TIDMWSL
RNS Number : 7217F
Worldsec Ld
29 April 2011
WORLDSEC LIMITED
Annual Report for the year ended 31 December 2010
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
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 8HQ, England
Principal Share Registrar and Transfer Office
Appleby Management (Bermuda) Ltd.
Argle House, 41A Cedar Avenue, Hamilton HM12, Bermuda
International Branch Registrar
Capita Registers (Jersey) Limited
12 Castle Street, St Helier, Jersey, JE2 3RT
United Kingdom Transfer Agent
Capita Registrars
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU,
England
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 statement of comprehensive income 8
Consolidated statement of financial position 9
Statement of financial position 10
Consolidated statement of changes in equity 11
Consolidated statement of cash flows 12
Notes to the consolidated financial statements 13
Biographical notes on the directors 38
CHAIRMAN'S STATEMENT
RESULTS
The audited consolidated loss for the year was US$187,000
compared with a loss of US$300,000 in previous year. Loss per share
was US 1 cent (2009: Loss per share of US 2 cents).
THE YEAR IN REVIEW
For the year ended 31 December 2010, the Group incurred a net
loss of US$187,000. This compares to the net loss of US$300,000 for
the last year. The operating expenses was reduced by US$105,000 as
compared to the last year. At the end of 31 December 2010, Group
shareholders' funds stood at US$1.22 million as compared to US$1.41
million at the end of December 2009.
PROSPECTS
During the year, the Board continued to explore opportunity 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 2011
DIRECTORS' REPORT
The directors submit their annual report and the financial
statements for the year ended 31 December 2010.
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 Directors
Mark Chung Fong
Ho Soo Ching (resigned on 31 July 2010)
Brief biographical notes on the directors serving at the date of
this Report are set out on page 38.
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' REPORT
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 2010 At 31 December 2010
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$0.001 each in the
Company.
Save as disclosed above, none of the directors named above had
an interest, whether beneficial or non-beneficial, in any shares or
debentures of any group company at the beginning or at the end of
the year. None of the directors named above, or members of their
immediate families, held, exercised or were awarded any right to
subscribe for any shares or debentures of the group companies
during the year.
DIRECTORS' REMUNERATION
The remuneration of the directors of the Company for the year
ended 31 December 2010 were as follows:
Fees Emoluments Total
US$'000 US$'000 US$'000
Alastair Gunn-Forbes - - -
Henry Ying Chew Cheong - - -
Mark Chung Fong 15 - 15
Ho Soo Ching 9 - 9
------- ---------- -------
24 - 24
======= ========== =======
PROVIDENT FUND AND PENSION CONTRIBUTION FOR DIRECTOR
During the year under review, there was no provident fund and
pension contribution for the director.
DIRECTORS' REPORT
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 11 March 2011, 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.
DIRECTORS' REPORT
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 2011
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 2011
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
We have audited the consolidated financial statements of
Worldsec Limited (the "Company") and its subsidiaries (hereafter
collectively referred to as the "Group") set out on pages 8 to 37,
which comprise the consolidated and company statements of financial
position as at 31 December 2010, and the consolidated statement of
comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year
then ended, and a summary of significant accounting policies and
other explanatory information.
Directors' responsibility for the consolidated financial
statements
The directors of the Company are responsible for the preparation
and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and
for such internal control as directors determine 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 give a
true and fair view of the financial position of the Company and of
the Group as at 31 December 2010 and of the Group's 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
that the Company is no longer a going concern.
