30th May 2008 10:03
Origo Sino-India Plc
Preliminary results for the year ended 31 December, 2007
Financial highlights:
- Revenues reached £902k (2006: £42k)
- Operating loss reduced to £1.9 million (2006: £7.4 million)
- Net Profit: £11.3 million (2006: loss of £7.4 million)
- Net Asset Value: £25.8 million (2006: £11.5 million)
- £17.1 million raised through a private placement (March, 2008)
- £3 million research contract signed (March, 2008)
Operating highlights:
- Total commitments of US$21.1 million to eight new portfolio companies and one other asset
- Two new investments with a total commitment of US$4.3 million announced since year-end
- First US$100 million co-investment fund launched (Origo Resource Partners Ltd)
Wang Chao Yong, Executive Chairman of Origo Sino-India Plc, commented:
"Origo has exceeded the goals set for its first year as a listed entity. We have committed the capital raised in last year's IPO, launched our first co-investment fund, and demonstrated substantial growth in revenues and the value of our portfolio. With further funds on our balance sheet and several new initiatives in the pipeline, we look forward to another strong year for the Company."
Further information:
|
Origo Sino-India PLC Chris Rynning |
+86 1390 124 6417 |
|
Nominated Adviser: Smith & Williamson Corporate Finance Limited Azhic Basirov |
+44 (0)20 7131 4000 |
|
Broker: Liberum Capital Limited Simon Atkinson |
+44 (0)20 3100 2223 |
|
Public Relations: Aura Financial Michael Oke/Andy Mills |
+44 (0)20 7321 0000 |
Chairman's Statement
It is with great pleasure I present the Annual Report and Accounts for 2007, our first full fiscal year as an AIM listed Company. The last year and a half has been a transformative time for Origo: we have developed from being a closely held private company to a public entity, set up a first co-investment fund and completed a private placement with one of Europe's largest alternative asset management groups.
The Company spent the first six months of the year investing the proceeds from the IPO, taking stakes in eight new promising companies. In total, at year end, the Company was actively involved in the development of 17 investee companies, each of which has expanded during the year.
Since the completion of the IPO in December 2006, the Company has witnessed a steadily increasing flow of quality investment opportunities, particularly in the natural resource sector. Having considered different financing options, the Board decided to expand the business scope of the Group by launching a co-investment fund, Origo Resource Partners Ltd ("ORP").
Admitted to trading on the AIM market of the London Stock Exchange in December 2007, ORP is a US$100 million closed ended fund dedicated to private equity investments in Chinese and Indian related natural resource companies. In the capacity of consultant to ORP, Origo stand to benefit from management and performance fees as well as a co-investment arrangement.
In early 2008, Origo formed a partnership with GLG Partners LP, one of Europe's largest alternative asset managers, which has the potential to deliver significant benefits to Origo by broadening the range and scale of transactions open to us whilst underpinning the development of our asset management business. Through various funds, GLG invested approximately £17.1 million in the Company via a placing of new ordinary shares. Following completion of the placing, GLG held a 29.6% interest in the Company's issued ordinary share capital.
I was delighted to welcome Niklas Ponnert to the Board of Directors as an Executive Director and Chief Financial Officer. A Managing Director since early 2006, Mr. Ponnert is familiar with the Company and its portfolio. Besides playing a critical role in our fund-raising efforts, he has left a mark by taking a lead role in the deployment of capital and monitoring of our growing portfolio.
The Company has adopted IFRS in its single entity accounts, including IAS 39 "Financial Instruments: Recognition and Measurement," with changes in fair value being recognized in the profit and loss account. Besides adhering to best practices of the private equity industry, we believe this change in accounting policy will allow us to better reflect the value of our portfolio companies - and hence the value of the Group as a whole. We also appointed new advisers, including Smith & Williamson as nominated adviser, Liberum Capital as broker, and, after having completed a process to ascertain their cost competitiveness and competence, Ernst & Young as our auditor.
The Company's achievements during the course of the year underline the commitment of our team. I thank them for their support, as well as the management, staff and my fellow board directors for their hard work over the year.
