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Worldsec Ld (WSL)

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Wednesday 29 April, 2009

Worldsec Ld

Annual Financial Report

RNS Number : 3557R
Worldsec Ld
29 April 2009
 





WORLDSEC LIMITED


    Annual Report for the year ended 31 December 2008

  

  CORPORATE INFORMATION



Board of Directors


Non-Executive Chairman

Alastair GUNN-FORBES


Executive Director

Henry Ying Chew CHEONG (Deputy Chairman)


Non-Executive Directors

Mark Chung FONG

HO Soo Ching


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


Solicitors

Linklaters

One, Silk Street, London EC2Y 8HQEngland


Principal Share Registrar and Transfer Office

Appleby Management (Bermuda) Ltd.    

Argle House, 41A Cedar AvenueHamilton HM12Bermuda


International Branch Registrar

Capita Registers (Jersey) Limited

12 Castle StreetSt HelierJerseyJE2 3RT


United Kingdom Transfer Agent

Capita Registrars

The Registry, 34 Beckenham RoadBeckenhamKent BR3 4TUEngland


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






Page




Chairman's statement


1

Directors' report


2

Statement of directors' responsibilities


6

Independent Auditors' report


7

Consolidated income statement


8

Consolidated statement of recognized income and expense


9

Consolidated balance sheet


10

Balance sheet


11

Consolidated cash flow statement


12

Notes to the consolidated financial statements


13

Biographical notes on the directors


28






CHAIRMAN'S STATEMENT    



RESULTS


The audited consolidated loss for the year was US$258,000 compared with a loss of US$217,000 in previous yearLoss per share was US 2 cents (2007Loss per share of US 2 cents).



THE YEAR IN REVIEW


For the year ended 31 December 2008, the Group incurred a net loss of US$258,000. This compares to the net loss of US$217,000 for the last yearAt the end of 31 December 2008, Group shareholders' funds stood at US$1.71 million as compared to US$1.96 million at the end of December 2007.



PROSPECTS


During the year, the Board looked at few investment opportunities in Asia but found those valuation were relatively high. The financial crisis in the fourth quarter of 2008 saw prices returned to a more reasonable level and hence a better investment environment. The Board will continue 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.


Alastair GUNN-FORBES

Non-Executive Chairman

20 April 2009

 

DIRECTORS' REPORT    



The directors submit their annual report and the financial statements for the year ended 31 December 2008.



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 Income Statement 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 Directors

Mark Chung Fong

Ho Soo Ching


Brief biographical notes on the directors serving at the date of this Report are set out on page 28.


Save as disclosed in note 17, none of the directors had during the year or at the end of the year material interest, directly or indirectly, in any contract of significance with the Company or any of its subsidiaries.


In accordance with the Bye-Laws of the Company, Mr. Alastair Gunn-Forbes will retire by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.



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 2008

At 31 December 2008



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

Ho Soo Ching


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 2008 were as follows:



Fees


Emoluments


Total


US$'000


US$'000


US$'000







Alastair Gunn-Forbes

-


-


-

Henry Ying Chew Cheong 

-


-


-

Mark Chung Fong

17


-


17

Ho Soo Ching

17


-


17








34


-


34



PROVIDENT FUND AND PENSION CONTRIBUTION FOR DIRECTOR


During the year under review, there was no provident fund and pension contribution for the director.



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 activities of the Group.



MAJOR INTERESTS IN SHARES


At 14 April 2009, 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:



No. of shares


Percentage of
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 three quarter 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 tthe 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


The financial statements have been audited by Messrs. HLB Hodgson Impey Cheng. A resolution to re-appoint Messrs. HLB Hodgson Impey Cheng as auditors of the Company will be proposed at the forthcoming Annual General Meeting.



On behalf of the Board


Henry Ying Chew Cheong

Executive Director

20 April 2009

 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

20 April 2009

 INDEPENDENT AUDITORS' REPORT    



TO THE MEMBERS OF WORLDSEC LIMITED 

(incorporated in Bermuda with limited liability)


We have audited the accompanying balance sheet of Worldsec Limited (the 'Company') and the consolidated balance sheet of the Company and its subsidiaries (hereafter collectively referred to as the 'Group') as at 31 December 2008 and the consolidated income statement, the consolidated statement of recognized income and expense and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.


Directors' responsibility for the consolidated financial statements


The directors of the Company are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board and with the requirements of Section 90 of the Bermuda Companies Act. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.


