ORIGO PARTNERS PLC
REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2020
CONTENTS
I.
DIRECTORS’ REPORT
Chairman’s letter
Directors’ report
II.
INDEPENDENT AUDITOR’S REPORT
III.
AUDITED FINANCIAL STATEMENTS
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
Page
1
3
5
10
11
12
13
14
Chairman’s Letter
Dear Shareholders,
The Company’s net asset value as at year end 2020 was US$2.3 million as compared to US$3.6 million a year earlier. The primary
reasons for the decline in net asset value are a write down of the Company’s investment in Celadon Mining Limited (Celadon)
and the Company’s running costs.
Celadon is a privately held company domiciled in the British Virgin Islands. It owns rights to mine coal in northern China. As we
announced about a year ago, Celadon had entered into an agreement with a third party for the sale of the Company’s assets.
If that transaction had completed, the Company would have expected to receive net proceeds of approximately £3.3 million.
That agreement was subsequently replaced with one that entailed a series of payments commencing in March 2021 and
completing in March 2022 with gross proceeds to Celadon of RMB 282 million and net proceeds to the Company of about £2.5
million. Celadon’s controlling shareholder has reported that although Celadon has already received a small portion of the RMB
282 million, the bulk has not been received on schedule because of what he identifies as short-term obstacles to transferring
money out of China. He is nonetheless confident that the promised consideration will be received in its entirety and has stated
that net proceeds will be distributed to Celadon’s shareholders. Given the series of disappointments over the buyer’s failure
to complete as promised and concomitant concerns, the Company has decided to write down this asset by half.
On 7 June 2021 the Company announced the sale of its entire investment in Gobi Coal & Energy Ltd. (Gobi Coal) for US$275,438.
This represents Gobi’s carrying value. In 2009, nearly a decade prior to this board’s tenure, the Company paid nearly US$15
million for the Gobi Coal investment. Gobi Coal is a privately held BVI company that purports to own various mining rights in
Mongolia. That company has been mired in legal battles for many years with various allegations of wrongdoing and corruption,
including a connection to the disgraced Malaysia state investment fund 1MDB. In the beginning, the Company had a Gobi Coal
board seat and a role in Gobi Coal. The board seat was lost under unclear circumstances and for many years the ultimate control
of that company has been opaque as well. The BVI company does not appear to have produced audited financial statements in
many years. The Company has for many years been entirely dependent on Gobi Coal’s controlling shareholder for information.
About a year ago, Gobi Coal said that it had retained KPMG (Beijing) to sell the company’s assets. Earlier this year Gobi Coal
said that KPMG had received no bids. Gobi Coal has had two capital raises over the last several years, none of which has the
Company participated in. The last capital raise reportedly closed at about US$75,000. These capital raises were apparently to
meet Gobi Coal’s running costs. Given these facts and circumstances and a review of recent transactions in Gobi Coal shares,
the Board determined that a sale at the asset’s carrying value was appropriate.
- 1 -
Our objectives continue to be selling the Company’s remaining assets, returning capital to shareholders and putting the
Company into liquidation. We also periodically review the cost of maintaining a listed company in light of the prospects of
attaining our objectives.
We welcome bids for the Company’s remaining assets.
Very truly yours,
John D. Chapman
Chairman
Origo Partners Plc
Date: 25 June 2021
- 2 -
Directors’ Report
The Directors present their report together with the audited financial statements for the year ended 31 December 2020.
Results and dividends
The result of the Group for the year is set out on page 10 and shows a loss for the year of US$1,257,000 (2019: US$567,000).
During 2019, the Directors approved a capital distribution of US$0.02947 to the holders of the Company's redeemable
preference and US$0.00117 to the holders of the Company's ordinary shares at US$0.00117 per ordinary share. No distributions
were made during the current reporting period. The retained loss of the year of US$1,257,000 (2019: US$567,000) has been
transferred to reserves.
Principal activities, review of business and future developments
On 20 November 2014, the Company’s Investing Policy 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 over a four year period.
However, investments will only be realised when the Independent Directors believe the terms are appropriate. A review of the
business of the Company is covered in the Chairman’s Letter.
Directors
At 31 December 2020:
Mr John Chapman
Mr Philip Peter Scales
Mr Hiroshi Funaki
Directors’ responsibilities in respect of the financial statements
The Directors are responsible for the preparation of the financial statements. The Directors have elected to prepare the financial
statements in accordance with applicable law and International Financial Reporting Standards as adopted by the European
Union. In preparing these financial statements, the Directors are required to:
•
•
•
•
select suitable accounting policies and then apply them on a consistent basis;
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.
- 3 -
Directors’ Report
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.
Corporate Governance Statement
The Board of Origo Partners Plc has adopted the Quoted Companies Alliance 2018 Corporate Governance Code (the "QCA
Code"). The Company is committed to the highest standards of corporate governance, ethical practices and regulatory
compliance. In particular, the Board is committed to ensuring that the Company is governed in a manner to allow efficient and
effective decision making, with robust risk management procedures.
The Company is reliant upon its service providers for many of its operations and as such will maintain an ongoing and rigorous
review of these providers. The Company's compliance with the QCA Code is reported on the Company's website
(www.origopartners.com), and at the back of this report. The Company will provide annual updates on changes to compliance
with the QCA Code.
Going concern
The Board has concluded that the Company and the Group is not considered to be a going concern and as a result of this the
consolidated financial statements for the year ended 31 December 2020 have been prepared on an orderly realisation basis.
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.
Auditor 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 is unaware.
Financial statements are published on the Group’s website in accordance with legislation in the Isle of Man governing the
preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance
and integrity of the Group’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the
ongoing integrity of the financial statements contained therein.
Each of the Directors has taken all the steps they ought to have taken individually as a Director in order to make themselves
aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
Lubbock Fine LLP, who, being eligible, have expressed their willingness to continue in office in accordance with the Isle of Man
Companies Act 2006.
By Order of the Board
Philip Peter Scales
Date: 25 June 2021
- 4 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
(incorporated in the Isle of Man with limited liability)
QUALIFIED OPINION
We have audited the consolidated financial statements of Origo Partners Plc (the 'Company') and its subsidiaries (the 'Group')
for the year ended 31 December 2020, which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement
of Cash Flows, and the related notes, including a summary of significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the
European Union.
In our opinion, except for the possible effects of the matter described in the Basis for Qualified Opinion section of our report,
the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group
as at 31 December 2020 and of its consolidated financial performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards as adopted by the European Union
BASIS FOR QUALIFIED OPINION
In the year ended 31 December 2020, the Group’s Consolidated Statement of Financial Position included an investment in
Celadon Mining Limited which at the year-end was valued at US$564,000, and in the Consolidated Statement of
Comprehensive Income for the year there was an unrealised loss on this investment of US$565,000 due to the reduction in the
fair value of this investment at the year-end. Note 10 in these consolidated financial statements sets out the directors’ approach
to valuing this investment, including highlighting the uncertainties around a potential sale. Given these uncertainties we have
been unable to obtain sufficient appropriate audit evidence about the fair value of the Group’s investment in Celadon Mining
Limited as at 31 December 2020 and consequently the movement in unrealised losses on investments in the Consolidated
Statement of Comprehensive Income for the year then ended. Consequently, we were unable to determine whether any
adjustments to these amounts were necessary.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
EMPHASIS OF MATTER – BASIS OF PREPARATION
As explained in Note 1.2, the directors do not consider either the Group or Company to be a Going Concern, and so consider
that the consolidated financial statements should be prepared on a basis other than that of going concern. As explained in note
1.2, no adjustments are required to the financial statements as a result of preparing the financial statements on this basis.
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 and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team.
- 5 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
(incorporated in the Isle of Man with limited liability)
KEY AUDIT MATTERS (continued)
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
Valuation of investments (Note 10)
How our audit addressed the key audit matter
The Group holds unquoted investments with a fair value
at 31 December 2020 of US$839,000 (2019 –
US$1,404,000).
We have obtained an understanding of the processes and
controls around investment valuation, and reviewed the
directors’ approach to the valuation of the investments.
