TIDMOPP TIDMOPPP
RNS Number : 4862J
Origo Partners PLC
29 June 2017
29 June 2017
Origo Partners PLC
("Origo" or the "Group" or the "Company")
Final Results for year ended 31 December 2016
Origo announces its audited final results for the year ended 31
December 2016.
Summary:
-- Continued progress in realisation programme with a majority
of the portfolio (in terms of fair value) now either publicly
listed or subject to indicative merger or disposal terms
-- Net asset value of US$46.0 million as at 31 December 2016(1)
(30 June 2016: US$$26.5 million, 31 December 2015: US$30.6
million)
-- Restructuring of Origo's share capital and settlement of
previous disputes with Brooks Macdonald Group plc ("Brooks
Macdonald") during the year
-- Loss after tax of US$12.3 million (2015: loss after tax of
US$24.4 million) reflecting unrealised and realised losses on
investments
-- Reduction in operating expenses to US$3.6 million in 2016 (2015: US$4.7 million)
-- No investments in existing investee companies during the year (2015: US$0.58 million)
-- Raised unsecured loan facility of US$2.5 million (approximately GBP2 million)
-- Cash position of US$1.8 million as at 31 December 2016 (31
December 2015: US$1.3 million)
1. The increase in net asset value was principally the result of
the rebasing of RPS accrued value.
Chairman's Statement
The restructuring of the Company's share capital and settlement
of disputes with Brooks Macdonald was a positive achievement in
2016 and ended a period of uncertainty for the Company.
As a result, since the third quarter of 2016, we have been able
to focus on the delivery of Origo's investing policy to divest the
Company's entire portfolio by November 2018.
Following extensive discussions with key shareholders, and
further to the restructuring of the Company's share capital
proposed in the shareholder circular of January 2016, a revised set
of proposals (the "Proposals") to restructure the Company's share
capital, settle the ongoing disputes with Brooks Macdonald and
provide Origo with greater flexibility to implement its investing
policy were put to shareholders in September 2016.
Following the publication of the Proposals in the Company's
circular of 7 September 2016, trading in the Company's ordinary
shares and convertible zero dividend preference shares ("CZDPs") on
the AIM market of the London Stock Exchange resumed.
The Proposals were approved by the Company's ordinary and
convertible zero dividend preference shareholders on 26 September
2016 and have now been implemented in full. Amongst other things,
the Proposals removed the Company's obligations in respect of the
redemption of at least 12 million CZDPs, removed any final CZDP
redemption and/or maturity date and also made a number of further
significant changes to the terms of the CZDPs. The CZDPs were also
renamed redeemable preference shares ("RPSs").
The carrying amount as at 31 December 2016 of the RPSs has been
reduced to approximately US$47.5 million and interest accruals in
respect of the RPSs have been frozen until 1 January 2018. As a
result, Origo's net asset value increased by 50 per cent. to
US$46.0 million at the end of the year. The Proposals have also
effected a reduction in ongoing management fees and an increase in
the hurdle for any investment performance incentive fee payments to
Origo Advisors Ltd ("OAL"), our Investment Consultant.
We now look forward to working with all shareholders to continue
our work in realising the portfolio.
The greater certainty following the implementation of the
Proposals enabled the Company to raise funds to pay a number of
outstanding liabilities and to improve our funding position via a
US$2.5 million unsecured loan agreement with a private
investor.
The Board is now working closely with OAL to advance a number of
divestment opportunities. However, whilst we are cautiously
positive about the prospects of partially realising a number of
positions in the mid-term, there can be no certainty that all of
the portfolio's interests will be capable of being individually
realised within the parameters of the investing policy. As a
result, the Board is also exploring options in respect of the
portfolio and will report to shareholders, as appropriate, in due
course.
For further information about Origo please visit
www.origoplc.com or contact:
Origo Partners plc
Niklas Ponnert niklas@origoplc.com
Nominated Adviser and Broker
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
After a period of falling prices and significant
underperformance in 2015, commodities markets recovered gradually
in 2016 as economic fundamentals improved. Driven by the Chinese
economy and supported by improving economic conditions in other
regions, we expect commodities markets to continue to provide an
improving, yet volatile, backdrop for Origo's commodity investments
in 2017.
In addition to traditional stimulus measures, the Chinese
government continued to provide significant support to the
cleantech industries during 2016. Supportive fiscal, trade and
other policies look likely to provide growing markets for electric
battery producers and others in the years ahead as China seeks to
build a dominant position in cleantech markets. As a result, our
cleantech investments also appear well positioned.
Reflecting Origo's revised strategy, other administrative
expenses have been significantly reduced, despite the significant
costs involved in approving and implementing the Proposals, from
US$4.7 million in 2015 to US$3.6 million in 2016. We expect further
reductions to be achieved in 2017.
In line with Origo's investing policy, OAL focussed on pursuing
exit opportunities during 2016. We continue to make progress in
re-positioning the portfolio to facilitate exits either by
increasing our exposure to publicly quoted positions or by
initiating merger or disposal processes. Listed positions rose to 5
per cent of the fair value of the portfolio at the end of the year
compared to 3 per cent. as at 31 December 2015 and the majority of
the portfolio (in terms of fair value as of 31 December 2016) is
now either listed or subject to indicative terms of merger or
disposals.
No investments were made during the year.
Celadon Mining
The process for the disposal of Celadon Mining Ltd's ("Celadon")
main asset, ChangTan West, remains ongoing. The net proceeds of any
sale will be distributed to Celadon shareholders (31 December 2016
carrying value: US$20.1 million). 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 for that project are pending. However,
in view of delays in obtaining such approvals, we understand that
management has initiated discussions with alternative potential
bidders for Celadon's assets.
China Rice
Discussions with a group of well-capitalised Chinese state-owned
enterprises in respect of a strategic partnership and a potential
merger with the operating subsidiary of China Rice Ltd ("China
Rice") began in 2016 and remain ongoing (31 December 2016 carrying
value: US$31.4 million). While no immediate deal is expected, due
to ongoing government reform of the sector, we continue to believe
that the formation of this new venture is likely to proceed and
offer Origo an opportunity to realise its investment in the
business within the time-frame of the Company's investing
policy.
Niutech
Niutech Energy Ltd ("Niutech") listed its operating company
Jinan Heng Yu Environmental Protection Technology Co., Ltd. ("Heng
Yu") on China's "New Third Board" in May 2016 (31 December 2016
carrying value: US$14.2 million). The lock-up restrictions on
Origo's shares have expired, and we expect that Heng Yu will
shortly complete a placing of shares to institutional investors,
which is likely to offer the Company the opportunity to realise
part of its holding in the business.
In addition, OAL assisted Niutech in building a commercial
relationship with a potential new customer with plans to build two
major tyre recycling facilities in China. This opportunity alone
has the potential to dramatically increase Niutech's sales over the
next couple of years. In total, Niutech has contracted and
indicative orders of 280,000 MT of capacity to be fulfilled over
the next few years, which should be compared to maximum sales of
60,000 MT of equipment in any financial year since Origo's initial
investment.
Unipower
Unipower Battery Ltd ("Unipower") developed two new significant
customer relationships which resulted in framework-agreements for
the purchase of up to 130 million Ah per annum of batteries during
the year. This significantly boosted Unipower's sales in 2H of
2016. Unipower is now one of few licensed, private suppliers with a
certified and proven product portfolio and has 1,000 buses and
2,500 other vehicles equipped with its batteries running on China's
roads.
Kincora
Kincora Copper Limited ("Kincora") is focussing exploration work
on the two priority targets they have identified on their licences
in Mongolia. Following the completion of a merger towards the end
of 2016, Kincora now has a dominant landholding in the most
prospective areas of the Mongolian copper belt between and on
strike from Rio Tinto's largest global expansion project, the Oyu
Tolgoi mine, and the private Tsagaan Suvarga Serven Sukhait
development project. We also received C$0.5 million from Kincora in
loan repayments with the balance of Origo's convertible notes
(C$2.0 million) converted into quoted Kincora common shares on
value accretive terms.
Moly World
During 2016 OAL worked with other shareholders in Moly World Ltd
("MolyWorld") to address a number of important strategic issues,
including the: development and implementation of a short-term
financing strategy; application to convert the existing exploration
license to a mining license; implementation of a new management
structure; and the development of a plan for liquidity for
MolyWorld and its shareholders. Moly World, through its subsidiary,
owns an exploration license, covering 2,360 hectares in the Mandal
area of Mongolia (the "Mandal Project") which holds a JORC resource
of 203Mt in situ material at 0.126 per cent. Molybdenum and 0.026
per cent Tungsten. A successful conversion of the exploration to a
mining license in the third quarter of this year will be a
necessary condition to achieve the desired liquidity in the
targeted time frame.
Gobi Coal & Energy
In line with its stated strategy of becoming a diversified
multi-national energy resources company, Gobi coal & Energy
announced the 100 per cent. stock acquisition of Zaraiya Holdings
Ltd ("Zaraiya") in February 2017. Zaraiya wholly owns an advanced
in-situ leach uranium project in Mongolia and following the
transaction Gobi Coal plans to rename itself Zaraiya Energy
Resources Limited.
The enlarged company benefits from nearly US$200 million of
investments in three high-grade metallurgical coal mines in
Mongolia containing 318 million tons of JORC compliant resources
and the advanced in-situ leach uranium project with an estimated of
5 million pounds of resource.
The primary metallurgical coal mine in southwest Mongolia is
pre-stripped and production ready with peak production potential of
more than 6 million tons per annum of semi-soft and hard coking
coal and coal seams as wide as 44 meters.
With coal prices rebounding strongly in 2016, we have been
informed by the Company that it is evaluating options for resuming
production as well as exploring a capital market event to fund the
development of its business and provide liquidity for its
shareholders.
Other holdings
We entered into a share transfer agreement to dispose all of
Origo's interest in Shanghai Evtech New Energy Technology Ltd and
its related entities for a consideration of US$0.36 million at
applicable exchange rates. The deal was completed in November
2016.
In May 2016, Beijing Rising Information Technology Ltd completed
a listing on China's New Third Board (31 December, 2016 carrying
value: US$1.0 million). We expect to be able to complete the
disposal of our holding in the very near term.
We also initiated the disposal of a number of smaller positions,
including Aquila Resources Inc and Shanta Gold Ltd, (aggregate 31
December 2016 carrying value: US$71 k).
Portfolio summary
At 31 December 2016 the carrying value of our portfolio, which
is comprised of interests in 15 companies, was US$96.7 million
compared to US$104.0 million as at the end of 2015.
The metals and mining sector accounted for 33 per cent. in 2016
(2015: 38 per cent.). The portion of our portfolio invested in
agriculture was 32 per cent. (2015: 30 per cent.), while our
exposure to cleantech was 32 per cent. (2015: 27 per cent.). The
consumer, technology and media portion of our portfolio was at 3
per cent. in 2016 (2015: 5 per cent.).
Reflecting the Group's revised strategy of seeking exits via
sales or liquidity events, 5 per cent. of the portfolio (in terms
of fair value) as at 31 December 2016 was invested in quoted
portfolio companies. The weighted average holding period for
portfolio companies is 6.1 years compared to 5.2 years in 2015.
Profit and Loss
Total other administrative expenses, excluding the provision for
bad debts, were US$2.6 million in 2016, a reduction of US$2.1
million from 2015.
The Group recorded a loss before tax of US$12.3 million,
compared to a loss before tax of US$24.8 million in the previous
year. The loss is primarily due to unrealised and realised losses
of US$6.1 million on investments and US$5.8 million of financing
costs relating to the CZDPs. We expect financing costs to fall in
2017 following the restructuring of the CZDPs in Q3 2016.
Balance Sheet
At the end of 2016, the Group had total cash and cash
equivalents of US$1.8 million (2015: US$1.3 million). The increase
follows the raising of a US$2.5 million (approximately GBP2.0
million) unsecured loan (the "Facility"). The Facility carries a
rate of return (payable at repayment) of the higher of 12 per cent.
per annum (calculated on a non-compounding basis) and 1.5 times the
amount of the Facility.
The Facility is repayable on the earlier of (i) 2 December 2020;
and (ii) when the Company has distributed US$6 million to the
Company's shareholders in accordance with articles 4.10 to 4.12 of
the Company's articles of association provided it has sufficient
funds to repay the Facility. The Company may at any time prepay the
Facility, in whole or in part, without penalty.
Net asset value rose to US$46.0 million at the end of 2016 from
US$30.6 million in 2015, representing a net asset value per share
of US$0.13 as at 31 December 2016, a 46 per cent. increase from
US$0.09 per share in 2015. This increase was principally the result
of the restructuring of the Company's capital structure.