HLB Hodgson Impey Cheng
Chartered Accountants
Certified Public Accountants
Hong Kong, 20 April 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
Year ended 31 December
Notes 2010 2009
US$'000 US$'000
Other gain 7 4 -
Staff costs 8 (24) (33)
Other expenses (167) (267)
----------- -----------
Loss before tax 9 (187) (300)
Income tax expense 10 - -
----------- -----------
Loss for the year (187) (300)
----------- -----------
Total comprehensive income for
the year (187) (300)
----------- -----------
Loss attributable to :
Owners of the Company (187) (300)
=========== ===========
Total comprehensive income attributable
to :
Owners of the Company (187) (300)
=========== ===========
Loss per share - basic and diluted 11 (1) cent (2) cents
=========== ===========
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2010
Notes 2010 2009
US$'000 US$'000
Current assets
Cash and bank balances 14 1,482 1,687
Current liabilities
Other payables and accruals (264) (282)
------- -------
Net current assets 1,218 1,405
------- -------
Net assets 1,218 1,405
======= =======
Capital and reserves
Share capital 15 13 13
Contributed surplus 9,646 9,646
Special reserve 625 625
Accumulated losses (9,066) (8,879)
------- -------
Total equity 1,218 1,405
======= =======
The financial statements on pages 8 to 37 were approved and
authorized for issue by the Board of Directors on 20 April 2011 and
signed on its behalf by:
Alastair Gunn-Forbes Henry Ying Chew Cheong
Director Director
The accompanying notes form an integral part of these financial
statements.
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2010
Notes 2010 2009
US$'000 US$'000
Current assets
Interests in subsidiaries 12 2,125 2,171
Amounts due from subsidiaries 13 183 154
Cash and bank balances 14 1,424 1,612
------- -------
3,732 3,937
------- -------
Current liabilities
Other payables and accruals (186) (204)
Amounts due to subsidiaries 13 (2,328) (2,328)
------- -------
(2,514) (2,532)
Net current assets 1,218 1,405
------- -------
Net assets 1,218 1,405
======= =======
Capital and reserves
Share capital 15 13 13
Contribution surplus 16 9,646 9,646
Accumulated losses 16 (8,441) (8,254)
------- -------
Total equity 1,218 1,405
======= =======
The financial statements on pages 8 to 37 were approved and
authorized for issue by the Board of Directors on 20 April 2011 and
signed on its behalf by:
Alastair Gunn-Forbes Henry Ying Chew Cheong
Director Director
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2010
Share Contributed Special Accumulated
capital surplus reserve losses Total
US$'000 US$'000 US$'000 US$'000 US$'000
(Note 16)
Balance at 1 January
2009 13 9,646 625 (8,579) 1,705
Loss for the year
and total comprehensive
income for the year - - - (300) (300)
------- ----------- ------- ----------- -------
Balance at 1 January
2010 13 9,646 625 (8,879) 1,405
Loss for the year
and total comprehensive
income for the year - - - (187) (187)
------- ----------- ------- ----------- -------
Balance at 31 December
2010 13 9,646 625 (9,066) 1,218
======= =========== ======= =========== =======
The accompanying notes form an integral part of these financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
Year ended 31 December
Note 2010 2009
US$'000 US$'000
Cash flows from operating activities
Loss for the year (187) (300)
(187) (300)
Movements in working capital
(Decrease) in other payables and
accruals (18) (58)
Net cash used in operating activities (205) (358)
----------- -----------
Net decrease in cash and cash equivalents (205) (358)
Cash and cash equivalents at 1 January 1,687 2,045
----------- -----------
Cash and cash equivalents at 31
December 14 1,482 1,687
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
1. GENERAL INFORMATION
The Company is a public listed company incorporated in Bermuda
and its shares are listed on the London Stock Exchange. The address
of the registered office of the Company is Canon's Court, 22
Victoria Street, Hamilton HM12, Bermuda and the address of the
principal place of business of the Company is 6th Floor, New Henry
House, 10 Ice House Street, Central, Hong Kong.
The principal activity of the Company is investment holding. The
principal activities of the Company's subsidiaries are set out in
note 12 to the consolidated financial statement.
The functional currency of the Company is Hong Kong Dollars. The
consolidated financial statements of the Group are presented in
United States Dollars ("US$"), which is a currency widely and
commonly recognised 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 also been adopted 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 but may affect the
accounting for future transactions or arrangements.
IFRS 3 (revised in 2008) IFRS 3(2008) has been applied in
Business Combinations the current year prospectively to
business combinations for which the
acquisition date is on or after 1
January 2010 in accordance with the
relevant transitional provisions.