These are held at fair value and are revalued annually by
the Directors. Unquoted investments have no readily
available market price and so are valued in accordance
with International Private Equity and Venture Capital
Valuation Guidelines by using measurement of value such
as multiples, discounted cash flow and industry valuation
benchmarks.
Due to the significance of these balances to the financial
statements this represents a key audit matter.
We have evaluated the appropriateness of the valuation
approach and methodology applied by the directors, with
reference to the nature of the underlying entities in the
investments held
We have challenged key assumptions and inputs into the
valuation models used and verified the arithmetical
accuracy of the models and adjustments made.
Due to continued uncertainties around the valuation of the
investment in Celadon Mining Ltd, we have issued a
qualified audit opinion in respect of this investment.
OUR APPLICATION OF MATERIALITY
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply the concept of
materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the
consolidated financial statements.
We define financial statements materiality as the magnitude by which misstatements, including omissions, could influence the
economic decisions taken on the basis of the consolidated financial statements by reasonable users.
We also determine a level of performance materiality, which we use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality
for the consolidated financial statements as a whole.
• Overall materiality - We determine materiality for the consolidated financial statements as a whole to be $50,000.
This was based on the key performance indicator, being 2% of gross assets. We believe gross asset values are the
most appropriate bench mark due to the minimal income statement activity during the year and existence of key
balance sheet items.
•
Performance materiality - On the basis of our risk assessment, together with our assessment of the Group’s control
environment, our judgement is that performance materiality for the consolidated financial statements should be 55%
of materiality, amounting to $28,000.
- 6 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
(incorporated in the Isle of Man with limited liability)
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated
financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account an understanding of the structure of the Group, its activities, the accounting
processes and controls, and the industry in which they operate. Our planned audit testing was directed accordingly and was
focused on areas where we assessed there to be the highest risk of material misstatement. During the audit, we reassessed and
re-valuated audit risks and tailored our approach accordingly.
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the control environment, the effectiveness of controls and
management of specific risk.
We communicated with the directors regarding, among other matters, the planned scope and timing of the audit and significant
findings, including any significant deficiencies in internal control that we identify during the audit.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. 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.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement, 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 Company
(the “Audit Committee”) assists the directors in discharging their responsibility in this regard.
- 7 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
(incorporated in the Isle of Man with limited liability)
AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below:
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and noncompliance with
laws and regulations, we considered the following:
•
Enquires of management, including obtaining and reviewing supporting documentation, concerning the Group's
policies and procedures relating to:
o
o
o
Identifying, evaluating and complying with laws and regulations and whether they were aware of any
instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected
or alleged fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance of laws and
regulations; and
• Discussions among the engagement team regarding how and where fraud might occur in the consolidated financial
statements and any potential indicators of fraud.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions
of those laws and regulations that had direct effect on the determination of material amounts and disclosures in the
consolidated financial statements. The key laws and regulations we considered in this context included the Isle of Man
Companies Act 2006, International Financial Reporting Standards and AIM Listing Rules.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group's ability to operate or to avoid a material penalty. These included
employment law and health and safety regulations. As a result of these procedures, we considered the opportunities and
incentives that may exist within the Group for fraud. In common with all audits under ISAs (UK), we are also required to perform
specific procedures to respond to the risk of management override.
- 8 -
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ORIGO PARTNERS PLC
(incorporated in the Isle of Man with limited liability)
Our procedures to respond to risks identified included the following:
•
•
•
•
•
•
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the consolidated financial
statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud;
reading minutes of meetings of the directors’ meetings;
reviewing the investment valuation approach taken by the directors;
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal
entries and other adjustments; assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and evaluating the rationale of any significant transactions that are unusual or outside
the normal course of the Group’s operations.
A further description of our responsibilities for the audit of the consolidated financial statements is located on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
USE OF OUR REPORT
This report is made solely to the Company's members, as a body, in accordance with our engagement letter dated 10 May 2021.
Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state
to them in an Auditors’ Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or
for the opinions we have formed.
Lubbock Fine LLP
Chartered Accountants & Statutory Auditors
3rd Floor Paternoster House
65 St Paul's Churchyard
London
EC4M 8AB
Date: 25 June 2021
- 9 -
Origo Partners Plc
Consolidated statement of comprehensive income
For the year ended 31 December 2020
Investment gain/loss:
Realised gains/losses on disposal of investments
Unrealised gains/losses on investments
Other income
Other administrative expenses
Share based payment
Financial guarantee derecognition
Foreign exchange loss
Net loss before finance costs and taxation
Finance costs
Loss before tax
Income tax credit
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
Notes
2
3
21
15
5
6
Loss after tax
Attributable to:
- Owners of the parent
- Non-controlling interests
Total comprehensive loss
Attributable to:
- Owners of the parent
- Non-controlling interests
2020
US$'000
2019
US$'000
22
(565)
(543)
20
(725)
-
-
(7)
(1,255)
(2)
(1,257)
-
(1,257)
-
-
-
-
(1,257)
(1,257)
-
(1,257)
(1,257)
-
(1,257)
(75)
-
(75)
-
(1,270)
103
435
(3)
(810)
(4)
(814)
247
(567)
(41)
(41)
-
(41)
(608)
(567)
-
(567)
(608)
-
(608)
Basic loss per ordinary share
Diluted loss per ordinary share
Basic loss per redeemable zero dividend preference share
Diluted loss per redeemable zero dividend preference share
7
7
7
7
(0.07) cents
(0.07) cents
(6.71) cents
(6.71) cents
(0.03) cents
(0.03) cents
(3.24) cents
(3.24) cents
The accompanying notes form an integral part of these consolidated financial statements.
- 10 -
Origo Partners Plc
Consolidated statement of financial position
At 31 December 2020
Assets
Non-current assets
Property, plant and equipment
Loans
Current assets
Investments at fair value through profit or loss
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Non-current liabilities
Deferred income tax liability
Total liabilities
Net assets
Equity attributable to owners of the parent
Issued capital
Share premium
Share-based payment reserve
Accumulated losses
Translation reserve
Other reserve
Non-controlling interests
Total equity
Notes
2020
US$'000
2019
US$'000
8
11
10
12
13
14
6
17
18
-
-
-
842
20
1,651
2,513
2,513
170
-
170
-
-
170
2,343
56
149,994
5,048
(198,200)
(1,457)
46,902
2,343
-
2,343
-
-
-
1,407
34
2,455
3,896
3,896
296
-
296
-
-
296
3,600
56
150,027
5,048
(200,216)
(1,379)
50,064
3,600
-
3,600
The consolidated financial statements were approved by the Board of Directors and authorised for issue. They were signed on
its behalf by:
Philip Peter Scales
Director
25 June 2021
The accompanying notes form an integral part of these consolidated financial statements.
- 11 -
Origo Partners Plc
Consolidated statement of changes in equity
For the year ended 31 December 2020
Attributable to equity holders of the parent
Share-
based
Non-
Issued
Share
payment
Accumulated
Translation
Other
controlling
Total
capital
premium
reserve
losses
reserve
reserve
Total
interests
equity
Notes US$'000 US$'000 US$'000
US$'000
US$'000 US$'000 US$'000
US$'000 US$'000
At 31 December 2018
Loss for the year
Other comprehensive income
Total comprehensive
income/(loss)
Capital distribution
At 31 December 2019
Adjustment
Loss for the year
Total comprehensive
income/(loss)
Reclassification on disposal of
subsidiaries
At 31 December 2020
56
150,414
5,048
(199,649)
(1,338)
51,744
6,275
-
-
-
-
-
-
-
(387)
-
-
-
-
(567)
-
-
(41)
(567)
(41)
-
-
-
(567)
(41)
(608)
-
-
(1,680)
(2,067)
56
150,027
5,048
(200,216)
(1,379) 50,064
3,600
-
-
-
-
(33)
-
-
-
-
-
-
-
48
(15)
(1,257)
(1,257)
-
-
-
-
-
-
-
(1,257)
3,225
(63)
(3,162)
-
56
149,994
5,048
(198,200)
(1,457) 46,902
2,343
-
-
-
-
-
-
-
-
-
-
-
6,275
(567)
(41)
(608)
(2,067)
3,600
-
(1,257)
(1,257)
-
2,343
The following describes the nature and purpose of each reserve within parent’s equity:
Reserve
Share premium
Amounts subscribed for share capital in excess of nominal value.
