15 Mar 2010 14:01
COMPANY NO: 1698076
WORLD TRADE SYSTEMS PLC |
REPORT AND FINANCIAL STATEMENTS |
¨ Year ended 30 September 2008¨ |
CONTENTS
Page
DIRECTORS AND ADVISERS 1
CHAIRMAN'S STATEMENT 2
FINANCIAL REVIEW 3
REPORT OF THE DIRECTORS 4
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS 8
DIRECTORS' REMUNERATION REPORT 9
INDEPENDENT AUDITORS' REPORT 11
INCOME STATEMENT 13
STATEMENT OF CHANGES IN EQUITY 13
BALANCE SHEET 14
CASH FLOW STATEMENT 15
NOTES TO THE FINANCIAL STATEMENTS 16
DIRECTORS AND ADVISERS
ROBERT LEE Non-executive Chairman, aged 60, is a solicitor admitted in England and Wales, Hong Kong, California, Ontario and Victoria (Australia). Since 1984 his professional career has been spent practising in the Far East, where he has been a partner in two international law firms. In 1988 he established his own firm, which has offices in Hong Kong and Tokyo, where he now lives. His practice is a general corporate and commercial one, centred on providing assistance for Japanese companies investing and operating overseas.
| ANTARES CHENG Non-executive Director, aged 52 is the Chief Executive Officer and major shareholder of the King Power group of companies based in Hong Kong. King Power is a large duty free goods and travel wholesaler and retailer operating in Hong Kong, Peoples Republic of China (PRC), Macau and Japan and has interests in other related activities.
|
SECRETARY Murzban Mehta
REGISTERED OFFICE Devonshire House 1 Devonshire Street London W1W 5DR
REGISTERED NUMBER 1698076
AUDITORS Grant Thornton UK LLP Churchill House Chalvey Road East Slough Berkshire SL1 2LS
REGISTRARS Capita Registrars Limited Northern House Penistone Road Fenay Bridge Huddersfield HD8 0LA |
CHAIRMAN'S STATEMENT
INTRODUCTION
The Company continued to seek new business opportunities during the year ended 30 September 2008.
RESULTS
The loss for the period of £84,000 (2007: £80,000) arises from administrative expenses and charges less rent receivable.
TRADING PROSPECTS
Your directors have been continuously reviewing and considering other business opportunities for the Company and we will keep shareholders advised of any significant developments.
Robert Lee
Non-executive Chairman
12 March 2010
Results
The Company has achieved a loss before tax of £84,000 (2007: £80,000).
Net liabilities as at 30 September 2008 were £400,000 (2007: £316,000).
Treasury and Financial Instruments
The Company has no financing facility with its bankers. It focuses on cash flows and monitors cash balances and requirements on a monthly basis.
On 15 May 2006 the Company obtained interest free unsecured loans totalling £120,000. These loans were repayable on demand and were due to be repaid on 31 March 2008. Since that date these loans have accrued interest at a rate of 6% per annum. No demand for repayment has been received.
The Company has an interest free unsecured loan of £260,000 from Kudrow Finance Limited the ultimate parent company.
On 12 February 2010 the Company obtained a further unsecured loan of £200,000 from Kudrow Finance Limited ("the new loan"). Under the terms of a loan agreement dated 12 February 2010 the new loan carries interest at the rate of 5% per annum and the existing loans totalling £260,000 are interest free until 12 February 2010 from when they carry interest at the rate of 5 % per annum. Under the terms of this loan agreement the new loan together with earlier loans fall due for repayment upon the earlier of 31 July 2011 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business. In the event of a default in payment of capital and or interest the loans will be capitalised from the date of default and shall carry interest at the rate of 10% per annum.
At 30 September 2008 the Company had cash on deposit with its bankers of £4,000 (2007: £62,000), and £46,000 held in a client account with Robert Lee Law Offices, Hong Kong (2007: £13,000).
Dividend Policy
The Directors take a prudent approach to dividend payments and will make payments only when commercially viable to do so, subject to the availability of distributable reserves.
Antares Cheng
Non-executive Director
12 March 2010
report of the directors
The Company Directors present their Report together with the audited financial statements for the year ended 30 September 2008.
PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENT
The Company was seeking investment opportunities throughout the period under review. The Company received rental income on freehold agricultural land.
A review of the business is given in the Chairman's Statement and in the Financial Review on pages 2 and 3.
The future development of the Company is under constant review by the Board.
The Company has no environmental matters, no employees and no essential contracts.
Results and dividends
The loss for the period before tax amounted to £84,000 (2007: £80,000). The loss attributable to ordinary shareholders after taxation was £84,000 (2007: £80,000). The Directors do not recommend the payment of a final equity dividend (2007: Nil). No interim dividend was paid (2007: Nil).
KEY PERFORMANCE INDICATORS
The Company's only source of income was rent received on freehold agricultural land which is let under an agricultural tenancy at a fixed annual rental.
The Company measures its performance by comparing budgeted cash flows to actual cash flows and monitors cash balances carefully. There are no other relevant key performance indicators being reviewed at this time.
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE COMPANY
The principal risk and uncertainty facing the Company relates to it finding suitable new business opportunities, within the timeframe of the current financing arrangements. Should such an opportunity not materialise the Board will take steps to wind up the Company.
