16 Aug 2016 17:15
Company No. 01698076
WORLD TRADE SYSTEMS PLC |
REPORT AND FINANCIAL STATEMENTS |
¨ Period ended 31 December 2015¨ |
CONTENTS Page
DIRECTORS AND ADVISERS
STRATEGIC REPORT 2
REPORT OF THE DIRECTORS 4
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENT 7
DIRECTORS' REMUNERATION REPORT 8
INDEPENDENT AUDITOR'S REPORT 10
STATEMENT OF COMPREHENSIVE INCOME 14
STATEMENT OF CHANGES IN EQUITY 14
STATEMENT OF FINANCIAL POSITION 15
STATEMENT OF CASH FLOWS 16
NOTES TO THE FINANCIAL STATEMENTS 17
DIRECTORS AND ADVISERS
ROBERT LEE Non-executive Chairman, aged 66, 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.
CLIO LEE Non-executive Director, aged 40 qualified as a solicitor in 2002 at London based niche corporate boutique Memery Crystal where she focused on company commercial work. Clio has practised commercial law and also acted in a business advisory capacity in the UK for over 10 years. Clio also has a broad range of experience in international property development both in a legal capacity and as a development consultant.
| ANTARES CHENG Non-executive Director, aged 58 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.
MURZBAN MEHTA Non-executive Director, aged 68 is a Certified Accountant in Public Practice in the UK. He was appointed to the Board in an alternate director capacity and plays no active role in the management of the company.
DR SHAO CHEN Non Executive Director aged 38 is a graduate of the China Pharmaceutical University, Bachelor of Pharmaceutical analysis and obtained a doctorate from Peking University of Pharmaceutical Sciences. He is the Chairman of Suzhou Weibao Investment Co Ltd and SZWK Tianchen Biotech Ltd. |
SECRETARY Murzban Mehta
REGISTERED OFFICE Devonshire House 1 Devonshire Street London W1W 5DR
REGISTERED NUMBER 01698076
AUDITOR Grant Thornton UK LLP 1020 Eskdale Road Winnersh Wokingham Berkshire RG41 5TS
REGISTRARS Capita Registrars Limited The Registry 34 Beckenham Road Kent BR3 4TU |
strategic report FOR THE PERIOD ENDED 31 december 2015
The Company Directors present their Strategic Report for the period ended 31 December 2015.
BUSINESS REVIEW
The Company continued to have no business activity and was seeking investment opportunities throughout the year under review. The Company received rental income on freehold agricultural land.
RESULTS
The Company's accounting reference period was extended to cover the period from 1 October 2014 to 31 December 2015.
The loss for the period of £152,000 (Year ended - 30 September 2014: £100,000) arises from administrative expenses and charges less rent receivable. The increase in the loss is due to this accounting period being of 15 months compared to 12 months previously. On a like for like basis the loss for a 12 month period to 30 September 2014 would have been £122,000. The increase in the like for like loss is attributed to legal expenses which the company has incurred in examining new business opportunities and in defending a proposed action by the UKLA to de-list the company's securities.
At 31 December 2015 the Company had net liabilities of £1,103,000 (30 September 2014: £951,000).
TREASURY AND FINANCIAL INSTRUMENTS
The Company has no financing facility with its bankers and is financed by loans from its parent company Kudrow Finance Limited. The Board focuses on cash flows and monitors cash balances and requirements on a monthly basis.
At 31 December 2015 the company had an indebtedness due of £60,000 in respect of a loan first obtained on 15 May 2006. Under the terms of the agreement entered into interest has continued to accrue on this loan as from 31 March 2008 at a rate of 6% per annum. At 31 December 2015 accrued interest on this loan amounted to £34,000 (30 September 2014: £30,000). To date no demand has been received from the lender for repayment and the parent company Kudrow Finance Limited ("Kudrow") has undertaken to procure the necessary funding to discharge any demand for the remaining loan and interest as and when received.
The Company has an unsecured loan of £795,363 from Kudrow, including £71,563 advanced during the period to 31 December 2015 ("the new loan") for on-going working capital requirements.
Under the terms of the revised loan agreement dated 20 January 2015 the loans carry interest at the rate of 5% per annum from the earlier of 12 February 2010 or date of advance if later, and are due for repayment on the earlier of 31 July 2017 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 rolled up into the principal loan from the date of default and shall carry interest at the rate of 10% per annum. As at 31 December 2015, £181,000 (30 September 2014: £132,000) of interest was outstanding.
Subsequently, on 20 June 2016 Kudrow has provided a further working capital loan in the sum of £117,500.
Kudrow has unconditionally undertaken to provide such further financial support as may be required.
At 31 December 2015 the Company had cash on deposit with its bankers of £8,000 (30 September 2014: £13,000), and £100 held in a client account with Robert Lee Law Offices, Hong Kong (30 September 2014: £12,000).
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. The actual net cash outflows for the period exceeded the budget by £17,000 principally attributed to legal and professional expenses incurred in examing new business opportunities and in defending a proposed action by the UKLA to de-list the company's securities 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 and if new financing arrangements are not forthcoming the Board will consider taking steps to wind up the Company.
