TIDMWSL
RNS Number : 1587L
Worldsec Ld
23 April 2015
WORLDSEC LIMITED
Annual Report for the year ended 31 December 2014
CORPORATE INFORMATION
Board of Directors
Non-Executive Chairman
Alastair GUNN-FORBES*
Executive Directors
Henry Ying Chew CHEONG (Deputy Chairman)
Ernest Chiu Shun SHE
Non-Executive Directors
Mark Chung FONG*
Martyn Stuart WELLS*
* independent
Company Secretary
Jordans Company Secretaries Limited
21 St Thomas Street, Bristol B51 6JS, United Kingdom
Registered Office Address
Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda
Registration Number
EC21466 Bermuda
Principal Bankers
The Hongkong and Shanghai Banking Corporation Limited
1 Queen's Road, Central, Hong Kong
External Auditor
BDO Limited
25th Floor, Wing On Centre, 111 Connaught Road Central, Hong
Kong
Principal Share Registrar and Transfer Office
Appleby Management (Bermuda) Ltd.
Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda
International Branch Registrar
Capita Asset Services
12 Castle Street, St Helier, JE2 3RT, Jersey, Channel
Islands
United Kingdom Transfer Agent
Capita Registrars Limited
The Registry, 34 Beckenham Rd, Beckenham, Kent, BR3 4TU, United
Kingdom
Investor Relations
For further information about Worldsec Limited, please
contact:
Henry Ying Chew CHEONG
Executive Director
Worldsec Group
Unit 607, 6th Floor, FWD Financial Centre, 308 Des Voeux Road
Central, Sheung Wan, Hong Kong
enquiry@worldsec.com
CONTENTS
Page
Chairman's statement 1
Directors' report 2 - 11
Statement of directors' responsibilities 12
Independent auditor's report 13
Consolidated statement of profit or loss and other comprehensive
income 14
Consolidated statement of financial position 15
Statement of financial position 16
Consolidated statement of changes in equity 17
Consolidated statement of cash flows 18
Notes to the consolidated financial statements 19 - 52
Biographical notes of the directors 53 - 54
Chairman's Statement
I am pleased to report that Worldsec Limited (the "Company") and
its subsidiaries (together the "Group") had made notable progress
during the year under review.
To better position the Group to achieve the investment objective
of the Company with greater flexibility, the Board proposed in
August 2014 to broaden the scope of the Company's Investment Policy
to include investments in start-up/early stage growth companies.
The proposal was approved by shareholders in the Annual General
Meeting held on 29 September 2014.
Following the approval of the broadening of the Company's
Investment Policy, the Group had successfully made two investments
in start-up companies during the last quarter of 2014:
an investment of US$800,000 for an 8% interest in the
non-voting, participating share capital issued by ICBC Specialised
Ship Leasing Investment Fund; and.
an investment totalling HK$4 million for a 50% interest in Oasis
Education Group Limited.
Subsequent to the end of 2014, the Group has further expanded
its investment portfolio by investing CHF320,000 in the equity
capital of Ayondo Holding AG, a company incorporated in
Switzerland.
Details of these investments are set out in the Review section
of the Directors' Report.
To cope with the increase in business activities, Worldsec
Investment (Hong Kong) Limited, the Group's principal operating
subsidiary in Hong Kong, has moved into a new office and has
started to recruit additional staff.
Prospects
Apart from the U.S. Federal Reserve which has adopted a policy
stance towards gradual tightening, the central banks of other major
advanced economies continue to pursue highly accommodative monetary
policies. Given the abundance of liquidity, the private equity
space is awash with investment capital and dry powder competing for
quality deals. This has been driving up valuations and narrowing
the spreads of return. Nonetheless, with the broadening of the
Investment Policy of the Company, I am confident that the Group has
better positioned itself to capture market opportunities consistent
with the Company's investment objective with a view to generating
sustainable growth in shareholders' value in the longer term.
Note of Appreciation
I wish to take this opportunity to thank my fellow directors for
the efforts and contribution they had made to enable the Group to
achieve satisfying progress during the year under review. I would
also like to extend a note of appreciation to shareholders for
their patience with and support of the Company.
Alastair Gunn-Forbes
Non-Executive Chairman
23 April 2015
DIRECTORS' REPORT
The directors submit the annual report of the Company and the
audited consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2014.
Principal activities
The principal activity of the Company is investment holding. The
Company and its subsidiaries are primarily engaged in investment in
unlisted companies in the Greater China and South East Asian
regions.
Results
The audited consolidated loss of the Company and its
subsidiaries for the year ended 31 December 2014 was US$475,000,
compared with a loss of US$273,000 in 2013. Loss per share was
US0.84 cent (2013: US1.00 cent).
The increase in loss was largely due to increased fees paid to
professional parties which assisted the Group in the evaluation of
potential investments as well as higher administration costs as the
Group started, albeit gradually, to return to normal business
activities since its reactivation in the latter part of 2013. There
was also a share of joint venture loss arising from the Group's
investment in a start-up company, Oasis Education (as defined and
discussed below).
The decline in loss per share reflects the full year impact
during 2014 of the increase in the number of shares as a result of
the share issue associated with the fund raising exercise in August
2013.
As at 31 December 2014, the net assets of the Group amounted to
approximately US$3.8 million (2013: US$4.2 million), equivalent to
approximately US6.6 cents per share (2013: US7.5 cents).
Further details of the Group's results are set out in the
consolidated statement of profit and loss and other comprehensive
income on page 14 and notes to the consolidated financial
statements on pages 19 to 52.
The Board does not propose to declare any dividend for the year
ended 31 December 2014 (2013: nil).
Review
At the Annual General Meeting held on 29 September 2014, in
addition to normal ordinary business, shareholders also approved
two resolutions in respect of special business, namely, (a) to
widen the scope of the Company's Investment Policy to allow
investments in start-up/early stage growth companies; and (b) to
change the rules of the Worldsec Employee Share Option Scheme 1997
(the "Scheme") to align with the changes to tax and legislation
since the Scheme was introduced and to include the Group's
non-executive directors as eligible participants of the Scheme. The
reason for widening the Company's Investment Policy was to enable
the Group to make investments with greater flexibility and hence to
achieve the Company's investment objective more efficiently. The
inclusion of the Group's non-executive directors as eligible
participants of the Scheme would enable the Group to reward them
for their commitments to the Company beyond the nominal annual fees
that the Group could afford to pay during its early stage of
development. Further discussion relating to the special business
can be found in the Notice of Annual General Meeting sent to
shareholders on 1 September 2014.
DIRECTORS' REPORT
During the last quarter of 2014 following the widening of the
Company's Investment Policy, the Group had successfully made two
investments in start-up companies:
an investment of US$800,000 for an 8% interest in the
non-voting, participating share capital issued by ICBC Specialised
Ship Leasing Investment Fund which is a newly established company
incorporated in Cayman Islands with an objective of achieving
stable return from primarily investing in marine vessels. Since
January 2015, the Group has received dividends from this investment
on a monthly basis; and
an investment totalling HK$4 million (equivalent to
approximately US$514,000), by way of capital contribution of HK$2
million and shareholders loan of HK$2 million, for a 50% interest
in Oasis Education Group Limited ("Oasis Education") which is a
start-up company incorporated in Hong Kong. Oasis Education and its
subsidiary (the "Oasis Education Group") are principally engaged in
the provision of education consulting and support services to
kindergartens in China. The first such kindergarten serviced by the
Oasis Education Group is located in Huizhou City of Guangdong
Province (the "Huizhou Kindergarten"). The service agreement
between the Oasis Education Group and the Huizhou Kindergarten,
which has facilities designed to cater for 300 pupils and which has
recently commenced classes, will run until the end of 2033. Oasis
Education aims in the longer term to develop and expand the
education consulting and supporting services to cover a network of
kindergartens in China.
Subsequent to the end of 2014, the Group has made an investment
of CHF320,000 (equivalent to approximately USD325,000) in the
equity capital of ayondo Holding AG ("Ayondo"), a company
incorporated in Switzerland. Listed as one of the top 50 financial
technology companies by FinTech in 2013, Ayondo (previously known
as Next Generation Finance Investment AG) invests in new
technologies and high growth business models that can achieve
increased efficiency in the financial service sector. Belonging to
the portfolio of Ayondo is the social trading provider, ayondo
GmbH, in Frankfurt, Germany, as well as the broker, ayondo markets
Limited, in London, U.K. In addition, Ayondo has embarked upon an
international expansion strategy with a particular focus on South
East Asia.
In terms of operations, Worldsec Investment (Hong Kong) Limited,
the Group's principal operating subsidiary in Hong Kong, has moved
into a new office and has started to recruit additional staff to
cope with the increase in business activities. The Group plans to
complete the first stage/initial round of recruitment of staff by
the end of the current financial year and by then its reliance on
third party professional assistance is expected to be meaningfully
reduced.
Owing to the failure to reach agreement with the Company on the
proposed audit fee for the year ended 31 December 2014, Menzies LLP
resigned in February 2015 as the Company's external auditor and
confirmed that there were no other circumstances connected with
their ceasing to hold office which they considered should be
brought to the notice of the members or creditors of the Company.
On the recommendation of the Audit Committee, the Board has
appointed BDO Limited as the Company's external auditor until the
conclusion of the next general meeting of shareholders.
DIRECTORS' REPORT
ProspectS
The Group remains at an early stage of development. Since its
reactivation of business activities in the latter part of 2013, the
Group has invested in a number of start-up/early stage growth
companies. As these companies are unlikely to make any meaningful
contribution in the near term, the Group is expected to experience
what is commonly described as the J-curve effect, which is typical
characteristic of private equity funds during the initial periods
of investment, of not producing positive return until its
investment portfolio gradually becomes mature.
Meanwhile, the mixed economic outlook across the globe has led
to a divergence in global monetary policies. Faced with the perils
of disinflation or outright deflation, however, the majority of the
central banks of developed countries continue to pursue aggressive
easing measures. The abundance of liquidity and the availability of
low cost credit under these conditions provide the private equity
space with a massive source of funds competing for quality deals.
This has been pushing up asset prices and thus reducing overall
risk reward balance. Under these circumstances, the investment
environment for the private equity industry is expected to remain
competitive and challenging.