IFRS 3(2008) allows a choice on a
transaction-by-transaction basis
for the measurement of non-controlling
interests at the date of acquisition
(previously referred to as 'minority'
interests) either at fair value or
at the non-controlling interests'
share of recognised identifiable
net assets of the acquiree.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements (continued)
IFRS 3 (revised in 2008) IFRS 3(2008) changes the
Business Combinations (continued) recognition and subsequent
accounting requirements for
contingent consideration.
Previously, contingent
consideration was recognised at
the acquisition date only if
payment of the contingent
consideration was probable and it
could be measured reliably; any
subsequent adjustments to the
contingent consideration were
always made against the cost of
the acquisition. Under the revised
Standard, contingent consideration
is measured at fair value at the
acquisition date; subsequent
adjustments to the consideration
are recognised against the cost of
the acquisition only to the extent
that they arise from new
information obtained within the
measurement period (a maximum of
12 months from the acquisition
date) about the fair value at the
date of acquisition. All other
subsequent adjustments to
contingent consideration
classified as an asset or a
liability are recognised in profit
or loss. IFRS 3(2008) requires the
recognition of a settlement gain
or loss when the business
combination in effect settles a
pre-existing relationship between
the Group and the acquiree. IFRS
3(2008) requires
acquisition-related costs to be
accounted for separately from the
business combination, generally
leading to those costs being
recognised as an expense in profit
or loss as incurred, whereas
previously they were accounted for
as part of the cost of the
acquisition.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements (continued)
IAS 27 (revised in 2008) The application of IAS 27(2008) has
Consolidated and Separate resulted in changes in the Group's
Financial Statements accounting policies for changes in
ownership interests in subsidiaries.
Specifically, the revised Standard has
affected the Group's accounting policies
regarding changes in ownership interests
in its subsidiaries that do not result in
loss of control. In prior years, in the
absence of specific requirements in IFRSs,
increases in interests in existing
subsidiaries were treated in the same
manner as the acquisition of subsidiaries,
with goodwill or a bargain purchase gain
being recognised, when appropriate; for
decreases in interests in existing
subsidiaries that did not involve a loss
of control, the difference between the
consideration received and the adjustment
to the non-controlling interests was
recognised in profit or loss. Under IAS
27(2008), all such increases or decreases
are dealt with in equity, with no impact
on goodwill or profit or loss. When
control of a subsidiary is lost as a
result of a transaction, event or other
circumstance, the revised Standard
requires the Group to derecognise all
assets, liabilities and non-controlling
interests at their carrying amount and to
recognise the fair value of the
consideration received. Any retained
interest in the former subsidiary is
recognised at its fair value at the date
control is lost. The resulting difference
is recognised as a gain or loss in profit
or loss. These changes in accounting
policies have been applied prospectively
from 1 January 2010 in accordance with the
relevant transitional provisions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements (continued)
IAS 28 (revised in 2008) The principle adopted under IAS
Investments in Associates 27(2008) (see above) that a loss of
control is recognised as a disposal
and re-acquisition of any retained
interest at fair value is extended by
consequential amendments to IAS 28.
Therefore, when significant influence
over an associate is lost, the
investor measures any investment
retained in the former associate at
fair value, with any consequential
gain or loss recognised in profit or
loss.
Amendments to IFRS 1 First-time The amendments provide two exemptions
Adoption of International when adopting IFRSs for the first
Financial Reporting Standards time relating to oil and gas assets,
- Additional Exemptions and the determination as to whether
for First-time Adopters an arrangement contains a lease.
Amendments to IFRS 2 Share-based The amendments clarify the scope
Payment - Group Cash-settled of IFRS 2, as well as the accounting
Share-based Payment Transactions for group cash-settled share-based
payment transactions in the separate
(or individual) financial statements
of an entity receiving the goods
or services when another group entity
or shareholder has the obligation
to settle the award.
Amendments to IFRS 5 Non-current The amendments clarify that all the
Assets Held for Sale and assets and liabilities of a subsidiary
Discontinued Operations should be classified as held for sale
(as part of Improvements when the Group is committed to a sale
to IFRSs issued in 2008) plan involving loss of control of that
subsidiary, regardless of whether the
Group will retain a non-controlling
interest in the subsidiary after the
sale.
