REG - Worldsec Ld - Annual Financial Report 2015 <Origin Href="QuoteRef">WSL.L</Origin> - Part 3
29/04/2016 17:55
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Other remuneration including
contributions to pension and provident fund - -
105 75
10. LOSS BEFORE INCOME TAX EXPENSE
Loss before income tax expense has been arrived at after charging:
Year ended 31 December
2015 2014
US$'000 US$'000
Auditor's remuneration
- Current year 38 36
- Under provision in prior year - 15
38 51
Depreciation of property, plant and equipment 23 2
Foreign exchange loss 1 7
Operating lease rental expenses in respect of office premises and warehouse 80 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
11. INCOME TAX EXPENSE
No provision for taxation has been made as the Group did not generate any
assessable profits for United Kingdom Corporation Tax, Hong Kong Profits Tax
and tax in other jurisdictions.
The tax charge for 2015 and 2014 can be reconciled to the loss before income
tax expense per the consolidated statement of profit or loss and other
comprehensive income as follows:
Year ended 31 December
2015 2014
US$'000 US$'000
Loss before income tax expense 644 475
Loss before tax calculated at 16.5% (2014: 16.5%) 106 78
Tax effect of non-deductible expenses (67) -
Tax effect of estimated tax losses not recognised (39) (78)
Tax charge for the year - -
No deferred tax asset has been recognised in respect of the unused tax losses
due to the unpredictability of future profit streams. No deferred tax has been
recognised in the financial statements as the Group did not have material
temporary difference arising between the tax bases of assets and liabilities
and their carrying amounts as at 31 December 2015 and 2014.
12. LOSS PER SHARE
The loss and weighted average number of ordinary shares used in the
calculation of basic and diluted loss per share were as follows.
Year ended 31 December
2015 2014
Loss for the year attributable to owners of theCompany (US$'000) 644 475
Weighted average number of ordinary shares forthe purposes of basic and diluted loss per share 56,734,580 56,734,580
Loss per share - basic and diluted (1.14) cent (0.84) cent
Diluted loss per share was the same as basic loss per share for the years
ended 31 December 2015 and 2014 as the impact of the potential dilutive
ordinary shares outstanding had an anti-dilutive effect on the basic loss per
share presented for the years ended 31 December 2015 and 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
13. PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements
US$'000
Cost
At 1 January 2014 -
Additions 69
At 31 December 2014 and 1 January 2015 69
Additions -
At 31 December 2015 69
Accumulated depreciation
At 1 January 2014 -
Depreciation 2
At 31 December 2014 and 1 January 2015 2
Depreciation 23
At 31 December 2015 25
Carrying amount
At 31 December 2014 67
At 31 December 2015 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
14. INTEREST IN A JOINT VENTURE
2015 2014
US$'000 US$'000
Unlisted investment, at cost 257 257
Share of post-acquisition losses (101) (48)
Share of post-acquisition other comprehensive income (19) -
Share of net assets 137 209
Amount due from a joint venture 257 257
The amount due from a joint venture was unsecured, interest-free and repayable
on demand.
