TIDMOPP TIDMOPPP
RNS Number : 1333D
Origo Partners PLC
04 July 2016
4 July 2016
Origo Partners PLC
("Origo" or the "Group" or the "Company")
Final Results for year ended 31 December 2015
Origo announces its audited final results for the year ended 31
December 2015.
Summary:
-- Net asset value declined by 44 per cent. during the year to
US$30.6 million (30 June 2015: US$50.7 million, 31 December 2014:
US$54.3 million)
-- Loss after tax of US$24.4 million (2014: loss after tax of
US$61.9 million) reflecting unrealised and realised losses on
investments
-- Total investments in existing investee companies during the
year of US$0.58 million (2014: US$2.7 million)
-- Cash position of US$1.3 million as at 31 December 2015 (31 December 2014: US$5.2 million)
Chairman's Statement
2015 was another challenging year for Origo as we sought to deal
with a number of interrelated issues that have impacted the
Company's financial position, the performance of our investment
portfolio and our ability to execute our realisation strategy.
We successfully implemented the revised strategy and governance
arrangements which were approved by shareholders at the end of
2014. Through an orderly realisation programme, the Company is now
seeking to divest its entire portfolio by November 2018, at such
time and under such conditions as the Board may determine in order
to maximise value on behalf of the Company's Shareholders (the
"Revised Investing Policy"). Following the reorganisation of the
Company's governance and management arrangements, we have been able
to reduce the core operating cost of the business which amounted to
US$4.2 million (2014: US$5.0 million) (excluding litigation related
expenses and one-off items, such as provisions for loans extended
and other movements in the fair value of the Company's portfolio).
We expect to achieve further reductions of applicable costs in 2016
and beyond.
Continued economic uncertainty in China and the concomitant
turbulence in commodities markets have impeded our ability to
dispose of assets and impacted the value of a number of companies
in the portfolio. Without a material improvement in the
macro-economic environment in general and commodity markets in
particular, we foresee continuous pressure on asset prices and
limited liquidity for the kind of assets the Company holds. That
said, as is further detailed in the Investment Consultant's Report
below, there are a number of positive developments at some
portfolio companies, which indicate that there is potential to
realise value for investors in due course.
During 2015, the Board continued to seek an amicable resolution
to the ongoing dispute with Brooks Macdonald Group plc ("BM") in
respect of the terms of the Company's convertible zero dividend
preference shares ("CZDPs"). To this end, the Board negotiated a
detailed set of CZDP restructuring proposals which would have
served, inter alia, to settle the ongoing dispute with BM while
providing the Company with greater financial flexibility to achieve
an orderly realisation of its assets. Unfortunately, the proposals
did not receive the necessary approval of a 75 per cent. majority
of votes cast at the General Meeting and the Ordinary Share Class
Meeting held in February 2016 and therefore the proposals could not
be implemented.
The Company was unable to redeem US$12m CZDPs which were due for
redemption on 8 March 2016. It is important to point out that,
according to the Isle of Man Companies Act 2006 ("2006 Act"), under
which Origo is organised, and the Company's Articles of Association
(the "Articles"), (notably articles 4.25 and 4.8), no redemptions
of the CZDPs are allowed by the Company if, immediately following
any such redemption, the Company would be unable to satisfy the
Solvency Test under the 2006 Act. In other words, the effect of the
2006 Act and the Articles is to postpone the obligation to redeem
any CZDPs which cannot be redeemed until such time as the Company
is able to pass the Solvency Test. Therefore, the Company's
inability to redeem US$12 million of CZDPs in March 2016 was not a
breach of the Articles. Nonetheless, in early March 2016, BM issued
a claim in the Isle of Man seeking a Winding-Up Order against the
Company on the grounds that it was just and equitable to do so in
view of the Company's alleged oppressive conduct and unfairly
prejudicial treatment of the BM as a shareholder (the "Winding-up
Claim").
Section 167 of the Isle of Man Companies Act 1931 states that
any disposition of the property of the Company after the
commencement of the winding up by the Isle of Man Court is void
unless the Court orders otherwise. Consequently, whilst the
Company's daily operations should remain broadly unaffected,
disposals of its assets without Court approval may be rendered void
and therefore there are likely to be challenges in implementing the
Company's Revised Investing Policy pending the outcome of the
trail. The Company has received legal advice that the Isle of Man
Court is likely to validate realisations where no person will be
prejudiced by them, and also that the provisions of section 167 of
the Isle of Man Companies Act 1931 may extend to any transfer of
the Company's shares.
As a result, the Board requested that trading in Origo's shares
on AIM be suspended. Trading in Origo's shares (Ordinary shares and
CZDPs) has been suspended since 11 March 2016.
Following an initial Court Hearing on 7 April 2016, the Company
was notified that the Isle of Man Court has directed that Pacific
Alliance Asia Opportunity Fund L.P. (a 25.6 per cent. ordinary
shareholder of the Company) be joined to the proceedings (at its
request) in relation to the petition. A hearing in respect of a
disclosure request in relation to the Winding-up Claim made by BM
has been set down for Friday 22 July 2016 and Monday 25 July 2016.
Dates for a trail are yet to be set but is expected no earlier than
September 2016.
The Company is vigorously contesting the Winding-up Claim. The
Board believes it is an abuse of process being brought for
collateral, improper and self-serving purposes. However, the
Company's opposition to the Winding-up Claim will inevitably
involve significant cost. Further, pursuant to Rule 41 of the AIM
Rules for Companies, the London Stock Exchange plc will cancel the
admission of an AIM company's securities to trading on AIM where
trading has been suspended for six months. Accordingly, the Company
faces the risk of cancellation of its admission to trading on AIM
on or about 11 September 2016.
In the year ahead, the Board will continue to work towards a
resolution of the ongoing dispute with BM in the interests of all
shareholders.
For further information about Origo please visit
www.origoplc.com or contact:
Origo Partners plc niklas@origoplc.com
Niklas Ponnert
Nominated Adviser
Smith & Williamson Corporate Finance Limited
Azhic Basirov
Ben Jeynes +44 (0)20 7131 4000
Public Relations
Aura Financial
Andy Mills +44 (0)20 7321 0000
Investment Consultant's Report
Difficult economic conditions in China and falling commodity
prices in the second half of 2015 provided a difficult background
for many of the companies in the portfolio. The exploration and
development stage mining companies in which we have invested were
particularly impacted, with opportunities for developing or
divesting such companies being extremely limited. Consequently, the
Company wrote down the value of a number of investments in the
portfolio. On a more positive note, working closely with the
Company's portfolio investments, we were able to reach a number of
important commercial milestones. We expect this progress to
facilitate divestments during the course of the Revised Investing
Policy.
Celadon Mining
Following a strategic review and discussions with its key
shareholders, including Origo, Celadon Mining Ltd. ("Celadon") has
commenced a process to dispose of its main asset - the Chang Tan
West - and distribute the proceeds to its shareholders.
Chang Tan West is a high quality thermal coal deposit located in
the Jungar Banner coal belt, the closest major coalfield to the
coastal areas of Northern China. Chang Tan West has current coal
resources of 603 million MT (Chinese classification). Celadon owns
80 per cent. of Chang Tan West and is in the process of acquiring
the remaining 20 per cent. of the relevant project company.
After an active sales process during the second half of the
year, Celadon entered into a Letter of Intent for the sale of Chang
Tan West in November 2015 with a large Chinese state-owned
enterprise. The prospective buyer is developing a
coal-to-natural-gas project as a downstream project for coal
produced at Chang Tan West. In May 2016, we were informed that the
proposed Buyer's coal-to-gas conversion project was included in
China's Thirteenth Five Year Plan; final approvals from relevant
central authorities are pending. Once the project receives these
approvals we expect negotiations in respect of the Chang Tan West
deposit to continue.
China Rice
Throughout 2015 and beyond, we worked with China Rice Ltd
("China Rice") management on financing and liquidity options for
the business. The initiatives assessed included a possible reverse
merger in Hong Kong; the potential for an introduction on China's
National Equities Exchange and Quotations (generally referred to as
China's "New Third Board"); and a possible sale to a strategic
player.
Discussions with strategic players have led to a
joint-initiative with a consortium of powerful Chinese State-Owned
Enterprises. The consortium is spearheaded by a large state owned
trading group listed on the Shanghai Stock Exchange. With a
traditional business focus on commodity trading, this group is
seeking to expand into supply chain management and related
financial services in the agricultural sector, including leasing,
guarantee, and asset management. The second player is another state
owned grain company, with existing interests in the rice processing
industry.
Being based in south China, both parties have a strategic
interest to expand their business in Jilin province, being one of
the three provinces in north-east China that form "China's
bread-basket". The vehicle for doing so would be a proposed
partnership with China Rice and its founding shareholder. The
venture will seek to build and operate a large logistics hub in the
provincial capital of Changchun, which would serve as the trading
platform of third parties products between Jilin and the rest of
the Chinese market. Beyond storage and logistic services, the
vehicle will provide a range of auxiliary services, including
quality control, financial services, as well as a trading/clearing
platform.
While details are yet to be agreed, we expect that the formation
of this new venture will offer Origo an opportunity to realise its
investment in the business within the time-frame of the Company's
Revised Investing Policy.
Niutech
In May 2016 Jinan Heng Yu Environmental Protection Technology
Co., Ltd. ("Heng Yu"), the operating company of Niutech Energy Ltd
("Niutech") received final approval for a listing on China's "New
Third Board."
The market introduction was completed later in May 2016 and a
placing of new Heng Yu shares to investors is planned for later
this year. The shares of all current shareholders are subject to
lock-up restrictions until November 2016. As such, the listing will
not represent an opportunity for Origo to realise part or all of
its investment in Heng Yu in the short term.
However, by providing access to a domestic Chinese investor
base, Origo expects the New Third Board listing to facilitate a
realisation of this investment over the course of the Company's
Revised Investing Policy period.
Unipower
The performance of Unipower Battery Ltd. ("Unipower") during
2015 was negatively impacted by previously announced issues. On the
one hand, China's EV market, and those of related systems and
components,including batteries, experienced solid growth. However,
Unipower was unable to take advantage of this positive environment
due to a dispute over a cross-guarantee issued to a local bank.
While the dispute was ongoing, Unipower was unable to renew its
credit facilities. Without sufficient funding, production and sales
fell below the break-even point. As a result, Origo's equity
position in the business was written down by 52 per cent.
The dispute was finally resolved in April 2016, paving the way
for the Company to resume normal operation. Provided sufficient
capital in the short-term, we believe that Unipower will be well
positioned for a trade sale, specifically since the universe of
potential suitors is both broad and deep. Unipower produces large
polymer batteries used primarily in EVs which could make it an
attractive target for players from a wide range of sectors,
including automotive, utilities and industrial.
Based on our introductions and assistance, Unipower is currently
in discussion with a number of parties, both banks and equity
investors, to secure additional capital. While the immediate focus
is on financing the company so it can return to growth, we believe
there are reasonable prospects for a bundled transaction which
would allow a partial sale and/or refinancing of Origo's
convertible loans to the business.
Kincora
Kincora Copper Limited ("Kincora"), a TSX Venture Exchange
listed Mongolia focused copper exploration company, announced the
combination of two of its wholly owned subsidiaries with companies
that own contiguous licences in May 2016. Concurrent with the
mergers, Kincora announced a proposed C$2 million non-brokered
private placement.
To enable the business combination and the private placement,
Origo agreed to convert C$2,000,000 of convertible notes
outstanding into equity on the same terms as the private placement.
Meanwhile, we have informed the company that we intend to draw-down
escrowed funds in the amount of C$500,000 in conjunction with the
completion of the proposed financing.
Kincora now benefits from a portfolio of contiguous copper
porphyry targets in a highly prospective region, access to one of
the largest regional geophysical and surface geochemistry datasets,
an enhanced, experienced team with complementary skill sets as well
as increased funding. While the carrying value of Origo's
investment in Kincora declined by 33 per cent. during the year,
reflecting movements in the price of Kincora's listed equity, the
market value of the investment has rebounded significantly in
connection with the above mentioned private placement.
Staur Aqua (Aqualyng)
Aqualyng A/S ("Aqualyng") radically transformed its business in
2015. Since Origo's initial investment in 2008, Aqualyng has
pursued an integrated strategy, seeking to become a one-stop
provider and operator of desalination facilities. Aqualyng was
successful in acquiring a number of build-operate-transfer
projects, most importantly a large-scale desalination operation in
north-east China. However, this business model required large
amounts of capital with returns realised over the long-term.
In 2015, Aqualyng revamped its strategy to focus on more
asset-light opportunities in order to improve financial returns.
The company also expanded its business scope to outside of China
and from desalination to water-treatment more generally. In line
with its new strategy, the company entered into an agreement to
merge with Fontus Water Private Ltd, an Indian water treatment
company. The merger is expected to achieve final closing in July
this year.
Having operated on a consolidated basis for the last year, the
enlarged business broke even in 2015 on a pro-forma business.
Guidance for 2016 suggests revenues in excess of US$100 million
with EBITDA margins in the range of 8-10%. Once the merger is
completed, the enlarged business will be owned by a group of
shareholders that wish to seek a liquidity event over the coming
years and given the enhanced profile of the combined group this
could include a trade sale or IPO.
Moly World
Moly World Ltd (Moly World), through its subsidiary, owns an
exploration license, covering 2,360 hectares in the Mandal area of
Mongolia (the "Mandal Project"). The Mandal project holds a JORC
resource of 203Mt in situ material at 0.126% Mo and 0.026%W. Over
the last two years, Moly World has undertaken further exploration
work and discovered that the project has the potential to
significantly expand its resource base. The company also
commissioned a third-party scoping study for a small mining
operation. On this basis, in 2015, the company initiated a process
to convert the exploration license into a mining license. However,
Moly prices are at a level where the majority of primary producers
are producing at a loss. Taking into account the risks of obtaining
the relevant licenses and raising the required project financing,
the carrying value of the Moly World position was reduced by 38 per
cent.
Gobi Coal & Energy
Over the past several years, Gobi Coal & Energy Ltd. ("GCE")
has successfully preserved its coal assets while conducting
selected exploration and drilling works to expand and improve the
resource during an unusually weak coking coal market.
In 2015, the company successfully completed a drilling program
at its primary coking coal mine at Shinejinst. The drilling program
consisted of a total of 637.3 meters of drilling comprised of 8
diamond core boreholes that enlarged the deposit area to the
southeast with an average coal thickness of 9.3m. One hole returned
an exceptional coal seam of 44m in thickness with low volatile
materials. 76 coal quality samples were obtained in 2015 and
submitted for laboratory testing, with subsequent results
confirming hard coking coal properties and the potential for a new
sub-basin at Shinejinst.
Due to the protracted weakness in semi-soft coking coal prices,
GCE's Shinejinst and Zeegt projects were placed on and have
remained on care and maintenance, except for minimal mining
requirements to local communities, in order to preserve cash. While
the primary mine at Shinejinst is uneconomic at the current
semisoft coking coal pricing, its long-term Net Present Value is
positive based on the recent and future expected semi-soft coking
coal price improvements and using assumptions in GCE's feasibility
study.
