OPP.L Regulatory News (OPP)

18 September 2012

Origo Partners Plc

("Origo" or the "Group")

Interim Financial Report for the six months ended 30 June 2012

Highlights for the six months ended 30 June, 2012 ("the Period"):

·; Total investments of US$10.6 million in existing portfolio companies

·; Investment loss of US$38.6 million (30 June 2011 investment income: US$23.6 million), Loss before tax of US$37.3 million (30 June 2011 profit before tax: US$19.4 million)

·; Net asset value of US$204.2 million (31 December 2011: US$240.6 million, 30 June 2011: US$225.1 million)

·; Net asset value per share of US$0.58 (31 December 2011: US$0.68), equivalent to 37 pence (31 December 2011: 44 pence)*

·; Closing net cash position of US$35.6 million

·; Strengthening of the Board by appointment of two new Non-Executive Directors

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

Chief Executive's Statement

We entered 2012 in a strong position, with a robust balance sheet, a good pipeline of investment opportunities and a number of potential realisation opportunities. Whilst I am pleased with the progress made across our portfolio, the persistent global economic uncertainty together with the associated weakness in many commodities prices and related equity prices have clearly constrained our ability to deliver on our strategy.

With capital markets virtually shut for new equity placings, private companies such as those in Origo's portfolio are naturally finding it very difficult to raise capital at present. In addition, as mining and commodity related companies have been amongst those most dramatically affected by falling asset and commodity prices and with mining being a key investment sector for Origo, currently comprising over 50 per cent of our portfolio, the carrying value of our portfolio has been reduced by 12 per cent during the Period. Nevertheless, we continue to have the ability to support follow on financing requirements from portfolio companies should they be required.

In the first half of the year China has also experienced a significant and broad economic slowdown, led by a contraction of the real-estate market and reduced exports. China's economic deceleration has been accompanied by a loss of investor confidence in Chinese companies in the wake of a broad range of widely covered financial fraud cases. It is fair to say that the reputation of Chinese companies in terms of compliance, governance and transparency has fallen significantly, but on the other hand, confirmed the value of Origo's "hands on" investment approach.

In addition Mongolia, to which Origo has a significant exposure through a number of mining investments, has gone through a turbulent period with negative foreign investment rhetoric, hampering our ability to increase the value of our investments and generate cash realisations. Both China and Mongolia are experiencing leadership transitions, which inevitably create a degree of uncertainty about the future economic direction of each country.

Taking into account these market conditions, we have significantly reduced the carrying value of our portfolio. Almost half of the decrease is attributable to a reduction in the carrying value of Gobi Coal & Energy Ltd ("Gobi"). Although the development of Gobi's Shinejinst coking coal deposit is progressing on track, a planned IPO has been delayed until market conditions are more favourable. As a result, the fair value of our stake in Gobi has been reduced by 23 per cent.

We hold our other Mongolian mining assets either at investment cost or, in the case of listed companies such as Toronto listed Kincora Copper Ltd ("Kincora"), at prevailing market prices. We believe that this is a conservative approach, and I am committed to seeing through the challenges in Mongolia to the point where solid returns can be realised.

In line with falling commodity prices, we have also marked down the fair value of R.M.Williams Agricultural Holdings Pty Ltd ("RMWAH"), one of our largest positions, by 27 per cent. However, I am pleased to report that RMWAH is set to start delivering on our original investment thesis by exporting agricultural products to Greater China.

On a more positive note, our MSE (Mongolian Stock Exchange) Liquidity Fund ("the Fund") continued to perform well during the Period, reporting a positive return of 10.3 per cent annualized, with June being its ninth consecutive month of positive performance since inception. With the Fund's peers delivering negative returns year to date, we are very pleased this product has achieved comparatively world class returnson the basis of modest risks. We have therefore decided to increase our exposure to the fund.