Outlook
Macro conditions are looking increasingly supportive for the
Company and its assets. However, the nature of the portfolio means
that concluding transactions on favourable terms may take time and
continues to be subject to external risks beyond our control.
Hence, we are supporting the Board in evaluating all options
available to the Company with regards to meeting the time frame set
by the investing policy of divesting all assets by November
2018.
Consolidated statement of comprehensive income
For the year ended 31 December 2016
2016 2015
Notes US$'000 US$'000
---------------------------------- ------ --------- ---------
Investment loss: 2
Realised losses on disposal
of investments (142) (1,526)
Unrealised losses on investments (6,069) (14,365)
Income from loans 627 721
(5,584) (15,170)
---------------------------------- ------ --------- ---------
Fund consulting fee - 14
Consulting services payable 3 (1,769) (2,054)
Other income 134 113
Performance fee
- Performance incentive 4 4,195 3,209
Other administrative expenses 5 (3,618) (4,748)
Share-based payments 26 (67) (226)
Foreign exchange gains/(losses) 178 (106)
---------------------------------- ------ --------- ---------
Net loss before finance
costs and taxation (6,531) (18,968)
Finance costs 9 (5,791) (5,802)
---------------------------------- ------ --------- ---------
Loss before tax (12,322) (24,770)
Income tax 10 65 406
---------------------------------- ------ --------- ---------
Loss after tax (12,257) (24,364)
---------------------------------- ------ --------- ---------
Other comprehensive income
---------------------------------- ------ --------- ---------
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods:
Exchange differences on
translating foreign operations 5 5
---------------------------------- ------ --------- ---------
Net other comprehensive
income to be reclassified
to profit or loss in subsequent
periods 5 5
Tax on other comprehensive
income - -
Other comprehensive income
net of tax 5 5
Total comprehensive loss
after tax (12,252) (24,359)
Loss after tax
---------------------------------- ------ --------- ---------
Attributable to:
- Owners of the parent (12,244) (24,340)
- Non-controlling interests (13) (24)
---------------------------------- ------ --------- ---------
(12,257) (24,364)
---------------------------------- ------ --------- ---------
Total comprehensive loss
---------------------------------- ------ --------- ---------
Attributable to:
- Owners of the parent (12,239) (24,335)
- Non-controlling interests (13) (24)
---------------------------------- ------ --------- ---------
(12,252) (24,359)
---------------------------------- ------ --------- ---------
(3.49) (6.95)
Basic loss per share 11 cents cents
---------------------------------- ------ --------- ---------
(3.49) (6.95)
Diluted loss per share 11 cents cents
---------------------------------- ------ --------- ---------
The accompanying notes form an integral part of these
consolidated financial statements.
Consolidated statement of financial position
At 31 December 2016
2016 2015
Assets Notes US$'000 US$'000
-------------------------------------------------------- ------ ---------- ----------
Non-current assets
Property, plant and equipment 12 33 64
Intangible assets 2 4
Investments at fair value through profit or loss 14 72,023 77,571
Loans 15 350 350
72,408 77,989
-------------------------------------------------------- ------ ---------- ----------
Current assets
Loans due within one year 15 24,290 26,093
Trade and other receivables 16 4,007 4,101
Cash and cash equivalents 17 1,786 1,272
-------------------------------------------------------- ------ ---------- ----------
30,083 31,466
-------------------------------------------------------- ------ ---------- ----------
Total assets 102,491 109,455
-------------------------------------------------------- ------ ---------- ----------
Current liabilities
Trade and other payables 18 3,971 2,701
Performance incentive payable within one year 18 8 8
Financial guarantee contracts 19 435 435
-------------------------------------------------------- ------ ---------- ----------
4,414 3,144
-------------------------------------------------------- ------ ---------- ----------
Non-current liabilities
Long-term borrowing 20 2,500 -
Provision 21 82 4,262
Redeemable/convertible zero dividend preference shares 22 47,469 69,385
Deferred income tax liability 10 2,017 2,082
52,068 75,729
-------------------------------------------------------- ------ ---------- ----------
Net assets 46,009 30,582
-------------------------------------------------------- ------ ---------- ----------
Equity attributable to owners of the parent
Issued capital 23 56 56
Share premium 150,414 150,414
Share-based payment reserve 5,048 7,573
(109,567)
Accumulated losses ) (135,824)
Translation reserve (1,490) (1,495)
Equity component of convertible zero
dividend preference shares 22 - 8,297
Other reserve 24 1,056 1,056
-------------------------------------------------------- ------ ---------- ----------
45,517 30,077
Non-controlling interests 492 505
-------------------------------------------------------- ------ ---------- ----------
Total equity 46,009 30,582
-------------------------------------------------------- ------ ---------- ----------
Total equity and liabilities 102,491 109,455
-------------------------------------------------------- ------ ---------- ----------
Karl Niklas Ponnert
Director
27 June 2017
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.
Consolidated statement of changes in equity
For the year ended 31 December 2016
Attributable to equity holders of the parent
Share- Equity
based component
Issued Share payment Accumulated Translation of Other Non-controlling Total
capital premium reserve losses reserve CZDP 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
2015 55 150,262 7,147 (111,484) (1,500) 8,297 995 53,772 572 54,344
---------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
Loss for
the year - - - (24,340) - - - (24,340) (24) (24,364)
Other
comprehensive
income - - - - 5 - - 5 - 5
Total
comprehensive
income/(loss) - - - (24,340) 5 - - (24,335) (24) (24,359)
New issue
of shares 23 1 184 - - - - - 185 - 185
Own shares
acquired 23 - (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) (1,495) 8,297 1,056 30,077 505 30,582
---------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
Loss for
the year - - - (12,244) - - - (12,244) (13) (12,257)
Other
comprehensive
income - - - - 5 - - 5 - 5
---------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
Total
comprehensive
income/(loss) - - - (12,244) 5 - - (12,239) (13) (12,252)
Share-based
payment
expense 26 - - 52 - - - - 52 - 52
Lapse of
share-based
payment 26 - - (2,577) 2,577 - - - - - -
Change
of fair
value upon
extinguishment
of convertible
zero dividend
preference
shares 22 - - - - - 27,627 - 27,627 - 27,627
Released
upon
extinguishment
of convertible
zero dividend
preference
shares 22 - - - 35,924 - (35,924) - - - -
At 31 December
2016 56 150,414 5,048 (109,567) (1,490) - 1,056 45,517 492 46,009
---------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
The following describes the nature and purpose of each reserve
within parent's equity:
Reserve Description and purpose
-------------------- ----------------------------------------
Share premium Amounts subscribed for share capital
in excess of nominal value.
-------------------- ----------------------------------------
Share-based payment Equity created to recognise share-based
reserve payment expense.
-------------------- ----------------------------------------
Accumulated losses Cumulative net gains and losses
recognised in profit or loss.
-------------------- ----------------------------------------
Translation reserve Equity created to recognise foreign
currency translation differences.
-------------------- ----------------------------------------
Equity component Difference between the proceeds
of CZDP of the convertible zero dividend
preference shares ("CZDP") issued
and the fair value of the liability
component of CZDP.
-------------------- ----------------------------------------
Other reserve Own shares acquired and EBT (as
defined in Note 24) shares and
capital redemption.
-------------------- ----------------------------------------
The accompanying notes form an integral part of these
consolidated financial statements.
Consolidated statement of cash flows
For the year ended 31 December 2016
2016 2015
Notes US$'000 US$'000
--------------------------------------- ------ --------- ---------
Loss before tax (12,322) (24,770)
--------------------------------------- ------ --------- ---------
Adjustments for:
Depreciation and amortisation 5 26 34
Release of provision for performance
incentive 4 (4,195) (3,209)
Share-based payments 26 67 226
Provision for bad debts 5 1,008 49
Provision for financial guarantee
contracts 5 - 435
Realised losses on disposal
of investments 2 142 1,526
Unrealised losses on investments
at FVTPL* 2 6,059 12,357
Unrealised losses on loans 2 10 1,997
Fair value losses on derivative
financial assets 2 - 11
Income from loans 2 (627) (721)
Gain recognised upon extinguishment
of CZDP** 22 (62) -
Foreign exchange (gains)/losses (178) 106
Interest expenses of RZDP/CZDP** 9 5,773 5,776
Operating loss before changes
in working capital and provisions (4,299) (6,183)
--------------------------------------- ------ --------- ---------
Purchases of investments at
FVTPL* 8 - (219)
Purchases of loans 15 - (363)
Proceeds from disposals of
investments at FVTPL* 8 765 432
Proceeds from repayment of
loans 15 383 459
(Increase)/decrease in trade
and other receivables (287) 344
Increase in trade and other
payables 1,270 1,452
Net cash outflow from operations (2,168) (4,078)
--------------------------------------- ------ --------- ---------
Investing activities
Disposal of property, plant
and equipment 7 10
Net cash inflow from investing
activities 7 10
--------------------------------------- ------ --------- ---------
Financing activities
Proceeds from long term borrowing 20 2,500 -
Net cash inflow from financing
activities 2,500 -
--------------------------------------- ------ --------- ---------
Net increase/(decrease) in
cash and cash equivalents 339 (4,068)
--------------------------------------- ------ --------- ---------
Effect of exchange rate changes
on cash and cash equivalents 175 155
Cash and cash equivalents at
beginning of year 1,272 5,185
--------------------------------------- ------ --------- ---------
Cash and cash equivalents at
end of year 17 1,786 1,272
--------------------------------------- ------ --------- ---------
* FVTPL refers to fair value through profit or loss
** RZDP refers to redeemable zero dividend preference shares;
CZDP refers to convertible zero dividend preference shares
The accompanying notes form an integral part of these
consolidated financial statements.
Notes to the financial statements
1 Accounting policies
1.1 Corporate information
The consolidated financial statements of Origo Partners Plc
("Origo" or the "Company") and its subsidiaries (together the
"Group") for the year ended 31 December 2016 were authorised for
issue in accordance with a resolution of the Directors on 27 June
2017. The Company is a limited liability company incorporated and
domiciled in the Isle of Man whose shares are publicly traded on
the Alternative Investment Market ("AIM") of the London Stock
Exchange. The registered office is located at 33-37 Athol Street,
Douglas, Isle of Man IM1 1LB. The principal activities of the Group
are described in Note 8.
1.2 Basis of preparation
The Group's consolidated financial statements are prepared in
accordance with International Financial Reporting Standards
("IFRS") issued by the International Accounting Standard Board
("IASB") and adopted for use in the European Union ("EU") and also
to comply with relevant Isle of Man law.
The principal accounting policies applied in the preparation of
the consolidated financial information are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
(a) The financial information set out below, is based on the
financial statements of the Company and its subsidiaries for the
year ended 31 December 2016.
(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.
The Company continues with the investment realisation programme
that commenced in November 2014 and the Directors expect that the
proceeds generated from the planned divestment of the investment
portfolio will be sufficient, not only to settle all liabilities,
but also to fulfil the redemption obligations in respect of the
redeemable zero dividend preference shares as further described in
Note 22.
1.3 Significant accounting judgements, estimates and assumptions
The preparation of consolidated financial information in
conformity with IFRSs requires the use of certain critical
accounting estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial
information and the reported amounts of revenue and expenses during
the reporting period. Although these estimates are based upon
management's best knowledge of current events and actions, actual
results may differ from those estimates.
The following is a list of accounting policies which cover areas
that the Directors consider require estimates and judgements which
have a significant risk of causing a material adjustment to the
carrying amount of assets and liabilities within the next financial
year:
(a) Fair value of unquoted equity instruments
The Group has estimated the value of each of its unquoted equity
instruments by using judgement to select the most appropriate
valuation methodology for each investment based on the
recommendations of the International Private Equity and Venture
Capital Valuation Guidelines (the "Guidelines"). Valuation
methodologies mainly include the price of recent investments,
multiples, discounted cash flow, industry valuation benchmarks,
available market prices and so on, which may apply individually or
in combination. Key assumptions and judgements of each methodology
concerning the future and other key sources of estimation
uncertainty will have a significant risk of causing a material
adjustment to the fair value of the instruments within the next
financial year.
(b) Assessment as investment entity
Entities that meet the definition of an investment entity within
IFRS 10 are required to account for most investments in controlled
entities as held at fair value through profit or loss. Subsidiaries
that provide investment related services or engage in permitted
investment related activities with investees continue to be
consolidated unless they are also investment entities. The Board
has concluded that the Company meets the definition of an
investment entity.
(c) Share-based payments
The Group has applied the requirements of IFRS 2 "Share-based
payment" in these consolidated financial statements.
