TIDMOPP TIDMOPPP
RNS Number : 4703Q
Origo Partners PLC
12 September 2017
12 September 2017
Origo Partners Plc
("Origo" or the "Company" and together with its subsidiaries the
"Group")
Interim Financial Report for the six months ended 30 June
2017
Origo announces its unaudited interim results for the six months
ended 30 June 2017 (the "Period").
Highlights:
-- Sale of 30 per cent. of holding in Niutech for US$4.2 million
at value in line with carrying values
-- Sale of entire stake in Rising for US$1.0 million
-- New licences awarded to Kincora Copper which is poised to
explore two world class copper-gold targets
-- Mining licence awarded to Moly World, underlining the high
quality nature of the molybdenum/ tungsten asset
-- The majority of the portfolio (in terms of fair value) now
either publicly listed or subject to indicative merger or disposal
terms
-- Investment loss of US$10.7 million (30 June 2016 investment gain: US$0.9 million)
-- Loss after tax of US$14.6 million (30 June 2016 loss after
tax: US$4.1 million) reflecting unrealised losses on
investments
-- Total assets of US$90.3 million (31 December 2016: US$102.5 million)
-- Net asset value of US$31.9 million (31 December 2016: US$46.0 million)
-- Total other administrative expenses of US$1.3 million (30 June 2016: US$1.0 million)
-- Net asset value per share of US$0.09 as at 30 June 2017 (31 December 2016: US$0.13)
-- Closing net cash position of US$0.9 million as at 30 June 2017
Chairman's Statement
A period of stability enabled us to focus on executing the
Company's investing policy to divest the entire portfolio by
November 2018.
Progress in the Period in this regard was satisfactory, with the
disposal or partial disposal of a number of portfolio companies. In
addition, developments at, in particular Kincora Copper and
MolyWorld, indicates that there is potential for value creation in
a number of portfolio companies.
Nevertheless, there can be no certainty, and it indeed seems
increasingly more unlikely, that all of Origo's investments will be
individually realised within the timetable set out in the investing
policy.
As previously announced, the Board is therefore also exploring
options in respect of the entire portfolio and further
announcements will be made in due course as required.
Investment Consultant's Report
On balance, the market environment is looking slightly more
positive, with benefits flowing from both rebounding commodity
prices as well as continued support from the Chinese government for
the environmental protection sectors.
In line with Origo's investing policy, we announced a number of
transactions just after the Period end at valuations in line with
our reported carrying values.
In July 2017, we announced the sale of up to a 5.9 per cent.
beneficial interest in Jinan Heng Yu Environmental Protection
Technology Co., Ltd. ("Heng Yu"), the operating company of Niutech
Energy Ltd ("Niutech") for gross cash proceeds of up to RMB28.5
million (approximately US$4.2 million) in two tranches (the
"Disposals") to Chinese institutional and other investors. The sale
represents approximately 30 per cent. of the Company's total
beneficial interest in Heng Yu.
Cash receipts of the Disposals, net of applicable taxes, costs
and commissions, are expected to amount to approximately 85 per
cent. of gross proceeds and will be applied towards Origo's working
capital requirements. Any repatriation of capital from China is
subject to restrictions and standard processes. It is currently
unclear how long the repatriation process will take in this
instance.
The gross cash proceeds of the Disposals imply a valuation of
the Company's total pre-disposal beneficial interest in Heng Yu of
approximately US$13 million. The audited carrying value of Origo's
18.4 per cent. beneficial interest in Niutech as at 31 December
2016 was US$14.2 million, having increased from an unaudited
carrying value as at 30 June 2016 of US$11.5 million (original
investment cost of US$6.35 million). Following the Disposals, the
Company will continue to hold a 12.4 per cent. indirect beneficial
interest in Heng Yu.
Also in July 2017, Origo entered into binding agreements with
ChinaEquity International Holding Co., Ltd ("ChinaEquity") for the
disposal of the Company's 2.0 per cent. equity stake in Rising
Technology Corporation Ltd ("Rising Technology") and Origo's 1.6
per cent. beneficial interest in Beijing Rising Information
Technology Ltd ("Rising InfoTech") (collectively the "Rising
Interests") to ChinaEquity for a cash consideration of US$1.0
million (the "Disposal"). The deal has subsequently been completed
and cash has been received.
In 2011, the Company received gross proceeds of US$2.5 million
from a partial sale of the Rising Interests. The Company's residual
interests in Rising Technology and Rising InfoTech had an audited
aggregated carrying value of US$1.0 million as at 31 December 2016.
As a result of the Disposal, the Company has now recouped a total
of US$3.5 million, equal to the initial cash cost of the
investment. The net proceeds of the Disposal will be applied
towards the Company's general working capital requirements.
In addition, positive operational progress was achieved at two
of our larger mining investments.
In June 2017 Kincora Copper Limited ("Kincora") was awarded the
Shavagtai licence to further consolidate the company's footprint
along the world class Southern Gobi copper belt. In August 2017,
the company completed a C$4.52 million equity raise from
sophisticated investors including a pre-eminent private equity
exploration specialist fund who participated as the cornerstone.
The proceeds of the equity raise will fund a planned reconnaissance
exploration program in the world-class Southern Gobi copper gold
porphyry belt where Kincora has built the largest landholding with
properties located close to Rio Tinto's Oyu Tolgoi mine and
infrastructure.
The fundraising was carried out via a private placement of
13,711,174 units at a price of C$0.33 per unit. Each unit is
comprised of one common share (the "Shares") and one-half of a
share purchase warrant, with each whole warrant (the "Warrants")
entitling the holder to acquire a further Share at C$0.445 for a
period of two years. The private placement is subject to final
TSX-V approval. Following successful completion of the placement
Origo's shareholding in Kincora will be 25 per cent.
In addition, Moly World Ltd ("Moly World") was awarded a 30 year
mining licence for its Mandal Project in Mongolia by the Mineral
Resources Authority of Mongolia. The Mandal Project holds a large
JORC resource of 203Mt in situ material at 0.126 per cent.