Details of the joint ventures at 31 December 2015 were as follows:
Name Country of incorporation and operation Proportion of ownership interest Paid-up registered Capital Principal activities
Direct Indirect
Oasis Education Group Limited奧偉詩教育集團有限公司("Oasis Education") Hong Kong 50% - HK$4,000,000 Investment holding
奧偉詩教育咨詢(深圳)有限公司 The People's Republic of China (the "PRC") - 50% HK$5,000,000 Provision of education consulting and support services to kindergartens in the PRC
The contractual arrangement provides the Group with only the rights to the net
assets of the joint arrangement, with the rights to the assets and obligation
for the liabilities of the joint arrangement resting primarily with Oasis
Education. Under IFRS 11, this joint arrangement is classified as a joint
venture and has been included in the consolidated financial statements using
the equity method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
14. INTEREST IN A JOINT VENTURE (CONTINUED)
The aggregate amounts relating to the joint venture that have been included in
the consolidated financial statements of the Group as extracted from relating
financial statements of the joint venture, adjusted to reflect adjustments
made by the Group when applying the equity method of accounting are set out
below:
2015 2014
Results of the joint venture for the year US$'000 US$'000
Revenue - -
Expenses (105) (96)
Loss for the year (105) (96)
Other comprehensive income for the year (38) -
Total comprehensive income for the year (143) (96)
Share of losses of the joint venture for the year (53) (48)
Share of other comprehensive income of the joint venture for the year (19) -
Accumulated share of results of the joint venture (101) (48)
Assets and liabilities of the joint venture at 31 December
2015 2014
US$'000 US$'000
Non-current assets - -
Current assets 835 772
Non-current liabilities - -
Current liabilities (562) (353)
Net assets 273 419
Included in the above amounts were:
Cash and cash equivalents 22 772
Depreciation and amortisation - -
Interest income - -
Interest expense - -
Current financial liabilities (excluding trade and other payables) - -
Percentage of equity interest attributable to the Group 50% 50%
Share of net assets of the joint venture 137 209
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
15. AVAILABLE-FOR-SALE FINANCIAL ASSETS
2015 2014
US$'000 US$'000
Unlisted equity investment, - at cost 1,125 800
During the year ended 31 December 2014, the Group acquired 8% equity interest
in ICBC Specialised Ship Leasing Investment Fund (the "ICBC Shipping Fund")
for a total cash consideration of US$800,000. The ICBC Shipping Fund is a
company incorporated in the Cayman Islands with an objective of achieving
stable return from primarily investing in marine vessels.
During the year ended 31 December 2015, the Group acquired equity interest in
ayondo Holding AG ("Ayondo") for a total cash consideration of CHF320,000
(equivalent to approximately US$325,000). Ayondo is a company incorporated in
Switzerland and invests in new technologies and high growth business models
that can be achieved through efficiency improvements within the banking
sector.
These investments were designated as available-for-sale financial assets. The
investments are measured at cost less impairment at each reporting date
because the investments do not have quoted market prices in an active market,
the variability in the range of reasonable fair value estimates for the
investments is significant and therefore their fair value cannot be reliably
measured. The directors had no intention to dispose of the available-for-sale
financial assets at the end of the reporting period.
The directors have assessed the impacts on the recoverable amount of the
financial assets and concluded that no impairment loss needed to be made.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
16. SUBSIDIARIES
Details of the subsidiaries of the Company at 31 December 2015 were as
follows:
Name Country of incorporation and operation Proportion of ownership interest Proportion Principal activities
of voting power held
Worldsec Financial Services Limited British Virgin Islands 100% 100% Investment holding
Worldsec Corporate Finance Limited British Virgin Islands 100%* 100%* Inactive
Worldsec International NV Netherlands Antilles 100%* 100%* Inactive
Worldsec International (Netherlands) BV Netherlands 100%* 100%* Inactive
Worldsec International (PH) BV Netherlands 100%* 100%* Inactive
Worldsec Investment (Hong Kong) Limited Worldsec Investment (China) Limited Hong Kong British Virgin Islands 100%* 100%* 100%* 100%* Investment holding Investment holding
* Indirectly held subsidiaries
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the reporting period as shown in the
consolidated statement of financial position were as follows:
2015 2014
US$'000 US$'000
Bank balances 1,987 2,768
Cash balances 1 1
1,988 2,769
Bank balances bore interest at the then prevailing market rates ranging from
0.001% to 0.01% (2014: 0.001% to 0.01%) per annum and had original maturities
of three months or less.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
18. OTHER PAYABLES AND ACCRUALS
2015 2014
US$'000 US$'000
Other payables 308 188
Accruals 133 180
441 368
19. SHARE CAPITAL
Number of shares Total valueUS$'000
Authorised:
Ordinary shares of US$0.001 each
At 1 January 2014, 31 December 2014, 1 January 2015 and 31 December 2015 60,000,000,000 60,000
Called up, issued and fully paid:
Ordinary shares of US$0.001 each
At 1 January 2014, 31 December 2014, 1 January 2015 and 31 December 2015 56,734,580 57
20. RESERVES
(a) The share premium account represents the premium arising from the issue
of shares of the Company at a premium.