OTHER MATTERS
As the Company has no current business activity or employees, this report therefore does not contain information as to the following as it is not deemed relevant to the Company:
· its business strategy and business model;
· policy on environmental matters;
· employees; and
· social community and human rights issues
As the Company has no business activity there are therefore no greenhouse gas emissions generated which require separate report.
RECENT EVENTS AND FUTURE PROSPECTS
On 15 February 2016 your Board announced that the Company had been approached by Avalon Enterprises Ltd ("Avalon") and JH Global Partners Ltd ("JH Global") to inject a new business into the Company and to seek a relisting of the Company through lifting of the suspension of trading in the Company's shares and that a Memorandum of Understanding ("MOU") had been executed with Suzhou Weibao Investment Co Ltd ("SZWB") which, in summary, provides for certain actions and events, of which the most relevant have been summarized below.
SZWB., a PRC corporation located in Suzhou China has been engaged in health care businesses involving the production and sale of bio-tech medical and healthcare products as well as in investment in research, development and patenting of biotechnical processes and formula used to make the products which it sells.
On 22 June 2016, the Company established Shimao Bio-technology Co. Ltd., a new wholly-owned subsidiary in Suzhou, China ("WTS China") which has been fully licensed as a wholly foreign-owned enterprise ("WFOE") to engage in (i) the manufacture and sale of
bio-technical medical and healthcare products; (ii) domestic and cross-border mergers and acquisitions of bio-technical and other related businesses; and (iii) the development and management of off-shore and domestic care centres for the elderly (collectively the "WTS China Business"). These business activities and/or the know-how relating thereto have been made available to WTS China by SZWB and other companies in its group.
Following the execution of the MOU, Dr. Shao Chen, founder and Chairman of SZWB, joined the Board of Directors of the Company.
More details concerning various agreements and transactions relating to the above events will be forthcoming at the next AGM.
THE BOARD AND THE COMMITTEES OF THE BOARD
The Board is comprised of a non-executive Chairman, and four non-executive Directors one of whom is female. One of the non-executive directors is independent. The Board formally met 3 times during the year. When and where appropriate, the Directors meet 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.
All Directors are subject to re-election at least every three years. Murzban Mehta will retire by rotation and being eligible offers himself for re-election. Dr Shao Chen appointed prior to the forthcoming Annual General Meeting will retire and being eligible offers himself for re-election.
The Strategic Report was approved by the Board on 11 August 2016 and signed on its behalf by:
Robert Lee
Non-executive Chairman
11 August 2016
report of the directors
The Company Directors present their Report together with the audited financial statements for the period ended 31 December 2015.
PRINCIPAL ACTIVITIES, BUSINESS REVIEW AND FUTURE DEVELOPMENT
A review of the business is given in the Strategic Report on pages 2 and 3.
An overview of the future development of the Company is provided in the Strategic Report.
Results and dividends
The loss for the period before and after tax, attributable to ordinary shareholders amounted to £152,000 (Year ended 30 September 2014: £100,000). The Directors do not recommend the payment of a final equity dividend (Year ended 30 September 2014: Nil). No interim dividend was paid (Year ended 30 September 2014: Nil).
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 and trade and other receivables which represent its maximum exposure to credit risk in relation to financial assets.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
The credit risk on liquid funds held by Robert Lee Law Offices on behalf of the Company, in a designated client account, is mitigated as far as possible as these funds are also held with a high credit-ratings bank and Robert Lee Law Offices are monitored and reviewed in a regulated environment.
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 from its parent company were interest free until 12 February 2010 after which they began to accrue interest at a fixed rate of 5% per annum. Borrowings from third parties accrue interest at a fixed 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.
Directors and their interests
The membership of the Board as at the date of approval of this report is set out on page 1.
The Board was comprised of a non-executive Chairman, and four non-executive Directors, one 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.
report of the directors - (Continued)
Substantial interests
At 10 August 2016 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 |
On 18 May 2016 the company announced the transfer of 2,500,000 shares representing 28.55% of the issued capital from Kudrow Finance Limited to SZWB. At the date of this report the transfer has not been formally registered as it is subject to a condition subsequent, namely, the re-listing of the company's shares on the London Stock Exchange. 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 UK Corporate Governance Code. The functions of the Audit Committee and Remuneration Committee have been carried out by the Board.
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 misstatement or loss.
As the Company had no material operations in the period under review there were no formal internal control systems or risk management systems in relation to the financial reporting process. The Board monitors and approves all payments made by the Company and ensures that at all times there are adequate financial resources to enable the Company to meet its obligations. The Board reviews the financial reports provided to it by the Company's external accountants to mitigate the risk of misstatement.
Throughout the period from 1 October 2014 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.
The Directors, therefore, ensure that the external auditor is independent via the segregation of audit related work from other accounting functions and measures applicable fees with similar auditors.
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.
OTHER MATTERS
As the Company has no business activity there are therefore no greenhouse gas emissions generated which require separate report.
Going Concern
Whilst the Board is active in considering business opportunities for the Company, should such an opportunity not materialise, having regard to the cash flow forecasts prepared in May 2016 the Directors consider that the Company has sufficient liquid resources to meet its financial requirements for the period up to 31 August 2017. 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 ("Kudrow"), the parent company, has provided unsecured loans totalling £795,363 ("the existing loans") to support the Company's financing requirements, including £71,563 advanced in the period to 31 December 2015 for working capital purposes. Subsequently, on 20 June 2016 Kudrow has provided a further working capital loan in the sum of £117,500. Since 12 February 2010, or the date of advancement if later, the total loan balance carries interest at a rate of 5% per annum.