Description and purpose
Share-based payment reserve
Equity created to recognise share-based payment expense.
Accumulated losses
Translation reserve
Other reserve
Cumulative net gains and losses recognised in profit or loss.
Equity created to recognise foreign currency translation differences.
Own shares acquired, EBT (as defined in Note 21) shares and capital redemption and
capitalisation of redeemable zero dividend preference shares (“RZDP”).
The accompanying notes form an integral part of these consolidated financial statements.
- 12 -
Origo Partners Plc
Consolidated statement of cash flows
For the year ended 31 December 2020
Loss before tax
Adjustments for:
Depreciation and amortisation
Share-based payments
Realised gains/losses on disposal of investments
Unrealised gains/losses on investments at FVTPL*
Foreign exchange gains
Other adjustment
Operating loss before changes in working capital and provisions
Proceeds from disposals of investments at FVTPL*
Movement in loans
Increase in trade and other receivables
Decrease in trade and other payables
Derecognition of financial guarantee
Net cash (outflow)/inflow from operations
Investing activities
Cash removed on disposal of subsidiary
Net cash outflow from investing activities
Financing activities
Capital distribution
Net cash outflow from financing activities
Net (decrease)/increase 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
* FVTPL refers to fair value through profit or loss
Notes
2020
US$'000
(1,257)
2019
US$'000
(814)
3
21
2
2
10
11
15
13
-
-
(22)
565
7
-
(707)
24
-
14
(126)
-
(795)
(2)
(2)
-
-
(797)
(7)
2,455
1,651
5
(103)
75
-
15
(23)
(845)
2,045
-
(7)
(86)
(435)
672
-
-
(2,100)
(2,100)
(1,428)
-
3,883
2,455
The accompanying notes form an integral part of these consolidated financial statements.
- 13 -
Notes to the financial statements
1
Accounting policies
1.1 Corporate information
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 55 Athol
Street, Douglas, Isle of Man IM1 1LA. The principal activity of the Group is that of an Investment vehicle. The Group
currently holds investments in companies including unquoted interests, and illiquid publicly traded equity interests, based
or principally active in China and Mongolia. On 20 November 2014, the Company’s shareholders voted to amend the
Company’s investing policy to that of a realisation vehicle.
1.2 Basis of preparation
The Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union (“IFRS”). These comprise standards and interpretations approved by the International Accounting
Standards Board (“IASB”), together with interpretations of the International Accounting Standards and Standing
Interpretations Committee approved by the International Accounting Standards Committee that remain in effect, to the
extent that IFRS have been adopted by the EU.
Going concern
The Board has concluded that the Company and the Group is not considered to be a going concern and as a result of this
the consolidated financial statements for the year ended 31 December 2020 have been prepared on an orderly realisation
basis. There was no impact to the financial information as result of changing to this basis.
The comparative information is for the year from 1 January 2019 to 31 December 2019.
1.3 Functional and presentation currency
The consolidated financial statements are presented in United States dollars, 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.
1.4 Use of judgments and estimates
In preparing these consolidated financial statements, management has made judgments and estimates that affect the
application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised
prospectively.
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 Directors have estimated the value of each of its unquoted equity instruments by using their 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”). For more information on
estimation, refer to Note 10. Valuation methodologies mainly include 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.
- 14 -
1
Accounting policies
1.4 Use of judgments and estimates (continued)
(b) Assessment of the Company 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 directors have concluded that the Company meets the definition of an investment entity.
(c) Assessment of the subsidiaries as investment entities
The Company controls the voting rights and ownership interests in its subsidiaries as stated in Note 9 for which the
countries of incorporation for those subsidiaries are included in the same note.
Per IFRS 10, there is a requirement for the Board to assess whether each subsidiary is itself an investment entity.
The Board has performed the assessments and has concluded that the subsidiaries stated in Note 10 are not
operating subsidiaries of the Group for the reasons below:
(I)
The subsidiaries do not provide services to the Group (including administrative services to the Board of the
Group, buying / selling securities as well as managing the portfolios on a fair value basis); and
(II) The subsidiaries are not remunerated for these services.
(III) Each subsidiary is itself not deemed to be an investment entity investing solely for capital appreciation and
investment income and therefore the subsidiaries are consolidated.
(d) Share-based payments
The Group has applied the requirements of IFRS 2 “Share-based payments” in these consolidated financial
statements.
The Group has issued share options, which are equity-settled share-based payments, to an ex director, certain ex-
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 also granted upper share rights/contingent share awards, which are cash-settled share-based
payments, to an ex director and certain ex-employees under the Company’s JSOS (as defined in Note 21). 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 expense.
When estimating the value of the share options, the upper share rights and contingent share awards, 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.
- 15 -
1
Accounting policies (continued)
1.5 Summary of significant accounting policies
The accounting policies which follow set out those policies which apply in preparing the Financial Statements for the
period 1 January 2020 to 31 December 2020.
Standards and amendments effective for the period beginning 1 January 2020 or later
A number of other new standards are effective from 1 January 2021 but they do not have a material effect on the
Company’s financial statements.
Amendments to IFRS 3: Definition of a business
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark Reform
Amendments to IAS 1 and IAS 8 Definition of Material
Conceptual Framework for Financial Reporting issued on 29 March 2018
Amendments to IFRS 16 COVID – 19 Related Rent Concessions
A number of new standards are effective for annual periods beginning after 1 January 2020 and earlier application is
permitted; however, the Group has not early adopted the new or amended standards in preparing these consolidated
financial statements.
The following amended standards and interpretations are not expected to have a significant impact on the Group’s
consolidated financial statements:
IFRS 17 Insurance Contracts (effective on or after 1 January 2023)
•
• Amendments to IAS 1: Classification of Liabilities as Current or Non-current (effective on or after 1 January 2023)
Reference to the Conceptual Framework – Amendments to IFRS 3 (effective on or after 1 January 2022)
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 (effective on or after 1
January 2022)
•
• Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 (effective on or after 1 January 2022)
•
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopted
(effective on or after 1 January 2022)
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities (effective on
or after 1 January 2022)
IAS 41 Agriculture – Taxation in fair value measurements (effective on or after 1 January 2022
•
•
Financial instruments
i) Recognition and initial measurement
The Company initially recognises financial assets and financial liabilities at fair value through profit or loss (“FVTPL”) on
the trade date, which is the date on which the Company becomes a party to the contractual provisions of the instrument.
Other financial assets and financial liabilities are recognised on the date on which they are originated.
A financial asset or financial liability is measured initially at fair value plus, for an item not at FVTPL, transaction costs that
are directly attributable to its acquisition or issue.
- 16 -
1
Accounting policies (continued)
1.5 Summary of significant accounting policies (continued)
Financial instruments (continued)
ii) Classification and subsequent measurement
Classification of financial assets
On initial recognition, the Company classifies financial assets as measured at amortised cost or FVTPL.
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as at FVTPL.
- it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payment of principal and interest (“SPPI”).
All other financial assets of the Fund are measured at FVTPL.
Business model assessment
In making an assessment of the objective of the business model in which a financial asset is held, the Company considers
all of the relevant information about how the business is managed, including:
- the documented investment strategy and the execution of this strategy in practice. This includes expected cash outflows
or realising cash flows through the sale of assets;
- how the performance of the portfolio is evaluated and reported to the Company’s management;
- the risks that affect the performance of the business model (and the financial assets held within that business model)
and how those risks are managed; and
- the frequency, volume and timing of sales of financial assets and expectations about the future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales
for this purpose, consistent with the Company’s continuing recognition of the assets.
The Company has determined that it has two business models.
- Held-to-collect business model: this includes cash and cash equivalents and receivables. These financial assets are held to
collect contractual cash flow.
- Other business model: this includes equity investments. These financial assets are managed and their performance is
evaluated, on a fair value basis, with frequent sales taking place.
Assessment whether contractual cash flows are SPPI
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition.
‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal
amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the instrument.