Notwithstanding the short term challenges, the Board will
continue to explore investment opportunities and expand the Group's
investment portfolio in accordance with the Company's investment
objective with a view to generating sustainable growth in
shareholders' value in the longer term.
Directors
The directors during the year under review and up to the date of
this report were:
Non-Executive Chairman
Alastair Gunn-Forbes(*)
Executive Directors
Henry Ying Chew Cheong
Ernest Chiu Shun She
Non-Executive Directors
Mark Chung Fong(*)
Martyn Stuart Wells(*)
* independent
Brief biographical notes of the directors serving at the date of
this report are set out on pages 53 to 54.
Save as disclosed in this report and in note 22 to the
consolidated financial statements, none of the directors had during
the year under review or at the end of the year a material
interest, directly or indirectly, in any contract of significance
with the Company or any of its subsidiaries.
DIRECTORS' REPORT
Messrs Alastair Gunn-Forbes and Mark Chung Fong have served on
the Board for more than nine years. (In accordance with Provision
B.7.1 of the UK Corporate Governance Code on corporate governance
published by the Financial Reporting Council (the "UK Corporate
Governance Code"), both Messrs Alastair Gunn-Forbes and Mark Chung
Fong retired by rotation and were re-elected to office by separate
resolutions passed at the Annual General Meeting held on 29
September 2014.) During the past nine year period, however, neither
of them has had any material/major interest in the issued share
capital of the Company, has been an employee or involved in the
daily management of any of the Group companies, or has had any
material relationship with any of the Group companies or any of the
major shareholders or managers of any such companies other than
being a member of the Board. Accordingly, and in accordance with
Provision B.1.1 of the UK Corporate Governance Code, the Board has
determined that their independence and objectivity have not been
impaired and they will therefore be able to continue to act
independently in character and judgement.
At the Annual General Meeting held on 29 September 2014,
shareholders approved the inclusion of the Group's non-executive
directors, including Messrs Alastair Gunn-Forbes, Mark Chung Fong
and Martyn Stuart Wells, as eligible participants of the Scheme. As
explained in the Review section above, the reason for such
inclusion was to enable the Group to reward its non-executive
directors for their commitments to the Company beyond the nominal
annual fees that the Group could afford to pay during its early
stage of development. Accordingly, and in accordance with Provision
B.1.1 of the UK Corporate Governance Code, given such
circumstances, the Board has determined that the participation of
Messrs Alastair Gunn-Forbes, Mark Chung Fong and Martyn Stuart
Wells in the Scheme will not affect their ability to act
independently in character and judgement.
DIRECTORS' INTERESTS
The interests of the individuals who were directors during the
year under review in the issued share capital of the Company,
including the interests of persons connected with a director
(within the meaning of Sections 252, 253 to 255 of the United
Kingdom Companies Act 2006 as if the Company were incorporated in
England), the existence of which was known to, or could with
reasonable diligence be ascertained by, that director, whether or
not held through another party, were as follows:
At 1 January 2014 At 31 December
2014
No. of shares No. of shares
Alastair Gunn-Forbes 30,000 30,000
Henry Ying Chew Cheong
(Note) 3,054,873 3,054,873
Mark Chung Fong Nil Nil
Ernest Chiu Shun She 366,730 366,730
Martyn Stuart Wells Nil Nil
DIRECTORS' REPORT
Note: Mr Henry Ying Chew Cheong ("Mr Cheong") owns, in
addition to the beneficial interest in 3,054,873
ordinary shares of US$0.001 each in the Company,
2 ordinary shares of US$1 each in Grand Acumen Holdings
Limited ("GAH"), representing 25% of the issued
share capital of GAH. GAH beneficially owned 6,450,000
ordinary shares of US$0.001 each in the Company
at 1 January 2014 and 31 December 2014.
In addition, HC Investment Holdings Limited ("HCIH")
is wholly owned by Mr Cheong. HCIH beneficially
owned 10,000,000 ordinary shares of US$0.001 each
in the Company at 1 January 2014 and 31 December
2014.
In total, Mr Cheong and his associates were the
legal and beneficial owners of 19,504,873 ordinary
shares of US$0.001 each in the Company, representing
34.4% of the Company's issued share capital, at
1 January 2014 and 31 December 2014. The Company
and Mr Cheong entered into a relationship agreement
on 2 August 2013 (the "Relationship Agreement").
Pursuant to the Relationship Agreement, Mr Cheong
has agreed to exercise his rights as a shareholder
at all times, and to procure that his associates
exercise their rights, so as to ensure that the
Company is capable of carrying on its business independently
of Mr Cheong or any control which Mr Cheong or his
associates may otherwise be able to exercise over
the Company. Moreover, Mr Cheong has undertaken
to ensure, so far as he is able to, that all transactions,
relationships and agreements between Mr Cheong or
his associates and the Company or any of its subsidiaries
are on arms' length terms on a normal commercial
basis. Mr Cheong and the Company have also agreed,
amongst other things, that he will not participate
in the deliberations of the Board in relation to
any proposal to enter into any commercial arrangements
with Mr Cheong or his associates.
Save as disclosed above, none of the above named directors had
an interest, whether beneficial or non-beneficial, in any shares or
debentures of any Group companies at the beginning or at the end of
the year under review. None of the above named directors, or
members of their immediate families, held, exercised or were
awarded any right to subscribe for any shares or debentures of any
Group companies during the year.
DIRECTORS' REMUNERATION
The remuneration of the directors for the year ended 31 December
2014 was as follows:
Fees Emoluments Total
US$'000 US$'000 US$'000
Alastair Gunn-Forbes 15 - 15
Henry Ying Chew Cheong 15 - 15
Mark Chung Fong 15 - 15
Ernest Chiu Shun She 15 - 15
Martyn Stuart Wells 15 - 15
75 - 75
======= ========== =======
DIRECTORS' REPORT
PROVIDENT FUND AND PENSION CONTRIBUTION FOR DIRECTORS
During the year under review, there was no provident fund and
pension contribution for the directors.
LETTERS OF APPOINTMENT/ SERVICE CONTRACTS
Messrs Alastair Gunn-Forbes, Mark Chung Fong and Martyn Stuart
Wells, each has entered into a letter of appointment with the
Company to serve as non-executive director. Each of them is
entitled to a fee of GBP10,000 per annum. The appointment may be
terminated on one month notice in writing.
Messrs Henry Ying Chew Cheong and Ernest Chiu Shun She, each has
entered into a letter of appointment with the Company to serve as
executive director. Each of them is entitled to a fee of GBP10,000
per annum. The appointment may be terminated on not less than six
month notice in writing.
All directors are eligible to participate in the Group's bonus
arrangements at the discretion of the Remuneration Committee and
the Board. No bonus was recommended for the year ended 31 December
2014.
Save as disclosed above, there are no existing or proposed
letters of appointment or service contracts between any of the
directors and the Company or any of its subsidiaries which cannot
be determined without payment of compensation (other than any
statutory compensation) within one year.
MAJOR INTERESTS IN SHARES
At 21 April 2015, being the latest practicable date prior to the
notice of meeting at which this annual report and the consolidated
financial statements of the Company and its subsidiaries for the
year ended 31 December 2014 are to be laid before the Company in
general meeting of shareholders, the Company was aware of the
following direct or indirect interests (other than directors'
interests) representing 5 % or more of the Company's issued share
capital:
Percentage of
No. of shares issued share
capital
Capita IRG Trustees (Nominees)
Limited
(Note) 19,928,429 35.1%
Grand Acumen Holdings Limited 6,450,000 11.4%
HC Investment Holdings Limited 10,000,000 17.6%
Luis Chi Leung Tong 5,000,000 8.8%
Note: Capita IRG Trustees (Nominees) Limited ("Capita")
acts as custodian for Capita IRG Trustees Limited
(the "Depositary") which has been appointed by the
Company to provide the depositary interest facility
in Crest. The Depositary passes all rights and entitlements,
including voting rights, to the underlying depositary
interest holders. As such, Capita does not constitute
a controlling shareholder. Furthermore, to the best
of the knowledge of the Company, no single one of
the underlying depositary interest holders had depositary
interests held under Capita totalling 30% or more
of the Company's issued capital at 21 April 2015.
DIRECTORS' REPORT
GOING CONCERN
After making enquiries, and taking into account the increase in
the equity capital of the Company and the reactivation of the
Group's business activities in the latter part of 2013, the
directors have formed a judgement, at the time of approving the
consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2014, that there was a
reasonable expectation that the Group would have adequate resources
to carry out its operations for the foreseeable future. For this
reason, as stated in note 3 to the consolidated financial
statements, the directors have adopted the going concern basis in
preparing the consolidated financial statements.
CORPORATE GOVERNANCE
The Company seeks to comply with the code provisions of the UK
Corporate Governance Code (the September 2012 edition of which is
publicly available on the webpage of the Financial Reporting
Council,
https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-
Governance-Code-September-2012.pdf). The UK Corporate Governance
Code was updated in September 2014
(https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-2014.pdf).
But as the current reporting period of the Company began on 1
January 2014, the Company continues to report against the September
2012 edition of the UK Corporate Governance Code.
The Board, with a non-executive chairman and over half of its
members being non-executive directors, is committed to high
standard of corporate governance. All non-executive directors are
considered by the Board as independent of management and free from
any business or other relationship which could materially interfere
with the exercise of their independent judgement. All directors are
able to take independent professional advice in furtherance of
their duties, if necessary.
The Board is responsible for establishing strategic directions
and setting objectives for the Company and making significant
investment decisions and monitoring the performance of the Group.
The management is responsible for the day to day running of the
Group's operations.
Although the Board believes that a Nomination Committee (as
noted in Provision B2.1 of the UK Corporate Governance Code), which
makes recommendations to the Board on all new board appointments,
will ensure shareholders as to the suitability of a chosen
director, the Board considers that due to its size and level of
activities it is a "small" Board in the context of the UK Corporate
Governance Code and has therefore decided that it would not be
necessary to establish such a committee. All responsibilities of
such a committee have been reverted to the Board as a whole.