Wang Chao Yong
Executive Chairman
Chief Executive's Statement
Origo's business model expanded in 2007 to include asset management consulting, commodity brokering and equity research services in addition to our existing private equity investment and transaction service practice.
We intend to aggressively expand these new business areas, with growth of assets under management being the key strategic objective. To support these initiatives, we have recruited several investment professionals and invested in business support staff and systems.
The cornerstone of Origo's strategy remains unchanged: we invest from our balance sheet in promising Chinese and Indian companies across various sectors, ranging from natural resources and energy, manufacturing and consumer services, to technology and media. Starting from last year, we now also complement our proprietary investments with capital from third party co-investment funds.
We support local entrepreneurs and partner with foreign market leaders who invest in China and India. Through the partnership with GLG Partners, we will also seek to capitalise on what promises to be a new trend in international capital flows: out-bound investments by Chinese and Indian companies going overseas to invest and acquire assets.
Positioning the Company as a value-adding investor, we work closely with our investee companies, providing services relating to private placements, expansions into new markets, mergers and acquisitions and access to international capital markets. Through active ownership we are able to control risk and optimise value. It also allows the Group to earn fees, thus reducing our dependency on asset realisations, while providing us with an edge in increasingly competitive markets.
The seeds of success of our strategy can be seen in the results for 2007. Revenues reached £902k, up from £42k in 2006. Other Administration costs were up significantly in line with our investments in people and infrastructure, reaching £1,478k, compared to £398k in the previous year. As a result, including a non-cash expense of £901k for share-based payments, the Company posted an operating loss of £1,871k. The operating loss was offset by growth in the value of our portfolio, crystallised in the revaluation of our holdings in Rising Technology Corporation Ltd and Roshini International Bio Energy Corporation. Including movements in fair value, the Company posted a profit of £11.4 million, equivalent to 16.48p per ordinary share on a fully diluted basis.
Our balance sheet is strong. We ended 2007 with £3.6 million in cash and cash equivalents, down from £9.2 million in 2006, reflecting an active year of investing. Net assets rose to £25.8 million, up from £11.5 million last year. In early 2008, our balance sheet was further strengthened with £17.1 million in proceeds from the placing of ordinary shares to GLG Partners.
In summary, 2007 was an exceptional year for the Company. Much was achieved and several new initiatives were successfully launched. Looking forward, we note that China and India have been relatively shielded thus far from the turmoil in international financial markets and underlying growth remains strong.
Chris Andre Rynning
Chief Executive Officer
Operational review
Investments
Origo completed nine new investments during the course of the year, with total cash-commitments amounting to US$21.1 million. In line with the strategy stated prior to our admission to AIM, US$13 million was allocated to mature, development stage companies, namely Rising Technology Corporation ("Rising") and Fomento International Ltd. ("FIL"), and US$8.1 million was invested in seven earlier stage companies.
|
Time of Investment |
Company |
Business Activities |
Commitment (US$) |
|
January |
Rising Technology Corporation Ltd. |
Anti-virus software |
3 (7mn*) |
|
February |
China Silvertone** |
Digital media |
1mn |
|
March |
Fans Media Co.,Ltd. |
Online entertainment |
2mn |
|
April |
Possibility Space Incorporated |
Online game development |
1mn |
|
July |
Bach Technology AS |
Content discovery software |
60k |
|
August |
Fomento International Ltd. |
Iron ore mining |
10mn |
|
August |
Roshini International Bio Energy Corporation |
Bio-fuels feedstock |
2mn |
|
October |
Staur Holding AS*** |
Water desalination |
1mn |
|
November |
SHERQ Ltd. |
Safety and health services |
1mn |
Note:
*3 million in cash; 4 million in the form of Origo ordinary shares
** Commitments to various Silvertone group companies, including Beijing RongRun YinTong Meida Technology Co. Ltd
*** Receivable from Origo Resource Partners Ltd.
During the course of the year, we also provided certain working capital facilities to our existing portfolio companies, including Dragon Ports, ISAK, Spiced Bits, and PSI. Provided to fund specific value-creating events, these investments were all in the form of convertible notes, most of which carry a coupon, and all of which are convertible into conversion stock of the investee company at a discount to the price of the next financing round.