FINANCIAL INSTRUMENTS
The Company's principal financial instruments comprise sterling cash and bank deposits, loans together with trade receivables and payables that arise directly from its operations.
The main risks arising from the Company's financial instruments can be analysed as follows:
Liquidity risk
Until such time as the Company acquires new business it is reliant upon continued financial support in the form of medium term loans from its ultimate parent company and others to enable it to meet its ongoing financial obligations.
Credit risk
The Company's principal financial assets are cash and cash equivalents, trade and other receivables which represent its maximum exposure to credit risk in relation to financial assets.
The Company's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables, estimated by management based on prior experience and their assessment of the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Cash flow interest rate risk
Interest bearing assets comprise cash and bank deposits all of which earn interest at a variable rate. The Company has no bank borrowings. The Company's existing borrowings are interest free until their extended due date for repayment. The Directors monitor overall borrowings and interest costs to limit any adverse effects on the financial performance of the Company.
Capital structure
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders. The Company believes that an optimum capital structure is achieved through equity and debt. Total deficit of equity at 30 September 2008 was £400,000 and debt was £397,000.
Directors and their interests
The membership of the Board at the end of the year is set out on page 1.
The Board was comprised of a non-executive Chairman, and a non-executive director neither of whom was independent. Brief biographies of the Board at the end of the period appear on page 1.
No Director had any interests in the shares of the Company.
Substantial interests
At 10 March 2010 the following had notified the Company of an interest in 3% or more of the nominal value of the Company's shares.
| Ordinary shares of 1p | % |
|
|
|
Kudrow Finance Limited | 5,308,640 | 60.64 |
Mushashino Industries Co. Limited | 500,000 | 5.71 |
CORPORATE GOVERNANCE
As the Company has no material operations and in order to maintain a restraint on administration costs, the Company has not complied with the provisions of the Combined Code.
THE BOARD AND THE COMMITTEES OF THE BOARD
The Board comprised of a non-executive Chairman, and a non-executive Director, neither of whom was independent. No formal meetings have been held during year. When and where appropriate, all Directors meet regularly to monitor and guide the Company's performance. All Directors have access to the advice and services of the Company Secretary, who is responsible for ensuring that Board procedures are observed and that applicable rules and regulations are complied with. Any Director, in furtherance of his duties, may take independent professional legal advice at the Company's expense.
The functions of the Audit Committee and Remuneration Committee have been carried out by the Board.
All Directors are subject to re-election at least every three years. Antares Cheng will retire by rotation and being eligible offers himself for re-election.
INTERNAL CONTROLS
The Board has overall responsibility for the Company's systems of internal control and for reviewing their effectiveness, which are appropriate to the activities of the Company and are designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material financial mis-statement or loss.
Throughout the period from 1 October 2007 up to the date of approval of the annual report and accounts the Directors have maintained close control over the Company's finances to ensure that at all times it has sufficient cash resources to meet its financial obligations.
Given the scale of the Company's operations the Board is of the view that formal internal audit procedures are not required.
AUDIT COMMITTEE
There is currently no Audit Committee and the Directors have carried out the functions normally reserved to such a Committee.
Relations with Shareholders
The Company encourages two-way communications with all its shareholders and responds quickly to all requests or queries received. All shareholders have at least twenty-one days' notice of the Annual General Meeting at which all of the Directors and the Chairman are normally available for questions. Comments and questions are encouraged from the shareholders at the meeting.
MARKET VALUE OF LAND
Based on a valuation report dated 4 July 2006 conducted by Savills (L & P) Limited Chartered Surveyors of Winchester, Hampshire the fair value of the Company's investment in freehold land was £110,000. However, in view of the reductions in land values generally throughout 2008 and 2009 the directors consider that the fair value of this investment is now £80,000.
Going Concern
Whilst the Board is active in considering business opportunities for the Company, should such an opportunity not materialise, having regard to the cashflow forecasts prepared in February 2010 the Directors consider that the Company has sufficient liquid resources to meet its financial requirements for the period up to 31 July 2011 when existing loans are due for repayment. Thereafter the Company would be reliant upon further financial support from the loan providers and will review the alternative options at that point in time.
Kudrow Finance Limited, the ultimate parent company, has provided interest free, unsecured loans totalling £260,000 ("the existing loans") to support the Company's financing requirements.
On 12 February 2010 the Company obtained a further unsecured loan of £200,000 from Kudrow Finance Limited ("the new loan"). Under the terms of a loan agreement dated 12 February 2010 the new loan carries interest at the rate of 5% per annum and the existing loans totalling £260,000 are interest free until 12 February 2010 from when they carry interest at the rate of 5% per annum. Under the terms of this loan agreement the new loan together with earlier loans fall due for repayment upon the earlier of 31 July 2011 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business. In the event of a default in payment of capital and/or interest the loans will be capitalised from the date of default and shall carry interest at the rate of 10% per annum.
The above loans were obtained to enable the Company to meet its on going financial obligations and to seek new business opportunities.
Taking account of these factors the Directors believe that the Company has adequate resources to continue as a going concern for the foreseeable future.
CREDITOR PAYMENT POLICY
It is not the Company's policy to follow any standard or code on payment practice. However, the Company agrees payment terms with its suppliers on an individual basis and abides by those payment terms. The average credit period taken is 60 days (2007: 60 days).
EMPLOYEES
Throughout the period and at the date of this report the Company had no employees.
