OPP.L Regulatory News (OPP)

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 20161 (30 June 2016: US$$26.5 million, 31 December 2015: US$30.6 million)

· Restructuring of Origo's share capital and settlement of previous disputes with Brooks Macdonald Group plc ("Brooks Macdonald") during the year

· Loss after tax of US$12.3 million (2015: loss after tax of US$24.4 million) reflecting unrealised and realised losses on investments

· Reduction in operating expenses to US$3.6 million in 2016 (2015: US$4.7 million)

· No investments in existing investee companies during the year (2015: US$0.58 million)

· Raised unsecured loan facility of US$2.5 million (approximately £2 million)

· Cash position of US$1.8 million as at 31 December 2016 (31 December 2015: US$1.3 million)

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:

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 £2.0 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

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated statement of financial position

At 31 December 2016

The consolidated financial statements were approved by the Board of Directors and authorised for issue. They were signed on its behalf by:

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated statement of changes in equity

For the year ended 31 December 2016

Attributable to equity holders of the parent

The following describes the nature and purpose of each reserve within parent's equity:

The accompanying notes form an integral part of these consolidated financial statements.

Consolidated statement of cash flows

For the year ended 31 December 2016

* 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.

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.

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

3 Consulting services payable

4 Performance incentive

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

6 Information regarding directors and employees

* Most employees of the Group have been transferred to and employed by Origo Advisors Ltd. in January 2015, which is controlled by entities whose ultimate beneficiaries include Niklas Ponnert (Director of the Company) and Chris A Rynning (former Director of the Company).

7 Directors' remuneration

Directors' remuneration for the year 2016 and the number of options held were as follows:

Directors' remuneration for the year 2015 and the number of options held were as follows:

* 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

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 year ended 31 December 2015

9 Finance costs

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.

* 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:

Deferred income tax

11 Loss per share ("LPS")

* 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

13 Investments in subsidiaries

The principal subsidiaries of the Group are as follows:

* 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