Again, due to its size and level of activities, the Board has
not appointed a senior independent director and does not consider
an annual self-evaluation to be particularly meaningful. The
responsibilities normally rested with a senior independent director
have been reverted to the Board as a whole.
Likewise, as the Group is at an early stage of development
following its reactivation of business activities in the latter
part of 2013 and the scale of its operations remains relatively
insubstantial, the Board has decided that it would not be necessary
or cost-effective to set up an internal audit function. However,
the Company has set up an Audit Committee in accordance with
Provision C3.1 of the UK Corporate Governance Code.
DIRECTORS' REPORT
AUDIT COMMITTEE
The Audit Committee held three meetings during the year under
review and the table below gives the attendance record.
Director Audit Committee Meeting
Mark Chung Fong 3/3
Martyn Stuart Wells 3/3
The Audit Committee is chaired by Mr Mark Chung Fong and its
other current member is Mr Martyn Stuart Wells. The Audit Committee
is appointed by the Board and the committee's membership is
comprised of non-executive directors.
The terms of reference of the Audit Committee (copies of which
are available at the Company's registered office) generally follow,
where applicable, those stated in the code provisions of the UK
Corporate Governance Code.
The Audit Committee meets not less than two times a year and its
responsibilities include, amongst others, the examination and
review of the Group's risk management, internal financial controls
and financial and accounting policies and practices, as well as
overseeing and reviewing the work of the Company's external
auditor, their independence and the fees paid to them.
During the year under review, the activities undertaken by the
Audit Committee in discharge of its duties and functions included
(i) the review and recommendation to the Board of the appointment
of Menzies LLP as the Company's external auditor; (ii) the review
and recommendation to the Board for approval of the annual report
of the Company and the consolidated financial statements of the
Company and its subsidiaries for the year ended 31 December 2013;
and (iii) the review and recommendation to the Board for approval
of the interim report of the Company and the unaudited consolidated
financial statements of the Company and its subsidiaries for the
six months ended 30 June 2014.
Given that Menzies LLP resigned as the Company's external
auditor and that BDO Limited were appointed to carry out the 2014
audit work for the Group in February 2015, no assessment of the
external audit process was carried out during the year under
review.
Subsequent to the year end, the activities that have been
undertaken by the Audit Committee in relation to 2014 included (i)
the review and recommendation to the Board of the appointment of
BDO Limited to replace Menzies LLP as the Company's external
auditor for the 2014 audit; (ii) the review and recommendation to
the Board of the annual report of the Company and the consolidated
financial statements of the Company and its subsidiaries for the
year ended 31 December 2014; and (iii) the review of the Group's
risk management and internal financial controls. In appointing BDO
Limited, the Audit Committee has taken into consideration, amongst
others, BDO Limited's independence, objectivity and terms of
engagement.
The appointment of BDO Limited as the Company's external auditor
will be kept under annual review, and if satisfactory, BDO Limited
will be recommended by the Audit Committee for reappointment. There
are, however, no contractual obligations that would restrict the
Audit Committee's choice of external auditor for the Company.
DIRECTORS' REPORT
REMUNERATION COMMITTEE
In accordance with Provision D2.1 of the UK Corporate Governance
Code, the Company has set up a Remuneration Committee. The
Remuneration Committee held one meeting during the year under
review and the table below gives the attendance record.
Director Remuneration Committee Meeting
Martyn Stuart Wells 1/1
Mark Chung Fong 1/1
Alastair Gunn-Forbes 1/1
The Remuneration Committee is chaired by Mr Martyn Stuart Wells
and its other current members are Messrs Alastair Gunn-Forbes and
Mark Chung Fong. The Remuneration Committee is appointed by the
Board and the committee's membership is comprised of non-executive
directors.
The previous chair of the Remuneration Committee was Mr Alastair
Gunn-Forbes, the non-executive chairman of the Company. Provision
D2.1 of the UK Corporate Governance Code states that the chairman
of a company may be a member of, but not chair, the remuneration
committee of the company if he was considered independent on
appointment as the company's chairman. Accordingly, Mr Alastair
Gunn-Forbes resigned as the chair but remains as a member of the
Remuneration Committee and Mr Martyn Stuart Wells was appointed by
the Board in place of Mr Alastair Gunn-Forbes as the chair of the
Remuneration Committee.
The terms of reference of the Remuneration Committee (copies of
which are available at the Company's registered office) generally
follow, where applicable, those stated in the code provisions of
the UK Corporate Governance Code.
The Remuneration Committee meets not less than two times a year
and its responsibilities include, amongst others, the evaluation of
the performance of the executive directors and senior staff, and
the comparison of the Group's remuneration policy with similar
organisations in the market to form the basis for the
recommendations to the Board to determine the remuneration
packages, which may include the grant of share options under the
Scheme, for individual staff and director members.
In accordance with the Main Principle of Provision D.2 of the UK
Corporate Governance Code, no director should be involved in
deciding his own remuneration.
During the year under review, the activities undertaken by the
Remuneration Committee in discharge of its duties and functions
included the review of, and recommendation to the Board to retain,
the Group's previous remuneration arrangements. As the Group had a
very small workforce and only started to recruit additional staff
in the latter part of 2014, the Remuneration Committee did not
consider necessary or meaningful to hold more than one meeting
during the year under review.
DIRECTORS' REPORT
BOARD MEETING
The Board held 4 meetings during the year under review and the
table below gives the attendance record.
Director Board Meeting
Alastair Gunn-Forbes 4/4
Henry Ying Chew Cheong 4/4
Ernest Chiu Shun She 4/4
Mark Chung Fong 4/4
Martyn Stuart Wells 4/4
In addition to the above board meetings, pursuant to the
Company's bye-laws, three written resolutions were passed by all
the directors during the year under review.
WORLDSEC EMPLOYEE SHARE OPTION SCHEME 1997
As mentioned in the Review section above, at the Annual General
Meeting held on 29 September 2014, shareholders approved to change
the rules of the Scheme to align with the changes to tax and
legislation since the Scheme was introduced and to include the
Group's non-executive directors as eligible participants of the
Scheme.
No share options have been granted under the Scheme since its
adoption in a general meeting of shareholders on 26 February
1997.
RELATION WITH SHAREHOLDERS
Communication with shareholders is given high priority.
Information about the Group's activities is provided in the annual
report and the interim report of the Company which are sent to
shareholders on a regular basis. All shareholders are encouraged to
attend the Annual General Meeting at which directors are introduced
and available for questions. Enquiries are dealt with in an
informative and timely manner. Directors, including non-executive
directors, are also available to meet with major shareholders on
request.
EXTERNAL AUDITOR
The consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2014 have been audited
by BDO Limited.
A resolution will be submitted to the next Annual General
Meeting to reappoint BDO Limited as the Company's external
auditor.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
23 April 2015
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are required under the Bermuda Companies Act 1981
to prepare consolidated financial statements for each financial
year. The directors acknowledge responsibility for the preparation
of the consolidated financial statements for the year ended 31
December 2014, which give a true and fair view of the state of
affairs of the Company and the Group as at the end of that
financial year and of the profit or loss of the Group for that year
and which provide the necessary information for shareholders to
assess the business activities and performance of the Group during
that year. In preparing these consolidated financial statements,
the directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether the consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards; and
- prepare the consolidated financial statements on a going
concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.
The directors confirm that they have met the above
requirements.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and the Group. They are also
responsible for the Group's system of internal financial controls,
for safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of frauds and
other irregularities.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
23 April 2015
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
REPORT ON FINANCIAL STATEMENTS
We have audited the consolidated financial statements of
Worldsec Limited (the "Company") and its subsidiaries (together the
"Group") set out on pages 14 to 52, which comprise the consolidated
statement of financial position of the Group and the statement of
financial position of the Company as at 31 December 2014, and the
consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory
information.
DIRECTORS' RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The directors of the Company are responsible for the preparation
of consolidated financial statements that give a true and fair view
in accordance with International Financial Reporting Standards as
adopted by the European Union, and for such internal control as the
directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
AUDITOR'S RESPONSIBILITY
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit. This report
is made solely to you, as a body, in accordance with Section 90 of
the Bermuda Companies Act 1981, and for no other purpose. We do not
assume responsibility towards or accept liability to any other
person for the contents of this report.
We conducted our audit in accordance with International
Standards on Auditing issued by International Auditing and
Assurance Standards Board. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor's
judgement, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due
to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation of
the consolidated financial statements that give a true and fair
view in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. An audit
also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the
consolidated financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
OPINION
In our opinion, the consolidated financial statements give a
true and fair view of the state of affairs of the Company and of
the Group as at 31 December 2014 and of the Group's loss and cash
flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
REPORT ON OTHER REGULATORY REQUIREMENTS
Under the listing rules of the Financial Conduct Authority in
the United Kingdom (the "Listing Rules"), we are required to review
the part of the Corporate Governance Statement relating to the
Company's compliance with the provisions of the UK Corporate
Governance Code specified for our review.
Under the Listing Rules, we are required to review the
directors' statement set out on page 12 in relation to going
concern.
BDO Limited
Certi ed Public Accountants
Alfred Lee
Practising Certi cate Number P04960
Hong Kong, 23 April 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Year ended 31 December
Notes 2014 2013
US$'000 US$'000
Revenue 7 8 -
Staff costs 9 (75) (45)
Other expenses (360) (228)
Share of result of a joint venture 14 (48) -
Loss before income tax expense 10 (475) (273)
Income tax expense 11 - -
----------- -----------
Loss for the year (475) (273)
----------- -----------
Other comprehensive income, net
of income tax
Items that may be reclassified
subsequently to
profit or loss:
Exchange differences on translating
foreign
operations (6) 2
----------- -----------
Other comprehensive income for
the
year, net of income tax (6) 2
----------- -----------
Total comprehensive income for
the year (481) (271)
=========== ===========
Loss for the year attributable
to:
Owners of the Company (475) (273)
=========== ===========
Total comprehensive income attributable
to:
Owners of the Company (481) (271)
=========== ===========
Loss per share - basic and diluted 12 US (0.84) US (1.00)
cent cent
=========== ===========
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Notes 2014 2013
US$'000 US$'000
Non-current assets
Property, plant and equipment 13 67 -
Interest in a joint venture 14 209 -
Available-for-sale financial
asset 15 800 -
------- -------
1,076 -
------- -------
Current assets
Other receivables 8 -
Deposits 21 -
Amount due from a joint venture 14 257 -
Cash and cash equivalents 18 2,769 4,702
3,055 4,702
------- -------
Current liabilities
Other payables and accruals 19 368 458
------- -------
Net current assets 2,687 4,244
------- -------
Net assets 3,763 4,244
======= =======
Capital and reserves
Share capital 20 57 57
Reserves 3,706 4,187
------- -------
Total equity 3,763 4,244
======= =======
The consolidated financial statements on pages 14 to 52 were
approved and authorised for issue by the Board of Directors on 23
April 2015 and signed on its behalf by:
Alastair Gunn-Forbes Henry Ying Chew Cheong
Director Director
The accompanying notes form an integral part of these
consolidated financial statements.
