11 Jun 2009 07:00
Origo Sino-India plc
Preliminary results for the year ended 31 December 2008
Highlights:
Revenues reached £2.8 million (2007: £0.9 million)
Net asset value per share: 39p (2007: 37p)
Net asset value increased to £38.4 million (2007: £25.8 million)
Total investments of £4.7 million in three new portfolio companies
Follow on investments of £0.6 million in existing portfolio companies
Ending cash position of £13.1 million
Operating loss of £2.9 million (2007: £1.9 million)
Net loss of £4.8 million (2007: Net profit: £11.4 million)
Chris Rynning, Chief Executive of Origo Sino-India, said:
"We achieved a creditable performance in 2008 despite the significant economic uncertainty that developed in the second half of the year. This was reflected in significant growth in revenues and assets under management and a strengthened balance sheet."
"Revenues increased by more than 200% to £2.8 million, up from £0.9 million in 2007, reflecting new income streams following our entry into the fund consulting and research services business segments. Growth in revenues shows the robustness of our increasingly diverse business model."
"We have carefully reviewed the value of the Group's investments in light of the worldwide deflation of asset values across a broad spectrum of asset classes. Whilst we have taken significant write-downs on specific holdings, I am pleased to report that the value of our portfolio companies overall has largely been maintained."
Further information:
| Origo Sino-India PLC Chris Rynning (chris@origoplc.com) Niklas Ponnert (niklas@origoplc.com) | +86 1390 124 6417 +86 1351 106 1672 |
| Nominated Adviser: Smith & Williamson Corporate Finance Limited Azhic Basirov / Jo Royden-Turner | +44 (0)20 7131 4000 |
| Broker: Liberum Capital Limited Simon Atkinson | +44 (0)20 3100 2222 |
| Public Relations: Aura Financial Andy Mills / Nina Legge | +44 (0)20 7321 0000 |
Chairman's Statement
I am pleased to present the annual report and consolidated financial statements of Origo Sino-India Plc (the "Company"), and its subsidiaries (together the "Group") for the period ended 31 December 2008. In our second year as an AIM listed company, we have continued to make good operational and strategic progress despite worldwide financial turmoil. I expect our focus on China and India to further strengthen our relative position in the market as the global economic order is rebalanced.
We successfully launched our asset management consulting practice through the IPO of our first co-investment fund, Origo Resource Partners Ltd ("ORP"), at the end of 2007. In 2008, ORP made a number of investments, providing co-investment opportunities and a new revenue stream to the Group. We also successfully raised £17.1 million via a placing to GLG Partners LP in April 2008, substantially improving our capital position.
2008 saw the extension of our market research capabilities, which we believe will provide the Group not only with an additional revenue stream, but will also strengthen our ability to identify promising investment opportunities while providing support to our portfolio companies.
The uncertain economic climate has necessitated a more cautious approach to our investment strategy. We have focused our efforts and financial resources on our existing portfolio companies to ensure they are well placed to develop in the current economic climate. However, the low levels of gearing applied across the Group's investments have shielded the portfolio from the immediate effects of the credit crunch, although we have reduced the carrying value of a number of investments to reflect weakening trading and declining ratings in the wake of the financial crisis.
We enter 2009 confident in our strategy of selectively investing in value accretive opportunities in China and India. Our financial position remains strong, providing us with the confidence to continue to invest in and grow the range of services we provide and to strengthen the companies in our portfolio at a time when many of our competitors are contracting or scaling back investments.
I would like to thank the rest of the Board and our employees for their continued hard work throughout the year and I am confident that, despite the uncertainties facing the world economy, we will continue to grow and develop the business of the Group in 2009.
Chief Executive's Statement
We achieved a creditable performance in 2008 despite the significant economic uncertainty that developed in the second half of the year. This was reflected in significant growth in revenues and assets under management and a strengthened balance sheet.
Investments and divestments
We made three investments in new portfolio companies in the year, totalling £4.7 million, two of which were co-investments with ORP. We believe these new investments offer further diversification to the portfolio and exposure for the Group to three attractive sectors.
