TIDMWSL
RNS Number : 5890D
Worldsec Ld
30 April 2013
WORLDSEC LIMITED
Annual Report for the year ended 31 December 2012
CORPORATE INFORMATION
Board of Directors
Non-Executive Chairman
Alastair GUNN-FORBES
Executive Director
Henry Ying Chew CHEONG (Deputy Chairman)
Non-Executive Director
Mark Chung FONG
Company Secretary
May Yim CHAN
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
Auditors
HLB Hodgson Impey Cheng
Chartered Accountants, Certified Public Accountants
31st Floor, Gloucester Tower, The Landmark, 11 Pedder Street,
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 Registrars (Jersey) Limited
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, UK
Investor Relations
For further information about Worldsec Limited, please
contact:
Henry Ying Chew CHEONG
Executive Director
Worldsec Group
6th Floor, New Henry House, 10 Ice House Street, Central, Hong
Kong
CONTENTS
Chairman's statement
Directors' report
Statement of directors' responsibilities
Independent auditors' report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Biographical notes on the directors
CHAIRMAN'S STATEMENT
RESULTS
The audited consolidated loss for the year was US$304,000
compared with a loss of US$276,000 in previous year. Loss per share
was US 2 cents (2011: Loss per share of US 2 cents).
THE YEAR IN REVIEW
For the year ended 31 December 2012, the Group incurred a net
loss of US$304,000. This compares to the net loss of US$276,000 for
the last year. The operating expenses were increased by US$28,000
as compared to the last year. At 31 December 2012, the Group
shareholders' funds stood at US$0.63 million as compared to US$0.94
million at 31 December 2011.
PROSPECTS
During the year, the board of directors (the "Board") continued
to explore opportunities in the financial services and other new
suitable business. Shareholders will be informed as soon as the
Board has evaluated a suitable business proposition.
In preparation for the rebuilding of the Group's equity capital,
the Board has engaged financial and legal advisers to advise us on
a fund raising exercise. Shareholders will be informed as soon as
the fund raising proposal is finalized with the professional
advisers.
Alastair GUNN-FORBES
Non-Executive Chairman
29 April 2013
DIRECTORS' REPORT
The directors submit their annual report and the financial
statements for the year ended 31 December 2012.
PRINCIPAL ACTIVITIES
The principal activity of Worldsec Limited (the "Company") is
investment holding. Prior to the sale of most of its undertakings
in the last quarter of 2002, the Group was engaged in agency
broking in securities, futures and options dealing and provided
corporate finance, financial advisory and nominee services.
REVIEW AND PROSPECTS
The results of the Company and its subsidiaries (the "Group")
for the year are set out in the Consolidated Statement of
Comprehensive Income on page 8.
As stated in the Chairman's statement on page 1, the Board
continues to explore opportunities in the financial services and
other new suitable business. Shareholders will be informed as soon
as the Board has evaluated a suitable business proposition.
DIRECTORS
The directors during the year and up to the date of this report
were:
Non-Executive Chairman
Alastair Gunn-Forbes
Executive Director
Henry Ying Chew Cheong
Non-Executive Director
Mark Chung Fong
Brief biographical notes on the directors serving at the date of
this Report are set out on page 41.
Save as disclosed in note 17, none of the directors had during
the year 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' INTERESTS
The interests of the individuals who were directors during the
year in the issued share capital of the Company, including the
interests of persons connected with a director (within the meaning
of Section 346 of the United Kingdom Companies Act 1985 (as
amended) as if the Company were incorporated in England), the
existence of which is known to, or could with reasonable diligence
be ascertained by, that director, whether or not held through
another party, are as follows:
At 1 January 2012 At 31 December 2012
No. of shares No. of shares
Alastair Gunn-Forbes 15,000 15,000
Henry Ying Chew Cheong 950,000 (Note) 950,000
Mark Chung Fong Nil Nil
Note: Henry Ying Chew Cheong owns, in addition to the beneficial
interest in 950,000 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 owns
3,225,000 ordinary shares of US$0.001 each in the Company.
In addition, HC Investment Holdings Limited ("HCIH")
is wholly owned by Henry Ying Chew Cheong. HCIH beneficially
owns 2,751,000 ordinary shares of US$0.001 each in the
Company.
Save as disclosed above, none of the directors named above had
an interest, whether beneficial or non-beneficial, in any shares or
debentures of any group company at the beginning or at the end of
the year. None of the directors named above, or members of their
immediate families, held, exercised or were awarded any right to
subscribe for any shares or debentures of the group companies
during the year.
DIRECTORS' REMUNERATION
The remuneration of the directors of the Company for the year
ended 31 December 2012 were as follows:
Fees Emoluments Total
US$'000 US$'000 US$'000
Alastair Gunn-Forbes - - -
Henry Ying Chew Cheong - - -
Mark Chung Fong 16 - 16
16 - 16
======= ========== =======
PROVIDENT FUND AND PENSION CONTRIBUTION FOR DIRECTORS
During the year under review, there was no provident fund and
pension contribution for the directors.
SERVICE CONTRACTS
There are no existing 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). It is anticipated that service contracts
between Company and its executive directors will be proposed
together with the proposal to re-active the business re-activate of
the Group.