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2014
Notes 2014 2013
US$'000 US$'000
Non-current assets
Interests in subsidiaries 16 1,926 1,926
------- -------
Current assets
Amounts due from subsidiaries 17 1,470 -
Cash and cash equivalents 18 2,626 4,640
------- -------
4,096 4,640
------- -------
Current liabilities
Other payables and accruals 19 276 371
Amounts due to subsidiaries 17 2,294 2,331
------- -------
2,570 2,702
------- -------
Net current assets 1,526 1,938
------- -------
Net assets 3,452 3,864
======= =======
Capital and reserves
Share capital 20 57 57
Reserves 21 3,395 3,807
------- -------
Total equity 3,452 3,864
======= =======
Alastair Gunn-Forbes Henry Ying Chew Cheong
Director Director
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2014
Equity attributable to owners of the Company
-------------------------------------------------------------------------
Foreign
currency
Share Share Contributed translation Special Accumulated
capital premium surplus reserve reserve losses Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
(note (note (note (note (note (note
20) 21) 21) a) b) c)
Balance at 1
January 2013 13 - 9,646 (4) 625 (9,646) 634
Loss for the
year - - - - - (273) (273)
Other comprehensive
income for the
year
Exchange differences
on translating
foreign
operations - - - 2 - - 2
Total comprehensive
income for the
year - - - 2 - (273) (271)
Contributions
by and distributions
to owners
Issue of new
shares by way
of open offer
and placing 44 4,293 - - - - 4,337
Transaction costs
attributable
to issue of new
shares - (456) - - - - (456)
------- ------- ----------- ----------- ------- ----------- -------
Balance at 31
December 2013
and 1 January
2014 57 3,837 9,646 (2) 625 (9,919) 4,244
------- ------- ----------- ----------- ------- ----------- -------
Loss for the
year - - - - - (475) (475)
Other comprehensive
income for the
year
Exchange differences
on translating
foreign
operations - - - (6) - - (6)
Total comprehensive
income for the
year - - - (6) - (475) (481)
Balance at 31
December 2014 57 3,837 9,646 (8) 625 (10,394) 3,763
======= ======= =========== =========== ======= =========== =======
Notes:
(a) Exchange differences relating to the translation of the net
assets of the Group's foreign operations from their functional
currencies to the Group's presentation currency were recognised
directly in other comprehensive income and accumulated in the
foreign currency translation reserve. Such exchange differences
accumulated in the foreign currency translation reserve were
reclassified to profit or loss on the disposal of the foreign
operation.
(b) The special reserve represents the amount arising from the
difference between the nominal value of the issued share capital of
each subsidiary and the nominal value of the issued share capital
of the Company along with the surplus arising in a subsidiary on
group reorganisation completed on 26 February 2007.
(c) Accumulated losses represent accumulated net gains and
losses recognised in the profit or loss of the Group.
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
Year ended 31 December
2014 2013
US$'000 US$'000
Cash flows from operating activities
Loss for the year (475) (273)
Adjustments for:
Depreciation of property, plant and equipment 2 -
Share of result of a joint venture 48 -
Operating loss before working capital
changes (425) (273)
Increase in trade receivables (8) -
Increase in deposits (21) -
(Decrease)/increase in other payables
and accruals (90) 183
---------- -----------
Net cash used in operating activities (544) (90)
---------- -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (69) -
Acquisition of a joint venture (257) -
Purchase of available-for-sale financial
asset (800) -
Advance to a joint venture (257) -
Net cash used in investing activities (1,383) -
---------- -----------
Cash flows from financing activities
Proceeds from issue of new shares - 4,337
Payment for share issue costs - (456)
---------- -----------
Net cash from financing activities - 3,881
---------- -----------
Net (decrease)/increase in cash and cash
equivalents (1,927) 3,791
Cash and cash equivalents at the beginning
of the year 4,702 909
Effects of exchange rate changes (6) 2
---------- -----------
Cash and cash equivalents at the end
of the year 2,769 4,702
========== ===========
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. GENERAL INFORMATION
Worldsec Limited (the "Company") is a public listed company
incorporated in Bermuda and its shares are listed on the Main
Market of the London Stock Exchange. The address of the registered
office of the Company is Canon's Court, 22 Victoria Street,
Hamilton HM12, Bermuda. The Company changed its principal place of
business address from 6th Floor, New Henry House, 10 Ice House
Street, Central, Hong Kong to Unit 607, 6th Floor, FWD Financial
Centre, 308 Des Voeux Road Central, Sheung Wan, Hong Kong during
the year ended 31 December 2014.
The principal activity of the Company is investment holding. The
principal activities of the Company's subsidiaries are set out in
note 16 to the consolidated financial statements.
The functional currency of the Company is Hong Kong Dollars
("HK$"). The consolidated financial statements of the Company and
its subsidiaries (collectively referred to as the "Group") are
presented in United States Dollars ("US$" or "USD").
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs")
2.1 New and revised IFRSs applied with no material effect on the consolidated financial
statements
The following new and revised IFRSs have been applied by the
Group in the current year and have affected the presentation and
disclosures set out in these consolidated financial statements. The
application of these new and revised IFRSs has not had any material
impact on the amounts reported for the current and prior years.
Amendments to IAS Offsetting Financial Assets and Financial
32 Liabilities
Amendments to IFRS Investment Entities
10, IFRS 12 and IAS
27 (2011)
Amendments to IAS Novation of Derivatives and Continuation
39 of Hedge Accounting
IFRIC 21 Levies
Except as described below, the application of the above new and
revised IFRSs in the current year has had no material impact on the
Group's financial performance and position for the current and
prior years and/or on the disclosures set out in these consolidated
financial statements.
Amendments to IAS 32 - Offsetting Financial Assets and Financial
Liabilities
The amendments clarify the offsetting requirements by adding
appliance guidance to IAS 32 which clarifies when an entity
"currently has a legally enforceable right to set off" and when a
gross settlement mechanism is considered equivalent to net
settlement. The amendments are applied retrospectively. The
adoption of the amendments has no impact on these financial
statements as the Group does not have any offsetting
arrangements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
2. Application OF NEW AND REVISED IFRSs (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the consolidated financial
statements (continued)
Amendments to IFRS 10, IFRS 12 and IAS 27 (2011) - Investment
Entities
The amendments apply to a particular class of businesses that
qualify as investment entities. An investment entity's business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both. It evaluates the
performance of its investments on a fair value basis. Investment
entities could include private equity organisations, venture
capital organisations, pension funds and investment funds.
The amendments provide an exception to the consolidation
requirements in IFRS 10 "Consolidated Financial Statements" and
require investment entities to measure particular subsidiaries at
fair value through profit or loss rather than to consolidate them.
The amendments also set out the disclosure requirements for
investment entities. The amendments are applied retrospectively
subject to certain transitional provisions.
The adoption of the amendments has no impact on these financial
statements as the Company is not an investment entity.
Amendments to IAS 39 - Novation of Derivatives and Continuation
of Hedge Accounting
The amendments provide relief from discontinuing hedge
accounting when novation of a hedging instrument to a central
counterparty meets specified criteria. The amendments are applied
retrospectively. The adoption of the amendments has no impact on
these financial statements as the Group does not apply hedge
accounting.
IFRIC 21 - Levies
IFRIC 21 clarifies that an entity recognises a liability to pay
a levy imposed by government when the activity that triggers
payment, as identified by the relevant legislation, occurs. The
interpretation has been applied retrospectively. The adoption of
IFRIC 21 has no impact on these financial statements as the
interpretation is consistent with the Group's previous application
of its accounting policies on provisions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
2. Application OF NEW AND REVISED IFRSs(CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
IFRSs (Amendments) Annual Improvements 2010-2012 Cycle(2)
IFRSs (Amendments) Annual Improvements 2011-2013 Cycle(1)
IFRSs (Amendments) Annual Improvements 2012-2014 Cycle(3*)
Amendments to IAS 1 Disclosure Initiative(3*)
Amendments to IAS 27 Equity Method in Separate Financial
Statements(3)
IFRS 9 (2014) Financial Instruments(5*)
Amendments to IFRS 10 and Sale or Contribution of Assets between
IAS 28 an Investor
and its Associate or Joint Venture(3*)
IFRS 15 Revenue from Contracts with Customers(4*)
(1) Effective for annual periods beginning on or after
1 July 2014
(2) Effective for annual periods beginning, or transactions
occurring, on or after 1 July 2014
(3) Effective for annual periods beginning on or after
1 January 2016
(4) Effective for annual periods beginning on or after
1 January 2017
(5) Effective for annual periods beginning on or after
1 January 2018
(*) Not yet endorsed by the European Union
Annual Improvements 2010-2012 Cycle, 2011-2013 Cycle and
2012-2014 Cycle
The amendments issued under the annual improvements process make
small, non-urgent changes to a number of standards where they are
currently unclear.
Amendments to IAS 1 - Disclosure Initiative
The amendments to IAS 1 are designed to further encourage
companies to apply professional judgement in determining what
information to disclose in their financial statements. For example,
the amendments make clear that materiality applies to the whole of
financial statements and that the inclusion of immaterial
information can inhibit the usefulness of financial disclosures,
and the amendments clarify that companies should use professional
judgement in determining where and in what order information is
presented in the financial disclosures.