Furthermore, we are continuing to move towards first closing of our China Cleantech Partners fund ("CCP"), and expect to begin to deploy capital from the end of the year with a final close in 2013. Discussions are ongoing with a number of Chinese local governments to secure additional RMB commitments for this strategy.

Finally, during the Period we strengthened the Board through the appointment of two new Non-Executive Directors. Both Lionel de Saint-Exupery and Tom Preststulen bring a vast amount of experience from working in China and in transactions across our key investment sectors. I am delighted to welcome them both to the Board and believe their knowledge will be invaluable to the future development of Origo.

Portfolio review

Operationally, our portfolio is generally performing well despite the present market uncertainties. We are particularly encouraged and involved in the developments at two of our Mongolian mining companies, Kincora and Moly World Ltd ("Moly World"), where very positive exploration results underline the inherent value in our portfolio.

In March this year, Kincora reached an agreement in principle to acquire mineral exploration licences adjoining its Bronze Fox project in Mongolia, including the Tourmaline Hills copper - gold project, an area previously assigned as a high priority target by Ivanhoe Mining. With these license acquisitions, Kincora holds licenses that cover an area close to 60,000 hectares, located along the same copper belt, about 120km northeast of the world class Oyu Tolgoi project.

With an equity stake in Kincora of 29.2 per cent, Origo is the largest shareholder of the company. We continued to be deeply involved in the management and operations of Kincora, most recently illustrated by us seconding Origo's Head of Geological and Technical Services, John Rickus, to be Kincora's Interim CEO.

Also in March this year, Moly World's molybdenum and tungsten project in Mongolia completed a maiden JORC compliant resource statement of 203.4 million tonnes of ore grading 0.1261 per cent molybdenum with total contained molybdenum metal of 256,000 tons. These results confirm a high grade, near surface resource which could support a large scale open cut mine. Runge LLC has been retained by Moly World to produce a scoping study which is expected to lead to the commencement of a detailed Pre-Feasibility Study. Origo's has a 20 per cent equity stake in Moly World held at investment cost. An important and valuable attribute to our investment in Moly World is a marketing right of up to 20 per cent of Moly World's mining output.

After the Period end, Origo participated in a private placement offering in Kincora subscribing for up to CAD2.5 million of a three year convertible note (the "Convertible Note"). The Convertible Note is due and payable three years from the date of issuance, and has a 8.7 per cent per annum interest rate, calculated and paid annually by the issuance of Kincora common shares; these being priced at the time of issuance in accordance with the policies of the TSX Venture Exchange.

Kincora intends to use the proceeds of the private placement for further development of its mineral properties in Mongolia and for general working capital purposes. After the end of the Period Kincora released partial assay results from the Bronze Fox project in Mongolia which confirms the potential for a deep high grade copper deposit. It is Origo's ambition to allow Kincora to deliver on its drilling and business plan, whilst looking for near term production potential which will allow for near term cash inflow as well as bolt on acquisition opportunities.

Unipower Battery Ltd ("Unipower"), our lithium-ion battery material and battery manufacturing company, has seen a marked upturn in sales revenue in the first half of 2012. Whilst cementing its leading market share in China's bourgeoning electrical vehicle sector, the company has also begun to branch out into the energy storage market. In a noteworthy example of how private equity portfolio funded companies can work together, Origo invested Shanghai Evtech New Energy Technology Ltd ("Shanghai Evtech"), a battery management system company, is working closely with Unipower to provide total battery package solutions to Chinese bus and auto companies. Origo is holding the fair value of its investments in Unipower and Shanghai Evtech at cost, whilst observing that the companies' fundamentals are rapidly improving.

I am also pleased to report that China Rice Ltd ("China Rice") is maintaining its position as a leading rice processor and distributor in China. Whilst current equity market conditions have proven a hard environment for raising external capital, the company is operationally performing to plan. Markets allowing, we expect China Rice to raise additional capital to fund further expansion.