The Group has issued share options, which are equity-settled
share-based payments, to certain directors and employees, and to
its advisors for services provided in respect of the admission of
the Company to trading on the AIM of the London Stock Exchange.
Equity-settled share-based payments to directors and employees are
measured at the fair value of equity instruments awarded at the
date of grant. Equity-settled share-based payments to non-employees
are measured at the fair value of goods or services rendered at the
date when the goods or services are received. Where equity
investments are granted subject to vesting conditions,
equity-settled share-based payments are expensed to the profit or
loss on a straight-line basis over the vesting period, based on the
Group's estimate of the number of shares that will eventually vest.
Fair value is measured by use of the Binominal option pricing
model.
The Group has granted upper share rights, which are cash-settled
share-based payments, to certain directors, executives and key
employees under the Company's JSOS (as defined in Note 26). The
cost of cash-settled share-based payments is measured initially at
fair value at the grant date using the Binominal Tree model. This
fair value is expensed over the period until the vesting date with
recognition of a corresponding liability. The liability is
remeasured to fair value at each reporting date up to and including
the settlement date, with changes in fair value recognised in
employee expense.
When estimating the value of the share options and the upper
share rights, significant assumptions such as the expected life of
the share options and the upper share rights, and expected
volatility of the shares have been applied based on management's
best estimates.
1.4 Summary of significant accounting policies
The following principal accounting policies have been applied
consistently throughout the year in dealing with items which are
considered material in relation to the consolidated financial
information.
(a) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries as at 31 December
2016. Control is achieved when the Group is exposed, or has rights,
to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has:
-- Power over the investee (i.e., existing rights that give it
the current ability to direct the relevant activities of the
investee);
-- Exposure, or rights, to variable returns from its involvement with the investee; and
-- The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting
rights results in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement(s) with the other vote holders of the investee;
-- Rights arising from other contractual arrangements; and
-- The Group's voting rights and potential voting rights.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date when such control
ceases. The financial statements of the subsidiaries are prepared
for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances,
transactions, unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
Profit or loss and each component of other comprehensive income
("OCI") are attributed to the equity holders of the parent of the
Group and to the non-controlling interests, even if this results in
the non-controlling interests having a deficit balance.
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction.
Goodwill is initially measured at cost being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interest over the net identifiable
assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating
units that are expected to benefit from the combination,
irrespective of whether other assets or liabilities of the acquiree
are assigned to those units.
(b) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. The Group elects to
measure investments in associates at fair value through profit or
loss as, in the opinion of the Directors, the Company meets the
definition of venture capital organisation. This treatment is
permitted under IAS 28 "Investments in Associates and Joint
Ventures".
(c) Foreign currencies
-- Functional and presentation currency
The consolidated financial statements are presented in United
States dollar, which is also the parent company's functional
currency. For each group entity the Group determines functional
currency and items included in the financial statements of each
entity are measured using that functional currency.
-- Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
Non-monetary financial assets and liabilities that are carried
at historic cost are translated using the exchange rate as at the
dates of initial transactions and are not re-measured. Translation
differences on non-monetary financial assets and liabilities such
as equities held at fair value through profit or loss are
recognised in profit or loss as part of the fair value gain or
loss.
-- Group companies
The results and financial position of all group entities, none
of which has the currency of a hyperinflationary economy that have
a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(I) assets and liabilities for each statement of financial
position presented are translated at the closing rate at the date
of that statement of financial position;
(II) income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions); and
(III) all resulting exchange differences are recognised in the
statement of comprehensive income as other comprehensive
income.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
(d) Financial assets
The Group classifies its financial assets, at initial
recognition, into one of the following categories: investments at
fair value through profit or loss, loans and receivables and other
financial assets, as appropriate, depending on the purpose for
which the asset was acquired. The Group's accounting policy for
each category is as follows:
-- Investments at fair value through profit or loss
These investments at fair value through profit or loss are
designated by the Board of Directors at fair value through profit
or loss at inception, which include debt and equity securities,
convertible credit agreements and derivatives, on the basis that
they are part of a group of financial assets which are managed and
have their performance evaluated on a fair value basis, in
accordance with the risk management and investment strategies of
the Group.
Recognition / Derecognition:
Regular acquisitions and disposals of investments are recognised
on the trade date on which the Group received acquisitions of
investments or delivered disposals of investments. Investment fair
value through profit or loss is derecognised when the Group loses
control over the contractual rights that comprise that asset. This
occurs when the rights to receive cash flows from the asset have
expired or the Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party
under a 'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset. Investments at fair value through profit or loss is
derecognised and corresponding receivables from the buyer for the
payment are recognised as of the date the Group commits to sell the
assets.
-- Investments at fair value through profit or loss
Measurement:
Investment at fair value through profit or loss is initially
recognised at fair value. Transaction costs are expensed in the
profit or loss. Subsequent to initial recognition, all financial
assets and financial liabilities are measured at fair value. Gains
and losses arising from changes in the fair value of the financial
assets held at fair value through profit or loss are presented in
the profit or loss in the period in which they arise.
Dividend income from financial assets at fair value through
profit or loss is recognised in the profit or loss within
investment loss when the Group's right to receive payments is
established.
Fair value estimation:
The fair value of financial instruments traded in active markets
(such as publicly traded securities) is based on quoted market
prices at the reporting date. The quoted market price used for
financial assets held by the Group is the current bid price. The
fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques in
accordance with the Guidelines. Pursuant to the Guidelines, the
Group believes the following techniques applied individually, or in
combination, are the most suitable ones for the Group's current
portfolios:
(I) Price of recent investments: When valuing investments on the
basis of the price of recent investments, the cost of the
investment itself or the price at which a significant amount of new
investment into the relevant investee company was made to estimate
the fair value of the investment, but only for a limited period
following the date of the relevant transaction. During the limited
period following the date of the relevant transactions, changes or
events subsequent to the relevant transaction which would imply a
change in the investment's fair value have been assessed.
(II) Multiples: When valuing investments on a multiple basis,
the Group has abided by the following principles:
i. apply a multiple that is appropriate and reasonable (giving
the risk profile and earnings growth prospects of the underlying
company) to the maintainable earnings of the underlying
company;
ii. adjust the amount derived in (i) above for surplus assets or
excess liabilities and other relevant factors to derive the
enterprise value for the underlying company;
iii. deduct from the enterprise value all amounts relating to
financial instruments ranking ahead of the highest ranking
instrument of the Group in a liquidation and taking into account
the effect of any instrument that may dilute the Group's
investments in order to derive the gross attributable enterprise
value;
iv. apply an appropriate marketability discount to the gross
attributable enterprise value derived in (iii) above in order to
derive the net attributable enterprise value. The marketability
discount relates to an investment rather than to the underlying
business. Marketability discounts will vary from situation to
situation and is a question of judgement. When a discount is
applied, relevant factors in determining the appropriate
marketability discount in each particular situation will be
considered. A discount in the range of 20% to 30% (in steps of 5%)
is generally used in practice, depending upon the particular
circumstances; and
v. apportion the net attributable enterprise value appropriately
between the relevant financial instruments.
(III) Discounted cash flow: Fair value is estimated by deriving
the present value of the investment using reasonable assumptions of
expected future cash flows of the underlying business and the
terminal value and date, and the appropriate risk-adjusted discount
rate that quantifies the risk inherent to the investment. The
discount rate is estimated with reference to the market risk-free
rate, a risk adjusted premium and information specific to the
investment or market sector.
(IV) Industry valuation benchmarks: The use of industry
benchmarks is only likely to be reliable and therefore appropriate
as the main basis of estimating fair value in limited situations,
and is more likely to be useful as a sense check of values produced
using other methodologies. The Group has primarily relied on such
metrics to validate the outcome produced by other valuation
techniques.
-- Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market.
Income from loans and receivables is recognised as it accrues by
reference to the principal outstanding and the effective interest
rate applicable, which is the rate that exactly discounts the
estimated future cash flows through the expected life of the
financial asset to the asset's carrying value. The losses arising
from impairment are recognised in the statement of comprehensive
income.
This category generally applies to trade and other receivables.
For more information on receivables, refer to Note 16.
-- Derivative financial instruments
Derivative financial instruments are held at fair value and
changes in fair value are recognised in profit or loss of the
consolidated statement of comprehensive income.
-- Impairment of financial assets
For amortised cost loans and receivables, the Group assesses, at
each reporting date, whether there is objective evidence that a
financial asset or a group of financial assets is impaired. An
impairment exists if one or more events that have occurred since
the initial recognition of the asset (an incurred 'loss event'),
have an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably
estimated. Evidence of impairment may include indications that the
debtor is experiencing significant financial difficulty, default or
delinquency in interest or principal payments, the probability that
they will enter bankruptcy or other financial reorganisation and
observable data indicating that there is a measurable decrease in
the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
(e) Financial liabilities
The Group's financial liabilities include trade and other
payables, financial guarantee contracts and preference shares.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
The measurement of financial liabilities depends on their
classification, as described below:
-- Financial liabilities at amortised cost
Financial liabilities (including trade and other payables and
long-term borrowing) are subsequently measured at amortised cost
using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or where appropriate a shorter period, to the
net carrying amount on initial recognition.
-- Financial guarantee contracts
Financial guarantee contracts issued by the Group are those
contracts that require a payment to be made to reimburse the holder
for a loss it incurs because the specified debtor fails to make a
payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a
liability at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
Subsequently, the liability is measured at the higher of the best
estimate of the expenditure required to settle the present
obligation at the reporting date and the amount recognised less
cumulative amortisation.
-- Preference shares
Convertible zero dividend preference shares
Convertible zero dividend preference shares are regarded as a
compound financial instrument, consisting of a liability component
and an equity component. The fair value of the liability component
is estimated at the date of issue using the prevailing market
interest rate for a similar bond without early redemption or equity
conversion option. The difference between the proceeds of
convertible zero dividend preference shares issued and the fair
value of the liability component of convertible zero dividend
preference shares is assigned to the equity component of
convertible zero dividend preference shares representing the
embedded equity conversion option, and the derivative financial
assets representing the embedded early redemption option.
Issue costs were allocated among the liability, and equity
components of convertible zero dividend preference shares and the
derivative financial assets based on their relative carrying
amounts at the date of issue.
The interest charges on convertible zero dividend preference
shares liability component is computed using the prevailing market
interest rate for a similar bond without early redemption or equity
conversion option.
When the Group extinguishes a compound instrument before
maturity through revision of terms, the Group allocates the
consideration paid and any transaction costs for the revision of
terms to the liability and equity components of the instrument at
the date of the transaction. The method used in allocating the
consideration paid and transaction costs to the respective
components is consistent with that used in the original allocation
to the respective components of the proceeds received by the Group
when the convertible instrument was issued.
Once the allocation of the consideration is made, any resulting
gain or loss is treated in accordance with accounting principles
applicable to the related component, as follows:
(a) the amount of gain or loss relating to the liability
component is recognised in profit or loss; and
(b) the amount of consideration relating to the equity component
is recognised in equity.
Redeemable zero dividend preference shares
On initial recognition, redeemable zero dividend preference
shares are recognised at the fair value, which are determined using
the prevailing market interest of similar non-convertible debts,
net of issue costs incurred. In subsequent periods, redeemable zero
dividend preference shares are carried at amortised cost using the
effective interest method.
-- Derecognition
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled, or expires. When an
existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in the statement of
profit or loss.
(f) Cash and bank and short-term borrowings
Cash and bank are defined as cash in hand, demand deposits, time
deposit and short-term, highly liquid investments that are readily
convertible into known amounts of cash, are subject to an
insignificant risk of changes in value, and have a short maturity,
generally less than three months, less bank overdrafts which are
repayable on demand and form an integral part of the Group's cash
management. For the purpose of the consolidated statement of
financial position, cash and bank balances comprise cash on hand
and at banks, including term deposits, which are not restricted as
to use.
Short-term borrowings are financial liabilities at amortised
cost and are initially measured at fair value, net of directly
attributable costs incurred. It is subsequently measured at
amortised cost, using the effective interest method. The related
interest expense is recognised in profit or loss.
(g) Share-based payments
Employees (including senior executives) of the Group receive
remuneration in the form of share-based payment transactions (i.e.
share options), whereby employees render services as consideration
for equity instruments ("equity-settled transactions"). Certain
directors, executives and key employees of the Group are granted
share appreciation rights (including upper share rights and
contingent share awards), which can only be settled in cash
("cash-settled transactions"). Advisors receive equity-settled
options in relation to the Company's admission to trading on the
AIM of the London Stock Exchange.
The cost of these options with employees are measured by
reference to the fair value of the equity instruments awarded at
the date of grant, whereas those with non-employees are measured at
the fair value of goods or services received at the date when the
goods or services have been received. The fair value is determined
by using binominal tree model, further details of which are given
in Note 26.
