TIDMWSL
RNS Number : 5724M
Worldsec Ld
30 April 2018
WORLDSEC LIMITED
Annual Report for the year ended 31 December 2017
CORPORATE INFORMATION
Board of Directors
Non-Executive Chairman
Alastair GUNN-FORBES*
Executive Directors
Henry Ying Chew CHEONG (Deputy Chairman)
Ernest Chiu Shun SHE
Non-Executive Directors
Mark Chung FONG*
Martyn Stuart WELLS*
* independent
Company Secretary
Jordans Company Secretaries Limited
First Floor, Templeback, 10 Temple Back, Bristol, BS1 6FL,
United Kingdom
Registered Office Address
Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda
Registration Number
EC21466 Bermuda
Principal Bankers
The Hongkong and Shanghai Banking Corporation Limited
1 Queen's Road, Central, Hong Kong
External Auditor
BDO Limited
25th Floor, Wing On Centre, 111 Connaught Road Central, Hong
Kong
Principal Share Registrar and Transfer Office
Estera Management (Bermuda) Ltd.
Canon's Court, 22 Victoria Street, Hamilton HM12, Bermuda
International Branch Registrar
Link Market Services (Jersey) Limited
12 Castle Street, St Helier, JE2 3RT, Jersey, Channel
Islands
United Kingdom Transfer Agent
Link Asset Services
The Registry, 34 Beckenham Rd, Beckenham, Kent, BR3 4TU, United
Kingdom
Investor Relations
For further information about Worldsec Limited, please
contact:
Henry Ying Chew CHEONG
Executive Director
Worldsec Group
Unit 607, 6th Floor, FWD Financial Centre, 308 Des Voeux Road
Central, Sheung Wan, Hong Kong
enquiry@worldsec.com
Company's Website
http://www.worldsec.com
CONTENTS
Page
Chairman's statement 1
Directors' report 2
Statement of directors' responsibilities 15
Independent auditor's report 16
Consolidated statement of profit or loss
and other comprehensive income 21
Consolidated statement of financial position 22
Consolidated statement of changes in equity 23
Consolidated statement of cash flows 24
Notes to the consolidated financial statements 25
Investment policy 59
Biographical notes of the directors 60
Chairman's Statement
RESULTS AND REVIEW
Under the persistently low interest rate environment with a
plethora of liquidity that has been conducive to asset price
inflation, investment opportunities with attractive returns have
been few and far between. Accordingly, Worldsec Limited (the
"Company") and its subsidiaries (together the "Group") had a
relatively quiet period for the year ended 31 December 2017. The
audited consolidated loss of the Group was US$424,000, representing
a small improvement over the loss of US$514,000 in 2016. Loss per
share was US0.75 cent (2016: US0.91 cent). Net asset value per
share was US4.5 cents (2016: US5.2 cents). Detailed discussion of
the results of the Group is set out in the directors' report on
pages 2 to 16.
During the year ended 31 December 2017, the Group's investments
continued to perform satisfactorily. Subsequent to the year end,
two important events for the Group took place:
- ayondo Ltd. ("Ayondo*"), one of the Group's investee
companies, entered into a new era having successfully obtained a
listing on Catalist in Singapore in March 2018.
- With the support of shareholders, the Company successfully
completed an open offer of new ordinary shares in April 2018. This
has strengthened the Company's capital base to further the growth
of Group in the longer term.
PROSPECTS
Markets dislike uncertainty. This is clearly reflected by the
recent market volatility over concern on what could potentially
become a serious trade war between the world's two largest
economies. While the tariff rhetoric and threats from the United
States and the retaliatory posturing from China appear increasingly
likely to be no more than negotiation tactics adopted by either
side, any import restrictions or protectionist measures that may
materialise in the event of any miscalculations in or unfavourable
outcome of the negotiations could have damaging consequences on the
global economic environment. Apart from the peril associated with
the trade conflict between the world's two largest economies, there
is also the risk of escalation in the renewed geopolitical tension
in the Middle East on top of a host of continuing uncertainty
associated with other developments unfolding around the globe,
including notably the normalisation of monetary policies in the
advanced countries, the implementation of the withdrawal of Britain
from the European Union, and the ongoing structural reforms in
China. Nevertheless, uncertain times also bring investment
opportunities that might otherwise not be available. With the
timely completion of the Company's open offer that has strengthened
its capital base, I am confident that the Group would be able to
continue to expand and diversify its investment portfolio while
meeting the investment objective of the Company.
NOTE OF APPRECIATION
I wish to thank my fellow directors and staff for their efforts
and contributions made during the year ended 31 December 2017. I
would also like to extend a note of appreciation to shareholders
for their continued patience with and support of the Company.
Alastair Gunn-Forbes
Non-Executive Chairman
30 April 2018
* the entity that became the holding company of ayondo Holding
AG and its subsidiaries following a pre-listing restructuring
DIRECTORS' REPORT
The directors submit the annual report of the Company and the
audited consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2017.
PRINCIPAL ACTIVITIES
The principal activity of the Company is investment holding. The
Company and its subsidiaries are primarily engaged in investment in
unlisted companies in the Greater China and South East Asian
region.
RESULTS
The audited consolidated loss of the Company and its
subsidiaries for the year ended 31 December 2017 was US$424,000,
compared with a loss of US$514,000 in 2016. Loss per share was
US0.75 cent (2016: US0.91 cent). The decrease in the loss was
principally attributable to (i) reduced staff costs in the absence
of non-recurrent share-based payment expenses associated with the
grant of options to the directors and staff which were largely
accounted for in 2016; and (ii) lower administrative expenses
following the completion of the voluntary liquidation of two
subsidiaries last year.
Revenue, by way of dividend income received from the Group's
investment in ICBC Specialised Ship Leasing Fund, remained
unchanged at US$96,000 in 2017. Other income fell to US$3,000 from
US$99,000 last year during which there was a write back of
provisions relating to certain legal fees over-provided
previously.
As at 31 December 2017, the net assets of the Group stood at
US$2.5 million (2016: US$2.9 million), equivalent to US4.5 cents
(2016: US5.2 cents). Cash and cash equivalents declined to
US$260,000 from US$848,000 a year ago, reflecting in part the
payment of professional fees relating to the Company's fund raising
exercise as discussed below. Such payment was also the main reason
for the increase of US$212,000 in deposits and prepayments for the
period under review and will eventually be offset against equity
upon the issue of new ordinary shares under the open offer which
was duly completed subsequent to the year end.
Further details of the Group's results are set out in the
consolidated statement of profit or loss and other comprehensive
income on page 23 and notes to the consolidated financial
statements on pages 27 to 62.
The Board does not propose to declare any dividend for the year
ended 31 December 2017 (2016: nil).
DIRECTORS' REPORT (CONTINUED)
REVIEW
In accordance with the investment policy of the Company, a copy
of which is set out on page 63, the investment strategy of the
Group focuses on investing in small to medium sized trading
companies based mainly in the Greater China and South East Asian
region with a view to building a diversified portfolio of minority
investments in such companies. To spread the investment risk of the
Group, none of the Group's investments at the time when made
exceeded 20% of its gross assets.
Velocity Mobile Limited ("Velocity"), one of the Group's
investee companies, is the holding company of a technology group
that provides real-time lifestyle mobile applications focusing in
the areas of restaurant, travel and hotel bookings and payment.
During the year under review, the Velocity group continued to
achieve increased customer engagement and spend with an improved
margin on transactional value driven by economies of scale.
Recently, the Velocity group has expanded geographically to the
Middle East with the launch of its conversational commerce engine,
Velocity Black, in the United Arab Emirates. Meantime, the board of
Velocity has been further strengthened by the appointment of a
number of new members, including an influential strategic advisor
and branding expert and a former senior executive from the credit
card industry.
Ayondo, another of the Group's investee companies, is the
holding company of a financial technology group that provides
social trading and brokerage services for contract-for-differences
and spread betting. By combining trading and investment with
elements of social media, the Ayondo group is disrupting the
traditional asset management industry by offering an alternative
way to trade and invest. This innovative social trading approach
allows knowledge transfer and performance replication by letting
traders share and follow other traders' trading and investment
strategies automatically, proportionally and on a real-time basis.
In March 2018, Ayondo entered into a new era having successfully
obtained a listing on Catalist, the sponsor-supervised listing
platform of the Singapore Exchange Securities Trading Limited, by
way of a public offer and a placement of a total of 80,770,000
shares at S$0.26 raising aggregate gross proceeds of S$21 million
to finance the further development and growth of the Ayondo group.
Since then, shares of Ayondo have traded at between S$0.275 to
S$0.132.
In China, Oasis Education Consulting (Shenzhen) Company Limited
( ( ) , "Oasis Shenzhen"), a subsidiary of the 50% joint venture of
the Group, Oasis Education Group Limited ("Oasis Education"),
continued to record steady performance. Under the consulting and
support services provided by Oasis Shenzhen, the Huizhou
Kindergarten reached a milestone with its first graduation of 34
pupils in July 2017. Throughout the various academic terms during
the year under review, the Huizhou Kindergarten also managed to
maintain a pupil enrolment of around 200.
As noted in the chairman's statement, investment opportunities
with attractive returns have been few and far between under the
persistently low interest rate environment that has been conducive
to asset price inflation. Accordingly, the Group did not during the
year under review make any new investments, although evaluations on
a number of investment proposals had been carried out. Of these new
investment proposals, two remain under consideration and are
subject to further due diligence works. Shareholders will be
updated in due course should any decision to invest be made.
Subsequent to the year ended 31 December 2017, the Company on 13
March 2018 announced an open offer of 28,367,290 new ordinary
shares at US$0.15 per share to shareholders on the basis of one new
share for every two existing shares held. In addition to the open
offer, the Company proposed to carry out subsequent placings of up
to 100,000,000 new ordinary shares should investor demand arise.
New ordinary shares may be issued under the placing programme until
12 March 2019. With the support of shareholders, the Company on 4
April 2018 successfully completed the open offer raising aggregate
gross proceeds of US$4.2 million to strengthen its capital base in
order to finance the further development and expansion of the
Group's investment portfolio. Details relating to the fund raising
exercise of the Company can be found in the Company's open offer
and subsequent placings prospectus dated 13 March 2018 and its open
offer result announcement dated 3 April 2018.
DIRECTORS' REPORT (CONTINUED)
PROSPECTS
Notwithstanding the gradual normalisation of interest rates in
the advanced economies, the Group's investment in the ICBC
Specialised Ship Leasing Fund will continue to represent a stable
and attractive source of return through high yielding dividend
income. The other two of its unlisted investee companies, Velocity
and Oasis Education, have yet to reach a stage of development that
would generate any significant contribution for the Group in the
near future.
With the successful listing of Ayondo on Catalist in Singapore,
the Ayondo group aims to improve the public awareness of its brand
and consolidate its position as a leading player to tap the huge
growth potential in the social trading space. The Ayondo group
plans to expand its international operations as well as its white
label partnering network, extend the spectrum of its customers
through education, develop new products with innovative
functionality and enhance its trading platform. The Catalist
listing of Ayondo will enable the Ayondo group to accelerate its
growth strategy.
On the broader perspective, there appears to be an increasingly
uncertain investment climate around the globe: the differing pace
of the advanced economies in pursuing the normalisation of monetary
policies, the uncertainty surrounding the implementation of
Britain's exit from the European Union, the ongoing structural
reforms in China, and the geopolitical risks associated with
various politically precarious regions in Asia and the Middle East,
which is further compounded by the threat of a trade war between
the United States and China that could have adverse impact on the
growth of the global economy. In investment environment as such, it
is challenging for the Group to seek quality deals with attractive
returns while meeting the Company's investment criteria. The
relatively small size of the Company also limits the availability
of investment opportunities for the Group to projects that do not
require a large amount of capital outlay. This in turn constricts
the Group's capacity to further expand and diversify its investment
portfolio. To address such bottleneck and to better position the
Group for longer term growth, the Company therefore decided to
strengthen its capital base by raising fresh equity capital through
the fund raising exercise as discussed above. With the completion
of the open offer and under the prevailing investment climate, the
Group will continue to act carefully and identify and make
appropriate investments to expand and diversify its investment
portfolio in accordance with the Company's investment policy with a
view to building shareholders' value in the longer term.
Directors
The directors during the year under review and up to the date of
this report were:
Non-Executive Chairman
Alastair Gunn-Forbes(*)
Executive Directors
Henry Ying Chew Cheong
Ernest Chiu Shun She
Non-Executive Directors
Mark Chung Fong(*)
Martyn Stuart Wells(*)
* independent
Brief biographical notes of the directors serving at the date of
this report are set out on pages 64 to 66.