|
Time of Investment |
Company |
Instrument |
Commitment (US$) |
|
January |
Dragon Ports Ltd. |
Convertible Notes |
67k |
|
February |
ISAK International Holding Ltd. |
Convertible Notes |
400k |
|
May |
Spiced Bits Ltd. |
Convertible Notes |
130k |
Since December 31, 2007, Origo has completed two further transactions with a total commitment of US$4.3 million: a follow-on investment in FIL and an investment in E-Bill China Holdings Ltd.
|
Time of Investment |
Company |
Business Activities |
Commitment (US$) |
|
February |
Fomento International Ltd. |
Iron ore mining |
3mn |
|
February |
E-Bill China Holdings Ltd. |
Electronic payment services |
1.3mn |
Divestments/Realizations
The Company's portfolio comprises both early-stage venture investments and mature development stage companies. One trade-sale was completed in 2007: in June we transferred our 30% shareholding in M-Ikon Ltd in consideration for a 3% stake in Fans Media Ltd. The transaction re-valued the original cash-investment of US$6k reflecting a realized gain of US$354k.
|
Date of Divestment |
Company |
Carrying value of Investment |
Proceeds |
Gain |
|
June |
M-ikon Ltd. |
US$6k |
US$ 360k |
US$ 354k |
Further, in the first half of 2008, the Company assigned to Origo Resource Partners ("ORP") a convertible loan already extended to RIBEC and transferred an equity position and a related subordinated debt commitment to Staur Holdings AS. Approved by the Origo Board in conjunction with the inception of Origo Resource Partners and disclosed in ORP's admission document, these interests were assigned at cost, together with the value of accrued interest. Accordingly, the initial investments have been classified as other receivable in the Origo accounts, with no material difference between the fair and carrying value.
|
Time of Divestment |
Company |
Cost of Investment |
Proceeds |
Gain |
|
February |
Staur Holding AS |
US$340k |
US$340k |
N/A |
|
April |
Roshini International Bio Energy Corporation |
US$1mn |
US$1mn |
N/A |
Origo Resource Partners Ltd
In December 2007, Origo's first co-investment fund, Origo Resource Partners Ltd ("ORP") was admitted to trading on the Channel Islands Stock Exchange (CISX) and AIM (LSE: ORP). A US$100 million closed end fund, ORP seeks to invest in companies with significant assets in the natural resource sectors of China and India as well as in companies and projects throughout the world with a link to these two markets. As a sub-consultant to the fund, Origo stand to be benefit from management and performances fees linked to the net asset value of the fund, as well as through co-investment opportunities. In the first five months of 2008, ORP announced four investments, with a total transaction value of US$46 million.
|
Date of Investment |
Company |
Business Activities |
Commitment (US$) |
|
January |
Roshini International Bio Energy Corporation |
Bio-fuels feedstock |
17mn* |
|
February |
Fomento International Ltd. |
Iron ore mining/beneficiation |
17mn |
|
February |
Staur Holding AS |
Desalination |
1mn** |
|
January |
SHERQ Ltd |
Work safety certification/consulting |
11mn |
Note:
*US$1 million in the form of a convertible loan originally extended by Origo
** US$1 million in the form of an equity position and a loan facility originally extended by Origo
Financial Review
Operating Results
Revenues reached £902k, up from £42k in 2007. Other Administration costs were up significantly in line with investments in people and infrastructure, reaching £1,478k, compared to £398k in the previous period. Including non-cash based expenses related to share-settled payments, the Company posted an operating loss of £1,871k.
Valuation of investments
The valuation of financial investments at December 31, 2007 was £20.8 million (2006: £158k). This value was calculated having taken into account new investments of £8.1 million, and a net increase in the fair value of new investment in the amount of £12.7 million. The positive movement in the fair value of investments is driven by substantial revaluations of two of the Company's holdings - Rising Technology Corporation Ltd ("Rising") and Roshini International Bio Energy Corporation ("RIBEC")
The carrying value of the Company's stake in RIBEC has been re-adjusted based on the price of the last round of investment into that company. Acquired at nominal value in May 2007, the re-adjusted fair value of this holding is £8 million, representing an unrealised gain of £8 million.