Molybdenum and 0.026 per cent Tungsten. The resource covers a
lateral area of approximately 900m and vertical extent of 500m from
surface. Origo holds a 20 per cent. stake in Moly World which owns
100 per cent. of the Mandal Project through its subsidiary Mandal
Moly. In addition, a subsidiary of Origo has an off-take agreement
covering up to 20 per cent of all production from Mandal Moly while
Origo holds an interest of between 5 and 20 per cent. in Moly
World.
Following a review of the prospects for achieving a timely sale
of Celadon Mining Ltd ("Celadon") following delays in the receipt
of relevant regulatory approvals and the changing Chinese
regulatory environment with regards to investments in coal and
related industries, the carrying value of Origo's 8.9 per cent.
holding was reduced by US$10.2 million (51 per cent.).
As a result, Origo recorded a total investment loss of US$10.7
million in the first half of 2017 compared to a gain of $0.9
million in the same period of 2016.
Outlook
We expect that economic and policy conditions will remain
broadly neutral for our portfolio in the medium term. We continue
to progress a number of potential liquidity events across the
portfolio, however market, transaction and execution risks remain.
There can be no certainty that the entire portfolio will be
disposed of by November 2018. Indeed, it seems unlikely that this
target can be achieved and proceeds distributed to shareholders in
the targeted time frame. As a result, we are working closely with
the Board to develop alternative options for realising value from
the portfolio and achieve liquidity for the Company's shareholders
by November 2018.
For further information about Origo please visit
www.origoplc.com or contact:
Origo Partners plc
Niklas Ponnert niklas@origoplc.com
Nominated Adviser and Broker
Smith & Williamson Corporate Finance Limited
Azhic Basirov
Ben Jeynes +44 (0)20 7131 4000
Public Relations
Aura Financial
Andy Mills +44 (0)20 7321 0000
Origo Partners Plc
Interim Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
Notes US$'000 US$'000
------------------------------------------- ------ -------------- --------------
Investment loss: 3
Realised gains/ (losses) on disposal
of investments 395 26
Unrealised gains/ (losses) on investments (11,341) 497
Income from loans 267 356
(10,679) 879
------------------------------------------- ------ -------------- --------------
Fund consulting fee
Consulting services payable 4 (740) (966)
Other income 25 18
Performance fee
- Performance incentive 5 - (71)
Other administrative expenses 6 (1,306) (951)
Share-based payments 23 (215) (29)
Foreign exchange gains/(losses) 8 92
------------------------------------------- ------ -------------- --------------
Net loss before finance costs and
taxation (12,907) (1,028)
Finance income - 9
Finance costs 9 (2,352) (3,086)
------------------------------------------- ------ -------------- --------------
Loss before tax (15,259) (4,105)
Income tax 10 704 (44)
------------------------------------------- ------ -------------- --------------
Loss after tax (14,555) (4,149)
------------------------------------------- ------ -------------- --------------
Other comprehensive income
------------------------------------------- ------ -------------- --------------
Other comprehensive income to be
reclassified to profit or loss
in subsequent periods:
Exchange differences on translating
foreign operations (37) 16
------------------------------------------- ------ -------------- --------------
Net other comprehensive income
to be reclassified to profit or
loss in subsequent periods (37) 16
Tax on other comprehensive income -
Other comprehensive income net
of tax (37) 16
Total comprehensive loss after
tax (14,592) (4,133)
Loss after tax
------------------------------------------- ------ -------------- --------------
Attributable to:
- Owners of the parent (14,555) (4,144)
- Non-controlling interests - (5)
------------------------------------------- ------ -------------- --------------
(14,555) (4,149)
------------------------------------------- ------ -------------- --------------
Total comprehensive loss
------------------------------------------- ------ -------------- --------------
Attributable to:
- Owners of the parent (14,592) (4,128)
- Non-controlling interests - (5)
------------------------------------------- ------ -------------- --------------
(14,592) (4,133)
------------------------------------------- ------ -------------- --------------
Basic loss per share 11 (4.15)cents (1.18) cents
------------------------------------------- ------ -------------- --------------
Diluted loss per share 11 (4.15)cents (1.18) cents
------------------------------------------- ------ -------------- --------------
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Interim Consolidated statement of financial position
At 30 June 2017
(Unaudited) (Audited)
30 June 2017 31 December 2016
Assets Notes US$'000 US$'000
-------------------------------------------------------- ------ -------------- ------------------
Non-current assets
Property, plant and equipment 27 33
Intangible assets - 2
Investments at fair value through profit or loss 13 60,676 72,023
Loans 14 350 350
61,053 72,408
-------------------------------------------------------- ------ -------------- ------------------
Current assets
Loans due within one year 14 24,293 24,290
Trade and other receivables 15 4,060 4,007
Cash and cash equivalents 880 1,786
-------------------------------------------------------- ------ -------------- ------------------
29,233 30,083
-------------------------------------------------------- ------ -------------- ------------------
Total assets 90,286 102,491
-------------------------------------------------------- ------ -------------- ------------------
Current liabilities
Trade and other payables 16 4,247 3,971
Performance incentive payable within one year 16 8 8
Financial guarantee contracts 17 435 435
-------------------------------------------------------- ------ -------------- ------------------
4,690 4,414
-------------------------------------------------------- ------ -------------- ------------------
Non-current liabilities
Long term borrowing 18 2,500 2,500
Provision 19 296 82
Redeemable/convertible zero dividend preference shares 20 49,623 47,469
Deferred income tax liability 10 1,314 2,017
53,733 52,068
-------------------------------------------------------- ------ -------------- ------------------
Net assets 31,863 46,009
-------------------------------------------------------- ------ -------------- ------------------
Equity attributable to owners of the parent
Issued capital 21 56 56
Share premium 150,414 150,414
Share-based payment reserve 5,048 5,048
Accumulated losses (124,122) (109,567)
Translation reserve (1,527) (1,490)
Other reserve 22 1,056 1,056
-------------------------------------------------------- ------ -------------- ------------------
30,925 45,517
Non-controlling interests 938 492
-------------------------------------------------------- ------ -------------- ------------------
Total equity 31,863 46,009
-------------------------------------------------------- ------ -------------- ------------------
Total equity and liabilities 90,286 102,491