Amendments to IAS 39 Financial The amendments provide clarification
Instruments: Recognition on two aspects of hedge accounting:
and Measurement - Eligible identifying inflation as a hedged
Hedged Items risk or portion, and hedging with
options.
IFRIC 17 Distributions The Interpretation provides guidance
of Non-cash Assets to Owners on the appropriate accounting
treatment when an entity distributes
assets other than cash as dividends to
its shareholders.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements (continued)
IFRIC 18 Transfers of Assets The Interpretation addresses the accounting
from Customers by recipients for transfers of property,
plant and equipment from 'customers' and
concludes that when the item of property,
plant and equipment transferred meets the
definition of an asset from the perspective
of the recipient, the recipient should
recognise the asset at its fair value on
the date of the transfer, with the credit
being recognised as revenue in accordance
with IAS 18 Revenue.
Improvements to IFRSs issued The application of Improvements to
in 2009 IFRSs issued in 2009 has not had
any material effect on amounts reported
in the consolidated financial statements.
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:
Amendments to IFRSs Improvements to IFRSs issued in 2010(1)
Amendments to IFRS 1 Limited Exemption from Comparative
IFRS 7 Disclosures for First-time
Adopters(2)
Amendments to IFRS 7 Disclosures - Transfers of Financial
Assets(3)
IFRS 9 (as amended in 2010) Financial Instruments(4)
Amendments to IAS 12 Deferred Tax: Recovery of Underlying
Assets(7)
IAS 24 (revised in 2009) Related Party Disclosures(5)
Amendments to IAS 32 Classification of Rights Issues(6)
Amendments to IFRIC 14 Prepayments of a Minimum Funding
Requirement(4)
IFRIC 19 Extinguishing Financial Liabilities
with Equity Instruments(2)
(1 ) Effective for annual periods beginning on or after 1 July
2010 and 1 January 2011, as appropriate
(2 ) Effective for annual periods beginning on or after 1 July
2010.
(3 ) Effective for annual periods beginning on or after 1 July
2011.
(4 ) Effective for annual periods beginning on or after 1
January 2013.
(5 ) Effective for annual periods beginning on or after 1
January 2011.
(6 ) Effective for annual periods beginning on or after 1
February 2010.
(7 ) Effective for annual periods beginning on or after 1
January 2012.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.2 New and revised IFRSs in issue but not yet
effective(continued)
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.
-- IFRS 9 requires all recognised financial assets that are
within the scope of IAS 39 Financial Instruments: Recognition and
Measurement to be subsequently measured at amortised 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 amortised 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 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 recognised 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 recognised in profit or loss.
IFRS 9 is effective for annual periods beginning on or after 1
January 2013, with earlier application permitted.
The directors anticipate that IFRS 9 that 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 will have nosignficant impact on amounts reported in
respect of the Groups' financial assets and financial
liabilities.
The amendments to IFRS 7 titled Disclosures - Transfers of
Financial Assets 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
2. Application OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS(IFRSs) (CONTINUED)
2.2 New and revised IFRSs in issue but not yet
effective(continued)
The directors do not anticipate that these amendments to IFRS 7
will have asignificant effect on the Group's disclosures. However,
if the Group enters into any transactions involvingtransfers of
financial assets in the future, disclosures regarding those
transfers may be affected.
The amendments to IAS 12 titled Deferred Tax: Recovery of
Underlying Assets mainly deal with the measurement of deferred tax
for investment properties that are measured using the fair value
model in accordance with IAS 40 Investment Property. Based on the
amendments, for the purposes of measuring deferred tax liabilities
and deferred tax assets for investment properties measured using
the fair value model, the carrying amounts of the investment
properties are presumed to be recovered through sale, unless the
presumption is rebutted in certain circumstances. The directors
anticipate that the amendments to IAS 12 will have no impact on the
consolidated financial statements.
IAS 24 Related Party Disclosures (as revised in 2009) modifies
the definition of a related party and simplifies disclosures for
government-related entities.
The disclosure exemptions introduced in IAS 24 (as revised in
2009) do not affect the Group because the Group is not a
government-related entity. However, disclosures regarding related
party transactions and balances in these consolidated financial
statements may be affected when the revised version of the Standard
is applied in future accounting periods because some counterparties
that did not previously meet the defintion of a related party may
come within the scope of the Standard.