Equity-settled transactions
The cost of equity-settled transactions (share options) is
recognised, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are
fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (the "vesting date"). The
cumulative expense recognised for equity-settled transactions at
each reporting date until the vesting date reflects the extent to
which the vesting period has expired and the Group's best estimate
of the number of equity instruments that will ultimately vest. The
profit or loss charge of credit for a period represents the
movement in cumulative expense recognised as at the beginning and
end of that period and is recognised in employee expense (see Note
6).
No expense is recognised for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market or
non-vesting condition, which are treated as vesting irrespective of
whether or not the market condition is satisfied, provided that all
other performance and/or service conditions are satisfied.
The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per
share.
Cash-settled transactions
The cost of cash-settled transactions (upper share rights and
contingent share awards) is measured initially at fair value at the
grant date using binominal tree model, further details of which are
given in Note 26. This fair value is expensed over the period until
the vesting date with recognition of a corresponding liability. The
liability is remeasured to fair value at each reporting date up to
and including the settlement date, with changes in fair value
recognised in employee expense (see Note 6).
(h) Taxes
Current Income Tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively
enacted at the reporting date.
Current income tax relating to items recognised directly in
equity is recognised in equity and not in the statement of
comprehensive income. Management periodically evaluates positions
taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and
establishes provisions where appropriate.
Deferred Tax
Deferred tax is provided using the liability method on temporary
differences at the reporting date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences, except:
(I) where the deferred tax liability arises from goodwill or the
initial recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor taxable profit or loss;
and
(II) in respect of taxable temporary differences associated with
investments in subsidiaries and associates where the timing of the
reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the
foreseeable future.
Deferred tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses
can be utilised, except:
(I) where the deferred tax asset relating to the deductible
temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
(II) in respect of deductible temporary differences associated
with investments in subsidiaries and associates, deferred tax
assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow
all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax assets and deferred tax liabilities are offset, if
a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
Income taxes are recognised in the profit or loss or directly in
equity except when a tax exemption has been granted.
(i) Performance incentive payable
Performance incentive payable is only accrued on those
investments (classified as investments at fair value through profit
or loss and loans) in which the investment's performance
conditions, measured at the end of each reporting period, would be
achieved if those investments were realised at fair value. Fair
value is determined using the Group's valuation methodology and is
measured at the end of each reporting period.
Any changes in the performance incentive provision will be
reflected in the line item of performance fee in the consolidated
statement of comprehensive income in which the expense establishing
the provision was originally recorded.
(j) Investment income /loss
Investment income/loss derived from the investment activities is
equivalent to "revenue" for the purposes of IAS 1. Investment
income/loss is analysed into the following components:
-- Realised gains/losses on the disposal of investments are the
difference between the fair value of the consideration received
less any directly attributable costs, on the sale of equity and the
repayment of loans and receivables, and its carrying value at the
start of the accounting period.
-- Unrealised gains/losses on the revaluation of investments are
the movement in the carrying value of investments measured at fair
value between the start and end of the accounting period and the
impairment of amortised cost loans.
-- Income/loss from loans is recognised on a time proportion
basis as it accrues by reference to the principal outstanding and
the effective interest rate applicable.
(k) Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or
amount when the Group has a legal or constructive obligation
arising as a result of a past event, which will probably result in
an outflow of economic benefits that can be reasonably
estimated.
Where it is not probable that an outflow of economic benefits
will be required, or the amount cannot be estimated reliably, the
obligation is disclosed as a contingent liability, unless the
probability of an outflow of economic benefits is remote. Possible
obligations, the existence of which will only be confirmed by the
occurrence or non-occurrence of one or more future events, are also
disclosed as contingent liabilities unless the probability of an
outflow of economic benefits is remote.
(l) New and revised IFRS that are effective or early adopted in 2016
The following new and revised IFRSs have been applied by the
Group in the current year and have affected the presentation and
disclosures set out in these consolidated financial statements.
IFRSs (Amendments) Annual Improvements 2010-2012
Cycle
IFRSs (Amendments) Annual Improvements 2012-2014
Cycle
Amendments to Investment Entities: Applying
IFRS 10, IFRS the Consolidation Exception
12 and IAS 28
Amendments to Disclosure Initiative
IAS 1
Amendments to Clarification of Acceptable
IAS 16 and IAS Methods of Depreciation and
38 Amortisation
Amendments to Defined Benefit Plans : Employee
IAS 19 Contributions
Amendments to Equity Method in Separate
IAS 27 Financial Statements
Amendments to Accounting for Acquisitions
IFRS 11 of Interests in Joint Operations
The application of the above new and revised IFRSs in the
current year had no material impact on the Group's financial
performance and financial position for the current and prior years
and/or on the disclosures set out in these consolidated financial
statements.
(m) Standards issued but not yet effective
Standards issued but not yet effective up to the date of
issuance of the Group's consolidated financial statements are
listed below. This listing is of standards, amendments and
interpretations issued that the Group reasonably expects to be have
an impact on disclosures, financial position or performance when
applied at a future date.
Amendments to Annual Improvements 2014-2016
IFRSs Cycle(1,2*)
IFRS 9 Financial instruments(2)
IFRS 15 Revenue from Contracts with
Customers(2)
IFRS 16 Leases(3*)
Amendments to Classification and Measurement
IFRS 2 of Share-based Payment Transactions(2*)
Amendments to Applying IFRS 9 Financial
IFRS 4 Instruments with IFRS 4 Insurance
Contracts(2*)
Amendments to Revenue From Contracts with
IFRS 15 Customers (Clarification to
IFRS 15)(2*)
Amendments to Disclosure Initiative(1*)
IAS 7
Amendments to Recognition of Deferred Tax
IAS 12 Assets for Unrealised Losses(1*)
Amendments to Transfer of Investment Property(2*)
IAS 40
IFRIC 22 Foreign Currency Transactions
and Advance Consideration(2*)
1 Effective in the EU for annual periods
beginning on or after 1 January 2017
2 Effective in the EU for annual periods
beginning on or after 1 January 2018
3 Effective in the EU for annual periods
beginning on or after 1 January 2019
* Not yet endorsed by the European Union
The Group is in process of making an assessment of the potential
impact of these new or revised IFRSs and the directors are not yet
in a position to quantity the effects on the Group's financial
statements.
2 Investment loss
2016 2015
US$'000 US$'000
---------------------------------- --------- ---------
Realised (losses)/gains on
disposal of investments (142) (1,526)
---------------------------------- --------- ---------
- Investments at FVTPL (269) (1,160)
- Loans at FVTPL 127 -
- Loans at amortised cost - (363)
- Subsidiary - (3)
---------------------------------- --------- ---------
Unrealised losses on investments (6,069) (14,365)
---------------------------------- --------- ---------
- Investments at FVTPL (6,059) (12,357)
- Loans at FVTPL - (894)
- Loans at amortised cost (10) (1,103)
- Derivative financial assets - (11)
---------------------------------- --------- ---------
Income from loans 627 721
Total (5,584) (15,170)
---------------------------------- --------- ---------
3 Consulting services payable
2016 2015
US$'000 US$'000
----------------------------- --------- ---------
Consulting services payable (1,769) (2,054)
----------------------------- --------- ---------
Total (1,769) (2,054)
----------------------------- --------- ---------
4 Performance incentive
2016 2015
US$'000 US$'000
-------------------------------- --------- ---------
Release of provision for
performance incentive payable
over
one year 4,195 3,209
-------------------------------- --------- ---------
Total 4,195 3,209
-------------------------------- --------- ---------
A provision at consolidated statement of financial position for
future performance incentive for the year ended 31 December 2016
was US$Nil (2015: US$4,195,000) (Note 21). The performance
incentives are accrued and payable to Origo Advisors Ltd. Refer to
Note 27 for details on Origo Advisors Ltd. The release of provision
was derived from the amendment agreement of Asset Realisation
Support Agreement (the "Amendment Agreement") signed between the
Group and Origo Advisors Ltd. on 6 September 2016.
The amount of performance incentives has been calculated and
accrued in accordance with the basis, (i) from the time the Hurdle
(see below *) has been reached, the next US$1,700,000 of Gross
Realisation (see below **) shall be applied towards equal payments
of performance incentives; and thereafter (ii) 20 per cent. of each
subsequent Gross Realisation shall be applied towards an equal
further payment of performance incentive.
* Hurdle: Pursuant to the Amendment Agreement, the hurdle
revised to US$90,000,000 of distribution in accordance with
articles 4.10 to 4.12 of the Company's articles of association
("Articles") being made in the period until the termination of the
Amendment Agreement (2015: US$90,000,000 of Gross Realisation).
** Gross Realisation: cumulative gross cash proceeds received by
or on behalf of the Group which are derived from the realisation of
assets in the portfolio investment companies, after having made
full provision for repayment of any third party debt (including any
unpaid interest thereon) and any related hedge or other break costs
and any prepayment fees and penalties thereon, but before any
related transactional costs, fees and expenses and any taxes
required to be paid by the relevant selling entity that arise
directly as a result of completion of the relevant transaction to
dispose of the relevant asset, provided that any amounts of
deferred consideration or earn-out shall not be counted towards
such realisations until actually received by the relevant selling
member of the Group.
5 Other administrative expenses
2016 2015
US$'000 US$'000
----------------------------------- --------- ---------
Employee expenses (161) (262)
Professional fees (1,769) (2,991)
Audit fees (139) (257)
--------- ---------
- Current year (158) (257)
- Over-provision in respect
of prior years 19 -
--------- ---------
Depreciation expenses (24) (22)
Amortisation expenses (2) (12)
Provision for bad debts (1,008) (49)
Provision for financial guarantee
contracts - (435)
Others (515) (720)
----------------------------------- --------- ---------
Total (3,618) (4,748)
----------------------------------- --------- ---------
6 Information regarding directors and employees
2016 2015
----------------------------- --------- ---------
The aggregate payroll costs
of these employees were as
follows: US$'000 US$'000
Wages and salaries (161) (262)
Share-based payments (67) (226)
(228) (488)
----------------------------- --------- ---------
* Most employees of the Group have been transferred to and
employed by Origo Advisors Ltd. in January 2015, which is
controlled by entities whose ultimate beneficiaries include Niklas
Ponnert (Director of the Company) and Chris A Rynning (former
Director of the Company).
7 Directors' remuneration
2016 2015
US$'000 US$'000
------------------------------ --------- ---------
Directors' emoluments (153) (231)
Share-based payment expenses (33) (191)
------------------------------ --------- ---------
(186) (422)
------------------------------ --------- ---------
Directors' remuneration for the year 2016 and the number of
options held were as follows:
Director Share-based 2016
Salaries* fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
-------------------- ----------- --------- ------------ --------- ------------
Mr. Niklas Ponnert - - 33 33 4,500,000
Mr. Lionel de
Saint-Exupery - 78 - 78 -
Ms. Shonaid
Jemmett Page - 75 - 75 -
- 153 33 186 4,500,000
-------------------------------- --------- ------------ --------- ------------
Directors' remuneration for the year 2015 and the number of
options held were as follows:
Director Share-based 2015
Salaries* fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
------------------------ ---------- --------- ------------ --------- ------------
Mr. Wang Chao
Yong*** 3 - 17 20 4,000,000
Mr. Chris A
Rynning*** - - 87 87 3,500,000
Mr. Niklas Ponnert - - 87 87 5,300,000
Mr. Christopher
Jemmett*** - 3 - 3 100,000
Mr. Lionel de
Saint-Exupery - 72 - 72 -
Mr. Tom Preststulen*** - 6 - 6 -
Ms. Shonaid
Jemmett Page - 147 - 147 -
3 228 191 422 12,900,000
------------------------ ---------- --------- ------------ --------- ------------
* Short term employee benefits.
** Share-based payment refers to expenses arising from the
Company's share option scheme (Note 26).
*** Mr. Wang Chao Yong, Mr. Chris A Rynning, Mr. Christopher
Jemmett and Mr. Tom Preststulen resigned as Directors of the
Company in February 2015. The remaining directors of the Company
are Shonaid Jemmett-Page (Non-executive Chairman), Lionel de
Saint-Exupery (Non-executive Director) and Niklas Ponnert
(Director).
8 Operating segment information
Operating segments are components of the entity whose results
are regularly reviewed by the entity's chief operating
decision-maker to make decisions about resources to be allocated to
the segment and to assess its performance. The chief operating
decision-maker for the Group is considered to be the Board of
Directors. The Group's operating segments have been defined based
on the types of investments which was equity investment and debt
instrument in 2016 and 2015.