MAJOR INTERESTS IN SHARES
At 8 March 2013, being the latest practicable date prior to the
notice of meeting at which this annual report and financial
statements are to be laid before the Company in general meeting,
the Company was aware of the following direct or indirect interests
(other than directors' interests) representing 3 per cent, or more
of the Company's issued share capital:
Percentage of
No. of shares issued share
capital
Grand Acumen Holdings Limited 3,225,000 24.10%
HC Investment Holdings Limited 2,751,000 20.60%
First Taisec Securities (Asia)
Limited 630,000 4.70%
The Bank of New York (Nominees)
Limited 550,000 4.10%
GOING CONCERN
After making enquiries, the directors have considered that it is
appropriate to prepare the financial statements on a basis other
than that of a going concern as the Group no longer has a trading
operation during the year. Details of the basis of preparation are
set out in note 3 to the financial statements.
CORPORATE GOVERNANCE
The Company is eligible for exemption from the Financial
Services Authority's requirements relating to corporate governance
disclosures but the directors have decided to provide certain
disclosures which are set out as below.
The Board, with an independent non-executive chairman and
two-thirds of its members being non-executive directors, is
committed to high standards of corporate governance. The Company
has in the past applied all the principles set out in the Combined
Code on Corporate Governance ("the Combined Code"). However, since
the Group's withdrawal from its main business, certain aspects of
the Combined Code became increasingly not applicable in the form
that had been previously been applied. As a result, the
responsibilities of the board committees including the remuneration
and audit committees reverted to the Board.
Following the decision in 2003 to liquidate Worldsec
International Limited, the Group's main operating company in the
past, certain aspects of the Group's established internal control
procedures also became inapplicable as these procedures were
formerly designed to cater for a trading operation. The Board has
implemented suitable alternative measures to safeguard the Group's
assets. The spirit of corporate governance continues in effect but
previous operating procedures have been modified as and when they
became inapplicable.
POLICY ON REMUNERATION
As the Group has practically ceased business operations, the
previous policy on remuneration for employees and directors which
was designed to motivate employees' performance is no longer
applicable. A new remuneration policy will be adopted as and when
appropriate.
The Group's remuneration packages for directors are reviewed
from time to time by, and are subject to approval by the Board.
Details of the directors' remuneration and provident fund and
pension fund contributions are set out in this report on page
3.
WORLDSEC EMPLOYEE SHARE OPTION SCHEME 1997
No share options have been granted under the scheme since its
adoption in a general meeting on 26 February 1997. No director held
any option to subscribe for shares in the Company during the
year.
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 which are sent to shareholders. There
is regular dialogue with institutional investors and enquiries are
dealt with in an informative and timely manner. All shareholders
are encouraged to attend the Annual General Meeting at which
directors are introduced and available for questions.
AUDITORS
A resolution for the re-appointment of HLB Hodgson Impey Cheng
as the auditors of the Company for the subsequent year will be
proposed at the forthcoming annual general meeting.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
29 April 2013
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing financial statements
for each financial year which give a true and fair view of the
state of affairs of the Company and the Group as at the end of the
financial year and of the profit or loss of the Group for that
period. In preparing those financial statements, the directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimate that are reasonable and prudent;
- state whether applicable accounting standards have been followed; and
- prepare the financial statements on a going concern basis
unless it is inappropriate to presume that the Group 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 Group. They are also responsible for the
Group's system of internal financial control, for safeguarding the
assets of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
29 April 2013
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
We have audited the accompanying consolidated financial
statements of Worldsec Limited (the "Company") and its subsidiaries
(collectively referred to as the "Group"), which comprise the
consolidated and company statements of financial position as at 31
December 2012, and the consolidated statement of comprehensive
income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and a
summary of significant accounting policies and other explanatory
information.
Management's responsibility for the consolidated financial
statements
Management is responsible for the preparation and fair
presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and
for such internal control as management determines is necessary to
enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or
error.
Auditors' responsibility
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit and to report
our opinion solely to you, as a body, in accordance with Section 90
of the Companies Act 1981 of Bermuda 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. 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 auditors'
judgment, 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 auditors
consider internal control relevant to the entity's preparation and
fair presentation of the consolidated financial statements 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 management,
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 present
fairly, in all material respects, the financial position of the
Company and of the Group as at 31 December 2012, and of their
financial performance and cash flows for the year then ended in
accordance with International Financial Reporting Standards.
Emphasis of matters
Without qualifying our opinion, we draw your attention to note 3
to the consolidated financial statements which states that the
consolidated financial statements have been prepared on the basis
other than of a going concern.