Auditors' 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, and for no other purpose. We do not assume responsibility towards or accept liability to any other person of the contents of this report. We conducted our audit in accordance with International Standards on Auditing issued by the International Federation of Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 accompanying consolidated financial statements give a true and fair view of the financial position of the Company and of the Group as at 31 December 2008 and of the Group's loss and cash flows for the year then ended in accordance with International Financial Reporting Standards.


Other matters


In forming our opinion, which is not qualified, 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 that the Company is no longer a going concern.




HLB Hodgson Impey Cheng

Chartered Accountants

Certified Public Accountants

Hong Kong20 April 2009

  CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2008            







Year ended 31 December



Notes

2008


2007




US$'000


US$'000






 

Interest income


6

3


39 

Staff costs


7

(34)


(40)

Other expenses



(227)


(216)







Loss before tax


8

(258)


(217)

Income tax expense


9

-


-  







Loss for the year



(258)


(217)







Loss per share - basic and diluted


10

(2) cents


 (2) cents 



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


    

CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE

FOR THE YEAR ENDED 31 DECEMBER 2008                

            




Year ended 31 December


2008


2007


US$'000


US$'000

Net income recognized directly in equity

-


-

Loss for the year

(258)


(217)





Total recognized income and expense for the year

(258)


(217)








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


  CONSOLIDATED BALANCE SHEET

AT 31 DECEMBER 2008    



Notes


2008


2007




US$'000


US$'000







Current assets






Cash and bank balances

13


2,045 


2,282 







Current liabilities






Other payables and accruals

14


(340)


(319)







Net current assets



1,705 


1,963 







Net assets



1,705 


1,963 







Capital and reserves






Share capital

15


13 


13 

Contributed surplus

16


9,646 


9,646 

Special reserve

16


625 


625 

Accumulated losses

16


(8,579)


(8,321)







Equity shareholders' funds



1,705 


1,963 



                    

The financial statements on pages 8 to 27 were approved and authorized for issue by the Board of Directors on 20 April 2009 and signed on its behalf by:







Alastair Gunn-Forbes 

Director


Henry Ying Chew Cheong 

Director

    

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

                    

                    

BALANCE SHEET

AT 31 DECEMBER 2008            



Notes


2008


2007




US$'000


US$'000







Current assets






Interests in subsidiaries 

11


2,207 


2,278 

Amounts due from subsidiaries

12


98 


30 

Cash and bank balances

13


1,925 


2,220 










4,230 


4,528 

Current liabilities






Other payables and accruals

14


(197)


(237)

Amounts due to subsidiaries

12


(2,328)


(2,328)










(2,525)


(2,565)







Net current assets



1,705 


1,963 







Net assets



1,705 


1,963 







Capital and reserves






Share capital

15


13 


13 

Contribution surplus

16


9,646 


9,646 

Accumulated losses

16


(7,954)


(7,696)







Equity shareholders' funds



1,705 


1,963 


                    

The financial statements on pages 8 to 27 were approved and authorized for issue by the Board of Directors on 20 April 2009 and signed on its behalf by:







Alastair Gunn-Forbes

Director


Henry Ying Chew Cheong

Director



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

    

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2008        








Year ended 31 December





Note

2008


2007






US$'000


US$'000

Cash flows from operating activities








Loss for the year




(258)


(217)








Interest income




(3)


(39)












(261)


(256)








Movements in working capital




Decrease in other receivables




-


2

Increase/(decrease) in other payables and accruals


21


(9)





Net cash used in operating activities

(240)


(263) 








Cash flows from investing activities







Interest received




3


39






Net cash generated from investing activities


3


39







Net decrease in cash and cash equivalents



(237)


(224)








Cash and cash equivalents as at 1 January




2,282


2,506








Cash and cash equivalents as at 31 December 

Cash and bank balances



13

2,045


2,282




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


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2008        



1.    GENERAL INFORMATION


The Company is a public listed company incorporated in Bermuda and its shares are listed on the London Stock Exchange. The addresses of the registered office and principal place of business of the Company are disclosed in the corporate information to the annual report.


The principal activity of the Company is investment holding. The principal activities of the Company's subsidiaries are set out in note 11.



2.    ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING 

STANDARDS


In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the 'IASB') and the International Financial Reporting Interpretations Committee (the 'IFRIC') of the IASB that are relevant to its operations and effective for annual reporting periods beginning on 1 March 2007. The adoption of these new and revised Standards and Interpretations has no significant impact on the financial statements of the Group.


