RNS No 9487r
WORLDSEC LIMITED
16th September 1997
The Directors have pleasure in presenting the interim report on
Worldsec Limited (the "Company") and its subsidiaries
(collectively known as the "Group") for the six months ended 30
June 1997 (the "Period").
HIGHLIGHTS
- Turnover for the Period amounted to US$11,782,000.
- Profit from ordinary activities after taxation and
minority interests was US$735,000.
- Earnings per share for the Period was 5.70 US cents.
- Proposed interim dividend of 2.00 US cents per share.
REVIEW OF OPERATIONS AND PROSPECTS
The first half of 1997 has been a mixed period for the
securities industry in the Asian region. While respectable
index gains were achieved by the stock markets of Hong Kong
(+13%), Taiwan (+30%), China (Shanghai "B" shares +22%) and
South Korea (+14%), poor performances were recorded by the
Southeast Asia stock markets of Thailand (-37%), Singapore (-
10%), Malaysia (-13%) and the Philippines (-11%). During the
period, the Group recorded a substantial increase in its
business volume for the Greater China markets (Hong Kong,
Taiwan, Mainland China) but this was offset by the decline in
our business volume in the other markets.
The unaudited Group profit from ordinary activities, after
taxation and minority interests, for the Period amounted to
US$735,000 equivalent to earnings per share of 5.70 US cents.
The Directors recommend the payment of an interim dividend of
2.00 US cents per share. There are no comparable figures for
the corresponding six month period last year since the Group in
its present structure was only formed at the beginning of this
year.
After a period of consolidation under the austerity programme
during the last three years, China has made impressive progress
in achieving an economic soft landing and is poised for a
cyclical recovery. This has had and is expected to have a
continued positive impact on Hong Kong and Taiwan which both
have significant investments in China and are hence likely to
benefit from the expected economic recovery. However, China's
economy remains burdened by certain problems associated with
its dirigiste structure. Economic reforms in China therefore
have to be carefully controlled in order to avoid creating
instability. Investor concerns over potential instability may
result in a certain degree of volatility in the Greater China
stock markets.
The recent falls against the U.S. dollar of the Thai Baht,
Malaysia Ringgit and Philippines Peso have had and are expected
to continue to have serious repercussions on the economies of
these countries. Such recent problems reflect not just
cyclical factors but also significant structural weaknesses in
these economies. Now that these weaknesses have been exposed,
investors may be reluctant to accord such countries' stock
markets the valuations they were able to command in the past
without seeing evidence that such weaknesses have been
corrected. This will take time. The outlook therefore remains
uncertain.
Despite the mixed operating environment, the Group has started
the second half on a promising note, maintaining its business
volume in the Greater China markets where sentiment remains
positive. In the other Asian markets, the Group's business
volume remains poor but, encouragingly, investor sentiment
appears to be stabilising. Management is confident that with
its experience in the region, the Group is in a good position
to benefit from any recovery in these markets. It would be
overly optimistic, however, to think that recovery is imminent
in these other Asian markets. Consequently, and
notwithstanding the encouraging start to the second half, the
operating environment for the Group will remain challenging.
MANAGEMENT
Mr. Asataro Miyake, a non-executive director of the Company,
resigned from the Board on 17 June 1997. Mr. Kenichi Masuda, a
director and general manager of The Bank of Tokyo-Mitsubishi,
Ltd., was appointed as a non-executive director of the Company
on 26 June 1997 and Mr. Yasuhiro Matsumura, a chief manager of
the Treasury and Capital Market Planning Division of The Bank
of Tokyo-Mitsubishi, Ltd., was appointed as alternate to Mr.
Kenichi Masuda on the same day.
BASIS OF PREPARATION OF THE INTERIM REPORT
The Company was incorporated in Bermuda on 19 December 1995 and
remained dormant throughout the financial year ended 31
December 1996.
In preparation for the listing of the Company's shares on The
London Stock Exchange Limited, through a group reorganisation,
the Company on 26 February 1997 became the holding company of
Worldsec Financial Services Limited which on the previous day
had become the holding company of certain investments and
subsidiaries previously held by Worldsec International Holdings
Limited.
The consolidated results of the Group for the Period have not
been audited. The comparative figures are extracted from the
consolidated financial statements of the Group for the
financial year ended 31 December 1996 which have been prepared
as if the Group had been in existence throughout that financial
year and have been audited by Messrs. Deloitte Touche Tohmatsu
at 20F, Wing On Centre, 111 Connaught Road Central, Hong Kong.
Messrs. Deloitte Touche Tohmatsu have issued an unqualified
opinion on the consolidated financial statements of the Group
for the financial year ended 31 December 1996. Comparative
figures for the six month period ended 30 June 1996 have not
been presented as they are not readily available.
The consolidated results of the Group for the period from 26
February 1997, the date of the reorganisation, to 30 June 1997
have not been presented as, in the opinion of the directors,
the information is of no real value to the members of the
Company.