HLB Hodgson Impey Cheng
Chartered Accountants
Certified Public Accountants
Hong Kong, 29 April 2013
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2012
Year ended 31 December
Notes 2012 2011
US$'000 US$'000
Other income and gain 7 - 13
Staff costs 8 (16) (15)
Other expenses (288) (274)
----------- -----------
Loss before tax 9 (304) (276)
Income tax expense 10 - -
----------- -----------
Loss for the year (304) (276)
----------- -----------
Other comprehensive income,
net of income tax
Exchange differences on translating
foreign operations 1 (5)
----------- -----------
Other comprehensive income for
the year, net of income tax 1 (5)
----------- -----------
Total comprehensive income for
the year (303) (281)
=========== ===========
Loss attributable to :
Owners of the Company (304) (276)
=========== ===========
Total comprehensive income attributable
to :
Owners of the Company (303) (281)
=========== ===========
Loss per share - basic and diluted 11 (2) cents (2) cents
=========== ===========
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2012
Notes 2012 2011
US$'000 US$'000
Current assets
Cash and bank balances 14 909 1,217
Current liabilities
Other payables and accruals (275) (280)
------- -------
Net current assets 634 937
------- -------
Net assets 634 937
======= =======
Capital and reserves
Share capital 15 13 13
Contributed surplus 9,646 9,646
Foreign currency translation
reserve (4) (5)
Special reserve 625 625
Accumulated losses (9,646) (9,342)
------- -------
Total equity 634 937
======= =======
The consolidated financial statements on pages 8 to 40 were
approved and authorized for issue by the Board of Directors on 29
April 2013 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 2012
Notes 2012 2011
US$'000 US$'000
Current assets
Interests in subsidiaries 12 1,989 2,051
Amounts due from subsidiaries 13 317 255
Cash and bank balances 14 845 1,161
------- -------
3,151 3,467
------- -------
Current liabilities
Other payables and accruals (188) (201)
Amounts due to subsidiaries 13 (2,329) (2,329)
------- -------
(2,517) (2,530)
------- -------
Net current assets 634 937
------- -------
Net assets 634 937
======= =======
Capital and reserves
Share capital 15 13 13
Contributed surplus 16 9,646 9,646
Accumulated losses 16 (9,025) (8,722)
------- -------
Total equity 634 937
======= =======
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 2012
Foreign
currency
Share Contributed translation Special Accumulated
capital surplus reserve reserve losses Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
(Note 16)
Balance at 1 January
2011 13 9,646 - 625 (9,066) 1,218
Loss for the year - - - - (276) (276)
Other comprehensive
income for the
year - - (5) - - (5)
------- ----------- ----------- ------- ----------- -------
Balance at 31 December
2011 and 1 January
2012 13 9,646 (5) 625 (9,342) 937
Loss for the year - - - - (304) (304)
Other comprehensive
income for the
year - - 1 - - 1
------- ----------- ----------- ------- ----------- -------
Total comprehensive
income for the
year - - 1 - (304) (303)
Balance at 31 December
2012 13 9,646 (4) 625 (9,646) 634
======= =========== =========== ======= =========== =======
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2012
Year ended 31 December
Note 2012 2011
US$'000 US$'000
Cash flows from operating activities
Loss for the year (304) (276)
(304) (276)
Movements in working capital
(Decrease)/increase in other payables
and accruals (5) 16
Net cash used in operating activities (309) (260)
---------- -----------
Net decrease in cash and cash
equivalents (309) (260)
Cash and cash equivalents at
1 January 1,217 1,482
Effects of exchange rate changes 1 (5)
---------- -----------
Cash and cash equivalents at
31 December 14 909 1,217
========== ===========
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2012
1. GENERAL INFORMATION
The Company is a public listed company incorporated in Bermuda
and its shares are listed on the London Stock Exchange. The address
of the registered office of the Company is Canon's Court, 22
Victoria Street, Hamilton HM12, Bermuda and the address of the
principal place of business of the Company is 6th Floor, New Henry
House, 10 Ice House Street, Central, Hong Kong.
The principal activity of the Company is investment holding. The
principal activities of the Company's subsidiaries are set out in
note 12 to the consolidated financial statement.
The functional currency of the Company is Hong Kong Dollars. The
consolidated financial statements of the Group are presented in
United States Dollars ("US$"), which is a currency widely and
commonly recognized in the global economy and is freely convertible
into a number of foreign currencies. Therefore, the directors
consider the presentation in US$ to be more useful for its current
and potential investors.
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.
IFRS 1 (Amendments) Severe Hyperinflation and Removal of
Fixed Dates
for First-time Adopters
IFRS 7 (Amendments) Disclosures - Transfers of Financial
Assets
IAS 12 (Amendments) Deferred Tax: Recovery of Underlying
Assets
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 to IFRSs 2009-2011
cycle
except for the amendments to IAS 1(2)
IFRS 7 (Amendments) Disclosures - Offsetting Financial
Assets and
Financial Liabilities(2)
IFRS 9 Financial Instruments(4)
IFRS 10 Consolidated Financial Statements(2)
IFRS 11 Joint Arrangements(2)
IFRS 12 Disclosure of Interests on Other Entities(2)
IFRS 13 Fair Value Measurement(2)
IAS 1 (Amendments) Presentation of Items of Other Comprehensive
Income(1)
IAS 19 (as revised in Employee Benefits(2)
2011)
IAS 27 (as revised in Separate Financial Statements(2)
2011)
IAS 28 (as revised in Investments in Associates and Joint
2011) Ventures(2)
IAS 32 (Amendments) Financial Instruments: Presentation
- Offsetting
Financial Assets and Financial Liabilities(3)
IFRIC 20 Stripping Costs in the Production
Phase of a Surface
Mine(2)
(1) Effective for annual periods beginning on or
after 1 July
2012
(2) Effective for annual periods beginning on or
after 1 January
2013
(3) Effective for annual periods beginning on or
after 1 January
2014
(4) Effective for annual periods beginning on or
after 1 January
2015
The amendments to IFRS 7 increase the disclosure requirements
for transactions involving transfers of financial assets. These
amendments are intended to provide greater transparency around risk
exposures when a financial asset is transferred but the transferor
retains some level of continuing exposure in the asset. The
amendments also require disclosures where transfers of financial
assets are not evenly distributed throughout the period.