DIRECTORS' REPORT (CONTINUED)
Save as disclosed in this report and in note 25 to the
consolidated financial statements on page 60, none of the directors
had during the year under review or at the end of the year a
material interest, directly or indirectly, in any contract of
significance with the Company or any of its subsidiaries.
Messrs Alastair Gunn-Forbes and Mark Chung Fong have served on
the Board for more than nine years. (In accordance with Provision
B.7.1 of the UK Corporate Governance Code on corporate governance
published in April 2016 by the Financial Reporting Council of the
United Kingdom (the "Code"), both Messrs Alastair Gunn-Forbes and
Mark Chung Fong retired by rotation and were re-elected to office
by separate resolutions passed at the Annual General Meeting held
on 28 November 2017.) During the past nine year period, however,
neither of them has had any major interest in the issued share
capital of the Company, has been an employee or involved in the
daily management of any of the Group companies, or has had any
material relationship with any of the Group companies or any of the
major shareholders or managers of any such companies other than
being a member of the Board. Accordingly, and in accordance with
Provision B.1.1 of the Code, the Board has determined that their
independence and objectivity have not been impaired and that they
will therefore be able to continue to act independently in
character and judgement.
At the Annual General Meeting held on 29 September 2014,
shareholders approved the inclusion of the Group's non-executive
directors, including Messrs Alastair Gunn-Forbes, Mark Chung Fong
and Martyn Stuart Wells, as eligible participants of the Worldsec
Employee Share Option Scheme 1997 (the "Scheme"). As explained in
the 2014 annual report of the Company, the reason for such
inclusion was to enable the Group to reward its non-executive
directors for their commitments to the Company beyond the nominal
annual fees that the Group could afford to pay during its early
stage of development. Accordingly, and in accordance with Provision
B.1.1 of the Code, given such circumstances, the Board has
determined that the participation of Messrs Alastair Gunn-Forbes,
Mark Chung Fong and Martyn Stuart Wells in the Scheme will not
affect their ability to act independently in character and
judgement.
DIRECTORS' INTERESTS
The interests of the individuals who were directors during the
year under review in the issued share capital of the Company,
including the interests of persons connected with a director
(within the meaning of Sections 252, 253 to 255 of the United
Kingdom Companies Act 2006 as if the Company were incorporated in
England), the existence of which was known to, or could with
reasonable diligence be ascertained by, that director, whether or
not held through another party, were as follows:
At 1 January At 31 December
2017 2017
No. of shares No. of shares
Alastair Gunn-Forbes 30,000 30,000
Henry Ying Chew Cheong
(Note i) 3,054,873 3,054,873
Mark Chung Fong Nil Nil
Ernest Chiu Shun She 366,730 366,730
Martyn Stuart Wells Nil Nil
Notes: Mr Henry Ying Chew Cheong ("Mr Cheong")
(i) owns, in addition to the beneficial interest
in 3,054,873 ordinary shares of US$0.001
each in the Company, 2 ordinary shares
of US$1 each in Grand Acumen Holdings Limited
("GAH"), representing 25% of the issued
share capital of GAH. GAH beneficially
owned 6,450,000 ordinary shares of US$0.001
each in the Company at 1 January 2017 and
31 December 2017.
In addition, HC Investment Holdings Limited
("HCIH") is wholly owned by Mr Cheong.
HCIH beneficially owned 10,000,000 ordinary
shares of US$0.001 each in the Company
at 1 January 2017 and 31 December 2017.
DIRECTORS' REPORT (CONTINUED)
In total, Mr Cheong and his associates
were the legal and beneficial owners of
19,504,873 ordinary shares of US$0.001
each in the Company, representing 34.4%
of the Company's issued share capital,
at 1 January 2017 and 31 December 2017.
The Company and Mr Cheong entered into
a relationship agreement on 2 August 2013
(the "Relationship Agreement"). Pursuant
to the Relationship Agreement, Mr Cheong
has agreed to exercise his rights as a
shareholder at all times, and to procure
that his associates exercise their rights,
so as to ensure that the Company is capable
of carrying on its business independently
of Mr Cheong or any control which Mr Cheong
or his associates may otherwise be able
to exercise over the Company. Moreover,
Mr Cheong has undertaken to ensure, so
far as he is able to, that all transactions,
relationships and agreements between Mr
Cheong or his associates and the Company
or any of its subsidiaries are on arms'
length terms on a normal commercial basis.
Mr Cheong and the Company have also agreed,
amongst other things, that he will not
participate in the deliberations of the
Board in relation to any proposal to enter
into any commercial arrangements with Mr
Cheong or his associates.
(ii) In April 2018, the Company raised new equity
capital through an open offer of new ordinary
shares to shareholders on the basis of
one new share for every two existing shares
held at the open offer price of US$ 0.15
per share. As a result, the Directors'
interests in the Company have changed since
4 April 2018. For details please refer
to note 28 to the consolidated financial
statements on pages 61 to 62.
At 1 January At 31 December
2017 2017
No. of share No. of share options
options (Note) (Note)
Alastair Gunn-Forbes 500,000 500,000
Henry Ying Chew
Cheong 500,000 500,000
Mark Chung Fong 500,000 500,000
Ernest Chiu Shun
She 500,000 500,000
Martyn Stuart Wells 500,000 500,000
Note: The share options entitle the holders to
subscribe on a one for one basis new ordinary
shares of US$0.001 each in the share capital
of the Company at an exercise price of
US$0.122 per share. The share options vest
six months from the date of grant on 1
December 2015 and are then exercisable
within a period of 9.5 years.
Save as disclosed above, none of the above named directors had
an interest, whether beneficial or non-beneficial, in any shares or
debentures of any Group companies at the beginning or at the end of
the year under review. Save as disclosed above, none of the above
named directors, or members of their immediate families, held,
exercised or were awarded any right to subscribe for any shares or
debentures of any Group companies during the year.
The Board confirms that (i) the Company has complied with the
independence provisions set out in the Relationship Agreement since
it was entered into; and (ii) so far as the Company is aware, Mr
Cheong and his associates have complied with the independence
provisions set out in the Relationship Agreement since it was
entered into and since 1 January 2017.
DIRECTORS' REPORT (CONTINUED)
DIRECTORS' REMUNERATION
The remuneration of the directors for the year ended 31 December
2017 was as follows:
Share-based Other
Fees payment emoluments Total
expenses
US$'000 US$'000 US$'000 US$'000
Alastair Gunn-Forbes 13.6 - - 13.6
Henry Ying Chew
Cheong 13.6 - - 13.6
Mark Chung Fong 13.6 - - 13.6
Ernest Chiu Shun
She 13.6 - - 13.6
Martyn Stuart Wells 13.6 - - 13.6
-----------
68.0 - - 68.0
======= =========== =========== =======
DIRECTORS' REPORT (CONTINUED)
PROVIDENT FUND AND PENSION CONTRIBUTION FOR DIRECTORS
During the year under review, there was no provident fund and
pension contribution for the directors.
LETTERS OF APPOINTMENT/ SERVICE CONTRACTS
Messrs Alastair Gunn-Forbes, Mark Chung Fong and Martyn Stuart
Wells, each has entered into a letter of appointment with the
Company dated 28 November 2017 to serve as non-executive director.
Each of them is entitled to a fee of GBP10,000 per annum. The
appointment may be terminated on one month notice in writing.
Messrs Henry Ying Chew Cheong and Ernest Chiu Shun She, each has
entered into a letter of appointment with the Company dated 2
August 2013 to serve as executive director. Each of them is
entitled to a fee of GBP10,000 per annum. The appointment may be
terminated on not less than six month notice in writing.
All directors are eligible to participate in the Group's bonus
arrangements under which bonuses may be granted at the discretion
of the Remuneration Committee and the Board. No bonus was
recommended for the year ended 31 December 2017.
Save as disclosed above, there are no existing or proposed
letters of appointment or service contracts between any of the
directors and the Company or any of its subsidiaries which cannot
be determined without payment of compensation (other than any
statutory compensation) within one year.
MAJOR INTERESTS IN SHARES
At 28 March 2018, the Company was aware of the following direct
or indirect interests representing 5% or more of the Company's
issued share capital:
Percentage
No. of shares of
issued share
capital
HC Investment Holdings
Limited (Note i) 10,000,000 17.6%
Grand Acumen Holdings
Limited (Note i) 6,450,000 11.4%
Luis Chi Leung Tong 5,000,000 8.8%
Henry Ying Chew Cheong 3,054,873 5.4%
Lynchwood Nominees Limited
(Note ii) 12,500,000 22.0%
Vidacos Nominees Limited
(Note ii) 5,000,000 8.8%
Notes: Mr Henry Ying Chew Cheong is the legal
(i) and beneficial owner of the entire issued
share capital of HC Investment Holdings
Limited and the legal and beneficial owner
of 25% of the issued share capital of Grand
Acumen Holdings Limited.
(ii) Lynchwood Nominees Limited and Vidacos
Nominees Limited act as custodians for
their customers, to whom they effectively
pass all rights and entitlements, including
voting rights.
DIRECTORS' REPORT (CONTINUED)
INTERNAL CONTROL, RISK MANAGEMENT AND FINANCIAL REPORTING
The Board is responsible for establishing and maintaining
appropriate systems of internal control and risk management to
safeguard the Group's interests and assets. The control measures
that have been put in place cover key areas of operations, finance
and compliance and aim to manage rather than eliminate risks that
are inherent in the running of the business of the Group.
Accordingly, the Group's systems of internal control and risk
management are expected to provide reasonable but not absolute
assurance against material misstatements, loss or fraud.
Amongst the control measures, the key steps that have been put
in place include:
- the setting of the investment strategy and the approval of
significant investment decisions of the Group by the Board to
ensure consistency with the investment objective and compliance
with the investment policy of the Company;
- the segregation of duties between the investment management
and accounting functions of the Group;
- the adoption of written procedures in relation to the
operations of the bank accounts of the Group;
- the adoption of written procedures to deal with conflicts of
interests and related party transactions;
- the maintenance of proper accounting records providing with
reasonable accuracy at any time information on the financial
position of the Group;
- the review by the Board of the management accounts of the Group on a regular basis; and
- the engagement of external professionals to carry out company
secretarial works for the Company and to assist the Group on
compliance issues.
The Board considers the identification, evaluation and
management of the principal risks faced by the Group under the
changing environment to be an ongoing process and has kept under
regular review the effectiveness of the Group's systems of internal
control and risk management. The Board is satisfied that the
arrangements that have been put in place represent an appropriate
framework to meet the internal control and risk management
requirements of the Group.
PRINCIPAL RISKS AND UNCERTAINTIES
The Board considers that the principal risks and uncertainties
that are relevant to the Group include:
Target market risk
Under the investment policy of the Company, the Group focuses on
investing in small to medium sized trading companies based mainly
in the Greater China and South East Asian region. Consequently, a
sharp or prolonged downturn in the economic environment or a
heightened uncertainty in the political environment in these target
markets could adversely and seriously affect the underlying
investments and hence the cash flows of the Group. This is clearly
a risk factor beyond the Group's control. Nevertheless, in line
with the investment policy of the Company, the Board will seek to
invest in and maintain a diversified portfolio in order to spread
the investment risk of the Group.
Investment opportunity risk
Given the abundance of liquidity under the persistently low
interest rate environment, the private equity space has been awash
with investment capital and dry powder competing for quality deals.
This has been driving up valuations and narrowing the spreads of
investment returns, thereby limiting the availability of attractive
investment opportunities for the Group. Under such circumstances,
with the approval from shareholders, the Company broadened its
investment policy in the latter part of 2014. This offers greater
flexibility for the Group to make investment choices from a broader
range of opportunities to achieve the Company's investment
objective under the persistently challenging and competitive
environment.
DIRECTORS' REPORT (CONTINUED)
Key person risk
As the Group does not engage any external investment manager,
the Board is responsible for overseeing the Group's investment
management activities with frontline management duties delegated to
the executive directors. The Group is therefore heavily dependent
on the executive directors' abilities to identify and evaluate
investment targets, execute and implement investment decisions,
monitor investment performance and execute and implement exit
decisions. Both of the executive directors, Messrs Henry Ying Chew
Cheong and Ernest Chiu Shun She, have entered into a letter of
appointment with the Company with a termination clause of not less
than six month notice. Moreover, Mr Cheong is also the deputy
chairman and a major shareholder beneficially holding a substantial
interest in the Company's issued share capital.
Operational risks
The Group is exposed to various operational risks that are
inherent in the running of its business, including, amongst others,
the failure to comply with the investment policy of the Company,
the failure to prevent misstatements, loss or fraud due to
inadequacies in the Group's internal operational processes, and the
failure to comply with applicable rules and regulations by the
Group. As mitigating measures, the Board has established and
maintained systems of internal control and risk management to
safeguard the Group's interests and assets, details of which are
set out in the section headed "Internal Control, Risk Management
and Financial Reporting" on page 9.