The amendments to IAS 32 titled Classification of Rights Issues
address the classification of certain rights issues denominated in
a foreign currency as either an equity instrument or as a financial
liability. To date, the Group has not entered into any arrangements
that would fall within the scope of the amendments. However, if the
Group does enter into any rights issues within the scope of the
amendments in future accounting periods, the amendments to IAS 32
will have an impact on the classification of those rights
issues.
IFRIC 19 provides guidance regarding the accounting for the
extinguishment of a financial liability by the issue of equity
instruments. To date, the Group has not entered into transactions
of this nature. However, if the Group does enter into any such
transactions in the future, IFRIC 19 will affect the required
accounting. In particular, under IFRIC 19, equity instruments
issued under such arrangements will be measured at their fair
value, and any difference between the carrying amount of the
financial liability extinguished and the fair value of equity
instruments issued will be recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
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 Company'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 ReportingStandards.
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.
When 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 recognised directly in equity and
attributed to owners of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of consolidation (continued)
When the Group loses control of a subsidiary, the profit or loss
on disposal 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 recognised in other
comprehensive income and accumulated in equity, the amounts
previously recognised in other comprehensive income and accumulated
in equity are accounted for as if the Company had directly disposed
of the relevant 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 arise except 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;
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currencies (continued)
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 recognised in other comprehensive
income and accumulated in equity (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 the case of a partial disposal that does not result in the
Group losing control over a subsidiary that includes a foreign
operation, 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. reductions in the Group's ownership interest in 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
recognised in equity.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Taxation (continued)
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised 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. Where 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.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 on 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.
Interest income is recognized on an effective interest basis for
debt instruments other than those financial assets classified as at
FVTPL.
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 bank balances and cash)
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 where 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial assets (continued)
Objective evidence of impairment could include:
significant financial difficulty of the issuer or counterparty;
or
breach of contract, such as a default or delinquency in interest
or principal payments; or
it becoming probable that the borrower will enter bankruptcy or
financial re-organisation; or
the disappearance of an active market for that financial asset
because of financial difficulties.
For financial assets carried at amortised cost, the amount of
the impairment loss recognised 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 measured at amortised 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 recognised.
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 collateralised 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 recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial assets (continued)
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 or retains a residual interest that does not
result in the retention of substantially all the risks and rewards
of ownership and the Group retains control), the Group allocates
the previous carrying amount of the financial asset between the
part it continues to recognise under continuing involvement, and
the part it no longer recognises 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
recognised and the sum of the consideration received for the part
no longer recognised and any cumulative gain or loss allocated to
it that had been recognised in other comprehensive income is
recognised in profit or loss. A cumulative gain or loss that had
been recognised in other comprehensive income is allocated between
the part that continues to be recognised and the part that is no
longer recognised 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 recognised
and deducted directly in equity. No gain or loss is recognised 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'.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial liabilities and equity instruments (continued)
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). Where 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. Where 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.
Where 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
4. FINANCIAL instruments
Categories of financial instruments
2010 2009
US$'000 US$'000
Financial assets
Loans and receivables (including cash and
cash equivalents) 1,482 1,687
======= =======
Financial liabilities
Amortized cost (including other payables
and accruals) 264 282
======= =======
Financial risk management objectives
The Group's major financial instruments include cash and bank
balances, other payables and accruals. The risks associated with
these financial instruments include market risk (currency risk and
interest rate risk), credit risk and liquidity risk. The policies
on how to mitigate these risks are set out below. The management
manages and monitors these exposures to ensure appropriate measures
are implemented on a timely and effective manner.
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
2010 2009 2010 2009
US$'000 US$'000 US$'000 US$'000
HKD 113 113 52 99
Others 15 32 26 45
======= ======= ======= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
4. FINANCIAL instruments (continued)
Financial risk management objectives (continued)
Foreign currency risk management (continued)
The following table details the Group's sensitivity to a 1%
(2009: 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 monetary items which are denominated in relevant
foreign currencies and adjusts its translation at the year end for
a 1% (2009: 1%) change in the relevant foreign currencies exchange
rates. A positive number below indicates a decrease in loss for the
year where USD strengthens 1% (2009: 1%) against the relevant
foreign currency. For a 1% (2009: 1%) weakening of USD against the
relevant foreign currencies there would be an equal and opposite
impact on the loss for the year.