POST BALANCE SHEET EVENTS
On 12 February 2010 the Company obtained a further unsecured loan of £200,000 from Kudrow Finance Limited ("the new loan"). Under the terms of a loan agreement dated 12 February 2010 the new loan carries interest at the rate of 5% per annum and the existing loans totalling £260,000 are interest free until 12 February 2010 from when they carry interest at the rate of 5 % per annum. Under the terms of this loan agreement the new loan together with earlier loans fall due for repayment upon the earlier of 31 July 2011 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business. In the event of a default in payment of capital and or interest the loans will be capitalised from the date of default and shall carry interest at the rate of 10% per annum.
DISCLOSURE OF INFORMATION TO AUDITORS
At the date of making this report each of the Company's Directors, as set out on page 1, confirm the following:
·; so far as each Director is aware, there is no relevant information needed by the Company's auditors in connection with preparing their report of which the Company's auditors are unaware, and
·; each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant information needed by the Company's auditors in connection with preparing their report and to establish that the Company's auditors are aware of that information.
AUDITORS
The auditors, Grant Thornton UK LLP, were appointed Auditors in succession to Robson Rhodes LLP following the merger of the two firms. Grant Thornton UK LLP have indicated their willingness to continue in office and a resolution to re-appoint them will be proposed at the Annual General Meeting.
APPROVAL OF REPORT
The report of the Directors was approved by the Board on 12 March 2010 and signed on its behalf by:
…………………………
Murzban Mehta - Secretary
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs).
The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing those financial statements, the Directors are required to:
·; select suitable accounting policies and then apply them consistently;
·; make judgements and estimates that are reasonable and prudent;
·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
·; state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In so far as each Director is aware
·; there is no relevant audit information of which the Company's auditors are unaware, and
·; the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
To the best of my knowledge:
·; the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and
·; the management report includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties which it faces.
Antares Cheng
Non- executive Director
12 March 2010
DIRECTORS' REMUNERATION REPORT
The Directors present the Directors' Remuneration Report for the financial period ended 30 September 2008.
This report has been prepared in accordance with Schedule 8 of Large & Medium sized Companies and Groups (Accounts and Reports) Regulations 2008. The report also meets the relevant requirements of the Listing Rules of the Financial Services Authority.
As required, a resolution to approve this Directors' Remuneration Report will be proposed at the company's Annual General Meeting.
The auditors are required to report to the shareholders on the "auditable part" of the Directors' Remuneration Report and to state whether in their opinion the "auditable part" of the Directors' Remuneration Report has been properly prepared in accordance with the Companies Act 1985. This Report therefore has separate sections containing unaudited and audited information.
UNAUDITED INFORMATION
Remuneration Committee
There is currently no Remuneration Committee and the Directors have carried out the functions normally reserved to such a Committee.
REMUNERATION POLICY
Executive Directors
There are no executive Directors on the Board.
Non-executive Directors
The Board determines the remuneration of the non-executive Directors and fees are related to current market levels for a comparable business.
Under a revised letter of engagement dated 9 September 2001 Robert Lee was entitled to receive fees at the rate of £7,500 per annum for his services as a non-executive Director. The appointment is terminable on three months written notice by either party. There are no contractual termination payments. As from 1 April 2003, by mutual agreement, fees payable to Robert Lee have been reduced to £1,000 per annum.
Antares Cheng was appointed to the Board as a non-executive Director on 1 July 2004. There is currently no contract of employment with the Company and he has not received any remuneration or benefits. The Board will consider and determine the level of his future remuneration at a time when the Company has acquired new business.
Total shareholder return
The following graph shows the Company's performance for the period from 1 October 2003 to 30 September 2008 as measured by the Total Shareholder Return (TSR) (with dividends reinvested), for equity shareholders of World Trade Systems plc, compared with the TSR for the FTSE All Share index. The Directors consider that as the Company currently has no trading activity there are no comparable companies or market sector and accordingly they have chosen the TSR for the FTSE All Share index as a suitable comparator.
(For graph please see pdf version at the end of this document)
Pension Arrangements
There are no UK pension schemes (either defined benefit or defined contribution) for the Directors.
INFORMATION SUBJECT TO AUDIT
Directors' emoluments
2008 2007
£'000 £'000
Non-executive Chairman
Robert Lee 1 1
Executive Director
Murzban Mehta 1 - 10
Non-executive directors
Richard Lascelles - 1
Antares Cheng - -
___ __
Total 1 12
____ ___
1 Murzban Mehta was the highest paid director in the previous period.
APPROVAL OF REPORT
The Directors' Remuneration Report was approved by the Board on 12 March 2010 and signed on its behalf by:
…………………………
Antares Cheng - Non-executive Director
Report of the independent auditor to the members of WORLD TRADE SYSTEMS PLC
We have audited the financial statements of World Trade Systems plc for the year ended 30 September 2008 which comprise the income statement, the balance sheet, the cash flow statement, the statement of changes in equity, and notes 1 to 19. These financial statements have been prepared under the accounting policies set out therein. We have also audited the information in the Directors' Remuneration Report that is described as having been audited.
This report is made solely to the Company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
The Directors' responsibilities for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with United Kingdom law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out in the Statement of Directors' Responsibilities on page 8.
Our responsibility is to audit the financial statements and the part of the Directors' Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. The information given in the Directors' Report includes that specific information presented in the Financial Review and Chairman's Statement that is cross referred from the Business Review section of the Directors' Report.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.