For the year ended 31 December 2016
Unlisted Listed Total
Equity Debt Total Equity Debt Total
US$'000 US $'000 US $'000 US $'000 US $'000 US $'000 US $'000
----------------- -------- --------- --------- --------- --------- --------- ---------
Investment
loss:
Realised
(losses)/gains
on disposal
of investments (440) - (440) 171 127 298 (142)
Unrealised
(losses)/gains
on investments (8,337) (10) (8,347) 2,278 - 2,278 (6,069)
Income
from loans - 542 542 - 85 85 627
-------- --------- --------- --------- --------- --------- ---------
Total (8,777) 532 (8,245) 2,449 212 2,661 (5,584)
Unallocated
corporate
expense (6,738)
Loss before
tax (12,322)
Income
tax 65 - 65 - - - 65
Loss for
the year (12,257)
Net divestment
Net proceeds
of divestment 353 - 353 412 383 795 1,148
----------------- -------- --------- --------- --------- --------- --------- ---------
Statement
of financial
position
Investment
portfolio 66,995 24,640 91,635 5,028 - 5,028 96,663
----------------- -------- --------- --------- --------- --------- --------- ---------
The Group's geographical areas based on the location of
investment assets, are defined primarily as China, Mongolia, South
Africa and Europe, as presented in the following table.
South
Europe China Mongolia Africa Total
US$'000 US $'000 US $'000 US $'000 US $'000
------------------------- -------- --------- ------------------------------- --------- ---------
Investment
loss:
Realised (losses)/gains
on disposal
of investments - (440) 298 - (142)
Unrealised
gains/(losses)
on investments 102 (2,833) (3,255) (83) (6,069)
Income from
loans - 542 85 - 627
------------------------- -------- --------- ------------------------------- --------- ---------
Total 102 (2,731) (2,872) (83) (5,584)
------------------------- -------- --------- ------------------------------- ---------
Unallocated
corporate
expense (6,738)
Loss before
tax (12,322)
Income tax - 65 - - 65
Loss for the
year (12,257)
Net divestment
Net proceeds
of divestment - 353 795 - 1,148
------------------------- -------- --------- ------------------------------- --------- ---------
Statement
of financial
position
Investment
portfolio 1,202 83,840 11,490 131 96,663
------------------------- -------- --------- ------------------------------- --------- ---------
For the year ended 31 December 2015
Unlisted Listed Total
Equity Debt Total Equity Debt Total
US$'000 US $'000 US $'000 US $'000 US $'000 US $'000 US $'000
----------------------------- --------- --------- --------- --------- --------- --------- ---------
Investment
loss:
Realised
losses on
disposal
of investments (3) (363) (366) (1,160) - (1,160) (1,526)
Unrealised
losses on
investments (12,755) (1,866) (14,621) 387 (131) 256 (14,365)
Income from
loans - 555 555 - 166 166 721
---------
Total (12,758) (1,674) (14,432) (773) 35 (738) (15,170)
----------------------------- --------- --------- --------- --------- --------- ---------
Unallocated
corporate
expense (9,600)
Loss before
tax (24,770)
Income tax 406 - 406 - - - 406
Loss for
the year (24,364)
Net divestment/(investment)
Net proceeds
of divestment - 459 459 432 - 432 891
Investment (20) (363) (383) (199) - (199) (582)
----------------------------- --------- --------- --------- --------- --------- --------- ---------
Statement
of financial
position
Investment
portfolio 76,125 24,650 100,775 1,446 1,793 3,239 104,014
----------------------------- --------- --------- --------- --------- --------- --------- ---------
South
Europe China Mongolia Africa Total
US$'000 US $'000 US $'000 US $'000 US $'000
----------------------------- -------- --------- --------- --------- ---------
Investment
loss:
Realised losses
on disposal
of investments (366) - (1,160) - (1,526)
Unrealised
losses on
investments (415) (2,485) (9,831) (1,634) (14,365)
Income from
loans - 555 166 - 721
----------------------------- -------- --------- --------- --------- ---------
Total (781) (1,930) (10,825) (1,634) (15,170)
----------------------------- -------- --------- --------- ---------
Unallocated
corporate
expense (9,600)
Loss before
tax (24,770)
Income tax - 406 - - 406
Loss for the
year (24,364)
Net divestment/(investment)
Net proceeds
of divestment - 459 432 - 891
Investment (383) - (199) - (582)
----------------------------- -------- --------- --------- --------- ---------
Statement
of financial
position
Investment
portfolio 1,100 87,467 15,233 214 104,014
----------------------------- -------- --------- --------- --------- ---------
9 Finance costs
2016 2015
US$'000 US$'000
--------------------------------------------- --------- ---------
Finance costs
Bank charges (18) (26)
Interest expenses of redeemable/convertible
zero dividend preference shares (5,773) (5,776)
---------------------------------------------- --------- ---------
(5,791) (5,802)
--------------------------------------------- --------- ---------
10 Income tax
As the Company is not in receipt of income from Manx land,
certain related business or property and does not hold a Manx
banking licence, it is taxed at the standard rate of 0% on the Isle
of Man. The Company is resident for tax purposes in the Isle of Man
and subject to corporate income tax at the standard rate of 0% and
as such no provision for tax in the Isle of Man has been made.
2016 2015
US$'000 US$'000
------------------------------------------ --------- ---------
Current tax
Current year - -
Deferred tax
Deferred income tax* 65 406
Total income tax credit in the
consolidated statement of comprehensive
income 65 406
------------------------------------------ --------- ---------
* As at 31 December 2016, the deferred income tax liability US$
2,017,000 (2015: US$2,082,000) relates to fair value gain of
Celadon Mining Ltd., China Rice Ltd., Niutech Energy Ltd. and
Unipower Battery Ltd., estimated in accordance with the relevant
tax laws and regulations in the People's Republic of China ("PRC")
based on a tax rate of 10%.
The income tax for the year can be reconciled per the
consolidated statement of comprehensive income as follows:
2016 2015
US$'000 US$'000
------------------------------------------ --------- ---------
Loss before tax (12,322) (24,770)
------------------------------------------ --------- ---------
Loss before tax multiplied by rate
of corporate income tax in the
Isle
of Man of 0% (2015: 0%) - -
Effects of:
Deferred tax on unrealised gains
on investments 65 406
Total income tax credit in the
consolidated statement of comprehensive
income 65 406
------------------------------------------ --------- ---------
Deferred income tax
2016 2015
US$'000 US$'000
--------------------------------------- --------- ---------
Opening deferred income tax liability
Income in accounts taxable in
the future 2,082 2,488
2,082 2,488
--------------------------------------- --------- ---------
Recognised through consolidated
statement of comprehensive income
Income in accounts taxable in
the future (65) (406)
--------------------------------------- --------- ---------
(65) (406)
--------------------------------------- --------- ---------
Closing deferred income tax liability
Income in accounts taxable in
the future 2,017 2,082
--------------------------------------- --------- ---------
2,017 2,082
--------------------------------------- --------- ---------
11 Loss per share ("LPS")
2016 2015
Numerator US$'000 US$'000
---------------------------------------- ------------ ------------
Loss for the year attributable
to owners of the parent
as used in the calculation of
basic loss per share (12,244) (24,340)
---------------------------------------- ------------ ------------
Loss for the year attributable
to owners of the parent
as used in the calculation of
diluted loss per share (12,244) (24,340)
---------------------------------------- ------------ ------------
2016 2015
Number Number
of of
Denominator Shares shares
---------------------------------------- ------------ ------------
Weighted average number of ordinary
shares for basic LPS 351,035,389 350,714,047
---------------------------------------- ------------ ------------
Effect of dilution*:
Share options - -
Convertible zero dividend preference
shares - -
---------------------------------------- ------------ ------------
Weighted average number of ordinary
shares adjusted for the effect
of dilution 351,035,389 350,714,047
---------------------------------------- ------------ ------------
(3.49) (6.95)
Basic LPS cents cents
---------------------------------------- ------------ ------------
(3.49) (6.95)
Diluted LPS cents cents
---------------------------------------- ------------ ------------
* Diluted loss per share for the years ended 31 December 2016
and 31 December 2015 is the same as the basic loss per share, as
the Company's outstanding share options and convertible zero
dividend preference shares had an anti-dilutive effect on the basic
loss per share for the years ended 31 December 2016 and 31 December
2015.
12 Property, plant and equipment
Computer Machinery
equipment Vehicles equipment Total
US$'000 US$'000 US$'000 US$'000
---------------- ----------- --------- ----------- --------
Cost
At 1 January
2015 15 153 48 216
----------------- ----------- --------- ----------- --------
Disposal (15) (9) (48) (72)
----------------- ----------- --------- ----------- --------
At 31 December
2015 - 144 - 144
----------------- ----------- --------- ----------- --------
Disposal - (59) - (59)
----------------- ----------- --------- ----------- --------
At 31 December
2016 - 85 - 85
----------------- ----------- --------- ----------- --------
Accumulated
depreciation
At 1 January
2015 14 58 48 120
----------------- ----------- --------- ----------- --------
Charge for
the year 2015 - 22 - 22
Disposal (14) - (48) (62)
----------------- ----------- --------- ----------- --------
At 31 December
2015 - 80 - 80
----------------- ----------- --------- ----------- --------
Charge for
the year 2016 - 24 - 24
Disposal - (52) - (52)
----------------- ----------- --------- ----------- --------
At 31 December
2016 - 52 - 52
----------------- ----------- --------- ----------- --------
Net book value -
---------------- ----------- --------- ----------- --------
At 31 December
2015 - 64 - 64
At 31 December
2016 - 33 - 33
----------------- ----------- --------- ----------- --------
13 Investments in subsidiaries
The principal subsidiaries of the Group are as follows:
Proportion Proportion
of ownership of ownership
interest interest
Country at 31 December at 31 December
Name of incorporation 2016 2015
--------------------------- ------------------- ---------------- ----------------
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. ("CCP Fund") Cayman Islands 100% 100%
ISAK International British
Holding Ltd** Virgin Islands 71.2% 71.2%
Origo Partners MGL
LLC*** Mongolia - 100%
China Commodities Isle of
Absolute Return Ltd*** Man - 95.3%
--------------------------- ------------------- ---------------- ----------------
* Owned by Origo Resource Partners Ltd
** Owned by Ascend Ventures Ltd
*** Struck off
14 Investments at fair value through profit or loss
As at 31 December 2016
Fair
Country value Proportion Fair
of hierarchy of ownership Cost value
Name* incorporation level interest US$'000 US$'000
-------------------------- ------------------ ----------- -------------- ------------------------- ---------
China Rice Ltd British
(Note d) Virgin Islands 3 32.1% 13,000 16,364
Kincora Copper
Ltd (Notes c and
d) Canada 1 30.9% 8,571 4,957
Moly World Ltd British
(Note d) Virgin Islands 3 20.0% 10,000 3,783
Niutech Energy British
Ltd Virgin Islands 3 18.4% 6,350 14,160
Unipower Battery Cayman
Ltd (Note d) Islands 3 16.5% 4,301 6,648
Gobi Coal & Energy British
Ltd (Note c) Virgin Islands 3 10.8% 14,960 2,679
Staur Aqua AS Norway 3 9.2% 719 562
Celadon Mining British
Ltd Virgin Islands 3 8.9% 13,069 20,059
Rising Technology
Corporation Ltd/Beijing
Rising Information
Technology Ltd British 2%/
(Note b) Virgin Islands 3 1.6% 5,565 1,000
British
Six Waves Inc Virgin Islands 3 1.1% 240 1,464
Marula Mines Ltd South Africa 3 0.9% 250 131
Fram Exploration
AS Norway 3 0.6% 1,223 145
Other quoted investments
(Note c) 1 685 71
---------------------------------------------- ----------- -------------- ------------------------- ---------
72,023
--------------------------------------------- ----------- -------------- ------------------------- ---------
The shares held in China Rice Ltd and Unipower Battery Ltd are
all convertible preference shares whilst the remaining investments
held in the other entities are all ordinary equity shares. The
'proportion of ownership interest' represents the percentage of the
shares held by the Group in all share classes.