-------------------------------------------------------- ------ -------------- ------------------
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Interim Consolidated statement of changes in equity
For the six months ended 30 June 2017
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$'000
--------------- ------- -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
At 1 January
2017 56 150,414 5,048 (109,567) (1,490) - 1,056 45,517 492 46,009
------------------------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
Loss for the
period - - - (14,555) - - - (14,555) - (14,555)
Other comprehensive
income - - - - (37) - - (37) - (37)
Total comprehensive
income/(loss) - - - (14,555) (37) - - (14,592) - (14,592)
Minority interests - - - - - - - - 446 446
------------------------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
At 30 June
2017 56 150,414 5,048 (124,122) (1,527) - 1,056 30,925 938 31,863
------------------------ -------- -------- -------- ------------ ------------ ---------- -------- --------- ----------------- ---------
Attributable to equity holders of the parent
Share- Equity
based component
Issued Share payment Accumulated Translation of Other Non-controlling Total
capital premium reserve losses reserve CZDP reserve Total interests Equity
--------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- -------- ----------------- --------
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- -------- ----------------- --------
At 1 January
2016 56 150,414 7,573 (135,824) (1,495) 8,297 1,056 30,077 505 30,582
--------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- -------- ----------------- --------
Loss for the
period - - - (4,144) - - - (4,144) (5) (4,149)
Other
comprehensive
income - - - - 16 - - 16 - 16
--------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- -------- ----------------- --------
Total
comprehensive
income/(loss) - - - (4,144) 16 - - (4,128) (5) (4,133)
Share-based
payment
expense 23 - - 53 - - - - 53 - 53
Minority
interests - - - - - - - - (3) (3)
At 30 June
2016 56 150,414 7,626 (139,968) (1,479) 8,297 1,056 26,002 497 26,499
--------------- ------ -------- -------- -------- ------------ ------------ ---------- -------- -------- ----------------- --------
The following describes the nature and purpose of each reserve
within parent's equity:
Reserve Description and purpose
-------------------- ---------------------------------------------------
Share premium Amounts subscribed for share capital in excess
of nominal value.
-------------------- ---------------------------------------------------
Share-based payment Equity created to recognise share-based payment
reserve expense.
-------------------- ---------------------------------------------------
Accumulated losses Cumulative net gains and losses recognised
in profit or loss.
-------------------- ---------------------------------------------------
Translation reserve Equity created to recognise foreign currency
translation differences.
-------------------- ---------------------------------------------------
Equity component of Difference between the proceeds of the convertible
CZDP 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 22) shares and capital redemption.
-------------------- ---------------------------------------------------
The accompanying notes form an integral part of these
consolidated financial statements.
Origo Partners Plc
Interim Consolidated statement of cash flows
For the six months ended 30 June 2017
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
Notes US$'000 US$'000
--------------------------------------------- ------ ------------ ------------
Loss before tax (15,259) (4,105)
--------------------------------------------- ------ ------------ ------------
Adjustments for:
Depreciation and amortisation 6 7 14
Release of provision for performance
incentive 5 - 71
Share-based payments 23 215 29
Provision for bad debts 6 833 -
Realised gains on disposal of investments 3 (395) (26)
Unrealised losses on investments at FVTPL* 3 11,344 (373)
Unrealised losses on loans 3 (3) (124)
Income from loans 3 (267) (356)
Foreign exchange (gains)/losses (8) (92)
Interest expenses of long term borrowing 9 176 -
Interest expenses of RZDP/CZDP** 9 2,155 3,083
Operating loss before changes in working
capital and provisions (1,202) (1,879)
--------------------------------------------- ------ ------------ ------------
Proceeds from disposals of investments
at FVTPL* 14 -
(Increase)/decrease in trade and other
receivables (53) 36
Increase in trade and other payables 321 1,206
Net cash outflow from operations (920) (637)
--------------------------------------------- ------ ------------ ------------
Investing activities
Disposal of property, plant and equipment - -
Net cash acquired from subsidiary 14 8
Net cash inflow from investing activities 14 8
--------------------------------------------- ------ ------------ ------------
Financing activities
Proceeds from long term borrowing - -
Net cash inflow from financing activities - -
--------------------------------------------- ------ ------------ ------------
Net increase/(decrease) in cash and cash
equivalents (906) (629)
--------------------------------------------- ------ ------------ ------------
Effect of exchange rate changes on cash
and cash equivalents - (3)
Cash and cash equivalents at beginning
of period 1,786 1,272
--------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of period 880 640
--------------------------------------------- ------ ------------ ------------
* 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 Interim Consolidated Financial Statements
1 General information
Origo Partners Plc is a limited liability company incorporated
and domiciled in the Isle of Man whose shares are publicly traded
on the AIM market of the London Stock Exchange.
The Company and its subsidiaries are collectively referred to as
the Group.
The principal activities of the Group are private equity
investment, focused on growth opportunities created by the
urbanization and industrialization of China. The Group's Investing
Policy has now changed from that of a closed-ended, permanent
capital vehicle to that of a realisation company with the mandate
to return the net proceeds of realisations to shareholders.
These interim consolidated financial statements have been
approved and authorised for issue by the Company's board of
directors on 11 September 2017.
2 Basis of preparation and significant accounting policies
2.1 Basis of preparation
These interim consolidated financial statements have been
prepared in accordance with International Accounting Standard 34
"Interim Financial Reporting".
These interim consolidated financial statements do not include
all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual financial statements for the year ended 31 December
2016, which were prepared in accordance with IFRSs as adopted by
the European Union.
2.2 Summary of significant accounting policies
The accounting policies adopted in the preparation of the
interim consolidated financial statements are consistent with those
followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2016.
The Group has not early adopted any other standard,
interpretation or amendment that was issued but is not yet
effective.