The directors do not anticipate that these amendments to IFRS 7
will have a significant effect on the Group's disclosures regarding
transfers of trade receivables previously affected. However, if the
Group enters into other types of transfers of financial assets in
the future, disclosures regarding those transfers may be
affected.
IFRS 9 Financial Instruments issued in November 2009 and amended
in October 2010 introduces new requirements for the classification
and measurement of financial assets and financial liabilities and
for derecognition.
Key requirements of IFRS 9 are described as follows:
-- IFRS 9 requires all recognized financial assets that are
within the scope of IAS 39 Financial Instruments: Recognition and
Measurement to be subsequently measured at amortized cost or fair
value. Specifically, debt investments that are held within a
business model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding are
generally measured at amortized cost at the end of subsequent
accounting periods. All other debt investments and equity
investments are measured at their fair values at the end of
subsequent accounting periods.
-- The most significant effect of IFRS 9 regarding the
classification and measurement of financial liabilities relates to
the accounting for changes in the fair value of a financial
liability (designated as at fair value through profit or loss)
attributable to changes in the credit risk of that liability.
Specifically, under IFRS 9, for financial liabilities that are
designated as at fair value through profit or loss, the amount of
change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is
presented in other comprehensive income, unless the recognition of
the effects of changes in the liability's credit risk in other
comprehensive income would create or enlarge an accounting mismatch
in profit or loss. Changes in fair value attributable to a
financial liability's credit risk are not subsequently reclassified
to profit or loss. Previously, under IAS 39, the entire amount of
the change in the fair value of the financial liability designated
as at fair value through profit or loss was presented in profit or
loss.
IFRS 9 is effective for annual periods beginning on or after 1
January 2015, with earlier application permitted.
The directors anticipate that IFRS 9 will be adopted in the
Group's consolidated financial statements for the annual period
beginning 1 January 2015 and that the application of IFRS 9 may
have significant impact on amounts reported in respect of the
Group's financial assets and financial liabilities. However, it is
not practicable to provide a reasonable estimate of that effect
until a detailed review has been completed.
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. The
Standard defines fair value, establishes a framework for measuring
fair value, and requires disclosures about fair value measurements.
The scope of IFRS 13 is broad; it applies to both financial
instrument items and non-financial instrument items for which other
IFRSs require or permit fair value measurements and disclosures
about fair value measurements, except in specified circumstances.
In general, the disclosure requirements in IFRS 13 are more
extensive than those required in the current standards. For
example, quantitative and qualitative disclosures based on the
three-level fair value hierarchy currently required for financial
instruments only under IFRS 7 Financial Instruments: Disclosures
will be extended by IFRS 13 to cover all assets and liabilities
within its scope.
IFRS 13 is effective for annual periods beginning on or after 1
January 2013, with earlier application permitted.
The directors anticipate that IFRS 13 will be adopted in the
Group's consolidated financial statements for the annual period
beginning 1 January 2013 and that the application of the new
Standard may affect the amounts reported in the financial
statements and result in more extensive disclosures in the
financial statements.
The amendments to IAS 1 retain the option to present profit or
loss and other comprehensive income in either a single statement or
in two separate but consecutive statements. However, the amendments
to IAS 1 require additional disclosures to be made in the other
comprehensive income section such that items of other comprehensive
income are grouped into two categories: (a) items that will not be
reclassified subsequently to profit or loss; and (b) items that
will be reclassified subsequently to profit or loss when specific
conditions are met. Income tax on items of other comprehensive
income is required to be allocated on the same basis.
The amendments to IAS 1 are effective for annual periods
beginning on or after 1 July 2012. The presentation of items of
other comprehensive income will be modified accordingly when the
amendments are applied in the future accounting periods.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared on a basis other
than that of a going concern which includes, where appropriate,
writing down the Group's assets to net realisable values, as the
Group no longer has a trading operation. Provision has also been
made for any onerous contractual commitments at the end of the
reporting period. The financial statements do not include any
provision for the future costs of terminating the business of the
Company except to the extent that such costs were committed at the
end of the reporting period. Accordingly, all assets are classified
as current assets.
The financial statements have been prepared in accordance with
International Financial Reporting Standards.
The principal accounting policies are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
Income and expenses of subsidiaries acquired or disposed of
during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition and up
to the effective date of disposal, as appropriate. Total
comprehensive income of subsidiaries is attributed to the owners of
the Company and to the non-controlling interests even if this
results in the non-controlling interests having a deficit
balance.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Changes in the Group's ownership interests in existing
subsidiaries
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control over the subsidiaries are
accounted for as equity transactions. The carrying amounts of the
Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the
subsidiaries. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the
consideration paid or received is recognized directly in equity and
attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is
recognized in profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests.