(b) The contributed surplus represents the amount arising from the reduction
in the nominal value of the authorised and issued shares of the Company and
the reduction in the share premium account pursuant to an ordinary resolution
passed on 23 July 2003.
(c) Share option reserve comprises the fair value of the Company's share
options granted which have yet to be exercised, as further explained in the
accounting policy for share-based payment transactions in note 3 to the
consolidated financial statements. The amount will either be transferred to
the issued capital account and the share premium account when the related
options are exercised, or be transferred to accumulated losses should the
related options expire or be forfeited.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
20. RESERVES (CONTINUED)
(d) Exchange differences relating to the translation of the net assets of
the Group's foreign operations (including joint venture) from their functional
currencies to the Group's presentation currency were recognised directly in
other comprehensive income and accumulated in the foreign currency translation
reserve. Such exchange differences accumulated in the foreign currency
translation reserve will be reclassified to profit or loss on the disposal of
the foreign operations.
(e) The special reserve represents the amount arising from the difference
between the nominal value of the issued share capital of each subsidiary and
the nominal value of the issued share capital of the Company along with the
surplus arising in a subsidiary on group reorganisation completed on 26
February 2007.
(f) Accumulated losses represent accumulated net gains and losses
recognised in the profit or loss of the Group.
21. SHARE-BASED PAYMENTS
The Company operates an equity-settled share-based remuneration schemes for
the employees and directors.
On 1 December 2015, the Company granted to certain eligible persons a total of
2,950,000 share options to subscribe for ordinary shares of US$0.001 each in
the share capital of the Company under the Worldsec Employee Share Option
Scheme 1997 (the "Scheme") which was revised on 24 September 2014. The options
vest six months from the date of grant and then are exercisable within a
period of 9.5 years.
The following table discloses the movements of the outstanding share options
under the Scheme during the year ended 31 December 2015.
Number of options
Grantee Exercisable period Balance at 1 January 2015 Granted during the year Exercised during the year Forfeited during the year Lapsed during the year Balance at 31 December 2015 Exercise price per share(US$)
Directors 1 June 2016 to 30 November 2025 - 2,500,000 - - - 2,500,000 0.122
Employees 1 June 2016 to 30 November 2025 - 450,000 - - - 450,000 0.122
- 2,950,000 - - - 2,950,000
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
21. SHARE-BASED PAYMENTS (CONTINUED)
The fair value of options granted during the year ended 31 December 2015 was
approximately US$206,000 and was determined at the grant date using the
Black-Scholes Option Pricing Model.
Significant inputs into the calculation included the weighted average share
price of US$0.136, expected dividend yield of 0.000% and a volatility rate of
56.850%. The volatility assumption was based on the historical share price
volatility during the year ended 31 December 2015. Risk-free annual interest
rate was determined at 1.762%.
The share-based payment expenses of approximately US$34,000 were charged to
the profit or loss during the year ended 31 December 2015.
The options outstanding as at 31 December 2015 had a weighted average
remaining contractual life of 9.5 years and a weighted average exercise price
of US$0.122.
No option was exercised during the year ended 31 December 2015.
22. RELATED PARTY TRANSACTIONS
The Group entered into the following transactions with a related party during
the years ended 31 December 2015 and 2014:
Name of related company Nature of transaction
2015 2014
US$'000 US$'000
WAG Worldsec Corporate
Finance Limited (note) Consultancy fee - 32
WAG Worldsec Corporate
Finance Limited (note) Accounting fee 5 19
Note: Mr. Henry Ying Chew Cheong, a director of the Company, had beneficial
interest (approximately 34%) in the related company.
There was no outstanding balance with the related party as at 31 December 2015
and 2014.
Compensation of key management personnel
Key management personnel of the Company are the directors of the Company only.
The remuneration of directors is set out on the consolidated statement of
profit or loss and other comprehensive income and with additional disclosure
in note 9 to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
23. OPERATING LEASE COMMITMENTS
Operating leases - lessee
At the reporting date, the Group had future aggregate minimum lease payments
under non-cancellable operating leases in respect of office premises and
warehouse as follows:
2015 2014
US$'000 US$'000
Not later than one year 58 63
Later than one year and not later than five years 44 101
102 164
The leases run for an initial period of 2 to 3 years, with an option to renew
the office premises lease upon expiry when all terms are renegotiated.