3 Investment loss
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
US$'000 US$'000
------------------------------------------ -------------- --------------
Realised (losses)/gains on disposal
of investments 395 26
------------------------------------------ -------------- --------------
- Investments at FVTPL 9 29
- Subsidiary 386 (3)
------------------------------------------ -------------- --------------
Unrealised (losses)/gains on investments (11,341) 497
------------------------------------------ -------------- --------------
- Investments at FVTPL (11,344) 373
- Loans at FVTPL 3 124
Income from loans 267 356
Total (10,679) 879
------------------------------------------ -------------- --------------
4 Consulting services payable
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
US$'000 US$'000
----------------------------- -------------- --------------
Consulting services payable (740) (966)
----------------------------- -------------- --------------
Total (740) (966)
----------------------------- -------------- --------------
5 Performance incentive
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
US$'000 US$'000
-------------------------------------- --------------- --------------
Release of provision for performance
incentive payable over
one year - (71)
-------------------------------------- --------------- --------------
Total - (71)
-------------------------------------- --------------- --------------
A provision at consolidated statement of financial position for
future performance incentive for the period ended 30 June 2017 was
US$Nil (2016: US$Nil) (Note 19). The performance incentives are
accrued and payable to Origo Advisors Ltd. Refer to Note 24 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$90,000,000 of Gross Realisation).
** Gross Realisation: cumulative gross cash proceeds received by
or on behalf of the Group which are derived from the realisation of
assets in the portfolio investment companies, after having made
full provision for repayment of any third party debt (including any
unpaid interest thereon) and any related hedge or other break costs
and any prepayment fees and penalties thereon, but before any
related transactional costs, fees and expenses and any taxes
required to be paid by the relevant selling entity that arise
directly as a result of completion of the relevant transaction to
dispose of the relevant asset, provided that any amounts of
deferred consideration or earn-out shall not be counted towards
such realisations until actually received by the relevant selling
member of the Group.
6 Other administrative expenses
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
US$'000 US$'000
------------------------- -------------- --------------
Employee expenses (91) (162)
Professional fees (289) (682)
Audit fees
-------------- --------------
- Current year - (2)
Depreciation expenses (7) (14)
Provision for bad debts (833) -
Others (86) (93)
------------------------- -------------- --------------
Total (1,306) (951)
------------------------- -------------- --------------
7 Directors' remuneration
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 2017 30 June 2016
US$'000 US$'000
------------------------------ -------------- --------------
Directors' emoluments 153 153
Share-based payment expenses - 45
------------------------------ -------------- --------------
153 198
------------------------------ -------------- --------------
Directors' remuneration for the six months ended 30 June 2017
and the number of options held were as follows:
30 June
Director Share-based 2017
Salaries* fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
----------------------------- ----------- --------- ------------ --------- ------------
Mr. Niklas Ponnert - - 22 - 4,500,000
Mr. Lionel de Saint-Exupery - 78 - 78 -
Ms. Shonaid Jemmett
Page - 75 - 75 -
- 153 - 153 4,500,000
----------------------------------------- --------- ------------ --------- ------------
Directors' remuneration for the six months ended 30 June 2016
and the number of options held were as follows:
Director Share-based 2016
Salaries* fee payment** Total Number
Name US$'000 US$'000 US$'000 US$'000 of options
----------------------------- ----------- --------- ------------ --------- ------------
Mr. Wang Chao Yong*** - - 7 7 4,000,000
Mr. Chris A Rynning*** - - 19 19 3,500,000
Mr. Niklas Ponnert - - 19 19 5,300,000
Mr. Christopher
Jemmett*** - - - - 100,000
Mr. Lionel de Saint-Exupery - 78 - 78 -
Mr. Tom Preststulen*** - - - - -
Ms. Shonaid Jemmett
Page - 75 - 75 -
- 153 45 198 12,900,000
----------------------------------------- --------- ------------ --------- ------------
* Short term employee benefits.
** Share-based payment refers to expenses arising from the
Company's share option scheme (Note 23).
*** Mr. Wang Chao Yong, Mr. Chris A Rynning, Mr. Christopher
Jemmett and Mr. Tom Preststulen resigned as Directors of the
Company in February 2015. The remaining directors of the Company
are Shonaid Jemmett-Page (Non-executive Chairman), Lionel de
Saint-Exupery (Non-executive Director) and Niklas Ponnert
(Director).
8 Operating segment information
Operating segments are components of the entity whose results
are regularly reviewed by the entity's chief operating
decision-maker to make decisions about resources to be allocated to
the segment and to assess its performance. The chief operating
decision-maker for the Group is considered to be the Board of
Directors. The Group's operating segments have been defined based
on the types of investments which was equity investment and debt
instrument in 2017 and 2016.
For the six months ended 30 June 2017 (Unaudited)
Unlisted Listed Total
Equity Debt Total Equity Debt Total
US$'000 US $'000 US $'000 US $'000 US $'000 US $'000 US $'000
----------------- --------- --------- --------- --------- --------- --------- ---------
Investment
loss:
Realised gains
on disposal
of investments 386 - 386 9 - 9 395
Unrealised
(losses)/gains
on investments (10,571) 3 (10,568) (773) - (773) (11,341)
Income from
loans - 267 267 - - - 267
--------- --------- --------- --------- --------- --------- ---------
Total (10,185) 270 (9,915) (764) - (764) (10,679)
Unallocated
corporate
expense (4,580)
Loss before
tax (15,259)
Income tax 444 - 444 - - - 704
Loss for the
period (14,555)
Net divestment
Net proceeds
of divestment 14 - 14 14 - 14 28
----------------- --------- --------- --------- --------- --------- --------- ---------
Statement
of financial
position
Investment
portfolio 41,264 24,643 65,907 19,412 - 19,412 85,319
----------------- --------- --------- --------- --------- --------- --------- ---------
The Group's geographical areas based on the location of
investment assets, are defined primarily as China, Mongolia, South
Africa and Europe, as presented in the following table.