Under the terms of this loan agreement the repayment date is the earlier of 31 July 2017 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 rolled up into the principal loan from the date of default and shall carry interest at the rate of 10% per annum. Kudrow has unconditionally undertaken to provide such further financial support as may be required.
The above loans were obtained to enable the Company to meet its on going financial obligations and to seek new business opportunities.
At 31 December 2015 the company had an indebtedness due of £60,000 in respect of a loan first obtained on 15 May 2006. Under the terms of the agreement entered into interest has continued to accrue on this loan as from 31 March 2008 at a rate of 6% per annum. At 31 December 2015 accrued interest on this loan amounted to £35,000 (30 September 2014: £30,000). To date no demand has been received from the lender for repayment and the parent company Kudrow Finance Limited ("Kudrow") has undertaken to procure the necessary funding to discharge any demand for the remaining loan and interest as and when received.
The parent company Kudrow Finance Limited ("Kudrow") has undertaken to procure the necessary funding to discharge any demand for the remaining loan and interest as and when received.
Taking account of these factors and the post balance sheet events the Directors believe that the Company has adequate resources to continue as a going concern for the foreseeable future.
EVENTS AFTER REPORTING PERIOD
On 20 June 2016 the Company obtained a further loan of £117,500 from Kudrow Finance Limited which is repayable on the earlier of 31 July 2017 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business.
On 22 June 2016, the Company established Shimao Bio-technology Co. Ltd., a new wholly-owned subsidiary in Suzhou, China ("WTS China") which has been fully licensed as a wholly foreign-owned enterprise ("WOFE") to engage in (i) the manufacture and sale of
bio-technical medical and healthcare products; (ii) domestic and cross-border mergers and acquisitions of bio-technical and other related businesses; and (iii) the development and management of off-shore and domestic care centres for the elderly (collectively the "WTS China Business").
AUDITOR
Grant Thornton UK LLP, offer themselves for re-appointment as auditor. A resolution to re-appoint Grant Thornton UK LLP will be proposed at the forthcoming annual general meeting.
APPROVAL OF REPORT
The Report of the Directors was approved by the Board on 11 August 2016 and signed by order of the Board by:
_______________________
Murzban Mehta - Secretary
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The directors are responsible for preparing the Strategic Report, Directors' Report, the Remuneration Report and 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 to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and prudent;
· state whether applicable IFRSs have been followed, subject to any material departures disclosed and explained in the financial statements;
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Remuneration Report comply with the Companies Act 2006 and Article 4 of the IAS Regulation. 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.
The directors confirm that:
· so far as each director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
· the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.
The directors are responsible for preparing the annual report in accordance with applicable law and regulations. The directors consider the annual report and the financial statements, taken as a whole, provides the information necessary to assess the Company's performance, business model and strategy and is fair, balanced and understandable.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
To the best of our knowledge:
· the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company
· the annual report, including the Strategic 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 that it faces.
……………………..
Antares Cheng
……………………..
Non-executive Director
11 August 2016
DIRECTORS' REMUNERATION REPORT
The Directors present the Directors' Remuneration Report for the financial period ended 31 December 2015.
This report has been prepared in accordance with Schedule 8 of the Large & Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended by SI2013/1981. 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 auditor is required to report to the shareholders on the "auditable part" of the Directors' Remuneration Report and to state whether in its opinion the "auditable part" of the Directors' Remuneration Report has been properly prepared in accordance with the Companies Act 2006. 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 Chairman but as from 1 April 2003, by mutual agreement the fee payable was reduced to £1,000 per annum. Robert Lee is not entitled to receive any benefits. The appointment is terminable on three months written notice by either party. There are no contractual termination payments.
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.
Clio Lee was appointed to the Board as a non-executive Director on 1 June 2010. There is currently no contract of employment with the Company and she has not received any remuneration or benefits. The Board will consider and determine the level of her future remuneration at a time when the Company has acquired new business.
Murzban Mehta was appointed as an Director on 7 April 2014 to act as an alternate director and has no active role in the management of the company. There is no contract of employment with the Conpany and he has not received any remuneration or benefits.
Dr Shao Chen was appointed to the Board on 15 February 2016 and there is currently no contract of employment with the Company and he has not received any remuneration or benefits.
Assuming this policy is approved by the members at the forthcoming Annual General Meeting, it is intended that this policy will continue for the year ending 31 December 2016 and subsequent years. In accordance with the regulations, an ordinary resolution to approve the Directors' Remuneration Report policy will be put to shareholders at least once every three years.
None of the non-executive directors are contractually entitled to any employment related benefits, incentive awards or contributions to pension schemes.
Total shareholder return
The following graph shows the Company's performance for the period from I January 2011 to 31 December 2015 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.
http://www.rns-pdf.londonstockexchange.com/rns/3550H_1-2016-8-16.pdf Pension Arrangements
There are no UK pension schemes (either defined benefit or defined contribution) for the Directors.