As at 31 December 2015
Fair Proportion
Country value of Fair
of hierarchy ownership Cost value
Name* incorporation level interest US$'000 US$'000
-------------- --------------- ------------------------------- ----------- -------------------------- -------------------
Shanghai Yi
Rui
Tech New
Energy
Technology
Ltd
(Note d) China 3 49.0% 675 793
China Rice British
Ltd Virgin
(Note d) Islands 3 32.1% 13,000 16,417
Kincora
Copper
Ltd (Notes c
and
d) Canada 1 26.1% 6,728 1,180
Moly World British
Ltd Virgin
(Note d) Islands 3 20.0% 10,000 5,419
Niutech British
Energy Virgin
Ltd Islands 3 19.1% 6,350 11,531
Unipower
Battery Cayman
Ltd (Note d) Islands 3 16.5% 4,301 5,795
Gobi Coal & British
Energy Virgin
Ltd (Note c) Islands 3 14.0% 14,960 6,575
Celadon British
Mining Virgin
Ltd Islands 3 9.7% 13,069 23,674
Staur Aqua AS Norway 3 9.2% 719 373
Rising
Technology
Corporation
Ltd/Beijing
Rising
Information
Technology British
Ltd Virgin 2%/
(Note b) Islands 3 1.6% 5,565 3,884
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
(Note c) 1 1,569 266
------------------------------- ------------------------------- ----------- -------------------------- -------------------
77,571
------------------------------ ------------------------------- ----------- -------------------------- -------------------
Notes
a. There are no significant restrictions that will have an
impact on ability to transfer these investments.
b. 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.
c. Investments held partially by China Commodities Absolute
Return Ltd, one of the subsidiaries of the Group in 2015. During
the year, the investments had been transferred and held by the
Company.
d. These investments are associates of the Group measured at
fair value through profit or loss.
In accordance with IFRS 13 "Fair Value Measurement", investments
recognised at fair value are required to be analysed between those
whose fair value is based on:
a) Quoted prices in active markets for identical assets or liabilities (Level 1);
b) Those involving inputs other than quoted prices included in
level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2);
and
c) Those with inputs for the asset or liability that are not
based on observable market data (unobservable inputs) (Level
3).
For assets and liabilities that are recognised in the
consolidated financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the
hierarchy by re-assessing categorisation (based on the lowest level
input that is significant to the fair value measurement as a whole)
at the end of each reporting period. There have been no transfers
between levels during the years of 2016 and 2015.
The following table provides an analysis of investments carried
at fair value by level of fair value hierarchy:
2016
Level Level Level Total
1 2 3
US$'000 US$'000 US$'000 US$'000
------------------------------------ -------- -------- -------- --------
Investments at fair
value through profit
or loss
* Listed equity investments 5,028 - - 5,028
* Unlisted equity investments - - 66,995 66,995
5,028 - 66,995 72,023
------------------------------------ -------- -------- -------- --------
2015
Level Level Level Total
1 2 3
US$'000 US$'000 US$'000 US$'000
------------------------------------ -------- -------- -------- --------
Investments at fair
value through profit
or loss
* Listed equity investments 1,446 - - 1,446
* Unlisted equity investments - - 76,125 76,125
1,446 - 76,125 77,571
------------------------------------ -------- -------- -------- --------
Changes in investments at fair value through profit or loss
based on Level 3:
2016 2015
US$'000 US$'000
---------------------------------------- --------- ---------
Opening balance 76,125 88,860
Acquisitions - 20
Proceeds from disposals of investments (353) -
Realised losses on disposals
of investments (440) -
Net exchange difference (4,657) (1,327)
Movement in unrealised losses
on investments
- In profit or loss (3,680) (11,428)
Closing balance 66,995 76,125
---------------------------------------- --------- ---------
The fair value decrease on investments categorised within Level
3 of US$8,337,000 (2015: US$12,755,000) was recorded in the
consolidated statement of comprehensive income.
Description of significant unobservable inputs to valuation:
as at 31 December 2016
Significant
Valuation unobservable
technique inputs Range
----------------------- -------------- ------------------------ ----------
Investments in
unquoted equity Discounted Weighted average
shares - metal cash flow cost of
& mining sector* method capital ("WACC") 23%
Discount for
lack of marketability 20% - 30%
Investments in
unquoted equity
shares - metal Multiples Discount for
& mining sector* method lack of marketability 20% - 30%
Investments in
unquoted equity
shares - cleantech Multiples Discount for
sector* method lack of marketability 30%
Investments in
unquoted equity
shares - agriculture Multiples Discount for
sector* method lack of marketability 30%
Investments in
unquoted equity
shares - TMT Multiples Discount for
sector* method lack of marketability 30%
as at 31 December 2015
Significant
Valuation unobservable
technique inputs Range
----------------------- ------------ ------------------- ----------
Investments in
unquoted equity Discounted
shares - metal cash flow
& mining sector* method WACC 20%
Discount
for lack
of marketability 20% - 30%
Investments in
unquoted equity Discount
shares - metal Multiples for lack
& mining sector* method of marketability 20% - 30%
Investments in
unquoted equity Discount
shares - cleantech Multiples for lack
sector* method of marketability 30%
Investments in
unquoted equity Discount
shares - agriculture Multiples for lack
sector* method of marketability 30%
Investments in
unquoted equity Discount
shares - TMT Multiples for lack
sector* method of marketability 30%
* Sector disclosed in the portfolio overview in Directors'
report.
Risk management activities
Fair value risk
The Group's financial assets are predominantly investments in
unquoted companies, and the fair value of each investment depends
upon a combination of market factors and the performance of the
underlying asset. The Group does not hedge the market risk inherent
in the portfolio but manages asset performance risk on an
asset-specific basis by continuously monitoring each asset's
performance and charging the change of each asset's fair value to
the statement of comprehensive income as necessary. The Group
believes that the carrying amount is a reasonable approximation of
fair value for their financial assets and liabilities.
Valuation techniques
The fair value of financial instruments traded in active markets
(such as publicly traded securities) is based on quoted market
prices at the reporting date. The quoted market price used for
financial assets held by the Group is the current closing
price.
The fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. The
Group has estimated the value of each of its unquoted equity
instruments by using judgement to select the most appropriate
valuation methodology for each investment based on the
recommendations of the Guidelines. Valuation methodologies mainly
include the price of recent investments, multiples, discounted cash
flow, industry valuation benchmarks, available market prices and so
on, which may apply individually or in combination. Key assumptions
and judgements of each methodology concerning the future and other
key sources of estimation uncertainty will have a significant risk
of causing a material adjustment to the fair value of the
instruments within the next reporting period.
Sensitivity risk of investments at fair value through profit or
loss based at Level 3
Level 3 inputs are sensitive to assumptions made when
ascertaining fair value of financial assets. A reasonable
alternative assumption would be to apply a standard marketability
discount of 25% for all assets rather than the specific approach
adopted. This would have a positive impact on the portfolio of
US$2,442,000 (2015: US$1,883,000) or 3.70% (2015: 2.47%) of total
investments at fair value through profit or loss based at level
3.
Increase in WACC by 1% would decrease/increase the fair value by
US$282,000 (2015: US$356,000).
15 Loans
The Group has entered into convertible credit agreements and has
the right to convert the outstanding principal balance of relevant
loans into borrower's shares according to certain conversion
conditions, and loan agreements with certain investee companies as
set forth in the table below.
As at 31 December 2016
Loans
due Loans
within due
one after
Loan Loan year one Fair
rates principal year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
-------------------- ----------- ------- ----------- -------- -------- --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery
Ltd 3 6 9,000 9,000 - 9,000
Staur Aqua AS 3 0-15 3,848 145 350 495
Sub-total 24,145 350 24,495
-------------------- ----------- ------- ----------- -------- -------- --------
Loan agreements*
Unipower Battery
Ltd 12 164 145 - 145
Sub-total 145 - 145
------------------- --- ---- ------- ---- -------
Total 24,290 350 24,640
------------------- --- ---- ------- ---- -------
* Loans in relation to convertible credit agreements are
measured at fair value. Loans in relation to loan agreements are
measured at amortised cost using the effective interest rate method
less any identified impairment losses.
As at 31 December 2015
Loans
due Loans
within due
one after
Loan Loan year one Fair
rates principal year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
-------------------- ----------- ------- ----------- -------- -------- --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery
Ltd 3 6 9,000 9,000 - 9,000
Staur Aqua AS 3 0-15 3,848 145 350 495
Kincora Copper
Ltd 3 8.7 2,254 1,793 - 1,793
Sub-total 25,938 350 26,288
-------------------- ----------- ------- ----------- -------- -------- --------
Loan agreements*
Unipower Battery
Ltd 12 164 155 - 155
Sub-total 155 - 155
------------------- --- ---- ------- ---- -------
Total 26,093 350 26,443
------------------- --- ---- ------- ---- -------
Statement of changes in loans:
2016 2015
US$'000 US$'000
------------------------------------- --------- ---------
Opening balance 26,443 28,899
Additions - 363
Repayment (383) (459)
Write-offs - (363)
Impairment - (1,103)
Converted into ordinary shares (1,532) -
Net exchange difference (5) -
Movement in realised and unrealised
losses on investments
- In profit or loss 117 (894)
Closing balance 24,640 26,443
------------------------------------- --------- ---------
Changes in convertible credit agreements based on Level 3:
2016 2015
US$'000 US$'000
------------------------------------- --------- ---------
Opening balance 26,288 27,397
Repayment (383) (215)
Converted into ordinary shares (1,532) -
Net exchange difference (5) -
Movement in realised and unrealised
losses on investments
- In profit or loss 127 (894)
Closing balance 24,495 26,288
------------------------------------- --------- ---------
The fair value decrease on convertible credit agreements
categorised within Level 3 of US$212,000 (2015: US$894,000), was
recorded in the consolidated statement of comprehensive income.
Description of significant unobservable inputs to valuation:
The valuation technique of convertible credit agreements
includes discounted cash flow method for the liability component
and Binomial Model for the embedded option. The significant
unobservable input is the discount rate.
Convertible loans issued to China Rice Ltd and Unipower Battery
Ltd are structured as "bundled investments", i.e. they have been
extended along-side of equity investments. Substantial repayments
of loans outstanding are expected to negatively affect the
Company's ability to realise the full value of its combined
investment in relevant companies. Consequently, except smaller
amounts, the bulk of convertible loan investments are expected to
be realised (whether through repayment in cash or conversion into
and subsequent sale of equity) with the disposal of the relevant
portfolio company as a whole, or through divestments of the
Company's equity positions. The Company has a reasonable
expectation to be in a position to realise the full value of these
loans over next 12 months; however, substantial balances may remain
outstanding beyond such period.
16 Trade and other receivables
2016 2015
US$'000 US$'000
--------------------------- --------- ---------
Trade debtors 5 5
Other debtors 889 1,378
Loan interest receivables 3,113 2,676
Prepayments - 42
Total 4,007 4,101
----------------------------- --------- ---------
2016 Aging for the Group
Over
0-30 31-60 61-90 91-180 181-365 365
days days days days days days Total
---------------
Aging for
the Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- -------- -------- -------- -------- -------- -------- --------
Trade debtors - - - - - 5 5
Other debtors 19 240 2 10 14 2,941 3,226
Loan interest
receivables 46 44 46 136 223 7,666 8,161
Provision
against loan
interest
receivables - - - - - (5,048) (5,048)
Provision
of bad debts - - - - - (2,337) (2,337)
--------------- -------- -------- -------- -------- -------- -------- --------
Total 65 284 48 146 237 3,227 4,007
--------------- -------- -------- -------- -------- -------- -------- --------
Percentage 2% 7% 1% 4% 6% 80% 100%
--------------- -------- -------- -------- -------- -------- -------- --------
2015 Aging for the Group
Over
0-30 31-60 61-90 181-365 365
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%
---------------- -------- -------- -------- -------- -------- --------
The below table reconciled the impairment loss of trade debtors
for the year:
2016 2015
US$'000 US$'000
---------------------------- --------- ---------
At 1 January 10,753 10,753
Impairment loss recognised 1,008 49
Bad debts written off (4,376) (49)
Total 7,385 10,753
------------------------------ --------- ---------
The Group identified an impairment of US$1,008,000 (2015:
US$49,000) on trade and other receivables, and the impairment is
recognised within the other administrative expenses.
17 Cash and cash equivalents
2016 2015
US$'000 US$'000
--------------------- --------- ---------
Current account 1,786 1,272
Total cash and cash
equivalents 1,786 1,272
----------------------- --------- ---------
18 Trade and other payables
2016 2015
US$'000 US$'000
-------------------------- --------- ---------
Trade payables 5 5
Other payables 3,966 2,696
Performance incentive
payable within one year 8 8
---------------------------- --------- ---------
Total 3,979 2,709
---------------------------- --------- ---------
19 Financial guarantee contracts
2016 2015
US$'000 US$'000
-------------------------------- --------- ---------
Financial guarantee contracts* 435 435
--------------------------------- --------- ---------
Total 435 435
--------------------------------- --------- ---------
* In July 2013, the Group entered into a guarantee agreement
with IRCA Holdings Ltd and ABSA Bank Limited to guarantee the
repayment of loan facilities of up to Rand 6,769,000 extended by
ABSA Bank Limited to IRCA Holdings Ltd, which has applied for
liquidation, so the Group recognised it as a liability. The payment
request related to this provision is expected in the next year.