Amendments to IAS 27 - Equity Method in Separate Financial
Statements
The amendments allow an entity to apply the equity method in
accounting for its investments in subsidiaries, joint ventures and
associates in its separate financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
2. Application OF NEW AND REVISED IFRSs(CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective (Continued)
IFRS 9 (2014) - Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial assets. Debt instruments that are held
within a business model whose objective is to hold assets in order
to collect contractual cash flows (the business model test) and
that have contractual terms that give rise to cash flows that are
solely payments of principal and interest on the principal amount
outstanding (the contractual cash flow characteristics test) are
generally measured at amortised cost. Debt instruments that meet
the contractual cash flow characteristics test are measured at fair
value through other comprehensive income ("FVTOCI") if the
objective of the entity's business model is both to hold and
collect the contractual cash flows and to sell the financial
assets. Entities may make an irrevocable election at initial
recognition to measure equity instruments that are not held for
trading at FVTOCI. All other debt and equity instruments are
measured at fair value through profit or loss ("FVTPL").
IFRS 9 includes a new expected loss impairment model for all
financial assets not measured at FVTPL replacing the incurred loss
model in IAS 39 and new general hedge accounting requirements to
allow entities to better reflect their risk management activities
in financial statements.
IFRS 9 carries forward the recognition, classification and
measurement requirements for financial liabilities from IAS 39,
except for financial liabilities designated at FVTPL, where the
amount of change in fair value attributable to change in credit
risk of the liability is recognised in other comprehensive income
unless that would create or enlarge an accounting mismatch. In
addition, IFRS 9 retains the requirements in IAS 39 for
derecognition of financial assets and financial liabilities.
Amendments to IFRS 10 and IAS 28 - Sale or Contribution of
Assets between an Investor and its Associate or Joint Venture
The amendments clarify the extent of gains or losses to be
recognised when an entity sells or contributes assets to its
associate or joint venture. When the transaction involves a
business the gain or loss is recognised in full, conversely when
the transaction involves assets that do not constitute a business
the gain or loss is recognised only to the extent of the unrelated
investors' interests in the joint venture or associate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
2. Application OF NEW AND REVISED IFRSs(CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective (Continued)
IFRS 15 - Revenue from Contracts with Customers
The new standard establishes a single revenue recognition
framework. The core principle of the framework is that an entity
should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods and services. IFRS 15 supersedes existing
revenue recognition guidance including IAS 18 "Revenue", IAS 11
"Construction Contracts" and related interpretations.
IFRS 15 requires the application of a 5- step approach to
revenue recognition:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to each performance obligation
Step 5: Recognise revenue when each performance obligation is satisfied
IFRS 15 includes specific guidance on particular revenue related
topics that may change the current approach taken under IFRS. The
standard also significantly enhances the qualitative and
quantitative disclosures related to revenue.
None of these new and revised IFRSs, which are effective for
periods beginning after 1 January 2014 and which have not been
adopted early, are expected to have a material effect on the
consolidated financial statements of the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements of the Group have been
prepared in accordance with all applicable IFRSs issued by the
International Accounting Standards Board ("IASB"). The consolidated
financial statements also comply with IFRSs as issued by the IASB
as adopted by the European Union. The differences between IFRSs as
adopted by the European Union and IFRS as issued by the IASB have
not had a material impact on the consolidated financial statements
for the years presented.
Basis of preparation
The consolidated financial statements have been prepared on a
going concern basis using the historical cost convention.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries. Inter-company
transactions and balances between group companies together with
unrealised profits are eliminated in full in preparing the
consolidated financial statements. Unrealised losses are also
eliminated unless the transaction provides evidence of impairment
on the asset transferred, in which case the loss is recognised in
profit or loss.
Subsidiaries
A subsidiary is an investee over which the Company is able to
exercise control. The Company controls an investee if all three of
the following elements are present: (1) power over the investee,
(2) exposure, or rights, to variable returns from the investee, and
(3) the ability to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
In the Company's statement of financial position, investments in
subsidiaries are stated at cost less impairment loss, if any. The
results of subsidiaries are accounted for by the Company on the
basis of dividend received and receivable.
Joint arrangements
The Group is a party to a joint arrangement where there is a
contractual arrangement that confers joint control over the
relevant activities of the arrangement to the Group and at least
one other party. Joint control is assessed under the same
principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as
either:
- Joint ventures: where the Group has rights to only the net
assets of the joint arrangement; or
- Joint operations: where the Group has both the rights to
assets and obligations for the liabilities of the joint
arrangement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Joint arrangements (Continued)
In assessing the classification of interests in joint
arrangements, the Group considers:
- The structure of the joint arrangement;
- The legal form of joint arrangements structured through a separate vehicle;
- The contractual terms of the joint arrangement agreement; and
- Any other facts and circumstances (including any other contractual arrangements).
Joint ventures are accounted for using the equity method whereby
they are initially recognised at cost and thereafter, their
carrying amount are adjusted for the Group's share of the
post-acquisition change in the joint ventures' net assets except
that losses in excess of the Group's interest in the joint venture
are not recognised unless there is a legal and constructive
obligation to make good those losses.
Profits and losses arising on transactions between the Group and
its joint ventures are recognised only to the extent of unrelated
investors' interests in the joint ventures. The investor's share in
the joint venture's profits and losses resulting from these
transactions is eliminated against the carrying value of the joint
venture.
Any premium paid for an investment in a joint venture above the
fair value of the Group's share of the identifiable assets,
liabilities and contingent liabilities acquired is capitalised and
included in the carrying amount of the investment in joint venture.
Where there is objective evidence that the investment in a joint
venture has been impaired the carrying amount of the investment is
tested for impairment in the same way as other non-financial
assets.
The Group accounts for its interests in joint operations by
recognising its share of assets, liabilities, revenues and expenses
in accordance with its contractually conferred rights and
obligations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. The
cost of property, plant and equipment includes its purchase price
and the costs directly attributable to the acquisition of the
items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are recognised as an expense in
profit or loss during the financial period in which they are
incurred.
Property, plant and equipment are depreciated so as to write off
their cost net of expected residual value over their estimated
useful lives on a straight-line basis. The useful lives, residual
value and depreciation method are reviewed, and adjusted if
appropriate, at the end of each reporting period. The useful lives
are as follows:
Leasehold improvements over the lease terms
An asset is written down immediately to its recoverable amount
if its carrying amount is higher than the asset's estimated
recoverable amount.
The gain or loss on disposal of an item of property, plant and
equipment is the difference between the net sale proceeds and its
carrying amount, and is recognised in profit or loss on
disposal.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessee
The total rentals payable under the operating leases are
recognised in profit or loss on a straight-line basis over the
lease term. Lease incentives received are recognised as an
integrated part of the total rental expense, over the term of the
lease.
Revenue recognition
Dividend income is recognised when the right to receive payment
is established.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currencies
Transactions entered into by the group entities in currencies
other than the currency of the primary economic environment in
which they operate are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the end of
reporting period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the translation of monetary items, are recognised in
profit or loss in the period in which they arise.
On consolidation, income and expense items of foreign operations
are translated into the presentation currency of the Group (i.e.
US$) at the average exchange rates for the year, unless exchange
rates fluctuate significantly during the period, in which case, the
rates approximating to those ruling when the transactions took
place are used. All assets and liabilities of foreign operations
are translated at the rate ruling at the end of reporting period.
Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity as foreign exchange
reserve (attributed to minority interests as appropriate). Exchange
differences recognised in profit or loss of group entities'
separate financial statements on the translation of long-term
monetary items forming part of the Group's net investment in the
foreign operation concerned are reclassified to other comprehensive
income and accumulated in equity as foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign exchange reserve relating to
that operation up to the date of disposal are reclassified to
profit or loss as part of the profit or loss on disposal.
Goodwill and fair value adjustments on identifiable assets
acquired arising on an acquisition of a foreign operation on or
after 1 January 2005 are treated as assets and liabilities of that
foreign operation and translated at the rate of exchange prevailing
at the end of reporting period. Exchange differences arising are
recognised in the foreign currency translation reserve.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from 'loss before tax' as reported in
the consolidated statement of profit or loss and other
comprehensive income because of items of income or expense that are
taxable or deductible in other years and items that are never
taxable or deductible. The Group's current tax is calculated using
tax rates that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the
end of the reporting period.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
Financial instruments
Financial assets and financial liabilities are recognised when a
group entity becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Financial assets
The Group classifies its financial assets at initial
recognition, depending on the purpose for which the asset was
acquired. Regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. A regular way
purchase or sale is a purchase or sale of a financial asset under a
contract whose terms require delivery of the asset within the time
frame established generally by regulation or convention in the
marketplace concerned.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Loans and receivables (including cash and bank balance) are
measured at amortised cost using the effective interest method,
less any impairment.
Interest income is recognised by applying the effective interest
rate, except for short-term receivables when the effect of
discounting is immaterial.
Available-for-sale financial assets
These assets are non-derivative financial assets that are
designated as available-for-sale or are not included in other
categories of financial assets. When the fair value of unlisted
equity securities cannot be reliably measured because (a) the
variability in the range of reasonable fair value estimates is
significant for that investment or (b) the probabilities of the
various estimates within the range cannot be reasonably assessed
and used in estimating fair value, such securities are stated at
cost less any impairment losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Impairment of financial assets
The Group assesses, at the end of each reporting period, whether
there is any objective evidence that financial asset is impaired.
Financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that has occurred
after the initial recognition of the asset and that event has an
impact on the estimated future cash flows of the financial asset
that can be reliably estimated.
Evidence of impairment may include:
-- significant financial difficulty of the debtor;
-- a breach of contract, such as a default or delinquency in
interest or principal payments;
-- granting concession to a debtor because of debtor's financial
difficulty; or
-- it becoming probable that the debtor will enter bankruptcy or
other financial reorganisation.
For loans and receivables
An impairment loss is recognised in profit or loss when there is
objective evidence that the asset is impaired, and is measured as
the difference between the asset's carrying amount and the present
value of the estimated future cash flows discounted at the original
effective interest rate. The carrying amount of a financial asset
is reduced through the use of an allowance account. When any part
of a financial asset is determined as uncollectible, it is written
off against the allowance account for the relevant financial
asset.