We review whether the Corporate Governance Statement reflects the Company's compliance with the nine provisions of the 2006 Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the Board's statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the Company's corporate governance procedures or its risk and control procedures.
We read other information contained in the Annual Report and consider whether it is consistent with the financial statements. The other information comprises only the Directors' Report, the unaudited part of the Directors' Remuneration Report, the Chairman's Statement and the Financial Review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements and the part of the Directors' Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Company's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the Directors' Remuneration Report to be audited are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Directors' Remuneration Report to be audited.
Opinion
In our opinion:
·; the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the Company's affairs as at 30 September 2008 and its loss for the year then ended;
·; the financial statements and the part of the Directors' Remuneration Report to be audited have been properly prepared in accordance with the Companies Act 1985; and
·; the information given in the Directors' Report is consistent with the financial statements.
Separate opinion in relation to IFRSs
As explained in Note 2 to the financial statements, the Company in addition to complying with IFRSs as adopted by the European Union, has also complied with the IFRSs as issued by the International Accounting Standards Board.
In our opinion the financial statements give a true and fair view, in accordance with IFRSs, of the state of the Company's affairs as at 30 September 2008 and of its loss for the year then ended.
Grant Thornton UK LLP Registered Auditor Chartered Accountants
Slough
15 March 2010
INCOME STATEMENT
For the year ended 30 September 2008
|
|
Note |
2008 |
2007 |
|
|
| £'000 | £'000 |
Continuing operations |
|
|
|
|
|
|
|
|
|
Operating income |
| 7 | 3 | 3 |
Administrative expenses |
|
| (70) | (85) |
Reversal of impairment expense |
| 8 | - _____ | 2 _____ |
|
|
|
|
|
Loss from operations |
| 3 | (67) | (80) |
|
|
|
|
|
Finance costs |
|
| (17) |
|
|
|
| _____ | _____ |
Loss before tax |
|
| (84) | (80) |
|
|
|
|
|
Income tax expense |
| 5 | - _____ | - _____ |
|
|
|
|
|
Loss for the year attributable to equity holders |
|
| (84) _____ | (80) _____ |
|
|
|
|
|
Basic and diluted loss per ordinary share |
| 6 | (0.960p) | (0.915p) |
|
|
| _____ | _____ |
|
|
|
|
|
|
|
|
|
|
There is no other recognised income or expense during the period.
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2008
|
|
Share capital |
Retained earnings |
Total |
|
| £'000 | £'000 | £'000 |
|
|
|
|
|
At 1 October 2006 |
| 4,378 | (4,614) | (236) |
Loss for the year |
| - | (80) | (80) |
|
| _____ | ______ | _____ |
At 30 September 2007 |
| 4,378 | (4,694) | (316) |
Loss for the year |
| - | (84) | (84) |
|
| _____ | ______ | _____ |
|
|
|
|
|
At 30 September 2008 |
| 4,378 | (4,778) | (400) |
COMPANY NO: 1698076
BALANCE SHEET
as at 30 September 2008
|
Note
|
|
2008 2007 £'000 £'000 | ||
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment property | 7 |
|
| 40 | 40 |
|
|
|
|
|
|
|
|
|
| ______ | _____ |
|
|
|
| 40 | 40 |
|
|
|
| ______ | _____ |
Current assets |
|
|
|
|
|
Trade and other receivables | 9 |
|
| 4 | 5 |
Cash and cash equivalents | 10 |
|
| 50 | 75 |
|
|
|
| ____ | _____ |
|
|
|
| 54 | 80 |
|
|
|
| ____ | _____ |
Total assets |
|
|
| 94 | 120 |
|
|
|
| ____ | _____ |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables | 11 |
|
| (97) | (56) |
Financial liabilities - borrowings | 11 |
|
| (397) | (380) |
|
|
|
| _____ | ______
|
Total liabilities |
|
|
| (494) | (436) |
|
|
|
| _____ | ______ |
|
|
|
|
|
|
Net liabilities |
|
|
| (400) | (316) |
|
|
|
| _____ | _____ |
Equity |
|
|
|
|
|
|
|
|
|
|
|
Share capital | 12 |
|
| 4,378 | 4,378 |
Retained earnings | 13 |
|
| (4,778) | (4,694) |
|
|
|
| ______ | ______ |
Total deficit of equity attributable to equity holders |
|
|
|
(400) ______ |
(316) ______ |
The financial statements were approved by the Board of Directors and authorised for issue on
12 March 2010 and signed on its behalf by:
Robert Lee - Non-executive Chairman
CASH FLOW STATEMENT
For the year ended 30 September 2008
| Note |
|
| 2008 | 2007 |
|
|
|
| £'000 | £'000 |
|
|
|
|
|
|
Net cash used in operating activities | 14 |
|
| (25) | (97) |
|
|
|
| _____ | _____ |
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
Cash proceeds from new loans |
|
|
| - | 100 |
|
|
|
|
|
|
|
|
|
| _____ | ____ |
Net cash received from financing activities |
|
|
| - | 100 |
|
|
|
| _____ | ____ |
|
|
|
|
|
|
Net decrease/(increase) in cash and cash equivalents |
|
|
| (25) | 3 |
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
75 |
72 |
|
|
|
| _____ | _____ |
|
|
|
|
|
|
Cash and cash equivalents at end of period | 10 |
|
| 50 | 75 |
|
|
|
| _____ | _____ |
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2008
1. GENERAL INFORMATION
World Trade Systems plc is a Company incorporated in the United Kingdom under the Companies Act 1985. The address of the registered office is given on page 1. The Company is currently seeking new investment opportunities and its only source of revenue is rental income.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which it operates. The Company has no foreign operations.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Preparation - Going concern
Whilst the Board is active in considering business opportunities for the Company, should such an opportunity not materialise, having regard to the cashflow forecasts prepared in February 2010 the Directors consider that the Company has sufficient liquid resources to meet its financial requirements for the period up to 31 July 2011 when existing loans are due for repayment. Thereafter the Company would be reliant upon further financial support from the loan providers and will review the alternative options at that point in time.