At the date of authorization of these financial statements, the following Standards and Interpretations were in issue but not yet effective:


IAS 1 (Revised)

Presentation of Financial Statements 1

IAS 23 (Revised)

Borrowing Costs 1

IAS 27 (Revised)

Consolidated and Separate Financial Statements 2

IFRS 8

Operating Segments 1

IFRIC - Int 15

Agreements for the Construction of Real Estate  1


1 Effective for annual periods beginning on or after 1 January 2009.

Effective for annual periods beginning on or after 1 July 2009.


The directors anticipate that the adoption of these Standards and Interpretations in the future periods will have no material financial impact on the financial statements of the Group.



3.    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 Company's assets to net realisable value. Provision has also been made for any onerous contractual commitments at the balance sheet date. 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 balance sheet date. Accordingly, all assets are classified as current assets. 


The financial statements have been prepared in accordance with International Financial Reporting Standards. The Group's principal accounting policies are described 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.


The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.


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. Investments in subsidiaries are stated at cost less impairment losses in the Company's balance sheet.


Revenue


Revenue of the Group comprises agency commissions received and receivable from securities dealing on behalf of clients and income received and receivable from investment advisory businesses.


Revenue recognition


Commission income on dealing in securities is recognized on a trade date basis.


Interest revenue 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.


Revenue for rendering of services is recognized when the service is rendered.


Foreign currencies


The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States Dollars ('USD'), which is the functional currency of the Company and the presentation currency for the consolidated financial statements.


In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on 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 are recognized in profit or loss in the period in which they arise except for:


- exchange differences which relate to assets under construction for future productive use, which are included in the cost of those assets where they are regarded as an adjustment to interest costs on 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, which form part of the net investment in a foreign operation, and which are recognized in the foreign currency translation reserve and recognized in profit or loss on disposal of the net investment.


For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are expressed in USD using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rates for the year, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such exchange differences are recognized in profit or loss in the period in which the foreign operation is disposed of.

    

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.


Financial instruments


Financial assets and financial liabilities are recognised on the balance sheet when the Company 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 recognised immediately in the income statement.


Financial assets


The Company's financial assets are classified as loans and receivables. All regular way purchases or sales of financial assets are recognised and derecognised 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. The accounting policies adopted in respect of the financial assets are set out below.


Loans and receivables

    

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. At each balance sheet date subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in the income statement 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. 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.


Financial liabilities and equity


Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.


An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Under IAS 39, financial liabilities are generally classified as financial liabilities at fair value through profit or loss and other financial liabilities. The Company's financial liabilities are all classified as other financial liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below.

    

Other financial liabilities 


Other financial liabilities are subsequently measured at amortised cost, using the effective interest rate method.


Equity instruments


Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.


Derecognition


Financial assets are derecognised when the rights to receive cash flows from the assets expire or, the financial assets are transferred and the Company has transferred substantially all the risks and rewards of ownership of the financial assets. On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognised directly in equity is recognised in income statement.


For financial liabilities, they are removed from the Company's balance sheet (when the obligation specified in the relevant contract is discharged, cancelled or expires). The difference between the carrying amount of the financial liability derecognised and the consideration received or receivable is recognised in the income statement.


Cash and bank balances


Cash and bank balances comprise cash at bank and on hand, demand deposits with banks and other short-term highly liquid investments that are directly convertible to a known amount of cash and are insignificant risk of change in value.


Trade and other receivables


Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest rate method, less impairment losses for bad and doubtful debts.


The impairment losses recognized is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. 


Other payables


Other payables are initially measured at fair value and subsequently measured at the present value of the estimated future cash outflows.


Impairment of investment in a subsidiary


Assets that have an indefinite useful life or are not yet available for use are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.


Income tax


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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes 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 balance sheet date.


Deferred tax


Deferred tax is recognized on 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, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and 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 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 each balance sheet date 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 balance sheet date. 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 reporting date, to recover or settle the carrying amount of its assets and liabilities.


Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.


Provisions


Provisions are recognized when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligations. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material.

 


4.    FINANCIAL RISK MANAGEMENT

    

The Group employs a conservative strategy regarding its risk management. As the Group's exposure to market risk is kept at a minimal level, the Group has not used any derivatives or other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes.


A31 December 2008, the Group's principal financial instruments mainly consisted of cash and bank balances, and other payables and accruals.


Categories of financial instruments


Financial assets





2008


2007

Loans and receivables (including cash and cash equivalents)

2,045


2,282





Financial liabilities








Other payables and accruals (at amortized cost)

340


319

            

Cash flow interest rate risk


At 31 December 2008, the Company's cash flow interest rate risk arises mainly from bank deposits, which is primarily short-term in nature.  