New investments (2008)
| Time of initial investment | Company | Business activity | Investment (£ million) |
| February | E-Bill (China) Holding Ltd. | Electronic payment services | 1.0 |
| July | Halosource, Inc. | Water treatment | 1.5 |
| September | Primary Holdings Int'l Trust | Soft-commodities | 2.2 |
In aggregate, total investments amounted to £5.3 million, down from £8.0 million in 2007, reflecting a slowdown in our investment activities in line with the general market trend.
With the unprecedented turmoil in capital markets, exit opportunities were limited in 2008, and the Group did not conclude any divestments in the period. As our targeted average holding period is 2-3 years, we would not expect the Group to enter into a divestment phase until 2010 at the earliest, by which time a majority of analysts expect the global economy to have recovered and possibly returned to moderate growth.
In early 2009, however, we disposed of our holding in Fomento International Ltd. ("FIL"). The stake (acquired at a cost of USD 4 million, or £2 million at the prevailing exchange rate) was sold back to FIL for a total cash consideration of USD 4 million (£2.9 million). In sterling terms, the transaction reflected a 45% uplift on cost. Given the state of commodity markets, and the decline in the values of junior mining stocks in particular, we believe this was a favorable outcome.
Divestment (2009)
| Date of divestment | Company | Cost of investment | Proceeds | Gain/loss on cost |
| February | FIL | £2.0 m | £2.9 m | £0.9 m |
In May 2009, Primary Holdings International Trust agreed to merge with R.M. Williams Agricultural Holdings Pty Ltd. ("RMWAH"). As a result of the merger, the Group's shareholding in PHI was exchanged into an approximately 8% shareholding in RMWAH.
Portfolio
At the end of the year, the Group's portfolio comprised 15 holdings.
The portfolio is almost equally balanced between technology, media and telecom ("TMT") investments (53% of the portfolio by value) and natural resources related holdings (47% by value). Our natural resources investments can be further subdivided into metals & mining (15%), renewable/clean technology (20%), and agriculture (12%). Following the sale of our stake in FIL the focus of the portfolio has been reweighted slightly towards the TMT sector.
The portfolio comprises both early-stage ventures and more mature, expansion stage companies. However, the portfolio as a whole is still in the early stage of the investment cycle. In terms of value, 27% of invested capital was committed in the last 12 months; 71% of the portfolio has been held for 12 to 24 months, and only 2% of the portfolio has been invested for longer than 2 years.
We have carefully reviewed the value of the Group's investments in light of the worldwide deflation of asset values across a broad spectrum of asset classes. Whilst we have taken significant write-downs on specific holdings, I am pleased to report that the value of our portfolio companies overall has largely been maintained. This has been achieved through careful deal structuring including the use of preference shares, which has protected the overall value of our investments in spite of falling equity prices. We have also benefited from favourable foreign exchange movements, in particular the decline of the Sterling against the US dollar. There are two notable exceptions: the value of our common stock holdings in Roshini International Bio-Energy Corporation ("RIBEC") and Rising Technology Corporation Ltd. ("Rising") have been written down substantially due to weakening trading of these two companies, re-ratings of their respective peer-groups, and, in the case of RIBEC, delays in procuring required expansion funding.
Assets under management
We have been successful in continuing to grow the value of assets under management, a key strategic objective of the Group. Assets under management comprise assets on the Group's own balance-sheet, from which we seek to generate a return on capital, as well as assets managed on behalf of third parties in return for fees.
At the end of the period, net assets on the Group's own balance sheet amounted to £38.4 million, up 49% from 2007 (£25.8 million). Third party funds, represented by our consulting engagement with Origo Resource Partners Limited ("ORP"), totalled USD 79.7 million (£55.1 million equivalent), down from USD 91.6 million at the end of the first reporting period (30 June 2008).
In sterling terms, assets under management as at 31 December 2008, comprising the net assets of both the Group and ORP, equalled £93.5 million.
Profit and Loss
Revenues increased by more than 200% to £2.8 million, up from £0.9 million in 2007, reflecting new income streams following our entry into the fund consulting and research services business segments. Growth in revenues shows the robustness of our increasingly diverse business model.