20 Long term borrowing
2016 2015
US$'000 US$'000
-------------------------- --------- ---------
Long term borrowing
* 2,500 -
Total long term borrowing 2,500 -
-------------------------- --------- ---------
* On 2 December 2016, the Company entered into an unsecured loan
agreement with an independent third party for an unsecured loan
US$2,500,000 (the "Facility"). The Facility carries a rate of
return (payable at repayment) of the higher of 12% per annum
(calculated on a non-compounding basis) and 1.5 times the amount of
the Facility. The proceeds of the Facility will be applied in
accordance with article 13.1.1 of the Company's Articles.
The Facility is repayable on the earlier of (i) 2 December 2020;
and (ii) when the Company has distributed US$6,000,000 to the
Company's shareholders in accordance with articles 4.10 to 4.12 of
the Company's Articles provided it has sufficient funds to repay
the Facility. The Company may at any time prepay the Facility, in
whole or in part, without penalty.
As at 31 December 2016, no distribution had been made in
accordance with articles 4.10 to 4.12 of the Company's
Articles.
21 Provision
2016 2015
US$'000 US$'000
----------------------------------- --------- ---------
Upper share rights/contingent
share awards * 82 67
Performance incentive provision** - 4,195
----------------------------------- --------- ---------
Total 82 4,262
----------------------------------- --------- ---------
2016 2015
US$'000 US$'000
------------------------------------------- --------- ---------
Opening balance 4,262 7,701
Movement in upper share rights/contingent
share awards * 15 (230)
Movement in performance incentive
provision** (4,195) (3,209)
------------------------------------------- --------- ---------
Total 82 4,262
------------------------------------------- --------- ---------
* The provision relates to the fair value of upper share rights
and contingent share awards granted to certain directors,
executives and key employees under the Company's joint share
ownership scheme. Further details about the upper share rights and
contingent share awards are included in Note 26. The provision is
expected to be utilised in the next 9 years provided the upper
share rights are exercised.
** Refer to Note 4 for total performance incentive expenses. The
provision is expected to be utilised when investments are realised
and the hurdle is reached.
22 Redeemable / convertible zero dividend preference shares
Early
Number redemption
of Liability Equity option
shares component component derivative
US$'000 US$'000 US$'000
------------------------------ ----------- ----------- ----------- ------------
Balance at 1 January
2015 57,000,000 63,609 8,297 -
Interest expense
on convertible zero -
dividend preference
shares - 5,776 -
------------------------------ ----------- ----------- ----------- ------------
Balance at 31 December
2015 57,000,000 69,385 8,297 -
------------------------------- ----------- ----------- ----------- ------------
Interest expense
on convertible zero -
dividend preference
shares - 4,674 -
Interest expense
on redeemable zero -
dividend preference
shares 1,099 -
Gain recognised upon -
extinguishment* - (62) -
Change in fair value -
upon extinguishment - - 27,627
Released upon extinguishment - (73,997) (35,924) -
Recognition of redeemable -
preference shares - 46,370 -
Balance at 31 December
2016 57,000,000 47,469 - -
------------------------------- ----------- ----------- ----------- ------------
* Gain recognised upon extinguishment was recognised in other
income during the year (2015: US$Nil).
On 8 March 2011, the Company issued 60 million convertible zero
dividend preference shares at a price of US$1.00 per share.
Convertible zero dividend preference shares have a maturity period
of five years from the issue date and can be converted into 1
ordinary share of the Company at the conversion price of US$0.95
per share at the holder's option at any time between more than 40
dealing days after 8 March 2011 up to 5 dealing days prior to the
maturity date and, if it has not been converted, it will be
redeemed on maturity at the redemption price of US$1.28 per share
(representing a gross redemption yield of 5% per annum at
issue).
Convertible zero dividend preference shares contain a redemption
feature which allows for early redemption at the option of issuer.
The issuer has the option to redeem all or some of convertible zero
dividend preference shares subject to the restrictions on
redemption described below:
(a) at any time after the second anniversary of 8 March 2011,
for a cash sum of US$1.28 per convertible zero dividend preference
shares redeemed;
(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
convertible zero dividend preference shares being redeemed;
(c) at any time, if less than 15% of remain outstanding, for a
cash sum equal to the accreted principal amount in respect of
convertible zero dividend preference shares being redeemed.
The convertible zero dividend preference shares contain three
components, a liability component, an equity component and the
early redemption option derivative. The effective interest rate of
the liability component is 6.5%. The early redemption option
derivative is presented as derivative financial assets in the
consolidated statement of financial position and is measured at
fair value subsequent to initial recognition with changes in fair
value recognised in profit and loss.
In March 2013, the Company restructured the terms of its
existing convertible zero dividend preference shares, the principal
terms of restructure include: i) extension of the maturity date of
the convertible zero dividend preference shares by 18 months from 8
March 2016 to 8 September 2017 (the "Extended Period"); ii)
amendment of the final capital value ("FCV") of the convertible
zero dividend preference shares to US$1.41 each, with the accrued
rate of return for the Extended Period equivalent to 10 per cent of
the accrued value of the convertible zero dividend preference
shares at the start of the Extended Period; iii) a commitment by
the Company to repurchase, by means of tender offers to holders, at
least 12 million convertible zero dividend preference shares by 8
March 2016, the original maturity date; and iv) the Company to set
aside, for the funding of convertible zero dividend preference
shares tender offers, 50 per cent of the next US$24 million of net
proceeds (post transaction costs and management incentives) from
investment realisations by the Company. The new effective interest
rate of the liability component is 9.0%. In addition to the
restructure, the Company repurchased 3 million convertible zero
dividend preference shares from holders at a price of US$1.00 per
convertible zero dividend preference shares in 2013.
In September 2016, the Company further restructured the terms of
its existing convertible zero dividend preference shares, where the
conversion feature has been removed, which revised as redeemable
zero dividend preference shares. The principal terms of restructure
includes: i) removal of redemption and/or maturity date; ii) reset
of the accreted principal amount per preference shares to US$1.0526
each; iii) no rate of return on the outstanding amount will begin
to accrete until 1 January 2018 and, iv) in respect of each
preference share still in issue on 1 January 2018, its principal
amount of US$1.0526 shall be subject to the accretion of a rate of
return equal to 4 per cent per annum from (and including) 1 January
2018 to (and including) the date on which such amount is redeemed,
with such return accruing on a simple and not compound basis. Due
to the revised terms, the convertible zero dividend preference
shares were regarded as an extinguishment and redeemable zero
dividend preference shares were therefore recognised.
The redeemable zero dividend preference shares are now subject
to the distribution in accordance with articles 4.10 to 4.12 of the
revised Articles. In summary, the distribution is mandatory to
distribute when the Company's available funds, which is the
aggregate amount of the Company's net cash less (i) working capital
requirements for the following 12 months and (ii) comply with the
solvency test under the Companies Act 2006 ("Solvency Test").
The redeemable zero dividend preference shares only have a
liability component and the new effective interest rate of the
liability component is 9.18% per annum.
23 Issued capital
2016 2015
Number Number
Authorised of shares GBP'000 of shares GBP'000
----------------------- ------------ -------- ------------ --------
Ordinary shares of
GBP 0.0001 each 500,000,000 50 500,000,000 50
----------------------- ------------ -------- ------------ --------
Number Number
Issued and fully paid of shares US$'000 of shares US$'000
----------------------- ------------ -------- ------------ --------
At beginning of the
year 358,746,814 56 356,706,814 55
New issue of shares* - - 2,390,000 1
Buyback shares - - (350,000) -
At end of the year 358,746,814 56 358,746,814 56
----------------------- ------------ -------- ------------ --------
* Included in the new issue of shares, a total of 2,040,000 new
ordinary shares were issued at an effective issue price of 5.875
pence per ordinary share to the Non-executive Directors, Shonaid
Jemmett-Page and Lionel de Saint-Exupery, and former Non-executive
Directors, Wang Chao Yong and Christopher Jemmett in February
2015.
24 Other reserve
Included within the other reserve mainly comprised 7,711,425
shares of the Company held by Employee Benefit Trust ("EBT") and
the amounts of US$ 3,162,677 credited from the capital redemption
of CCP fund in 2014.
25 Financial instruments - Risk management
The Group are exposed through their operations to one or more of
the following risks:
- Fair value risk
- Cash flow interest rate risk
- Currency risk
- Credit risk
- Liquidity risk
- Concentration risk
- Price risk
The policy for managing these risks is set by the board. The
policy for each of the above risks is described in more detail
below:
Fair value risk
The Group's financial assets are predominantly investments in
unquoted companies, and the fair value of each investment depends
upon a combination of market factors and the performance of the
underlying asset. The Group does not hedge the market risk inherent
in the portfolio but manages asset performance risk on an
asset-specific basis by continuously monitoring each asset's
performance and charging the change of each asset's fair value to
the consolidated statement of comprehensive income as
necessary.
Cash flow interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group's exposure to the risk
of changes in market interest rates is relatively small as the
Group's outstanding debt is fixed rate. Meanwhile, the interest
income is not material in the context of the total portfolio return
as a whole.
Currency risk
Some of the Group's assets, liabilities, income and expenses are
effectively denominated in currencies other than US Dollars (the
Group's presentation currency). Fluctuations in the exchanges rates
between these currencies and US Dollars will have an effect on the
reported value of those items.
The following table demonstrates the sensitivity of the Group's
profit before tax due to a change in the fair value of monetary
assets and liabilities resulting from a reasonably possible change
in the US dollar exchange rate, with all other variables held
constant.
Effect on Effect on
Increase/ profit net asset
(decrease) before tax value
in US$ rate US$'000 US$'000
------ ------------- ------------ -----------
2016 +10% 2,739 2,739
-10% (2,739) (2,739)
2015 +10% 2,784 2,784
-10% (2,784) (2,784)
------ ------------- ------------ -----------
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
2016 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Cash and bank
balances 176 - 141 - 50 - - 367
Investments
at FVTPL* 20,065 707 - - - 5,023 - 25,795
Loans - 495 145 - - - - 640
Trade and
other receivables - - 385 - - - - 385
Total Assets 20,241 1,202 671 - 50 5,023 - 27,187
-------------------- --------- --------- --------- --------- --------- --------- --------- ---------
Trade and
other payables - - (78) - - - - (78)
Financial
guarantee
contracts - - - - - - (435) (435)
Provision (82) - - - - - - (82)
Total Liabilities (82) - (78) - - - (435) (595)
-------------------- --------- --------- --------- --------- --------- --------- --------- ---------
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
Investments
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)
Total Liabilities (221) - - - - - (435) (656)
-------------------- --------- --------- --------- --------- --------- --------- --------- ---------
* Included investments in associates of US$5,023,000 (2015:
US$1,362,000) that nominated in CAD and measured at fair value
through profit or loss.
Credit risk
The Group is primarily exposed to credit risk from the loans
including convertible credit agreements and loan agreements
extended to unquoted portfolio companies, loan interest receivables
and other debtors, in which the Directors consider the maximum
credit risk to be the carrying value of the convertible credit
agreements, loan agreements, loan interest receivables and other
debtors which amounted to US$28,647,000 (2015: US$30,544,000).
Directors consider cash and receivables do not expose to
significant credit risk, because the cash is held at reputable
banks. The credit risk exposure is managed on an asset-specific
basis by management.
2016 2016 2015 2015
up more up more
to than 2016 to than 2015
2016 12 12 Total 2015 12 12 Total
not months months US$'000 not months months US$'000
past past past past past past
due due due due due due
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------- ---------- --------- --------- ---------- --------- --------- --------- ----------
Convertible
credit
agreements - - 24,495 24,495 - 350 25,938 26,288
Loan agreements - - 145 145 - - 155 155
Trade and
other receivables - 780 3,227 4,007 874 3,227 4,101
Total - 780 27,867 28,647 - 1,224 29,320 30,544
-------------------- ---------- --------- --------- ---------- --------- --------- --------- ----------
Liquidity risk
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period at the
end of reporting period to the contractual maturity date or, if
earlier, the expected date on which the financial liabilities will
be settled. The amounts in the table are the contractual
undiscounted cash flows.