Financial risks
The Group is exposed to a variety of financial risks, including
market risks, credit risk and liquidity risk, which arise from its
operating and investment management activities. The Group's
management of such risks is coordinated at the office of Worldsec
Investment (Hong Kong) Limited, the principal operating subsidiary
of the Group, in close cooperation with the Board. Details of the
Group's approach on financial risk management are described in note
5(b) to the consolidated financial statements on page 49.
VIABILITY STATEMENT
The directors have assessed the viability of the Company for the
three years to 31 December 2020.
The directors consider that, for the purpose of this viability
statement, a three year period is appropriate taking into account
the Group's investment horizon under its investment strategy.
Besides, there should unlikely be any significant change to most if
not all of the principal risks and uncertainties facing the Group
over the timeframe selected for the assessment.
In assessing the viability of the Company and its ability to
meet liabilities as they fall due, the directors have taken into
consideration, amongst others:
- the investment strategy of the Group;
- the current position including the existing financial status and cost structure of the Group;
- the prospects of and the industry outlook for the Group;
- the economic and political environment of the Greater China
and South East Asian region, the primary target markets in which
the Group focuses its investment; and
- the potential adverse impact of the principal risks and uncertainties facing the Group and the effectiveness of the mitigating measures that have been put in place, details of which are described in the section headed "Principal Risks and Uncertainties" on pages 9 to 10.
DIRECTORS' REPORT (CONTINUED)
The directors note, in particular, that the Group:
- has a liquid amount of unrestricted cash and bank balances;
- does not have any borrowings;
- does not have any commitments other than certain operating
leases with modest outstanding rental payments; and
- has low operating expenses with a small but stable team under stringent cost control.
Furthermore, subsequent to the year ended 31 December 2017, the
Company has completed an open offer of new ordinary shares raising
additional equity capital. Accordingly, the directors are confident
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the assessment period.
GOING CONCERN
After making enquiries, and taking into account the increase in
the equity capital of the Company following the completion of an
open offer of new ordinary shares on 4 April 2018, the directors
have formed a judgement, at the time of approving the consolidated
financial statements of the Company and its subsidiaries for the
year ended 31 December 2017, that there was a reasonable
expectation that the Group would have adequate resources to carry
out its operations for a period of at least twelve months from the
date of approving the consolidated financial statements. For this
reason, the directors have adopted the going concern basis in
preparing the consolidated financial statements.
CORPORATE GOVERNANCE
As a company with a premium listing on the Main Market of the
London Stock Exchange, its business is subject to the principles
contained in the Code, a copy of which is available on the website
of the Financial Reporting Council of the United Kingdom. The Board
confirms that, throughout the accounting period from 1 January to
31 December 2017, the Group complied with the relevant provisions
of the Code, apart from certain exceptions set out and explained
below.
The Board, comprising a non-executive chairman, two
non-executive directors and two executive directors, is committed
to maintaining a high standard of corporate governance. All
non-executive directors are considered by the Board to be
independent of management and free from any business or other
relationship which could materially interfere with the exercise of
their independent judgement. All directors are able to take
independent professional advice in furtherance of their duties, if
necessary.
The Board is responsible for establishing strategic directions
and setting objectives for the Company and making significant
investment decisions and monitoring the performance of the Group.
The management is responsible for the day to day running of the
Group's operations.
BOARD MEETING
The Board held four meetings during the year under review and
the table below gives the attendance record.
Director Board Meeting
Alastair Gunn-Forbes 4/4
Henry Ying Chew Cheong 4/4
Ernest Chiu Shun She 4/4
Mark Chung Fong 4/4
Martyn Stuart Wells 4/4
DIRECTORS' REPORT (CONTINUED)
In addition to the above board meetings, during the year under
review, the directors also attended several discussion meetings to
review and evaluate various investment proposals.
Although the Board notes that a Nomination Committee (as noted
in Provision B.2.1 of the Code), which makes recommendations to the
Board on all new board appointments, will ensure shareholders as to
the suitability of a chosen director, the Board considers that, due
to its size and level of activities, it is a "small" Board in the
context of the Code and has therefore decided that it would not be
necessary to establish such a committee. The Board as a whole will
remain responsible for ensuring that a transparent, formal and
rigorous process will be followed for any future board
appointments. The Board is satisfied that appropriate succession
planning is in place for appointments to both the Board and senior
management.
Again, due to its size and level of activities, the Board has
not appointed a senior independent director and did not consider an
annual self-evaluation to be required during the year under review.
The responsibilities normally rested with a senior independent
director have been reverted to the Board as a whole. These
decisions will be re-considered annually by the Board.
The Board established both an Audit Committee and a Remuneration
Committee upon the re-activation of the Group's business in 2013.
Details of these committees are set out below.
AUDIT COMMITTEE
The Audit Committee held two meetings during the year under
review and the table below gives the attendance record.
Director Audit Committee Meeting
Mark Chung Fong 2/2
Martyn Stuart Wells 2/2
The Audit Committee is chaired by Mr Mark Chung Fong and its
other current member is Mr Martyn Stuart Wells. The Audit Committee
is appointed by the Board and the committee's membership is
comprised wholly of non-executive directors.
The terms of reference of the Audit Committee (copies of which
are available at the Company's registered office and the Company's
website) generally follow, where applicable, those stated in the
code provisions of the Code.
The Audit Committee meets a minimum of two times a year and may
be convened at other times if required. The responsibilities of the
Audit Committee include, amongst others, the examination and review
of the Group's risk management, internal financial controls and
financial and accounting policies and practices, as well as
overseeing and reviewing the work of the Company's external
auditor, their independence and the fees paid to them.
During the year under review, the activities undertaken by the
Audit Committee in discharge of its duties and functions included
(i) the review and recommendation to the Board of the reappointment
of BDO Limited as the Company's external auditor; (ii) the review
and recommendation to the Board for approval of the annual report
of the Company and the consolidated financial statements of the
Company and its subsidiaries for the year ended 31 December 2016;
and (iii) the review and recommendation to the Board for approval
of the interim report of the Company and the unaudited consolidated
financial statements of the Company and its subsidiaries for the
six months ended 30 June 2017. In recommending the reappointment of
BDO Limited, the Audit Committee has taken into consideration,
amongst others, BDO Limited's independence, objectivity and terms
of engagement.
DIRECTORS' REPORT (CONTINUED)
Subsequent to the year end, the activities that have been
undertaken by the Audit Committee in relation to 2017 included (i)
the review and recommendation to the Board of the annual report of
the Company and the consolidated financial statements of the
Company and its subsidiaries for the year ended 31 December 2017;
(ii) the monitoring of the effectiveness of the Group's risk
management and internal financial controls; and (iii) the
assessment of the effectiveness of the external audit process
through feedback from the management involved in the audit and
through interactions with and observations and review of the level
of audit service provided.
As the scale of the operations of the Group remains relatively
insubstantial, the Board has decided and the Audit Committee
concurs that it would not be necessary or cost-effective to set up
an internal audit function.
In connection with the review of the consolidated financial
statements of the Company and its subsidiaries for the year ended
31 December 2017, the Audit Committee has identified and reviewed
two issues which it considered significant and details on these
matters are set out in the table below.
Significant Reporting Review and Assessment
Issue
---------------------------------- -------------------------------
Impairment review of the The Audit Committee has
Group's interests in respect (i) reviewed the operational
of its 50% owned joint and financial performance
venture, Oasis Education and the latest development
- At 31 December 2017, of Oasis Education and
the Group had an equity its subsidiaries; and
interest of US$136,000 (ii) assessed the assumptions
in and an amount of US$257,000 underlying the cash flow
due from Oasis Education. projection for Oasis
These carrying amounts Education and its subsidiary
were significant in the as well as the reliability
Group's context and their of such projection by
valuation was subject comparing relevant historic
to judgments, estimates budgets with actual results.
and assumptions.
---------------------------------- -------------------------------
Impairment review of the The Audit Committee has
Group's available-for-sale (i) reviewed the operational
financial assets - At and financial performance
31 December 2017, the and the latest development
Group had equity interests of the Available-for-Sale
carried at costs totalling Financial Assets; and
US$1,784,000 in ICBC Specialised (ii) discussed with the
Ship Leasing Investment management and assessed
Fund, ayondo Holding AG any impairment indicators
and Velocity (together that might impact such
the "Available-for-Sale assets.
Financial Assets"). These
carrying amounts were
significant in the Group's
context and their valuation
was subject to judgments
and assumptions.
---------------------------------- -------------------------------
BDO Limited was appointed as the external auditor of the Company
in February 2015, since when audit services have not been tendered
competitively. The Audit Committee has concluded that a competitive
tender of audit services is not necessary at this time, but
acknowledges that circumstances could arise where a competitive
tender for audit services may be desirable. The performance of BDO
Limited as the Company's external auditor will be kept under annual
review, and if satisfactory, BDO Limited will be recommended by the
Audit Committee for reappointment. There are, however, no
contractual obligations that would restrict the Audit Committee's
choice of external auditor for the Company.
DIRECTORS' REPORT (CONTINUED)
Any non-audit services that are to be provided by the Company's
external auditor are reviewed in order to safeguard the auditor's
objectivity and independence. During the year under review, the
non-audit services provided by BDO Limited consisted of agreed-upon
procedures in respect of the Group's interim report for the six
months ended 30 June 2017. BDO Financial Services Limited, an
affiliate of BDO Limited, was also engaged to act as the reporting
accountant in connection with the Company's fund raising exercise,
which is detailed in note 28 to the consolidated financial
statements on pages 61 to 62. Taking into account the nature and
fees of the work that was involved, the Board has confirmed to the
Audit Committee that, during the reporting period and subsequently
thereafter, there had not been any non-audit services that were
considered to have impaired the objectivity and independence of the
external auditor of the Company.
As advised by the Audit Committee and concurred with by the
Board, the annual report of the Company and the audited
consolidated financial statements for the year ended 31 December
2017, taken as a whole, is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group's position and performance, business model and strategy.
REMUNERATION COMMITTEE
In accordance with Provision D.2.1 of the Code, the Company has
set up a Remuneration Committee. The Remuneration Committee held
one meeting during the year under review and the table below gives
the attendance record.
Director Remuneration Committee
Meeting
Martyn Stuart Wells 1/1
Mark Chung Fong 1/1
Alastair Gunn-Forbes 1/1
The Remuneration Committee is chaired by Mr Martyn Stuart Wells
and its other current members are Messrs Alastair Gunn-Forbes and
Mark Chung Fong. The Remuneration Committee is appointed by the
Board and the committee's membership is comprised wholly of
non-executive directors.
The terms of reference of the Remuneration Committee (copies of
which are available at the Company's registered office and the
Company's website) generally follow, where applicable, those stated
in the code provisions of the Code. They provide for the
Remuneration Committee to meet at least two times a year. However,
as the Group has a very small and stable workforce with hardly any
personnel change since 31 December 2016, the Remuneration Committee
did not consider it meaningful or necessary to hold more than one
meeting during the year under review.
The Remuneration Committee's responsibilities include, amongst
others, the evaluation of the performance of the executive
directors and senior staff, and the comparison of the Group's
remuneration policy with similar organisations in the market to
form the basis for the recommendations to the Board to determine
the remuneration packages, which may include the grant of share
options under the Scheme, for individual staff and director
members.
In accordance with the Main Principle of Provision D.2 of the
Code, no director should be involved in deciding his own
remuneration.
During the year under review, the activities undertaken by the
Remuneration Committee in discharge of its duties and functions
included the review of and recommendation to the Board to retain
the Group's previous remuneration arrangements.
DIRECTORS' REPORT (CONTINUED)
AD HOC COMMITTEE
In accordance with Bye-law 98 of the Company, the Board set up
in February 2018 an additional committee comprising of a minimum of
two directors, to whom it delegated responsibility to deal with all
matters relating to the Company's fund raising exercise. For
details on this activity please refer to note 28 to the
consolidated financial statements on pages 61 to 62.
WORLDSEC EMPLOYEE SHARE OPTION SCHEME 1997
On 1 December 2015, the Company granted to certain eligible
persons a total of 2,950,000 share options to subscribe for new
ordinary shares of US$0.001 each in the share capital of the
Company under the Scheme. The share options vest six months from
the date of grant and are then exercisable within a period of 9.5
years.
The following table discloses the movements of the outstanding
share options under the Scheme during the year under review.
