OPP.L Regulatory News (OPP)

30 September 2014

Origo Partners PLC

("Origo" or the "Company")

Interim Financial Report for the six months ended 30 June 2014

Origo Partners PLC announces its unaudited interim results for the six months ended 30 June 2014 (the "Period").

Summary

· Total investments of US$0.8 million in existing portfolio companies

· Investment loss of US$25.5 million (30 June 2013 investment loss: US$37.1 million)

· Loss before tax of US$30.6 million (30 June 2013 loss before tax: US$40.1 million)

· Net asset value of US$90.0 million (31 December 2013: US$135.0 million)

· Total administrative expenses of US$2.8 million (30 June 2013: US$7.9 million)

· Net asset value per share of US$0.26 (31 December 2013: US$0.39), equivalent to 15 pence (31 December 2013: 24 pence)*

· Closing net cash position of US$18.7 million

* translated into British Pounds at the prevailing exchange rate at the end of the Period

Chief Executive's Statement

In line with the revised strategy announced a year ago we have made significant, sustainable reductions in operating costs, with administrative expenses falling by approximately 65 per cent. compared to the previous year. The Company's loss before tax also narrowed significantly to US$30.6 million compared to US$40.1 million in the same period of 2013.

However, the net asset value of Origo's portfolio declined by 33 per cent. during the Period due, in large part, to depressed prices for commodities such as coal, concerns over the outlook for Chinese growth and political uncertainty in certain territories in which Origo's investments are located.

The Board's primary aim at this time remains to monitor the portfolio and, in due course, to facilitate the realisation of assets and the distribution of capital to shareholders in an orderly fashion. We continue to engage with our investors in order to finalise a set of detailed proposals to update the Company's management structure, investment policy, asset realisation programme, and management incentive plan. Discussions are progressing and we remain committed to putting our proposals to a shareholder vote shortly.

In line with our revised strategy, we made no new investments in the Period. However, the Company made two small follow on investments in existing investee companies, notably in Kincora Copper Limited ("Kincora"), which the Board considered to be value enhancing. Developments at Kincora continue to be positive and in June 2014 Kincora entered into an exclusivity agreement with a large-scale copper producer granting it rights to carry out due diligence with respect to a potential transaction which could take the form of a joint venture, an earn-in, a strategic alliance, an equity investment or some other transaction.

The Company's mining portfolio includes investments in a combination of exploration and early stage production companies. These types of companies have been particularly hard hit by market conditions over the last two years. During the Period we reduced the carrying value of our investment in Gobi Coal & Energy Ltd ("Gobi Coal") by 50 per cent., reflecting the significant decline in coking coal prices and the reduced demand from China for Mongolian coal. Gobi Coal's assets have significant long-term potential, with large resources and reserves and the possibility of low-cost open cast mining. However it remains unclear as to when prices and demand for metallurgical coal will recover.

In addition, we recorded a US$7.8 million loss following the proposed disposal of our 49 percent. equity stake and loans extended to IRCA Holdings Ltd ("IRCA"). We had already written the value of Origo's equity stake in IRCA down to zero following the well publicised issues in the South African mining sector in recent years. In view of continuing political unrest, and the additional funding required to get this particular business back into profitability, we have decided to cap our exposure to the business and are presently in discussions with interested parties to divest the position in full.

After the Period end our portfolio company Celadon Mining Ltd ("Celadon") increased its stake in the Chang Tan West thermal coal project in Inner Mongolia to 80 per cent., for an undisclosed, staged cash consideration. The consolidation of Celadon's holding in the Chang Tan West thermal coal project should substantially improve the potential returns for Celadon from the future development of the project. The consolidation of Celadon's holding in Chang Tan West did not involve any follow on investment by Origo.

In addition, in June we published the results of a scoping study on the Mandal Moly molybdenum and tungsten project ("Mandal Project") wholly owned by our portfolio company Moly World Ltd ("Moly World"). The study identified the potential for an initial small scale open pit operation that could be brought into production for a low upfront investment with the option to expand production, dependent upon future molybdenum prices. The study has estimated that the Mandal Project, which benefits from world class grades and a low strip ratio, is capable of returning an IRR of 46.8%, with a net present value of US$87.6 million (at a 12% discount rate) at current molybdenum prices. For the purposes of the interim results, Origo's interest in Moly World is carried at a fair value arrived at by using a discounted cash flow methodology. The discount rate used for this purpose is higher than the 12% discount rate applied in the independent scoping study.