2010 2009
US$ US$
Decrease in post-tax loss
for the year
HKD impact 618 134
==== ====
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
As at 31 December 2010, 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 arising from the
carrying amount of the respective recognised financial assets as
stated in the consolidated statement of financial position.
The credit risk on liquid funds is limited because the
counterparties are banks with high credit ratings.
Other than concentration of credit risk on liquid funds which
are deposited with several banks with high credit ratings, the
Group does not have any other significant concentration of credit
risk.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
4. FINANCIAL instruments (continued)
Financial risk management objectives (continued)
Liquidity risk
In the management of the liquidity risk, the Group monitors and
maintains a level of cash and cash equivalents deemed adequate by
the management to finance the Group's operations and mitigate the
effects of fluctuations in cash flows.
The following tables detail the Group's remaining contractual
maturity for its non-derivative financial liabilities with 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. The tables
include both interest and principal cash flows. To the extent that
interest flows are floating rate, the undiscounted amount is
derived from interest rate curves at the end of the reporting
period. The contractual maturity is based on the earliest date on
which the Group may be required to pay.
Total Carrying
Less than undiscounted amount at
1 year cash flows 31/12/2010
US$'000 US$'000 US$'000
Other payables and accruals 264 264 264
========= ============ ==========
Total Carrying
Less than undiscounted amount at
1 year cash flows 31/12/2009
US$'000 US$'000 US$'000
Other payables and accruals 282 282 282
========= ============ ==========
Fair value of financial instruments
The directors consider that the carrying amounts of financial
assets and financial liabilities recognized in the consolidated
financial statements approximate their fair values.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
5. 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 less cash and bank balances.
Adjusted capital comprises all components of equity which includes
share capital, reserves and accumulated losses.
The debt-to-adjusted capital ratios as at 31 December 2010 and
2009 were as follows:
2010 2009
US$'000 US$'000
Total debt 264 282
Less: Cash and bank balances (1,482) (1,687)
------- -------
Net debt - -
======= =======
Adjusted capital 1,218 1,405
======= =======
Debt-to-adjusted capital ratio 0% 0%
======= =======
6. SEGMENT Information
No segment analysis is presented for the years ended 31 December
2010 and 31 December 2009 as the Group has only maintained a
minimum operation during the years.
7. OTHER GAIN
Year ended 31 December
2010 2009
US$'000 US$'000
Net foreign exchange gains 4 -
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
8. STAFF COSTS
The aggregate cost of persons employed by the Group was as
follow:
Year ended 31 December
2010 2009
US$'000 US$'000
Wages and salaries 24 33
=========== ===========
Directors' remuneration was as follow:
Year ended 31 December
2010 2009
US$'000 US$'000
Fees 24 33
Other remuneration including
contributions to pension and provident
fund - -
----------- -----------
24 33
=========== ===========
9. LOSS BEFORE TAX
Loss before tax has been arrived at after charging:
Year ended 31 December
2010 2009
US$'000 US$'000
Auditors' remuneration 21 21
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
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
2010 2009
US$'000 US$'000
Loss before tax 187 300
=========== ===========
Loss before tax calculated at 16.5%
(2009:16.5%) 30 49
Tax effect of estimated tax losses
not recognized (30) (49)
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 2010 (2009: Nil).
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
2010 2009
Loss for the year attributable
to owners of the Company US$187,000 US$300,000
=========== ===========
Weighted average number of ordinary
shares for the purposes of basic
and diluted loss per share 13,367,290 13,367,290
=========== ===========
Loss per share - basic and diluted 1 cent 2 cents
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
12. INTERESTS IN SUBSIDIARIES
2010 2009
US$'000 US$'000
The Company
Unlisted shares, at cost 6,450 6,450
Less: Impairment loss (4,325) (4,279)
------- -------
2,125 2,171
======= =======
The Company has provided an impairment loss of approximately
US$46,000 (2009: US$36,000) for the year ended 31 December 2010 to
write down its investments to net realisable value.