At 31 December 2008, if interest rates on US dollar-denominated bank deposits had been 100 basis points higher/lower with all other variables held constant, post-tax profit for the year would have been US$30 (2007US$390) lower/higher, mainly as a result of higher/lower interest income on bank deposits. 


Foreign currency risk


Certain financial assets and financial liabilities of the Group are denominated in foreign currencies.  It did not have material transactions in foreign currency, nor did it enter into any foreign exchange forward contracts.


The carrying amounts of the Group's foreign currency denominated financial assets and financial liabilities at the reporting date are as follows:




Liabilities


Assets



2008


2007


2008


2007



US$'000


US$'000


US$'000


US$'000










HKD


113


114


158


235

Others


93

 

46


84

 

59



At 31 December 2008, if US dollar had weakened/strengthened by 1% against the HK dollar with all other variables held constant, post-tax profit for the year would have been US$455 (2007: US$1,214) higher/lower, mainly as a result of foreign exchange gains/losses on translation of HK Dollar-denominated bank balances and other payables and accruals. Profit is less sensitive to movement in US dollar/HK dollar exchange rates in 2008 than 2007 because of the decreased amount of US dollar denominated bank balances and other payables and accruals.


In virtue of the exposure on other foreign currency risk being minimal, the respective quantitative disclosures have not been prepared.


Capital risk management


The Group monitors capital on the basis of the 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 as disclosed in note 14less cash and bank balances as disclosed in note 13. Adjusted capital comprises all components of equity which includes share capital, reserves and retained earnings as disclosed in notes 15 and 16 respectively.


During 2008, the Group's strategy, which was unchanged from 2007, was to maintain zero debt-to-adjusted capital ratio. The debt-to-adjusted capital ratio as at 31 December 2008 and 2007 was as follows: 

        



2008


2007






Total debt


340 


319 

Less: Cash and bank balances


(2,045)


(2,282)

Net debt


-


-






Total equity and adjusted capital


1,705 


1,963 






Debt-to-adjusted capital ratio

   

0% 

   

0% 



5. BUSINESS AND GEOGRAPHICAL SEGMENTS


No business and geographical segment analysis are presented for the years ended 31 December 2008 and 31 December 2007 as the Group has only maintained a minimum operation during the years.


 

6.    INTEREST INCOME

    


Year ended 31 December


2008


2007


US$'000


US$'000

Interest income




  Bank interest receivable

3


39



7.    STAFF COSTS



Year ended 31 December


2008


2007


US$'000


US$'000

Wages and salaries

34


40

Contributions to provident fund

-


-


34


40





Directors' remuneration was as follow:





Year ended 31 December


2008


2007


US$'000


US$'000





Fees 

34


40

Other remuneration including




  contributions to pension and provident fund

-


-


34


40






Year ended 31 December


2008


2007


US$'000


US$'000





Salary excluding redundancy payment

-


-

Contributions to provident fund

-


-


-


-



Disclosures on directors' remuneration, share options, long-term incentive schemes, pension contributions and pension entitlements are detailed under the headings of directors' remuneration, service contracts and provident fund and pension contributions for directors on page 3 and 4 of the Directors' Report.



8.      LOSS BEFORE TAX


    Loss before tax has been arrived at after charging/(crediting):

     


Year ended 31 December


2008 


2007


US$'000


US$'000





Auditors' remuneration

21 


24 

Operating lease rentals - premises

-


-

Net exchange loss/(gain)

 

(5)



9.      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.


No deferred tax liabilities are recognized in the financial statements as the Group and the Company did not have material temporary difference arising between the tax bases of liabilities and their carrying amounts as at 31 December 2008 (2007: Nil).


The taxation for the year can be reconciled to the loss before tax per the consolidated income statement as follows:




Year ended 31 December



2008


2007



US$'000


US$'000






Loss before tax


258


217






Loss before tax calculated at 16.5% (2007:17.5%)


43


38

Tax effect of estimated tax losses not recognized


(44)


(45)

Tax effect of income not taxable for tax purpose


1


7






Total current tax charge for the year


-


-

 

                            

10.    LOSS PER SHARE    

    

Calculation of loss per share was based on the following:






Year ended 31 December



2008


2007






Loss for the year


(US$258,000)


(US$217,000)











Weighted average number of shares in issue


13,367,290


13,367,290











Loss per share - basic and diluted


(2) cents


(2) cents


    No diluted effect in loss per share as no diluting events occurred during either year.