This includes assessing whether the financial asset contains a contractual term that could change the timing or amount
of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:
- contingent events that would change the amount or timing of cash flows;
- prepayment and extension features;
- terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features); and
- features that modify consideration of the time value of money (e.g. periodical reset of interest rates).
- 17 -
1
Accounting policies (continued)
1.5 Summary of significant accounting policies (continued)
Financial instruments (continued)
Reclassifications
Financial assets are not reclassified subsequent to their initial recognition unless the Company were to change its business
model for managing financial assets, in which case all affected financial assets would be reclassified on the first day of the
first reporting period following the change in the business model.
Subsequent measurement of financial assets
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including foreign exchange gains and losses,
are recognised in the statement of comprehensive income.
Equity investments and derivative financial instruments are included in this category.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest method. Interest income is
recognised in ‘interest income calculated using the effective interest method’, foreign exchange gains and losses are
recognised in ‘net foreign exchange loss’ and impairment is recognised in ‘impairment losses on financial instruments’ in
the statement of comprehensive income. Any gain or loss on derecognition is also recognised in profit or loss.
Cash and cash equivalents, receivables and balances due from brokers are included in this category.
Financial liabilities – Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL.
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such
on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any
interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest
expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also
recognised in profit or loss.
Financial liabilities at amortised cost:
-
This includes trade and other payables.
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.
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.
- 18 -
1.5 Summary of significant accounting policies (continued)
Financial instruments (continued)
iii) Amortised cost measurement
The ‘amortised cost’ of a financial asset or financial liability is the amount at which the financial asset or financial liability
is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the
effective interest method of any difference between that initial amount and the maturity amount and, for financial assets,
adjusted for any loss allowance.
Equity instrument
Financial instruments shall reclassify a financial liability as equity from the date when there is no existence of a contractual
obligation to deliver cash or another financial asset by the issuer. The equity instruments are recorded at the fair value of
the equity instruments issued. The difference between the carrying amount of the financial liability extinguished and the
fair value of the equity instruments issued shall be recognised in profit or loss. The equity instruments issued shall be
recognised initially and measured at the date the financial liability is extinguished.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31
December 2020. 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 the current ability to direct 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.
The Group does not consolidate its subsidiaries other than those that solely provide it with services that relate to its
investment activities. Subsidiaries that provide services to the Group 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 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.
Subsequent to acquisition, the carrying amount of non-controlling interests that represent present ownership interests
in the subsidiary is the amount of those interests at initial recognition plus such non-controlling interest’s share of
subsequent changes in equity. Total comprehensive income is attributed to such non-controlling interests even if this
results in those non-controlling interests having a deficit balance.
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.
- 19 -
1.5 Summary of significant accounting policies (continued)
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”.
Foreign currencies
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 date 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.
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)
(II)
assets and liabilities for each statement of financial position are translated at the closing rate at the date
of that statement of financial position;
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 date of the
transaction); 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.
Cash and bank and borrowings
Cash and bank is defined as cash in hand, demand deposits, time deposit and short-term, highly liquid investments that
are readily convertible into known amounts of cash. They 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.
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.
- 20 -
1.5 Summary of significant accounting policies (continued)
Share-based payments
Ex employees (including former senior executives) of the Group received 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 ex director, executives and key employees of the Group were granted share
appreciation rights (including upper share rights and contingent share awards), which can only be settled in cash (“cash-
settled transactions”). Advisors received 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 ex 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 21.
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
ex 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. Movements in the
liability (other than cash payments) are recognised in profit or loss.
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 21. 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 expense.
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.
- 21 -
1
Accounting policies (continued)
1.5 Summary of significant accounting policies (continued)
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
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.
(II)
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
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.
(II)
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.
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.
- 22 -
1
Accounting policies (continued)
1.5 Summary of significant accounting policies (continued)
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.
2
Investment loss
Realised gains/losses on disposal of investments
- Investments at FVTPL
- Subsidiary
Unrealised gains/losses on investments
- Investments at FVTPL
Income from loans
Total
3
Other administrative expenses
Recurring expenses:
- Directors fees
- Audit fees
- Depreciation expenses
- Amortisation expenses
- Other
Non-recurring expenses*
Total
2020
US$'000
22
24
(2)
-
(565)
-
(543)
2020
US$'000
(777)
(210)
(35)
-
-
(532)
52
(725)
2019
US$'000
(75)
(75)
-
-
-
-
(75)
2019
US$'000
(928)
(210)
(58)
(5)
(1)
(654)
(342)
(1,270)
* Non-recurring expenses include professional fees of an ad-hoc nature and previous advisor fees. In 2020 expenses totalling
US$96k previously recognised have been written back.
- 23 -
4
Directors’ remuneration
Directors' emoluments
Share-based payment expenses
2020
US$'000
(210)
-
(210)
2019
US$'000
(210)
-
(210)
Directors’ remuneration for the year 2020 and the number of options held were as follows:
Name
Mr. Hiroshi Funaki
Mr. Philip Peter Scales
Mr. John Chapman
Salaries*
US$'000
Director fee
US$'000
Share-based
payment**
US$'000
Total
US$'000
2020
Number of
options
-
-
-
-
75
55
80
210
-
-
-
-
75
55
80
210
-
-
-
-
Directors’ remuneration for the year 2019 and the number of options held were as follows:
Name
Mr. Hiroshi Funaki
Mr. Philip Peter Scales
Mr. John Chapman
Salaries*
US$'000
Director fee
US$'000
Share-based
payment**
US$'000
Total
US$'000
2019
Number of
options
-
-
-
-
75
55
80
210
-
-
-
-
75
55
80
210
-
-
-
-
Short term employee benefits.
*
** Share-based payment refers to expenses arising from the Company’s share option scheme (Note 22).
5
Finance costs
Bank charges
6
Income tax
2020
US$'000
(2)
(2)
2019
US$'000
(4)
(4)
As the Company is not in receipt of income from Manx land, certain related business or property and does not hold a Manx
banking licence, it is taxed at the standard rate of 0% on the Isle of Man. The Company is resident for tax purposes in the
Isle of Man and subject to corporate income tax at the standard rate of 0% and as such no provision for tax in the Isle of
Man has been made.
Current tax
Current year
Deferred tax
Deferred income tax *
Total income tax credit in the consolidated statement of comprehensive income
2020
US$'000
2019
US$'000
-
-
-
-
247
247
*
The deferred income tax credit in 2019 relates to the write-back of the 2018 deferred tax provision, which was
reversed after the disposal of Niutech (see below).
- 24 -
6
Income tax (continued)
The income tax for the year can be reconciled per the consolidated statement of comprehensive income as follows:
Loss before tax
Loss before tax multiplied by rate of corporate income tax in the Isle
of Man of 0% (2019: 0%)
Deferred tax
Effects of:
Release of deferred tax provision **
Release of current taxation provision
Total income tax credit in the consolidated statement of comprehensive income
Deferred income tax liability:
Deferred income tax liability**
Total deferred income tax liability
2020
US$'000
(1,257)
2019
US$'000
(814)
-
-
-
-
-
247
-
247
2020
US$'000
2019
US$'000
-
-
-
-
** As at 31 December 2020, the deferred income tax liability was US$nil (2019: US$NIL). The amount released in the
year ended 31 December 2019 was in respect of the investment held in Niutech. This investment has been disposed
of and the final funds were received in the year ended 31 December 2019 from the sale of this investment from the
State Administration of Foreign Exchange (SAFE) in China.
7
Loss per share (“LPS”)
Numerator
Loss for the year attributable to ordinary shareholders of the parent
as used in the calculation of basic loss per share
Loss for the year attributable to redeemable zero dividend preference
shareholders of the parent as used in the calculation of basic loss per share
Loss for the year attributable to ordinary shareholders of the parent
as used in the calculation of diluted loss per share
Loss for the year attributable to redeemable zero dividend preference
shareholders of the parent as used in the calculation of diluted loss per share
Denominator
Weighted average number of ordinary shares for basic LPS
Effect of dilution*:
Share options
Weighted average number of ordinary shares adjusted for the effect of dilution
Weighted average number of redeemable zero dividend preference shares for
basic LPS before and after adjusted for the effect of dilution
Basic LPS of ordinary shares
Diluted LPS of ordinary shares
Basic LPS of redeemable zero dividend preference shares
Diluted LPS of redeemable zero dividend preference shares
2020
US$'000
2019
US$'000
(251)
(1,006)
(251)
(1,006)
(122)
(486)
(122)
(486)
2020
Number of
Shares
2019
Number of
shares
351,035,389
351,035,389
-
-
351,035,389
351,035,389
14,991,781
14,991,781
(0.07) cents
(0.03) cents
(0.07) cents
(0.03) cents
(6.71) cents
(3.24) cents
(6.71) cents
(3.24) cents
* Diluted loss per share for the years ended 31 December 2020 and 31 December 2019 is the same as the basic loss per
share, as the Company’s outstanding share options and convertible zero dividend preference shares had an anti-dilutive
effect on the basic loss per share for the years ended 31 December 2020 and 31 December 2019.