We understand exploration work is intended to continue. At the
same time, the company is exploring opportunities to expand and
diversify across the energy resources value chain inside and
outside of Mongolia.
We have been informed that GCE has maintained negligible debt
and was recently awarded US $11.5 million, plus costs and
continuing interest and damages, by the Hong Kong International
Arbitration Centre, in respect of collateralized loans outstanding
to a Mongolian business vehicle, granted in connection a power
generation business and a mining supply business focused on the
major active Mongolia mines such as Rio Tinto's Oyu Tolgoi
project.
On the basis of the valuation of a group of traded peers, the
carrying value of the position in Gobi has been reduced by 51 per
cent.
Portfolio summary
At 31 December 2015 the carrying value of our portfolio, which
is comprised of interests in 17 companies, decreased to US$104.0
million from US$120.2 million as at the end of 2014. The decrease
principally reflects the downward adjustment in the carrying value
of certain investments.
The composition of the portfolio has changed compared to the
previous year, reflecting the impact of falling commodity prices.
The metals and mining sector accounted for 38 per cent. in 2015
(2014: 45 per cent.). Elsewhere, the portion of our portfolio
invested in agriculture was 30 per cent. (2014: 23 per cent.),
while our exposure to cleantech fell to 27 per cent. (2014: 28 per
cent.). The consumer, technology and media portion of our portfolio
was at 5 per cent. in 2014 (2014: 4 per cent.).
Reflecting the Group's strategy of investing in privately held
companies, 97 per cent. of the portfolio (in terms of fair value)
as at 31 December 2015 was invested in unquoted portfolio
companies. The weighted average holding period for portfolio
companies is 5.2 years compared to 4.2 years in 2014.
Profit and Loss
Total administrative expenses, excluding the provision of
performance incentives, bad debt and financial guarantee contracts,
were US$4.3 million in 2015, a reduction of US$1.7 million from
2014.
The Group recorded a loss before tax of US$24.8 million,
compared to a loss before tax of US$62.2 million in the previous
year. The loss is primarily due to unrealised and realised losses
of US$15.9 million on investments.
Balance Sheet
At the end of 2015, the Group had total cash and cash
equivalents of US$1.3 million (2014: US$5.2 million). Besides
operating costs, the decline was primarily as a result litigation
related expenses incurred due to the disputes with Brooks
MacDonald.
Net asset value decreased from US$54.3 million in 2014 to
US$30.6 million in 2015, representing a net asset value per share
of US$0.09 as at 31 December 2015, a 44 per cent. decline from
US$0.16 per share in 2014. This fall was primarily due to the
revaluation of a number of the Group's investments.
Outlook
Economic conditions in China improved during the first half of
the year following measures by the Government to stimulate economic
activity, yet the debate as to whether the Chinese economy is about
to enter a soft or hard landing persists.
Also the picture for Mongolia is unclear. The country has
certainly made progress in addressing investor concerns following
the introduction of policies to promote protectionism and resource
nationalism in 2012. The resolution of the long-running dispute
with Rio Tinto in respect of the Oyu Tolgoi project, and the
commitment to proceed with the development of the underground phase
of the project, as announced in May 2016, are both cases in point.
However, the result of the parliamentary elections, held on June 29
2016, and approach taken by the newly elected government, will be
another important test of the country's attractiveness to foreign
investors.
From a macro-economic perspective, while commodity and equity
markets have recouped some of the losses recorded in 2015, the
prospects for a sustained rebound are dim. The outlook for coal and
molybdenum look particularly bleak.
While less pronounced, and more institutional than cyclical in
nature, the market environment for our Chinese portfolio companies
also remains challenging. Access to funding in general, and credit
in particular, remain key concerns for most SMEs in China. Over the
last few years, reforms of local equity markets, coupled with the
launch of China's New Third Board, have been much welcomed
institutional innovations aimed at directing domestic capital flows
from the banking and real-estate sectors towards the SME sector.
The rapid development of Chinese equity markets has also had
important spill-over effects for private equity investors by
creating a vibrant market for merger and acquisitions. Yet, as the
unprecedented volatility in the Chinese equity markets in the first
half of 2015 clearly demonstrated, these markets are fickle, and it
will take time for them to evolve into reliable channels for
raising capital. Accordingly, while we have repositioned our
Chinese portfolio companies to take advantage of domestic capital
flows, we remain cautious about the prospects for generating
substantial liquidity in the near-term.
Looking to the remainder of 2016 and beyond, contesting the
Winding-up Claim in the first instance and resolving the CZDP
dispute is a key concern. Meanwhile, we will continue to work with
our portfolio companies to assist them in their continued
development and to review opportunities for value creating
transactions, in line with the Company's Revised Investing
Policy.
Origo Partners Plc
Consolidated statement of comprehensive income
For the year ended 31 December 2015
2015 2014
Notes US$'000 US$'000
------------------------------------------ ------ ------------- --------------
Investment loss: 2
Realised losses on disposal of
investments (1,526) (14,513)
Unrealised losses on investments (14,365) (30,078)
Income from loans 721 764
Dividends - 4
------------------------------------------ ------ ------------- --------------
(15,170) (43,823)
------------------------------------------ ------ ------------- --------------
Fund consulting fee 14 98
Consulting services payable 3 (2,054) (98)
Other income 113 52
Performance fee
- Performance incentive 4 3,209 (5,790)
Other administrative expenses 5 (4,748) (6,765)
Share-based payments 26 (226) (545)
------------------------------------------ ------ ------------- --------------
Net loss before finance costs and
taxation (18,862) (56,871)
------------------------------------------ ------ ------------- --------------
Foreign exchange losses (106) (43)
Finance income 9 - 18
Finance cost 9 (5,802) (5,336)
Loss before tax (24,770) (62,232)
------------------------------------------ ------ ------------- --------------
Income tax 10 406 341
------------------------------------------ ------ ------------- --------------
Loss after tax (24,364) (61,891)
------------------------------------------ ------ ------------- --------------
Other comprehensive income/(loss)
------------------------------------------ ------ ------------- --------------
Other comprehensive income/(loss)
to be reclassified to profit or
loss in subsequent periods:
Exchange differences on translating
foreign operations 5 (252)
------------------------------------------ ------ ------------- --------------
Net other comprehensive income/(loss)
to be reclassified to profit or
loss in subsequent periods 5 (252)
Tax on other comprehensive income/(loss) - -
Other comprehensive income/(loss)
net of tax 5 (252)
Total comprehensive loss after
tax (24,359) (62,143)
Loss after tax
------------------------------------------ ------ ------------- --------------
Attributable to:
- Owners of the parent (24,340) (62,357)
- Non-controlling interests (24) 466
------------------------------------------ ------ ------------- --------------
(24,364) (61,891)
------------------------------------------ ------ ------------- --------------
Total comprehensive loss
------------------------------------------ ------ ------------- --------------
Attributable to:
- Owners of the parent (24,337) (62,617)
- Non-controlling interests (22) 474
------------------------------------------ ------ ------------- --------------
(24,359) (62,143)
------------------------------------------ ------ ------------- --------------
Basic loss per share 11 (6.95) cents (17.89) cents
------------------------------------------ ------ ------------- --------------
Diluted loss per share 11 (6.95) cents (17.89) cents
------------------------------------------ ------ ------------- --------------
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Consolidated statement of financial position
At 31 December 2015
2015 2014
Assets Notes US$'000 US$'000
-------------------------------------------------- ------ ---------- ----------
Non-current assets
Property, plant and equipment 12 64 96
Intangible assets 4 6
Investments at fair value through profit or loss 14 77,571 91,306
Loans 15 350 653
Derivative financial assets 16 - 11
-------------------------------------------------- ------ ---------- ----------
77,989 92,072
-------------------------------------------------- ------ ---------- ----------
Current assets
Loans due within one year 15 26,093 28,246
Trade and other receivables 17 4,101 3,896
Cash and cash equivalents 18 1,272 5,185
-------------------------------------------------- ------ ---------- ----------
31,466 37,327
-------------------------------------------------- ------ ---------- ----------
Total assets 109,455 129,399
-------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables 19 2,701 1,249
Performance incentive payable within one year 19 8 8
Financial guarantee contracts 20 435 -
-------------------------------------------------- ------ ---------- ----------
3,144 1,257
-------------------------------------------------- ------ ---------- ----------
Non-current liabilities
Provision 21 4,262 7,701
Convertible zero dividend preference shares 22 69,385 63,609
Deferred income tax liability 10 2,082 2,488
75,729 73,798
-------------------------------------------------- ------ ---------- ----------
Net assets 30,582 54,344
-------------------------------------------------- ------ ---------- ----------
Equity attributable to owners of the parent
Issued capital 23 56 55
Share premium 150,414 150,262
Share-based payment reserve 7,573 7,147
Retained earnings (135,824) (111,484)
Translation reserve (1,495) (1,500)
Equity component of convertible zero
dividend preference shares 22 8,297 8,297
Other reserve 24 1,056 995
-------------------------------------------------- ------ ---------- ----------
30,077 53,772
Non-controlling interests 505 572
-------------------------------------------------- ------ ---------- ----------
Total equity 30,582 54,344
-------------------------------------------------- ------ ---------- ----------
Total equity and liabilities 109,455 129,399
-------------------------------------------------- ------ ---------- ----------
Karl Niklas Ponnert
Director
3 July 2016
The consolidated financial statements were approved by the Board
of Directors and authorised for issue. They were signed on its
behalf by:
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Consolidated statement of changes in equity
For the year ended 31 December 2015
Attributable to equity holders of the parent
Share- Equity
based component
Issued Share payment Retained of Other Translation Non-controlling Total
capital premium reserve earnings CZDP reserve reserve Total interests equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
At 1 January
2014 55 150,281 6,741 (49,127) 8,297 (2,193) (1,248) 112,806 22,163 134,969
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
Loss for the
year - - - (62,357) - - - (62,357) 466 (61,891)
Other
comprehensive
loss - - - - - - (252) (252) - (252)
Total
comprehensive
income/(loss) - - - (62,357) - - (252) (62,609) 466 (62,143)
Capital
redemption
of CCP fund - - - - - 3,162 - 3,162 (9,003) (5,841)
Own shares
acquired - (19) - - - 26 - 7 - 7
Share-based
payment
expense 26 - - 406 - - - - 406 - 406
Disposal of
subsidiaries - - - - - - - - (13,054) (13,054)
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
At 31 December
2014 55 150,262 7,147 (111,484) 8,297 995 (1,500) 53,772 572 54,344
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
Loss for the
year - - - (24,340) - - - (24,340) (24) (24,364)
Other
comprehensive
loss - - - - - - 5 5 - 5
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
Total
comprehensive
income/(loss) - - - (24,340) - - 5 (24,335) (24) (24,359)
New issue
of shares 1 184 - - - - - 185 - 185
Own share
acquired - (32) - - - 61 - 29 - 29
Share-based
payment
expense 26 - - 426 - - - - 426 - 426
Minority
interests - - - - - - - - (43) (43)
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
At 31 December
2015 56 150,414 7,573 (135,824) 8,297 1,056 (1,495) 30,077 505 30,582
--------------- ------ -------- -------- -------- ---------- ---------- -------- ------------ --------- ----------------- ---------
The following describes the nature and purpose of each reserve
within parent's equity:
Reserve Description and purpose
-------------------- ------------------------------------------------
Share premium Amounts subscribed for share capital in excess
of nominal value.
-------------------- ------------------------------------------------
Share-based payment Equity created to recognise share-based payment
reserve expense.
-------------------- ------------------------------------------------
Equity component of Convertible zero dividend preference shares.
CZDP
-------------------- ------------------------------------------------
Other reserve Equity created to recognise fair value change
of available-for-sale investments and own
shares acquired.
-------------------- ------------------------------------------------
Translation reserve Equity created to recognise foreign currency
translation differences.
-------------------- ------------------------------------------------
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Consolidated statement of cash flows
For the year ended 31 December 2015
2015 2014
Notes US$'000 US$'000
---------------------------------------------- ------ --------- ---------
Loss before tax (24,770) (62,232)
---------------------------------------------- ------ --------- ---------
Adjustments for:
Depreciation and amortisation 5 34 44
Performance incentive 4 (3,209) 5,790
Share-based payments 26 226 545
Provision for bad debts 5 49 803
Provision for financial guarantee contracts 5 435 -
Realised losses on disposal/written off
of investments 2 1,526 14,513
Unrealised losses on investments at FVTPL* 2 12,357 19,601
Unrealised losses on loans 2 1,997 10,379
Fair value losses on derivative financial
assets 2 11 98
Income from loans (721) (688)
Foreign exchange losses 106 43
Interest expenses of convertible zero
dividend preference shares 9 5,776 5,296
Purchases of investments at FVTPL 8 (219) (363)
Purchases of loans 15 (363) (2,121)
Proceeds from disposals of investments
at FVTPL 8 432 396
Proceeds from repayment of loans 15 459 732
Operating loss before changes in working
capital and provisions (5,874) (7,164)
---------------------------------------------- ------ --------- ---------
Decrease/ (increase) in trade and other
receivables 344 (569)
Decrease in inventories - 2
Increase/(decrease) in trade and other
payables 1,452 (793)
Decrease in financial guarantee contracts 20 - (825)
Net cash outflow from operations (4,078) (9,349)
---------------------------------------------- ------ --------- ---------
Investing activities
Disposal/(purchases) of property, plant
and equipment 10 18
Disposal of subsidiaries, net of cash
impact - (15,054)
Acquisition of subsidiaries, net of cash
impact - -
Net cash inflow/(outflow) from investing
activities 10 (15,036)
---------------------------------------------- ------ --------- ---------
Financing activities
Repayment of shareholder loans - (500)
Redemption (CCP LP, CCF & MSE)** - (5,726)
Net cash outflow from financing activities - (6,226)
---------------------------------------------- ------ --------- ---------
Net decrease in cash and cash equivalents (4,068) (30,611)
---------------------------------------------- ------ --------- ---------
Effect of exchange rate changes on cash
and cash equivalents 155 496
Cash and cash equivalents at beginning
of period 5,185 35,300
---------------------------------------------- ------ --------- ---------
Cash and cash equivalents at end of period 1,272 5,185
---------------------------------------------- ------ --------- ---------
* FVTPL refers to fair value through profit or loss
** CCP LP, CCF & MSE refer to China Cleantech Partners,
L.P., China Commodities Absolute Return Ltd and MSE Liquidity
Fund
The accompanying notes form an integral part of these
consolidated financial statements.
1 Accounting policies
1.1 Corporate information
The consolidated financial statements of Origo Partners Plc
('the Company") and its subsidiaries (together "the Group") for the
year ended 31 December 2015 were authorised for issue in accordance
with a resolution of the Directors on 30 June 2016. The Company is
a limited liability company incorporated and domiciled in the Isle
of Man whose shares are publicly traded on the AIM market of the
London Stock Exchange. The registered office is located at 33-37
Athol Street, Douglas, Isle of Man IM1 1LB. The principal
activities of the Group are described in Note 8.