The Company remains committed to attempting to work with Brooks Macdonald Group plc ("Brooks Macdonald") to achieve a mutually acceptable resolution to Brooks Macdonald's complaints - as announced by the Company on 30 June 2014.

Financial performance

The Directors' estimate of the fair value of Origo's portfolio of investments decreased to US$133.8 million as at 30 June 2014, from US$153.8 million as at 31 December 2013. The decline in the portfolio's value was primarily due to the 50 per cent. reduction in the carrying value of our stake in Gobi Coal and a significant write-down in the carrying value of IRCA.

The carrying value of Gobi Coal was reduced by 50 per cent. from US$26.8 million to US$13.4 million [reflecting the currently depressed coal price and declines in the share prices of similar Mongolian mining companies]. In addition we wrote down the total position of IRCA to US$1.7 million following the proposed disposal of all our interest in this company. 

Total other administrative expenses were reduced to US$2.8 million (30 June 2013: US$7.9 million).

Total investments in existing portfolio companies amounted to US$0.8 million during the Period.

The Company recorded a loss before tax of US$30.6 million for the Period, compared to a loss before tax of US$40.1 million in the corresponding period in 2013.

At the end of the Period, the Company had cash and cash equivalents of US$18.7 million compared to US$35.3 million as at 31 December 2013, the decline was primarily as a result of restructuring of China Cleantech Partners Ltd and the disposal of the partnership interest in one of its associated RMB denominated sub-funds.

The Company reported net asset value of US$90.0 million at the end of the Period, representing a net asset value per share of US$0.26. This compares to US$135.0 million as at 31 December 2013 (US$0.39 per share).

Outlook

The Board has a cautious view for the remainder of the year given the macro economic uncertainties that prevail. The prospects for the Chinese economy remain finely balanced, with recent disappointing economic data leading to speculation of a potential stimulus package. In Mongolia, despite some apparent progress in resolving the disputes in respect of Oyu Tolgoi, the government's commitment to establishing an attractive environment for foreign investment remains unproven. International commodity markets also continue to remain depressed. All of these factors currently limit our ability to generate value from the portfolio in the near term.

The Board remains focussed on agreeing a revised, long-term strategy and management structure with shareholders that will provide an appropriate framework for the Company to deliver value to its shareholders.

For further information about Origo please visit www.origoplc.com or contact:

AUDITORS' INDEPENDENT REVIEW REPORT

Introduction

We have been engaged by Origo Partner Plc ("the Group") to review the set of financial statements in the interim financial report for the six months ended 30 June 2014 which comprises the interimconsolidated statement of comprehensive income, the interimconsolidated statement of financial position, the interimconsolidated statement of cash flows, the interimconsolidated statement of changes in equity and the related notes 1 to 25. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim set of financial statements.

This report is made solely to the Group's members, as a body, in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE 2410") issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group's members, for our work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34").

As disclosed in note 2.1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards issued by the Accounting Standards Board and adopted for the use in the European Union. The set of financial statements in the interim financial report has been prepared in accordance with IAS 34.

Our responsibility

Our responsibility is to express to the Group a conclusion on the set of financial statements in the interim financial report based on our review.

Scope of review

We conducted our review in accordance with ISRE 2410 (UK and Ireland) issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the set of financial statements in the interim financial report for the six months ended 30 June 2014 are not prepared, in all material respects, in accordance with IAS 34.

Ernst & Young LLC

Chartered Accountants

Isle of Man

30 September 2014

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2014

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

Interim Consolidated Statement of Financial Position

As at 30 June 2014

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

Interim Consolidated Statement of Changes in Equity

For the six months ended 30 June 2014

Attributable to equity holders of the parent

Attributable to equity holders of the parent

* C-ZDPs refers to convertible zero dividend preference shares.

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

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

Interim Consolidated Statement of Cash Flows

For the six months ended 30 June 2014

* FVTPL refers to fair value through profit or loss

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

Notes to the Interim Consolidated Financial Statements

1 General information

Origo Partners Plc is a limited liability company incorporated and domiciled in the Isle of Man whose shares are publicly traded on the AIM market of the London Stock Exchange.

The Company and its subsidiaries are collectively referred to as the Group.

The principal activities of the Group are private equity investment, focused exclusively on growth opportunities created by the urbanization and industrialization of China and Mongolia.