Administration costs rose from £2.4 million in 2007 to £4.0 million because of ongoing investment in people and infrastructure required to support our new ventures. Due to the worsening economic climate in the first half of the year, we were forced to put a number of growth initiatives on hold, in particular the launch of new fund products.
As a result, our operating loss increased to £2.9 million (2007: £1.9 million). A significant proportion of this loss (£1.3 million) relates to non-cash items resulting from recognising the fair value of equity-settled benefits. To put this into perspective, the cash element of our operating loss (£1.5 million) was equivalent to 4% of our net assets.
We recognised £3.4 million of losses resulting from the reduction in the carrying value of certain portfolio holdings; we do not expect these movements in fair value to translate into an equal reduction in future cash-flows to be derived from these assets.
Post net gains from foreign exchange movement and finance income, the Group posted a loss before and after tax of £4.8 million (2007: profit of £11.4 million)
Balance Sheet
The Directors valuation of the portfolio at 31st December 2008 was £22.7 million (2007: £20.8 million). This value was calculated having taken into account new investments at cost of £5.3 million, and a net decrease in the fair value of total investments on the balance sheet amounting to £3.2 million.
In April 2008, we completed a secondary fundraising, issuing 28,286,499 new ordinary shares to GLG Partners LP at an average placing price per share of approximately 60.4p. The placing raised a total of £17.1 million, thus substantially strengthened our balance sheet.
At 31st December 2008, net assets were £38.4 million, compared to £25.8 million at 31st December 2007 and net asset per share was 39p compared to 37p at 31st December 2007.
The increase in net assets per share over the 12 months to 31 December 2008 of 5% compares with a decline of 33% in the FTSE All-Share Index over the same period (Dec 31 2007: FTA 3286 / Dec 31 2008: FTA 2209).
Cash and cash equivalents at the end of the period totalled £13.1 million, representing 34% of our net assets. This ratio is significantly higher than in 2007 (2007: 14%), despite the total value of our portfolio of investments having increased. We believe that holding a higher proportion of our assets in cash provides the Group with the buffer and flexibility required to steer through the present financial climate.
Outlook
We are optimistic about the Group's prospects for the year ahead and will continue to seek to expand our advisory business, in particular our asset management practice, although present market conditions provide a challenge to new fund-raising efforts.
Despite prevailing uncertainties about the health of the global economy, we remain optimistic about the Chinese economy, which we expect to grow in excess of 8% in 2009. We also remain generally positive about India, although a comparatively less attractive outlook for this country may prompt us to focus more on opportunities in China for the remainder of the current year.
As for our capital allocation strategy, we intend to ensure we maintain sufficient cash for the portfolio, while selectively taking advantage of investment opportunities as they arise. In line with our previously announced strategy and the additional capital at our disposal, we will primarily seek to invest in expansion stage, profitable businesses.