1.2 Basis of preparation
The Group financial statements are prepared in accordance with
IFRS issued by the IASB and adopted for use in the European Union
and also to comply with relevant Isle of Man law.
The principal accounting policies applied in the preparation of
the consolidated financial information are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
(a) The financial information set out below, is based on the
financial statements of the Company and its subsidiaries and
associates for the year ended 31 December 2015.
(b) The consolidated financial information has been prepared
under the historical cost convention except for certain financial
instruments, which have been measured at fair value, and in
accordance with IFRS and International Financial Reporting
Interpretations Committee's interpretations ("IFRIC") (collectively
, "IFRSs") issued by the IASB.
(c) Non-controlling interests represent the portion of profit or
loss and net assets that is not held by the Group and are presented
separately in the consolidated statement of comprehensive income
and within equity in the consolidated statement of financial
position, separately from parent shareholders' equity.
As mentioned in the Directors Report the Company is currently
facing a potential court battle over its future due to the fact
that Brooks Macdonald Asset Management (International) Limited have
filed a Claim Form (dated 9 March 2016) at the Isle of Man High
Court seeking an order to wind up the Company. As also mentioned in
the Directors Report, the Company has deferred the repurchase of at
least 12million US$1.00 Convertible Zero Dividend Preference Shares
that the Company had previously committed to repurchasing on the 8
March 2016. The Directors have also noted that the Convertible Zero
Dividend Preference Shares will only be repurchased at a time when
the Company has sufficient reserves to do so and can still satisfy
the Solvency Test, as defined in the Company's Articles.
The Directors have taken legal advice with regards to the
Winding-up Claim and are working with Brooks Macdonald Asset
Management (International) Limited and other key shareholders in
the Company to reach a solution that is acceptable to all parties
involved. The Directors have assumed, based on legal advice
received and discussions held to date that this can be
achieved.
The Company continues with the investment realisation programme
that commenced in November 2014 and the Directors expect that the
proceeds generated from the planned divestment of the investment
portfolio will be sufficient, not only to settle all liabilities,
but also to fulfil the redemption obligations in respect of the
Convertible Zero Dividend Preference Shares.
However, there is uncertainty as to whether the assumptions will
be met which could impact the Company and the Group's ability to
repay the Convertible Zero Dividend Preference Shares or settle the
ongoing dispute.
The Board have concluded that the circumstances surrounding the
ability to settle the ongoing dispute with Brooks Macdonald Asset
Management (International) Limited represents a material
uncertainty that casts significant doubt upon the Company's and the
Group's ability to continue as a going concern. However, whilst
recognising this uncertainty the Board has a reasonable expectation
that this ongoing dispute will be resolved and therefore it is
appropriate to prepare the consolidated financial statements on a
going concern basis. The consolidated financial statements do not
reflect any adjustments that would have to be made should this not
be the case.
1.3 Significant accounting judgements, estimates and assumptions
The preparation of consolidated financial information in
conformity with IFRSs requires the use of certain critical
accounting estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial
information and the reported amounts of revenue and expenses during
the reporting period. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results may differ from those estimates.
The following is a list of accounting policies which cover areas
that the Directors consider require estimates and judgements which
have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial
year:
(a) Fair value of unquoted equity instruments
The Group has estimated the value of each of its unquoted equity
instruments by using judgement to select the most appropriate
valuation methodology for each investment based on the
recommendations of the International Private Equity and Venture
Capital Valuation Guidelines (the "Guidelines"). Valuation
methodologies mainly include the price of recent investments,
earnings multiples, industry valuation benchmarks, available market
prices and so on, which may apply individually or in combination.
Key assumptions and judgements of each methodology concerning the
future and other key sources of estimation uncertainty will have a
significant risk of causing a material adjustment to the fair value
of the instruments within the next financial year.
The Group has applied the requirements of IFRS 2 share-based
payment in these consolidated financial statements.
(b) Share-based payments, equity-settled transactions and cash-settled transactions
The Group has issued equity-settled share-based payments to
certain directors and employees, and to its advisors for services
provided in respect of the admission of the Company to trading on
the AIM market of the London Stock Exchange. Equity-settled
share-based payments to directors and employees are measured at the
fair value of equity instruments awarded at the date of grant.
Equity-settled share-based payments to non-employees are measured
at the fair value of goods or services rendered at the date when
the goods or services are received. Where equity investments are
granted subject to vesting conditions, share-based payments are
expensed to the profit or loss on a straight-line basis over the
vesting period, based on the Group's estimate of the number of
shares that will eventually vest. Fair value is measured by use of
the Binominal option pricing model.
The Group has granted cash-settled share-based payments to
certain directors, executives and key employees under the Company's
joint share ownership scheme ("JSOS"). The cost of cash-settled
share-based payments is measured initially at fair value at the
grant date using the Binominal Tree model. This fair value is
expensed over the period until the vesting date with recognition of
a corresponding liability. The liability is remeasured to fair
value at each reporting date up to and including the settlement
date, with changes in fair value recognised in employee
expense.
When estimating the value of the options and the upper share
rights ("USR"), significant assumptions such as the expected life
of the option and the USR, and expected volatility of the share
have been applied based on management's best estimates.
1.4 Summary of significant accounting policies
The following principal accounting policies have been applied
consistently throughout the year in dealing with items which are
considered material in relation to the financial information.
(a) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries as at 31 December
2015. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has:
-- Power over the investee (i.e., exiting rights that give it
the current ability to direct the relevant activities of the
investee)
-- Exposure, or rights, to variable returns from its involvement with the investee
-- The ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement(s) with the other vote holders of the investee
-- Rights arising from other contractual arrangements
-- The Group's voting rights and potential voting rights
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date when such control
ceases. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances,
transactions, unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
Profit or loss and each component of other comprehensive income
(OCI) are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
-- Derecognises the assets (including goodwill) and liabilities of the subsidiary
-- Derecognises the carrying amount of any non-controlling interest
-- Derecognises the cumulative translation differences, recorded in equity
-- Recognises the fair value of the consideration received
-- Recognises the fair value of any investment retained
-- Recognises any surplus or deficit in profit or loss
-- Reclassifies the parent's share of components previously
recognised in other comprehensive income to profit or loss or
retained earnings, as appropriate.
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred, measured at acquisition date fair
value and the amount of any non-controlling interest in the
acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree at the proportionate share
of the acquiree's identifiable net assets. Acquisition costs
incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss. This will cease to apply
when control is achieved.
Any contingent consideration to be transferred by the acquirer
will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability, will be
recognised in accordance with IAS 39 in profit or loss. If the
contingent consideration is classified as equity, it should not be
remeasured until it is finally settled within equity.
Goodwill is initially measured at cost being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interest over the net identifiable
assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating
units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of
the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the
carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this
circumstance is measured based on the relative values of the
operation disposed of and the portion of the cash-generating unit
retained.
(b) Foreign currencies
-- Functional and presentation currency
The consolidated financial statements are presented in United
States dollar, which is also the parent company's functional
currency. For each entity the Group determines the functional
currency and items included in the financial statements of each
entity are measured using that functional currency.
-- Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
Changes in the fair value of monetary securities denominated in
foreign currencies classified as available for sale are analysed
between translation differences resulting from changes in the
amortised cost of the security, and other changes in the carrying
amount of the security. Translation differences are recognised in
profit or loss, and other changes in the carrying amount are
recognised in other reserve.
Non-monetary financial assets and liabilities that are carried
at historic cost are translated using the exchange rate as at the
dates of initial transactions and are not re-measured. Translation
differences on non-monetary financial assets and liabilities such
as equities held at fair value through profit or loss are
recognised in profit or loss as part of the fair value gain or
loss. Translation differences on non-monetary financial assets,
such as equities classified as available for sale, are included in
the fair value reserve in equity.
-- Group companies
The results and financial position of all Group entities, none
of which has the currency of a hyperinflationary economy that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(I) assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
(II) income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions); and
(III) all resulting exchange differences are recognised in the
statement comprehensive income as other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(c) Financial assets
The Group classifies its financial assets, at initial
recognition, into one of the following categories: investments at
fair value through profit or loss, loans and receivables,
derivative financial instruments and other financial assets, as
appropriate, depending on the purpose for which the asset was
acquired. The Group's accounting policy for each category is as
follows:
-- Investments at fair value through profit or loss
These financial assets are designated by the Board of Directors
at fair value through profit or loss at inception, which include
debt and equity securities, convertible credit agreements and
derivatives, upon initial recognition on the basis that they are
part of a group of financial assets which are managed and have
their performance evaluated on a fair value basis, in accordance
with the risk management and investment strategies of the
Group.
Recognition / Derecognition:
Regular acquisitions and disposals of investments are recognised
on the trade date on which the Group received acquisitions of
investments or delivered disposals of investments. A fair value
through profit or loss asset is derecognised when the Group loses
control over the contractual rights that comprise that asset. This
occurs when the rights to receive cash flows from the asset have
expired or the Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party
under a 'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset. Fair value through profit or loss assets that are
derecognised and corresponding receivables from the buyer for the
payment are recognised as of the date the Group commits to sell the
assets.
-- Investments at fair value through profit or loss
Measurement:
Financial assets held at fair value through profit or loss is
initially recognised at fair value. Transaction costs are expensed
in the profit or loss. Subsequent to initial recognition, all
financial assets and financial liabilities are measured at fair
value. Gains and losses arising from changes in the fair value of
the financial assets held at fair value through profit or loss are
presented in the profit or loss in the period in which they
arise.
Dividend income from investments at fair value through profit or
loss is recognised in the profit or loss within other income when
the Group's right to receive payments is established.
Fair value estimation:
The fair value of financial instruments traded in active markets
(such as publicly traded securities) is based on quoted market
prices at the reporting date. The quoted market price used for
financial assets held by the Group is the current bid price. The
fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques in
accordance with the Guidelines. Pursuant to the Guidelines, the
Group believes the following techniques applied individually, or in
combination, are the most suitable ones for the Group's current
portfolios:
(I) Price of recent investments: When valuing investments on the
basis of the price of recent investments, the cost of the
investment itself or the price at which a significant amount of new
investment into the relevant investee company was made to estimate
the fair value of the investment, but only for a limited period
following the date of the relevant transaction. During the limited
period following the date of the relevant transactions, changes or
events subsequent to the relevant transaction which would imply a
change in the investment's fair value have been assessed.
(II) Earnings multiples: When valuing investments on a multiple
basis, the Group has abided by the following principles:
i. apply a multiple that is appropriate and reasonable (giving
the risk profile and earnings growth prospects of the underlying
company) to the maintainable earnings of the underlying
company;
ii. adjust the amount derived in (i) above for surplus assets or
excess liabilities and other relevant factors to derive the
enterprise value for the underlying company;
iii. deduct from the enterprise value all amounts relating to
financial instruments ranking ahead of the highest ranking
instrument of the Group in a liquidation and taking into account
the effect of any instrument that may dilute the Group's
investments in order to derive the gross attributable enterprise
value;
iv. apply an appropriate marketability discount to the gross
attributable enterprise value derived in (iii) above in order to
derive the net attributable enterprise value. The marketability
discount relates to an investment rather than to the underlying
business. Marketability discounts will vary from situation to
situation and is a question of judgement. When a discount is
applied, relevant factors in determining the appropriate
marketability discount in each particular situation will be
considered. A discount in the range of 20% to 30% (in steps of 5%)
is generally used in practice, depending upon the particular
circumstances; and
v. apportion the net attributable enterprise value appropriately
between the relevant financial instruments.
(III) Discounted cash flow ("DCF"): Fair value is estimated by
deriving the present value of the investment using reasonable
assumptions of expected future cash flows and the terminal value
and date, and the appropriate risk-adjusted discount rate that
quantifies the risk inherent to the investment. The discount rate
is estimated with reference to the market risk-free rate, a risk
adjusted premium and information specific to the investment or
market sector.
(IV) Industry valuation benchmarks: The use of industry
benchmarks is only likely to be reliable and therefore appropriate
as the main basis of estimating fair value in limited situations,
and is more likely to be useful as a sense of check of values
produced using other methodologies. The Group has primarily relied
on such metrics to validate the outcome produced by other valuation
techniques.
-- Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market.
Income from loans and receivables is recognised as it accrues by
reference to the principal outstanding and the effective interest
rate applicable, which is the rate that exactly discounts the
estimated future cash flows through the expected life of the
financial asset to the asset's carrying value. The losses arising
from impairment are recognised in the statement of comprehensive
income.
This category generally applies to trade and other receivables.
For more information on receivables, refer to Note 17.
-- Derivative financial instruments
Derivative financial instruments are held at fair value and
changes in fair value are recognised in profit or loss of the
statement of comprehensive income.
-- Impairment of financial assets
For amortised cost loans and receivables, the Group assesses, at
each reporting date, whether there is objective evidence that a
financial asset or a group of financial assets is impaired. An
impairment exists if one or more events that has occurred since the
initial recognition of the asset (an incurred 'loss event'), has an
impact on the estimated future cash flows of the financial asset or
the group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors is
experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganisation and
observable data indicating that there is a measurable decrease in
the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
(d) Financial liabilities
The Group's financial liabilities include trade and other
payables, financial guarantee contracts and preference shares.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The measurement of financial liabilities depends on their
classification, as described below:
-- Financial guarantee contracts
Financial guarantee contracts issued by the Group are those
contracts that require a payment to be made to reimburse the holder
for a loss it incurs because the specified debtor fails to make a
payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a
liability at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the best
estimate of the expenditure required to settle the present
obligation at the reporting date and the amount recognised less
cumulative amortisation.
-- Preference shares
Convertible Zero Dividend Preference Shares ("CZDP") are
regarded as a compound financial instrument, consisting of a
liability component and an equity component. The fair value of the
liability component is estimated at the date of issue using the
prevailing market interest rate for a similar bond without early
redemption or equity conversion option. The difference between the
proceeds of the CZDP issue and the fair value of the liability
component of the CZDP is assigned to the equity component of the
CZDP representing the embedded equity conversion option, and the
derivative financial assets representing the embedded early
redemption option.
Issue costs were allocated among the liability, and equity
components of the CZDP and the derivative financial assets based on
their relative carrying amounts at the date of issue.
The interest charges on the CZDP liability component is computed
using the prevailing market interest rate for similar bond without
early redemption or equity conversion option.
-- Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled, or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of
profit or loss.
(e) Cash and cash equivalents and short-term borrowings
Cash and cash equivalents are defined as cash in hand, demand
deposits, time deposit and short-term, highly liquid investments
that are readily convertible into known amounts of cash, are
subject to an insignificant risk of changes in value, and have a
short maturity, generally less than three months, less bank
overdrafts which are repayable on demand and form an integral part
of the Group's cash management. For the purpose of the statement of
financial positions, cash and bank balances comprise cash on hand
and at banks, including term deposits, which are not restricted as
to use.