Number of options
------------------------------------------------------------------------------
Exercise
Balance Granted Exercised Forfeited Lapsed Balance price
at during during during during at 31 per
Exercisable 1 January the the the the December share
Grantee period 2017 year year year year 2017 (US$)
----------- ------------- ----------- -------- ---------- ---------- -------- ---------- ---------
1 June
2016
to 30
November
Directors 2025 2,500,000 - - - - 2,500,000 0.122
1 June
2016
to 30
November
Employees 2025 450,000 - - - - 450,000 0.122
----------- -------- ---------- ---------- -------- ----------
2,950,000 - - - - 2,950,000
=========== ======== ========== ========== ======== ==========
Further details relating to the granting of the share options
during the year under review are set out in note 23 to the
consolidated financial statements on pages 58 to 59.
RELATION WITH SHAREHOLDERS
Communication with shareholders is given high priority.
Information about the Group's activities is provided in the annual
report and the interim report of the Company which are sent to
shareholders each year and are available on the website of the
Company. All shareholders are encouraged to attend the Annual
General Meeting at which directors are introduced and available for
questions. Enquiries are dealt with in an informative and timely
manner. Directors, including non-executive directors, are also
available to meet with major shareholders on request.
DIRECTORS' REPORT (CONTINUED)
EXTERNAL AUDITOR
The consolidated financial statements of the Company and its
subsidiaries for the year ended 31 December 2017 have been audited
by BDO Limited.
A resolution will be submitted to the next Annual General
Meeting to reappoint BDO Limited as the Company's external
auditor.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
30 April 2018
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are required under the Bermuda Companies Act 1981
to prepare consolidated financial statements for each financial
year. The directors acknowledge responsibility for the preparation
of the consolidated financial statements for the year ended 31
December 2017, which give a true and fair view of the financial
position of the Group as at the end of that financial year and of
the financial performance of the Group for that year and which
provide the necessary information for shareholders to assess the
business activities and performance of the Group during that year.
In preparing these consolidated financial statements, the directors
are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether the consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union; and
- prepare the consolidated financial statements on a going
concern basis unless it is inappropriate to presume that the Group
will continue in business.
The directors confirm that the above requirements have been
met.
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 controls, for safeguarding the
assets of the Group and hence for taking reasonable steps for the
prevention and detection of frauds and other irregularities.
The directors further confirms that, to the best of their
knowledge and understanding, the chairman's statements on page 1
and the directors' report on pages 2 to 16 include a fair review of
the development and performance of the business and the position of
the Company and its subsidiaries taken as a whole together with a
description of the principal risks and uncertainties that they
face.
On behalf of the Board
Henry Ying Chew Cheong
Executive Director
30 April 2018
INDEPENT AUDITOR'S REPORT
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
OPINION
We have audited the consolidated financial statements of
Worldsec Limited (the "Company") and its subsidiaries (together the
"Group") set out on pages 23 to 62, which comprise the consolidated
statement of financial position as at 31 December 2017, and the
consolidated statement of profit or loss and other comprehensive
income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and
notes to the consolidated financial statements, including a summary
of significant accounting policies.
In our opinion, the consolidated financial statements give a
true and fair view of the consolidated financial position of the
Group as at 31 December 2017 and of its consolidated financial
performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards as
adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with International
Standards on Auditing ("ISAs"). Our responsibilities under those
standards are further described in the "Auditor's Responsibilities
for the Audit of the Consolidated Financial Statements" section of
our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants' Code of
Ethics for Professional Accountants (the "IESBA Code"), and we have
fulfilled our other ethical responsibilities in accordance with the
IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These
matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
impairment review of interest in a joint venture and amount due
from a joint venture
Refer to note 16 to the consolidated financial statements
The Group owns 50% in Oasis Education Group Limited ("Oasis
Education"), which is accounted for using the equity method and
considered for impairment if there is any indication that the
investment may be impaired. The interest in the joint venture
amounted to approximately US$136,000 as at 31 December 2017 and the
Group's share of its losses of approximately US$4,000 for the year
then ended.
Further, the Group has advanced an amount of approximately
US$257,000 to Oasis Education as at 31 December 2017, which is
subject to an impairment assessment.
The impairment review of investment in, and amount due from,
Oasis Education is significant to our audit due to the significance
of the carrying amounts subject to impairment review comparing to
the Group's net loss, and judgement applied in determining if an
impairment in carrying amounts is necessary.
INDEPENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
Key Audit Matters (Continued)
impairment review of interest in a joint venture and amount due
from a joint venture (CONTINUED)
Our response:
Our audit procedures included:
-- Understanding Oasis Education's operation and latest development;
-- Assessing the financial performance of Oasis Education based
on information available to us;
-- Evaluating management's considerations of the impairment
indicators of the investment in, and the amount due from, Oasis
Education;
-- Assessing the appropriateness of the management's assumption
concerning the future cash flow to be generated from the operation
of Oasis Education; and
-- Assessing reliability of the joint venture's forecast by
comparing historical budget to actual performance and challenging
management on any significant variances.
impairment review of available-for-sale financial assets
Refer to note 17 to the consolidated financial statements
The Group owns equity interests in ICBC Specialised Ship Leasing
Investment Fund ("ICBC Shipping Fund"), ayondo Holding AG ("Ayondo
AG") and Velocity Mobile Limited ("Velocity"), which are all
accounted for as available-for-sale financial assets totaling
approximately US$1,784,000 as at 31 December 2017 carried at cost.
The available-for-sale financial assets are measured at cost less
any identified impairment loss, if any. The amount of an impairment
loss, if any, is measured as the difference between the carrying
amount of the asset and the present value of estimated future cash
flows discounted at the current market rate of return for a similar
financial asset.
The impairment review of the investments in ICBC Shipping Fund,
Ayondo AG and Velocity are significant to our audit due to the
significance of the carrying amount of the investments, and
judgement applied in determining if an impairment in carrying
amount is necessary.
Our response:
Our audit procedures included:
-- Understanding the investees' operations and latest development;
-- Assessing the financial performance of the investees; and
-- Evaluating management's considerations of the impairment
indicators of the available-for-sale financial assets based on our
knowledge of the relevant industry and business.
INDEPENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
Other information in the annual report
The directors are responsible for the other information. The
other information comprises the information included in the
Company's annual report, but does not include the consolidated
financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not
cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements
or our knowledge obtained in the audit or otherwise appears to be
materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report in this regard.
Directors' responsibilitIES for the consolidated financial
statements
The directors are responsible for the preparation of the
consolidated financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as
adopted by the European Union, and for such internal control as the
directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the
directors are responsible for assessing the Group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
Group or to cease operations, or have no realistic alternative but
to do so.
The directors are also responsible for overseeing the Group's
financial reporting process. The audit committee of the Group (the
"Audit Committee") assists the directors in discharging their
responsibility in this regard.
Auditor's responsibilitIES for the audit of the consolidated
financial statements
Our objectives are to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue
an auditor's report that includes our opinion. This report is made
solely to you, as a body, in accordance with Section 90 of the
Bermuda Companies Act 1981, and for no other purpose. We do not
assume responsibility towards or accept liability to any other
person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional skepticism
throughout the audit. We also:
INDEPENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
Auditor's responsibilitIES for the audit of the consolidated
financial statements (CONTINUED)
-- identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide
a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- obtain an understanding of internal control relevant to the
audit 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 Group's internal control.
-- evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
-- conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to continue as a
going concern.
-- evaluate the overall presentation, structure and content of
the consolidated financial statements, including the disclosures,
and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
-- obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with the Audit Committee regarding, among other
matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit Committee with a statement that we
have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine
those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
INDEPENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WORLDSEC LIMITED
(incorporated in Bermuda with limited liability)
REPORT ON OTHER REGULATORY REQUIREMENTS
Under the listing rules of the Financial Conduct Authority in
the United Kingdom (the "Listing Rules"), we are required to review
the part of the Corporate Governance Statement relating to the
Company's compliance with the provisions of the UK Corporate
Governance Code specified for our review in accordance with Listing
Rule 9.8.10R (2). We have nothing to report arising from our
review.
BDO Limited
Certi ed Public Accountants
Alfred Lee
Practising Certi cate Number P04960
Hong Kong, 30 April 2018
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2017
Year ended 31 December
Notes 2017 2016
US$'000 US$'000
Revenue 7 96 96
Other income 9 3 99
Staff costs 10 (233) (385)
Other expenses (286) (319)
Share of losses of a joint
venture 16 (4) (5)
Loss before income tax expense 11 (424) (514)
Income tax expense 12 - -
----------- -----------
Loss for the year (424) (514)
----------- -----------
Other comprehensive income,
net of income tax
Items that may be reclassified
subsequently to
profit or loss:
Exchange differences on
translating foreign
operations - (1)
Release of foreign currency
translation reserve
upon dissolution of subsidiaries 24 - 12
Share of other comprehensive
income/(loss) of a
joint venture 16 17 (9)
----------- -----------
Other comprehensive income
for the year,
net of income tax 17 2
----------- -----------
Total comprehensive loss
for the year (407) (512)
=========== ===========
Loss for the year attributable
to:
Owners of the Company (424) (514)
=========== ===========
Total comprehensive loss
for the year
attributable to:
Owners of the Company (407) (512)
=========== ===========
Year ended 31 December
Notes 2017 2016
Loss per share - basic and 13 US (0.75) US (0.91)
diluted cent cent
=========== ===========
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEARED 31 DECEMBER 2017
Notes 2017 2016
US$'000 US$'000
Non-current assets
Property, plant and
equipment 15 - 21
Interest in a joint
venture 16 136 123
Available-for-sale financial
assets 17 1,784 1,784
------- -------
1,920 1,928
------- -------
Current assets
Other receivables 8 8
Deposits and prepayments 234 22
Amount due from a joint
venture 16 257 257
Cash and cash equivalents 19 260 848
759 1,135
------- -------
Current liabilities
Other payables and accruals 20 148 125
------- -------
Net current assets 611 1,010
------- -------
Net assets 2,531 2,938
======= =======
Capital and reserves
Share capital 21 57 57
Reserves 22 2,474 2,881
------- -------
Total equity 2,531 2,938
======= =======
The consolidated financial statements on pages 23 to 62 were
approved and authorised for issue by the Board of Directors on 30
April 2018 and signed on its behalf by:
Alastair Gunn-Forbes Henry Ying Chew Cheong
Director Director
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF changes in equity
FOR THE YEARED 31 DECEMBER 2017
Equity attributable to owners of the
Company
------------------------------------------------------------------------------
Foreign
Contri- Share currency
Share Share buted option translation Special Accumulated
capital premium surplus reserve reserve reserve losses Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
(note (note (note (note (note (note (note
21) 22) 22) 22) 22) 22) 22)
Balance at
1 January 2016 57 3,837 9,646 34 (30) 625 (11,038) 3,131
Loss for the
year - - - - - - (514) (514)
Other
comprehensive
income for
the year
Exchange
differences
on translating
foreign
operations - - - - (1) - - (1)
Release of
foreign currency
translation
reserve upon
dissolution
of subsidiaries
(note 24) - - - - 12 - - 12
Share of other
comprehensive
loss of a joint
venture (note
16) - - - - (9) - - (9)
------- ------- ------- ------- ----------- ------- ----------- -------
Total
comprehensive
loss for the
year - - - - 2 - (514) (512)
Recognition
of share-based
payments (note
23) - - - 172 - - - 172
Unclaimed
dividends
forfeited (note
20) - - - - - - 147 147
------- ------- ------- ------- ----------- ------- ----------- -------
Transactions
with owners - - - 172 - - 147 319
------- ------- ------- ------- ----------- ------- ----------- -------
Balance at
31 December
2016 and 1
January 2017 57 3,837 9,646 206 (28) 625 (11,405) 2,938
Loss for the
year - - - - - - (424) (424)
Other
comprehensive
income for
the year
Share of other
comprehensive
income of a
joint venture
(note 16) - - - - 17 - - 17
Total
comprehensive
loss for the
year - - - - 17 - (424) (407)
------- ------- ------- ------- ----------- ------- ----------- -------
Balance at
31 December
2017 57 3,837 9,646 206 (11) 625 (11,829) 2,531
======= ======= ======= ======= =========== ======= =========== =======
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2017
Year ended 31 December
2017 2016
US$'000 US$'000
Cash flows from operating activities
Loss before income tax expense (424) (514)
Adjustments for:
Depreciation of property, plant
and equipment 21 23
Share of losses of a joint
venture 4 5
Share-based payment expenses - 172
Loss on dissolution of subsidiaries - 12
Other payables written back - (99)
Operating loss before working
capital changes (399) (401)
Increase in other receivables - (8)
Increase in deposits and prepayments (6) (1)
Increase/(decrease) in other
payables and accruals 23 (70)
---------------------- -------
Net cash used in operating
activities (382) (480)
---------------------- -------
Cash flows from investing activities
Purchase of available-for-sale
financial assets - (659)
Net cash used in investing activities - (659)
---------------------- -------
Cash flows from financing activities
Prepaid share issue expenses (206) -
---------------------- -------
Net cash used in financing
activities (206) -
---------------------- -------
Net decrease in cash and cash
equivalents (588) (1,139)
Cash and cash equivalents at
the beginning of the year 848 1,988
Effects of exchange rate
changes - (1)
---------------------- -------
Cash and cash equivalents at
the end of the year 260 848
====================== =======
The accompanying notes form an integral part of these
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
1. GENERAL INFORMATION
Worldsec Limited (the "Company") is a public listed company
incorporated in Bermuda and its shares are listed on the Main
Market of the London Stock Exchange. The address of the registered
office of the Company is Canon's Court, 22 Victoria Street,
Hamilton HM12, Bermuda. Its principal place of business address is
Unit 607, 6th Floor, FWD Financial Centre, 308 Des Voeux Road
Central, Sheung Wan, Hong Kong.