For the six months ended 30 June 2017 (Unaudited)
Europe China Mongolia South Africa Total
US$'000 US $'000 US $'000 US $'000 US $'000
------------------------ -------- --------- --------- ------------- ---------
Investment loss:
Realised gains
on disposal of
investments 9 386 - - 395
Unrealised losses
on investments (22) (10,549) (770) - (11,341)
Income from loans - 267 - - 267
------------------------ -------- --------- --------- ------------- ---------
Total (13) (9,896) (770) - (10,679)
------------------------ -------- --------- --------- -------------
Unallocated corporate
expense (4,580)
Loss before tax (15,259)
Income tax - 444 - - 704
Loss for the period (14,555)
Net divestment
Net proceeds of
divestment 28 - - - 28
------------------------ -------- --------- --------- ------------- ---------
Statement of financial
position
Investment portfolio 1,247 73,292 10,649 131 85,319
------------------------ -------- --------- --------- ------------- ---------
For the six months ended 30 June 2016
Unlisted Listed Total
Equity Debt Total Equity Debt Total
US$'000 US $'000 US $'000 US $'000 US $'000 US $'000 US $'000
----------------------------- -------- --------- --------- --------- --------- --------- ---------
Investment
loss:
Realised gains
on disposal
of investments 4 - 4 22 - 22 26
Unrealised
gains/(losses)
on investments (540) (3) (543) 913 127 1,040 497
Income from
loans - 271 271 - 85 85 356
---------
Total (536) 268 (268) 935 212 1,147 879
----------------------------- -------- --------- --------- --------- --------- ---------
Unallocated
corporate expense (4,984)
Loss before
tax (4,105)
Income tax (44) - - - - - (44)
Loss for the
period (4,149)
Net divestment/(investment)
Net proceeds
of divestment - - - - - - -
Investment - - - - - - -
----------------------------- -------- --------- --------- --------- --------- --------- ---------
Statement of
financial position
Investment
portfolio 75,585 24,646 100,231 2,374 1,920 4,294 104,525
----------------------------- -------- --------- --------- --------- --------- --------- ---------
Europe China Mongolia South Africa Total
US$'000 US $'000 US $'000 US $'000 US $'000
----------------------------- -------- --------- --------- ------------- ---------
Investment loss:
Realised gains/(losses)
on disposal of
investments - (3) 29 - 26
Unrealised gains/(losses)
on investments (75) 534 38 - 497
Income from loans - 271 85 - 356
----------------------------- -------- --------- --------- ------------- ---------
Total (75) 802 152 - 879
----------------------------- -------- --------- --------- -------------
Unallocated corporate
expense (4,984)
Loss before tax (4,105)
Income tax - 406 - - (44)
Loss for the period (4,149)
Net divestment/(investment)
Net proceeds of
divestment - - - - -
Investment - - - - -
----------------------------- -------- --------- --------- ------------- ---------
Statement of financial
position
Investment portfolio 1,025 88,000 15,500 - 104,525
----------------------------- -------- --------- --------- ------------- ---------
9 Finance costs
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
US$'000 US$'000
--------------------------------------------- ------------ ------------
Finance costs
Bank charges (21) (3)
Interest expenses of long term borrowing (176) -
Interest expenses of redeemable/convertible
zero dividend preference shares (2,155) (3,083)
---------------------------------------------- ------------ ------------
(2,352) (3,086)
--------------------------------------------- ------------ ------------
10 Income tax
As the Company is not in receipt of income from Manx land,
certain related business or property and does not hold a Manx
banking licence, it is taxed at the standard rate of 0% on the Isle
of Man. The Company is resident for tax purposes in the Isle of Man
and subject to corporate income tax at the standard rate of 0% and
as such no provision for tax in the Isle of Man has been made.
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
US$'000 US$'000
--------------------------------------------- ------------ ------------
Current tax
Current year - -
Deferred tax
Deferred income tax* 704 (44)
Total income tax credit in the consolidated
statement of comprehensive income 704 (44)
--------------------------------------------- ------------ ------------
* The deferred income tax liability US$ 1,314,000 relates to
fair value gain of 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%.
11 Loss per share ("LPS")
(Unaudited) (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
Numerator US$'000 US$'000
----------------------------------------------- ------------ -------------
Loss for the period attributable to owners
of the parent
as used in the calculation of basic loss
per share (14,555) (4,144)
----------------------------------------------- ------------ -------------
Loss for the period attributable to owners
of the parent
as used in the calculation of diluted
loss per share (14,555) (4,144)
----------------------------------------------- ------------ -------------
(Unaudited) (Unaudited)
30 June 30 June
2017 2016
Number
of Number of
Denominator Shares Shares
----------------------------------------------- ------------ -------------
Weighted average number of ordinary shares
for basic LPS 351,035,389 351,035,389
----------------------------------------------- ------------ -------------
Effect of dilution*:
Share options - -
Convertible zero dividend preference shares - -
----------------------------------------------- ------------ -------------
Weighted average number of ordinary shares
adjusted for the effect of dilution 351,035,389 351,035,389
----------------------------------------------- ------------ -------------
(4.15)
Basic LPS cents (1.18) cents
----------------------------------------------- ------------ -------------
(4.15)
Diluted LPS cents (1.18) cents
----------------------------------------------- ------------ -------------
12 Investments in subsidiaries
The principal subsidiaries of the Group are as follows:
Proportion Proportion
of ownership of ownership
interest interest
Country of at 30 June at 31 December
Name incorporation 2017 2016
----------------------------- ---------------- -------------- ----------------
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 Holding British Virgin
Ltd*** Islands - 71.2%
----------------------------- ---------------- -------------- ----------------
* Owned by Origo Resource Partners Ltd
** Owned by Ascend Ventures Ltd
*** Struck off
13 Investments at fair value through profit or loss