Rising posted an 87% increase in profits for the year ended December 31, 2006 and is expected to have grown in excess of 50% in 2007. In the absence of an external financing round, the stake in this portfolio has been revalued on a multiple approach, based on a cross-selection of comparable companies, with the application of a 30% liquidity discount. The Rising stake is carried in the accounts at a value of £8.2 million, representing an unrealized gain of £ 4.6 million.
Profits
Including movements in fair value, profits before (and after) tax for the year were £11.4 million, compared with a loss of £7.4 million for the prior year. With an operating loss for the year of £1,871k, this substantial increase in profit was driven by the movement in fair value in the portfolio as detailed above.
Net cash position
Cash and cash equivalents at the end of the period totaled £3.6 million, representing 14% of our net assets (2006: 80%). The decrease in our cash position over the year is consistent with our commitment to actively investing the proceeds of the IPO in a timely fashion while ensuring that the Company has sufficient cash resources for working capital purposes.
Net asset value
As of December 31, 2007, net assets attributable to the ordinary shares were £25.8 million, compared to £11.4 million at December 31, 2006. The net increase in the valuation of our investments comprised upward movements of £20.6 million, with no downward adjustment for any impairment in any of our portfolio holdings.
Dividends
The Company seeks to generate shareholder value through providing fee-based services coupled with long-term appreciation in the value of its portfolio holdings. The Company made good progress in 2007 in terms of growing the value of its assets however recorded no positive cash-flows from operations or divestment of assets. Thus, the Board is not recommending the distribution of dividends for 2007.
Consolidated income statement for the year ended 31 December 2007
|
Note |
2007 £'000 |
From 31 March 2006 (Date of incorporation) to 31 December 2006 £'000 |
|
|
Revenue |
902 |
42 |
|
|
Cost of sales |
(355) |
(26) |
|
|
Gross profit |
547 |
16 |
|
|
Distribution costs |
(39) |
(1) |
|
|
Impairment of goodwill |
|
- |
(4,795) |
|
Share-based payments |
(901) |
(1,043) |
|
|
AIM flotation fees |
- |
(1,184) |
|
|
Other administrative expenses |
|
(1,478) |
(398) |
|
Total administrative expenses |
(2,379) |
(7,420) |
|
|
Loss from operations |
|
(1,871) |
(7,405) |
|
Investment income |
2 |
12,856 |
(1) |
|
- Realised gains on disposal of the associate |
172 |
- |
|
|
Finance income |
418 |
12 |
|
|
Finance costs |
(13) |
(4) |
|
|
Other income |
|
4 |
- |
|
Profit/(loss) before and after tax |
|
11,394 |
(7,398) |
|
Attributable to: |
|||
|
- Equity holders of the parent |
|
11,394 |
(7,398) |
|
|
|
11,394 |
(7,398) |
|
Basic and diluted EPS |
16.48p |
(22.88p) |
Consolidated balance sheet at 31 December 2007
|
Assets |
Note |
2007 £'000 |
2006 (Restated) £'000 |
|
Non-current assets |
|||
|
Property, plant and equipment (PPE) |
21 |
12 |
|
|
Investments at fair value through profit or loss |
4 |
20,537 |
- |
|
Loan investments |
126 |
- |
|
|
Available for sale investments |
130 |
132 |
|
|
Investments in associates |
52 |
22 |
|
|
Other investments |
4 |
4 |
|
|
|
|
20,870 |
170 |
|
Current assets |
|||
|
Inventories |
13 |
- |
|
|
Trade and other receivables |
5 |
1,517 |
2,996 |
|
Cash and bank balance |
3,659 |
9,175 |
|
|
|
|
5,189 |
12,171 |