24. CONTINGENT LIABILITIES
The Group had no material contingent liabilities at 31 December 2015 (2014:
nil).
INVESTMENT POLICY
The Company will invest in small to medium sized trading companies, both
start-up/early stage growth and established, being companies with a turnover
typically up to US$20 million, based mainly in the Greater China and South
East Asian region, and thereby create a portfolio of minority investments in
such companies.
The Company's investment objective is to achieve attractive investment returns
through capital appreciation on a medium to long term horizon. The Directors
consider between 2 to 4 years to be medium term and long term to be over 4
years. The Directors intend to build an investment portfolio of small to
medium sized companies based mainly in the Greater China and South East Asian
region, where economic growth is expected to remain strong. The Company may
also take advantage of opportunities to invest in companies in other
jurisdictions, such as the United Kingdom, which have close trading links with
Greater China and South East Asia. Investments will normally be in equity or
preferred equity but if appropriate convertible loans or preference shares may
be utilised.
The Company has no intention to employ gearing, but reserves the right to gear
the Company to a maximum level of 25 per cent. of the last published net asset
value of the Group should circumstances arise where, in the opinion of the
Directors, the use of debt would be to the advantage of the Company and the
Shareholders as a whole.
The investment portfolio will consist primarily of unlisted companies but the
Directors will also consider investing in undervalued listed companies, if and
when such an opportunity arises. Where suitable opportunities are identified,
investment in companies considering a stock market listing at the pre-initial
public offering stage will be considered.
No more than 20 per cent. of the gross assets of the Group will be invested in
any single investment. The Directors consider that opportunities will arise
to invest in investee companies by the issue of new Ordinary Shares at a
discount of no more than 10 per cent. of the mid market price at the time of
agreement of their issue in exchange for new equity, preferred equity or
convertible instrument in the investee company.
Initial target sectors are financial services, consumer retail distribution,
natural resources and infrastructure but the Company will seek to take
advantage of opportunities in other sectors if these arise.
The Company will invest in at least five different investee companies, thereby
reducing the potential impact of poor performance by any individual
investment.
The Company does not intend to take majority interests in any investee
company, save in circumstances where the Company exercises any rights granted
under legal agreements governing its investment. Each investment by the
Company will be made on terms individually negotiated with each investee
company, and the Company will seek to be able to exercise control over the
affairs of any investee company in the event of a default by the investee
company or its management of their respective obligations under the legal
agreements governing each investment. Where appropriate, the Company will
seek representation on the board of companies in which it invests. Where
board representation is secured in an investee company, remuneration for such
appointment will be paid to the benefit of the Company thereby enhancing
returns on the investment. There will be no intention to be involved in the
day to day management of the investee company but the skills and connections
of the board representative will be applied in assisting the development of
the investee company, with the intention of enhancing shareholder value. The
Company will arrange no cross funding between investee companies and neither
will any common treasury function operate for any investee company; each
investee company will operate independently of each other investee company.
Where the Company has cash awaiting investment, it will seek to maximise the
return on such sums through investment in floating rate notes or similar
instruments with banks or other financial institutions with an investment
grade rating or investment in equity securities issued by companies which have
paid dividends for each of the previous three years.
BIOGRAPHICAL NOTES OF THE DIRECTORS
The Board of Directors has ultimate responsibility for the Group's affairs.
Brief biographical notes of the directors are set out below:
Alastair Gunn-Forbes - Non-ExecutiveChairman - aged 71
Mr Gunn-Forbes has been associated with Asian regional stock markets since
1973 when he was a fund manager at Brown Shipley Ltd. Subsequently, he was a
director of W.I Carr, Sons & Co. (Overseas) Ltd until 1985, since when he has
held directorships with other Asian securities firms in the United Kingdom
prior to joining the Group in 1993. Mr Gunn-Forbes is the Chairman of Opera
Holdings, a recruitment company and also the Chairman of FutureBiogas, a green
energy company.