As at 30 June 2017(Unaudited)
Fair
value Proportion Fair
Country of hierarchy of ownership Cost value
Name* incorporation level interest US$'000 US$'000
-------------------------- ----------------- ----------- -------------- ------------------------- ---------
China Rice Ltd (Note British Virgin
d) Islands 3 32.1% 13,000 16,378
Kincora Copper Ltd
(Notes c and d) Canada 1 30.9% 8,571 4,187
Moly World Ltd (Note British Virgin
d) Islands 3 20.0% 10,000 3,783
British Virgin
Niutech Energy Ltd Islands 3 18.4% 6,350 14,160
Unipower Battery Ltd
(Note d) Cayman Islands 3 16.5% 4,301 6,250
Gobi Coal & Energy British Virgin
Ltd (Note c) Islands 3 10.8% 14,960 2,679
Staur Aqua AS Norway 3 9.2% 719 562
British Virgin
Celadon Mining Ltd Islands 3 8.9% 13,069 9,843
Rising Technology
Corporation Ltd/Beijing
Rising Information
Technology Ltd (Note British Virgin 2%/
b) Islands 3 1.6% 5,565 1,000
British Virgin
Six Waves Inc Islands 3 1.1% 240 1,515
Marula Mines Ltd South Africa 3 0.9% 250 131
Fram Exploration AS Norway 3 0.6% 1,223 125
Other quoted investments
(Note c) 1 682 63
--------------------------------------------- ----------- -------------- ------------------------- ---------
60,676
-------------------------------------------- ----------- -------------- ------------------------- ---------
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 2016 (Audited)
Fair
value Proportion Fair
Country of hierarchy of ownership Cost value
Name* incorporation level interest US$'000 US$'000
-------------------------- ----------------- ----------- -------------- ------------------------- ---------
China Rice Ltd (Note British Virgin
d) 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 (Note British Virgin
d) Islands 3 20.0% 10,000 3,783
British Virgin
Niutech Energy Ltd Islands 3 18.4% 6,350 14,160
Unipower Battery Ltd
(Note d) Cayman Islands 3 16.5% 4,301 6,648
Gobi Coal & Energy British Virgin
Ltd (Note c) Islands 3 10.8% 14,960 2,679
Staur Aqua AS Norway 3 9.2% 719 562
British Virgin
Celadon Mining Ltd Islands 3 8.9% 13,069 20,059
Rising Technology
Corporation Ltd/Beijing
Rising Information
Technology Ltd (Note British Virgin 2%/
b) Islands 3 1.6% 5,565 1,000
British Virgin
Six Waves Inc 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
-------------------------------------------- ----------- -------------- ------------------------- ---------
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 2016, 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 period of 2017 and 2016.
The following table provides an analysis of investments carried
at fair value by level of fair value hierarchy:
30 June 2017 (Unaudited)
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 4,250 - 15,160 19,410
* Unlisted equity investments - - 41,266 41,266
4,250 - 56,426 60,676
------------------------------------ -------- -------- -------- --------
2016 (Audited)
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
------------------------------------ -------- -------- -------- --------
Changes in investments at fair value through profit or loss
based on Level 3:
(Unaudited)
Six months
ended (Audited)
30 June 2017 2016
US$'000 US$'000
---------------------------------------------- -------------- ----------
Opening balance 66,995 76,125
Proceeds from disposals of investments - (353)
Realised losses on disposals of investments - (440)
Net exchange difference 1,164 (4,657)
Movement in unrealised losses on investments
- In profit or loss (11,733) (3,680)
Closing balance 56,426 66,995
---------------------------------------------- -------------- ----------
The fair value decrease on investments categorised within Level
3 of US$10,569,000 (2015: US$8,337,000) was recorded in the
consolidated statement of comprehensive income.
Description of significant unobservable inputs to valuation:
as at 30 June 2017
Significant
unobservable
Valuation technique inputs Range
------------------------------ --------------------- ------------------------ ----------
Investments in unquoted Discounted Weighted average
equity 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 Discount for
& mining sector* Multiples method lack of marketability 20% - 30%
Investments in unquoted
equity shares - cleantech Discount for
sector* Multiples method lack of marketability 30%
Investments in unquoted
equity shares - agriculture Discount for
sector* Multiples method lack of marketability 30%
Investments in unquoted
equity shares - TMT Discount for
sector* Multiples method lack of marketability 30%
as at 31 December 2016
Significant
unobservable
Valuation technique inputs Range
------------------------------ --------------------- ------------------------ ----------
Investments in unquoted Discounted Weighted average
equity 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 Discount for
& mining sector* Multiples method lack of marketability 20% - 30%
Investments in unquoted
equity shares - cleantech Discount for
sector* Multiples method lack of marketability 30%
Investments in unquoted
equity shares - agriculture Discount for
sector* Multiples method lack of marketability 30%
Investments in unquoted
equity shares - TMT Discount for
sector* Multiples method lack of marketability 30%
Risk management activities
Fair value risk
The Group's financial assets are predominantly investments in
unquoted companies, and the fair value of each investment depends
upon a combination of market factors and the performance of the
underlying asset. The Group does not hedge the market risk inherent
in the portfolio but 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.
14 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 30 June 2017 (Unaudited)
Loans
due within Loans
Loan Loan one year due after Fair
rates principal one year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
---------------------- ----------- ------- ----------- ------------ ------------ --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery Ltd 3 6 9,000 9,000 - 9,000
Staur Aqua AS 3 0-15 3,848 145 350 495
Sub-total 24,145 350 24,495
---------------------- ----------- ------- ----------- ------------ ------------ --------
Loan agreements*
Unipower Battery Ltd 12 164 148 - 148
Sub-total 148 - 148
----------------------- --- ---- ------- ---- -------
Total 24,293 350 24,643
----------------------- --- ---- ------- ---- -------
* Loans in relation to convertible credit agreements are
measured at fair value. Loans in relation to loan agreements are
measured at amortised cost using the effective interest rate method
less any identified impairment losses.