Finally, Celadon Mining Ltd ("Celadon") expanded its portfolio of China based coal assets by acquiring a 23 per cent equity stake for US$44 million in the Chang Tan West thermal coal project. The project, covering an area of 20.65 square kilometres, is located in the Ordos region of Inner Mongolia. Past exploration has confirmed the presence of a 602.8 MT coal resource (Chinese classification) on the license area. We believe this transaction represents a significant positive milestone for Celadon, providing the company with a number of strategic options to either further grow its asset base or deliver value-accretive realisations over the medium term.

Financial performance

The Directors' estimate of the fair value of Origo's portfolio of investments decreased to US$229.7 million from US$260.0 million as at 31 December 2011, after total investments of US$10.6 million in existing portfolio companies during the Period. The decrease principally reflects a reduction in the fair value of our investments caused by the uncertain economic outlook.

Of our unquoted investments, we reduced the carrying value of Gobi by 23 per cent from US$87.1 million to US$67.0 million and RMWAH by 27 per cent from US$35.0 million to US$25.6 million. In respect of our listed investments, the carrying value of Kincora decreased from US$11.5 million to US$7.0 million and Voyager Resource Ltd decreased from US$3.2 million to US$947,000.

Total other administrative expenses reached US$4.5 million (30 June 2011: US$2.8 million), which include one-off provisions of US$1.2 million in respect of debts from certain portfolio companies.

The Group recorded a loss before tax of US$37.3 million, compared to a profit before tax of US$19.4 million in the corresponding period in 2011 primarily due to unrealised losses of US$39.4 million on investments compared to unrealised gains of US$25.4 million in the first half of 2011.

At the end of the Period, the Group had cash and cash equivalents of US$35.6 million compared to US$51.9 million as at June 30 2011.

The Group reported net asset value of US$204.2 million at the end of the Period, compared to US$240.6 million as at 31 December 2011 and US$225.1 million as at 30 June 2011, representing a net asset value per share of US$0.58.

Strategy and outlook

Chinese economic growth slowed in the first half of the year, as the government took steps to combat inflation and asset bubbles. While a number of data points over the last months suggest a further deceleration in the near term, we expect to see a recovery towards the end of 2012, as the government moves to implement the necessary measures to ensure targets for a more stable growth rate are met. Accordingly, our focus on investing in sectors such as natural resources, agriculture and cleantech sectors, which will benefit greatly from continued urbanisation remains undiminished.

Recent elections in Mongolia have been a source of concern for international investors as resource nationalism has taken centre stage in the context of a highly contested election. We expect populist pressures to remain on the agenda for the foreseeable future as Mongolia seeks to strike a balance between fostering its economy whilst ensuring that the benefits of development is shared appropriately among relevant stakeholders. Hence our strategy in the country follows the principles which have proved successful in our China based operations; we believe that significant local presence and hands on management will help navigate short term uncertainty and that the portfolio will benefit from long-term value creation as the country continues on its development path.

In summary, we believe the underlying supply-demand dynamics of our strategy remain intact and we continue to work closely with our portfolio companies to create value in China and neighbouring territories for our shareholders. Whilst falling asset values in the Period have caused us to take a rather cautious approach on realisations and investments in the short term, we are well capitalisedand hence positioned to benefit from opportunities as they arise. We approach the remainder of 2012 with a focus on prudent management of the existing portfolio and our cash reserves.

ENDS

Further information:

Interim Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2012

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

Interim Consolidated Statement of Financial Position

As at 30 June 2012

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

Interim Consolidated Statement of Cash Flows

For the six months ended 30 June 2012

* FVTPL refers to fair value through profit or loss

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 2012

Attributable to equity holders of the parent

* CZDP refers to convertible zero dividend preference shares.

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 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 described in note 8.

These interim consolidated financial statements have been approved and authorised for issue by the Company's board of directors on 14 September 2012.

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 2011.