We believe that there is significant value upside in our portfolio, and our key priority remains to continue to work closely with our existing investee companies and fellow stakeholders in order to sustain and grow the value of our portfolio holdings in anticipation of a broader market recovery. Consolidated income statement
For the year ended 31 December 2008
| 2008 | 2007 | ||
| Note | £'000 | £'000 | |
| Revenue | 2 | 2,773 | 902 |
| Cost of sales | 2 | (1,551) | (355) |
| Gross profit | 1,222 | 547 | |
| Distribution costs | (34) | (39) | |
| Share-based payments | 3 | (1,329) | (901) |
| Other administrative expenses | 3 | (2,716) | (1,478) |
| Total administrative expenses | 3 | (4,045) | (2,379) |
| Loss from operations | (2,857) | (1,871) | |
| Investment (loss)/income | 4 | (3,388) | 12,856 |
| Including: | |||
| - Share of losses of associates | (157) | - | |
| - Realised gain on disposal of an associate | - | 172 | |
| Foreign exchange gain | 974 | - | |
| Finance income | 5 | 500 | 418 |
| Finance costs | 5 | (21) | (13) |
| Other income | - | 4 | |
| (Loss)/profit before and after tax | (4,792) | 11,394 | |
| Attributable to: | |||
| - Equity holders of the parent | (4,672) | 11,394 | |
| - Minority interests | (120) | - | |
|
| (4,792) | 11,394 | |
| Basic and diluted (loss)/earnings per share | 8 | (5.29)p | 16.48p |
Consolidated balance sheet
At 31 December 2008
| 2008 | 2007 | ||
| Assets | Note | £'000 | £'000 |
| Non-current assets | |||
| Property, plant and equipment (PPE) | 41 | 21 | |
| Intangible assets | 12 | - | |
| Investments at fair value through profit or loss | 7 | 21,856 | 20,537 |
| Loan investments | 9 | 684 | 126 |
| Available for sale investments | 10 | 126 | 130 |
| Investments in associates | 8 | 61 | 52 |
| Other investments | 6 | 4 | |
| 22,786 | 20,870 | ||
| Current assets | |||
| Inventories | 35 | 13 | |
| Trade and other receivables | 2,913 | 1,517 | |
| Cash and bank balances | 13,133 | 3,659 | |
| 16,081 | 5,189 | ||
| Total assets | 38,867 | 26,059 | |
| Current liabilities | |||
| Trade and other payables | 427 | 225 | |
| Total liabilities | 427 | 225 | |
| Total net assets | 38,440 | 25,834 | |
| Equity attributable to equity holders of the parent | |||
| Issued capital | 11 | 9 | 7 |
| Share premium | 31,502 | 15,105 | |
| Share-based payment reserve | 3,273 | 1,944 | |
| Retained earnings | (676) | 3,996 | |
| Warrant reserve | 4,738 | 4,738 | |
| Translation reserve | (249) | 44 | |
| Other reserve | (37) | - | |
| 38,560 | 25,834 | ||
| Minority interests | (120) | - | |
| Total equity | 38,440 | 25,834 | |
| Total equity and liabilities |
| 38,867 | 26,059 |
Consolidated statement of changes in equity
For the year ended 31 December 2008
| Attributable to equity holders of the parent | ||||||||||
| Issued capital | Share premium | Share- based payment reserve | Retained earnings | Warrant reserve | Other reserve | Translation reserve | Total | Minority interests | Total equity | |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| At 1 January 2007 | 7 | 13,071 | 1,043 | (7,398) | 4,738 | - | - | 11,461 | - | 11,461 |
| Proceeds from share issues | - | 2,034 | - | - | - | - | - | 2,034 | - | 2,034 |
| Share-based payment expense | - | - | 901 | - | - | - | - | 901 | - | 901 |
| Profit for the year | - | - | - | 11,394 | - | - | - | 11,394 | - | 11,394 |
| Foreign currency translation | - | - | - | - | - | - | 44 | 44 | - | 44 |
| At 31 December 2007 | 7 | 15,105 | 1,944 | 3,996 | 4,738 | - | 44 | 25,834 | - | 25,834 |
| Net losses on available for sale investments | - | - | - | - | - | (37) | - | (37) | - | (37) |
| Proceeds from share issue | 2 | 16,397 | - | - | - | - | - | 16,399 | - | 16,399 |
| Share-based payment expense | - | - | 1,329 | - | - | - | - | 1,329 | - | 1,329 |
| Minority interests | - | - | - | - | - | - | - | - | (120) | (120) |
| Loss for the year | - | - | - | (4,672) | - | - | - | (4,672) | - | (4,672) |
| Foreign currency translation | - | - | - | - | - | - | (293) | (293) | - | (293) |
