RNS Number:1672V
Worldsec Ld
26 April 2002
Worldsec Limited
Preliminary Statement of Annual Results
Worldsec Limited is pleased to release today its preliminary statement of annual
results for the year ended 31 December 2001.
The directors do not recommend the payment of a dividend.
The Chairman's Statement and extracts from the audited financial statements are
reproduced below.
Investor Relations
For further information please contact:
In the United Kingdom In Hong Kong
Mr Alastair Gunn-Forbes Mr Paul K K Cheng
Director Chief Operating Officer and Finance Director
+44 207 972 0880 +852 2867 7213
CHAIRMAN'S STATEMENT
RESULTS
The audited consolidated loss after taxation was US$7.96m (2000: profit of
US$0.41m).
Loss per share based on the weighted average number of shares in issue during
the year amounted to US 60 cents (2000: earnings US 3 cents).
THE YEAR IN REVIEW
The year 2001 was not a good year for Asia. Economic slowdown in the West,
particularly in the US, meant that the Asian export performance was
disappointing. Domestic demand growth, particularly in those Asian economies
trying to recover from the Asian currency crisis, was also lacklustre. Against
this backdrop, stockmarkets in Asia were volatile as they reacted to national
and international developments. The attack on the World Trade Centre on
September 11th 2001 amplified the volatility of Asian stockmarkets on the
downside.
Over the past two years, we have closely examined our pan-Asian strategy
focusing on the South-east Asian equity markets. Due to a combination of
factors, these stockmarkets have become marginalised, at least as far as
institutional investors are concerned. As part of our restructuring to focus
attention on the Hong Kong and China market, we closed our offices in Malaysia
and the Philippines last year.
Chairman's Statement
Reflecting the bear market conditions, our turnover fell 43% from US$14m to
US$8m. The fall in turnover was a combination of three factors, namely, turnover
in our markets, lower commission rates and a loss of market share. While we have
reduced our staff costs by 20% and other operating costs, which are largely
fixed in nature, by 7%, because of the unexpected sharp fall in turnover, we
recorded a heavy operating loss. Last year provisions for doubtful receivables
improved compared to 2000, but in 2001 we did not enjoy the profits from
investments that flattered our operating profits in 2000. Our results in 2001
included writing off purchased goodwill relating to the retail brokerage
business and a loss on revaluation of investments. The net effect is a loss for
the year of US$7.96m.
PROSPECTS
Financial markets have recovered strongly from the levels recorded in the
aftermath of the September 11th attack on the World Trade Centre. The general
economic outlook for most countries has also improved. However, as far as Hong
Kong is concerned, the business outlook for stockbrokers, especially the smaller
firms, remain uncertain. Institutional investors have been cutting back their
list of approved brokers due to the contraction in trading volumes. As always
the smaller brokers tend to be the ones culled. As a result, the consolidation
in the broking industry has already started and several prominent brokerage
firms in the region have ceased trading.
Shareholders are aware that we have in the past held substantive negotiations
with several interested parties with a view to a merger. Our reduced business
scope focus's on Thailand, Hong Kong and China which could make a merger easier
to implement, now that we have downsized our operations. Past negotiations with
potential merger partners have not been successful, but we remain open for
discussion. Meanwhile we believe our focus on Thailand, Hong Kong and China is a
viable strategy and while we remain cautious, we do expect a substantially
reduced level of loss in the current financial year.
David Archibald Evelyn Lyle
Non-Executive Chairman
26 April 2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2001
Year ended 31 December
Notes 2001 2000
US$'000 US$'000
Turnover 1 8,035 14,052
Fees and commissions payable (1,155) (2,579)
___________ ___________
6,880 11,473
Gain on disposal of intangible assets 181 -
Gain on disposal of investments 541 6,608
Recovery of doubtful receivables 232 1,208
Other operating income 794 2,819
___________ ___________
8,628 22,108
Staff costs (8,305) (10,331)
Provision for doubtful receivables (1,193) (5,518)
Loss on revaluation of investments (1,824) -
Other operating costs (4,397) (4,719)
___________ ___________
Operating (loss)/profit 1 (7,091) 1,540
Interest receivable and similar income 473 828
Interest payable and similar charges (480) (1,689)
Provision for close of operations (123) -
Goodwill written off (591) -
___________ ___________
(Loss)/profit on ordinary activities before
taxation (7,812) 679
Tax on profit on ordinary activities 2 (149) (266)
___________ ___________
(Loss)/profit for the financial year (7,961) 413
___________ ___________
(Loss)/earnings per share - basic and diluted 3 (60) cents 3 cents
___________ ___________
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2001
Notes 2001 2000
US$'000 US$'000
Fixed assets
Intangible assets 875 1,270