Short-term borrowings are made for varying periods of between
three months and twelve months, depending on the immediate cash
requirements of the Group, and pay interest at the respective
short-term borrowing rates.
(f) Share-based payments
Employees (including senior executives) of the Group receive
remuneration in the form of share-based payment transactions,
whereby employees render services as consideration for equity
instruments ("equity-settled transactions"). Certain directors,
executives and key employees of the Group are granted share
appreciation rights, which can only be settled in cash
("cash-settled transactions"). Advisors receive equity-settled
options in relation to the Company's admission to trading on the
AIM market of the London Stock Exchange.
The cost of these options with employees are measured by
reference to the fair value of the equity instruments awarded at
the date of grant, whereas those with non-employees are measured at
the fair value of goods or services received at the date when the
goods or services have been received. The fair value is determined
by using Binominal Tree model, further details of which are given
in note 27.
Equity-settled transactions
The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in which
the performance and/or service conditions are fulfilled, ending on
the date on which the relevant employees become fully entitled to
the award (the "vesting date"). The cumulative expense recognised
for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has
expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The profit or loss charge of
credit for a period represents the movement in cumulative expense
recognised as at the beginning and end of that period and is
recognised in employee expense (see Note 6).
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market or
non-vesting condition, which are treated as vesting irrespective of
whether or not the market condition is satisfied, provided that all
other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the
minimum expense recognised is the expense as if the terms had not
been modified. An additional expense is recognised for any
modification, which increases the total fair value of the
share-based payment arrangement, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award, and designated as
a replacement award on the date that it is granted, the cancelled
and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per
share.
Cash-settled transactions
The cost of cash-settled transactions is measured initially at
fair value at the grant date using binominal tree model, further
details of which are given in Note 27. This fair value is expensed
over the period until the vesting date with recognition of a
corresponding liability. The liability is remeasured to fair value
at each reporting date up to and including the settlement date,
with changes in fair value recognised in employee expense (see Note
6).
(g) Taxes
Current Income Tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively
enacted at the reporting date.
Current income tax relating to items recognised directly in
equity is recognised in equity and not in the statement of
comprehensive income. Management periodically evaluates positions
taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred Tax
Deferred tax is provided using the liability method on temporary
differences at the reporting date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
(I) where the deferred tax liability arises from goodwill or the
initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss;
and
(II) in respect of taxable temporary differences associated with
investments in subsidiaries and associates where the timing of the
reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses
can be utilised, except:
(I) where the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
(II) in respect of deductible temporary differences associated
with investments in subsidiaries and associates, deferred tax
assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Deferred Tax (continued)
Deferred tax assets and deferred tax liabilities are offset, if
a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
Income taxes are recognised in the profit or loss or directly in
equity except when a tax exemption has been granted.
(h) Performance incentive payable
Performance incentive payable is only accrued on those
investments (classified as investments at fair value through profit
or loss and loans) in which the investment's performance
conditions, measured at the end of each reporting period, would be
achieved if those investments were realised at fair value. Fair
value is determined using the Group's valuation methodology and is
measured at the end of each reporting period.
Any changes in the performance incentive provision will be
reflected in the line item of the statement of comprehensive income
in which the expense establishing the provision was originally
recorded.
(i) Investment Income /Loss
Investment income/loss derived from the investment activities is
equivalent to "revenue" for the purposes of IAS1. Investment
income/loss is analysed into the following components:
-- Realised gains/losses on the disposal of investments are the
difference between the fair value of the consideration received
less any directly attributable costs, on the sale of equity and the
repayment of loans and receivables, and its carrying value at the
start of the accounting period.
-- Unrealised gains/losses on the revaluation of investments are
the movement in the carrying value of investments measured at fair
value between the start and end of the accounting period and the
impairment of amortised cost loans.
-- Income/loss from loans is recognised on a time proportion
basis as it accrues by reference to the principal outstanding and
the effective interest rate applicable.
-- Dividends earned on equity investments are recognised when
the shareholders' rights to receive payment have been
established.
(j) Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or
amount when the Group has a legal or constructive obligation
arising as a result of a past event, which will probably result in
an outflow of economic benefits that can be reasonably
estimated.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the
probability of an outflow of economic benefits is remote. Possible
obligations, the existence of which will only be confirmed by the
occurrence or non-occurrence of one or more future events, are also
disclosed as contingent liabilities unless the probability of an
outflow of economic benefits is remote.
(k) New and revised IFRS that are effective or early adopted in
2015 and relevant to the Group
On 1 January 2015, the Group adopted the following new
standards, amendments and interpretations.
Amendment to IAS 19 Defined Benefit Plans: Employee
Contributions
Annual Improvements 2010-2012 Cycle
Annual Improvements 2011-2013 Cycle
The Group adopted the IAS 19 Amendments - Defined Benefit Plans:
Employee Contributions in 2015. IAS 19 Amendments require an entity
to consider contributions from employees or third parties when
accounting for defined benefit plans. Where the contributions are
linked to service, they should be attributed to periods of service
as a negative benefit. These amendments clarify that, if the amount
of the contributions is independent of the number of years of
service, an entity is permitted to recognise such contributions as
a reduction in the service cost in the period in which the service
is rendered, instead of allocating the contributions to the periods
of service.
Annual Improvements 2010-2012 Cycle and Annual Improvements
2011-2013 Cycle
IFRS 2 - Share-Based Payment
This improvement is applied prospectively and clarifies various
issues relating to the definitions of performance and service
conditions which are vesting conditions.
IFRS 3 - Business Combinations
The amendments are applied prospectively and clarify that: (1)
all contingent consideration arrangements classified as liabilities
(or assets) arising from a business combination should be
subsequently measured at fair value through profit or loss whether
or not they fall within the scope of IFRS 9 (or IAS 39, as
applicable); and (2) IFRS 3 does not apply to the accounting for
the formation of any joint arrangement.
(k) New and revised IFRS that are effective or early adopted in
2015 and relevant to the Group (continued)
IFRS 8 - Operating Segments
The amendments are applied retrospectively and clarify that: (1)
an entity must disclose the judgements made by management in
applying the aggregation criteria, including a brief description of
operating segments that have been aggregated and the economic
characteristics used to assess whether the segments are "similar";
and (2) the reconciliation of segment assets to total assets is
only required to be disclosed if the reconciliation is reported to
the chief operating decision maker, similar to the required
disclosure for segment liabilities.
IAS 24 - Related Party Disclosures
The amendment is applied retrospectively and clarifies that a
management entity (an entity that provides key management personnel
services) is a related party subject to the related party
disclosures. In addition, an entity that uses a management entity
is required to disclose the expenses incurred for management
services.
IFRS 13 - Fair Value Measurement
The amendment is applied prospectively and clarifies that the
portfolio exception can be applied not only to financial assets and
financial liabilities, but also to other contracts within the scope
of IFRS 9 (or IAS 39, as applicable).
IAS 40 - Investment Property
The amendment is applied prospectively and clarifies that the
guidance in IFRS 3 is used to determine if the purchase of
investment property is the purchase of an asset or a business
combination.
The adoption of the above standards, amendments and
interpretations does not have any significant impact on the
operating results, financial position and comprehensive income of
the Group. The Group has not early adopted any other standard,
amendment or interpretation that was issued but not yet
effective.
(l) Standards issued but not yet effective
Standards issued but not yet effective up to the date of
issuance of the Group's financial statements are listed below. This
listing is of standards, amendments and interpretations issued that
the Group reasonably expects to be have an impact on disclosures,
financial position or performance when applied at a future
date.
Effective
for
annual periods
beginning
on
or after
IFRS 9 Financial Instruments 1 January
2018
IAS 27 Amendments Equity Method in Separate Financial 1 January
Statements 2016
IFRS 10, IAS 28 Sale or Contribution of Assets 1 January
Amendments between 2016
an Investor and its Associate
or Joint Venture
IFRS 15 Revenue from Contracts with 1 January
Customers 2018
IFRS 10, IFRS 12 Investment Entities: Applying 1 January
and the 2016
IAS 28 Amendments Consolidation Exception
IAS 1 Amendments Disclosure Initiative 1 January
2016
IFRS 11 Amendments Accounting for Acquisitions 1 January
of 2016
Interests in Joint Operations
IAS 16 and IAS Clarification of Acceptable 1 January
38 Methods of 2016
Amendments Depreciation and Amortisation
IFRS 16 Leases 1 January
2019
IAS 7 Amendments Statement of Cash Flow 1 January
2017
Annual Improvements 1 January
to 2016
IFRSs 2012-2014
cycle
(issued in September
2014)
Directors do not anticipate that the adoption of these standards
and interpretations will have a material impact on the financial
statements in the period of initial application and have decided
not to adopt early.
The initial application of IFRS 9 could have a material effect
on the classification and measurement of the Group's financial
assets, but no impact on the classification and measurement of the
Group's financial liabilities.
2 Investment loss
2015 2014
US$'000 US$'000
-------------------------------------------- --------- ---------
Realised losses on disposal of investments (1,526) (14,513)
- Investments at FVTPL (1,160) (1,233)
- Loans at amortised cost (363) (3,867)
- Subsidiary (3) (9,413)
Unrealised losses on investments (14,365) (30,078)
- Investments at FVTPL (12,357) (19,601)
- Loans at FVTPL (894) (6,851)
- Loans at amortised cost (1,103) (3,528)
- Derivative financial assets (11) (98)
Income from loans 721 764
Dividends - 4
-------------------------------------------- --------- ---------
Total (15,170) (43,823)
-------------------------------------------- --------- ---------
3 Consulting services receivable/(payable)
2015 2014
US$'000 US$'000
-------------------------------- --------- ---------
Consulting services receivable - 17
Consulting services payable (2,054) (115)
Total (2,054) (98)
-------------------------------- --------- ---------
4 Performance incentive
2015 2014
US$'000 US$'000
------------------------------------- --------- ---------
Payable within one year - (8)
Provision for performance incentive
payable over one year 3,209 (5,782)
------------------------------------- --------- ---------
Total 3,209 (5,790)
------------------------------------- --------- ---------
A balance sheet provision for future performance incentive for
the year ended 31 December 2015 was US$4,194,262 (2014:
US$7,404,454). The decrease in balance was derived from the
unrealised losses on investments in 2015.The performance incentives
are accrued and payable to Origo Adviser Ltd refer to Note 27 for
details on Origo Advisers Ltd.
The amount of performance incentives has been calculated and
accrued in accordance with the basis, (i) from the time the Hurdle
has been reached, the next US$1,700,000 of Gross Realisations shall
be applied towards equal payments of performance incentives; and
thereafter (ii) 20 per cent of each subsequent Gross Realisation
shall be applied towards an equal further payment of performance
incentive.
* Hurdle: US$90,000,000 of Gross Realisations
** Gross Realisation: cumulative gross cash proceeds received by
or on behalf of the Group which are derived from the realisation of
assets in the Portfolio, after having made full provision for
repayment of any third party debt (including any unpaid interest
thereon) and any related hedge or other break costs and any
prepayment fees and penalties thereon, but before any related
transactional costs, fees and expenses and any taxes required to be
paid by the relevant selling entity that arise directly as a result
of completion of the relevant transaction to dispose of the
relevant asset, provided that any amounts of deferred consideration
or earn-out shall not be counted towards such realisations until
actually received by the relevant selling member of the Group.
5 Other administrative expenses
2015 2014
US$'000 US$'000
----------------------------------- --------- ---------
Employee expenses (262) (2,763)
Professional fees (3,248) (2,144)
Including:
- Audit fees (257) (291)
Depreciation expenses (22) (44)
Provision for bad debts* (49) (803)
Provision for financial guarantee
contracts (435) -
Others (732) (1,011)
----------------------------------- --------- ---------
Total (4,748) (6,765)
----------------------------------- --------- ---------
6 Information regarding directors and employees
Year ended Year ended
31 December 31 December
2015 2014
------------------------------------------- ------------- -------------
Average number of employees of the Group* Number Number
Management** - 2
Investment and transaction team - 4
Finance and accounting - 5
Administration and HR - 3
- 14
------------------------------------------- ------------- -------------
The aggregate payroll costs of these
employees were as follows: US$'000 US$'000
Wages and salaries 262 2,632
Share-based payments 226 545
Social security costs - 131
------------------------------------------- ------------- -------------
488 3,308
------------------------------------------- ------------- -------------
* All employees of the Group have been transferred to and
employed by Origo Advisors Ltd in January 2015, which is controlled
by entities whose ultimate beneficiaries include Niklas Ponnert
(Director of the Company), Chris A Rynning and Luke Leslie.
** Management includes Mr. Chris A Rynning, the former Chief
Executive Officer and Mr. Niklas Ponnert, the former Chief
Financial Officer.
7 Directors' remuneration
2015 2014
US$'000 US$'000
------------------------------ --------- ---------
Directors' emoluments 231 1,005
Share-based payment expenses 191 218
------------------------------ --------- ---------
422 1,223
------------------------------ --------- ---------
Directors' remuneration for the year 2015 and the number of
options held were as follows:
Director Share-based 2015
Salaries* Fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
----------------------------- ---------- --------- ------------ --------- ------------
Mr. Wang Chao Yong*** 3 - 17 20 4,000,000
Mr. Chris A Rynning*** - - 87 87 3,500,000
Mr. Niklas Ponnert - - 87 87 5,300,000
Mr. Christopher Jemmett*** - 3 - 3 100,000
Mr. Lionel de Saint-Exupery - 72 - 72 -
Mr. Tom Preststulen*** - 6 - 6 -
Ms. Shonaid Jemmett
Page - 147 - 147 -
3 228 191 422 12,900,000
----------------------------- ---------- --------- ------------ --------- ------------
Directors' remuneration for the year 2014 and the number of
options held were as follows:
Director Share-based 2014
Salaries* Fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
----------------------------- ---------- --------- ------------ --------- ------------
Mr. Wang Chao Yong 75 - (18) 57 4,000,000
Mr. Chris A Rynning 330 - 118 448 3,500,000
Mr. Niklas Ponnert 300 - 118 418 5,300,000
Mr. Christopher
Jemmett - 75 - 75 100,000
Mr. Lionel de Saint-Exupery - 75 - 75 -
Mr. Tom Preststulen - 75 - 75 -
Ms. Shonaid Jemmett
Page - 75 - 75 -
705 300 218 1,223 12,900,000
----------------------------- ---------- --------- ------------ --------- ------------
* Short term employee benefits
** Share-based payment refers to expenses arising from the
Company's share option scheme (note 26).
*** Mr. Wang Chao Yong, Mr. Chris A Rynning, Mr. Christopher
Jemmett and Mr. Tom Preststulen resigned as Directors of the
Company in February 2015. The remaining directors of the Company
are Shonaid Jemmett-Page (Non-executive Chairman), Lionel de
Saint-Exupery (Non-executive Director) and Niklas Ponnert
(Director).
8 Operating segment information
Operating segments are components of the entity whose results
are regularly reviewed by the entity's chief operating
decision-maker to make decisions about resources to be allocated to
the segment and to assess its performance. The chief operating
decision-maker for the Group is considered to be the Board of
Directors. The Group's operating segments have been defined based
on the types of investments which was equity investment and debt
instrument in 2015 and 2014.