Impairment losses are reversed in subsequent periods when an
increase in the asset's recoverable amount can be related
objectively to an event occurring after the impairment was
recognised, subject to a restriction that the carrying amount of
the asset at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been
recognised.
For available-for-sale financial assets
For available-for-sale equity investments that are carried at
cost, the amount of impairment loss is measured as the difference
between the carrying amount of the asset and the present value of
estimated future cash flows discounted at the current market rate
of return for a similar financial asset. Such impairment loss shall
not be reversed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Derecognition of financial assets
Financial assets are derecognised when the contractual rights to
receive cash ows from the assets expire, or the nancial assets are
transferred and the Group has transferred substantially all the
risks and rewards of ownership of the nancial assets.
On derecognition of a nancial asset, the difference between the
asset's carrying amount and the sum of the consideration received
and receivable and the cumulative gain or loss that had been
recognised directly in equity is recognised in pro t or loss.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a group entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities (including other payables and accruals)
are subsequently measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or where appropriate a shorter period, to the
net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is
recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of other assets
At the end of each reporting period, the Group reviews the
carrying amounts of the following assets to determine whether there
is any indication that those assets have suffered an impairment
loss or an impairment loss previously recognised no longer exists
or may have decreased:
-- property, plant and equipment; and
-- investments in subsidiaries
If the recoverable amount (i.e. the greater of fair value less
costs to sell and value in use) of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior
years.
A reversal of an impairment loss is recognised in the
consolidated statement of profit or loss immediately.
Related parties
(a) A person or a close member of that person's family is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of key management personnel of the Group or the Company's parent.
(b) An entity is related to the Group if any of the following conditions apply:
(i) The entity and the Group are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is
related to the others);
(ii) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member);
(iii) Both entities are joint ventures of the same third
party;
(iv) One entity is a joint venture of a third entity and the
other entity is an associate of the third entity;
(v) The entity is a post-employment benefit plan for the benefit
of the employees of the Group or an entity related to the
Group;
(vi) The entity is controlled or jointly controlled by a person
identified in (a); or
(vii) A person identified in (a)(i) has significant influence
over the entity or is a member of key management personnel of the
entity (or of a parent of the entity).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Related parties (Continued)
Close members of the family of a person are those family members
who may be expected to influence, or be influenced by, that person
in their dealings with the entity and include:
(i) that person's children and spouse or domestic partner;
(ii) children of that person's spouse or domestic partner; and
(iii) dependents of that person or that person's spouse or domestic partner.
Earnings per share
Basic earnings per share are calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the year.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are
described in note 3, management is required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and underlying assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Key sources of estimation uncertainty
In addition to information disclosed elsewhere in these
financial statements, other key sources of estimation uncertainty
that has a significant risk of resulting a material adjustment to
the carrying amounts of assets and liabilities within next
financial year are as follows:
(i) Depreciation
The Group depreciates property, plant and equipment using
straight-line method over the estimated useful lives, starting from
the date on which the assets are placed into use. The estimated
useful lives reflect the directors' estimate of the periods that
the Group intends to derive future economic benefits from the use
of the property, plant and equipment of the Group. The carrying
amount of property, plant and equipment is disclosed in note
13.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED)
(ii) Impairment of receivables
The Group maintains an allowance for estimated loss arising from
the inability of its debtors to make the required payments. The
Group makes its estimates based on the ageing of its receivable
balances, debtors' creditworthiness, and historical write-off
experience. If the financial condition of its debtors was to
deteriorate so that the actual impairment loss might be higher than
expected, the Group would be required to revise the basis of making
the allowance and its future results would be affected.
(iii) Impairment of non-financial assets
The Group assesses whether there are any indications of
impairment for all non-financial assets at each reporting date.
Other non-financial assets are tested for impairment when there are
indications that the carrying amounts may not be recoverable.
(iv) Impairment of available-for-sale financial assets
The directors review available-for-sale investments at the end
of each reporting period to assess whether they are impaired. The
Group records impairment charges on available-for-sale equity
investments when there is objective evidence that an impairment
indicator exists. The determination of whether the impairment
indicator exists requires judgement. In making this judgement,
management of the Group takes into account factors such as
significant changes with an adverse effect that has taken place in
technological, market, economic or legal environment in which the
investee operates, and that indicates that the cost of the
investment in the equity instrument may not be recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
5. FINANCIAL instruments
(a) Categories of financial instruments
2014 2013
The Group US$'000 US$'000
Financial assets
Loans and receivables 3,055 4,702
Available-for-sale financial asset 800 -
------- -------
3,855 4,702
======= =======
Financial liabilities
Financial liabilities measured at amortised
cost 368 458
======= =======
2014 2013
The Company US$'000 US$'000
Financial assets
Loans and receivables 4,096 4,640
======= =======
Financial liabilities
Financial liabilities measured at amortised
cost 2,570 2,702
======= =======
(b) Financial risk management objectives
Management monitors and manages the financial risks relating to
the operations of the Group through internal risk reports which
analyse exposures by degree and magnitude of risks. These risks
include market risks (including foreign currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The
policies on how to mitigate these risks are set out below. The
Group does not enter into or trade derivative financial instruments
for speculative purposes.
Market risks
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates, interest rates
and price risk.
There has been no change to the Group's exposure to market risks
or the manner in which these risks are managed and measured.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Market risks (Continued)
(i) Foreign currency risk
Certain financial assets and financial liabilities of the Group
are denominated in foreign currencies other than the functional
currency of the relevant group entities, which exposes the Group to
foreign currency risk. The Group currently does not have a foreign
currency hedging policy. However, management monitors foreign
exchange exposure and will consider hedging significant foreign
currency exposure should the need arise. Under the Linked Exchange
Rate System in Hong Kong, HK$ is currently pegged to the USD within
a narrow range, the directors therefore consider that there are no
significant foreign exchange risk with respect to the USD.
The currencies giving rise to this risk are primarily Euro
("EUR") and British Pound Sterling ("GBP"). The carrying amounts of
the Group's foreign currency denominated monetary assets and
monetary liabilities at the end of reporting period were as
follows:
Liabilities Assets
2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000
EUR 2 9 18 26
GBP 88 219 9 10
======= ======= ======= =======
The following table details the Group's sensitivity to a 10%
(2013: 10%) increase and decrease in USD against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and
represents management's assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and
adjusts its translation as at year end for a 10% (2013: 10%) change
in the relevant foreign currencies rates. A positive number below
indicates a decrease in loss for the year where USD strengthens 10%
(2013: 10%) against the relevant foreign currency. For a 10% (2013:
10%) weakening of USD against the relevant foreign currencies there
would be an equal and opposite impact on the loss for the year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Market risks (Continued)
(i) Foreign currency risk (Continued)
2014 2013
US$'000 US$'000
Change in post-tax loss for the year
EUR impact (2) (2)
======= =======
GBP impact 8 21
======= =======
(ii) Interest rate risk
The Group's exposure to changes in interest rates is mainly
attributable to its bank deposits at variable interest rates. Bank
deposits at variable rates expose the Group to cash flow interest
rate risk.
The directors consider that the exposure to cash flow interest
rate risk was insignificant. Hence, no sensitivity analysis on the
exposure to the Group's cash flow interest rate risk is
presented.
(iii) Price risk
Price risk is the risk that the value of a financial instrument
will fluctuate as a result of changes in market prices (other than
those arising from foreign currency risk), whether caused by
factors specific to an individual investment or its issuer, or
factors affecting all instruments.
At 31 December 2014, the Company was not exposed to any
significant price risk.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Credit risk
The Group's maximum exposure to credit risk which could cause a
financial loss to the Group due to failure to discharge an
obligation by the counterparties arises from the carrying amount of
the respective recognised financial assets as stated in the
consolidated statement of financial position.
The credit risk on liquid funds is limited because the major
counterparties are banks with high credit ratings assigned by
international credit-rating agencies. Other than concentration of
credit risk on liquid funds which are deposited with banks with a
high credit rating, the Group does not have any other significant
concentration of credit risk.
At the end of the reporting period, the maximum exposure to
credit risk in respect of amounts due from subsidiaries of the
Company is set out in Note 17.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has established an appropriate
liquidity risk management framework to meet the Group's short,
medium and long-term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves,
by regularly monitoring forecast and actual cash flows and by
matching the maturity profiles of financial assets and
liabilities.
Liquidity table
The following table details the Group's remaining contractual
maturity for its non-derivative financial liabilitieswith agreed
repayment periods. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on the
earliest date on which the Group can be required to pay.
On demand or
less than 1 year
2014 2013
US$'000 US$'000
Other payables and accruals 368 458
======== ========
(c) Fair value of financial instruments
The directors consider that the carrying amounts of financial
assets and financial liabilities recognised in the consolidated
financial statements approximated their fair values.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
6. Capital risk management
The Group's objective of managing capital is to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce cost of
capital.
In order to maintain or adjust the capital structure, the Group
may return capital to shareholders, issue new shares or sell assets
to reduce debts.
The capital structure of the Group consists of equity
attributable to owners of the Company only, comprising share
capital and reserves.
7. REVENUE
The Group's revenue represents dividend income from
available-for-sale financial asset for the year ended 31 December
2014 (2013: nil). No other source of income contributed to the
Group's revenue for 2014 and 2013.
8. SEGMENT Information
An operating segment is a component of the Group that is engaged
in business activities from which the Group may earn revenue and
incur expenses, and is identified on the basis of the internal
management reporting information that is provided to and regularly
reviewed by the Group's chief operating decision maker in order to
allocate resources and assess performance of the segment. For the
years ended 31 December 2014 and 2013, the executive directors, who
were the chief operating decision makers for the purpose of
resource allocation and assessment of performance, have determined
that the Group had only one single business component / reportable
segment as the Group was only engaged in investment holding. The
executive directors allocated resources and assessed performance on
an aggregated basis. Accordingly, no operating segment is
presented.