As at 31 December 2016
Loans
due within Loans
Loan Loan one year due after Fair
rates principal one year value
-----------
Fair US$'000 US$'000 US$'000 US$'000
value
hierarchy
Borrower level %
---------------------- ----------- ------- ----------- ------------ ------------ --------
Convertible credit
agreements*
China Rice Ltd 3 4 15,000 15,000 - 15,000
Unipower Battery Ltd 3 6 9,000 9,000 - 9,000
Staur Aqua AS 3 0-15 3,848 145 350 495
Sub-total 24,145 350 24,495
---------------------- ----------- ------- ----------- ------------ ------------ --------
Loan agreements*
Unipower Battery Ltd 12 164 145 - 145
Sub-total 145 - 145
----------------------- --- ---- ------- ---- -------
Total 24,290 350 24,640
----------------------- --- ---- ------- ---- -------
Statement of changes in loans:
(Unaudited) (Audited)
Six months 2016
ended30
June 2017
US$'000 US$'000
-------------------------------------------- ------------ -----------
Opening balance 24,640 26,443
Repayment - (383)
Converted into ordinary shares - (1,532)
Net exchange difference 3 (5)
Movement in realised and unrealised losses
on investments
- In profit or loss - 117
Closing balance 24,643 24,640
-------------------------------------------- ------------ -----------
Changes in convertible credit agreements based on Level 3:
(Unaudited) (Audited)
Six months 2016
ended30
June 2017
US$'000 US$'000
-------------------------------------------- ------------ -----------
Opening balance 24,495 26,288
Repayment - (383)
Converted into ordinary shares - (1,532)
Net exchange difference - (5)
Movement in realised and unrealised losses
on investments
- In profit or loss - 127
Closing balance 24,495 24,495
-------------------------------------------- ------------ -----------
The fair value decrease on convertible credit agreements
categorised within Level 3 of US$Nil (2016: US$212,000), was
recorded in the consolidated statement of comprehensive income.
15 Trade and other receivables
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
--------------------------- ---- ---- ------------ -------------
Trade debtors - 5
Other debtors 657 889
Loan interest receivables 3,403 3,113
Prepayments - -
Total 4,060 4,007
--------------------------------------- ------------ -------------
16 Trade and other payables
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
------------------------------- ---- ---- ------------ -------------
Trade payables 5 5
Other payables 4,242 3,966
Performance incentive payable
within one year 8 8
------------------------------------------- ------------ -------------
Total 4,255 3,979
------------------------------------------- ------------ -------------
17 Financial guarantee contracts
(Unaudited) (Audited)
31 December
30 June 2017 2016
US$'000 US$'000
-------------------------------- ---- -------------- -------------
Financial guarantee contracts* 435 435
-------------------------------------- -------------- -------------
Total 435 435
-------------------------------------- -------------- -------------
* In July 2013, the Group entered into a guarantee agreement
with IRCA Holdings Ltd and ABSA Bank Limited to guarantee the
repayment of loan facilities of up to Rand 6,769,000 extended by
ABSA Bank Limited to IRCA Holdings Ltd, which has applied for
liquidation, so the Group recognised it as a liability. The payment
request related to this provision is expected in the next year.
18 Long term borrowing
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
--------------------------- ---- ---- ------------ -------------
Long term borrowing * 2,500 2,500
Total long term borrowing 2,500 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$6,000,000 to the
Company's shareholders in accordance with articles 4.10 to 4.12 of
the Company's Articles provided it has sufficient funds to repay
the Facility. The Company may at any time prepay the Facility, in
whole or in part, without penalty.
As at 30 June 2017, no distribution had been made in accordance
with articles 4.10 to 4.12 of the Company's Articles.
19 Provision
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
-------------------------------------------- ------------ -------------
Upper share rights/contingent share awards
* 296 82
Performance incentive provision** - -
-------------------------------------------- ------------ -------------
Total 296 82
-------------------------------------------- ------------ -------------
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
----------------------------------------------- ------------ -------------
Opening balance 82 4,262
Movement in upper share rights/contingent
share awards * 214 15
Movement in performance incentive provision** - (4,195)
----------------------------------------------- ------------ -------------
Total 296 82
----------------------------------------------- ------------ -------------
* The provision relates to the fair value of upper share rights
and contingent share awards granted to certain directors,
executives and key employees under the Company's joint share
ownership scheme. Further details about the upper share rights and
contingent share awards are included in Note 23. The provision is
expected to be utilised in the next 9 years provided the upper
share rights are exercised.
** Refer to Note 5 for total performance incentive expenses. The
provision is expected to be utilised when investments are realised
and the hurdle is reached.
20 Redeemable / convertible zero dividend preference shares
Early
Number redemption
of Liability Equity option
shares Component component derivative
US$'000 US$'000 US$'000
-------------------------------------- ----------- ----------- ----------- ------------
Balance at 1 January 2016 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 - -
--------------------------------------- ----------- ----------- ----------- ------------
Interest expense on redeemable
zero dividend preference -
shares - 2,154 -
-------------------------------------- ----------- ----------- ----------- ------------
Balance at 30 June 2017 57,000,000 49,623 - -
--------------------------------------- ----------- ----------- ----------- ------------
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$1.0526 shall be subject to the accretion of a rate of
return equal to 4 per cent per annum from (and including) 1 January
2018 to (and including) the date on which such amount is redeemed,
with such return accruing on a simple and not compound basis. Due
to the revised terms, the convertible zero dividend preference
shares were regarded as an extinguishment and redeemable zero
dividend preference shares were therefore recognised.
The redeemable zero dividend preference shares are now subject
to the distribution in accordance with articles 4.10 to 4.12 of the
revised Articles. In summary, the distribution is mandatory to
distribute when the Company's available funds,
which is the aggregate amount of the Company's net cash less (i)
working capital requirements for the following 12 months and (ii)
comply with the solvency test under the Companies Act 2006
("Solvency Test").
The redeemable zero dividend preference shares only have a
liability component and the new effective interest rate of the
liability component is 9.18% per annum.
21 Issued capital
(Unaudited) (Audited)
30 June 2017 31 December 2016
Number of Number of
Authorised shares GBP'000 shares GBP'000
--------------------------------- ------------ -------- ------------ --------
Ordinary shares of GBP 0.0001
each 500,000,000 50 500,000,000 50
--------------------------------- ------------ -------- ------------ --------
Number of Number of
Issued and fully paid shares US$'000 shares US$'000
--------------------------------- ------------ -------- ------------ --------
At beginning of the period/year 358,746,814 56 358,746,814 56
New issue of shares - - - -
Buyback shares - - - -
At end of the period/year 358,746,814 56 358,746,814 56
--------------------------------- ------------ -------- ------------ --------
22 Other reserve
Included within the other reserve mainly comprised 7,711,425
shares of the Company held by Employee Benefit Trust ("EBT") and
the amounts of US$ 3,162,677 credited from the capital redemption
of CCP fund in 2014.