INFORMATION SUBJECT TO AUDIT
Director's Emoluments
| Period ended 31 December 2015 | Year ended 30 September 2014 | ||||||||||
Non-Executive |
Fees (A) |
Taxable Benefits (B) |
Annual Incentives (C) |
LTIP (D) |
Pension (E) |
Total |
Fees (A) |
Taxable Benefits (B) |
Annual Incentives (C) |
LTIP (D) |
Pension (E) |
Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Robert Lee | 1 | - | - | - | - | 1 | 1 | - | - | - | - | 1 |
Antares Cheng | - | - | - | - | - | - | - | - | - | - | - | - |
Clio Lee | - | - | - | - | - | - | - | - | - | - | - | - |
Murzban Mehta | - | - | - | - | - | - | - | - | - | - | - | - |
The Company has no employees and considers the Directors to be the key management personnel.
Interests in shares
None of the non-executive directors have any interest in the issued capital of the company.
APPROVAL OF REPORT
The Directors' Remuneration Report was approved by the Board on 11 August 2016 and signed on its behalf by:
…………………………
Antares Cheng - Non-executive Director
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF WORLD TRADE SYSTEMS PLC
Our opinion on the financial statements is unmodified In our opinion the financial statements:
· give a true and fair view of the state of the company's affairs as at 31 December 2015 and of its loss for the period then ended; · have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and · have been prepared in accordance with the requirements of the Companies Act 2006. |
Who we are reporting to
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 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.
What we have audited
World Trade Systems Plc's financial statements for the period ended 31 December 2015 comprise the statement of comprehensive income, the statement of changes in equity, the statement of financial position, the statement of cash flows and the related notes.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.
| Overview of our audit approach · Overall materiality: £7,000, which represents 5% of the company's loss before taxation; and · Key audit risks were identified as going concern and management override of controls. |
Our assessment of risk
In arriving at our opinions set out in this report, we highlight the following risks that, in our judgement, had the greatest effect on our audit:
Audit risk | How we responded to the risk |
Going concernThe accounts are prepared on a going concern basis in accordance with International Accounting Standard (IAS) 1 'Presentation of Financial Statements'. However, as no substantive operations exist, the company continues to generate minimal cash inflows, has made losses for consecutive years and has an on-going net liability position. As these conditions may cast doubt on the Company's ability to continue as a going concern we therefore identified going concern as a significant risk requiring special audit consideration.
|
Our audit work included, but was not restricted to: · An evaluation of management's assessment of the Company's ability to continue as a going concern; · An analysis of cash flow forecasts and an evaluation of the reliability of the underlying data including comparisons to historical data and post year-end actual data; · Confirming the financial support arrangements from related and third parties by obtaining letters of support signed by a director; · An assessment of the ability of the related party to fulfil the commitment if necessary; and · Consideration of the adequacy of the financial statement disclosures related to the ability to continue as a going concern. The Company's accounting policy on going concern is shown in note 2(a). |
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Management override of controlsUnder International Standards on Auditing (ISAs) (UK and Ireland), for all of our audits we are required to consider the risk of management override of financial controls. Due to the unpredictable nature of this risk we are required to assess it as a significant risk requiring special audit consideration.
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Our audit work included, but was not restricted to: · Specific procedures relating to this risk that are required by ISA (UK and Ireland) 240 ' The Auditors Responsibilities relating to Fraud in an Audit of Financial Statements'; · Reviewing the Company's manual journal entry procedures and policies; · Corroborating a sample of journals assessed as unusual to source documentation; and · Undertaking a detailed review of management's key judgements, specifically in relation to the amount disclosed under IAS 40 'Investment Property' in relation to the market value of the investment property.
|
Our application of materiality and an overview of the scope of our audit
Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent
of our audit work and in evaluating the results of that work.
We determined materiality for the audit of the financial statements as a whole to be £7,000, which is 5% of the company's loss before taxation. This benchmark is considered the most appropriate given the company incurs net expenses.
Materiality for the current period is higher than the level that we determined for the period ended 30 September 2014 to reflect the additional administrative expenses and finance costs incurred in the current period.
We use a different level of materiality, performance materiality, to drive the extent of our testing and this was set at 75% of financial statement materiality. We also determine a lower level of specific materiality for certain areas such as directors' remuneration and related party transactions.
We determined the threshold at which we will communicate misstatements to the audit committee to be £350. In addition, we will communicate misstatements below that threshold that, in our view, warrant reporting on qualitative grounds.
Overview of the scope of our audit
A description of the generic scope of an audit of financial statements is provided on the Financial Reporting Council's website at www.frc.org.uk/auditscopeukprivate.
We conducted our audit in accordance with ISAs (UK and Ireland). Our responsibilities under those standards are further described in the 'Responsibilities for the financial statements and the audit' section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the company in accordance with the Auditing Practices Board's Ethical Standards for Auditors, and we have fulfilled our other ethical responsibilities in accordance with those Ethical Standards.
Our audit approach was based on a thorough understanding of the company's business and is risk based, and in particular included:
· a review of management's assessment of the company's ability to continue as a going concern and the financial support arrangements in place;
· an interrogation of all journals posted during the period and assessment of the appropriateness of all judgemental areas;
· a detailed review of variances from the prior period;
· a review of the loan agreements in place and recalculation of the expected interest; and
· a detailed review of the land valuation and the related IAS 40 'Investment Properties' fair value disclosures.