Tangible fixed assets 832 1,060
Investments 1,271 1,771
Purchased goodwill - 788
___________ ___________
2,978 4,889
___________ ___________
Current assets
Investments 1,548 3,087
Debtors 25,086 18,051
Bank deposits and cash 36,167 41,223
___________ ___________
62,801 62,361
Creditors: Amounts falling due within one year (41,541) (34,983)
___________ ___________
Net current assets 21,260 27,378
___________ ___________
Total assets less current liabilities 24,238 32,267
Provisions for liabilities and charges (30) (32)
___________ ___________
Net assets 24,208 32,235
___________ ___________
Capital and reserves
Called up share capital 13,367 13,367
Share premium 11,664 11,664
Special reserve 625 625
Profit and loss account (1,270) 6,488
Revaluation reserve 989 1,204
Currency translation reserve (1,167) (1,113)
___________ ___________
Equity shareholders' funds 24,208 32,235
___________ ___________
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2001
Year ended 31 December
Note 2001 2000
US$'000 US$'000
Cash outflow from operating activities (2,207) (8,766)
___________ ___________
Returns on investments and servicing of finance
Interest received from banks and deposit taking
companies 473 828
Interest paid on bank loans and overdrafts (480) (1,689)
___________ ___________
Net cash outflow from returns on investments
and servicing of finance (7) (861)
___________ ___________
Taxation
Tax (paid)/refunded (230) 100
___________ ___________
Capital expenditure and financial investment
Sale of intangible assets 458 -
Purchase of tangible fixed assets (166) (272)
Sale of tangible fixed assets - 5
___________ ___________
Net cash inflow/(outflow) from capital
expenditure and financial investment 292 (267)
___________ ___________
Net cash outflow before use of liquid
resources and financing (2,152) (9,794)
Management of liquid resources
Increase in time deposits of maturity
exceeding 1 day (71) (473)
___________ ___________
Decrease in cash 5 (2,223) (10,267)
___________ ___________
NOTES TO THE PRELIMINARY STATEMENT OF ANNUAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2001
1. ANALYSIS OF TURNOVER, OPERATING PROFIT AND NET ASSETS
The turnover attributable to the different classes of the Group's business
is as follows:
Year ended 31 December
2001 2000
US$'000 US$'000
Analysis by class of business:
Broking and related services 6,389 12,509
Corporate finance 1,646 1,543
___________ ___________
8,035 14,052
___________ ___________
Geographical analysis of turnover:
Hong Kong 6,369 12,090
Thailand 1,012 824
Malaysia 46 349
Singapore 130 260
Philippines 76 136
Others 402 393
___________ ___________
8,035 14,052
___________ ___________
The operating (loss)/profit attributable to the different classes
of the Group's business is as follows:
Broking and related services (7,637) 1,147
Corporate finance 546 393
___________ ___________
(7,091) 1,540
___________ ___________
The operating (loss)/profit of the Group is mainly derived from the Group's
operations based in Hong Kong. The net assets utilised in the Group relate
substantially to broking activities and situated in Hong Kong.
2. TAX ON PROFIT ON ORDINARY ACTIVITIES
Year ended 31 December
2001 2000
US$'000 US$'000
The charge comprises:
UK Corporation Tax at 30% (2000: 30%)
current year 46 85
Hong Kong Profits Tax at 16% (2000:16%)
current year 86 144
Other overseas taxation 19 37
___________ ___________
151 266
Deferred taxation (2) -
___________ ___________
149 266
___________ ___________
3 (LOSS)/EARNINGS PER SHARE
Calculation of (loss)/earnings per share was based on the
following:
Year ended 31 December
2001 2000
(Loss)/profit for the financial year US$(7,961,000) US$413,000
_______________ _______________
Weighted average number of shares in
issue 13,367,290 13,367,290
______________ ______________
(Loss)/earnings per share (60) cents 3 cents
______________ ______________
4. RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES
Year ended 31 December
2001 2000
US$'000 US$'000
Operating (loss)/profit (7,091) 1,540
Gain on disposal of intangible assets (181) -
Loss on disposal of tangible fixed assets 81 -
Depreciation 301 289
Provision for doubtful receivables 1,193 5,518
Loss on revaluation of investments 1,824 -
Amortisation of intangible assets 118 115
Amortisation of purchased goodwill 197 198
Exchange difference (38) (205)
Decrease/(increase) in investments held as
current assets 199 (1,321)
(Increase)/decrease in trade debtors (9,492) 12,682
Decrease/(increase) in other debtors and
prepayments 1,264 (768)
Decrease/(increase) in cash at bank - trust
accounts 5,048 (15,700)
Increase/(decrease) in trade creditors 4,846 (10,718)
Decrease in other creditors and accruals (476) (396)
___________ ___________
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (2,207) (8,766)
___________ ___________
5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Year ended 31 December
2001 2000
US$'000 US$'000
Decrease in cash (2,223) (10,267)
Cash outflow from increase in liquid
resources 71 473
___________ ___________
Movement in net funds (2,152) (9,794)
Net funds brought forward 12,258 22,052
___________ ___________
Net funds carried forward 10,106 12,258
___________ ___________
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