23 Share-based payments
The Group has a number of share schemes that allow employees to
acquire shares in the Company.
The total cost recognised in the consolidated statement of
comprehensive income is shown below:
(Unaudited) (Audited)
30 June 31 December
2017 2016
US$'000 US$'000
-------------------------------------------- ------------ -------------
Equity-settled option - (52)
Upper share rights/contingent share awards (215) (15)
Total (215) (67)
-------------------------------------------- ------------ -------------
The following table illustrates the number ("No.") and weighted
average exercise prices ("WAEP") of, and movements in, share
options during the six months ended 30 June 2017 and 31 December
2016.
(Unaudited) (Audited)
30 June 2017 31 December 2016
No. WAEP No. WAEP
------------------------------ ----------- ------- ------------ ---------
Outstanding at 1 January 13,500,000 29.22p 20,951,932 26.87p
------------------------------ ----------- ------- ------------ ---------
Granted during the period/
year - -
Forfeited during the period/
year - -
Exercised during the period/
year - -
Expired during the period/
year (7,451,932) (22.62p)
Outstanding at the end
of the period/year 13,500,000 29.22p 13,500,000 29.22p
------------------------------ ----------- ------- ------------ ---------
Exercisable at the end
of the period/year 13,500,000 29.22p 13,500,000 29.22p
------------------------------ ----------- ------- ------------ ---------
The weighted average remaining contractual life for the share
options outstanding as at 30 June 2017 was 2.06 years (31 December
2016: 2.56 years).
The range of exercise prices for options outstanding at the end
of the period was 20 pence to 59.85 pence (31 December 2016: 20
pence to 59.85 pence).
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 six months ended 30
June 2017 and the year ended 31 December 2016.
(Unaudited) (Audited)
30 June 2017 31 December 2016
No. WAEP No. WAEP
------------------------------ ---------- ------ ------------ ------
Outstanding at 1 January 7,711,425 9.48p 7,711,425 9.48p
------------------------------ ---------- ------ ------------ ------
Granted during the period/
year - - - -
Forfeited during the period/
year - - - -
Exercised during the period/
year - - - -
Expired during the period/
year - - - -
Outstanding at the end of
the period/ year 7,711,425 9.48p 7,711,425 9.48p
------------------------------ ---------- ------ ------------ ------
Exercisable at the end of
the period/ 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 the end of the period was 4.01 years
(2016: 4.51 years).
The range of exercise prices for options outstanding at the end
of the period was zero to 15.5 pence (2016: 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 period.
(Unaudited) (Audited)
30 June 31 December
2017 2016
Underlying stock price (pence) 1.625 2.125
Exercise price (pence) 15.4 15.4
Expected life of option (years) 2 2
Expected volatility (%) 377.55 373.64
Expected dividend yield (%) - -
Risk-free interest rate (%) 0.5 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 30 June
2017 using source data from Reuters.
The carrying amount of the liability relating to the upper share
rights and the contingent share award as at 30 June 2017 is
US$296,000 (2016: US$82,000) and the credit expense recognised as
share-based payments during the period is US$215,000 (2016: expense
of US$15,000).
24 Related party transactions
Identification of related parties
The Group has a related party relationship with its
subsidiaries, associates and key management personnel. The Company
receives and pays certain debtors and creditors on behalf of its
subsidiaries and the amounts are recharged to the entities.
Transactions between the Company and its subsidiaries have been
eliminated on consolidation.
Transactions with key management personnel
The Group's key management personnel are the Executive and
Non-executive Directors as identified in the director's report
(Note 7).
Trading transactions
The following table provides the total amount of significant
transactions and outstanding balances which have been entered into
with related parties during the six months ended 30 June 2017 and
the year ended 31 December 2016.
(Unaudited) (Audited)
31 December
30 June 2017 2016
---------------------------------
US$'000 US$'000
--------------------------------- -------------- -------------
Amounts due to related parties*
Key management personnel:
Lionel de Saint-Exupery*** (105) (66)
Shonaid Jemmett Page*** (175) (138)
Other:
Origo Advisors Ltd** (2,739) (2,422)
--------------------------------- -------------- -------------
(Unaudited) (Audited)
30 June 31 December
2017 2016
-------------------------------------------------------
US$'000 US$'000
------------------------------------------------------- ------------ -------------
Transactions
Origo Advisors Ltd**
* Consulting services payable (740) (1,769)
* Release of provision for performance incentive - 4,195
------------------------------------------------------- ------------ -------------
* 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.
25 Commitments and contingencies
There were no other material contracted commitments or
contingent assets or liabilities at 30 June 2017 (31 December 2016:
none) that have not been disclosed in the consolidated financial
statements.
26 Events after the reporting period
In July 2017, Origo announced that the sale of up to a 5.9%
beneficial interest in Jinan Heng Yu Environmental Protection
Technology Co., Ltd. ("Heng Yu"), the operating company of Niutech
Energy Ltd, for gross cash proceeds of up to RMB 28.5 million
(approximately US$4.2 million) in two tranches. Heng Yu listed on
China's National Equities Exchange and Quotations (NEEQ), generally
referred to as China's "New Third Board", in May 2016 and, prior to
the Disposals, the Company held an 18.4% indirect beneficial
interest in Heng Yu via Origo's 95.3% holding in Niutech. Following
the Disposals, the Company will continue to hold a 12.4% indirect
beneficial interest in Heng Yu.
In July 2017, Origo announced that it has entered into binding
agreements with ChinaEquity International Holding Co., Ltd
("ChinaEquity") for the disposal of Origo's 2.0% equity stake in
Rising Technology Corporation Ltd and Origo's 1.6% beneficial
interest in Beijing Rising Information Technology Ltd to
ChinaEquity for a cash consideration of US$1.0 million. The net
proceeds of the Disposal will be applied towards Origo's general
working capital requirements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LIFVDAVIFLID
(END) Dow Jones Newswires
September 12, 2017 03:43 ET (07:43 GMT)
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