Other reporting required by regulations Our opinion on other matters prescribed by the Companies Act 2006 is unmodified In our opinion:
· the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and · the information given in the Strategic Report and Report of the Directors for the financial period for which the financial statements are prepared is consistent with the financial statements.
As described in the Report of the Directors, the Company has not complied with the UK Corporate Governance Code and has not prepared a Corporate Governance Statement. Accordingly, we were unable to form an opinion as to whether the information given in the Corporate Governance Statement with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements. |
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
· adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
· the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not made; or
· we have not received all the information and explanations we require for our audit.
As described in the Report of the Directors, the Company has not complied with the UK Corporate Governance Code and has not prepared a Corporate Governance Statement.
Under the Listing Rules, we are required to review:
· the directors' statement in relation to going concern set out on page 7.
As described in the Report of the Directors, the Company has not complied with the UK Corporate Governance Code. The directors have not prepared a statement in relation to longer-term viability and accordingly we were unable to review that statement. The Company has not prepared a Corporate Governance Statement and accordingly we were unable 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 by the Listing Rules.
Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is:
· materially inconsistent with the information in the audited financial statements; or
· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit; or
· otherwise misleading.
In particular, we are required to report to you if:
· we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the annual report is fair, balanced and understandable; or
· the annual report does not appropriately disclose those matters that were communicated to the board (which has assumed the duties of the audit committee) which we consider should have been disclosed.
Other than as stated, we have nothing to report in respect of any of the above matters.
Under the ISAs (UK and Ireland), we are required to give a statement as to whether we have anything material to add or to draw attention to in relation to:
· the directors' confirmation in the annual report that they have carried out a robust assessment of the principal risks facing the company including those that would threaten its business model, future performance, solvency or liquidity;
· the disclosures in the annual report that describe those risks and explain how they are being managed or mitigated; and
· the directors' explanation in the annual report as to how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We are unable to give a statement as to whether we have anything material to add or to draw attention to in relation to the above directors' confirmation, disclosures, or directors' explanation as none of these are presented in the annual report.
We confirm that we do not have anything material to add or to draw attention to in relation to:
· the directors' statement in the financial statements about whether they have considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements.
Responsibilities for the financial statements and the audit
What the directors are responsible for:
As explained more fully in the Statement of Directors' Responsibilities set out on page 7 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
What we are responsible for:
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Andy KaSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsOxford
Date:11 August 2016
STATEMENT OF COMPREHENSIVE INCOME
For the period ended 31 December 2015
|
|
Note | Period ended 31 December 2015 | Year ended 30 September 2014 |
|
|
| £'000 | £'000 |
Continuing operations |
|
|
|
|
|
|
|
|
|
Operating income |
|
| 3 | 3 |
Administrative expenses |
|
| (102) | (64) |
|
|
| _____ | ____ |
|
|
|
|
|
Loss from operations |
| 3 | (99) | (61) |
|
|
|
|
|
Finance costs |
|
| (53) | (39) |
|
|
| _____ | ____ |
Loss before tax |
|
| (152) | (100) |
|
|
|
|
|
Income tax expense |
| 5 | - | - |
|
|
| _____ | ____ |
|
|
|
|
|
Loss for the period and total comprehensive income attributable to equity holders |
|
|
(152) |
(100) |
|
|
| ____ | ====
|
Basic and diluted loss per ordinary share |
| 6 | (1.727p) | (1.143p) |
|
|
|
|
|
STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2015
|
| Share capital £'000 | Retained earnings £'000 | Total £'000 |
|
|
|
|
|
At 1 October 2013 |
| 4,378 | (5,229) | (851) |
Loss for the year Other comprehensive income for the year |
| -
- | (100)
- | (100)
- |
Total comprehensive income for the year attributable to equity holders
|
| _____ - _____
| ______ (100) ______ | _____ (100) _____
|
At 30 September 2014 |
| 4,378 | (5,329) | (951) |
Loss for the year Other comprehensive income for the year |
| -
- | (152)
- | (152)
- |
|
| _____ | ______ | _____ |
Total comprehensive income for the year attributable to equity holders
|
| - _____ | (152) ______ | (152) _____
|
At 31 December 2015 |
| 4,378 | (5,481) | (1,103) |
COMPANY NO: 01698076
STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
|
Note |
| As at 31 December 2015 | As at 30 September 2014 | |
|
|
|
| £'000 | £'000 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investment property | 7 |
|
| 40 | 40 |
|
|
|
| ______ | _____ |
|
|
|
| 40 | 40 |
|
|
|
| ______ | _____ |
Current assets |
|
|
|
|
|
Trade and other receivables |
|
|
| 3 | - |
Cash and cash equivalents | 8 |
|
| 8 | 25 |
|
|
|
| ______ | _____ |
|
|
|
| 11 | 25 |
|
|
|
| ______ | _____ |
Total assets |
|
|
| 51 | 65 |
|
|
|
| ===== | ==== |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables | 9 |
|
| (84) | (71) |
Financial liabilities - borrowings | 9 |
|
| (1,070) | (945) |
|
|
|
| _____ | ______ |
Total liabilities |
|
|
| (1,154) | (1,016) |
|
|
|
| _____ | ______ |
|
|
|
|
|
|
Net liabilities |
|
|
| (1,103) | (951) |
|
|
|
| ===== | ===== |
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Share capital | 10 |
|
| 4,378 | 4,378 |
Retained earnings | 11 |
|
| (5,481) | (5,329) |
|
|
|
| ______ | ______ |
Total deficit of equity attributable to equity holders |