- 25 -
8
Property, plant and equipment
Cost
At 1 January 2020
Disposal
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Charge for the year 2019
Disposal
At 31 December 2019
Charge for the year 2020
Disposal
At 31 December 2020
Net book value
At 31 December 2019
At 31 December 2020
Vehicles
US$'000
85
(85)
-
80
5
85
-
(85)
-
-
-
9
Investments in subsidiaries
The principal subsidiaries of the Group are as follows:
Name
Ascend Ventures Ltd
Origo Resource Partners Ltd
PHI International Holding Ltd
PHI International (Bermuda) Holding Ltd*
Ascend (Beijing) Consulting Ltd**
*
**
Owned by Origo Resource Partners Ltd
Owned by Ascend Ventures Ltd
Country of
incorporation
Proportion of
ownership interest
at 31 December 2020
Proportion of
ownership interest
at 31 December 2019
Malaysia
Guernsey
Bermuda
Bermuda
China
-
100%
-
-
-
100%
100%
100%
100%
100%
During 2020 the Company disposed of its interest in Ascend Ventures Limited, Ascend (Beijing) Consulting Ltd, PHI
International Holding Ltd and PHI International (Bermuda) Holding Ltd realizing a loss of US$2,000. Origo Resource
Partners Ltd has been placed in liquidation after the year end.
- 26 -
10
Investments at fair value through profit or loss
As at 31 December 2020
Name
Celadon Mining Ltd
Six Waves Inc
Gobi Coal & Energy Ltd
Fram Exploration AS
Staur Aqua AS
Unipower (Note a)
China Rice (Note a)
Moly World Ltd (Note a)
Country of
incorporation
Fair value
hierarchy
level
Proportion of
ownership
interest
Cost
US$’000
Fair value
US$’000
British Virgin Islands
British Virgin Islands
British Virgin Islands
Norway
Norway
Cayman Islands
British Virgin Islands
British Virgin Islands
3
3
3
3
3
3
3
3
8.9%
13,069
1.1%
7.5%
0.6%
9.2%
240
14,960
1,223
719
16.5%
4,301
32.1%
13,000
20.0%
10,000
564
-
275
-
-
-
-
-
Other quoted investments
3
842
The shares held in China Rice and Unipower are all convertible preference shares whilst the remaining investments held
in the other entities are all ordinary equity shares. The 'proportion of ownership interest' represents the percentage of
the shares held by the Group in all share classes.
593
1
As at 31 December 2019
Name
Celadon Mining Ltd
Six Waves Inc
Gobi Coal & Energy Ltd
Marula Mines Ltd
Fram Exploration AS
Staur Aqua AS
Unipower (Note a)
China Rice (Note a)
Moly World Ltd (Note a)
Country of
incorporation
Fair value
hierarchy
level
Proportion of
ownership
interest
Cost
US$’000
Fair value
US$’000
British Virgin Islands
British Virgin Islands
British Virgin Islands
South Africa
Norway
Norway
Cayman Islands
British Virgin Islands
British Virgin Islands
3
3
3
3
3
3
3
3
3
8.9%
13,069
1,129
1.1%
7.5%
0.9%
0.6%
9.2%
240
14,960
250
1,223
719
16.5%
4,301
32.1%
13,000
20.0%
10,000
-
275
-
-
-
-
-
-
Other quoted investments
3
1,407
The shares held in China Rice and Unipower are all convertible preference shares whilst the remaining investments held
in the other entities are all ordinary equity shares. The 'proportion of ownership interest' represents the percentage of
the shares held by the Group in all share classes.
593
1
Notes
a.
These investments are associates of the Group measured at fair value through profit or loss.
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) Quoted prices in active markets for identical assets or liabilities (Level 1);
b) 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
c) 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 year of 2020.
10
Investments at fair value through profit or loss (continued)
The following table provides an analysis of investments carried at fair value by level of fair value hierarchy:
- 27 -
Investments at fair value through profit or loss
-
-
Unlisted equity investments
Listed equity investments
Investments at fair value through profit or loss
-
-
Unlisted equity investments
Listed equity investments
2020
Level 1
US$’000
Level 2
US$’000
Level 3
US$’000
Total
US$’000
3
-
3
-
-
-
2019
-
839
839
3
839
842
Level 1
US$’000
Level 2
US$’000
Level 3
US$’000
Total
US$’000
3
-
3
-
-
-
-
1,404
1,404
3
1,404
1,407
Changes in investments at fair value through profit or loss based on Level 3:
Opening balance
Proceeds from disposals of investments
Realised gain/(losses) on disposals of investments
Movement in unrealised losses on investments
- In profit or loss
Closing balance
Description of significant unobservable inputs to valuation:
As at 31 December 2020
2020
US$’000
1,404
(24)
24
(565)
839
Celadon Mining Ltd
Multiples method
Valuation technique
Significant
unobservable inputs
Discount for lack of
marketability
2019
US$’000
3,521
(2,042)
(75)
-
1,404
Range
80%
Gobi Coal & Energy Ltd
Consensus pricing
method
Offered quote and
post year end sale
US$275,348
In June 2020 Celadon Mining Ltd announced the sale of their assets had been agreed at RMB 330m. Under the terms of
this sale the Company would have been due approximately US$ 4.2m. As detailed in note 27, in March 2021, the terms
of the sale agreement were renegotiated with a sale price of RMB 282m which would have given sales proceeds to the
Company of approximately US$ 3.4m This offer came with an agreed payment schedule which would have seen the
Company receive US$ 1.8m in September 2021 and the remaining US$ 1.6 m in March 2022.
In May 2021, the controlling shareholder of Celadon informed the Company that there were delays in receiving the
payments and that at the present time they were unable to advise of likely payment dates. In light of the uncertainties
over the timing and ultimate recoverability of funds, the Board have elected to reduce the carrying value of the
investment by 50% to US$ 565,000.
As disclosed in Note 27, the Company disposed of its holding in Gobi Coal at the carrying value above.
- 28 -
10
Investments at fair value through profit or loss (continued)
As at 31 December 2019
Celadon Mining Ltd
Multiples method
Valuation technique
Significant
unobservable inputs
Discount for lack of
marketability
Range
80%
Gobi Coal & Energy Ltd
Consensus pricing
method
Offered quote
US$275,348
11
Loans
The Group has entered into convertible credit agreements and has the right to convert the outstanding principal balance
of relevant loans into borrower’s shares according to certain conversion conditions, and loan agreements with certain
investee companies as set forth in the table below.
As at 31 December 2020:
Borrower
Convertible credit agreements*
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due after
one year
US$'000
Fair value
US$'000
Staur Aqua AS
0-15
3,848
-
-
-
-
-
-
The convertible loan issued to Staur Aqua was fully impaired in 2018.
As at 31 December 2019:
Loan
rates
%
Loan
principal
US$'000
Loans
due
within
one year
US$'000
Loans
due after
one year
US$'000
Fair value
US$'000
Borrower
Convertible credit agreements*
Staur Aqua AS
0-15
3,848
-
-
-
-
-
-
*
Loans in relation to convertible credit agreements are measured at fair value. Loans in relation to loan agreements
are measured at amortised cost using the effective interest rate method less any identified impairment losses.