The major operations and the revenue of the Group arise from
Hong Kong. The Board of Directors considers that most of the assets
of the Group are located in Hong Kong.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
9. STAFF COSTS
The aggregate staff costs of the Group were as follows:
Year ended 31 December
2014 2013
US$'000 US$'000
Wages and salaries (including directors'
remuneration) 75 45
=========== ===========
Directors' remuneration was as follows:
Year ended 31 December
2014 2013
US$'000 US$'000
Fees 75 45
Other remuneration including
contributions to pension and provident - -
fund
----------- -----------
75 45
=========== ===========
10. LOSS BEFORE INCOME TAX EXPENSE
Loss before income tax expense has been arrived at after
charging:
Year ended 31 December
2014 2013
US$'000 US$'000
Auditor's remuneration
- Current year 36 41
- Under provision in prior year 15 -
----------- -----------
51 41
=========== ===========
Depreciation of property, plant and
equipment 2 -
Foreign exchange loss 7 1
Operating lease rental expenses in
respect of office
premises and warehouse 25 10
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
11. INCOME TAX EXPENSE
No provision for taxation has been made as the Group did not
generate any assessable profits for United Kingdom Corporation Tax,
Hong Kong Profits Tax and tax in other jurisdictions.
The tax charge for 2014 and 2013 can be reconciled to the loss
before income tax expense per the consolidated statement of profit
or loss and other comprehensive income as follows:
Year ended 31 December
2014 2013
US$'000 US$'000
Loss before income tax expense 475 273
=========== ===========
Loss before tax calculated at 16.5%
(2013:16.5%) 78 45
Tax effect of estimated tax losses
not recognised (78) (45)
Tax charge for the year - -
=========== ===========
The tax losses of US$9,000 (2013: nil) can be carried forward
indefinitely. No deferred tax asset has been recognised in respect
of the unused tax losses due to the unpredictability of future
profit streams. No deferred tax has been recognised in the
financial statements as the Group and the Company did not have
material temporary difference arising between the tax bases of
assets and liabilities and their carrying amounts as at 31 December
2014 and 2013.
12. LOSS PER SHARE
The loss and weighted average number of ordinary shares used in
the calculation of basic and diluted loss per share were as
follows.
Year ended 31 December
2014 2013
Loss for the year attributable to
owners of the
Company (US$'000) 475 273
=========== ===========
Weighted average number of ordinary
shares for
the purposes of basic and diluted
loss per share 56,734,580 27,387,400
=========== ===========
Loss per share - basic and diluted (0.84) cent (1.00) cent
=========== ===========
In 2013, the weighted average number of ordinary shares for the
purpose of basic loss per share had been adjusted for the open
offer and placing in September 2013 (note 20).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
13. PROPERTY, PLANT AND EQUIPMENT
Leasehold
improvements
US$'000
Cost
At 1 January 2013, 31 December 2013
and 1 January 2014 -
Additions 69
At 31 December 2014 69
=============
Accumulated depreciation
At 1 January 2013, 31 December 2013
and 1 January 2014 -
Depreciation 2
-------------
At 31 December 2014 2
=============
Carrying amount
At 31 December 2013 -
=============
At 31 December 2014 67
=============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
14. INTEREST IN A JOINT VENTURE
2014
US$'000
Unlisted investment, at cost 257
Share of post-acquisition losses (48)
-------
Share of net assets 209
=======
Amount due from a joint venture 257
===
The amount due from a joint venture was unsecured, interest-free
and repayable on demand.
Details of the joint ventures at 31 December 2014 were as
follows:
Country Proportion Paid-up
of incorporation of ownership registered Principal
Name and operation interest capital activities
------------------------- ------------------ ------------ -----------------
Direct Indirect
Oasis Education Group
Limited
Investment
("Oasis Education") Hong Kong 50% - HK$4,000,000 holding
( ) The People's - 50% HK$5,000,000 Provision
Republic of education
of China consulting
(the "PRC") and support
services
to kindergartens
in the PRC
The contractual arrangement provides the Group with only the
rights to the net assets of the joint arrangement, with the rights
to the assets and obligation for the liabilities of the joint
arrangement resting primarily with Oasis Education. Under IFRS 11,
this joint arrangement is classified as a joint venture and has
been included in the consolidated financial statements using the
equity method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
14. INTEREST IN A JOINT VENTURE (CONTINUED)
The aggregate amounts relating to the joint venture that have
been included in the consolidated financial statements of the Group
as extracted from relating financial statements of the joint
venture, adjusted to reflect adjustments made by the Group when
applying the equity method of accounting are set out below:
Result of the joint venture for the year ended US$'000
31 December 2014
Revenue -
Expenses (96)
--------
Loss and total comprehensive income for the
year (96)
========
Share of result of the joint venture for the
year ended
31December 2014 (48)
=======
Accumulated share of result of the joint venture (48)
=======
Assets and liabilities of the joint venture
at 31 December 2014
Non-current assets -
Current assets 772
Non-current liabilities -
Current liabilities (353)
------
419
======
Included in the above amounts were:
Cash and cash equivalents 772
Current financial liabilities (excluding trade -
and other payables)
======
Share of net assets of the joint venture 209
============
At 31 December 2014, neither contingent liabilities nor capital
commitments were shared by the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
15. AVAILABLE-FOR-SALE FINANCIAL ASSET
2014 2013
US$'000 US$'000
Unlisted equity investment,
- at cost 800 -
======= =======
During the year ended 31 December 2014, the Group acquired 8%
equity interest in ICBC Specialised Ship Leasing Investment Fund
(the "ICBC Shipping Fund") for a total cash consideration of
US$800,000. The ICBC Shipping Fund is a newly established company
incorporated in the Cayman Islands with an objective of achieving
stable return from primarily investing in marine vessels. The
investment was designated as available-for-sale financial
asset.
The investment is measured at cost less impairment at each
reporting date because the investment does not have a quoted market
price in an active market, the range of reasonable fair value
estimate is so significant and therefore whose fair value cannot be
reliably measured. The directors have no intention to dispose of
the available-for-sale financial asset at the end of the reporting
period.
The directors have assessed the impacts on the recoverable
amount of the financial asset and concluded that no impairment loss
needed to be made.
16. INTERESTS IN SUBSIDIARIES
2014 2013
US$'000 US$'000
The Company
Unlisted shares, at cost 6,450 6,450
Less: accumulated impairment loss (4,524) (4,524)
------- -------
1,926 1,926
======= =======
The Company did not provide an impairment loss for the year
ended 31 December 2014 to write down its investments to net asset
value.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
16. INTERESTS IN SUBSIDIARIES (CONTINUED)
Details of the subsidiaries of the Company at 31 December 2014
were as follows:
Proportion
Country Proportion of voting
of incorporation of ownership power Principal
Name and operation interest held activities
----------------------- ------------------ ------------- ---------- -----------
British
Worldsec Financial Virgin Investment
Services Limited Islands 100% 100% holding
Worldsec Corporate British 100%* 100%* Inactive
Finance Limited Virgin
Islands
Worldsec International Netherlands 100%* 100%* Investment
NV Antilles holding
Worldsec International Netherlands 100%* 100%* Investment
(Netherlands) BV holding
Worldsec International Netherlands 100%* 100%* Investment
(PH) BV holding
Worldsec Investment Hong Kong 100%* 100%* Investment
(Hong Kong) Limited holding
Worldsec Investment British 100%* 100%* Investment
(China) Limited Virgin holding
Islands
* Indirectly held subsidiaries
17. AMOUNTS DUE FROM/(TO) SUBSIDIARIES
2014 2013
The Company US$'000 US$'000
Amounts due from subsidiaries 1,913 380
Less: impairment loss (443) (380)
------- -------
1,470 -
======= =======
Amounts due to subsidiaries (2,294) (2,331)
======= =======
The Company provided an impairment loss of approximately
US$63,000 (2013: US$380,000) for the year ended 31 December 2014.
The amounts due from/(to) subsidiaries were unsecured,
interest-free and repayable on demand.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
18. CASH AND CASH EQUIVALENTS
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents included cash on hand and in banks. Cash
and cash equivalents at the end of the reporting period as shown in
the consolidated statement of financial position were as
follows:
The Group The Company
2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000
Bank balances 2,768 4,701 2,625 4,639
Cash balances 1 1 1 1
2,769 4,702 2,626 4,640
======= ======= ======= =======
Bank balances bore interest at the then prevailing market rates
ranging from 0.001% to 0.01% (2013: 0.001% to 0.01%) per annum and
had original maturities of three months or less.
19. OTHER PAYABLES AND ACCRUALS
The Group The Company
2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000
Other payables 188 193 147 147
Accruals 180 265 129 224
------- ------- ------- -------
368 458 276 371
======= ======= ======= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
20. SHARE CAPITAL
Number of
shares Total value
(US$0.001 US$'000
each)
Authorised:
At 1 January 2013 50,000,000,000 50,000
Additions during the year (note
(a)) 10,000,000,000 10,000
----------------- --------------
At 31 December 2013, 1 January
2014 and
31 December 2014 60,000,000,000 60,000
================= ==============
Called up, issued and fully paid:
At 1 January 2013 13,367,290 13
Issue of new shares by way of
placing (note (b)) 30,000,000 30
Issue of new shares by way of
open offer
(note (c)) 13,367,290 14
----------------- --------------
At 31 December 2013, 1 January
2014 and
31 December 2014 56,734,580 57
================= ==============
Notes:
(a) Pursuant to the ordinary resolution passed on 30 August
2013, the authorised share capital of the Company was increased
from US$50,000,000 divided into 50,000,000,000 ordinary shares of
US$0.001 each to US$60,000,000 divided into 60,000,000,000 ordinary
shares of US$0.001 each by the creation of an additional
10,000,000,000 ordinary shares of US$0.001 each.
(b) In September 2013, the Company issued 30,000,000 ordinary
shares of US$0.001 each in the share capital of the Company at a
price of US$0.10 per share by way of placing to independent
investors, giving rise to gross proceeds of US$3 million.