As at the year end Kudrow Finance Limited, the ultimate parent company, had provided interest free, unsecured loans totalling £260,000 to support the Company's financing requirements, the repayment periods of which, post year end, have been extended and are due for repayment on 31 July 2011.
On 15 May 2006 the Company obtained interest free unsecured loans totalling £120,000. These loans were repayable on demand and by agreement the repayment date had been extended to 31 March 2008. No demand has been received for repayment but Kudrow Finance Limited has made arrangements to meet these obligations should repayment be demanded.
On 6 February 2007 the Company obtained a further interest free unsecured loan of £100,000 from Kudrow Finance Limited the earliest date for repayment of this loan was 31 March 2008, but post year end has been extended to 31 July 2011.
Subsequent to the year end Kudrow Finance Limited has provided further funding of £200,000 to enable the Company to meet its ongoing financial obligations.
Taking account of these factors the Directors believe that the Company has adequate resources to continue as a going concern for the foreseeable future.
b) IFRSs in issue but not effective
At the date of authorisation of this report the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:
IAS 1 (revised 2007) Presentation of financial statements (effective 1 January 2009)
IFRS 7 (amendment) Improving disclosures about financial instruments (effective 1 January 2009)
IFRS 9 Financial instruments (effective 1 January 2013)
IAS 24 Related Part Disclosures (Effective 1 January 2011)
Improvements to IFRSs 2009 (various effective dates, earliest of which is 1 July 2009, but mostly 2010.
Other than disclosure, the directors do not anticipate any significant impact as a result of these new standards.
c) Basis of Preparation - Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standard (IFRS's) as adopted by the European Union (EU).
The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards. The accounting policies set out below have been applied consistently in all periods presented in these financial statements. The financial statements are for the Company only. The Tamaris Employees Share Option Scheme Trust ("the trust") has no material effect on the Income Statement or Balance Sheet. Details of the trust have been disclosed in Note 12 to the financial statements.
d) Revenue recognition
Rental Income from operating leases is recognised on a straight line basis over the term of the relevant lease.
e) Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the Income Statement.
f) Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any tax payable in respect of previous years.
Full provision for deferred taxation is made using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for taxation purposes.
Deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or the initial recognition (other than a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
g) Investment property
Investment property comprised of agricultural land held to earn rentals and for capital appreciation is stated at its cost less impairment losses. Investment property is not depreciated. The value of the investment property is reviewed annually and where there is permanent impairment of the value this is written off to the Income Statement.
h) Financial instruments and equity instruments
Financial assets and liabilities are recognised on the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
(i) Trade and other receivables
Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in the Income Statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.
(ii) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
(iii) Trade and other payables
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
(iv) Borrowings
Borrowings are recorded at the proceeds received, net of direct issue costs. Finance costs are accounted for on an accruals basis and are charged to the Income Statement using the effective interest method.
(v) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.
i) Segmental analysis
As the Company has only one segment a segmental analysis is not required.
3. LOSS FROM OPERATIONS
Loss from operations is stated after charging: |
| 2008 £'000 | 2007 £'000 |
|
|
|
|
Loss on Foreign exchange |
| - | 2 |
Auditors' remuneration |
|
|
|
Fees payable to the Company's auditor for the audit of the financial statements |
|
|
|
|
|
|
|
- statutory audit |
|
|
|
Current year |
| 13 _____ | 13 _____ |
4. DIRECTORS' EMOLUMENTS
Basic salary/fees | 2008 £'000 |
2007 £'000 |
|
|
|
Executive Director |
|
|
M K Mehta (a) | - | 10 |
Non-executive directors - fees |
|
|
R Lascelles | - | 1 |
R Lee | 1 | 1 |
A Cheng | - | - |
| ____ | ____ |
| 1 | 1 |
| ____ | ____ |
a) Fees paid to Citroen Wells in respect of making available the services of M K Mehta to the Company during the year ended 30 September 2007 in accordance with the letter of engagement.
b) There were no pension contributions for directors in the year to 30 September 2008 (2007: Nil).
The Company has no employees. The Company considers the Directors to be the key personnel.
5. TAXATION
| 2008 £'000 | 2007 £'000 |
|
|
|
Loss for the year | (84) | (80) |
Expected income tax benefit @28% (2007: 28%) | (23) | (22) |
Adjustment for
Expenditure disallowed for tax purposes Tax losses not brought to account |
2 21 _____ |
- 22 _____
|
Actual tax expense | - _____ | - _____
|
|
|
|
Reconciliation of carried forward tax losses |
|
|
|
|
|
Loss on ordinary activities before tax | (76) | (80) |
Losses brought forward | (1,050) | (970) |
| ______ | ______ |
|
(1,126) |
(1,050) |
| ______ | ______ |
A deferred tax asset has not been recognised in respect of these losses, as the conditions for recognising such an asset are not evident. The estimated value of the deferred tax asset not recognised, at a standard rate of 28% (2007: 28%), is £315,000 (2007: £294,000).