| At 31 December 2008 | 9 | 31,502 | 3,273 | (676) | 4,738 | (37) | (249) | 38,560 | (120) | 38,440 |
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 reserve | Equity created to recognise share-based payment expense |
| Warrant reserve | Fair value of warrants as measured at grant date and spread over the period which the warrant holders become entitled to the warrants |
| Other reserve | Equity created to recognise fair value change of available for sale investments |
| Transaction reserve | Equity created to recognise foreign currency statement transaction difference |
Consolidated cash flow statement
For the year ended 31 December 2008
| Year ended | Year ended | |
| 31 December | 31 December | |
| 2008 | 2007 | |
| £'000 | £'000 | |
| (Loss)/profit before and after tax | (4,792) | 11,394 |
| Adjustments for: | ||
| Depreciation | 9 | 3 |
| Share-based payment | 1,329 | 901 |
| Loss/(gain) on fair value changes of FVTPL | 3,231 | (12,684) |
| Gain on disposal of an associate | - | (172) |
| Share of losses of associates | 157 | - |
| Foreign exchange gain | (95) | - |
| Finance income | (465) | (418) |
| Operating loss before changes in working capital and provisions | (626) | (976) |
| Increase in trade and other receivables | (1,869) | (1,382) |
| Increase/(decrease) in trade and other payables | 202 | (655) |
| Increase in inventories | (18) | (13) |
| Net cash outflow from operations | (2,311) | (3,026) |
| Investing activities | ||
| Purchases of property, plant and equipment | (19) | (12) |
| Increase in intangible assets | (12) | - |
| Investments of financial instruments | (5,179) | (5,761) |
| Finance income received | 465 | 418 |
| Net cash flows used in investing activities | (4,745) | (5,355) |
| Financing activities | ||
| Issue of ordinary shares | 16,399 | 2,865 |
| Increase/(decrease) in cash and cash equivalents | 9,343 | (5,516) |
| Net foreign exchange difference | 131 | - |
| Cash and cash equivalents at beginning of year | 3,659 | 9,175 |
| Cash and cash equivalents at end of year | 13,133 | 3,659 |
Notes to the financial statements
1 Accounting policies
1.1 Corporate information
The consolidated and company financial statements of Origo Sino-India Plc ("the Company") and its subsidiaries (together "the Group") for the year ended 31 December 2008 were authorised for issue in accordance with a resolution of the directors on 10 June 2009. The Company is a limited liability company incorporated and domiciled in the Isle of Man whose shares are publicly traded on the AIM market of the London Stock Exchange. The registered office is located at 1 Circular Road, Douglas, Isle of Man IM99 3NZ. The principal activities of the Group are described in Note 6.
1.2 Basis of preparation
Both Group and Company financial statements are prepared in accordance with International Financial Reporting Standards ("IFRSs") pursuant to the requirements of section 3 of the Isle of Man Society of Chartered Accountants and the Association of Chartered Certified Accountants Statement of Recommended Practice.
(a) The financial information set out below, is based on the financial statements of the Company and its subsidiaries and associates for the year ended 31 December 2008 and all values are rounded to the nearest £'000 except where indicated.
(b) The consolidated and company financial information has been prepared under the historical cost convention except for certain financial instruments, which are measured at fair value, and in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee's interpretations ("IFRIC") (collectively , "IFRSs") issued by the International Accounting Standards Board (the "IASB").
(c) Minority 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 income statement and within equity in the consolidated balance sheet, separately from parent shareholders' equity.
1.3 Significant accounting policies
The significant accounting policies adopted in the preparation of the financial information set out in this announcement are set out in the full financial statements for the year ended 31 December 2008.