|
|
|
(1,103) ===== |
(951) ===== |
The financial statements were approved by the Board of Directors and authorised for issue on 11 August 2016, and signed on its behalf by:
Robert Lee - Non-executive Chairman
STATEMENT OF CASH FLOWS
For the period ended 31 December 2015
| Note |
|
| Period ended 31 December 2015 | Year ended 30 September 2014 |
|
|
|
| £'000 | £'000 |
|
|
|
|
|
|
Operating activities Net cash used in operating activities |
12 |
|
|
(89) |
(60) |
|
|
|
| _____ | ______ |
Cash flows from operating activities
Financing activities Proceeds from ultimate parent company loans
Net Cash flows from financing activities
Net change in cash and cash equivalents from continuing operations |
|
|
|
(89) ______
72 _____
72 _____
(17) |
(60) ______
63 ______
63 ______
3 |
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
| 25 | 22 |
|
|
|
| _____ | ______ |
|
|
|
|
|
|
Cash and cash equivalents at end of period | 8 |
|
| 8 | 25 |
|
|
|
| ===== | ===== |
|
|
|
|
|
|
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION AND NATURE OF OPERATIONS
World Trade Systems plc is a company incorporated in the United Kingdom under the Companies Act 2006. 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 cash flow forecasts prepared in May 2016 the Directors consider that the Company has sufficient liquid resources to meet its financial requirements for the period up to 31 August 2017. 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 ("Kudrow"), the parent company, has provided unsecured loans totalling £795,363 ("the existing loans") to support the Company's financing requirements, including £71,563 advanced in the period to 31 December 2015 for working capital purposes. Subsequently, on 20 June 2016 Kudrow has provided a further working capital loan in the sum of £117,000. Since 12 February 2010, or the date of advancement if later, the total loan balance carries interest at a rate of 5% per annum.
Under the terms of this loan agreement the repayment date is the earlier of 31 July 2017 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 rolled up into the principal loan from the date of default and shall carry interest at the rate of 10% per annum. Kudrow has unconditionally undertaken to provide such further financial support as may be required.
The above loans were obtained to enable the Company to meet its on going financial obligations and to seek new business opportunities.
At 31 December 2015 the company had an indebtedness due of £60,000 in respect of a loan first obtained on 15 May 2006. Under the terms of the agreement entered into interest has continued to accrue on this loan as from 31 March 2008 at a rate of 6% per annum. At 31 December 2015 accrued interest on this loan amounted to £35,000 (30 September 2014: £30,000). To date no demand has been received from the lender for repayment and the parent company Kudrow Finance Limited ("Kudrow") has undertaken to procure the necessary funding to discharge any demand for the remaining loan and interest as and when received.
The parent company Kudrow Finance Limited ("Kudrow") has undertaken to procure the necessary funding to discharge any demand for the remaining loan and interest as and when received.
Taking account of these factors and the post balance sheet events 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 there were no Standards and Interpretations which have not been applied in these financial statements which were in issue but not yet effective and which would impact on the reported results.
c) Basis of Preparation - Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), The Companies Act 2006 that applies to companies reporting under IFRS and IFRIC interpretations.
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 Statement of Comprehensive Income or Statement of Financial Position. Details of the trust have been disclosed in Note 10 to the financial statements.
The financial statements do not include any amounts which are based on significant estimates or judgements.
d) Revenue recognition
Rental Income from operating leases is recognised in the profit or loss 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 profit or loss.
f) Taxation
Income tax on the profit or loss for the year comprises current and deferred tax. Taxation is recognised in the profit or loss except to the extent that it relates to items recognised in other comprehensive income or in equity in which case it is recognised in either other comprehensive income or equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the year end 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 rates enacted or substantively enacted at the year end 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 comprising agricultural land, held to earn rentals and for capital appreciation is stated at its cost less impairment losses. Investment property is not depreciated as it related to freehold land. The value of the investment property is reviewed annually and where there is permanent impairment of the value this is written off to profit or loss.
h) Financial instruments and equity instruments
Financial assets and liabilities are recognised 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 fair value on initial recognition, and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss 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 recognised initially at fair value, net of direct issue costs. Finance costs are accounted for on an accruals basis and are charged to profit or loss 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 as the proceeds received net of direct issue costs.
i) Segmental analysis
As the Company has only one segment, a segmental analysis is not presented. The entire rental income relates to one customer which is based in the UK.
3. LOSS FROM OPERATIONS
Loss from operations is stated after charging: |
| Period ended 31 December 2015 £'000 | Year ended 30 September 2014 £'000 |
|
|
|
|
Auditor's remuneration |
|
|
|
Fees payable to the Company's auditor for the audit of the financial statements |
|
|
|
|
|
|
|
- statutory audit |
|
|
|
Current year |
| 16 | 15 |
|
|
|
|
4. DIRECTORS' EMOLUMENTS
| Period ended31 December 2015 £'000 | Year ended 30 September 2014 £'000 |
Non-Executive directors - fees |
|
|
R Lee | 1 | 1 |
A Cheng | - | - |
C Lee | - | - |
M Mehta | - ___- | - ___ |
|
|
|
| 1 | 1 |
| ___ | ___ |
There were no pension contributions for directors in the period to 31 December 2015 (Year ended 31 September 2014: Nil).