11.    INTERESTS IN SUBSIDIARIES



2008


2007


US$'000


US$'000

The Company








Unlisted investment in 




  a subsidiary at cost less impairment

2,207


2,278


    

    The following companies were subsidiaries of the Company as at 31 December 2008:

    

Name


Country of incorporation and operation


Proportion of ownership interest


Proportion
of voting power held


Principal activities

Worldsec Financial Services Limited


British Virgin Islands 


100


100


Investment holding

Worldsec Corporate Finance Limited


British Virgin Islands 


100*


100*


Inactive

Worldsec International NV


Netherlands Antilles 


100*


100*


Investment holding

Worldsec International (Netherlands) BV


Netherlands 


100*


100*


Investment holding

Worldsec International (PH) BV


Netherlands 


100*


100*


Investment holding

*    Indirectly held subsidiary

 


12.    AMOUNTS DUE FROM / (TO) SUBSIDIARIES

    

The amounts were non-interest bearing, unsecured and have no fixed terms of repayment. 



13.    ANALYSIS OF CASH AND BANK BALANCES

            




The Group


The Company


   

2008


2007


2008


2007



US$'000


US$'000


US$'000


US$'000










Cash and bank balances









  (excluding time deposits)


2,045


2,282


1,925


2,220

Time deposits of maturity exceeding









  1 day and less than 3 months


-


-


-


-










Cash and bank balances


2,045


2,282


1,925


2,220



Cash and bank balances are at market interest rates with an original maturity of three months or less. The effective interest rate of the bank deposits is 0.14% per annum (2007: 1.63%). 



14.    OTHER PAYABLES AND ACCRUALS


The amounts are non-interest bearing, unsecured and repayable on demand. 



15.    SHARE CAPITAL




US$

Authorized:



Ordinary shares of US$0.001 each as at 1 January 2007,

31 December 2007 and 31 December 2008


50,000,000




Called up, issued and fully paid:



Ordinary shares of US$0.001 each as at 1 January 2007,

31 December 2007 and 31 December 2008


13,367

  


16.    RESERVES

    

    Movements on reserves were as follows:



Contributed


Special


Accumulated


Currency translation


surplus


reserve


losses


reserve


US$'000


US$'000


US$'000


US$'000









The Group








Balance as at 1 January 2007

9,646 


625 


(8,104)


-

Loss for the year

-


-


(217)


-

Balance as at 1 January 2008

9,646 


625 


(8,321)


-

Loss for the year

-


-


(258)


-









Balance as at 31 December 2008

9,646 


625 


(8,579)


-


    

    






Contributed


Accumulated






surplus


losses






US$'000


US$'000

The Company
















Balance as at 1 January 2007





9,646 


(7,479)

Loss for the year





-


(217)









Balance as at 1 January 2008





9,646 


(7,696)

Loss for the year





-


(258)









Balance as at 31 December 2008





9,646 


(7,954)


        


17    RELATED PARTY TRANSACTIONS


Save as those disclosed elsewhere in the financial statements, the contracts to which the Group and the Company was a party and in which a director, Mr. Henry Ying Chew Cheong,  had material interests during the year, as disclosable under International Accounting Standard No. 24, is as follow:


Name of

Nature of





related party

transaction


2008


2007




US$'000


US$'000

WAG Worldsec Corporate






  Finance Limited

Accounting fee


15


11


    

Key management personnel of the Company are the directors of the Company only. The remuneration of directors is set out on the consolidated income statement and with additional disclosure in note 7.



18.    CONTINGENT LIABILITIES


As at 31 December 2008, the Group and the Company had no material contingent liabilities (2007: 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 64


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.

 

Henry Ying Chew Cheong - Non-Executive Director and Deputy Chairman - aged 61


Mr. Cheong holds a Bachelor of Science (Mathematics) degree from Chelsea CollegeUniversity of London and a Master of Science (Operational Research and Management) degree from Imperial CollegeUniversity of London.  


Mr. Cheong has over 30 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, Excel Technology International 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 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).


Mr. Cheong is a member of Discipline Committee A of the Hong Kong Institute of Certified Public Accountants and also a member of the Securities and Futures Appeals Tribunal in Hong Kong.  Mr. Cheong was 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 ON THE DIRECTORS    



Mark Chung Fong - Non-Executive Director - aged 57


Mr. Fong is a partner of Grant Thornton, Certified Public Accountants, Hong Kong. He has over 20 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.


Ho Soo Ching - Non-Executive Director - aged 59


Mr. Ho has been a non-executive director of Worldsec since 1997. He is currently the chief executive officer of Manhattan Resources Limited, a Singapore public company involving in providing services to the coal mining sector in Indonesia. He has been involved in the financial services sector, principally in Singapore, for a number of years prior to joining Manhattan Resources in 2006.




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