The principal activity of the Company is investment holding. The
principal activities of the Company's subsidiaries are set out in
note 18 to the consolidated financial statements.
The functional currency of the Company is Hong Kong Dollars
("HK$"). The consolidated financial statements of the Company and
its subsidiaries (collectively referred to as the "Group") are
presented in United States Dollars ("US$" or "USD").
The consolidated financial statements have been prepared in
accordance with all applicable International Financial Reporting
Standards ("IFRS"), International Accounting Standards ("IAS") and
Interpretations adopted by the European Union ("EU") (collectively
referred to as the "IFRSs").
2. APPLICATION OF NEW AND REVISED IFRSs
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements
The following new and revised IFRSs have been applied by the
Group in the current year.
Amendments to Disclosure Initiative
IAS 7
Amendments to Recognition of Deferred Tax
IAS 12 Assets for Unrealised Losses
Annual Improvements Amendments to IFRS 12, Disclosure
to IFRSs 2014-2016 of Interests in Other Entities
Cycle
Amendments to IAS 7 - Disclosure Initiative
The amendments introduce an additional disclosure that will
enable users of financial statements to evaluate changes in
liabilities arising from financing activities.
The adoption of the amendments has had no impact on these
financial statements as the Group had no changes in liabilities
arising from financing activities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
2. APPLICATION OF NEW AND REVISED IFRSs (CONTINUED)
2.1 New and revised IFRSs applied with no material effect on the
consolidated financial statements (Continued)
Amendments to IAS 12 - Recognition of Deferred Tax Assets for
Unrealised Losses
The amendments relate to the recognition of deferred tax assets
and clarify some of the necessary considerations, including how to
account for deferred tax assets related to debt instruments
measured of fair value.
The adoption of the amendments has had no impact on these
financial statements as the Group had no deferred tax assets.
Annual Improvements to IFRSs 2014-2016 Cycle - Amendments to
IFRS 12, Disclosure of Interests in Other Entities
The amendments issued under the annual improvements process make
small, non-urgent changes to standards where they are currently
unclear. They include amendments to IFRS 12 "Disclosure of
Interests in Other Entities" to clarify that the disclosure
requirements of IFRS 12, other than the requirements to disclose
summarised financial information, also apply to an entity's
interests in other entities classified as held for sale or
discontinued operations in accordance with IFRS 5 "Non-Current
Assets Held for Sale and Discontinued Operations".
The adoption of the amendments to IFRS 12 has had no impact on
these financial statements as the Group had no interests in other
entities classified as held for sale or discontinued operations in
accordance with IFRS 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
2. APPLICATION OF NEW AND REVISED IFRSs (CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs,
potentially relevant to the Group's financial statements, that have
been issued but are not yet effective. Certain new or revised IFRSs
have yet been endorsed by the EU.
Annual Improvements Amendments to IAS 28, Investments
to IFRSs 2014-2016 in Associates and Joint Ventures(1)
Cycle
Annual Improvements Amendments to IFRS 3, Business
to IFRSs 2015-2017 Combinations(2*)
Cycle
Annual Improvements Amendments to IAS 12, Income
to IFRSs 2015-2017 Taxes(2*)
Cycle
Annual Improvements Amendments to IAS 23, Borrowing
to IFRSs 2015-2017 Costs(2*)
Cycle
IFRS 9 Financial instruments(1)
IFRS 15 Revenue from Contracts with
Customers(1)
IFRS 16 Leases(2)
Amendments to Long-term Interests in Associates
IAS 28 and Joint Ventures(2*)
Amendments to Classification and Measurement
IFRS 2 of Share-based Payment Transactions(1)
Amendments to Prepayment Features with Negative
IFRS 9 Compensation(2*)
Amendments to Revenue from Contracts with
IFRS 15 Customers (Clarification to
IFRS 15)(1)
Amendments to Sale or Contribution of Assets
IFRS 10 and IAS between an Investor and its
28 Associate or Joint Venture(#)
International Foreign Currency Transactions
Financial Reporting and Advance Consideration(1)
Interpretations
Committee ("IFRIC")
22
IFRIC 23 Uncertainty over Income Tax
Treatments(2*)
(1) Effective for annual periods beginning
on or after 1 January 2018
(2) Effective for annual periods beginning
on or after 1 January 2019
(#) The amendments were originally intended
to be effective for annual periods beginning
on or after 1 January 2016. The effective
date has now been deferred/removed.
Early application of the amendments
continues to be permitted.
(*) Not yet endorsed by the EU
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
2. APPLICATION OF NEW AND REVISED IFRSs (CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective (Continued)
IFRS 9 - Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial assets. Debt instruments that are held
within a business model whose objective is to hold assets in order
to collect contractual cash flows (the business model test) and
that have contractual terms that give rise to cash flows that are
solely payments of principal and interest on the principal amount
outstanding (the contractual cash flow characteristics test) are
generally measured at amortised cost. Debt instruments that meet
the contractual cash flow characteristics test are measured at fair
value through other comprehensive income if the objective of the
entity's business model is both to hold and collect the contractual
cash flows and to sell the financial assets. Entities may make an
irrevocable election at initial recognition to measure equity
instruments that are not held for trading at fair value through
other comprehensive income. All other debt and equity instruments
are measured at fair value through profit or loss.
IFRS 9 includes a new expected loss impairment model for all
financial assets not measured at fair value through profit or loss
replacing the incurred loss model in IAS 39 and new general hedge
accounting requirements to allow entities to better reflect their
risk management activities in financial statements.
IFRS 9 carries forward the recognition, classification and
measurement requirements for financial liabilities from IAS 39,
except for financial liabilities designated at fair value through
profit or loss, where the amount of change in fair value
attributable to change in credit risk of the liability is
recognised in other comprehensive income unless that would create
or enlarge an accounting mismatch. In addition, IFRS 9 retains the
requirements in IAS 39 for derecognition of financial assets and
financial liabilities.
The Group has performed a preliminary assessment of potential
impact of the adoption of IFRS 9 on the Group. The Group's unlisted
equity investments currently classi ed as available-for-sale
financial assets measured at cost less impairment will be reclassi
ed to nancial assets at fair value through pro t or loss or other
comprehensive income, which is being under the process of the
election. However, it is not practicable to provide a reasonable
estimate of that effect until the Group performs a detailed
review.
IFRS 15 - Revenue from Contracts with Customers
The new standard establishes a single revenue recognition
framework. The core principle of the framework is that an entity
should recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods and services. IFRS 15 supersedes existing
revenue recognition guidance including IAS 18 "Revenue", IAS 11
"Construction Contracts" and related interpretations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
2. APPLICATION OF NEW AND REVISED IFRSs (CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective (Continued)
IFRS 15 - Revenue from Contracts with Customers (Continued)
IFRS 15 requires the application of a 5-step approach to revenue
recognition:
-- Step 1: Identify the contract(s) with a customer
-- Step 2: Identify the performance obligations in the contract
-- Step 3: Determine the transaction price
-- Step 4: Allocate the transaction price to each performance obligation
-- Step 5: Recognise revenue when each performance obligation is satisfied
IFRS 15 includes specific guidance on particular revenue related
topics that may change the current approach taken under IFRS. The
standard also significantly enhances the qualitative and
quantitative disclosures related to revenue.
The Group has performed a preliminary assessment of potential
impact of the adoption of IFRS 15 on the Group. Based on the
preliminary assessment, the directors anticipate that the adoption
of IFRS 15 in the future is not likely to have significant impact
on the amounts reported but may result in more disclosures made to
the consolidated financial statements related to revenue.
Amendments to IFRS 15 - Revenue from Contracts with Customers
(Clarifications to IFRS 15)
The amendments to IFRS 15 included clarifications on
identification of performance obligations; application of principal
versus agent; licenses of intellectual property; and transition
requirements.
IFRS 16 - Leases
IFRS 16, which upon the effective date will supersede IAS 17
"Leases" and related interpretations, introduces a single lessee
accounting model and requires a lessee to recognise assets and
liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. Specifically, under
IFRS 16, a lessee is required to recognise a right-of-use asset
representing its right to use the underlying leased asset and a
lease liability representing its obligation to make lease payments.
Accordingly, a lessee should recognise depreciation of the
right-of-use asset and interest on the lease liability, and also
classifies cash repayments of the lease liability into a principal
portion and an interest portion and presents them in the statement
of cash flows. Also, the right-of-use asset and the lease liability
are initially measured on a present value basis. The measurement
includes non-cancellable lease payments and also includes payments
to be made in optional periods if the lessee is reasonably certain
to exercise an option to extend the lease, or not to exercise an
option to terminate the lease. This accounting treatment is
significantly different from the lessee accounting for leases that
are classified as operating leases under the predecessor standard,
IAS 17.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
2. APPLICATION OF NEW AND REVISED IFRSs (CONTINUED)
2.2 New and revised IFRSs in issue but not yet effective (Continued)
IFRS 16 - Leases (Continued)
In respect of the lessor accounting, IFRS 16 substantially
carries forward the lessor accounting requirements in IAS 17.
Accordingly, a lessor continues to classify its leases as operating
leases or finance leases, and to account for those two types of
leases differently.
The Group has performed a preliminary assessment of potential
impact of the adoption of IFRS 16 on the Group. As set out in note
26 to the consolidated financial statements, the total operating
lease commitment of the Group in respect of rented office premises
and warehouse as at 31 December 2017 amounted to approximately
US$216,000. The directors anticipate that the adoption of IFRS 16
would not result in significant impact on the Group's results but
expect that the above operating lease commitments will be
recognised as right-of-use assets and lease liabilities in the
consolidated financial statements.
Amendments to IFRS 9 - Prepayment Features with Negative
Compensation
The amendments clarify that prepayable financial assets with
negative compensation can be measured at amortised cost or at fair
value through other comprehensive income if specified conditions
are met - instead of at fair value through profit or loss.
The directors anticipate that the adoption of other new or
revised standards would not result in significant impact on amounts
reported in the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements of the Group have been
prepared in accordance with all applicable IFRSs issued by the
International Accounting Standards Board as adopted by the EU.
Basis of preparation
The consolidated financial statements have been prepared under
the historical cost basis.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries. Inter-company
transactions and balances between group companies together with
unrealised profits are eliminated in full in preparing the
consolidated financial statements. Unrealised losses are also
eliminated unless the transaction provides evidence of impairment
on the asset transferred, in which case the loss is recognised in
profit or loss.
Subsidiaries
A subsidiary is an investee over which the Company is able to
exercise control. The Company controls an investee if all three of
the following elements are present: (1) power over the investee,
(2) exposure, or rights, to variable returns from the investee, and
(3) the ability to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
Joint arrangements
The Group is a party to a joint arrangement where there is a
contractual arrangement that confers joint control over the
relevant activities of the arrangement to the Group and at least
one other party. Joint control is assessed under the same
principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as
either:
- Joint venture: where the Group has rights to only the net
assets of the joint arrangement; or
- Joint operation: where the Group has both the rights to assets
and obligations for the liabilities of the joint arrangement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Joint arrangements (Continued)
In assessing the classification of interests in joint
arrangements, the Group considers:
- The structure of the joint arrangement;
- The legal form of the joint arrangement structured through a separate vehicle;
- The contractual terms of the joint arrangement agreement; and
- Any other facts and circumstances (including any other contractual arrangements).
Joint ventures are accounted for using the equity method whereby
they are initially recognised at cost and thereafter, their
carrying amount are adjusted for the Group's share of the
post-acquisition change in the joint ventures' net assets except
that losses in excess of the Group's interest in the joint venture
are not recognised unless there is a legal and constructive
obligation to make good those losses.
Profits and losses arising on transactions between the Group and
its joint ventures are recognised only to the extent of unrelated
investors' interests in the joint ventures. The investors' share in
a joint venture's profits and losses resulting from such
transactions is eliminated against the carrying value of the joint
venture.