(c) In September 2013, the Company issued 13,367,290 ordinary
shares of US$0.001 each in the share capital of the Company at a
price of US$0.10 per share by way of open offer on the basis of 1
new share for every 1 ordinary share held by qualifying
shareholders, giving rise to gross proceeds of US$1.3 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
21. RESERVES
The Company Share Contributed Accumulated
premium surplus losses Total
US$'000 US$'000 US$'000 US$'000
(note (note (note (c))
(a)) (b))
At 1 January 2013 - 9,646 (9,025) 621
Loss and total comprehensive
income for the year - - (651) (651)
Issue of new shares by way
of open offer
and placing (notes 20(b),
(c)) 4,293 - - 4,293
Transaction costs attributable
to issue
of new shares (456) - - (456)
------- ----------- ----------- -------
At 31 December 2013 and 1 January
2014 3,837 9,646 (9,676) 3,807
Loss and total comprehensive
income for the year - - (412) (412)
At 31 December 2014 3,837 9,646 (10,088) 3,395
======= =========== =========== =======
Notes:
(a) The share premium account represents the premium arising
from the issue of shares of the Company at a premium.
(b) The contributed surplus represents the amount arising from
the reduction in the nominal value of the authorised and issued
shares of the Company and the reduction in the share premium
account of the Company pursuant to an ordinary resolution passed on
23 July 2003.
(c) Accumulated losses represent accumulated net gains and
losses recognised in the profit or loss of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
22. RELATED PARTY TRANSACTIONS
Save as those disclosed elsewhere in the consolidated financial
statements, the Group entered into the following transactions with
related parties during the years ended 31 December 2014 and
2013:
(a) Name of Nature of
related company transaction 2014 2013
US$'000 US$'000
WAG Worldsec Corporate
Consultancy
Finance Limited (note) fee 32 -
======= =======
WAG Worldsec Corporate
Finance Limited (note) Accounting fee 19 18
======= =======
Note: Mr. Henry Ying Chew Cheong, a director of the Company, had
beneficial interest (approximately 34%) in the related company.
(b) With reference to the open offer of new shares to
shareholders to raise new equity capital of the Company which was
approved by shareholders in the Special General Meeting on 30
August 2013, Messrs. Alastair Gunn-Forbes, Henry Ying Chew Cheong
and Ernest Chiu Shun She, being directors of the Company, had each
subscribed in full for their entitlements (including, in the case
of Mr. Henry Ying Chew Cheong, the entitlements belonging to his
associates).
In addition, Mr. Henry Ying Chew Cheong had entered into an
underwriting agreement with the Company to underwrite 6,242,925 new
shares under the open offer (being the number of shares not owned
by him, his associates or other directors).
(c) With reference to the placing of new shares to independent
third-party investors to raise new equity capital of the Company
which was approved by shareholders in the Special General Meeting
on 30 August 2013, Mr. Henry Ying Chew Cheong was approved by
shareholders to participate in the placing of new shares of up to
6,242,925 new shares. Under the terms of the underwriting agreement
in connection with the open offer referred to above, Mr. Henry Ying
Chew Cheong had agreed to acquire an aggregated maximum of
6,242,925 new shares in the open offer and placing.
As previously announced, the number of new shares required to be
taken up by Mr. Henry Ying Chew Cheong in his capacity as the
underwriter in connection with the open offer amounted to 5,652,873
new shares and he did not acquire any new shares from the placing
as valid acceptances for the maximum subscription of the placing
were received.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
22. RELATED PARTY TRANSACTIONS (CONTINUED)
Compensation of key management personnel
Key management personnel of the Company are the directors of the
Company only. The remuneration of directors is set out on the
consolidated statement of profit or loss and other comprehensive
income and with additional disclosure in note 9 to the consolidated
financial statements.
23. OPERATING LEASE COMMITMENTS
Operating leases - lessee
At the reporting date, the Group had future aggregate minimum
lease payments under non-cancellable operating leases in respect of
office premises and warehouse as follows:
2014 2013
US$'000 US$'000
Not later than one year 63 10
Later than one year and not later than
five years 101 5
164 15
======= =======
The leases run for an initial period of 2 to 3 years, with an
option to renew the office premises lease upon expiry when all
terms are renegotiated.
The Company did not have any lease arrangement as lessee at 31
December 2014 and 2013.
24. CONTINGENT LIABILITIES
The Group and the Company had no material contingent liabilities
at 31 December 2014 (2013: nil).
25. EVENT AFTER RERORTING PERIOD
Subsequent to 31 December 2014, the Group has made an investment
of CHF320,000 (equivalent to approximately USD325,000) in the
equity capital of Ayondo Holding AG, a company incorporated in
Switzerland.
BIOGRAPHICAL NOTES OF THE DIRECTORS
The Board has ultimate responsibility for the Group's
affairs.
Brief biographical notes of the directors are set out below:
Alastair Gunn-Forbes - Non-Executive Chairman - aged 70
Mr Gunn-Forbes has been associated with Asian regional stock
markets since 1973 when he was a fund manager at Brown Shipley Ltd.
Subsequently, he was a director of W.I Carr, Sons & Co.
(Overseas) Ltd until 1985, since when he has held directorships
with other Asian securities firms in the United Kingdom prior to
joining the Group in 1993. Mr Gunn-Forbes is the Chairman of Opera
Holdings, a recruitment company and also the Chairman of
FutureBiogas, a green energy company.
Henry Ying Chew Cheong - Executive Director and Deputy Chairman
- aged 67
Mr Cheong holds a Bachelor of Science (Mathematics) degree from
Chelsea College, University of London and a Master of Science
(Operational Research and Management) degree from Imperial College,
University of London.
Mr Cheong has over 35 years of experience in the securities
industry. Mr Cheong and The Mitsubishi Bank in Japan (now known as
The Bank of Tokyo-Mitsubishi UFJ Ltd) founded the Worldsec Group in
1991. In late 2002, Worldsec Group sold certain securities
businesses to UOB Kay Hian and following that Mr Cheong became the
Chief Executive Officer of UOB Asia (Hong Kong) Ltd until early
2005. Prior to the formation of the Worldsec Group, Mr Cheong was a
director of James Capel (Far East) Ltd for five years with overall
responsibility for Far East Sales. His earlier professional
experience includes 11 years with Vickers da Costa Limited in Hong
Kong latterly as Managing Director.
Mr Cheong is an Independent Non-Executive Director of Cheung
Kong (Holdings) Limited, Cheung Kong Infrastructure Holdings
Limited, CNNC International Limited, Creative Energy Solutions
Holdings Limited, Greenland Hong Kong Holdings Limited (formerly
known as SPG Land (Holdings) Limited), Hutchison Telecommunications
Hong Kong Holdings Limited, New World Department Store China
Limited, Skyworth Digital Holdings Limited and TOM Group Limited,
all being listed companies in Hong Kong. Mr Cheong is also an
Independent Director of BTS Group Holdings Public Company Limited,
being listed in Thailand. Mr Cheong was an Independent
Non-executive Director of Hong Kong Jewellery Holding Limited
(formerly known as Excel Technology International Holdings
Limited), a company listed in Hong Kong (resigned on 3 July
2012).
Mr Cheong is a member of the Advisory Committee of the
Securities and Futures Commission and also a member of the
Securities and Futures Appeals Tribunal in Hong Kong. Mr Cheong was
previously a member of Disciplinary Panel A of Hong Kong Institute
of Certified Public Accountants (from 2005-2011), a member of the
Corporate Advisory Council of the Hong Kong Securities Institute
(from 2002-2009), a member of the Advisory Committee (from
1993-1999) to the Securities and Futures Commission ("SFC"), a
member of the Board of Director of the Hong Kong Future Exchange
Limited (from 1994-2000), a member of GEM Listing Committee and
Main Board Listing Committee of Hong Kong Exchange and Clearing
Limited ("HKEX") (from May 2002-May 2006), a member of Derivatives
Market Consultative Panel of HKEX (from April 2000-May 2006), a
member of the Process Review Panel for the SFC (from November
2000-October 2006) and a member of the Committee on Real Estate
Investment Trust of the SFC (from September 2003-August 2006).
BIOGRAPHICAL NOTES OF THE DIRECTORS
Ernest Chiu Shun She - Executive Director - aged 54
Mr She is an investment banker with extensive experience in the
field of corporate finance having covered a broad and diverse range
of financial advisory and fund raising activities in the Asian
regional stock markets and had held executive management positions
and directorships at Worldsec Corporate Finance Limited and UOB
Asia (Hong Kong) Limited.
Mr She was one of the cofounding team members at the Worldsec
Group of companies when they were established in the early 1990s.
Between 1991 and until the disposal by the Group of certain
securities businesses to UOB Kay Hian Holdings Limited in 2002, Mr
She spent a total of eleven years holding senior management
positions at Worldsec Corporate Finance Limited and Worldsec
International Limited with the main responsibility of developing
and overseeing the Group's corporate finance activities.
Prior to his tenure at the Worldsec Group of companies, Mr She
was an investment analyst and an associate director at James Capel
(Far East) Limited where he was primarily responsible for equity
research in the real estate sector.
Mr She graduated from the University of Toronto with a Bachelor
of Applied Science degree in Industrial Engineering and obtained
from the Imperial College of Science and Technology a Master of
Science degree in Management Science specialising in Operational
Research. Mr She is a Chartered Financial Analyst.
From 2004 to 2010, Mr She served as an Independent Non-Executive
Director and the Chairman of the Audit Committee of New Island
Printing Holdings Limited, a company listed on the Main Board of
The Stock Exchange of Hong Kong Limited.
Mr She rejoined the Group in July 2013 to assist in the
reactivation of its business activities.
Mark Chung Fong - Non-Executive Director - aged 63
Mr Fong was an Executive Director for China development of Grant
Thornton International Ltd, a corporation incorporated in England
and had retired from Grant Thornton effective from 1 January 2014.
He has more than 30 years' experience in the accounting profession.
Mr Fong holds a Master of Science degree from the University of
Surrey. He is a Fellow of the Institute of Chartered Accountants in
England and Wales and a Fellow and a Past President of the Hong
Kong Institute of Certified Public Accountants.
Martyn Stuart Wells - Non-Executive Director - aged 70
Mr Wells was formerly an Executive Director of Citicorp
International Limited and has over 30 years' experience in the
securities industry. In 1969 he joined Vickers da Costa,
international stockbrokers. He was involved in the fund management
industry for 20 years and participated in the launch of several
country funds investing in the Asian region, serving as a director
or as a member of the investment advisory councils of several of
those funds. He lived in Hong Kong for almost 28 years and since
2000 has resided in England.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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