6. LOSS PER ORDINARY SHARE
The calculation of the basic loss per share is based on the loss after taxation attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. Shares held in employee trusts are treated as cancelled for the purpose of this calculation.
Reconciliations of the loss and weighted average number of shares used in the calculations are set out below:
Year ended 30 September 2008 |
Loss £'000 | Weighted average number of shares |
Per share loss pence (p) |
|
|
|
|
Basic and diluted loss per share | (84) | 8,747,367 | (0.960) |
|
| __________ |
|
Year ended 30 September 2007 |
|
|
|
|
|
|
|
Basic and diluted loss per share | (80) | 8,747,367 | (0.915) |
|
| __________ |
|
7. INVESTMENT PROPERTY
2008 2007
£'000 £'000
Land at cost 40 40
___ ___
Based on a valuation report dated 4 July 2006 conducted by Savills (L & P) Limited Chartered Surveyors of Winchester, Hampshire the fair value of the Company's investment in freehold land was £110,000. However, in view of the current market conditions the Directors are of the opinion that the fair value of the investment property is £80,000. The rental income earned by the Company from its investment property which is leased out on an agricultural tenancy which continues year to year amounted to £3,000 (2007: £3,000).
8. INVESTMENTS
|
|
|
|
Investment in subsidiary |
| 2008 £'000 | 2007 £'000 |
Cost |
|
|
|
At 1 October |
| - | 3,378 |
|
|
|
|
Disposal |
| - | (3,378) |
|
| _____ | _____ |
At 30 September |
| - _____ | - _____ |
Provision |
|
|
|
At 1 October |
| - | (2,869) |
Reversal of impairment expense |
| - | 2 |
Eliminated on disposal |
| - | 2,867 |
|
| _____ | _____ |
At 30 September |
| - | - |
|
| _____ | _____ |
Net book value |
| - _____ | - _____ |
The Company's only 100% owned subsidiary in the previous period was Lifecare International Limited a
company incorporated in England and Wales which had been dormant. On 6 February 2007, following an application made by the Directors to the Registrar of Companies , Lifecare International Limited was dissolved under the provisions of section 652a of The Companies Act 1985. The amounts owed to the subsidiary have therefore been deemed as consideration on the disposal of the investment. This represented the economic benefit to the Company and impairment of the investment had been adjusted accordingly.
| 2008 £'000 £'000 | 2007 £'000 £'000 | ||
Redemption of amounts owed to subsidiary |
| - |
| 511 |
|
|
|
|
|
Cost of investment in subsidiary | - |
| 3,378 |
|
Impairment provision | - _______ |
| (2,867) ______ |
|
Net carried value of Investment in subsidiary |
| - |
| 511 |
|
| _____ |
| _____ |
Gain on disposal |
| - |
| - |
|
| _____ |
| _____ |
9. OTHER FINANCIAL ASSETS
Trade and other receivablesat the balance sheet date comprise:
|
|
| 2008 | 2007 |
|
|
| £'000 | £'000 |
Rental debtor |
|
| 4 | 1 |
Prepayments |
|
| - ____ | 4 _____ |
|
|
| 4 | 5 |
|
|
| ____ | _____ |
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
10. CASH AND CASH EQUIVALENTS
|
|
| 2008 | 2007 |
|
|
| £'000 | £'000 |
Cash at bank |
|
| 4 | 62 |
Cash held on Solicitors' Client Account (Note 18) |
|
| 46 | 13 |
|
|
| ___ | ___ |
|
|
| 50 | 75 |
|
|
| ___ | ___ |
Bank balances and cash comprise cash held by the Company and short term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.
11. OTHER FINANCIAL LIABILITIES
Trade and other payables comprise amounts outstanding for services provided and accrued expenses. The average credit period taken is 60 days. Financial liabilities comprise:
|
|
| 2008 | 2007 |
|
|
| £'000 | £'000 |
Trade payables |
|
| 1 | 1 |
Accrued expenses |
|
| 96 | 55 |
Financial liabilities - borrowings |
|
| 137 | 120 |
Financial liabilities - amounts owed to ultimate parent company |
|
| 260 | 260 |
|
|
| ____ | _____ |
|
|
| 494 | 436 |
|
|
| ____ | _____ |
The Directors consider that the carrying amount of trade payables approximates to their fair value. The fair value of the Financial Liabilities is estimated using a valuation technique where all significant inputs are based on observable market prices, e.g. market interest rates of similar loans with a similar risk.
Other borrowings comprise unsecured loans totalling £120,000. These loans were repayable on demand and by agreement the repayment date had been extended to 31 March 2008. No demand has been received for repayment. Under the terms of the agreement the lenders are entitled to charge interest on the Loans at the rate of 6% per annum from the date of the advance on 15 May 2006 and within the amount disclosed above is a provision for interest payable for the period from 15 May 2006 to 30 September 2008 of £17,000.