For the year ended 31 December 2015
Unlisted Listed Total
Equity Debt Total Equity Debt Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
----------------------------- --------- -------- --------- -------- ------ -------- ---------
Investment
loss:
Realised losses
on disposal
of investments (3) (363) (366) (1,160) - (1,160) (1,526)
Unrealised
gains/(losses)
on investments (12,755) (1,866) (14,621) 387 (131) 256 (14,365)
Income from
loans - 555 555 - 166 166 721
----------------------------- --------- -------- --------- -------- ------ -------- ---------
Total (12,758) (1,674) (14,432) (773) 35 (738) (15,170)
Net divestment/(investment)
Net proceeds
of divestment - 459 459 432 - 432 891
Investment (20) (363) (383) (199) - (199) (582)
----------------------------- --------- -------- --------- -------- ------ -------- ---------
Balance sheet
Investment
portfolio 76,125 24,649 100,774 1,446 1,793 3,239 104,013
----------------------------- --------- -------- --------- -------- ------ -------- ---------
The Group's geographical areas based on the location of
investment assets (non-current assets), are defined primarily as
China, Mongolia, South Africa and Europe, as presented in the
following table.
Europe China Mongolia South Africa Total
$'000 $'000 $'000 $'000 $'000
----------------------------- ------- -------- --------- ------------- ---------
Investment loss:
Realised losses
on disposal of
investments (366) - (1,160) - (1,526)
Unrealised losses
on investments (415) (2,485) (9,831) (1,634) (14,365)
Income from loans - 555 166 - 721
Total (781) (1,930) (10,825) (1,634) (15,170)
Net divestment/(investment)
Net proceeds of
divestment - 460 432 - 892
Investment (383) - (199) - (582)
----------------------------- ------- -------- --------- ------------- ---------
Balance sheet
Investment portfolio 1,100 87,466 15,233 214 104,013
----------------------------- ------- -------- --------- ------------- ---------
For the year ended 31 December 2014
Unlisted Listed Total
Equity Debt Total Equity Debt Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
----------------------------- --------- --------- --------- ------- ------ ------ ---------
Investment
loss:
Realised losses
on disposal
of investments (9,751) (3,867) (13,618) (895) - (895) (14,513)
Unrealised
losses on investments (19,657) (10,169) (29,826) (42) (210) (252) (30,078)
Share of gains
of jointly
controlled
entity - - - - - - -
Income from
loans - 568 568 - 196 196 764
Dividends - - - 4 - 4 4
----------------------------- --------- --------- --------- ------- ------ ------ ---------
Total (29,408) (13,468) (42,876) (933) (14) (947) (43,823)
Net divestment/(investment)
Net proceeds
of divestment 5,411 732 6,143 396 - 396 6,539
Investment - (2,121) (2,121) (565) - (565) (2,686)
----------------------------- --------- --------- --------- ------- ------ ------ ---------
Balance sheet
Investment
portfolio 88,860 26,761 115,621 2,457 2,138 4,595 120,216
----------------------------- --------- --------- --------- ------- ------ ------ ---------
Rest North South
Europe China Mongolia of Asia America Africa Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
----------------------------- -------- --------- --------- --------- --------- -------- ---------
Investment losses
Realised losses
on disposal of
investments (3,885) (9,413) (1,103) (32) (80) - (14,513)
Unrealised losses
on investments (2,137) (4,647) (14,957) - - (8,337) (30,078)
Share of gains - - - - - -
of jointly controlled
entity
Income from loans - 568 196 - - - 764
Dividends - - 4 - - - 4
----------------------------- -------- --------- --------- --------- --------- -------- ---------
Total (6,022) (13,492) (15,860) (32) (80) (8,337) (43,823)
Net divestment/(investment)
Net proceeds of
divestment - 6,143 15 294 87 - 6,539
Investment (981) (1,140) (565) - - - (2,686)
----------------------------- -------- --------- --------- --------- --------- -------- ---------
Balance sheet
Investment portfolio 1,494 90,197 26,677 - - 1,848 120,216
----------------------------- -------- --------- --------- --------- --------- -------- ---------
9 Finance income and costs
2015 2014
US$'000 US$'000
----------------------------------- --------- ---------
Finance income
Bank interest - 18
------------------------------------ --------- ---------
- 18
----------------------------------- --------- ---------
Finance costs
Bank charges (26) (40)
Interest expenses of convertible
zero
dividend preference shares (5,776) (5,296)
------------------------------------ --------- ---------
(5,802) (5,336)
----------------------------------- --------- ---------
10 Income tax
As the Company is not in receipt of income from Manx land,
certain related business or property and does not hold a Manx
banking licence, it is taxed at the standard rate of 0% on the Isle
of Man. The company is resident for tax purposes in the Isle of Man
and subject to corporate income tax at the standard rate of 0% and
as such no provision for tax in the Isle of Man has been made.
2015 2014
US$'000 US$'000
-------------------------------------------- --------- ---------
Current taxes
Current year - (1)
Deferred taxes
Deferred income taxes* 406 342
Total income taxes credit in the statement
of comprehensive income 406 341
-------------------------------------------- --------- ---------
* The deferred income tax liability US$ 2,081,539 relates to
fair value gain of Celadon Mining Ltd, China Rice Ltd, Niutech
Energy Ltd, Unipower Battery Ltd and Shanghai Yi Rui Tech New
Energy Technology Ltd, estimated in accordance with the relevant
tax laws and regulations in the People's Republic of China ("PRC")
based on a tax rate of 10%.
The tax expense for the year can be reconciled per the statement
of comprehensive income as follows:
2015 2014
US$'000 US$'000
-------------------------------------------------- --------- ---------
Loss before tax (24,802) (62,232)
-------------------------------------------------- --------- ---------
Profit before tax multiplied by rate of
corporate income tax in the Isle
of Man of 0% (2014: 0%)
Effects of:
Current tax on realised gains on investments - (1)
Deferred tax on unrealised gains on investments 406 342
Total income taxes in the statement of
comprehensive income 406 341
-------------------------------------------------- --------- ---------
Deferred income taxes
2015 2014
US$'000 US$'000
----------------------------------------------- --------- ---------
Opening deferred income tax liability
Income in accounts taxable in the future 2,488 2,830
2,488 2,830
----------------------------------------------- --------- ---------
Recognised through statement of comprehensive
income
Income in accounts taxable in the future (406) (342)
----------------------------------------------- --------- ---------
(406) (342)
----------------------------------------------- --------- ---------
Closing deferred income tax liability
Income in accounts taxable in the future 2,082 2,488
----------------------------------------------- --------- ---------
2,082 2,488
----------------------------------------------- --------- ---------
11 Earnings per share
2015 2014
Numerator US$'000 US$'000
-------------------------------------------- ------------ ------------
Loss for the period attributable to owners
of the parent
as used in the calculation of basic loss
per share (24,340) (62,357)
-------------------------------------------- ------------ ------------
Loss for the period attributable to owners
of the parent
as used in the calculation of diluted
loss per share (24,340) (62,357)
-------------------------------------------- ------------ ------------
2015
Number 2014
of Number of
Denominator Shares shares
-------------------------------------------- ------------ ------------
Weighted average number of ordinary shares
for basic LPS 350,714,047 348,612,786
-------------------------------------------- ------------ ------------
Effect of dilution:
Share options - -
Convertible preference shares - -
-------------------------------------------- ------------ ------------
Weighted average number of ordinary shares
adjusted for the effect of dilution 350,714,047 348,612,786
-------------------------------------------- ------------ ------------
(6.95) (17.89)
Basic LPS cents cents
-------------------------------------------- ------------ ------------
(6.95) (17.89)
Diluted LPS cents cents
-------------------------------------------- ------------ ------------
12 Property, plant and equipment
Fixtures Computer Machinery
and fittings equipment Vehicles equipment Total
US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------- -------------- ----------- --------- ----------- --------
Cost
At 1 January 2014 42 128 153 48 371
-------------------------- -------------- ----------- --------- ----------- --------
Additions 1 3 - - 4
Disposal (43) (116) - - (159)
-------------------------- -------------- ----------- --------- ----------- --------
At 31 December
2014 - 15 153 48 216
-------------------------- -------------- ----------- --------- ----------- --------
Additions - - - - -
Disposal - (15) (9) (48) (72)
At 31 December
2015 - - 144 - 144
-------------------------- -------------- ----------- --------- ----------- --------
Accumulated depreciation
At 1 January 2014 35 86 31 44 196
-------------------------- -------------- ----------- --------- ----------- --------
Charge for the
year 2014 1 9 27 4 41
Disposal (36) (81) - - (117)
-------------------------- -------------- ----------- --------- ----------- --------
At 31 December
2014 - 14 58 48 120
-------------------------- -------------- ----------- --------- ----------- --------
Charge for the
year 2015 - - 22 - 22
Disposal - (14) - (48) (62)
At 31 December
2015 - - 80 - 80
-------------------------- -------------- ----------- --------- ----------- --------
Net book value
-------------------------- -------------- ----------- --------- ----------- --------
At 31 December
2014 - 1 95 - 96
At 31 December
2015 - - 64 - 64
-------------------------- -------------- ----------- --------- ----------- --------
13 Investments in subsidiaries
The principal subsidiaries of the Group, all of which have been
included in these consolidated financial statements are as
follows:
Proportion Proportion
of ownership of ownership
interest interest
Country of at 31 December at 31 December
Name incorporation 2015 2014
----------------------------- ---------------- ---------------- ----------------
Ascend Ventures Ltd Malaysia 100% 100%
Origo Resource Partners
Ltd Guernsey 100% 100%
PHI International Holding
Ltd Bermuda 100% 100%
PHI International (Bermuda)
Holding Ltd* Bermuda 100% 100%
Ascend (Beijing) Consulting
Ltd** China 100% 100%
China Cleantech Partners,
L.P. Cayman 100% 100%
Origo Partners MGL LLC Mongolia 100% 100%
China Commodities Absolute
Return Ltd Isle of Man 95.3% 95.3%
ISAK International Holding British Virgin
Ltd** Islands 71.2% 71.2%
Origo Asset Management
Ltd*** Cayman - 100%
China Venture Capital GP
Ltd*** Cayman - 100%
----------------------------- ---------------- ---------------- ----------------
* Owned by Origo Resource Partners Ltd
** Owned by Ascend Ventures Ltd
*** Struck off
14 Investments at fair value through profit or loss
As at 31 December 2015
Fair Proportion
Value of Fair
Country of hierarchy ownership Cost value
Name* incorporation level interest US$'000 US$'000
---------------- --------------- ------------------------------- ----------- -------------------------- ---------------------
British
IRCA Holdings Virgin
Ltd. Islands 3 49.1% 9,505 -
Shanghai Yi Rui
Tech
New Energy
Technology
Ltd China 3 49.0% 675 793
Resources British
Investment Virgin
Capital Ltd. Islands 3 38.5% 287 -
Roshini
International British
Bio Energy Virgin
Corporation Islands 3 35.9% 17,050 -
British
Virgin
China Rice Ltd Islands 3 32.1% 13,000 16,417
Kincora Copper
Ltd*** Canada 1 26.1% 6,728 1,180
R.M.Williams
Agricultural
Holdings Pty
Ltd Australia 3 24.0% 20,214 -
British
Virgin
Moly World Ltd Islands 3 20.0% 10,000 5,419
British
Niutech Energy Virgin
Ltd Islands 3 19.1% 6,350 11,531
Unipower Cayman
Battery Ltd Islands 3 16.5% 4,301 5,795
British
Fans Media Co., Virgin
Ltd Islands 3 14.3% 2,360 -
Gobi Coal & British
Energy Virgin
Ltd*** Islands 3 14.0% 14,960 6,575
British
Celadon Mining Virgin
Ltd Islands 3 9.7% 13,069 23,674
Staur Aqua AS Norway 3 9.2% 719 373
Ares Resources Mongolia 3 5.0% 148 -
Bach Technology
GmbH Germany 3 2.5% 60 -
Rising
Technology
Corporation
Ltd/Beijing
Rising
Information British
Technology Ltd Virgin 2%/
** Islands 3 1.6% 5,565 3,884
Cayman
Kooky Panda Ltd Islands 3 1.2% 25 -
British
Virgin
Six Waves Inc Islands 3 1.1% 240 1,218
Marula Mines
Ltd South Africa 3 0.9% 250 214
Fram
Exploration AS Norway 3 0.6% 1,223 232
Other quoted investments*** 1 1,569 266
--------------------------------- ------------------------------- ----------- -------------------------- ---------------------
128,298 77,571
-------------------------------- ------------------------------- ----------- -------------------------- ---------------------
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.
As at 31 December 2014
Fair Proportion
Value of Fair
Country of hierarchy ownership Cost value
Name* incorporation level interest US$'000 US$'000
---------------- --------------- ------------------------------- ----------- -------------------------- ---------------------
British
IRCA Holdings Virgin
Ltd. Islands 3 49.1% 9,505 -
Shanghai Yi Rui
Tech
New Energy
Technology
Ltd China 3 49.0% 675 695
Resources British
Investment Virgin
Capital Ltd. Islands 3 38.5% 287 -
Roshini
International British
Bio Energy Virgin
Corporation Islands 3 35.9% 17,050 -
British
Virgin
China Rice Ltd Islands 3 32.1% 13,000 12,027
Kincora Copper
Ltd*** Canada 1 26.3% 7,389 1,755
R.M.Williams
Agricultural
Holdings Pty
Ltd Australia 3 24.0% 20,214 -
British
Niutech Energy Virgin
Ltd Islands 3 21.1% 6,350 11,891
British
Virgin
Moly World Ltd Islands 3 20.0% 10,000 8,688
Unipower Cayman
Battery Ltd Islands 3 16.5% 4,301 12,053
British
Fans Media Co., Virgin
Ltd Islands 3 14.3% 2,360 -
Gobi Coal & British
Energy Virgin
Ltd*** Islands 3 14.0% 14,960 13,394
British
Celadon Mining Virgin
Ltd Islands 3 9.7% 13,069 24,634
Staur Aqua AS Norway 3 9.2% 719 43
Ares Resources Mongolia 3 5.0% 148 -
Bach Technology
GmbH Germany 3 2.5% 60 -
Rising
Technology
Corporation
Ltd/Beijing
Rising
Information British
Technology Virgin 2%/
Ltd ** Islands 3 1.6% 5,565 3,174
Cayman
Kooky Panda Ltd Islands 3 1.2% 25 -
British
Virgin
Six Waves Inc Islands 3 1.1% 240 804
Marula Mines
Ltd South Africa 3 0.9% 250 501
Fram
Exploration AS Norway 3 0.6% 1,202 956
Other quoted investments*** 1 2,296 691
--------------------------------- ------------------------------- ----------- -------------------------- ---------------------
129,665 91,306
-------------------------------- ------------------------------- ----------- -------------------------- ---------------------
* There are no significant restrictions that will have an impact
on ability to transfer of these investments.