Details of the Company's subsidiaries at 31 December 2010 are as
follows:
Proportion
Country Proportion of voting
of incorporation of ownership power Principal
Name and operation interest held activities
------------------ ------------------ ------------- ---------- -----------
British
Worldsec Financial Virgin Investment
Services Limited Islands 100% 100% holding
Worldsec Corporate British 100%* 100%* Inactive
Finance Limited Virgin
Islands
Worldsec Netherlands 100%* 100%* Investment
International NV Antilles holding
Worldsec Netherlands 100%* 100%* Investment
International holding
(Netherlands) BV
Worldsec Netherlands 100%* 100%* Investment
International holding
(PH) BV
* Indirectly held subsidiary
13. AMOUNTS DUE FROM / (TO) SUBSIDIARIES
The amounts due were unsecured, non-interest bearing and have no
fixed terms of repayment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
14. CASH AND cash equivalents
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents include cash on hand and in banks. Cash
and cash equivalents at the end of the reporting period as shown in
the consolidated statement of cash flows can be reconciled to the
related items in the consolidated statement of financial position
as follows:
The Group The Company
2010 2009 2010 2009
US$'000 US$'000 US$'000 US$'000
Cash and bank balances 1,482 1,687 1,424 1,612
======= ======= ======= =======
Bank balances are at market interest rates with an original
maturity of three months or less.
15. SHARE CAPITAL
Number of
shares US$
Authorized:
Ordinary shares of US$0.001 each as at 1 January
2009,
31 December 2009 and 31 December 2010 50,000,000,000 50,000,000
==================================== ==========
Called up, issued and fully paid:
Ordinary shares of US$0.001 each as at 1 January
2009,
31 December 2009 and 31 December 2010 13,367,290 13,367
==================================== ==========
16. RESERVES
The Company
Contributed Accumulated
surplus losses
US$'000 US$'000
Balance as at 1 January 2009 9,646 (7,954)
Loss for the year - (300)
----------- -----------
Balance as at 1 January 2010 9,646 (8,254)
Loss for the year - (187)
----------- -----------
Balance as at 31 December 2010 9,646 (8,441)
=========== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
16. RESERVES (continued)
The contributed surplus of the Company represents the amount
arising from the reduction in the nominal value of the authorised
and issued shares of the Company and the reduction in the share
premium account of the Company pursuant to an ordinary resolution
passed on 23 July 2003.
17. RELATED PARTY TRANSACTIONS
Save as those disclosed elsewhere in the consolidated financial
statements, the Group entered into the following transactions with
related parties during the year:
Name of Nature of
related company transaction 2010 2009
US$'000 US$'000
WAG Worldsec Corporate
Finance Limited (Note) Accounting fee 15 15
======= =======
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 2010 (2009: 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 66
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 - Executive Director and Deputy Chairman
- aged 63
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 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, Creative Energy Solutions
Holdings Limited, Excel Technology International 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).
Mr. Cheong is a member of the Advisory Committee of the
Securities and Futures Commission and also a member of the
Securities and Futures Appeals Tribunal in Hong Kong. Mr. Cheong
was previously a member of Disciplinary Panel A of Hong Kong
Institute of Certified Public Accountants (from 2005-2011), a
member of the Corporate Advisory Council of the Hong Kong
Securities Institute (from 2002-2009), a member of the Advisory
Committee (from 1993-1999) to the Securities and Futures Commission
("SFC"), a member of the board of Director of the Hong Kong Future
Exchange Limited (from 1994-2000), a member of GEM Listing
Committee and Main Board Listing Committee of Hong Kong Exchange
and Clearing Limited ("HKEX") (from May 2002-May 2006), a member of
Derivatives Market Consultative Panel of HKEX (from April 2000-May
2006), a member of the Process Review Panel for the SFC (from
November 2000-October 2006) and a member of the Committee on Real
Estate Investment Trust of the SFC (from September 2003-August
2006).
BIOGRAPHICAL NOTES ON THE DIRECTORS
Mark Chung Fong - Non-Executive Director - aged 59
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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