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
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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