When assets of the subsidiary are carried at revalued amounts or
fair values and the related cumulative gain or loss has been
recognized in other comprehensive income and accumulated in equity,
the amounts previously recognized in other comprehensive income and
accumulated in equity are accounted for as if the Group had
directly disposed of the related assets (i.e. reclassified to
profit or loss or transferred directly to retained earnings as
specified by applicable IFRSs). The fair value of any investment
retained in the former subsidiary at the date when control is lost
is regarded as the fair value on initial recognition for subsequent
accounting under IAS 39 Financial
Instruments: Recognition and Measurement or, when applicable,
the cost on initial recognition of an investment in an associate or
a jointly controlled entity.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated rebates
and other similar allowances.
Interest income from a financial asset is recognized when it is
probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying
amount on initial recognition.
Foreign currencies
In preparing the financial statements of each individual group
entity, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognized at the
rates of exchange prevailing at the dates of the transactions. At
the end of each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items carried at fair value that are denominated
in foreign currencies are retranslated at the rates prevailing at
the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences on monetary items are recognized in profit
or loss in the period in which they ariseexcept for:
exchange differences on foreign currency borrowings relating to
assets under construction for future productive use, which are
included in the cost of those assets when they are regarded as an
adjustment to interest costs on those foreign currency
borrowings;
exchange differences on transactions entered into in order to
hedge certain foreign currency risks; and
exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognized
initially in other comprehensive income and reclassified from
equity to profit or loss on repayment of the monetary items.
For the purposes of presenting consolidated financial
statements, the assets and liabilities of the Group's foreign
operations are translated into presentation currency of the Group
(i.e. US dollars) using exchange rates prevailing at the end of
each reporting period. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are recognized in other comprehensive
income and accumulated in equity under the heading of foreign
currency translation reserve (attributed to non-controlling
interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation, a disposal involving loss of joint control over a
jointly controlled entity that includes a foreign operation, or a
disposal involving loss of significant influence over an associate
that includes a foreign operation), all of the exchange differences
accumulated in equity in respect of that operation attributable to
the owners of the Company are reclassified to profit or loss.
In addition, in relation to a partial disposal of a subsidiary
that does not result in the Group losing control over the
subsidiary, the proportionate share of accumulated exchange
differences are re-attributed to non-controlling interests and are
not recognized in profit or loss. For all other partial disposals
(i.e. partial disposals of associates or jointly controlled
entities that do not result in the Group losing significant
influence or joint control), the proportionate share of the
accumulated exchange differences is reclassified to profit or
loss.
Goodwill and fair value adjustments on identifiable assets and
liabilities acquired arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign
operation and translated at the rate of exchange prevailing at the
end of each reporting period. Exchange differences arising are
recognized in equity.
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 profit as reported in the
consolidated statement of 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 liability
for 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 recognized 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 recognized for all taxable temporary differences.
Deferred tax assets are generally recognized 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 utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognized for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognized to the extent that it is probable
that there will be sufficient taxable profits against which to
utilize the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
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 realized, 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.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss,
except when they relate to items that are recognized in other
comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognized in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
Provisions
Provisions are recognized 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 recognized 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 recognized 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 recognized when a
group entity becomes a party to the contractual provisions of the
instrument.
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. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognized immediately in profit or loss.
Financial assets
Financial assets are classified into the following specified
categories: financial assets "at fair value through profit or loss"
(FVTPL), "held-to-maturity" investments, "available-for-sale" (AFS)
financial assets and "loans and receivables". The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition. All regular way
purchases or sales of financial assets are recognized and
derecognized on a trade date basis. Regular way purchases or sales
are purchases or sales of financial assets that require delivery of
assets within the time frame established by regulation or
convention in the marketplace.
Effective interest method
The effective interest method is a method of calculating the
amortized cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts
(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 debt
instrument, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
Income is recognized on an effective interest basis for debt
instruments other than those financial assets classified as at
FVTPL.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial
asset is either held for trading or it is designated as at
FVTPL.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling it in the near term; or
-- on initial recognition it is a part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading
may be designated as at FVTPL upon initial recognition if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial asset forms part of a group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognized in profit or
loss. The net gain or loss recognized in profit or loss
incorporates any dividend or interest earned on the financial asset
and is included in the consolidated statement of comprehensive
income.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets
with fixed or determinable payments and fixed maturity dates that
the Group has the positive intent and ability to hold to maturity.
Subsequent to initial recognition, held-to-maturity investments are
measured at amortized cost using the effective interest method less
any impairment.
Available-for-sale financial assets (AFS financial assets)
AFS financial assets are non-derivatives that are either
designated as available-for-sale or are not classified as (a) loans
and receivables, (b) held-to-maturity investments or (c) financial
assets at FVTPL.