Amounts owed to the ultimate parent company are unsecured and interest free and were due for repayment on 31 March 2008 but by agreement the repayment date has been extended to 31 July 2011. As from 12 February 2010 these loans carry interest at the rate of 5% per annum.
12. CALLED UP SHARE CAPITAL
| 2008 | 2007 | ||
| Number | £'000 | Number | £'000 |
Authorised |
|
|
|
|
Ordinary shares of 1p each Deferred shares of 49p each
| 11,041,237 11,041,237 | 110 5,411 _______ | 11,041,237 11,041,237 | 110 5,411 _______ |
|
| 5,521 _______ |
| 5,521 ______ |
Allotted, called up and fully paid |
|
|
|
|
Ordinary shares of 1p each Deferred shares of 49p each | 8,753,867 8,753,867 | 88 4,290 ______ | 8,753,867 8,753,867 | 88 4,290 ______ |
|
| 4,378 ______ |
| 4,378 _____ |
On 12 April 2006 by ordinary resolution passed at a general meeting the ordinary shares of 50p each in the capital of the Company were sub-divided and reclassified as 1 Ordinary Share of 1p and 1 Deferred Share of 49p. A special resolution passed on the same date approved the reduction of share capital by cancelling and extinguishing all of the issued deferred shares of 49p each in the company, subject to approval of the Court. No application has yet been made to the Court for the reduction of capital.
The deferred shares do not entitle the holder to payment of any dividend or other distribution or to receive Notice of or attend or vote at any General Meeting of the company or on a return of capital to the repayment of the amount paid on such deferred shares until after repayment of the capital paid up on the Ordinary Shares together with payment of £1,000,000 on each Ordinary Share and the Deferred Shares shall not be capable of transfer at any time other than with the consent of the Directors.
Tamerise Limited was the trustee of The Tamaris Employees Share Option Scheme Trust ("the Trust") and was dissolved on 23 January 2001. World Trade Systems plc ("the Employer") will appoint alternative independent trustees when considered appropriate. Under the terms of the Trust, the trustees may acquire ordinary shares in World Trade Systems plc from time to time, either in the market or by subscription. Benefits may be conferred on selected employees of World Trade Systems plc and/or its subsidiaries (both current and future subsidiaries) at the discretion of the trustees by methods including a direct bonus payment in cash or in shares with no payment required from the employee, a direct transfer of shares with payment of all or part required by the employee or the transfer of shares to an employee who exercises an option under World Trade Systems' existing share option schemes.
All acquisitions have been funded by non-interest bearing loans from World Trade Systems plc. The total trust holding of 6,501 ordinary shares of 1p each at 30 September 2008 (2007: 6,501 shares of 1p each) represented 0.07% (2007: 0.07%) of World Trade Systems plc's issued ordinary share capital. Following the reorganistion of share capital on 12 April 2006 the trust also holds 6,501 deferred shares of 49p (2007: 49p).
Any costs involved in the administration of the trust are charged to the general overheads of World Trade Systems plc.
13. RETAINED EARNINGS
|
| 2008 | 2007 |
|
| £'000 | £'000 |
At 1 October |
|
(4,694) |
(4,614) |
Loss for the year |
| (84) | (80) |
|
| ______ | ______ |
At 30 September |
|
|
|
|
| (4,778) ______ | (4,694) ______ |
14. NOTES TO THE CASH FLOW STATEMENT
|
|
| 2008 £'000 | 2007 £'000 |
Net loss |
|
|
(84) |
(80) |
Reversal of impairment of investment in subsidiary |
|
| - | (2) |
Decrease in receivables |
|
| 1 | 9 |
Increase/(decrease) in payables |
|
| 58 | (24) |
|
|
| ___ | ___ |
Net cash outflow from operating activities |
|
| (25) | (97) |
|
|
| ___ | ___ |
|
|
|
|
|
15. FINANCIAL COMMITMENTS
Other commitments
2008 2007
£'000 £'000
Professional fees - 50
_____ _____
The financial commitment in the prior year would have become payable on Inter-Asia Consulting Company Inc. successfully introducing a business opportunity. This arrangement was terminated during the year.
16. FINANCIAL INSTRUMENTS
The Company's principal financial instruments comprise sterling cash and bank deposits, loans together with trade receivables and payables that arise directly from its operations.
The main risks arising from the Company's financial instruments can be analysed as follows:
Liquidity risk
Until such time as the Company acquires new business it is reliant upon continued financial support in the form of medium term loans from its ultimate parent company and others to enable it to meet its ongoing financial obligations.
As at the balance sheet date the Company's liabilities have contractual maturities (including interest payments where applicable) as summarised below:
2008 2007
|
| Within 6 months | 6 to 12 months | Within 6 months | 6 to 12 months |
|
| £'000 | £'000 | £'000 | £'000 |
Trade and other payables (note 11) |
| 97 | - | 56 | - |
Financial liabilities - borrowings (note 11) |
| 137 | - | 120 | - |
Financial liabilities - parent (note 11) |
| 260 | - | - | 260 |
|
| _____ | _____ | ____ | ____ |
|
| 494 _____ | - _____ | 176 ____ | 260 ____ |
Kudrow Finance Limited has indicated its willingness to provide financial support to meet the repayment of the Company's borrowings.
Credit risk
The Company's principal financial assets cash and cash equivalents and trade and other receivables.