The Company has no employees. The Company considers the Directors to be the key management personnel.
5. TAXATION
| Period ended 31 December 2015 £'000 | Year ended 30 September 2014£'000 |
|
|
|
Loss for the year | (152) | (100) |
Expected income tax benefit at 21% (2014: 22%) | (32) | (22) |
Adjustment for; Tax losses not brought to account |
32 ___ |
22 ___
|
Actual tax expense | - ___ | - ___ |
|
|
|
Reconciliation of carried forward tax losses |
|
|
|
|
|
Loss on ordinary activities before tax | (152) | (100) |
|
|
|
Losses brought forward | (1,566) | (1,466) |
| ______ | ______ |
Unutilised tax losses | (1,718) | (1,566) |
| ====== | ====== |
A deferred tax asset has not been recognised in respect of these losses, as it is not evident that these losses will be utilised in the foreseeable future. Should the losses be utilised in the future the estimated value of the deferred tax asset not recognised, at a standard rate of 21% (Year ended 30 September 2014: 22%), is £360,000 (2014: £345,000).
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.
There are no potentially dilutive capital instruments in issue, therefore the basic and diluted loss per share are identical.
Reconciliations of the loss and weighted average number of shares used in the calculations are set out below:
Period ended 31 December 2015 |
Loss £'000 | Weighted average number of shares |
Per share loss pence (p) |
|
|
|
|
Basic and diluted loss per share | (152) | 8,747,366 | (1.727p) |
|
| __________ |
|
Year ended 30 September 2014 |
|
|
|
Basic and diluted loss per share | (100) | 8,747,366 | (1.143p) |
|
| __________ |
|
|
|
|
|
7. INVESTMENT PROPERTY
| At 31December 2015 | At 30 September 2014 |
| £'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. The Directors have reviewed comparable land values and given the mix and usage of the subject land they consider that the fair value of the Company's investment in freehold land as at 31 December 2015 was £500,000 (30 September 2014: £500,000) as this reflects the valuation of similar parcels of land in the same area. 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 (2014: £3,000).
The fair value of the land has been estimated by the Directors by reviewing the sales prices for local parcels of land which were on the market in the locality at the period end. This resulted in an average land value per acre for arable and rough grazing land of £11,000 and £14,000 respectively. The 66.94 acres of land held by the Company is split between arable, rough grazing and woodland in the following proportions: 59%, 35% and 6% respectively. The Directors consider that the land should be included at a valuation to reflect the similar parcels of land in the same region. A further 36% discount has been applied by the Directors due to the land currently being occupied.
The fair value hierarchy categorises the inputs used in the valuation of the land held to be level 3 inputs. Level 3 inputs are unobservable inputs, and have been used to measure the fair value as observable inputs have not been available. As the investment property is held at cost, the fair value measurement does not affect the statement of comprehensive income. There have been no changes in the method of valuation from the prior year.
The land is currently subject to a tenancy, which is not considered to be the highest and best use of the asset. However, a tenancy agreement is in place and so this is the only possible use in the period.
8. CASH AND CASH EQUIVALENTS
| At 31 December 2015 £'000 | At 30 September 2014 £'000 |
Cash at bank
|
8 |
13 |
Cash held in Solicitors' Client Account (Note 14) | - ___ | 12 ___ |
|
8 |
25 |
| === | === |
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.
9. OTHER FINANCIAL LIABILITIES
Trade and other payables comprise amounts outstanding for services provided and accrued expenses. The average credit period taken is 60 days (2014: 60 days). Financial liabilities comprise:
|
At 31 December 2015 £'000 |
At 30 September 2014 £'000
|
Accrued expenses | 84 __ | 71 ___ |
Financial liabilities - borrowings | 84 __
94 | 71 ___
90 |
Financial liabilities - amounts owed to ultimate parent company | 976 | 855 |
| --______ | ____ |
| 1,070 | 945 |
| ===== | ==== |
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.
Financial liabilities - borrowings comprise an unsecured loan totalling £60,000 (30 September 2014: £60,000). This loan is repayable on demand.
Under the terms of the agreement the lender is entitled to charge interest on the Loan at the rate of 6% per annum from the date of the advance on 15 May 2006. Within the amount disclosed above is a provision for interest payable for the period from 15 May 2006 to 31 December 2015 of £34,000 (30 September 2014: £30,000).
Kudrow has undertaken to procure the necessary funding to discharge the remaining loan together with any interest due thereon.
Amounts owed to Kudrow, the parent company, are unsecured and are due for repayment on 31 August 2017. As from 12 February 2010 these loans carry interest at the rate of 5% per annum. Within the amount disclosed above is a provision for interest payable for the period from 12 February 2010 to 31 December 2015 of £181,000 (30 September 2014: £131,000).
Kudrow has unconditionally undertaken to provide such further financial support as may be required.