Henry Ying Chew Cheong - Executive Director andDeputy Chairman - aged68
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 40 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 Property
Holdings Limited, Cheung Kong Infrastructure Holdings Limited, CNNC
International Limited, Greenland Hong Kong Holdings Limited, Hutchison
Telecommunications Hong Kong Holdings Limited, New World Department Store
China Limited, Skyworth Digital Holdings Limited and TOM Group Limited, all
being listed companies in Hong Kong. Mr Cheong is also an Independent Director
of BTS Group Holdings Public Company Limited, being listed in Thailand. Mr
Cheong was an Independent Non-executive Director of Cheung Kong (Holdings)
Limited, CK Hutchison Holdings Limited (both resigned on 3 June 2015) and
Creative Energy Solutions Holdings Limited (resigned on 9 May 2016) all being
listed in Hong Kong.
Mr Cheong was 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 (from 2009-2015). Mr Cheong was previously a member of Disciplinary
Panel A of Hong Kong Institute of Certified Public Accountants (from
2005-2011), a member of the Corporate Advisory Council of the Hong Kong
Securities Institute (from 2002-2009), a member of the Advisory Committee
(from 1993-1999) to the Securities and Futures Commission ("SFC"), a member of
the Board of Director of the Hong Kong Future Exchange Limited (from
1994-2000), a member of GEM Listing Committee and Main Board Listing Committee
of Hong Kong Exchange and Clearing Limited ("HKEX") (from May 2002-May 2006),
a member of Derivatives Market Consultative Panel of HKEX (from April 2000-May
2006), a member of the Process Review Panel for the SFC (from November
2000-October 2006) and a member of the Committee on Real Estate Investment
Trust of the SFC (from September 2003-August 2006).
BIOGRAPHICAL NOTES OF THE DIRECTORS
Ernest Chiu Shun She - Executive Director - aged55
Mr She is an investment banker with extensive experience in the field of
corporate finance having covered a broad and diverse range of financial
advisory and fund raising activities in the Asian regional stock markets and
had held executive management positions and directorships at Worldsec
Corporate Finance Limited and UOB Asia (Hong Kong) Limited.
Mr She was one of the cofounding team members at the Worldsec Group of
companies when they were established in the early 1990s. Between 1991 and
until the disposal by the Group of certain securities businesses to UOB Kay
Hian Holdings Limited in 2002, Mr She spent a total of eleven years holding
senior management positions at Worldsec Corporate Finance Limited and Worldsec
International Limited with the main responsibility of developing and
overseeing the Group's corporate finance activities.
Prior to his tenure at the Worldsec Group of companies, Mr She was an
investment analyst and an associate director at James Capel (Far East) Limited
where he was primarily responsible for equity research in the real estate
sector.
Mr She graduated from the University of Toronto with a Bachelor of Applied
Science degree in Industrial Engineering and obtained from the Imperial
College of Science and Technology a Master of Science degree in Management
Science specialising in Operational Research. Mr She is a Chartered Financial
Analyst.
From 2004 to 2010, Mr She served as an Independent Non-Executive Director and
the Chairman of the Audit Committee of New Island Printing Holdings Limited, a
company listed on the Main Board of The Stock Exchange of Hong Kong Limited.
Mr She rejoined the Group in July 2013 to assist in the reactivation of its
business activities.
Mark Chung Fong - Non-Executive Director - aged64
Mr Fong was an Executive Director for China development of Grant Thornton
International Ltd, a corporation incorporated in England and had retired from
Grant Thornton effective from 1 January 2014. He has more than 40 years'
experience in the accounting profession. Mr Fong holds a Master of Science
degree from the University of Surrey. He is a Fellow of the Institute of
Chartered Accountants in England and Wales and a Fellow and a Past President
of the Hong Kong Institute of Certified Public Accountants.
Martyn Stuart Wells - Non-Executive Director - aged 71
Mr Wells was formerly an Executive Director of Citicorp International Limited
and has over 30 years' experience in the securities industry. In 1969 he
joined Vickers da Costa, international stockbrokers. He was involved in the
fund management industry for 20 years and participated in the launch of
several country funds investing in the Asian region, serving as a director or
as a member of the investment advisory councils of several of those funds. He
lived in Hong Kong for almost 28 years and since 2000 has resided in England.
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