- 29 -
12
Trade and other receivables
Trade debtors
Other debtors
Prepayments
Total
13
Cash and cash equivalents
Current account
Total cash and cash equivalents
14
Trade and other payables
Trade payables
Other payables
Total
15
Financial guarantee contracts
Financial guarantee contracts*
Total
*
2020
US$'000
2019
US$'000
-
-
20
20
-
8
26
34
2020
US$'000
1,651
1,651
2020
US$'000
-
170
170
2020
US$'000
-
-
2019
US$'000
2,455
2,455
2019
US$'000
-
296
296
2019
US$'000
-
-
In July 2013, the Group entered into a purported guarantee agreement with IRCA Holdings Ltd and ABSA Bank
Limited purportedly 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 the purported
guarantee as a liability.
IRCA Holdings Ltd was struck off the company register in British Virgin Islands in the year ended 31 December
2018, and in the period since strike-off the Company has received no request for payment of any amounts under
this guarantee. Given the time lapse since the guarantee was purportedly given and that IRCA Holdings Ltd., the
counterparty has been stricken from the Companies’ Register, the Board now considers that the possibility of the
purported guarantee being exercised as remote. The Board has therefore decided to no longer recognize the
purported guarantee as a Company liability resulting in the write back to income of US$435,000 during 2019.
- 30 -
16 Redeemable / convertible zero dividend preference shares
Number of
shares
Liability
component
Equity
component
US$'000
US$'000
Balance at 1 January 2019
Distribution to redeemable preference share
holders
Balance at 31 December 2019
Balance at 31 December 2020
57,000,000
-
57,000,000
57,000,000
-
-
-
-
-
-
-
-
Other
reserve
US$'000
50,688
(1,680)
49,008
49,008
In September 2017, the Company restructured the terms of its existing convertible zero dividend preference shares, where
the conversion feature has been removed, which were revised as redeemable zero dividend preference shares. The
principal terms of restructure includes: i) removal of redemption of at least 12 million convertible zero dividend preference
shares 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.
On 27 September 2017, the rights attaching to the redeemable zero dividend preference shares and the ordinary shares
changed so that they rank alongside each other, and the redeemable zero dividend preference shareholders receive
distributions when ordinary shareholders do. Post 27 September 2017, the redeemable zero dividend preference shares
are accounted for as an equity instrument in accordance with the accounting policies disclosed in Note 1.5.
All future distributions to ordinary and redeemable zero dividend preference shareholders are on the following basis (pro
rata within the respective classes of shares):
•in respect of the first US$15 million of distributions, 80 percent (i.e. US$12 million) to the redeemable zero dividend
preference shareholders and 20 percent (i.e. US$3 million) to the ordinary shareholders;
•in respect of distributions in excess of the first US$15 million: until such time as all redeemable zero dividend preference
shares have been redeemed in full, 44 percent to the redeemable zero dividend preference shareholders and 56 percent
to the ordinary shareholders; thereafter, 100 percent to the ordinary shareholders.
The redeemable zero dividend preference shares are now subject to the distribution in accordance with articles 4.10 to
4.12 of the Articles. In summary, the distributions will be made, at such reasonable time as the Board shall decide, when:
the Company has available funds, which is the aggregate amount of the Company’s net cash less working capital
(i)
requirements for the following 12 months and;
the Company would be able to comply with the solvency test under the Companies Act 2006 (“Solvency Test”)
immediately after distribution.
(j)
In the year ended 31 December 2019 a distribution of US$1,680,000 was made to holders of the redeemable zero dividend
preference shares.
- 31 -
17
Issued capital
Authorised
Number of shares
£'000 Number of shares
£'000
Ordinary shares of £ 0.0001 each
500,000,000
50
500,000,000
50
2020
2019
Issued and fully paid
Number of shares US$'000 Number of shares US$'000
Ordinary shares of £ 0.0001 each
At beginning and end of the year
Redeemable zero dividend preference shares of no
par value (note 16)
At 1 January
At 31 December
18 Other reserve
358,746,814
56
358,746,814
56
57,000,000
-
57,000,000
-
-
-
57,000,000
-
57,000,000
-
-
-
This mainly comprised 57,000,000 (US$49,008,000) redeemable zero dividend preference shares at no par value
capitalised in September 2017 (see note 16).
19 Note to the consolidated statement of cash flows
(a) Major non-cash transaction
During the year ended 31 December 2020, interest expenses of US$nil (2019: (US$335,000)) related to interest on
borrowings and redeemable zero dividend preference shares.
20
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
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
- 32 -
Some of the Group’s assets, liabilities, income and expenses are effectively denominated in currencies other than US
Dollars (the Group’s presentation and functional currency). Fluctuations in the exchanges rates between these currencies
and US Dollars will have an effect on the reported value of those items.
Financial instruments - Risk management (continued)
20
The following table demonstrates the sensitivity of the Group’s loss 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, with all other variables held
constant.
2020
2019
Appreciation/
(depreciation) in US$
Effect on loss before tax
US$'000
Effect on net asset value
US$'000
+10%
-10%
+10%
-10%
9
(9)
72
(72)
9
(9)
72
(72)
The assumed movement for currency rate sensitivity analysis is based on the currently observable market environment.
The Group’s assets and liabilities that are effectively denominated in currencies other than the functional currency, US
Dollars, are:
2020
GBP
NOK
RMB
HKD
CAD
ZAR
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Cash and bank balances
Investments at FVTPL*
Loans
Trade and other receivables
Total Assets
Trade and other payables
Financial guarantee contracts
Provision
Total Liabilities
2019
Cash and bank balances
Investments at FVTPL*
Loans
Trade and other receivables
Total Assets
Trade and other payables
Financial guarantee contracts
Provision
Total Liabilities
93
-
-
-
93
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
93
-
-
-
93
-
-
-
-
GBP
NOK
RMB
HKD
CAD
ZAR
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
24
-
-
-
24
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
(4)
(3)
-
-
-
-
63
-
-
-
63
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
88
-
-
(4)
84
-
-
-
-
- 33 -
20
Financial instruments - Risk management (continued)
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 2020
Carrying
amount
Less than
1 month
1-3 months
3-12
months
over 12
months
Total
US$'000
US$'000
US$'000
US$'000
US$'000
US$'000
Other payables
Upper share rights
/contingent share awards
Short-term borrowing
170
-
-
Total
170
170
-
-
170
-
-
-
-
-
-
-
-
-
-
-
-
170
-
-
170
Liquidity risk (continued)
Liabilities
31 December 2019
Other payables
Upper share rights
/contingent share awards
Short-term borrowing
Carrying
amount
US$'000
296
-
-
Total
296
Concentration risk
Less than
1 month
1-3 months
3-12
months
over 12
months
Total
US$'000
US$'000
US$'000
US$'000
US$'000
296
-
-
296
-
-
-
-
-
-
-
-
-
-
-
-
296
-
-
296
The main concentration risk for Origo is that the largest investments are concentrated in China for the amount of
US$567,000 (2019: US$1,133,000), 67% (2019: 81%) out of the total portfolio value of US$842,000 (2019: US$1,407,000).
Price risk
Price risk may affect the value of listed and unlisted investments as a result of changes in market prices (other than arising
from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors
affecting all instruments traded in the market.
As the majority of financial instruments are carried at fair value, with fair value changes recognised in the consolidated
statement of comprehensive income, all changes in market conditions will directly affect reported portfolio returns.
Price risk is managed by constructing a diversified portfolio of instruments traded on various markets and hedging where
appropriate.
- 34 -
20
Financial instruments - Risk management (continued)
The following table details the sensitivity to a 10% variation in equity prices. The sensitivity analysis includes all equity
investments held at fair value through profit or loss and adjusts their valuation at the year-end for a 10% change in value.
Increase in price
Decrease in price
2020
US$'000
84
(84)
2019
US$'000
141
(141)
The sensitivity to equity and fund investments has not increased during the year due to net investments and investment
portfolio loss in the year.
21
Share-based payments
The Group has a number of share schemes that allow an ex-director, certain ex-employees and its advisors to acquire
shares in the Company, as detailed in Note 1.4(d).
The total cost recognised in the consolidated statement of comprehensive income is shown below:
Equity-settled option
Upper share rights/contingent share awards
Total
2020
US$'000
-
-
-
2019
US$'000
-
(103)
(103)
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 2020 and 31 December 2019.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2020
No.