** 2% equity stake in Rising Technology Corporation Ltd and 1.6%
beneficial interest in Beijing Rising Information Technology Ltd, a
company incorporated in the PRC, under a nominee agreement.
*** Investments held partially by China Commodities Absolute
Return Ltd ("CCF"), the fund managed by the Group.
As at 31 December 2015 the proportion of ownership interest held
by CCF in investments is as follows:
Proportion of ownership Cost Fair value
Name* interest US$'000 US$'000
------------------------ ------------------------ --------- -----------
Kincora Copper Ltd 1.38% 254 63
Gobi Coal & Energy Ltd 0.2% 252 111
------------------------ ------------------------ --------- -----------
In accordance with IFRS 13-Fair Value Measurement, financial
instruments recognised at fair value are required to be analysed
between those whose fair value is based on:
a) Quoted prices in active markets for identical assets or liabilities (Level 1);
b) Those involving inputs other than quoted prices included in
level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2);
and
c) Those with inputs for the asset or liability that are not
based on observable market data (unobservable inputs) (Level
3).
For assets and liabilities that are recognized in the financial
statements on a recurring basis, the Group determines whether
transfers have occurred between Levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period. There have been no transfers between
Levels during the period of 2015.
Statement of changes in Investments at fair value through profit
or loss based on level 3:
2015 2014
US$'000 US$'000
---------------------------------------------- --------- ---------
Opening balance 88,860 110,750
Acquisitions 20 -
Proceeds from disposals of investments - (294)
Realised losses on disposals of investments - (32)
Realised losses on write-off of investments - (306)
Net exchange difference (1,327) (1,692)
Movement in unrealised losses on investments
- In profit or loss (11,428) (17,965)
Transfers out of Level 3 - (1,601)
---------------------------------------------- --------- ---------
Closing balance 76,125 88,860
---------------------------------------------- --------- ---------
The fair value decrease on investments categorised within Level
3 of US$12,754,500 (2014: US$19,994,687), was recorded in the
statement of profit or loss.
Description of significant unobservable inputs to valuation:
as at 31 December 2015
Significant
unobservable
Valuation technique inputs Range
------------------------------ --------------------- ------------------------ ----------
Investments in unquoted
equity shares - metal
& mining sector DCF method WACC 19%
Discount for
lack of marketability 20% - 30%
Investments in unquoted
equity shares - metal Discount for
& mining sector Multiples method lack of marketability 20% - 30%
Investments in unquoted
equity shares - cleantech Discount for
sector Multiples method lack of marketability 30%
Investments in unquoted
equity shares - agriculture Discount for
sector Multiples method lack of marketability 30%
Investments in unquoted
equity shares - TMT Discount for
sector Multiples method lack of marketability 30%
as at 31 December 2014
Significant
unobservable
Valuation technique inputs Range
------------------------------ --------------------- ------------------------ -------------
Investments in unquoted
equity shares - metal
& mining sector DCF method WACC 13.85% - 15%
Discount for
lack of marketability 20% - 30%
Investments in unquoted
equity shares - metal Discount for
& mining sector Multiples method lack of marketability 20% - 30%
Investments in unquoted
equity shares - cleantech Discount for
sector Multiples method lack of marketability 30%
Investments in unquoted
equity shares - agriculture Discount for
sector Multiples method lack of marketability 30%
Investments in unquoted
equity shares - TMT Discount for
sector Multiples method lack of marketability 30%
Risk management activities
Fair value risk
The Group's financial assets are predominantly investments in
unquoted companies, and the fair value of each investment depends
upon a combination of market factors and the performance of the
underlying asset. The Group does not hedge the market risk inherent
in the portfolio but manage asset performance risk on an
asset-specific basis by continuously monitoring each asset's
performance and charging the change of each asset's fair value to
the statement of comprehensive income as necessary. The Group
believes that the carrying amount is a reasonable approximation of
fair value for their financial assets and liabilities.
Valuation techniques
The fair value of financial instruments traded in active markets
(such as publicly traded securities) is based on quoted market
prices at the reporting date. The quoted market price used for
financial assets held by the Group is the current closing
price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Group has estimated the value of each of its unquoted equity
instruments by using judgement to select the most appropriate
valuation methodology for each investment based on the
recommendations of the International Private Equity and Venture
Capital Valuation Guidelines. Valuation methodologies mainly
include the price of recent investments, multiples, discounted cash
flows or earnings, industry valuation benchmarks, available market
prices and so on, which may apply individually or in combination.
Key assumptions and judgements of each methodology concerning the
future and other key sources of estimation uncertainty will have a
significant risk of causing a material adjustment to the fair value
of the instruments within the next reporting period.
Sensitivity risk of investments at fair value through profit or
loss based at Level 3
Level 3 inputs are sensitive to assumptions made when
ascertaining fair value of financial assets. A reasonable
alternative assumption would be to apply a standard marketability
discount of 25% for all assets rather than the specific approach
adopted. This would have a positive impact on the portfolio of
US$1,882,986 (2014: US$2,310,225) or 2.47% (2014: 2.60%) of total
investments at fair value through profit or loss based at level
3.
15 Loans
The Group has entered into convertible credit agreements and has
the right to convert the outstanding principal balance of relevant
loans into borrower's shares according to certain conversion
conditions, and loan agreements with certain investee companies as
set forth in the table below.
As at 31 December 2015
Loans
due within Loans
Loan Loan one year due after Fair
rates principal one year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
---------------------------- ----------- ------- ----------- ------------ ------------ --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery Ltd 3 6 9,000 9,000 - 9,000
IRCA Holdings Ltd 3 1.5-8 11,645 - - -
R.M. Williams Agricultural
Holdings Pty Ltd 3 8-20 3,090 - - -
Staur Aqua AS 3 0-15 3,848 145 350 495
Kincora Copper Ltd 3 8.7 2,254 1,793 - 1,793
Roshini International
Bio Energy Corporation 3 - 424 - - -
Sub-total 45,261 25,938 350 26,288
---------------------------- ----------- ------- ----------- ------------ ------------ --------
Loans Loans
due within due
Loan one year after Amortised
rates Loan principal one year cost
Borrower % US$'000 US$'000 US$'000 US$'000
----------------------------- ----------- --------------- ------------ ---------- ----------
Loan agreements*
IRCA Holdings Ltd 6-10 8,909 - - -
TPL GmbH 10 3,807 - - -
R.M.William Agricultural 15.5+RBA
Holdings Pty Ltd cash rate 1,725 - - -
Shanghai Evtech New
Energy Technology
Ltd - 510 - - -
China Silvertone Investment
Co Ltd - 478 - - -
Unipower Battery Ltd 12 164 155 - 155
View Step Corporation
Ltd - 25 - - -
----------------------------- ----------- --------------- ------------ ---------- ----------
Sub-total 15,618 155 - 155
------------------------------ ----------- --------------- ------------ ---------- ----------
Total 60,879 26,093 350 26,443
------------------------------ ----------- --------------- ------------ ---------- ----------
* Loans in relation to convertible credit agreements are
measured at fair value. Loans in relation to loan agreements are
measured at amortised cost using the effective interest rate method
less any identified impairment losses.
As at 31 December 2014
Loans
due within Loans
Loan Loan one year due after Fair
rates principal one year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
---------------------------- ----------- ------- ----------- ------------ ------------ --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery Ltd 3 6 9,000 9,000 - 9,000
IRCA Holdings Ltd 3 1.5-8 11,645 764 - 764
R.M. Williams Agricultural
Holdings Pty Ltd 3 8-20 3,090 - - -
Staur Aqua AS 3 0-15 3,848 267 228 495
Kincora Copper Ltd 3 8.7 2,469 2,138 - 2,138
Roshini International
Bio Energy Corporation 3 - 424 - - -
Sub-total 45,476 27,169 228 27,397
---------------------------- ----------- ------- ----------- ------------ ------------ --------
As at 31 December 2014
Loans Loans
due within due
Loan one year after Amortised
rates Loan principal one year cost
Borrower % US$'000 US$'000 US$'000 US$'000
----------------------------- ----------- --------------- ------------ ---------- ----------
Loan agreements*
IRCA Holdings Ltd 6-10 8,909 158 425 583
TPL GmbH 10 3,807 - - -
R.M.William Agricultural 15.5+RBA
Holdings Pty Ltd cash rate 1,725 - - -
Shanghai Evtech New
Energy Technology
Ltd - 510 510 - 510
China Silvertone Investment
Co Ltd - 478 - - -
Unipower Battery Ltd 12 409 409 - 409
View Step Corporation
Ltd - 25 - - -
----------------------------- ----------- --------------- ------------ ---------- ----------
Sub-total 15,863 1,077 425 1,502
------------------------------ ----------- --------------- ------------ ---------- ----------
Total 61,339 28,246 653 28,899
------------------------------ ----------- --------------- ------------ ---------- ----------
Statement of changes in loans:
2015 2014
US$'000 US$'000
----------------- --------- ---------
Opening balance 28,899 41,756
Additions 363 2,121
Repayment (459) (732)
Write-offs (363) (3,867)
Revaluation (894) (6,851)
Impairment (1,103) (3,528)
Closing balance 26,443 28,899
----------------- --------- ---------
Statement of changes in convertible credit agreements based on
level 3:
2015 2014
US$'000 US$'000
---------------------------------------------- --------- ---------
Opening balance 27,397 34,248
Repayment (215) -
Write-offs - -
Movement in unrealised losses on investments
- In profit or loss (894) (6,851)
Closing balance 26,288 27,397
---------------------------------------------- --------- ---------
The fair value decrease on convertible credit agreements
categorised within level 3 of US$893,533 (2014: US$6,851,090), was
recorded in the statement of profit or loss.
Description of significant unobservable inputs to valuation:
The valuation technique of convertible credit agreements
includes DCF method for the liability component and Binomial Model
for the option embedded. The significant unobservable input is the
discount rate In accordance with the expected level of risk, which
moves opposite towards the fair value of convertible credit
agreements.
Convertible loans issued to China Rice Ltd and Unipower
Batteries Ltd are structured as "bundled investments", i.e. they
have been extended along-side of equity investments. Substantial
repayments of loans outstanding are expected to negatively affect
the Company's ability to realise the full value of its combined
investment in relevant companies. Consequently, except smaller
amounts, the bulk of convertible loan investments are expected to
be realised (whether through repayment in cash or conversion into
and subsequent sale of equity) with the disposal of the relevant
portfolio company as a whole, or through divestments of Origo's
equity positions. The Company has a reasonable expectation to be in
a position to realise the full value of these loans over next 12
months; however, substantial balances may remain outstanding beyond
such period.
16 Derivative financial assets
Fair value 2015
hierarchy US$'000 2014
level US$'000
---------- ----------- --------- ---------
Warrants 3 - 11
Total - 11
---------- ----------- --------- ---------
In accordance with the fair value hierarchy described in note
14, derivative financial instruments are measured using level 3 for
warrants.
Statement of changes in derivative financial assets based on
level 3:
2015 2014
US$'000 US$'000
---------------------------------------------- --------- ---------
Opening balance 11 109
Expired - -
Movement in unrealised losses on investments
- In profit or loss (11) (98)
Closing balance - 11
---------------------------------------------- --------- ---------
The fair value decreases on derivative financial instruments
categorised within level 3 of US$11,092 (2014: US$97,701), was
recorded in the statement of profit or loss.
17 Trade and other receivables
2015 2014
US$'000 US$'000
--------------------------- --------- ---------
Trade debtors 5 4
Other debtors 1,378 1,382
Loan interest receivables 2,676 2,127
Prepayments 42 383
Total 4,101 3,896
----------------------------- --------- ---------
2015 Aging for the Group
0-30 31-60 61-90 181-365 Over 365
days days days days days Total
-------------------
Aging for the
Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------- -------- -------- -------- -------- --------- --------
Trade debtors - - - 1 4 5
Other debtors - - - 200 3,762 3,962
Loan interest
receivables 18 37 24 552 10,214 10,845
Other 42 - - - - 42
Provision against
loan interest
receivables - (8,169) (8,169)
Provision of
bad debts - - - - (2,584) (2,584)
------------------- -------- -------- -------- -------- --------- --------
Total 60 37 24 753 3,227 4,101
------------------- -------- -------- -------- -------- --------- --------
Percentage 1% 1% 1% 18% 79% 100%
------------------- -------- -------- -------- -------- --------- --------
2014 Aging for the Group
0-30 31-60 61-90 91-180 181-365 Over
days days days days days 365 days Total
-----------------------
Aging for
the Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- -------- -------- -------- -------- -------- ---------- --------
Trade debtors - - - - - 4 4
Other debtors 645 10 - 104 312 2,895 3,966
Loan interest
receivables 136 124 127 404 721 8,784 10,296
Other 273 - 7 37 7 59 383
Provision
against loan
interest receivables (25) (79) (81) (238) (451) (7,295) (8,169)
Provision
of bad debts - (10) - (27) (5) (2,542) (2,584)
----------------------- -------- -------- -------- -------- -------- ---------- --------
Total 1,029 45 53 280 584 1,905 3,896
----------------------- -------- -------- -------- -------- -------- ---------- --------
Percentage 27% 1% 1% 7% 15% 49% 100%
----------------------- -------- -------- -------- -------- -------- ---------- --------
The Group identified an impairment of US$ 48,887 (2014: US$
802,505) on trade and other receivables, and the impairment is
recognised within the other administrative expenses.
18 Cash and cash equivalents
2015 2014
US$'000 US$'000
--------------------------------- --------- ---------
Current account 1,272 5,185
Total cash and cash equivalents 1,272 5,185
----------------------------------- --------- ---------
19 Trade and other payables
2015 2014
US$'000 US$'000
------------------------------- --------- ---------
Trade payables 5 2
Other payables 2,696 1,247
Performance incentive payable
within one year* 8 8
--------------------------------- --------- ---------
Total 2,709 1,257
--------------------------------- --------- ---------
* Refer to note 4 for total performance incentive expenses.
20 Financial guarantee contracts
2015 2014
US$'000 US$'000
------------------------------- --------- ---------
Financial guarantee contracts* 435 -
------------------------------- --------- ---------
Total 435 -
------------------------------- --------- ---------
* In July 2013, the Group entered into a guarantee agreement
with IRCA Holdings Ltd and ABSA Bank Limited to guarantee the
repayment of loan facilities of up to Rand 6,769,000 extended by
ABSA Bank Limited to IRCA Holdings Ltd, which has applied for the
liquidation, so the Group recognised it as a liability. The payment
request related to this provision is expected in the next year.