The Company's credit risk is primarily attributable to its trade receivables. The amounts presented in the Balance Sheet are net of allowances for doubtful receivables, estimated by Directors based on prior experience and their assessment of the current economic environment.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
An analysis of credit risk is summarised below
Some of the unimpaired trade receivables (note 9) are past due as at the reporting date and are shown as follows:
| 2008 | 2007 |
| £'000 | £'000 |
Not more than 3 months | 3 | 1 |
More than 3 months but not more than 6 months | - | - |
More than 6 months but not more than 1 year | - | - |
More than 1 year | 1 | - |
| __ | __ |
| 4 __ | 1 __ |
Interest rate risk
Interest bearing assets comprise cash and bank deposits all of which earn interest at a variable rate. The Company has no bank borrowings. The Company's existing borrowings are interest free until their extended due date for repayment up to which time they incur interest at a rate of 6% per annum. The Directors monitor overall borrowings and interest costs to limit any adverse effects on the financial performance of the Company.
The table below illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/- 1% (2007: +/- 1%) on cash and cash equivalents.
| 2008 | 2007 |
Sensitivity | £'000 | £'000 |
Increase 1% | 1 | 1 |
Decrease 1% | (1) | (1) |
| ___ | ___ |
Foreign currency risk
Foreign currency denominated financial assets all have short term exposure and are translated into GBP at the closing rate, as follows:
| 2008 | 2007 |
| £'000 | £'000 |
HKD Bank account | - | 50 |
| ____ | ____ |
|
|
|
The following table illustrates the sensitivity of profit with regard to the exchange rate impact and all other things being equal. This assumes a +/- 20% change of the GBP/HKD exchange rate for the year ended 30 September 2008 (2007: 12%) which represents the volatility in the high-low exchange rates for each given year.
Profit impact |
| 2008 | 2007 |
|
| £'000 | £'000 |
GBP weakened |
| - | 6 |
GBP strengthened |
| - | (6) |
|
| ____ | ___ |
The Company's Directors are based in Hong Kong and in order to maintain close control over the Company's finances, in addition to funds held in a London based bank account, funds have also been held in a bank account in Hong Kong from which account funds are either remitted to London or payments made directly to providers of services.
17. RELATED PARTY TRANSACTIONS
Kudrow Finance Limited, the ultimate parent company, has provided unsecured, interest free loans totalling £260,000 (2007: £260,000), which have been sourced from Glory Time Holdings Inc, a company under the control of a non-executive Director Antares Cheng. The loans were due for repayment on 31 March 2008 but by agreement the repayment date has been extended to 31 July 2011. As from 12 February 2010 these loans carry interest at the rate of 5% per annum.
Remuneration of key management personnel
The remuneration of the executive Director is set out below in aggregate for the categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual directors is provided in the audited part of the Directors' Remuneration report on page 10.
| 2008 | 2007 |
| £'000 | £'000 |
Short-term employee benefits | 1 | 10 |
| ____ | ____ |
Directors' transactions
Murzban Mehta a former executive Director of the Company is a partner in the firm of Citroen Wells, Chartered Accountants. During the previous period the Company paid fees totalling £6,500 for accountancy services provided by Citroen Wells. The total balance outstanding as at 30 September 2007 was £6,000.
Robert Lee a non-executive director is the principal of Robert Lee Law Offices which at 30 September 2008 held funds on behalf of the Company in a Clients Account amounting to £45,921 (2007: £12,985). Robert is also a Director/Shareholder of Inter-Asia Consulting Group Inc. Under the terms of an agreement Inter-Asia
Consulting Group Inc would have been entitled to receive a fee of £50,000 on the Company successfully concluding new business arrangements referred to it. This agreement was terminated during the year. At 30 September 2008 the company owed Robert Lee £8,200 in respect of unpaid director's fees (2007: £7,200). Proclass Limited, a company incorporated in the British Virgin Islands is a Corporate Director of Kudrow Finance Limited, the ultimate parent company. Robert Lee is a director of Proclass Limited and by virtue of this office is able to influence the decision making process of Kudrow Finance Limited.
Antares Cheng a non-executive Directoris also a director and controlling shareholder in Glory Time Holdings Inc.
18. ULTIMATE CONTROLLING PARTY
The Directors consider Kudrow Finance Limited ("Kudrow") a company incorporated in the British Virgin Islands as its Ultimate Parent Company. Kudrow has entered into an informal arrangement with Glory Time Holdings Inc ("Glory Time") - a company controlled by Antares Cheng - whereby Glory Time, at its discretion, makes available such funding as is required by Kudrow to enable it to support World Trade Systems plc. By virtue of this arrangement and the discretion and influence exercised by Glory Time the Directors consider Glory Time and Antares Cheng as it Ultimate Controlling Parties.
19. POST BALANCE SHEET EVENTS
On 12 February 2010 the Company obtained a further unsecured loan of £200,000 from Kudrow Finance Limited ("the new loan"). Under the terms of a loan agreement dated 12 February 2010 the new loan carries interest at the rate of 5% per annum and the existing loans totalling £260,000 are interest free until 12 February 2010 from when they carry interest at the rate of 5% per annum. Under the terms of this loan agreement the new loan together with earlier loans fall due for repayment upon the earlier of 31 July 2011 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business. In the event of a default in payment of capital and or interest the loans will be capitalised from the date of default and shall carry interest at the rate of 10% per annum.
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