Changes in the carrying amount of AFS monetary financial assets
relating to changes in foreign currency rates (see below), interest
income calculated using the effective interest method and dividends
on AFS equity investments are recognized in profit or loss. Other
changes in the carrying amount of available-for-sale financial
assets are recognized in other comprehensive income and accumulated
under the heading of investments revaluation reserve. When the
investment is disposed of or is determined to be impaired, the
cumulative gain or loss previously accumulated in the investments
revaluation reserve is reclassified to profit or loss.
Dividends on AFS equity instruments are recognized in profit or
loss when the Group's right to receive the dividends is
established.
The fair value of AFS monetary financial assets denominated in a
foreign currency is determined in that foreign currency and
translated at the spot rate prevailing at the end of the reporting
period. The foreign exchange gains and losses that are recognized
in profit or loss are determined based on the amortized cost of the
monetary asset. Other foreign exchange gains and losses are
recognized in other comprehensive income.
AFS equity investments that do not have a quoted market price in
an active market and whose fair value cannot be reliably measured
and derivatives that are linked to and must be settled by delivery
of such unquoted equity investments are measured at cost less any
identified impairment losses at the end of each reporting
period.
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 amortized cost using the effective interest method,
less any impairment.
Interest income is recognized by applying the effective interest
rate, except for short-term receivables when the recognition of
interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been
affected.
For AFS equity investments, a significant or prolonged decline
in the fair value of the security below its cost is considered to
be objective evidence of impairment.
For all other financial assets, objective evidence of impairment
could include:
-- significant financial difficulty of the issuer or counterparty; or
-- breach of contract, such as default or delinquency in interest or principal payments; or
-- it becoming probable that the borrower will enter bankruptcy or financial re organization;
or
-- the disappearance of an active market for that financial asset because of financial
difficulties.
For certain categories of financial assets, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis. Objective evidence of impairment for a portfolio
of receivables could include the Group's past experience of
collecting payments, an increase in the number of delayed payments
in the portfolio past the average credit period, as well as
observable changes in national or local economic conditions that
correlate with default on receivables.
For financial assets carried at amortized cost, the amount of
the impairment loss recognized is the difference between the
asset's carrying amount and the present value of estimated future
cash flows, discounted at the financial asset's original effective
interest rate.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. Such impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognized in
profit or loss.
When an AFS financial asset is considered to be impaired,
cumulative gains or losses previously recognized in other
comprehensive income are reclassified to profit or loss in the
period.
For financial assets measured at amortized cost, if, in a
subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after
the impairment was recognized, the previously recognized impairment
loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortized cost would have been
had the impairment not been recognized.
In respect of AFS equity securities, impairment losses
previously recognized in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognized in other comprehensive income and
accumulated under the heading of investments revaluation reserve.
In respect of AFS debt securities, impairment losses are
subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event
occurring after the recognition of the impairment loss.
Derecognition of financial assets
The Group derecognizes a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognizes its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognize
the financial asset and also recognizes a collateralized borrowing
for the proceeds received.
On derecognition of a financial asset in its entirety, 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 recognized in other comprehensive income and
accumulated in equity is recognized in profit or loss.
On derecognition of a financial asset other than in its entirety
(e.g. when the Group retains an option to repurchase part of a
transferred asset), the Group allocates the previous carrying
amount of the financial asset between the part it continues to
recognize under continuing involvement, and the part it no longer
recognizes on the basis of the relative fair values of those parts
on the date of the transfer. The difference between the carrying
amount allocated to the part that is no longer recognized and the
sum of the consideration received for the part no longer recognized
and any cumulative gain or loss allocated to it that had been
recognized in other comprehensive income is recognized in profit or
loss. A cumulative gain or loss that had been recognized in other
comprehensive income is allocated between the part that continues
to be recognized and the part that is no longer recognized on the
basis of the relative fair values of those parts.
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 Group are recognized
at the proceeds received, net of direct issue costs.
Repurchase of the Company's own equity instruments is recognized
and deducted directly in equity. No gain or loss is recognized in
profit or loss on the purchase, sale, issue or cancellation of the
Company's own equity instruments.
Financial liabilities
Financial liabilities are classified as either financial
liabilities "at FVTPL" or "other financial liabilities".
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at FVTPL .
A financial liability is classified as held for trading if:
-- it has been acquired principally for the purpose of repurchasing it in the near term; or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for
trading may be designated as at FVTPL upon initial recognition
if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on remeasurement recognized in profit
or loss. The net gain or loss recognized in profit or loss
incorporates any interest paid on the financial liability and is
included in the consolidated statement of comprehensive income.
Other financial liabilities
Other financial liabilities (including other payables and
accruals) are subsequently measured at amortized cost using the
effective interest method.
The effective interest method is a method of calculating the
amortized 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 derecognizes 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 derecognized and the consideration paid and payable is
recognized in profit or loss.