These interim consolidated financial statements have been approved and authorised for issue by the Company's board of directors on 30 September 2014.

2 Basis of preparation and significant accounting policies

2.1 Basis of preparation

These interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

These interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December 2013.

2.2 Significant accounting policies

The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2013.

The following new and revised IFRSs did not have any impact on the accounting policies, financial position or performance of the Group:

IFRS 11 Joint arrangements

IAS 27 Amendments to separate financial statements

IAS 28 Amendments to Investments in associate and joint ventures

IAS 32 Amendments to offsetting financial assets and financial liabilities

IFRS 10 Consolidated financial statements

IFRS 10 defines the principle of control, establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. The amendments to IFRS 10 introduces an exemption to the principal that all subsidiaries should be consolidated, defines an Investment Entity and requires a parent that is an Investment Entity to measure its investments in particular subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments instead of consolidating those subsidiaries in its consolidated and separated financial statements. Currently, the Company does not qualify as an Investment Entity. The application of IFRS 10 and amendments has no material impact on the Group's financial position and performance.

IFRS 12 Disclosure of interests in other entities

IFRS 12 sets out the requirement for disclosure relating to an entity's interests in subsidiaries, joint arrangements, associate and structured entities. The requirements in IFRS 12 are more comprehensive than the previously existing disclosure requirements for subsidiaries. The application of IFRS 12 affected presentation only and had no impact on the Group's financial position or performance.

The Group has not early adopted any other standard, interpretation or amendment that was issued but is not yet effective.

3 Investment (loss)/income

4 Consulting services receivable/ (payable)

5 Performance incentive

For the six months ended 30 June 2014, a balance sheet provision for future performance incentive of US$1,083,608 were approved by the board of directors of the Group (other than Chris Rynning and Niklas Ponnert) at the board meeting held on 30 September 2014. The performance incentives are accrued and payable to Origo Adviser Ltd. Refer to Note 23 for details on Origo Advisers Ltd.

In determining the amount to be accrued, the board(i) assessed the amount of performance incentives arising on each and every individual investment under the terms of the Scheme; and (ii) capped the total amount to be accrued at the higher of a) 20 per cent of the accumulated gain (realised and unrealised) of the Group's portfolio of investments taking into account write-offs, realisations, and movements in the fair value of all investment completed from the time of admission until the balance sheet date and previous payments made under the Scheme; and b) 10 per cent of the accumulated gain (realised and unrealised) over the 10% hurdle on applicable companies in the Group's portfolio of Investments.

6 Other administrative expenses

* Provision has been recognized only on receivables where it is considered there is a greater than 50% risk of failure.

7 Directors' remuneration

Directors' remuneration for the six months ended 30 June 2014 and number of options held were as follows:

Directors' remuneration for the six months ended 30 June 2013 and number of options held were as follows:

* Short term employee benefits

** Share-based payments refer to expenses arising from the Company's share option scheme (see note 22 for details).

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 Chief Executive Officer. The Group's operating segments has been defined based on the types of investments which was equity investment, debt instrument and partnership interest in 2014 and 2013.

For the six months ended 30 June 2014 (Unaudited)

The Group's geographical areas based on the location of investment assets (non-current assets), are defined primarily as China, Mongolia and Australia, as presented in the following table.

For the six months ended 30 June 2014 (Unaudited)

For the six months ended 30 June 2013 (Unaudited)

For the six months ended 30 June 2013 (Unaudited)

9 Finance income and costs

10 Income tax

No provision for current tax was made for the year as the subsidiaries had no assessable profit. As the Group is not in receipt of income from Manx land or property and does not hold a Manx banking licence, it is taxed at the standard rate of zero per cent on the Isle of Man.

* The deferred income tax relates to net change in fair value gain/(loss) of Celadon Mining Ltd, China Rice Ltd, Unipower Battery Ltd, and Niutech Energy Ltd, estimated in accordance with the relevant tax laws and regulations in the PRC based on a tax rate of 10 per cent.

11 Earnings per share

12 Investments in subsidiaries

The principal subsidiaries of the Company, all of which have been included in these consolidated financial statements are as follows:

* Owned by Origo Resource Partners Ltd

** Owned by Ascend Ventures Ltd

13 Investments at fair value through profit or loss

As at 30 June 2014 (Unaudited)

As at 31 December 2013 (Audited)