|
|
|
|
|
|
Total assets |
|
26,059 |
12,341 |
|
Current liabilities |
|||
|
Trade and other payables |
225 |
880 |
|
|
|
|
225 |
880 |
|
Total liabilities |
|
225 |
880 |
|
Total net assets |
|
25,834 |
11,461 |
|
Equity attributable to equity holders of the company |
|||
|
Share capital |
6 |
7 |
7 |
|
Share premium |
15,105 |
13,071 |
|
|
Share based payment reserve |
1,944 |
1,043 |
|
|
Retained earnings |
3,996 |
(7,398) |
|
|
Warrant reserve |
4,738 |
4,738 |
|
|
Translation reserve |
44 |
- |
|
|
Total equity |
|
25,834 |
11,461 |
|
Total equity and liabilities |
|
26,059 |
12,341 |
Consolidated Statement of Changes in Equity for the year ended 31 December 2007
|
Note |
Share Capital |
Share Premium |
Share based Payment Reserve |
Retained Earnings |
Warrant Reserve |
Merger Reserve |
Translation Reserve |
Total |
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Proceeds on share issues for cash |
6 |
9,123 |
- |
- |
4,738 |
- |
- |
13,867 |
|
|
Share issue costs |
- |
(701) |
- |
- |
- |
- |
- |
(701) |
|
|
Share-based payment expense |
- |
- |
1,043 |
- |
- |
- |
- |
1,043 |
|
|
Equity-settled combination |
1 |
4,649 |
- |
- |
- |
- |
- |
4,650 |
|
|
Loss for the year |
- |
- |
- |
(7,398) |
- |
- |
- |
(7,398) |
|
|
At 31 December 2006 (restated) |
|
7 |
13,071 |
1,043 |
(7,398) |
4,738 |
- |
- |
11,461 |
|
|
|||||||||
|
At 1 January 2007 (as previously reported) |
7 |
6,998 |
1,043 |
(7,398) |
6,162 |
4,649 |
- |
11,461 |
|
|
Prior year adjustments |
7 |
6,073 |
- |
(1,424) |
(4,649) |
- |
- |
||
|
At 1 January 2007 (restated) |
|
7 |
13,071 |
1,043 |
(7,398) |
4,738 |
- |
- |
11,461 |
|
Proceeds on share issues |
- |
2,034 |
- |
- |
- |
- |
2,034 |
||
|
Share-based payment expense |
- |
- |
901 |
- |
- |
- |
- |
901 |
|
|
Profit for the year |
- |
- |
- |
11,394 |
- |
- |
- |
11,394 |
|
|
Foreign Currency translation |
- |
- |
- |
- |
- |
- |
44 |
44 |
|
|
At 31 December 2007 |
|
7 |
15,105 |
1,944 |
3,996 |
4,738 |
- |
44 |
25,834 |
Consolidated cash flow statement for the year ended 31 December 2007
|
Year ended 31 Dec 2007 |
Year ended 31 Dec 2006 |
|
|
|
£'000 |
£'000 |
|
Profit before and after tax |
11,394 |
(7,398) |
|
Adjustments for: |
||
|
Depreciation |
3 |
2 |
|
Share-based payment |
901 |
1,043 |
|
Impairment of goodwill |
- |
4,795 |
|
Gains on fair value changes of FVTPL |
(12,684) |
- |
|
Gains on disposal of the associate |
(172) |
- |
|
Other investment income |
- |
1 |
|
Finance income |
(418) |
(12) |
|
Operating loss before changes in working capital and provisions |
(976) |
(1,569) |
|
Increase in trade and other receivables |
(1,382) |
(5) |
|
Change in trade and other payables |
(655) |
349 |
|
Increase in inventories |
(13) |
- |
|
Net Cash outflows from operations |
(3,026) |
(1,225) |
|
Investing activities |
||
|
Acquisition of subsidiary, net of cash acquired |
- |
106 |
|
Purchases of Property,Plant and Equipment |
(12) |
(9) |
|
Investment of financial instruments |
(5,761) |
- |
|
Finance income received |
418 |
12 |
|
Net Cash flows used in investing activities |
(5,355) |
109 |
|
Financing activities |
||
|
Issue of ordinary shares |
2,865 |
10,291 |
|
Increase in cash and cash equivalents |
(5,516) |
9,175 |
|
Cash and cash equivalents at beginning of year |
9,175 |
- |
|
Cash and cash equivalents at end of year |
3,659 |
9,175 |
Notes to the financial statements
1 Accounting policies
The principal 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 2007 (the "Financial Statements").