9,500,000
2020
WAEP
31.00p
2019
No.
10,000,000
-
-
-
-
-
-
-
-
-
-
-
(500,000)
2019
WAEP
32.37p
-
-
-
-
Outstanding at 31 December
9,500,000
31.00p
9,500,000
31.00p
Exercisable at 31 December
9,500,000
31.00p
9,500,000
31.00p
The weighted average remaining contractual life for the share options outstanding as at 31 December 2020 was 1.08 years
(31 December 2019: 2.09 years).
Outstanding options include 9,500,000 equity-settled options granted on 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 2018, except as described above.
During the years 2019 and 2020, there were no options granted, forfeited or exercised.
- 35 -
21
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 2020 and 31 December 2019.
Outstanding at 1 January
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
2020
No.
2,993,358
2020
WAEP
9.48p
2019
No.
7,711,425
-
-
-
-
-
-
-
-
-
-
-
(4,718,067)
2019
WAEP
9.48p
-
-
-
-
Outstanding at the end of the year
2,993,358
9.48p
2,993,358
9.48p
Exercisable at the end of the year
2,993,358
9.48p
2,993,358
9.48p
The weighted average remaining contractual life for the share options outstanding as at 31 December 2020 was 1.08 years
(2019: 2.09 years).
On 16 October 2009, 4,847,099 of upper share rights were granted to certain director, 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 and therefore these all expired in the year ended 31 December 2019.
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 carrying amount of the liability relating to the upper share rights and the contingent share award as at 31 December
2020 is US$nil (2019: US$nil) and the credit expense recognised as share-based payments during the year is US$nil (2019:
US$103,000).
22 Related party transactions
Identification of related parties
The Group has a related party relationship with its subsidiaries, associates and key management personnel. The Company
receives and pays certain debtors and creditors on behalf of its subsidiaries and the amounts are recharged to the entities.
Transactions between the Company and its subsidiaries have been eliminated on consolidation.
Transactions with key management personnel
The Group’s key management personnel are the non-executive directors as identified in the director’s report.
The following balances were included in trade and other payables and were outstanding in respect of Directors
remuneration at the year end.
Amounts due to related parties
Key management personnel:
Hiroshi Funaki
Philip Peter Scales
John Chapman
- 36 -
2020
US$'000
2019
US$'000
-
(15)
(80)
(19)
(15)
(35)
23
Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to maintain healthy capital
ratios in order to support its business and maximise shareholders’ value.
The Group manages and makes appropriate adjustments to its capital structure on an ongoing basis in light of changes in
economic conditions and the risk characteristic of the underlying assets. To maintain or adjust the capital structure, the
Group may adjust dividend payments to shareholders, return capital to shareholders and/or issue new shares. The Group
is not subject to any externally imposed capital requirements. No changes were made in the processes during the years
ended 31 December 2020 and 31 December 2019.
The Group monitors capital using a gearing ratio, which is net debt divided by capital plus net debt. Net debt includes
total liabilities less cash and bank balances. Capital includes equity attributable to equity holders of the parent company.
The gearing ratios as at the reporting dates were as follows:
Total liabilities
Less: Cash and bank balances
Net debt
Equity attributable to equity holders of the parent
Capital
Capital and net debt
Gearing ratio
25 Summary of financial assets and financial liabilities by category
Financial assets
Cash
Financial assets at amortised cost
Fair value through profit or loss – designated
Financial liabilities
Financial liabilities measured at amortised cost
Financial guarantee contracts
26 Commitments and contingencies
2020
US$’000
2019
US$’000
170
(1,651)
(1,481)
2,343
2,343
862
296
(2,455)
(2,159)
3,600
3,600
1,441
(172%)
(150%)
2020
US$’000
2019
US$’000
1,651
20
842
2,513
170
-
170
2,455
34
1,407
3,896
296
-
296
There were no material contracted commitments or contingent assets or liabilities at 31 December 2020 (31 December
2019: none) that have not been disclosed in the consolidated financial statements.
- 37 -
27
Subsequent events
Celadon Mining Limited
In June 2020, the controlling shareholder of Celadon Mining Ltd. ("Celadon") informed the Company that Celadon had
entered into an agreement with a third party to sell Celadon's assets for approximately RMB 330 million or approximately
US$47 million with closing scheduled for the earlier of (i) the lifting of certain restrictions on travel in connection with the
global pandemic or (ii) 31 December 2020.
In March 2021 the controlling shareholder informed the Company that the sale terms had been renegotiated and that
RMB 282 million was expected to be paid over the 12 month period to 31 March 2022. This would have provided a return
of approximately US$ 3.4 million after expenses to the Company.
During May 2021, the controlling shareholder of Celadon advised that the agreed payment schedule is not being met and
that there are difficulties in getting the money from China. The Company has been informed that the payments will be
made but that the timing will be delayed. No details have been supplied as to the likely timing of any payments.
The Company invested approximately US$ 13.1 million in Celadon in 2011. In the Company's last interim accounts dated
30 June 2020, the Celadon investment was carried at a fair value of US$1.129 million. In light of the information received
and the level of uncertainty as to the recoverability of any funds, the Directors have agreed to write the value down by
50% to US$ 0.565 million. This is approximately 25% of the likely return.
The Company has not been involved in the negotiations for the sale of the Celadon assets and has no direct insight into
whether closing will occur as planned.
Gobi Coal & Energy Ltd.
On 7 June 2021 the Company announced the sale of its entire investment in Gobi Coal & Energy Ltd. (Gobi Coal) for
US$275,438.
COVID-19
The extent of the impact of the coronavirus (“COVID-19”) outbreak on the financial performance of the company’s
investments will depend on future developments, including the duration and spread of the outbreak and related advice
and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly
uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended
period, the company’s investment results may be materially adversely affected.
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Statement of Compliance with the QCA Corporate Governance Code
(This disclosure was last reviewed and updated on 25 June 2021)
Introduction
The Board of Origo Partners Plc (the “Company”) has adopted the 2018 QCA Corporate Governance Code (the “QCA
Code”). The Board intends to take appropriate measures to ensure that the Company complies with the QCA Code.
Principle 1 - Establish a strategy and business model which promote long-term value for shareholders
The Company is now in realisation mode and entered into an amended Asset Realisation Agreement with the Company’s
investment consultant Origo Advisers Limited on 20 April 2018. This Agreement was terminated for cause in March
2019.The Company holds the remainder of a portfolio of unquoted interests and illiquid, publicly traded, equity interests,
in companies principally based or active in China and Mongolia (“Portfolio”).The Board of Origo Partners Plc (the
“Company”) has adopted the 2018 QCA Corporate Governance Code (the “QCA Code”). The Board intends to take
appropriate measures to ensure that the Company complies with the QCA
Code.Principle 1 - Establish a strategy and business model which promote long-term value for shareholders
The Company is now in realisation mode and entered into an amended Asset Realisation Agreement with the Company’s
investment consultant Origo Advisers Limited on 20 April 2018. This Agreement was terminated for cause in March 2019.
The Company holds the remainder of a portfolio of unquoted interests and illiquid, publicly traded, equity interests, in
companies principally based or active in China and Mongolia (“Portfolio”).
The Company shall, through an orderly realisation program, seek to divest the entire Portfolio over a period of no longer
than 4 years (“Realisation Period”) at such time and under such conditions as the Independent Directors may determine
in order to maximize value on behalf of Shareholders. The 4-year period ended on 20 November 2018. On 24 December
2019, the Company announced its intention to put the remaining assets up for auction. On 7 May 2020 the Company
announced that the auction process had been delayed due to the effect of the Covid-19 pandemic.
The Company’s realisation policy will not result in any immediate or accelerated sales; investments will only be realised
when, in the opinion of the Independent Directors, appropriate terms can be agreed.
During the Realisation Period, the Company shall maintain the ability at its discretion, to pursue follow-on investments
in the existing Portfolio companies in order to maximize value and/or facilitate future divestments.
All divestments, and any follow-on investments relating to a Portfolio company, above a cumulative threshold of
US$500,000, will be considered and approved by the Independent Directors.