The Company has changed the Statement of Comprehensive Income and Statement of Cash Flow effective from 1 January 2012, to present the investment income or loss derived from the investment activities as "revenue", and the investing activities as "operating activities" for the purpose of IAS 1, to better reflect the activities of the Company as a private equity company, the changes have no any impact on the profit or loss for the period and net cash position at the end of period.

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 2011.

The following amendments to IFRSs standards did not have any impact on the accounting policies, financial position or performance of the Group:

 

IFRS 7 - Disclosures - Transfers of financial assets (Amendment)

The IASB issued an amendment to IFRS 7 that enhances disclosures for financial assets. These disclosures relate to assets transferred (as defined under IAS 39). If the assets transferred are not derecognised entirely in the financial statements, an entity has to disclose information that enables users of financial statements to understand the relationship between those assets which are not derecognised and their associated liabilities. If those assets are derecognised entirely, but the entity retains a continuing involvement, disclosures have to be provided that enable users of financial statements to evaluate the nature of, and risks associated with, the entity's continuing involvement in those derecognised assets. Effective implementation date is for annual periods beginning on or after 1 July 2011 with no comparative requirements.



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

5 Performance incentive(Continued)

For the six months ended 30 June 2012, performance incentive accruals of US$5,962K was approved by the board of directors of the Company (other than Chris Rynning and Niklas Ponnert) at the board meeting held on 14 September 2012.

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 Company'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 Company's portfolio of Investments.

6 Other administrative expenses

*  Provision for bad debts of US$1.23 million of other receivables from IRCA Holdings Ltd. 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 2012 and number of options held were as follows:

Directors' remuneration for the six months ended 30 June 2011 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).

*** Resigned from the Board on 16 February 2011.

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 2012 and 2011.

For the six months ended 30 June 2012 (Unaudited)

* Derivative financial assets included except for derivative component of CZDP.

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 2012 (Unaudited)

8 Operating segment information (Continued)

For the six months ended 30 June 2011 (Unaudited)

For the six months ended 30 June 2011 (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 Company 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. As the Company is quoted on AIM market of the London Stock Exchange, it is outside the scope of the Attribution Regime for Individuals.

* The deferred income tax relates to net change in fair value loss of Celadon Mining Ltd and convertible option of China Rice Ltd, estimated in accordance with the relevant tax laws and regulations in the PRC based on a tax rate of 10 per cent.

11 (Loss)/earnings per share

12 Investments at fair value through profit or loss

As at 30 June 2012 (Unaudited)

* There are no significant restrictions that will have an impact on ability to transfer of these investments, except a lock up of the shares of Kincora Copper Ltd which will expire in July 2014.

** 2% equity stake in Rising Technology Corporation Ltd and 1.6% beneficial interest in Beijing Rising Information Technology Ltd, a company incorporated in the PRC, under a nominee agreement.

*** Investments held by China Commodities Absolute Return Ltd ("CCF") and MSE Liquidity Fund ("MSE Fund"), the funds managed by the Group. The Group ceased to recognize CCF as an investment at FVTPL on 1 May 2011 when its ownership in CCF increased to 60% and instead recognized its separate assets and liabilities.

**** A private equity fund focusing on China's cleantech sectors, jointly formed and co-managed by the Group and EFMI Limited on 50/50 basis.

***** A company focusing on mineral and metal exploration, jointly formed and co-managed by the Group and Eltrana LLC on 50/50 basis.

12 Investments at fair value through profit or loss (Continued)

The proportion of ownership interest held by CCF in unlisted investments is as follows:

In accordance with IFRS 7: Financial Instruments: Disclosures, financial instruments recognized at fair value are required to be analysed between those whose fair value is based on:

a) Quoted prices in active markets for identical assets or liabilities (Level 1);

b) Those involving inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and

c) Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

During the period, there were no transfers between Levels.

Statement of changes in investments at fair value through profit or loss based on level 3:

12 Investments at fair value through profit or loss (Continued)

As at 30 June 2011 (Unaudited)