2 Revenue and cost of sales
| 2008 £'000 | 2007 £'000 | |
| Revenue | ||
| Consulting services | 1,955 | 663 |
| Fund consulting | 466 | - |
| Furniture trading | 352 | 239 |
| Total | 2,773 | 902 |
| Cost of sales | ||
| Consulting services | 1,256 | 145 |
| Furniture trading | 265 | 200 |
| Business tax | 30 | 10 |
| Total | 1,551 | 355 |
3 Administrative expenses
| 2008 £'000 | 2007 £'000 | |
| Employee expense | 1,178 | 760 |
| Professional fees | 796 | 372 |
| Including: | ||
| -Audit fees | 82 | 31 |
| Share-based payments | 1,329 | 901 |
| Depreciation expense | 9 | 3 |
| Others | 733 | 343 |
| Total | 4,045 | 2,379 |
4 Investment (loss)/income
| 2008 £'000 | 2007 £'000 | |
| Unrealised gains or losses on fair value changes of FVTPL using estimation techniques* | (3,231) | 12,684 |
| Share of losses of associates | (157) | - |
| Realised gain on disposal of an associate | - | 172 |
| Total | (3,388) | 12,856 |
* FVTPL refers to fair value through profit or loss
5 Finance income and costs
| 2008 £'000 | 2007 £'000 | |
| Finance income | ||
| Bank interest | 500 | 418 |
| 500 | 418 | |
| Finance costs | ||
| Bank charges | (21) | (13) |
| (21) | (13) |
6 Earnings/(loss) per share
| Numerator | 2008 £'000 | 2007 £'000 |
| (Loss)/profit for the year | (4,792) | 11,394 |
| (Loss)/earnings used in basic and diluted loss or earnings per share | (4,792) | 11,394 |
| Denominator | 2008 Number of shares | 2007 Number of shares |
| Weighted average number of shares used in basic EPS/(LPS) | 90,514,895 | 69,149,922 |
| Weighted average number of shares used in diluted EPS/(LPS) | 90,514,895 | 69,149,922 |
| Basic and diluted EPS/(LPS) | (5.29)p | 16.48p |
7 Investments at fair value through profits or loss
As at 31 December 2008
| Name | Country of incorporation | Proportion of ownership interest | Cost | Fair value |
| £'000 | £'000 | |||
| Inveritas Global Holdings Ltd (Formerly SHERQ Ltd) | British Virgin Islands | 17.3% | 510 | 692 |
| Roshini International Bio-Energy Corporation | British Virgin Islands | 15.9% | - | 2,477 |
| Fans Media Co., Ltd | British Virgin Islands | 14.3% | 1,200 | 1,632 |
| Primary Holding International Trust | Australia | 9.8% | 2,186 | 2,767 |
| Possibility Space Incorporated | USA | 9.5% | 510 | 692 |
| E-Bill (China) Holding Ltd | Cayman Islands | 7.1% | 1,018 | 1,384 |
| Bach Technology AS | Norway | 4.6% | 31 | 42 |
| Halosource Inc | USA | 4.8% | 1,513 | 2,075 |
| Fomento International Ltd | British Virgin Islands | 3.0% | 2,038 | 2,767 |
| Rising Technology Corporation Ltd | British Virgin Islands | 2.0% | 3,564 | 7,328 |
| Total | 12,570 | 21,856 |
All investments at fair value through profit and loss amounting to £21.9 million (cost: £12.6 million) are held by the Company except for an investment of £249,000 (cost: £183,000) in Fans Media Co., Ltd held by Ascend Ventures Ltd and an investment of £2.8 million (cost: £2.2 million) in Primary Holding International Trust held through PHI International Holding Ltd.
As at 31 December 2007
| Name | Country of incorporation | Proportion of ownership interest | Cost | Fair value |
| £'000 | £'000 | |||
| SHERQ Ltd | British Virgin Islands | 25.0% | 510 | 510 |
| Roshini International Bio-Energy Corporation | British Virgin Islands | 19.8% | - | 8,016 |
| Fans Media Co., Ltd | British Virgin Islands | 15.9% | 1,200 | 1,200 |
| Possibility Space Incorporated | USA | 9.5% | 510 | 510 |
| Bach Technology AS | Norway | 6.3% | 31 | 31 |
| Fomento International Ltd | British Virgin Islands | 3.0% | 2,038 | 2,038 |
| Rising Technology Corporation Ltd | British Virgin Islands | 2.0% | 3,564 | 8,232 |
| Total | 7,853 | 20,537 |
All investments at fair value through profit and loss amounting to £20.5 million (cost: £7.9 million) were held by the Company except for an investment of £181,000 (cost: £183,000) in Fans Media Co., Ltd held by Ascend Ventures Ltd.