Impairment of tangible assets
At the end of each reporting period, the Group reviews the
carrying amounts of its tangible assets to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the
impairment loss (if any). When it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset
belongs. When a reasonable and consistent basis of allocation can
be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the
smallest group of cash-generating units for which a reasonable and
consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognized immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
When an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) 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 recognized
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognized immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
4. FINANCIAL instruments
(a) Categories of financial instruments
2012 2011
US$'000 US$'000
Financial assets
Loans and receivables
(including cash and cash equivalents) 909 1,217
======= =======
Financial liabilities
Amortized cost (including other payables
and accruals) 275 280
======= =======
(b) Financial risk management objectives
The Group's management monitors and manages the financial risks
relating to the operations of the Group through internal risk
report which analyze exposures by degree and magnitude of risks.
These risks include market risk (including foreign currency risk,
interest rate risk and other 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 risk
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates and interest
rates.
(i) Foreign currency risk management
Certain financial assets and financial liabilities of the Group
are denominated in foreign currencies other than the functional
currency of the relevant group companies, which exposes the Group
to foreign currency risk. The Group currently does not have a
foreign currency hedging policy. However, the management monitors
foreign exchange exposure and will consider hedging significant
foreign currency exposure should the need arise.
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at the end of reporting
period are as follows:
Liabilities Assets
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
HKD 113 113 57 113
Others 25 31 38 23
======= ======= ======= =======
The following table details the Group's sensitivity to a 1%
(2011: 1%) increase and decrease in USD against the relevant
foreign currencies. 1% 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
monetary items and adjusts its translation at the year end for a 1%
(2011: 1%) change in the relevant foreign currencies rates. A
positive number below indicates a decrease in loss for the year
where USD strengthens 1% (2011: 1%) against the relevant foreign
currency. For a 1% (2011: 1%) weakening of USD against the relevant
foreign currencies there would be an equal and opposite impact on
the loss for the year.
2012 2011
US$'000 US$'000
Decrease in post-tax loss
for the year
HKD impact 1 7
======= =======
(ii) Interest rate risk management
The Group's exposure to changes in interest rate is mainly
attributable to its bank deposits at variable interest rate. Bank
deposits at variable rate expose the Group to cash flow interest
rate risk.
The directors consider that the exposure to cash flow interest
rate risk is insignificant. Hence, no sensitivity analysis on the
exposure to the Group's cash flow interest rate risk is
presented.
Credit risk management
The Group's maximum exposure to credit risk which will cause a
financial loss to the Group due to failure to discharge an
obligation by the counterparties is arising from the carrying
amount of the respective recognized financial assets as stated in
the statement of financial position.
The credit risk on liquid funds is limited because the
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.
Liquidity risk management
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,
banking facilities and reserve borrowing facilities, by
continuously monitoring forecast and actual cash flows and by
matching the maturity profiles of financial assets and
liabilities.
Liquidity tables
The following tables detail the Group's remaining contractual
maturity for its non-derivative financial liabilitieswith agreed
repayment periods. The tables have 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.
Less than 1 year
2012 2011
US$'000 US$'000
Other payables and accruals 275 280
======== ========
(c) Fair value of financial instruments
Fair value of financial instruments carried at amortized
cost
The directors consider that the carrying amounts of financial
assets and financial liabilities recognized in the consolidated
financial statements approximate their fair values.
5. Capital risk management
The Group manages its capital to ensure that the Group will be
able to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance. The Group's overall strategy remains unchanged from prior
year.
The Group monitors capital on the basis of the net
debt-to-adjusted capital ratio. This ratio is calculated as net
debt divided by adjusted capital. Net debt is calculated as total
debt which includes other payables and accruals less cash and bank
balances. Adjusted capital comprises all components of equity which
includes share capital, contributed surplus, reserves and
accumulated losses.
Net debt-to-equity ratio
The Group's risk management reviews the capital structure on an
annual basis. As part of this review, the management considers the
cost of capital and risk associated with capital.
The net debt-to-adjusted capital ratio as at 31 December 2012
and 2011 were as follows:
2012 2011
US$'000 US$'000
Total debt 275 280
Less: Cash and bank balances (909) (1,217)
------- -------
Net debt - -
======= =======
Adjusted capital 634 937
======= =======
Debt-to-adjusted capital ratio 0% 0%
======= =======
6. SEGMENT Information
No segment analysis is presented for the years ended 31 December
2012 and 31 December 2011 as the Group has only maintained a
minimum operation during the years.
7. OTHER INCOME AND GAIN
Year ended 31 December
2012 2011
US$'000 US$'000
Sundry income - 13
=========== ===========
8. STAFF COSTS
The aggregate cost of persons employed by the Group was as
follow:
Year ended 31 December
2012 2011
US$'000 US$'000
Wages and salaries 16 15
=========== ===========
Directors' remuneration was as follow:
Year ended 31 December
2012 2011
US$'000 US$'000
Fees 16 15
Other remuneration including
contributions to pension and provident - -
fund
----------- -----------
16 15
=========== ===========
9. LOSS BEFORE TAX
Loss before tax has been arrived at after charging:
Year ended 31 December
2012 2011
US$'000 US$'000
Auditors' remuneration 22 21
=========== ===========
10. INCOME TAX EXPENSE
No provision for taxation has been made as the Group did not
generate any assessable profit for UK Corporation Tax, Hong Kong
Profits Tax and tax in other jurisdictions.