Net proceeds of divestments shall, pursuant to the Company’s Articles of Association, be distributed to shareholders at
such time as determined by the Board of Directors, at its absolute discretion, for the purpose of maximizing returns to
shareholders while maintaining sufficient liquidity for working capital and provisions for follow-on investments.
Principle 2 - Seek to understand and meet shareholder needs and expectations
Although the Company is in realisation mode the Directors actively seek to build a relationship with its shareholders and
continue to manage shareholder’s expectations. The Company remains committed to listening and communicating
openly with its shareholders to ensure that its strategy and performance are clearly understood. Meetings are held with
shareholders, typically following the issuing of results.
For shareholders the AGM is the main forum for dialogue with the Board and Directors are available to answer questions
raised by shareholders. The results of the AGM are subsequently published on the Company’s website.
There are also periodic class meetings held which is another forum for dialogue with the Directors, the results of these
class meetings are also published on the Company’s website. The Directors are the main point of contact for the
shareholders.
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Principle 3 - Take into account wider stakeholder and social responsibilities and their implications for long-term success.
This principle now has limited applicability, given that the investment policy of the Company is to realise its portfolio and
to return the net proceeds to shareholders. The Board has oversight, accountability and contact with key resources and
relationships.
The Group’s stakeholders include shareholders, auditors, regulators and industry bodies.
Engaging with stakeholders strengthens relationships and helps with business decisions in order to deliver the investment
policy.
Principle 4 - Embed effective risk management, considering both opportunities and threats, throughout the organisation.
The Company’s investment activities expose it to various types of risks, which are associated with the financial
instruments and markets in which it invests. The Board needs to ensure that the Company’s risk management framework
identifies and addresses all relevant risks.
The Board is responsible for reviewing and evaluating risk and considers the risks to the business at regular board
meetings.
The Group is exposed through their operations to one or more of the following risks:
Country risk
•
•
•
•
•
•
•
Fair value risk
Cash flow interest rate risk
Currency risk
Credit risk
Liquidity risk
Concentration risk
Price riskCovid-19 pandemic risk
The policy for managing these risks is set by the board and is available to view on the Company’s website.
The Board has overall responsibility for the Company’s systems of internal controls, for reviewing their effectiveness and
ensuring efficient day to day operations. These controls aim to ensure that assets of the Company are safeguarded,
proper accounting records are maintained and the financial information used within the business and for publication are
reliable.
Following their appointment in 2017, the new board appointed FIM Capital Limited as Administrator in order to improve
the levels of corporate governance, accounting and day to day management of the Company.
Principle 5 - Maintain the board as a well-functioning, balanced team led by the chair.
The Origo board was reconstituted in late 2017 with the appointment of three new directors and the resignations of two
of the incumbent directors. In September 2017, Hiroshi Funaki joined the Origo board as a nominee of Origo’s largest
ordinary shareholder. On 31 October 2017, John Chapman joined the Origo board as a nominee of our largest preference
shareholder. Also, on 31 October 2017, Philip Scales joined the board as an independent director. John Chapman was
elected the Company’s Chairman. In April 2018, Niklas Ponnert an employee of the investment adviser resigned from the
Board.
In the period since the new board was appointed, the primary focus has been to establish more robust controls over
company assets, strengthen the Company’s capital position by repaying debt, reduce costs, renegotiate the advisory
agreement, clarify the assets owned and begin to accelerate the realization of company assets in order to be able to return
cash to shareholders.
The Board now comprises three non- executive directors, John Chapman (Chairman), Hiroshi Funaki and Philip Scales and
all three have an effective and an appropriate balance of skills and experience for a company of this size.
The Board holds regular meetings, a minimum of at least 4 times per annum, either formally in person or informally by
telephone and ad hoc meetings are held as required. For the year ended 31 December 2020 five board meetings took
place. All meetings were attended by all directors.
- 40 -
Principle 6 - Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
The Board currently consists of three Non- Executive Directors. The Board is satisfied that between the Directors it has
an effective and appropriate balance of skills and experience, reflecting a broad range of commercial and professional
skills across geographies and industries that is necessary to ensure the Company is equipped to deliver is investment
objective. Additionally, each Director has experience with public companies.
John Chapman is an experienced investment company director with significant experience in managing and advising
investment companies in many emerging and developed markets. Mr. Chapman is a member of the New York State Bar
and holds the Chartered Financial Analyst (CFA) credential.
Hiroshi Funaki worked at Edmond de Rothschild Securities from 2000 to 2015 where he led the Investment Companies
team, focusing on Emerging Markets and Alternative Assets. Prior to that, he was Head of Research at Robert Fleming
Securities, also specialising in closed-end funds. He currently acts as a consultant to a number of emerging market
investors. He has a BA in Mathematics and Philosophy from Oxford University.
Philip Scales has over 40 years’ experience working in offshore corporate, trust, and third party administration. For 18
years, he was Managing Director of Barings Isle of Man (subsequently to become Northern Trust) where he specialised in
establishing offshore fund structures, latterly in the closed-ended arena (both listed and unlisted entities). Mr. Scales
subsequently co-founded FIM Capital Limited where he is Deputy Chairman. He is a Fellow of the Institute of Chartered
Secretaries and Administrators and holds a number of directorships of listed companies and collective investment
schemes.
FIM Capital Limited (“FIM”) is the Fund’s administrator, registrar and registered agent, and provide specialist fund
administration services to a variety of closed ended funds and collective investment schemes. Many of the closed ended
schemes are quoted on the London Stock Exchange. FIM Capital Limited act as secretary to the Company and are
available to advise and support the Board on corporate governance and secretarial matters.
Legal firms in London and China have been appointed to specifically provide advice to the Board on all matters relating
to the sale of the portfolio of assets.
Principle 7 - Evaluate board performance based on clear and relevant objectives, seeking continuous improvement.
As the Company is in realisation mode, no formal board evaluation has been carried out.
Principle 8 - Promote a corporate culture that is based on ethical values and behaviours.
It is the Board who set the standard/culture within the organisation and they ensure that there are appropriate codes of
practice in place.
Principle 9 - Maintain governance structures and processes that are fit for purpose and support good decision-making by
the board.
The Board has joint authority and decision-making powers for all aspects of the Company’s activities.
The Board has adopted appropriate delegations of authority that set out matters that are reserved to the Board.
The Non-Executive Chairman is responsible for the effectiveness of the Board together with the responsibility to oversee
the Company’s corporate governance practices.
The responsibility for the Company's day-to-day operations has been delegated by the Board to FIM.
There are no separate committees as the board does not feel these are necessary given the size of the Board, the
Company and the investment objective of realising all assets matters normally considered by a committee are considered
by the Board as a whole.
- 41 -
Whilst there has been no formal adoption of matters reserved for the Board, the Directors review and approve the
following:
•
•
•
•
•
•
• Adherence to Corporate Governance and best practice procedures
Strategy and management
Policies and procedures
Financial reporting and controls
Capital structure
Contracts
Shareholder documents / Press announcements
Principle 10 - Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders.
There are no additional committees and the board does not feel it is necessary at this time due to the size of the Company
and the fact that it is in realisation mode.
If a significant proportion of votes (e.g. 20% of independent votes) have been cast against a resolution at any general
meeting, the Company will include, on a timely basis, an explanation of what actions it intends to take to understand the
reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of the
vote
The results of votes taken at meetings are published on the Company’s website. Historical annual reports and notices are
also published on the website.
COMMITTEES
As detailed in Principle 5 there are no Board committees (and therefore no committee reports) and this will be highlighted
in future Reports and Accounts.
The Company will monitor and review the need to form Committees to support the function of the Board.
- 42 -
Origo Partners Plc
Directors, Advisors and Other Information
Directors
John Chapman, Non-Executive Chairman
Hiroshi Funaki, Non-Executive Director
Philip Peter Scales, Non-Executive Director
Country of incorporation of parent company
Isle of Man
Company number
005681V
Auditor
Nominated adviser and broker
UK legal advisers
Lubbock Fine LLP
Paternoster House
65 St Paul’s Churchyard
London EC4M 8AB
Arden Partners Plc
125 Old Broad Street,
London EC2N 1AR
Travers Smith LLP
10 Snow Hill,
London EC1A 2AL
- 43 -