1.1 Basis of preparation
For the year ended 31 December 2006, the Group financial statements were prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and the Company financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting practice). In the current year, both the Group and the Company financial statements are prepared in accordance with 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.
The following new and revised IFRSs and IFRIC interpretations have been adopted for the first time for the current year's financial statements:
|
IFRS 7 |
Financial Instruments: Disclosures |
|
IAS 1 |
Amendment Capital Disclosures |
|
IFRIC 8 |
Scope of IFRS 2 |
|
IFRIC 9 |
Reassessment of Embedded Derivatives |
|
IFRIC 10 |
Interim Financial Reporting and Impairment |
The principal effects of adopting these new and revised IFRSs and IFRIC interpretations are as follows:
The Group has adopted IFRS 7 in these financial statements, which requires disclosures that enable users of the financial statements to evaluate the significance of the Group's financial instruments and the nature and extent of risks arising from those financial instruments. There has been no effect on the financial position or results of operations of the Group.
IAS 1 Amendment has affected the disclosures about the qualitative information about the Company's objectives, policies and processes for managing capital. The new disclosure has been shown in note 19.
The adoption of IFRIC 8, 9 and 10 has had no material impact on these financial statements.
The Group has not applied the following new and revised IFRSs and IFRIC interpretations that have been issued but are not yet effective, in these financial statements.
|
IFRS 2 Amendment |
Share-based Payments - Vesting Conditions and Cancellations |
|
IFRS 3 (Revised) |
Business Combinations |
|
IFRS 8 |
Operating Segments |
|
IAS 1 (Revised) |
Presentation of Financial Statements |
|
IAS 27 (Revised) |
Consolidated and Separate Financial Statements |
|
IFRIC 11 |
IFRS 2 - Group and Treasury Share Transactions |
|
IFRIC 14 |
IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction |
IFRS 2 Amendment shall be applied for annual periods beginning on or after 1 January 2009. IFRS 2 Amendment restricts the definition of "vesting condition" to a condition that includes an explicit or implicit requirement to provide services.
IFRS 3 (Revised) shall be applied for annual periods beginning on or after 1 July 2009. It introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. The changes must be applied prospectively and will affect future acquisitions and transactions with minority interests.
IFRS 8 shall be applied for annual periods beginning on or after 1 January 2009 and will replace the existing IAS 14 "Segment Reporting". IFRS 8 requires an entity to report on the financial performance of its operating segments, based on the information used internally for the purpose of evaluating segment performance and deciding resources allocation to operating segments. Such information may be different from what is used for preparing the income statement and balance sheet. IFRS 8 therefore requires explanations of the basis on how the segment information is prepared and reconciled to the income statement and balance sheet.
IAS 1 (Revised) shall be applied for annual periods beginning on or after 1 January 2009. The standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Group is still evaluating whether it will have one or two statements.
IAS 27 (Revised) shall be applied for annual periods beginning on or after 1 July 2009. It requires that a change in the ownership interest of a subsidiary is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give raise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes must be applied prospectively and will affect future acquisitions and transactions with minority interests.
IFRIC interpretation 11 shall be applied for annual periods beginning on or after 1 March 2007. It requires arrangements whereby an employee is granted rights to an entity's equity instruments to be accounted for as an equity-settled scheme, even if the entity buys the instrument from another party, or the shareholders provide the equity instruments needed.
2 Investment income
|
|
2007 £'000 |
2006 £'000 |
|
Unrealized gains on fair value changes of FVTPL using estimation techniques* |
12,684 |
- |
|
Realised gains on disposal of the associate |
172 |
- |
|
Other gains and losses |
- |
(1) |
|
Total |
12,856 |
(1) |
* FVTPL refer to investments at fair value through profit or loss
3 Earnings per share
|
Numerator |
2007 £'000 |
2006 £'000 |
|
Profit/(Loss) for the year |
11,394 |
(7,398) |
|
Earnings used in basic EPS and diluted EPS |
11,394 |
(7,398) |
|
Denominator |
2007 number |
2006 number |
|
Weighted average number of shares used in basic and diluted EPS |
69,149,922 |
32,333,027 |
|
Basic and diluted EPS |
16.48p |
(22.88p) |
The options and warrant in issue are anti-dilutive under IAS Earnings per share, and hence basic and diluted earnings per share are the same.
