com 

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