8 Investments in associates
The following entities meet the definition of an associate and have been accounted for in the consolidated financial statements as at 31 December 2008 on an equity basis:
| Name | Country of incorporation | Proportion of voting rights held |
| Dragon Ports Ltd ("DP")* | British Virgin Islands | 45% (Owned by Ascend Ventures Ltd) |
| OS Consulting Ltd ("OS") | Malaysia | 19.9% (Owned by Ascend Ventures Ltd) |
* Spiced Bits Ltd merged into Dragon Ports Ltd through a share swap in June 2008.
Aggregated amounts relating to associates are as follows:
| 2008(DP) | 2008(OS) | |
| £'000 | £'000 | |
| Total assets | 890 | 370 |
| Total liabilities | 410 | 87 |
| Revenues | 390 | - |
| Loss | (376) | (32) |
The following entities meet the definition of an associate and were accounted for in the consolidated financial statements as at 31 December 2007 on an equity basis:
| Name | Country of incorporation | Proportion of voting rights held |
| Dragon Ports Ltd ("DP") | British Virgin Islands | 32.9% (Owned by Ascend Ventures Ltd) |
| Spiced Bits Ltd ("SB") | British Virgin Islands | 31.6% (Owned by Ascend Ventures Ltd) |
| OS Consulting Ltd ("OS") | Malaysia | 21.2% (Owned by Ascend Ventures Ltd) |
Aggregated amounts relating to associates are as follows:
| 2007(DP) | 2007(SB) | 2007(OS) | |
| £'000 | £'000 | £'000 | |
| Total assets | 135 | 38 | 233 |
| Total liabilities | 33 | 145 | 11 |
| Revenues | 174 | 90 | - |
| Profit/(loss) | 14 | (109) | (12) |
9 Loan investments
The Group has entered into convertible credit agreements with certain investee companies as set forth in the table below. Under these agreements, the Group has the right to convert the outstanding principal balance of relevant loans into the borrower's shares according to certain conversion conditions.
| For the year ended 31 December 2008 | ||||
| Borrower | Loan principal | Fair value | ||
| £'000 | £'000 | |||
| Dragon Ports Ltd | 112 | 148 | ||
| Possibility Space Incorporated | 395 | 536 | ||
| Total | 507 | 684 |
| For the year ended 31 December 2007 | ||||
| Loan principal | Fair value | |||
| Borrower | £'000 | £'000 | ||
| Spiced Bits Ltd | 50 | 50 | ||
| China Silvertone Investment Co. Ltd | 76 | 76 | ||
| Total | 126 | 126 |
10 Other financial assets
| 2008 £'000 | 2007 £'000 | |
| Available for sale investments | 126 | 130 |
| Total | 126 | 130 |
* Available for sale investments comprise a 0.26% shareholding in Cafe.com SA belonging to Ascend Ventures Ltd whose fair value is assessed at price of recent investment.
11 Issued capital
| 2008 | 2007 | |||
| Authorised | Number of shares | £'000 | Number of shares | £'000 |
| Ordinary shares of £ 0.0001 each | 500,000,000 | 50 | 500,000,000 | 50 |
| Issued and fully paid | Number of shares | £'000 | Number of shares | £'000 |
| At beginning of the year | 69,261,378 | 7 | 65,193,238 | 7 |
| Issued on 11 January 2007 for investment in Rising Technology Corporation Ltd* | - | - | 4,068,140 | - |
| Issued on 1 April 2008 on placing for cash** | 28,286,499 | 2 | - | - |
| At end of the year | 97,547,877 | 9 | 69,261,378 | 7 |
| Warrants | ||||
| At beginning and end of year*** | 25,673,238 | - | 25,673,238 | - |
| Exercised during the year | - | - | - | - |
| At end of the year | 25,673,238 | - | 25,673,238 | - |
* On 11 January 2007, the Company entered into an agreement with ChinaEquity International Holding Company Ltd to acquire a 2% ownership of Rising Technology Corporation Ltd in consolidation for USD 3,000,000 in cash and 4,068,140 ordinary shares of the Company. The price of the consideration shares was calculated at 50p per share at an exchange rate of USD 1.9665 per pound sterling, with 4,068,140 shares being issued and allotted by the company.