Any premium paid for an investment in a joint venture above the
fair value of the Group's share of the identifiable assets,
liabilities and contingent liabilities acquired is capitalised and
included in the carrying amount of the investment in the joint
venture. Where there is objective evidence that the investment in a
joint venture has been impaired, the carrying amount of the
investment is tested for impairment in the same way as other
non-financial assets.
The Group accounts for its interests in joint operations by
recognising its share of assets, liabilities, revenues and expenses
in accordance with its contractually conferred rights and
obligations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. The
cost of property, plant and equipment includes their purchase price
and the costs directly attributable to the acquisition of the
items.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. The carrying amount of the replaced part is derecognised.
All other repairs and maintenance are recognised as an expense in
profit or loss during the financial period in which they are
incurred.
Property, plant and equipment are depreciated so as to write off
their cost net of expected residual value over their estimated
useful lives on a straight-line basis. The useful lives, residual
value and depreciation method are reviewed, and adjusted if
appropriate, at the end of each reporting period. The useful lives
are as follows:
Leasehold improvements over the lease terms
An asset is written down immediately to its recoverable amount
if its carrying amount is higher than the asset's estimated
recoverable amount.
The gain or loss on disposal of an item of property, plant and
equipment is the difference between the net sale proceeds and its
carrying amount, and is recognised in profit or loss on
disposal.
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessee
The total rentals payable under the operating leases are
recognised in profit or loss on a straight-line basis over the
lease term. Lease incentives received are recognised as an
integrated part of the total rental expense, over the term of the
lease.
Revenue recognition
Dividend income is recognised when the right to receive payment
is established.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currencies
Transactions entered into by the group entities in currencies
other than the currency of the primary economic environment in
which they operate are recorded at the rates ruling when the
transactions occur. Foreign currency monetary assets and
liabilities are translated at the rates ruling at the end of the
reporting period. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary
items, and on the translation of monetary items, are recognised in
profit or loss in the period in which they arise.
On consolidation, income and expense items of foreign operations
are translated into the presentation currency of the Group (i.e.
US$) at the average exchange rates for the year, unless exchange
rates fluctuate significantly during the period, in which case, the
rates approximating to those ruling when the transactions took
place are used. All assets and liabilities of foreign operations
are translated at the rate ruling at the end of the reporting
period. Exchange differences arising, if any, are recognised in
other comprehensive income and accumulated in equity as foreign
currency translation reserve (attributed to minority interests as
appropriate). Exchange differences recognised in profit or loss of
group entities' separate financial statements on the translation of
long-term monetary items forming part of the Group's net investment
in the foreign operation concerned are reclassified to other
comprehensive income and accumulated in equity as foreign currency
translation reserve.
On disposal of a foreign operation, the cumulative exchange
differences recognised in the foreign currency translation reserve
relating to that operation up to the date of disposal are
reclassified to profit or loss as part of the profit or loss on
disposal.
Goodwill and fair value adjustments on identifiable assets
acquired arising on an acquisition of a foreign operation on or
after 1 January 2005 are treated as assets and liabilities of that
foreign operation and translated at the rate of exchange prevailing
at the end of the reporting period. Exchange differences arising
are recognised in the foreign currency translation reserve.
Share-based payments
The Group operates equity-settled share-based compensation plans
and the share options are awarded to employees and directors
providing services to the Group.
All services received in exchange for the grant of any
share-based compensation are measured at their fair values. These
are indirectly determined by reference to the equity instruments
awarded. Their value is appraised at the grant date and excludes
the impact of any non-market vesting conditions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Share-based payments (Continued)
All share-based compensation is recognised as an expense in
profit or loss over the vesting period if vesting conditions apply,
or recognised as an expense in full at the grant date when the
equity instruments granted vest immediately unless the compensation
qualifies for recognition as an asset, with a corresponding
increase in the share option reserve in equity. If vesting
conditions apply, the expense is recognised over the vesting
period, based on the best available estimate of the number of
equity instruments expected to vest. Non-market vesting conditions
are included in assumptions about the number of equity instruments
that are expected to vest. Estimates are subsequently revised, if
there is any indication that the number of equity instruments
expected to vest differs from previous estimates.
At the time when the share options are exercised, the amount
previously recognised in share option reserve will be transferred
to share premium. After the vesting date, when the vested share
options are forfeited or are still not exercised at the expiry
date, the amount previously recognised in share option reserve will
be transferred to retained profits.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from 'loss before income tax expense'
as reported in the consolidated statement of profit or loss and
other comprehensive income because of items of income or expense
that are taxable or deductible in other years and items that are
never taxable or deductible. Current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from initial recognition (other than in a business combination) of
assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Taxation (Continued)
Deferred tax (Continued)
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the
end of the reporting period.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle the
obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
Cash and cash equivalents
For the purposes of the consolidated statement of cash flows,
cash and cash equivalents included cash on hand and in banks.
Financial instruments
Financial assets and financial liabilities are recognised when a
group entity becomes a party to the contractual provisions of the
instruments.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Financial assets
The Group classifies its financial assets at initial
recognition, depending on the purpose for which the assets were
acquired. Regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. A regular way
purchase or sale is a purchase or sale of a financial asset under a
contract whose terms require delivery of the asset within the time
frame established generally by regulation or convention in the
marketplace concerned.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Loans and receivables (including cash and bank balance) are
measured at amortised cost using the effective interest method,
less any impairment.
Interest income is recognised by applying the effective interest
rate, except for short-term receivables when the effect of
discounting is immaterial.
Available-for-sale financial assets
These assets are non-derivative financial assets that are
designated as available-for-sale or are not included in other
categories of financial assets. When the fair value of unlisted
equity securities cannot be reliably measured because (a) the
variability in the range of reasonable fair value estimates is
significant for that investment or (b) the probabilities of the
various estimates within the range cannot be reasonably assessed
and used in estimating fair value, such securities are stated at
cost less any impairment losses.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Impairment of financial assets
The Group assesses, at the end of each reporting period, whether
there is any objective evidence that a financial asset is impaired.
A financial asset is impaired if there is objective evidence of
impairment as a result of one or more events that has occurred
after the initial recognition of the asset and that event has an
impact on the estimated future cash flows of the financial asset
that can be reliably estimated.
Evidence of impairment may include:
-- significant financial difficulty of the debtor;
-- a breach of contract, such as a default or delinquency in
interest or principal payments;
-- granting concession to a debtor because of debtor's financial
difficulty; or
-- it becoming probable that the debtor will enter bankruptcy or
other financial reorganisation.
For loans and receivables
An impairment loss is recognised in profit or loss when there is
objective evidence that the asset is impaired, and is measured as
the difference between the asset's carrying amount and the present
value of the estimated future cash flows discounted at the original
effective interest rate. The carrying amount of a financial asset
is reduced through the use of an allowance account. When any part
of a financial asset is determined as uncollectible, it is written
off against the allowance account for the relevant financial
asset.
Impairment losses are reversed in subsequent periods when an
increase in the asset's recoverable amount can be related
objectively to an event occurring after the impairment was
recognised, subject to a restriction that the carrying amount of
the asset at the date the impairment is reversed does not exceed
what the amortised cost would have been had the impairment not been
recognised.
For available-for-sale financial assets
For available-for-sale equity investments that are carried at
cost, the amount of impairment loss is measured as the difference
between the carrying amount of the asset and the present value of
estimated future cash flows discounted at the current market rate
of return for a similar financial asset. Such impairment loss shall
not be reversed.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (Continued)
Derecognition of financial assets
Financial assets are derecognised when the contractual rights to
receive cash ows from the assets expire, or the nancial assets are
transferred and the Group has transferred substantially all the
risks and rewards of ownership of the nancial assets.
On derecognition of a nancial asset, the difference between the
asset's carrying amount and the sum of the consideration received
and receivable, for available-for-sale investments, and the
cumulative gain or loss that had been recognised in other
comprehensive income is reclassified to pro t or loss.
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments issued by a group entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities (including other payables and accruals)
are subsequently measured at amortised cost using the effective
interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or where appropriate a shorter period, to the
net carrying amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is
recognised in profit or loss.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of other assets
At the end of each reporting period, the Group reviews the
carrying amounts of the following assets to determine whether there
is any indication that those assets have suffered an impairment
loss or an impairment loss previously recognised no longer exists
or may have decreased:
-- property, plant and equipment; and
-- interest in a joint venture
If the recoverable amount (i.e. the greater of fair value less
costs to disposal and value in use) of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
as an expense immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior
years.
A reversal of an impairment loss is recognised in profit or loss
immediately.
Value in use is based on the estimated future cash flows
expected to be derived from the asset or cash generating unit,
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 or cash generating unit).
Related parties
(a) A person or a close member of that person's family is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of key management personnel of the Group or the Company's parent.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Related parties (Continued)
(b) An entity is related to the Group if any of the following
conditions apply:
(i) The entity and the Group are members of the same group
(which means that each parent, subsidiary and fellow subsidiary is
related to the others);
(ii) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group of
which the other entity is a member);
(iii) Both entities are joint ventures of the same third
party;
(iv) One entity is a joint venture of a third entity and the
other entity is an associate of the third entity;
(v) The entity is a post-employment benefit plan for the benefit
of the employees of the Group or an entity related to the
Group;
(vi) The entity is controlled or jointly controlled by a person
identified in (a); or
(vii) A person identified in (a)(i) has significant influence
over the entity or is a member of key management personnel of the
entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a
part, provides key management personnel services to the Group or to
the Company's parent.
Close members of the family of a person are those family members
who may be expected to influence, or be influenced by, that person
in their dealings with the entity and include:
(i) that person's children and spouse or domestic partner;
(ii) children of that person's spouse or domestic partner; and
(iii) dependents of that person or that person's spouse or domestic partner.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, which are
described in note 3 to the consolidated financial statements,
management is required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
underlying assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to an accounting estimate are recognised
in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and
future periods if the revision affects both current and future
periods.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED)
Key sources of estimation uncertainty
The key sources of estimation uncertainty that have a
significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are as follows:
(i) Depreciation
The Group depreciates property, plant and equipment using the
straight-line method over the estimated useful lives, starting from
the date on which the assets are available for use. The estimated
useful lives reflect the directors' estimate of the periods that
the Group intends to derive future economic benefits from the use
of the property, plant and equipment of the Group. The carrying
amount of property, plant and equipment is disclosed in note 15 to
the consolidated financial statements.
(ii) Impairment of receivables (including amount due from a joint venture)
The Group maintains an allowance for estimated loss arising from
the inability of its debtors to make the required payments. The
Group makes its estimates based on the ageing of its receivable
balances, debtors' creditworthiness, and historical write-off
experience. If the financial condition of its debtors was to
deteriorate so that the actual impairment loss might be higher than
expected, the Group would be required to revise the basis of making
the allowance and its future results would be affected.
(iii) Impairment of non-financial assets (including interest in a joint venture)
The Group assesses whether there are any indications of
impairment for all non-financial assets at each reporting date.
Non-financial assets are tested for impairment when there are
indications that the carrying amounts may not be recoverable.
(iv) Impairment of available-for-sale financial assets
The directors review available-for-sale investments at the end
of each reporting period to assess whether they are impaired. The
Group records impairment charges on available-for-sale equity
investments when there is objective evidence that an impairment
indicator exists. The determination of whether the impairment
indicator exists requires judgement. In making this judgement, the
Group takes into account factors such as significant changes with
an adverse effect that has taken place in technological, market,
economic or legal environment in which the investee operates, and
that indicates that the cost of the investment in the equity
instrument may not be recovered.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
5. FINANCIAL instruments
(a) Categories of financial instruments
2017 2016
US$'000 US$'000
Financial assets
Loans and receivables 553 1,135
Available-for-sale financial
assets 1,784 1,784
------- -------
2,337 2,919
======= =======
Financial liabilities
Financial liabilities measured
at amortised cost 148 125
======= =======
(b) Financial risk management objectives
Management monitors and manages the financial risks relating to
the operations of the Group through internal risk reports which
analyse exposures by degree and magnitude of risks. These risks
include market risks (including foreign currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The
policies on how to mitigate these risks are set out below. The
Group does not enter into or trade derivative financial instruments
for speculative purposes.
Market risks
The Group's activities expose it primarily to the financial
risks of changes in foreign currency exchange rates, interest rates
and price risk.
There has been no change to the Group's exposure to market risks
or the manner in which these risks are managed and measured.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Market risks (Continued)
(i) Foreign currency risk
Certain financial assets and financial liabilities of the Group
are denominated in foreign currencies other than the functional
currency of the relevant group entities, which exposes the Group to
foreign currency risk. The Group currently does not have a foreign
currency hedging policy. However, management monitors foreign
exchange exposure and will consider hedging significant foreign
currency exposure should the need arise. Under the Linked Exchange
Rate System in Hong Kong, HK$ is currently pegged to the USD within
a narrow range, the directors therefore consider that there are no
significant foreign exchange risk with respect to the USD.