4 Investments at fair value through profits or loss
|
Name |
Country of incorporation |
Proportion of ownership interest |
Cost £'000 |
Fair value £'000 |
|
SHERQ Ltd |
British Virgin Islands |
25% |
510 |
510 |
|
Roshini Int'l Bio-Energy Corporation |
British Virgin Islands |
19.75% |
- |
8,016 |
|
Fans Media Co., Ltd |
British Virgin Islands |
15.88% |
1,200 |
1,200 |
|
Possibility Space Incorporated |
United States of America |
9.50% |
510 |
510 |
|
Bach Technology AS |
Norway |
6.32% |
31 |
31 |
|
Fomento International Ltd |
British Virgin Islands |
3% |
2,038 |
2,038 |
|
Rising Technology Corporation Ltd |
British Virgin Islands |
2% |
3,564 |
8,232 |
|
Total |
|
|
7,853 |
20,537 |
5 Trade and other receivables
|
Group |
Company |
|||
|
|
2007 £'000 |
2006 £'000 |
2007 £'000 |
2006 £'000 |
|
Trade debtors |
311 |
58 |
107 |
- |
|
Other debtors |
1,188 |
2,929 |
2,184 |
3,379 |
|
Prepayments |
18 |
9 |
9 |
- |
|
Total |
1,517 |
2,996 |
2,300 |
3,379 |
|
|
2007 £'000 |
2006 £'000 |
2007 £'000 |
2006 £'000 |
|
Other Debtors |
||||
|
Origo Resource Partners (equity investment in Staur) * |
163 |
- |
163 |
|
|
Origo Resource Partners (convertible credit to RIBEC) * |
521 |
- |
521 |
|
|
Other receivable from share subscription |
- |
2,890 |
- |
2,865 |
|
Others |
504 |
39 |
1,500 |
514 |
|
|
1,188 |
2,929 |
2,184 |
3,379 |
Equity Investment of 4.81% in Staur Aqua AS Ltd and a US$1 million convertible note extended to RIBEC were assigned to Origo Resource Partners Ltd in February and April, 2008, respectively.
6 Share capital
|
Authorised |
2007 |
2007 |
|
Number |
£'000 |
|
|
Ordinary shares of £ 0.0001 each |
500,000,000 |
50 |
|
Issued and fully paid |
2007 |
2007 |
|
Number |
£'000 |
|
|
At beginning of the year |
65,193,238 |
7 |
|
Issued on 11 January 2007 for acquisition of Rising Technology Corporation Ltd * |
4,068,140 |
- |
|
At end of the year |
69,261,378 |
7 |
|
Warrants |
||
|
At beginning and end of the year |
25,673,238 |
|
|
Exercised during the year |
- |
|
|
At end of the year |
25,673,238 |
|
* On 11 January 2007, the Company entered into an agreement with China Equity International Holding Company Ltd to acquire a 2% ownership of Rising Technology Corporation Ltd in consideration for US$3,000,000 in cash and 4,068,140 ordinary shares of the Company. The consideration shares were calculated at 50p per share at an exchange rate of US dollar 1.9665 per Pounds Sterling and 4,068,140 shares were therefore issued and allotted.
7 Business combination during prior year and prior year adjustments
By a share exchange agreement dated 23 October 2006 entered into by Amalie International Holdings Ltd, Bullfrog Holdings Ltd, Global Holdings Ltd, and Chee Lai Yong (together being "AVL" shareholders) and the Company, the AVL shareholders agreed to transfer the entire issued share capital held by them in AVL to the Company in exchange for 9,300,000 fully paid Ordinary Shares in aggregate in the capital of the Company. Following the transaction, AVL became a wholly owned subsidiary of the Company.
|
Book Value and fair value 23 October 2006 |
|
|
£'000 |
|
|
Net asset acquired |
|
|
Property, plant and equipment |
5 |
|
Inventories |
27 |
|
Trade and other receivables |
116 |
|
Cash and cash equivalents |
106 |
|
Available for sale investments |
132 |
|
Trade and other payables |
(531) |
|
|
(145) |
|
Goodwill on acquisition |
4,795 |
|
Total consideration |
4,650 |
|
Satisfied by: |
|
|
Equity |
4,650 |
The remaining excess of purchase consideration over the fair value of net assets acquired of £4,795,000 had been capitalized as goodwill. The goodwill had been allocated to the cash-generating unit of AVL from impairment testing. As this was the lowest level of cash-generating unit that could be reliably and separately identified, a goodwill impairment of £4,795,000 arising on the acquisition of AVL was identified.