21 Provision
2015 2014
US$'000 US$'000
----------------------------------- --------- ---------
USR/contingent share awards * 67 297
Performance incentive provision** 4,195 7,404
----------------------------------- --------- ---------
Total 4,262 7,701
----------------------------------- --------- ---------
2015 2014
US$'000 US$'000
----------------------------------------------- --------- ---------
Opening balance 7,701 1,787
Movement in USR/contingent share awards
* (230) 132
Movement in performance incentive provision** (3,209) 5,782
----------------------------------------------- --------- ---------
Total 4,262 7,701
----------------------------------------------- --------- ---------
* The provision relates to the fair value of USR and contingent
share awards granted to certain directors, executives and key
employees under the Company's joint share ownership scheme. Further
details about the USR and contingent share awards are included in
note 26. The provision is expected to be utilised in the next 9
years when the operation are exercised.
** Refer to note 4 for total performance incentive expenses. The
provision is expected to be utilised when investments are realised
and the hurdle is reached.
22 Liability component of convertible zero dividend preference shares
Early
Number redemption
of Liability Equity option
shares component component derivative
US$'000 US$'000 US$'000
------------------------ ----------- ----------- ----------- ------------
Balance at 1 January
2014 57,000,000 58,313 8,297 -
Interest expenses
on convertible zero
dividend preference
shares - 5,296 - -
------------------------ ----------- ----------- ----------- ------------
Fair value movement
of early redemption
option derivative - - - -
Balance at 31 December
2014 57,000,000 63,609 8,297 -
------------------------- ----------- ----------- ----------- ------------
Interest expenses
on convertible zero
dividend preference
shares - 5,776 - -
Fair value movement
of early redemption
option derivative - - - -
------------------------ ----------- ----------- ----------- ------------
Balance at 31 December
2015 57,000,000 69,385 8,297 -
------------------------- ----------- ----------- ----------- ------------
On 8 March 2011, the Company issued 60 million Convertible Zero
Dividend Preference Shares ("Convertible Preference Shares" or
"CZDP") at a price of US$1.00 per share. The Convertible Preference
Shares have a maturity period of five years from the issue date and
can be converted into 1 ordinary share of the Company at the
conversion price of US$0.95 per share at the holder's option at any
time between more than 40 dealing days after 8 March 2011 up to 5
dealing days prior to the maturity date and, if it has not been
converted, it will be redeemed on maturity at the redemption price
of US$1.28 per share (representing a gross redemption yield of 5%
per annum at issue).
The Convertible Preference Shares contain a redemption feature
which allows for early redemption at the option of issuer. The
issuer has the option to redeem all or some of the Convertible
Preference Shares subject to the restrictions on redemption
described below:
(a) at any time after the second anniversary of 8 March 2011,
for a cash sum of US$1.28 per Convertible Preference Share
redeemed;
(b) at any time after the second anniversary of 8 March 2011, if
in any period of 30 consecutive dealing days the closing middle
market price of the ordinary shares of the Company exceeds US$1.235
per ordinary share of the Company on 20 or more of those days, for
a cash sum equal to the Accreted Principal Amount in respect of the
Convertible Preference Shares being redeemed;
(c) at any time, if less than 15% of the Convertible Preference
Shares remain outstanding, for a cash sum equal to the Accreted
Principal Amount in respect of the Convertible Preference Shares
being redeemed.
The Convertible Preference Shares contain three components, a
liability component, an equity component and the early redemption
option derivative. The effective interest rate of the liability
component is 6.5%. The early redemption option derivative is
presented as derivative financial assets in the consolidated
statement of financial position and is measured at fair value
subsequent to initial recognition with changes in fair value
recognised in profit and loss.
In March 2013, the Company restructured the terms of its
existing Convertible Preference Shares, the principal terms of
restructure includes: i) extension of the maturity date of the
Convertible Preference Shares by 18 months from 8 March 2016 to 8
September 2017 (the "Extended Period"); ii) amendment of the final
capital value ("FCV") of the Convertible Preference Shares to
US$1.41 each, with the accrued rate of return for the Extended
Period equivalent to 10 per cent of the accrued value of the
Convertible Preference Shares at the start of the Extended Period;
iii) a commitment by the Company to repurchase, by means of tender
offers to holders, at least 12 million Convertible Preference
Shares by 8 March 2016, the original maturity date; and iv) the
Company to set aside, for the funding of Convertible Preference
Shares tender offers, 50 per cent of the next US$24 million of net
proceeds (post transaction costs and management incentives) from
investment realisations by the Company. The new effective interest
rate of the liability component is 9.0%. In addition to the
restructure, the Company repurchased 3 million Convertible
Preference Shares from holders at a price of US$1.00 per
Convertible Preference Shares in 2013.
23 Issued capital
2015 2014
Number of Number of
Authorised shares GBP'000 shares GBP'000
------------------------------- ------------ -------- ------------ --------
Ordinary shares of GBP 0.0001
each 500,000,000 50 500,000,000 50
------------------------------- ------------ -------- ------------ --------
Number of Number of
Issued and fully paid shares US$'000 shares US$'000
------------------------------- ------------ -------- ------------ --------
At beginning of the year 356,706,814 55 356,706,814 55
New issue of shares 2,390,000 1
Buyback shares (350,000) - -
At end of the year 358,746,814 56 356,706,814 55
------------------------------- ------------ -------- ------------ --------
24 Other reserve
Included within the other reserve are 7,711,425 shares of the
Company held by Employee Benefit Trust ("EBT") and the amounts of
US$ 3,162,677 credited from the capital redemption of CCP fund in
2014.
25 Financial instruments - Risk management
The Group and the Company are exposed through their operations
to one or more of the following risks:
- Fair value risk
- Cash flow interest rate risk
- Currency risk
- Credit risk
- Liquidity risk
- Concentration risk
- Sensitivity risk of financial assets based at level 3
The policy for managing these risks is set by the board. The
policy for each of the above risks is described in more detail
below:
Fair value risk
The Group and Company's financial assets are predominantly
investments in unquoted companies, and the fair value of each
investment depends upon a combination of market factors and the
performance of the underlying asset. The Group and the Company do
not hedge the market risk inherent in the portfolio but manages
asset performance risk on an asset-specific basis by continuously
monitoring each asset's performance and charging the change of each
asset's fair value to the statement of comprehensive income as
necessary.
Cash flow interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group's exposure to the risk
of changes in market interest rates is relatively small as the
Group's outstanding debt is fixed rate. Meanwhile, the interest
income is not material in the context of the total portfolio return
as a whole.
Currency risk
Some of the Group's assets, liabilities, income and expenses are
effectively denominated in currencies other than US Dollars (the
Group's presentation currency). Fluctuations in the exchanges rates
between these currencies and US Dollars will have an effect on the
reported value of those items.
The following table demonstrates the sensitivity of the Group's
profit before tax due to a change in the fair value of monetary
assets and liabilities resulting from a reasonably possible change
in the US dollar exchange rate, with all other variables held
constant.
Effect on
Increase/ profit before Effect on
(decrease) tax NAV
in US$ rate US$'000 US$'000
------ ------------- --------------- ----------
2015 +10% 2,784 2,784
-10% (2,784) (2,784)
2014 +10% 3,125 3,125
-10% (3,125) (3,125)
------ ------------- --------------- ----------
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 US Dollars are:
GBP NOK RMB AUD HKD CAD ZAR Total
2015 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Cash and bank
balances - - 84 10 50 6 - 150
Investment at
FVTPL 23,757 605 793 - - 1,362 - 26,517
Loans - 495 154 - - 1,793 - 2,442
Trade and other
receivables - - 380 - - 80 - 460
Total Assets 23,757 1,100 1,411 10 50 3,241 - 29,569
--------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Trade and other
payables (154) - - - - - - (154)
Financial guarantee
contracts - - - - - - (435) (435)
Provision (67) - - - - - - (67)
Deferred income
tax liability (1,060) - (12) - - - - (1,072)
--------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Total Liabilities (1,281) - (12) - - - (435) (1,728)
--------------------- --------- --------- --------- --------- --------- --------- --------- ---------
GBP NOK RMB AUD CAD Total
2014 US$'000 US$'000 US$'000 US$'000 HKD US$'000 US$'000 US$'000
------------------- --------- --------- --------- --------- ------------ --------- ---------
Cash and bank
balances 29 50 38 12 50 13 192
Investment at
FVTPL 24,802 999 695 - - 2,279 28,775
Loans 37 495 930 - - 2,138 3,600
Trade and other
receivables - - 317 - - 83 400
Derivative assets - - - - - 12 12
------------------- --------- --------- --------- --------- ------------ --------- ---------
Total Assets 24,868 1,544 1,980 12 50 4,525 32,979
------------------- --------- --------- --------- --------- ------------ --------- ---------
Trade and other
payables (171) - (101) - - - (272)
Provision (297) - - - - - (297)
Deferred income
tax liability (1,157) - (2) - - - (1,159)
------------------- --------- --------- --------- --------- ------------ --------- ---------
Total Liabilities (1,625) - (103) - - - (1,728)
------------------- --------- --------- --------- --------- ------------ --------- ---------
Credit risk
The Group is primarily exposed to credit risk from the
convertible loans extended to unquoted portfolio companies, in
which the Directors consider the maximum credit risk to be the
carrying value of the convertible loans and loans which amounted to
US$26.4 million. Directors consider cash and receivables do not
expose to significant credit risk, because the cash is held at
reputable banks. The credit risk exposure is managed on an
asset-specific basis by management.
2015 2015 2014 2014
more more
2015 2015 than 2014 2014 than
up to 12 months Total up to 12 Total
not 12 months past US$'000 not 12 months months US$'000
past past due past past past
due due US$'000 due due due
US$'000 US$'000 US$'000 US$'000 US$'000
----------------- ---------- ----------- ----------- --------- --------- ----------- --------- ---------
Convertible
loan - 350 25,938 26,288 2,366 - 25,031 27,397
Working capital
loan - - 155 155 425 556 521 1,502
----------------- ---------- ----------- ----------- --------- --------- ----------- --------- ---------
Total - 350 26,093 26,443 2,791 556 25,552 28,899
----------------- ---------- ----------- ----------- --------- --------- ----------- --------- ---------
Liquidity risk
The table below analyses the Group's financial assets and
liabilities into relevant maturity groupings based on the remaining
period at the balance sheet date to the contractual maturity date
or, if earlier, the expected date on which the financial assets
will be realised and the financial liabilities will be settled. The
amounts in the table are the contractual undiscounted cash
flows.
Assets
Less than 1-3 months 3-12 months over 12 Total
31 December 2015 1 month months
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- ----------- ------------ ------------- --------- ---------
Cash and cash
equivalents 1,272 - - - 1,272
Trade receivables - - - 5 5
Other receivables 988 220 - 170 1,378
Loan interest
receivables 2,630 46 - - 2,676
Loans 24,300 - 1,793 350 26,443
Investments at
fair value through
profit or loss - - - 77,571 77,571
--------------------- ----------- ------------ ------------- --------- ---------
Total 29,190 266 1,793 78,096 109,345
--------------------- ----------- ------------ ------------- --------- ---------
Liabilities
Less than 1-3 months 3-12 months over 12 Total
31 December 2015 1 month months
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ----------- ------------ ------------- --------- ---------
Trade payables 5 - - - 5
Performance incentive
payable - - 8 4,195 4,203
USR/Contingent
share awards 67 - - - 67
Other payables 1,912 281 - 503 2,696
Liability component
of convertible
zero dividend
preference shares - - - 57,000 57,000
Contractual interest
payable - - - 23,608 23,608
-----------------------
Total 1,984 281 8 85,306 87,579
----------------------- ----------- ------------ ------------- --------- ---------
Assets
Less than 1-3 months 3-12 months over 12 Total
31 December 2014 1 month months
US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ----------- ------------ ------------- --------- ---------
Cash and cash
equivalents 5,185 - - - 5,185
Trade receivables - - - 4 4
Other receivables 1,225 1 - 156 1,382
Loan interest
receivables 2,044 - 83 - 2,127
Derivative financial
assets 11 - - - 11
Loans 26,107 - 2,139 653 28,899
Investments at
fair value through
profit or loss 535 1,756 - 89,015 91,306
---------------------- ----------- ------------ ------------- --------- ---------
Total 35,107 1,757 2,222 89,828 128,914
---------------------- ----------- ------------ ------------- --------- ---------
Liabilities
Less than 1-3 months 3-12 months over 12 Total
31 December 2014 1 month months
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ----------- ------------ ------------- --------- ---------
Trade payables 2 - - - 2
Performance incentive
payable - - 8 7,404 7,412
USR/Contingent
share awards 297 - - - 297
Other payables 361 378 - 508 1,247
Liability component
of convertible
zero dividend
preference shares - - - 57,000 57,000
Contractual interest
payable - - - 16,843 16,843
-----------------------
Total 660 378 8 81,755 82,801
----------------------- ----------- ------------ ------------- --------- ---------
Concentration risk
The main concentration risk for Origo is that the largest
investments are concentrated in China for the amount of US$
87,466,071, 84% out of the total portfolio value of US$
104,012,816.
26 Share-based payments
The Group has a number of share schemes that allow employees to
acquire shares in the Company, as detailed in note 1.3 (b).
The total cost recognised in the statement of comprehensive
income is shown below:
2015 2014
US$'000 US$'000
----------------------------- --------- ---------
Equity-settled option (426) (406)
USR/contingent share awards 200 (139)
Total (226) (545)
----------------------------- --------- ---------
The following table illustrates the number ("No.") and weighted
average exercise prices ("WAEP") of, and movements in, share
options during the years ended 31 December 2015 and 31 December
2014.
2015 2015 2014 2014
No. WAEP No. WAEP
---------------------------- ----------- --------- ------------ ---------
Outstanding at 1 January 21,451,932 26.97p 23,001,932 27.32p
---------------------------- ----------- --------- ------------ ---------
Granted during the year - - - -
Forfeited during the year (500,000) (31.00p) (1,550,000) (31.00p)
Exercised during the year - - - -
Expired during the year - - - -
Outstanding at 31 December 20,951,932 26.87p 21,451,932 26.97p
---------------------------- ----------- --------- ------------ ---------
Exercisable at 31 December 11,451,932 23.45p 11,451,932 23.45p
---------------------------- ----------- --------- ------------ ---------
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2015 was 3.56 years (31
December 2014: 4.56 years).
The range of exercise prices for options outstanding at the end
of the year was 20 pence to 59.85 pence (31 December 2014: 20 pence
to 59.85 pence).
Outstanding options include 6,800,000, 3,500,000, 500,000 and
13,600,000 equity-settled options granted on 26 October 2006, 13
March 2008, 6 February 2009 and 2 February 2012 respectively to
certain directors and employees of the Company and 651,932
equity-settled options granted on 21 December 2006 to Seymour
Pierce Ltd, the Company's former nominated adviser. The Company did
not enter into any share-based transactions with parties other than
employees during the years from 2007 to 2015, except as described
above.