10. CALLED UP SHARE CAPITAL
| 31 December 2015 | 30 September 2014 | ||
| 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, other distribution, 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 of shares by the Trust 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 31 December 2015 (30 September 2014: 6,501 shares of 1p each) represented 0.07% (30 September 2014: 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 (30 September 2014: 49p).
Any costs involved in the administration of the trust are charged to the general overheads of World Trade Systems plc.
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to be able 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 31 December 2015 was £1,103,000 (30 September 2014: £951,000) and debt was £1,070,000 (30 September 2014: £945,000).
11. RETAINED EARNINGS
|
| 31 December 2015 | 30 September 2014 |
|
| £'000 | £'000
|
At 1 October |
| (5,329) | (5,229) |
Loss for the year |
| (152) | (100) |
|
| ______ | _____ |
At 30 September |
| (5,481) ====== | (5,329) ===== |
12. NOTES TO THE CASH FLOW STATEMENT
|
|
| 31 December 2015 £'000 | 30 September 2014 £'000 |
Net loss |
|
| (152) | (100) |
Finance costs Increase in receivables |
|
| 53 (3) | 39 - |
Increase in payables
Net cash outflow from operating activities |
|
| 13 _____ (89) ===== | 1 _____ (60) ===== |
13. 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 Kudrow, its 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 as summarised below:
|
| 31 December 2015 | 30 September 2014 | ||
|
|
|
|
|
|
|
| Within 6 months | 6 to 12 months | Within 6 months | 6 to 12 months |
|
| £'000 | £'000 | £'000 | £'000 |
Trade and other payables (note 9) |
| 84 | - | 70 | - |
Financial liabilities - borrowings (note 9) |
| 94 | - | 90 | - |
Financial liabilities - parent (note 9) |
| - | 976 | - | 855 |
|
| _____ | ____ | _____ | _____ |
|
| 178 ===== | 976 ==== | 160 =====
| 855 =====
|
Kudrow has unconditionally undertaken to provide financial support to meet the repayment of the Company's borrowings.
Credit risk
The Company's principal financial assets are bank balances and cash and trade and other receivables.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The credit risk on liquid funds held in a client account by Robert Lee Law Offices, on behalf of the Company, is mitigated as far as possible as these funds are also held with a high credit-ratings bank and Robert Lee Law Offices are monitored and reviewed in a regulated environment.
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 were interest free up until their extended due date for repayment, from which time they incur interest at rates of 5% and 6% per annum. During the year under review, existing borrowings carry an interest charge.
The Directors monitor overall borrowings and interest costs to limit any adverse effects on the financial performance of the Company.
Categories of financial assets and liabilities
The carrying amounts presented in the Statement of Financial Position relate to the following categories of assets and liabilities:
Financial assets |
| 31 December 2015 | 30 September 2014 |
|
| £'000 | £'000 |
Loans and receivables Trade and other receivables Cash and cash equivalents |
|
3 8 __ 11 |
- 25 __ 25 |
|
|
|
|
Financial liabilities
|
| 31 December 2015 | 30 September 2014 |
|
| £'000 | £'000 |
Financial liabilities at amortised cost Trade and other payables Borrowings |
|
84 1,070 |
70 945 |
|
| 1,154 | 1,015 |
14. RELATED PARTY TRANSACTIONS
Kudrow Finance Limited, the parent company, has provided unsecured loans totalling £795,363 (30 September 2014: £723,800), which have been sourced from Glory Time Holdings Inc, a company under the control of a non-executive Director, Antares Cheng. The loans are due for repayment on 31 August 2017. As from 12 February 2010 these loans carry interest at the rate of 5% per annum. Interest accrued in the period from 12 February 2010 to 31 December 2015 was £180,842 (30 September 2014: £131,517) Antares Cheng is ultimately interested in the interest payment.
Directors' transactions
Robert Lee the non-executive Chairman is the principal of Robert Lee Law Offices which at 31 December 2015 held funds on behalf of the Company in a Clients Account amounted to £246 (30 September 2014: £11,408). At 31 December 2015 the Company owed Robert Lee £15,200 in respect of unpaid director's fees (30 September 2014: £14,200). Proclass Limited, a company incorporated in the British Virgin Islands is a Corporate Director of Kudrow Finance Limited, the 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 Director is also a director and controlling shareholder in Glory Time Holdings Inc.
15. PARENT UNDERTAKING AND ULTIMATE CONTROLLING PARTIES
The Directors consider Kudrow Finance Limited ("Kudrow") a company incorporated in the British Virgin Islands as its 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 Antares Cheng through his control of Glory Time, to be the Ultimate Controlling Party.
16. EVENTS AFTER REPORTING PERIOD
On 20 June 2016 the Company obtained a further loan of £117,000 from Kudrow Finance Limited which is repayable on the earlier of 31 July 2017 or the date on which shareholder approval is obtained for the acquisition by the Company of a new business.
On 22 June 2016, the Company established Shimao Bio-technology Co. Ltd., a new wholly-owned subsidiary in Suzhou, China ("WTS China") which has been fully licensed as a wholly foreign-owned enterprise ("WFOE") to engage in (i) the manufacture and sale of bio-technical medical and healthcare products; (ii) domestic and cross-border mergers and acquisitions of bio-technical and other related businesses; and (iii) the development and management of off-shore and domestic care centres for the elderly (collectively the "WTS China Business").