Liabilities
Carrying Less 1-3 3-12 over Total
31 December amount than months months 12 months
2016 1 month
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- --------- ---------- --------- --------- ------------ ---------
Trade payables 5 5 - - - 5
Other payables 3,966 3,966 - - - 3,966
Performance
incentive
payable 8 - - 8 - 8
Upper share
rights /contingent
share awards 82 - - - 82 82
Long-term
borrowing 2,500 - - - 2,500 2,500
Redeemable
zero dividend
preference
shares 47,469 - - - 57,000 57,000
Contractual
interest payable - - - - 13,777 13,777
---------------------
Total 54,030 3,971 - 8 73,359 77,338
--------------------- --------- ---------- --------- --------- ------------ ---------
Financial
guarantees
issued
Maximum amount
guaranteed 435 - - 435 - 435
---------------- ------ ---- ----
Liabilities
Carrying Less 1-3 3-12 over Total
31 December amount than months months 12 months
2015 1 month
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------- --------- ---------- --------- --------- ------------ ---------
Trade payables 5 5 - - - 5
Other payables 2,696 1,912 281 503 - 2,696
Performance
incentive
payable 4,203 - - 8 4,195 4,203
Upper share
rights /Contingent
share awards 67 - - - 67 67
Liability
component
of convertible
zero dividend
preference
shares 69,385 - - - 57,000 57,000
Contractual
interest payable - - - - 23,608 23,608
---------------------
Total 76,356 1,917 281 511 84,870 87,579
--------------------- --------- ---------- --------- --------- ------------ ---------
Financial
guarantees
issued
Maximum amount
guaranteed 435 - - 435 - 435
----------------
Total 435 - - 435 - 435
---------------- ------ ---- ----
Concentration risk
The main concentration risk for Origo is that the largest
investments are concentrated in China for the amount of
US$83,840,000 (2015: US$87,467,000), 87% (2015: 84%) out of the
total portfolio value of US$96,663,000 (2015: US$104,014,000).
Price risk
Price risk may affect the value of listed and unlisted
investments as a result of changes in market prices (other than
arising from interest rate risk or currency risk), whether caused
by factors specific to an individual investment, its issuer or
factors affecting all instruments traded in the market.
As the majority of financial instruments are carried at fair
value, with fair value changes recognised in the consolidated
statement of comprehensive income, all changes in market conditions
will directly affect reported portfolio returns.
Price risk is managed by constructing a diversified portfolio of
instruments traded on various markets and hedging where
appropriate.
The following table details the sensitivity to a 10% variation
in equity prices. The sensitivity analysis includes all equity
investments held at fair value through profit or loss and adjusts
their valuation at the year end for a 10% change in value.
2016 2015
US$'000 US$'000
------------------- --------- ---------
Increase in price 7,202 7,757
Decrease in price (7,202) (7,757)
------------------- --------- ---------
The sensitivity to equity and fund investments has increased
during the year due to net investments and investment portfolio
gains in the year.
In management's opinion, the sensitivity analysis is
unrepresentative of the inherent price risk as the year end
exposure does not reflect the exposure throughout the year as a
whole.
26 Share-based payments
The Group has a number of share schemes that allow employees to
acquire shares in the Company, as detailed in Note 1.3(c).
The total cost recognised in the consolidated statement of
comprehensive income is shown below:
2016 2015
US$'000 US$'000
------------------------------- --------- ---------
Equity-settled option (52) (426)
Upper share rights/contingent
share awards (15) 200
Total (67) (226)
------------------------------- --------- ---------
The following table illustrates the number ("No.") and weighted
average exercise prices ("WAEP") of, and movements in, share
options during the years ended 31 December 2016 and 31 December
2015.
2016 2016 2015 2015
No. WAEP No. WAEP
-------------------- ------------ --------- ----------- ---------
Outstanding at 1
January 20,951,932 26.87p 21,451,932 26.97p
-------------------- ------------ --------- ----------- ---------
Granted during the
year - - - -
Forfeited during
the year - - (500,000) (31.00p)
Exercised during
the year - - - -
Expired during the
year (7,451,932) (22.62p) - -
Outstanding at 31
December 13,500,000 29.22p 20,951,932 26.87p
-------------------- ------------ --------- ----------- ---------
Exercisable at 31
December 13,500,000 29.22p 11,451,932 23.45p
-------------------- ------------ --------- ----------- ---------
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2016 was 2.56 years (31
December 2015: 3.56 years).
The range of exercise prices for options outstanding at the end
of the year was 20 pence to 59.85 pence (31 December 2015: 20 pence
to 59.85 pence).
During the year, options including 6,800,000 equity-settled
options granted on 26 October 2006 and 651,932 equity-settled
options granted on 21 December 2006 have expired.
Outstanding options include 3,500,000, 500,000 and 13,600,000
equity-settled options granted on 13 March 2008, 6 February 2009
and 2 February 2012 respectively to certain directors and employees
of the Company. The Company did not enter into any share-based
transactions with parties other than employees during the years
from 2007 to 2016, except as described above.
The following table illustrates the number ("No.") and weighted
average exercise prices ("WAEP") of, and movements in upper share
rights and contingent share awards during the years ended 31
December 2016 and 31 December 2015.
2016 2016 2015 2015
No. WAEP No. WAEP
-------------------------- ---------- ------ ----------- ------
Outstanding at 1 January 7,711,425 9.48p 8,061,425 9.07p
-------------------------- ---------- ------ ----------- ------
Granted during the
year - - - -
Forfeited during the
year - - - -
Exercised during the
year - - (350,000)* 0.00p
Expired during the
year - - - -
Outstanding at the
end of the year 7,711,425 9.48p 7,711,425 9.48p
-------------------------- ---------- ------ ----------- ------
Exercisable at the
end of the year 7,711,425 9.48p 7,711,425 9.48p
-------------------------- ---------- ------ ----------- ------
* The weighted average share price at the date of exercise of
these options was 5.70 pence.
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2016 was 4.51 years (2015:
5.51 years).
The range of exercise prices for options outstanding at the end
of the year was zero to 15.5 pence (2015: zero to 15.5 pence).
On 16 October 2009, 4,847,099 of upper share rights were granted
to certain directors, executives and key employees under the
Company's joint share ownership scheme ("JSOS"). 50% of upper share
rights vested 12 months from the date of grant and 50% of upper
share rights vested 24 months from the date of grant. The fair
value of the upper share rights is estimated at the end of each
reporting period using the binomial tree option pricing model. The
contractual life of each upper share rights granted is 10
years.
On 20 July 2012, 1,120,000 of contingent share awards were
granted to certain directors, executives and key employees under
the Company's JSOS, which vested 197 days from the date of grant.
The contractual life of each contingent share award granted is 10
years.
On 30 December 2014, 2,423,358 of share awards were granted to
certain key employees under the Company's JSOS, which vested
immediately at the date of grant. The contractual life of each
share offer granted is 10 years.
The following table lists the inputs to the model used to
calculate the fair value of upper share rights for the year.
2016 2015
Underlying stock price
(pence) 2.125 1.50
Exercise price (pence) 15.4 15.5
Expected life of option
(years) 2 2
Expected volatility (%) 373.64 34.53
Expected dividend yield
(%) - -
Risk-free interest rate
(%) 0.50 0.50
-------------------------- ------- ------
The volatility assumption, measured at the standard deviation of
expected share price returns, was based on a statistical analysis
of the Company's daily share prices from 1 January 2014 to 31
December 2016 using source data from Reuters.
The carrying amount of the liability relating to the upper share
rights and the contingent share award as at 31 December 2016 is
US$82,000 (2015: US$67,000) and the credit expense recognised as
share-based payments during the year is US$15,000 (2015: reversal
of expense of US$230,000).
27 Related party transactions
Identification of related parties
The Group has a related party relationship with its
subsidiaries, associates and key management personnel. The Company
receives and pays certain debtors and creditors on behalf of its
subsidiaries and the amounts are recharged to the entities.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation.
Transactions with key management personnel
The Group's key management personnel are the Executive and
Non-executive Directors as identified in the director's report
(Note 7).
Trading transactions
The following table provides the total amount of significant
transactions and outstanding balances which have been entered into
with related parties during the years ended 31 December 2016 and 31
December 2015.
2016 2015
---------------------------------
US$'000 US$'000
--------------------------------- -------- --------
Amounts due to related parties*
Key management personnel:
Lionel de Saint-Exupery*** (66) (25)
Shonaid Jemmett Page*** (138) (100)
Other:
Origo Advisors Ltd** (2,422) (4,203)
--------------------------------- -------- --------
2016 2015
-------------------------------------------------------
US$'000 US$'000
------------------------------------------------------- -------- --------
Transactions
Origo Advisors Ltd**
* Consulting services payable (1,769) (2,054)
* Release of provision for performance incentive 4,195 3,209
------------------------------------------------------- -------- --------
As at 31 December 2016 and 31 December 2015, the Group is
committed to pay Origo Advisors Ltd for consulting services fee as
below:
2016 2015
---------------------------------
US$'000 US$'000
--------------------------------- -------- --------
Within 1 year 1,200 1,800
After 1 year but within 5 years 1,000 2,650
--------------------------------- -------- --------
Total 2,200 4,450
--------------------------------- -------- --------
* Other than the amount due to Origo Advisors Ltd that is
unsecured, 8% interest bearing and has no fixed terms of repayment,
the other amounts are unsecured, non-interest bearing and have no
fixed terms of repayment.
** Origo Advisors Ltd is controlled by entities whose ultimate
beneficiaries include Niklas Ponnert (Director of the Company) and
Chris A Rynning (former Director of the Company). The transactions
were mutually agreed by both parties at a fixed sum or charged
based on cost incurred. The agreement was signed for four years up
to 31 December 2018.
*** Lionel de Saint-Exupery (Non-executive Director of the
Company) and Shonaid Jemmett-Page (Non-executive Chairman of the
Company) are directors of the Company.
28 Capital management
The primary objectives of the Group's capital management are to
safeguard the Group's ability to continue as a going concern and to
maintain healthy capital ratios in order to support its business
and maximise shareholders' value.
The Group manages and makes appropriate adjustments to its
capital structure on an ongoing basis in light of changes in
economic conditions and the risk characteristic of the underlying
assets. To maintain or adjust the capital structure, the Group may
adjust dividend payments to shareholders, return capital to
shareholders and/or issue new shares. The Group is not subject to
any externally imposed capital requirements. No changes were made
in the objectives, policies or processes during the years ended 31
December 2016 and 31 December 2015.
The Group monitors capital using a gearing ratio, which is net
debt divided by capital plus net debt. Net debt includes current
liabilities less cash and bank balances. Capital includes equity
attributable to equity holders of the parent company. The gearing
ratios as at the reporting dates were as follows:
2016 2015
US$'000 US$'000
------------------------------ -------- --------
Current liabilities 4,414 3,144
Less: Cash and bank balances (1,786) (1,272)
Net debt 2,628 1,872
------------------------------ -------- --------
2016 2015
US$'000 US$'000
----------------------------------------------- -------- --------
Liability component of redeemable/convertible
zero dividend
preference shares 47,469 69,385
Equity attributable to equity
holders of the parent 45,517 30,077
Capital 92,986 99,462
----------------------------------------------- -------- --------
Capital and net debt 95,614 101,334
----------------------------------------------- -------- --------
Gearing ratio 3% 2%
----------------------------------------------- -------- --------
29 Summary of financial assets and financial liabilities by category
2016 2015
US$'000 US$'000
-------------------------------- -------- --------
Financial assets
Loans and receivables 5,938 5,486
Fair value through profit or
loss - designated* 96,518 103,859
-------------------------------- -------- --------
102,456 109,345
-------------------------------- -------- --------
Financial liabilities
Financial liabilities measured
at amortised cost 53,940 72,086
Financial guarantee contracts 435 435
-------------------------------- -------- --------
54,375 72,521
-------------------------------- -------- --------
* Included investments in associates of the Group that measured
at fair value through profit or loss of US$31,752,000 (2015:
US$29,604,000).
30 Commitments and contingencies
During the year, the Company was notified by Brooks Macdonald
Asset Management (International) Limited ("Brooks Macdonald") that
it has filed a claim form at the Isle of Man High Court seeking an
order to wind-up the Company on the grounds that it is just and
equitable to do so and/or as relief under section 180 of the Isle
of Man Companies Act 2006. The claim was settled during the year.
Please refer to the announcement dated 7 September 2016 for
details.
There were no other material contracted commitments or
contingent assets or liabilities at 31 December 2016 (31 December
2015: none) that have not been disclosed in the consolidated
financial statements.
31 Financial Statements
The financial information set out in this announcement does not
constitute statutory accounts but has been extracted from the
Group's Financial Statements. The Group's annual report will be
posted to shareholders shortly and will be available on the
Company's website www.origoplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWANRBVANUAR
(END) Dow Jones Newswires
June 29, 2017 02:00 ET (06:00 GMT)
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