** 28,286,499 new ordinary shares were issued to GLG Partners LP ("GLG Funds") on 1 April 2008 at an average placing price per share of approximately 60.4p.
*** On Admission to AIM on 21 December 2006, the Company issued 25,673,238 warrants entitling each warrant holder to exercise warrants held at six monthly intervals during the period of 3 years from the date of Admission, or subject to certain exception where a surplus would be available for distribution among the holders of ordinary shares, on the winding up of the Company. No warrants have been exercised since issuance.
12 Related party transactions
Identification of related parties
The Group has a related party relationship with its subsidiaries, associates and key management personnel. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note.
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. Other than as disclosed above, in the Directors' report and in note 5, there were no other significant transactions with key management personnel in the period.
Trading transactions
The following table provides the total amount of significant transactions and outstanding balances which have been entered into with related parties during the years ended 31 December 2008 and 31 December 2007.
| 2008 | 2007 | |
| £'000 | £'000 | |
| Amounts owed by related parties* | ||
| ChinaEquity International Holding Company Ltd ** | 365 | 306 |
| Origo Resource Partners Ltd *** | 30 | 684 |
| OS Consulting Ltd | 73 | 9 |
| Origo Advisers Ltd **** | 8 | 1 |
| Sales to related parties | ||
| GLG Partners LP ***** | 1,320 | - |
| Origo Resource Partners Ltd | 466 | 46 |
| Origo Advisers Ltd | 466 | 46 |
| Purchases from related parties | ||
| Li Yi Fei ****** | 585 | - |
* The amounts are unsecured, non-interest bearing and have no fixed terms of repayment. In the opinion of the directors, the Company will demand the amounts within 12 months from the balance sheet date. Accordingly, the amounts are shown as current.
** Mr. Wang is the Executive Chairman of Origo-Sino India Plc and Chairman of ChinaEquity International Holding Company Ltd.
*** The Company provides consultancy services to Origo Resource Partners Ltd ("ORP") through a sub-consultancy arrangement with Origo Advisers Ltd, a company controlled by entities whose ultimate beneficiaries include two Directors of the Company (Mr. Rynning and Mr. Ponnert). Mr. Rynning and Mr. Ponnert also serve on the Board of ORP. The amounts disclosed for 2007 pertain to consideration paid for the assignment to ORP of certain interests in Roshini International Bio-Energy Corporation and Staur Aqua AS.
**** Amounts disclosed relate to services provided.
***** Funds managed by GLG Partners LP ("GLG") controlled 29.6% of the outstanding share capital of the Company as at 31 December 2008. The Company provides research and analysis services to GLG under a consultancy agreement. The amounts of transactions and outstanding balances relate to research services provided.
****** Ms. Li Yi Fei is the spouse of Wang Chao Yong, the Executive Chairman of the Company. Li Yi Fei provides research and analysis services to the Company in relation to the consultancy agreement with GLG.
13 Post balance sheet transactions
In February 2009, the Company announced the sale of its 3% stake in Fomento International Ltd ("FIL"), an intended consolidation vehicle for international iron ore assets. The stake (cost of £ 2.0 million) was sold back to FIL for a total cash consideration of USD 4 million (£ 2.9 million).
In February 2009, the Company entered into convertible loan agreements to extend USD 1.5million to Inveritas Global Holdings Ltd (formerly SHERQ Ltd).
In May 2009, the Company announced the merger of Primary Holdings International Trust ("PHI"), and R.M.Williams Agricultural Holdings Pty Ltd. ("RMWAH"), a new venture formed by R.M.Williams Pty Ltd. The Company exchanged its holding of 4,662,006 convertible preference units in PHI equivalent to 9.8 percent of the voting rights of PHI, for 6,843,006 ordinary shares in RMWAH, equivalent to around 8 percent of the voting rights of RMWAH.
14 Financial statements
The financial information set out in this announcement does not constitute statutory accounts but has been extracted from the Group's financial statements for the period ended 31 December 2008. The Group's annual report and consolidated financial statements will be posted to shareholders shortly. Further copies will be available from the Company's website: http://www.origoplc.com/