The currencies giving rise to this risk were primarily British
Pound Sterling ("GBP"). The carrying amounts of the Group's foreign
currency denominated monetary assets and monetary liabilities at
the end of reporting period were as follows:
Liabilities Assets
2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000
GBP 81 73 7 -
======= ======= ======= =======
The following table details the Group's sensitivity to a 10%
(2016: 10%) increase and decrease in USD against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and
represents management's assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and
adjusts its translation as at year end for a 10% (2016: 10%) change
in the relevant foreign currencies rates. A positive number below
indicates a decrease in loss for the year where USD strengthens 10%
(2016: 10%) against the relevant foreign currency. For a 10% (2016:
10%) weakening of USD against the relevant foreign currencies there
would be an equal and opposite impact on the loss for the year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Market risks (Continued)
(i) Foreign currency risk (Continued)
2017 2016
US$'000 US$'000
Change in post-tax loss for
the year
GBP impact 7 7
======= =======
(ii) Interest rate risk
The Group's exposure to changes in interest rates is mainly
attributable to its bank deposits at variable interest rates. Bank
deposits at variable rates expose the Group to cash flow interest
rate risk.
The directors consider that the exposure to cash flow interest
rate risk was insignificant. Hence, no sensitivity analysis on the
exposure to the Group's cash flow interest rate risk is
presented.
(iii) Price risk
Price risk is the risk that the value of a financial instrument
will fluctuate as a result of changes in market prices (other than
those arising from foreign currency risk), whether caused by
factors specific to an individual investment or its issuer, or
factors affecting all instruments.
All of the Group's unquoted investments are held for long term
strategic purposes. Their performance is assessed at least annually
against performance of any similar listed entities, based on the
limited information available to the Group, together with an
assessment of their relevance to the Group's long term strategic
plans.
The directors consider that the exposure to price risk was
insignificant. Hence, no sensitivity analysis on the exposure to
the Group's price risk is presented.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Credit risk
The Group's maximum exposure to credit risk which could cause a
financial loss to the Group due to failure to discharge an
obligation by the counterparties arises from the carrying amount of
the respective recognised financial assets as stated in the
consolidated statement of financial position.
The credit risk on liquid funds is limited because the major
counterparties are banks with high credit ratings assigned by
international credit-rating agencies. As at 31 December 2017,
approximately 94% (2016: 94%) of the bank balances were deposited
with a bank with a high credit rating. Other than concentration of
credit risk on liquid funds deposited with that bank, the Group
does not have any other significant concentration of credit
risk.
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the Board of Directors, which has established an appropriate
liquidity risk management framework to meet the Group's short,
medium and long-term funding and liquidity management requirements.
The Group manages liquidity risk by maintaining adequate reserves,
by regularly monitoring forecast and actual cash flows and by
matching the maturity profiles of financial assets and
liabilities.
Liquidity table
The following table details the Group's remaining contractual
maturity for its non-derivative financial liabilities with agreed
repayment periods. The table has been drawn up based on the
undiscounted cash flows of financial liabilities based on the
earliest date on which the Group can be required to pay.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
5. FINANCIAL instruments (CONTINUED)
(b) Financial risk management objectives (Continued)
Liquidity table (Continued)
On demand or
less than 1 year
2017 2016
US$'000 US$'000
Other payables and
accruals 148 125
======== ========
(c) Fair value of financial instruments
The directors consider that the carrying amounts of loans and
receivables and financial liabilities recognised in the
consolidated financial statements approximated their fair
values.
6. Capital risk management
The Group's objective of managing capital is to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce cost of
capital.
In order to maintain or adjust the capital structure, the Group
may return capital to shareholders, issue new shares or sell assets
to reduce debts.
The capital structure of the Group consists of equity
attributable to owners of the Company only, comprising share
capital and reserves.
7. REVENUE
The Group's revenue represents dividend income from
available-for-sale financial assets for the year. An analysis of
the Group's revenue from principal activities is as follows:
Year ended 31 December
2017 2016
US$'000 US$'000
Dividend income from available-for-sale
financial assets 96 96
============ ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
8. SEGMENT Information
An operating segment is a component of the Group that is engaged
in business activities from which the Group may earn revenue and
incur expenses, and is identified on the basis of the internal
management reporting information that is provided to and regularly
reviewed by the Group's chief operating decision makers in order to
allocate resources and assess performance of the segment. For the
years ended 31 December 2017 and 2016, the executive directors, who
were the chief operating decision makers for the purpose of
resource allocation and assessment of performance, have determined
that the Group had only one single business component / reportable
segment as the Group was only engaged in investment holding. The
executive directors allocated resources and assessed performance on
an aggregated basis. Accordingly, no operating segment is
presented.
The major operations and the revenue of the Group arise from
Hong Kong. The Board of Directors considers that most of the
non-current assets (other than the financial instruments) of the
Group are located in Hong Kong.
9. OTHER INCOME
Year ended 31 December
2017 2016
US$'000 US$'000
Other payables written back - 99
Sundry income 3 -
------------ -----------
3 99
============ ===========
10. STAFF COSTS
The aggregate staff costs (including directors' remuneration) of
the Group were as follows:
Year ended 31
December
2017 2016
US$'000 US$'000
Wages and salaries 228 208
Contributions to pension and
provident fund 5 5
Share-based payment expenses
(note 23) - 172
233 385
======== =======
Compensation of key management personnel
was as follows:
Year ended 31
December
2017 2016
US$'000 US$'000
Directors' fees 68 62
Share-based payment expenses - 152
Other remuneration including
contributions to pension - -
and provident fund
-------
68 214
======== =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
11. LOSS BEFORE INCOME TAX EXPENSE
Loss before income tax expense has been arrived at after
charging:
Year ended 31
December
2017 2016
US$'000 US$'000
Auditor's remuneration 42 40
Depreciation of property,
plant and equipment 21 23
Foreign exchange loss 5 -
Loss on dissolution of subsidiaries
(note 24) - 12
Operating lease rental expenses
in respect of office
premises and warehouse 68 58
======= =======
12. 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 2017 and 2016 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
2017 2016
US$'000 US$'000
Loss before income tax
expense (424) (514)
=========== ===========
Loss before tax calculated
at 16.5% (2016: 16.5%) (70) (85)
Tax effect of non-deductible
expenses 82 113
Tax effect of non-taxable
income (16) (32)
Tax effect of deductible
temporary differences 3 3
Tax effect of share of
losses of a joint venture 1 1
Tax charge for the year - -
=========== ===========
No deferred tax asset has been recognised in relation to the
deductible temporary differences of approximately US$58,000 (2016:
US$39,000) as it is not probable that taxable profit will be
available against which the deductible temporary differences can be
utilised. The deductible temporary differences can be carried
forward indefinitely.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
13. LOSS PER SHARE
The loss and weighted average number of ordinary shares used in
the calculation of basic and diluted loss per share were as
follows.
Year ended 31 December
2017 2016
Loss for the year attributable
to owners of the
Company (US$'000) (424) (514)
=========== ===========
Weighted average number
of ordinary shares for
the purposes of basic and
diluted loss per share 56,734,580 56,734,580
=========== ===========
Loss per share - basic and (0.75) (0.91)
diluted (US) cent cent
=========== ===========
Diluted loss per share was the same as basic loss per share for
the years ended 31 December 2017 and 2016 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 2017 and 2016.
14. DIVIDS
No dividend was paid or proposed during the year, nor has any
dividend been proposed since the end of the reporting period (2016:
nil).
15. PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements
US$'000
Cost
At 1 January 2016 69
Additions -
----------------------
At 31 December 2016 and 1 January
2017 69
Additions -
At 31 December 2017 69
======================
Accumulated depreciation
At 1 January 2016 25
Depreciation 23
----------------------
At 31 December 2016 and 1 January
2017 48
Depreciation 21
----------------------
At 31 December 2017 69
======================
Carrying amount
At 31 December 2016 21
======================
At 31 December 2017 -
======================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
16. INTEREST IN A JOINT VENTURE
2017 2016
US$'000 US$'000
Unlisted investment, at cost 257 257
Share of post-acquisition
losses (110) (106)
Share of post-acquisition
other comprehensive loss (11) (28)
------- -------
Share of net assets 136 123
======= =======
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 venture at 31 December 2017 were as
follows:
Country Proportion Paid-up
of incorporation of ownership registered Principal
Name and operation interest capital activities
------------------------ ------------------ ------------ -----------------
Direct Indirect
Oasis Education
Group Limited
Investment
("Oasis Education") Hong Kong 50% - HK$4,000,000 holding
( ) The People's - 50% HK$5,000,000 Provision
Republic of education
of China consulting
(the and support
"PRC") services
to kindergartens
in the
PRC
The contractual arrangement provides the Group with only the
rights to the net assets of the joint arrangement, with the rights
to the assets and obligation for the liabilities of the joint
arrangement resting primarily with Oasis Education. Under IFRS 11,
this joint arrangement is classified as a joint venture and has
been included in the consolidated financial statements using the
equity method.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
16. INTEREST IN A JOINT VENTURE (CONTINUED)
The aggregate amounts relating to the joint venture that have
been included in the consolidated financial statements of the Group
as extracted from relating financial statements of the joint
venture, adjusted to reflect adjustments made by the Group when
applying the equity method of accounting are set out below:
2017 2016
Results of the joint venture US$'000 US$'000
for the year
Revenue - -
Other income 20 42
Expenses (28) (52)
-------- --------
Loss for the year (8) (10)
Other comprehensive income/(loss)
for the year 34 (18)
-------- --------
Total comprehensive income/(loss)
for the year 26 (28)
======== ========
Share of losses of the joint
venture for the year (4) (5)
====== ======
Share of other comprehensive
income/(loss) of the
joint venture for the year 17 (9)
======
Accumulated share of results
of the joint venture (110) (106)
====== ======
Assets and liabilities of the joint
venture at 31 December
2017 2016
US$'000 US$'000
Non-current assets - -
Current assets 872 844
Non-current liabilities - -
Current liabilities (601) (599)
-------- --------
Net assets 271 245
======== ========
Included in the above amounts
were:
Cash and cash equivalents 51 60
Depreciation and amortisation - -
Interest income - -
Interest expense - -
Current financial liabilities - -
(excluding trade and other payables)
======== ========
Percentage of equity interest
attributable to the Group 50% 50%
Share of net assets of the joint
venture 136 123
==== ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
17. AVAILABLE-FOR-SALE FINANCIAL ASSETS
2017 2016
US$'000 US$'000
Unlisted equity investments,
- at cost 1,784 1,784
======= =======
During the year ended 31 December 2015, the Group acquired
equity interest in ayondo Holding AG ("Ayondo AG") for a total cash
consideration of CHF320,000 (equivalent to approximately
US$325,000). During the year ended 31 December 2016, the Group
acquired additional equity interest in Ayondo AG for a total cash
consideration of CHF160,050 (equivalent to approximately
US$163,000). In connection with the listing in March 2018 of ayondo
Ltd. ("Ayondo"), the holding company of Ayondo AG, on Catalist, the
sponsor-supervised listing platform of the Singapore Exchange
Securities Trading Limited, the Group exchanged its equity interest
in Ayondo AG into the equity interest in Ayondo under a pre-listing
restructuring. Ayondo is a company incorporated in Singapore and is
involved in social trading and broking services for
contract-for-differences and spread betting.
During the year ended 31 December 2016, the Group acquired
equity interest in Velocity Mobile Limited ("Velocity") for a total
cash consideration of GBP337,120 (equivalent to approximately
US$496,000). Velocity is a company incorporated in England and
Wales and provides real-time lifestyle mobile applications focusing
in the areas of restaurant, travel and hotel bookings and
payment.
As at 31 December 2017 and 2016, the Group also owned equity
interest in ICBC Specialised Ship Leasing Investment Fund in an
amount of US$800,000.
These investments were designated as available-for-sale
financial assets. The investments are measured at cost less
impairment at each reporting date because the investments do not
have quoted market prices in an active market*, the variability in
the range of reasonable fair value estimates for the investments is
significant and therefore their fair value cannot be reliably
measured. The directors had no intention to dispose of the
available-for-sale financial assets at the end of the reporting
period.
The directors have assessed the impact on the recoverable amount
of the financial assets and concluded that no impairment loss
needed to be made.