In the prior year's Company level accounts prepared under previous GAAP, merger relief under the Isle of Man Companies Act 1992 was applied and accordingly the cost of investment in AVL was initially measured at the nominal amount of the equity consideration issued by the Company. In accordance with IFRSs, this combination should be recognised as an acquisition, and hence merger relief under the Isle of Man Companies Act 1992 does not apply. Accordingly, on first-time adoption of IFRSs, an adjustment has been made to record the excess of fair value of equity consideration issued over the nominal value as share premium with a corresponding amount of impairment of long-term investment being charged to the prior year's profit or loss account (note 26)
On admission to AIM on 21 December 2006 the Company issued 25,673,238 warrants entitling each Warrant holder to subscribe for 1 Ordinary Share at a price per Ordinary Share of 55p. The Warrant holder may exercise the warrants held at six monthly intervals during the period of 3 years from the date of admission. The fair value of the warrants at the grant date, amounting to £6,162,000, was estimated by using Black-Scholes Model and recorded in warrant reserve at the fair value. Within the Black-Scholes Model formula, a key input of 5 years for the term of the warrant was used instead of 3 years. Accordingly, the warrant reserve was overstated by £1,424,000 and at the same time the share premium reserve was understated by the same amounts. The warrant reserve has been adjusted with the comparative information for this reporting year.
8 Post balance sheet transactions
In January 2008, the Company extended a convertible loan of US$500,000 to Possibility Space Incorporated.
In January 2008, the Company extended a further US$78,000 convertible loan to China Silvertone Investment Co. Ltd.
In February 2008, the Company assigned a 4.81% equity investment and a related loan facility of NOK 3,000,000 along with all future participation rights in Staur Aqua A/S to Origo Resource Partners Ltd.
In March 2008, the Company announced that funds managed by GLG Partners LP ("GLG Funds") were investing approximately £17.1 million in the Company via a placing of 28,286,499 new ordinary shares (equivalent to an average placing price per share of approximately 60.4p). Following completion of the placing, GLG Funds had a 29.6% interest in the Company's issued ordinary share capital. In addition, the Company and GLG Partners LP entered into an agreement whereby Origo Sino-India Plc will provide GLG Partners LP research services for a period of three years for a fee of £3 million.
In March 2008, the Company announced the grant of 2 million options for the benefit of Niklas Ponnert, Chief Financial Officer and director of the Company, and 1.8 million options to several other key personnel of the Company, all pursuant to the Company's existing share option plans. The options are exercisable at an exercise price of 59.85p.
In March 2008, the Company entered into an agreement to acquire an equity stake of approximately 5% in E-Bill China Holdings ("E-Bill"), an electronic payment services provider, for an investment of US$1.3 million.
In March 2008, the Company announced it had entered into an agreement to subscribe for an additional US$3 million worth of Ordinary Shares, equivalent to 0.9% interest, in Fomento International Ltd.
In April 2008, the Company assigned, at cost, a US$1million convertible credit facility and further investment rights in Roshini International Bio Energy Corporation to Origo Resource Partners Ltd.
9. The above financial information does not constitute statutory accounts within the meaning of the Isle of Man Companies Acts. Statutory accounts for the period ended 31 December 2007 will be finalised on the basis of the information presented in this preliminary announcement and will be delivered to the Isle of Man Financial Supervision Commission and sent to shareholders following their publication.
10. Copies of the Annual Report and Accounts for the Company for the year ended 31 December 2007 will be sent to shareholders in due course and will be available from the offices of Smith & Williamson Corporate Finance Limited, 25 Moorgate, London, EC2R 6AY.
Related Shares:
OPP.L