The following table illustrates the number ("No.") and weighted
average exercise prices ("WAEP") of, and movements in USRs and
contingent share awards during the years ended 31 December 2015 and
31 December 2014.
2015 2015 2014 2014
No. WAEP No. WAEP
--------------------------- ----------- ------ ----------- -------
Outstanding at 1 January 8,061,425 9.07p 5,688,067 12.85p
--------------------------- ----------- ------ ----------- -------
Granted during the year - - 2,423,358 0.00p
Forfeited during the year - - - -
Exercised during the year (350,000)* 0.00p (50,000)** 0.00p
Expired during the year - - - -
Outstanding at the end of
the year 7,711,425 9.48p 8,061,425 9.07p
--------------------------- ----------- ------ ----------- -------
Exercisable at the end of
the year 7,711,425 9.48p 8,061,425 9.07p
--------------------------- ----------- ------ ----------- -------
* The weighted average share price at the date of exercise of
these options was 5.70 pence.
** The weighted average share price at the date of exercise of
these options was 7.88 pence.
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2015 was 5.51 years (2014:
6.64 years).
The range of exercise prices for options outstanding at the end
of the year was zero to 15.5 pence (2014: zero to 15.5 pence).
On 16 October 2009, 4,847,099 of USR were granted to certain
directors, executives and key employees under the Company's joint
share ownership scheme ("JSOS"). 50% of USR vested 12 months from
the date of grant and 50% of USR vested 24 months from the date of
grant. The fair value of the USRs is estimated at the end of each
reporting period using the Binomial Tree option pricing model. The
contractual life of each USR granted is 10 years.
On 20 July 2012, 1,120,000 of contingent share awards were
granted to certain directors, executives and key employees under
the Company's JSOS, which vested 197 days from the date of grant.
The contractual life of each contingent share awards granted is 10
years.
On 30 December 2014, 2,423,358 of share awards were granted to
certain key employees under the Company's JSOS, which vested
immediately at the date of grant. The contractual life of each
share offers granted is 10 years.
The following table lists the inputs to the model used to
calculate the fair value of USRs for the year.
2015 2014
Underlying stock price (pence) 1.50 6.13
Exercise price (pence) 15.5 15.5
Expected life of option (years) 2 2
Expected volatility (%) 34.53 45.82
Expected dividend yield (%) - -
Risk-free interest rate (%) 0.50 1.18
---------------------------------- ------ ------
26 Share-based payments (continued)
The volatility assumption, measured at the standard deviation of
expected share price returns, was based on a statistical analysis
of the Company's daily share prices from 1 January 2013 to 31
December 2015 using source data from Reuters.
The carrying amount of the liability relating to the USR and the
contingent share award as at 31 December 2015 is US$66,895 and the
credit expense recognized as share-based payments during the period
is US$200,495.
27 Related party transactions
Identification of related parties
The Group has a related party relationship with its
subsidiaries, jointly controlled entity, associates and key
management personnel. The Company receives and pays certain debtors
and creditors on behalf of its subsidiaries and the amounts are
recharged to the entities. Transactions between the Company and its
subsidiaries have been eliminated on consolidation.
Transactions with key management personnel
The Group's key management personnel are the Executive and
Non-executive Directors as identified in the director's report.
Trading transactions
The following table provides the total amount of significant
transactions and outstanding balances which have been entered into
with related parties during the years ended 31 December 2015 and 31
December 2014.
2015 2014
----------------------------------------
US$'000 US$'000
---------------------------------------- -------- --------
Amounts due from/(to) related parties*
Key management personnel:
Wang Chao Yong*** - (47)
Christopher Jemmett*** - (47)
Lionel de Saint-Exupery*** (25) (47)
Shonaid Jemmett Page*** (100) (47)
Luke Leslie*** - (12)
Other:
Origo Advisers Ltd** (4,203) (7,117)
---------------------------------------- -------- --------
2015 2014
---------------------------
US$'000 US$'000
--------------------------- -------- --------
Transactions
Key management personnel:
Luke Leslie**** - (17)
Other:
Origo Advisers Ltd** 3,209 (5,790)
--------------------------- -------- --------
* The amounts are unsecured, non-interest bearing and have no
fixed terms of repayment.
** Origo Advisers Ltd is controlled by entities whose ultimate
beneficiaries include Niklas Ponnert (Director of the Company),
Chris A Rynning and Luke Leslie.
*** Wang Chao Yong and Christopher Jemmett were former
Non-executive Directors of the Company; Lionel de Saint-Exupery
(Non-executive Director of the Company); Shonaid Jemmett Page
(Non-executive, Chairman of the Company); and Luke Leslie is a
Director of CCF which is one of subsidiaries of the Group.
**** The amount is the management fee according to the advisory
agreement between CCF and the Group.
28 Capital management
The primary objectives of the Group's capital management are to
safeguard the Group's ability to continue as a going concern and to
maintain healthy capital ratios in order to support its business
and maximise shareholders' value.
The Group manages and makes appropriate adjustments to its
capital structure on an ongoing basis in light of changes in
economic conditions and the risk characteristic of the underlying
assets. To maintain or adjust the capital structure, the Group may
adjust dividend payments to shareholders, return capital to
shareholders and/or issue new shares. The Group is not subject to
any externally imposed capital requirements. No changes were made
in the objectives, policies or processes during the years ended 31
December 2015 and 31 December 2014.
The Group monitors capital using a gearing ratio, which is net
debt divided by capital plus net debt. Net debt includes current
liabilities less cash and bank balances. Capital includes equity
attributable to equity holders of the parent company. The gearing
ratios as at the reporting dates were as follows:
2015 2014
US$'000 US$'000
------------------------------ -------- --------
Current liabilities 3,144 1,257
Less: Cash and bank balances (1,272) (5,185)
Net debt 1,872 (3,928)
------------------------------ -------- --------
2015 2014
US$'000 US$'000
----------------------------------------- -------- --------
Liability component of convertible zero
dividend
preference shares 69,385 63,609
Equity attributable to equity holders
of the parent 30,077 53,772
Capital 99,462 117,381
----------------------------------------- -------- --------
Capital and net debt 101,334 113,453
----------------------------------------- -------- --------
Gearing ratio 2% (3%)
29 Commitments and contingencies
-- In February 2014, the Company made an announcement regarding
a complaint raised by Brooks Macdonald with the Company in respect
of the terms of Convertible Zero Dividend Preference Shares
("Convertible Preference Shares" or the "CZDP") (the "First
Complaint"). Brooks Macdonald contends that the change of control
provisions should have included an option exercisable by the
holders of the CZDP to redeem the CZDP upon a change of control in
respect of Origo (a "CZDP COC Redemption Option"). This is on the
basis on a reference in a short-form term sheet (the "CZDP Term
Sheet") that was appended to the placing letter entered into
between Origo's Broker and NOMAD (on behalf of Origo) and
Spearpoint (now part of the Brook MacDonald group) for the
subscription by Spearpoint of the CZDP (the CZDP Admission Document
and Articles, as amended, having not yet been prepared when the
placing letter was signed). The CZDP Term Sheet contained a
provision that Brooks Macdonald argues should be interpreted as
indicating that Spearpoint would have a CZDP COC Redemption
Option.
The CZDP Term Sheet contained only brief details of the CZDP and
Spearpoint's subscription was subject (amongst other things) to
detailed documentation being produced and approved (i.e. the CZDP
Admission Document and the Articles, as amended). Spearpoint had
the opportunity to review this detailed documentation prior to its
acquisition of the CZDP and should have made its actual
subscription for the CZDP based on the final information contained
in the CZDP Admission Document and the Articles. No query regarding
the purported non-inclusion in the terms of the CZDP of a CZDP COC
Redemption Option was raised by Spearpoint at the time of issue of
the CZDP in 2011 or subsequently (including at the time of the 2013
CZDP Amendment), until the communication by Brooks Macdonald of its
complaint.
Brooks Macdonald has indicated that it may commence legal
proceedings if the terms of the CZDP are not amended to provide a
CZDP COC Redemption Option. Such an amendment could only be made if
shareholders approve the relevant changes to the Articles at a
general meeting. Origo has also sought legal advice in respect of
the First Complaint. On the basis of that legal advice, Board
considers that a legal claim against Origo, in respect of the First
Complaint if initiated by Brooks Macdonald, would be unlikely to
succeed.
To date, no legal proceedings have been commenced by Brooks
MacDonald in relation to the First Complaint, although Brooks
MacDonald has not withdrawn its threat to bring such legal
proceedings.
Separately, Brooks MacDonald, through its lawyers in the Isle of
Man (where the Company is incorporated), has raised a further
complaint (the "Second Complaint"). Brooks MacDonald asserted that
the resolution passed on 8 March 2011 ("March 2011 Resolution") to
amend the Company's Articles to reflect the creation of the CZDP
shares was not validly passed. This assertion rested on an argument
that a "75% Resolution" (as defined in the Articles), which is
required in order to amend the Company's Articles, requires a
majority of holders of 75% of all issued and outstanding shares to
have voted in favour of it rather than a majority of 75% of votes
cast. Brooks MacDonald, therefore, contended that if the March 2011
Resolution was not validly passed it would have a legal claim for
the return from the Company of the consideration paid for the
purchase of the CZDP.
On July 9, 2015, the Isle of Man Court handed down judgment in
favour of the Company in respect of the Second Complaint,
confirming that the Articles bear the meaning propounded by the
Company.
Following the hearings of the Second Complaint, Brooks MacDonald
has notified the Company of a claim in relation to the construction
of a provision of the Company's Articles (the "Third Complaint").
This claim is in relation to article 4.17 of the Articles, which
primarily addresses a conversion mechanism relating to the
Company's convertible zero dividend preference shares.
On 29 September 2015, after extensive consultations with Brooks
MacDonald, and other shareholders, the Company announced a set of
proposals which would restructure the CZDPs and provide Origo with
greater flexibility to implement its orderly realisation strategy.
The proposals, if approved by Shareholders, would also have served
to settle the ongoing dispute with Brooks Macdonald. At the
relevant general meeting of the Company held on 4 February 2016,
the proposals were voted down by the Company's shareholders by way
of poll.
On 10 February 2016, Brooks MacDonald issued proceedings in the
Isle of Man Court in respect of the Third Complaint, seeking a
declaration as to the correct interpretation of article 4.17. Those
proceedings were subsequently stayed by consent and Brooks
MacDonald has made no attempt to prosecute that claim.
The Company announced on 8 March 2016 that, whilst the Company's
Articles include a requirement for the Company to have redeemed
US$12 million of CZDP by 8 March 2016, it was not in a position to
redeem US$12 million of CZDPs at the current time. The 8 March 2016
announcement went on to confirm that the Company remains under a
continuing obligation to undertake the redemption of US$12 million
of CZDPs as and when it is legally able to do so.
The Articles expressly envisage the possibility that the Company
will not have the available funds to redeem CZDP shares on the
relevant redemption date (whether 8 March 2016 or later). Article
4.8 provides:
"If on any date fixed for redemption the Company is unable to
redeem in full the relevant number of Convertible Preference Shares
[CZDPs], if as a result of so doing the Company would be unable to
satisfy the Solvency Test immediately thereafter, on any date fixed
for redemption, the Company shall redeem as many of such
Convertible Preference Shares as can lawfully and properly be
redeemed and the Company shall redeem the balance as soon as it is
lawfully and properly able to do so."
Further, under the Isle of Man Companies Act of 2006, no
Redemption of the CZDP may be made by the Company if, immediately
following any such redemption, the Company would be unable to
satisfy the Solvency Test under the 2006 Act, the effect of the
2006 Act is to postpone the obligation to redeem those CZDP which
cannot be redeemed due to the Solvency Test until such time as the
Company can redeem and pass the Solvency Test, and to avoid the
Company becoming insolvent by converting CZDP shareholders to
creditors when the Company cannot afford to redeem.
On 10 March 2016, the Company was notified by Brooks Macdonald
Asset Management (International) Limited that it has filed a Claim
Form, dated 9 March 2016, at the Isle of Man High Court seeking an
order to wind-up the Company on the grounds that it is just and
equitable to do so and/or as relief under section 180 of the Isle
of Man Companies Act 2006.
On 7 April 2016, the first hearing of this Winding-up Claim was
heard in the Isle of Man Courts of Justice and certain directions
were made. The presentation of Brooks Macdonald's claim to the Isle
of Man Court for winding up is deemed to have commenced a winding
up by the Isle of Man Court, under section 169(2) of the Isle of
Man Companies Act 1931. Section 167 of the Isle of Man Companies
Act 1931 states that any disposition of the property of the Company
after the commencement of the winding up by the Isle of Man Court
is void unless the court orders otherwise. Consequently, whilst the
Company judged that its daily operations should remain broadly
unaffected, disposals of its assets without Court approval may be
rendered void. The Company has received legal advice that the Isle
of Man Court is likely to validate realisations where no person
will be prejudiced by them which are for fair value and on arm's
length, and also that the provisions of section 167 of the Isle of
Man Companies Act 1931 may extend to any transfer of the Company's
shares.
As a result, the Board requested that trading in the Company's
shares on AIM be suspended. Trading in the Company's shares has
been suspended since 11 March 2016.
Following an initial Court Hearing on 7 April 2016, the Company
was notified that the Isle of Man Court has directed that Pacific
Alliance Asia Opportunity Fund L.P. (a 25.6 per cent. ordinary
shareholder of the Company) be joined to the proceedings (at its
request) in relation to the Winding-up Claim. A hearing in respect
of a disclosure request made by Brooks Macdonald Asset Management
(International) Limited in relation to the Winding-Up Claim has
been set down for Friday 22 July 2016 and Monday 25 July 2016.
These dates were originally set down as the trial dates to consider
the Winding-Up Claim. Revised dates for a trail are yet to be
determined but the trial is now not expected to occur no earlier
than September 2016. Pursuant to Rule 41 of the AIM Rules for
Companies, the London Stock Exchange plc will cancel the admission
of an AIM company's securities to trading on AIM where trading has
been suspended for six months. Accordingly, the Company faces the
risk of cancellation of its admission to trading on AIM on or about
11 September 2016.
Having sought and considered relevant legal advice provided, it
is the Directors' view that, on balance, if the matter goes to
Court, the Winding-up Claim will not succeed. Further, the Board
holds a reasonable expectation that the parties may be able to
reach an agreement in respect of a restructuring of the CZDP and a
related legal settlement which, if finalised and agreed, would
result in the Winding-up Claim being dropped and all related
disputes among the parties being settled.
There were no other material contracted commitments or
contingent assets or liabilities at 31 December 2015 (31 December
2014: none) that have not been disclosed in the consolidated
financial statements.
30 Events after the reporting period
In June 2016, Origo announced that it has agreed with Kincora to
convert the C$2,000,000 convertible note principal and interest
outstanding (net of C$500,000 escrowed funds to be paid to Origo)
into equity, subject to a Placement of not less than C$500,000,
with conversion being on the same terms as the Placement. The loan
note is due and payable on 21 October 2016 with interest at 8.7%
per annum, payable on maturity in cash or shares of Kincora, at
Origo's election. Prior to the conversion of the loan note and its
associated interest, Origo holds 85,883,786 common shares of
Kincora.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR USAKRNOABRRR
(END) Dow Jones Newswires
July 04, 2016 05:21 ET (09:21 GMT)
Origo Partners (LSE:OPP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Origo Partners (LSE:OPP)
Historical Stock Chart
From Jul 2023 to Jul 2024