* Subsequent to the year ended 31 December 2017, the holding
company of Ayondo AG, Ayondo, became listed on Catalist in
Singapore.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
18. SUBSIDIARIES
Details of the subsidiaries of the Company at 31 December 2017
were as follows:
Proportion
Country Proportion of voting
of incorporation of ownership power Principal
Name and operation interest held activities
----------------------- ------------------ ------------- ---------- -----------
British
Worldsec Financial Virgin Investment
Services Limited Islands 100% 100% holding
Worldsec Corporate British 100%* 100%* Inactive
Finance Limited Virgin
Islands
Worldsec International Netherlands 100%* 100%* Inactive
NV Antilles
Worldsec Investment Hong 100%* 100%* Investment
(Hong Kong) Limited Kong holding
Worldsec Investment 100%* 100%* Investment
(China) Limited British holding
Virgin
Islands
* Indirectly held subsidiaries
19. CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the end of the reporting period as
shown in the consolidated statement of financial position were as
follows:
2017 2016
US$'000 US$'000
Bank balances 259 847
Cash balances 1 1
260 848
======= =======
Bank balances bore interest at the then prevailing market rates
ranging from 0.001% to 0.01% (2016: 0.001% to 0.01%) per annum and
had original maturities of three months or less.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
20. OTHER PAYABLES AND ACCRUALS
2017 2016
US$'000 US$'000
Other payables and accruals
(note) 148 125
======= =======
Note:
During the year ended 31 December 2016, dividends declared by
the Company which were included in other payables and accruals as
at 31 December 2015 and which were unclaimed over a period of
twelve years from the date of declaration totalling approximately
US$147,000 were forfeited and transferred to accumulated losses in
accordance with the Bye-Laws of the Company.
21. SHARE CAPITAL
Number of Total
shares value
US$'000
Authorised:
Ordinary shares of US$0.001
each
At 1 January 2016, 31
December 2016,
1 January 2017 and 31
December 2017 60,000,000,000 60,000
================= =========
Called up, issued and
fully paid:
Ordinary shares of US$0.001
each
At 1 January 2016, 31
December 2016,
1 January 2017 and 31
December 2017 56,734,580 57
================= =========
22. 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
22. RESERVES (CONTINUED)
(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.
(d) Exchange differences relating to the translation of the net
assets of the Group's foreign operations (including a 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.
23. SHARE-BASED PAYMENTS
The Company operates an equity-settled share-based remuneration
scheme 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 new
ordinary shares of US$0.001 each in the share capital of the
Company under the Worldsec Employee Share Option Scheme 1997 (the
"Scheme") which was revised on 24 September 2014. The options vest
six months from the date of grant and are then exercisable within a
period of 9.5 years.
The following table discloses the movements of the outstanding
share options under the Scheme during the years ended 31 December
2017 and 2016.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
23. SHARE-BASED PAYMENTS (CONTINUED)
Number of options
-----------------------------------------------------------------------------
Exercise
Balance Granted Exercised Forfeited Lapsed Balance price
at 1 during during during during at 31 per
Exercisable January the the the the December share
Grantee period 2017 year year year year 2017 (US$)
----------- ------------- ---------- -------- ---------- ---------- -------- ---------- ---------
1 June
2016
to 30
November
Directors 2025 2,500,000 - - - - 2,500,000 0.122
1 June
2016
to 30
November
Employees 2025 450,000 - - - - 450,000 0.122
---------- -------- ---------- ---------- -------- ----------
2,950,000 - - - - 2,950,000
========== ======== ========== ========== ======== ==========
Number of options
------------------------------------------------------------------------------
Exercise
Balance Granted Exercised Forfeited Lapsed Balance price
at during during during during at 31 per
Exercisable 1 January the the the the December share
Grantee period 2016 year year year year 2016 (US$)
----------- ------------- ----------- -------- ---------- ---------- -------- ---------- ---------
1 June
2016
to 30
November
Directors 2025 2,500,000 - - - - 2,500,000 0.122
1 June
2016
to 30
November
Employees 2025 450,000 - - - - 450,000 0.122
----------- -------- ---------- ---------- -------- ----------
2,950,000 - - - - 2,950,000
=========== ======== ========== ========== ======== ==========
No share-based payment expenses were charged to the profit or
loss during the year ended 31 December 2017 (2016: US$172,000).
The options outstanding as at 31 December 2017 had a weighted
average remaining contractual life of 7.5 years (2016: 8.5 years)
and a weighted average exercise price of US$0.122 (2016:
US$0.122).
Of the total number of options outstanding at the end of the
year, all (2016: all) had vested and were exercisable at the end of
the year.
No option was exercised during the years ended 31 December 2017
and 2016.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
24. DISSOLUTION OF SUBSIDIARIES
On 7 December 2016, Worldsec International (Netherlands) B.V.
and Worldsec International (PH) B.V., the then subsidiaries of the
Company, were dissolved. The net assets of these then subsidiaries
at the date of dissolution were as follows:
2016
US$'000
Net assets of the subsidiaries -
under dissolution
Foreign currency translation
reserve released 12
Loss on dissolution of
subsidiaries (12)
-------
-
=======
Net inflow of cash and
cash equivalents in respect -
of the dissolution of subsidiaries
=======
25. RELATED PARTY TRANSACTIONS
Other than the compensation of key management personnel and the
underwriting of certain open offer shares as disclosed below, the
Group did not have any related party transactions during the years
ended 31 December 2017 and 2016.
Compensation of key management personnel
Key management personnel are the directors 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 10 to the consolidated financial
statements.
Underwriting of open offer
Subsequent to the year ended 31 December 2017, the Company
completed an open offer of 28,367,290 new ordinary shares at
US$0.15 per share. Of these, 18,416,489 open offer shares were
underwritten by Mr Henry Ying Chew Cheong ("Mr Cheong"), an
executive director of the Company, in his personal capacity. As
there was no underwriting consideration involved, the underwriting
was not subject to the rules contained in Chapter 11 of the Listing
Rules of the Financial Conduct Authority in the United Kingdom.
Details relating to the open offer can be found in note 28 to the
consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
26. OPERATING LEASE COMMITMENTS
Operating leases - lessee
At the reporting date, the Group had future aggregate minimum
lease payments under non-cancellable operating leases in respect of
office premises and warehouse as follows:
2017 2016
US$'000 US$'000
Not later than one year 79 44
Later than one year and not
later than five years 137 -
216 44
======= =======
The leases run for an initial period of 2 to 3 years (2016: 2 to
3 years), with an option to renew the office premises lease upon
expiry when all terms are renegotiated.
27. CONTINGENT LIABILITIES
The Group had no material contingent liabilities at 31 December
2017 (2016: nil).
28. EVENT AFTER THE REPORTING DATE
Subsequent to the year ended 31 December 2017, the Company on 13
March 2018 announced an open offer of 28,367,290 new ordinary
shares at US$0.15 per share to shareholders on the basis of one new
share for every two existing shares held. In addition to the open
offer, the Company proposed to carry out subsequent placings of up
to 100,000,000 new ordinary shares should investor demand arise.
New ordinary shares may be issued under the placing programme until
12 March 2019. The Company received valid acceptances under the
open offer for 18,645,729 new ordinary shares. Mr Cheong took up
his open offer entitlements in full and, in his personal capacity
as the underwriter, subscribed for another 9,721,561 new ordinary
shares not taken up in the open offer. On 3 April 2018, the Company
announced the result of the open offer that raised aggregate gross
proceeds of US$4.2 million. Details relating to the fund raising
exercise of the Company can be found in the Company's open offer
and subsequent placings prospectus dated 13 March 2018 and its open
offer result announcement dated 3 April 2018.
Following the completion of open offer, the interests of the
individuals who were directors as at 4 April 2018 in the issued
share capital of the Company, including the interests of persons
connected with a director (within the meaning of Sections 252, 253
to 255 of the United Kingdom Companies Act 2006 as if the Company
were incorporated in England), the existence of which was known to,
or could with reasonable diligence be ascertained by, that
director, whether or not held through another party, were as
follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2017
28. EVENT AFTER THE REPORTING DATE (CONTINUED)
At 4 April 2018
No. of shares
Alastair Gunn-Forbes 45,000
Mr Cheong (Note) 9,303,870
Mark Chung Fong Nil
Ernest Chiu Shun She 550,095
Martyn Stuart Wells Nil
Note: Mr Cheong owns, in addition to the beneficial
interest in 9,303,870 ordinary shares
of US$0.001 each in the Company, 2 ordinary
shares of US$1 each in Grand Acumen
Holdings Limited ("GAH"), representing
25% of the issued share capital of GAH.
GAH beneficially owned 9,675,000 ordinary
shares of US$0.001 each in the Company
at 4 April 2018.
In addition, HC Investment Holdings
Limited ("HCIH") is wholly owned by
Mr Cheong. HCIH beneficially owned 20,000,000
ordinary shares of US$0.001 each in
the Company at 4 April 2018.
In total, Mr Cheong and his associates
were the legal and beneficial owners
of 38,978,870 ordinary shares of US$0.001
each in the Company, representing 45.8%
of the Company's enlarged issued share
capital, at 4 April 2018.
As at 4 April 2018, the Company was aware of the following
direct or indirect interests representing 5 % or more of the
Company's issued share capital:
Percentage
No. of shares of
enlarged
issued share
capital
HC Investment Holdings
Limited (Note i) 20,000,000 23.5%
Grand Acumen Holdings
Limited (Note i) 9,675,000 11.4%
Mr Cheong 9,303,870 10.9%
Luis Chi Leung Tong 5,000,000 5.9%
Lynchwood Nominees
Limited (Note ii) 18,750,000 22.0%
Vidacos Nominees Limited
(Note ii) 5,500,000 6.5%
Notes: Mr Cheong is the legal and beneficial
(i) owner of the entire issued share capital
of HC Investment Holdings Limited and
the legal and beneficial owner of 25%
of the issued share capital of Grand
Acumen Holdings Limited.
(ii) Lynchwood Nominees Limited and Vidacos
Nominees Limited act as custodians for
their customers, to whom they effectively
pass all rights and entitlements, including
voting rights.
INVESTMENT POLICY
The Company will invest in small to medium sized trading
companies, being companies, both start-up/early stage growth and
established, 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 regions. 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. 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's portfolio in due course will comprise 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.
Any material change to the Investment Policy may only be made
with the prior approval of the Shareholders.
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-Executive Chairman - aged 73
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 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
Limited, a recruitment company and also the Chairman of Future
Biogas Limited, a green energy company.
Henry Ying Chew Cheong - Executive Director and Deputy Chairman
- aged 70
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 Holdings Limited 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 was a member of the Securities and Futures Appeals
Tribunal and a member of the Advisory Committee of the Securities
and Futures Commission in Hong Kong ("SFC")(from 2009-2015). Mr
Cheong was previously a member of Disciplinary Panel A of Hong Kong
Institute of Certified Public Accountants (from 2005-2011). He was
a member of the Corporate Advisory Council of the Hong Kong
Securities Institute (from 2002-2009), a member of the Advisory
Committee to the SFC (from 1993-1999), a member of the board of
directors 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).
Mr Cheong is an Independent Non-Executive Director of CK Asset
Holdings Limited, CK 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.
BIOGRAPHICAL NOTES OF THE DIRECTORS (CONTINUED)
Ernest Chiu Shun She - Executive Director - aged 57
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 equity markets and having held executive management
positions and directorships at various investment banks and
financial institutions including, among others, Worldsec Corporate
Finance Limited and UOB Asia (Hong Kong) Limited.
Since rejoining the Group to assist in the reactivation of its
business operations in 2013, Mr She has been an Executive Director
of the Company working on private equity investments.
Mr She has a deep-rooted and long-standing connection with the
Worldsec group of companies being one of the co-founding team
members at the time when the entities were established in the early
1990s. For more than a decade that followed and until the disposal
by the Group of certain securities businesses to UOB Kay Hian
Holdings Limited in 2002, Mr She held 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.
Mark Chung Fong - Non-Executive Director - aged 66
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 obtained a bachelor's degree in science from the University
College, London in August 1972 and a Master's degree in science
from the University of Surrey in December 1973. He has been a
Fellow of the Institute of Chartered Accountants in England and
Wales since January 1983 and a Fellow of the Hong Kong Institute of
Certified Public Accountants ("HKICPA") since March 1986. He was
the President of the HKICPA in 2007. He has been appointed as the
Chairman of the Audit Committee of HKICPA and has also served on
the Council of the Institute of Chartered Accountants in England
and Wales since 2016.
Martyn Stuart Wells - Non-Executive Director - aged 73
Mr Wells was formerly an Executive Director of Citicorp
International Limited and has over 30 years' experience in the
securities industry. In 1969 he joined Vickers da Costa,
international stockbrokers. He was involved in the fund management
industry for 20 years and participated in the launch of several
country funds investing in the Asian region, serving as a director
or as a member of the investment advisory councils of several of
those funds. He lived in Hong Kong for almost 28 years and since
2000 has resided in England.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR IMMMTMBJJBAP
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April 30, 2018 06:45 ET (10:45 GMT)
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