The tax charge for the year can be reconciled to the loss before
tax per the consolidated statement of comprehensive income as
follows:
Year ended 31 December
2012 2011
US$'000 US$'000
Loss before tax 304 276
=========== ===========
Loss before tax calculated at 16.5%
(2011:16.5%) 50 46
Tax effect of estimated tax losses
not recognized (50) (46)
Tax charge for the year - -
=========== ===========
No deferred tax has been recognized 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 2012 and 2011.
11. LOSS PER SHARE
The loss and weighted average number of ordinary shares used in
the calculation of basic and diluted loss per share are as
follows.
Year ended 31 December
2012 2011
Loss for the year attributable US$304,000 US$276,000
to owners of the Company
=========== ===========
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 13,367,290 13,367,290
=========== ===========
Loss per share - basic and diluted 2 cents 2 cents
=========== ===========
12. INTERESTS IN SUBSIDIARIES
2012 2011
US$'000 US$'000
The Company
Unlisted shares, at cost 6,450 6,450
Less: Impairment loss (4,461) (4,399)
------- -------
1,989 2,051
======= =======
The Company has provided an impairment loss of approximately
US$62,000 (2011: US$74,000) for the year ended 31 December 2012 to
write down its investments to net realisable value.
Details of the Company's subsidiaries at 31 December 2012 are as
follows:
Proportion
Country Proportion of voting
of incorporation of ownership power Principal
Name and operation interest held activities
----------------------- ------------------ ------------- ---------- -----------
British
Worldsec Financial Virgin Investment
Services Limited Islands 100% 100% holding
Worldsec Corporate British 100%* 100%* Inactive
Finance Limited Virgin
Islands
Worldsec International Netherlands 100%* 100%* Investment
NV Antilles holding
Worldsec International Netherlands 100%* 100%* Investment
(Netherlands) BV holding
Worldsec International Netherlands 100%* 100%* Investment
(PH) BV holding
* Indirectly held subsidiary
13. AMOUNTS DUE FROM / (TO) SUBSIDIARIES
The amounts due were unsecured, non-interest bearing and have no
fixed terms of repayment.
14. CASH AND BANK BALANCES
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents include cash on hand and in banks. Cash
and cash equivalents at the end of the reporting period as shown in
the consolidated statement of cash flows can be reconciled to the
related items in the consolidated statement of financial position
as follows:
The Group The Company
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
Cash and bank balances 909 1,217 845 1,161
======= ======= ======= =======
Bank balances are at market interest rates with an original
maturity of three months or less.
15. SHARE CAPITAL
Number of shares US$
Authorized:
Ordinary shares of US$0.001 each as at 1 January
2011,
31 December 2011 and 31 December 2012 50,000,000,000 50,000,000
============================ ==========
Called up, issued and fully paid:
Ordinary shares of US$0.001 each as at 1 January
2011,
31 December 2011 and 31 December 2012 13,367,290 13,367
============================ ==========
16. RESERVES
The Company
Contributed Accumulated
surplus losses
US$'000 US$'000
Balance as at 1 January
2011 9,646 (8,441)
Total comprehensive expense for the year - (281)
----------- -----------
Balance as at 1 January
2012 9,646 (8,722)
Total comprehensive expense for the year - (303)
----------- -----------
Balance as at 31 December
2012 9,646 9,025
=========== ===========
The contributed surplus of the Company represents the amount
arising from the reduction in the nominal value of the authorised
and issued shares of the Company and the reduction in the share
premium account of the Company pursuant to an ordinary resolution
passed on 23 July 2003.
17. RELATED PARTY TRANSACTIONS
Save as those disclosed elsewhere in the consolidated financial
statements, the Group entered into the following transactions with
related parties during the year:
Name of Natureof
related company transaction 2012 2011
US$'000 US$'000
WAG Worldsec Corporate
Finance Limited (Note) Accounting fee 17 16
======= =======
Note: Mr. Henry Ying Chew Cheong, the director of the Company,
had beneficial interest in the related company.
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 comprehensive income and with additional
disclosure in note 8.
18. CONTINGENT LIABILITIES
The Group and the Company had no material contingent liabilities
as at 31 December 2012 (2011: Nil).
----------- End of notes -------------
BIOGRAPHICAL NOTES ON THE DIRECTORS
The Board has ultimate responsibility for the Group's
affairs.
Brief biographical notes on the directors of the Company are set
out below:
Alastair Gunn-Forbes - Non-Executive Chairman - aged 68
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 a director of Opera
Holding, a recruitment company and he is also a chairman of
FutureBiogas, a green energy company.
Henry Ying Chew Cheong - Executive Director and Deputy Chairman
- aged 65
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, Hutchison Telecommunications Hong Kong Holdings
Limited, New World Department Store China Limited, SPG Land
(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 previously an independent non-executive
director of FPP Japan Fund Inc. (formerly known as FPP Golden Asia
Fund Inc. and Jade Asia Pacific Fund Inc.), a company listed in
Ireland (resigned on 21 October 2008), and 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).
Mark Chung Fong - Non-Executive Director - aged 61
Mr. Fong is an Executive director for China development of Grant
Thornton International Ltd, a corporation incorporated in England.
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 aPast President of the Hong Kong
Institute of Certified Public Accountants.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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