By order of the Board
Henry Y.C. Cheong
Deputy Chairman &
Chief Executive Officer
15th September, 1997
CONSOLIDATED PROFIT AND LOSS ACCOUNT
UNAUDITED AUDITED
Six
months Year ended
Notes ended 31 December
30 June 1996
1997
US$'000 US$'000
Turnover 2 11,782 22,328
Fees and commissions (2,221) (4,779)
payable
9,561 17,549
Other operating income 479 664
10,040 18,213
Staff costs (6,094) (9,710)
Other operating costs (3,056) (7,077)
Operating profit 2 890 1,426
Interest receivable and 397 688
similar charges
Interest payable and (149) (444)
similar charges
Profit on ordinary 1,138 1,670
activities before
taxation
Tax on profit on ordinary 3 (291) (396)
activities
Profit on ordinary 847 1,274
activities after taxation
Minority interest (112) (2)
Profit for the financial 735 1,272
period/year
Dividends 4 (258) (5,122)
Transfer to (from) 477 (3,850)
reserves
Earnings per share 5 5.70 cents 9.86 cents
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
UNAUDITED AUDITED
Six
months Year ended
ended 31 December
30 June 1996
1997
US$'000 US$'000
Profit for the financial 735 1,272
period/year
Surplus arising on - 4,890
revaluation of fixed
assets
Currency translation (37) 60
differences
698 6,222
CONSOLIDATED BALANCE SHEET
UNAUDITED AUDITED
As at As at
Notes 30 June 31 December
1997 1996
US$'000 US$'000
Fixed assets
Intangible assets 6 31 52
Tangible assets 1,795 1,992
Investments 7 5,533 5,542
7,359 7,586
Current assets
Debtors 37,546 30,297
Amounts owed by related - 1,061
companies
Cash at banks and in 8 59,298 46,460
hand
96,844 77,818
Creditors: Amounts falling
due within one year 9 (68,179) (67,158)
Net current assets 28,665 10,660
Total assets less 36,024 18,246
current liabilities
Creditors: Amounts falling
due after more than one 10 (10) (10)
year
Provisions for 11 (30) (30)
liabilities and charges
Equity minority interest 12 (289) (177)
Net assets 35,695 18,029
Capital and reserves
Called up share capital 13 12,900 6,450
Reserves 22,795 11,579
Equity shareholders' 35,695 18,029
funds
CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED AUDITED
Six
months Year
Notes ended ended 31
30 June December
1997 1996
US$'000 US$'000
Net cash outflow from operating 14 (6,205) (1,508)
activities
Returns on investments and
servicing of finance
Interest received from banks
and deposit taking companies 397 688
Interest paid on bank loans and (148) (100)
overdrafts
Interest paid on subordinated - (585)
bonds
Interest paid on hire purchase (1) (3)
contracts
Dividend paid by subsidiaries
to former holding company - (800)
Net cash inflow (outflow) from
returns on investments and 248 (800)
servicing of finance
Taxation
Tax paid - (207)
Investing activities
Purchase of fixed assets (29) (443)
Net cash outflow before (5,986) (2,958)
financing
Financing
Issue of shares 17,226 -
Issue of shares by subsidiaries - 350
Capital element of payments
under finance leases and hire (8) (17)
purchase contracts
Repayment of subordinated bonds - (6,500)
Net cash inflow (outflow) from 17,218 (6,167)
financing
Increase (decrease) in cash and 11,232 (9,125)
cash equivalents
Cash and cash equivalents at
the beginning of the 11,923 21,048
period/year
Cash and cash equivalents at
the end of the period/year 15 23,155 11,923
NOTES TO THE INTERIM REPORT
1. ACCOUNTING POLICIES
The accounting policies adopted in preparing this report
are consistent with those adopted in preparing the
consolidated financial statements of the Group for the
year ended 31 December 1996. These accounting policies
are in accordance with accounting principles generally
accepted in the United Kingdom.
2. TURNOVER AND OPERATING PROFIT
Six
months Year ended
ended 31 December
30 June 1996
1997
US$'000 US$'000
Analysis of turnover by
class of business:
Broking 11,315 20,644
Corporate finance 467 1,684
11,782 22,328
Geographical analysis of
turnover:
Hong Kong 7,791 11,026
Malaysia 689 2,136
Philippines 479 1,763
Thailand 1,334 4,707
Others 1,489 2,696
11,782 22,328
Analysis of operating profit by
class of business:
Broking 832 729
Corporate finance 58 697
890 1,426
3. TAX ON PROFIT ON ORDINARY ACTIVITIES
Six
months Year ended
ended 31 December
30 June 1996
1997
US$'000 US$'000
The charge
comprises:
UK Corporation Tax at 33% - 39 157
current year
Hong Kong Profits Tax at 16.5%177 163
- current year
Other overseas taxation 75 76
291 396
4. DIVIDENDS
Six
months Year ended
ended 31 December
30 June 1996
1997
US$'000 US$'000
Dividends paid by subsidiary
undertakings to Worldsec
International Holdings Limited, - 5,122
the former holding company
Interim dividend declared 258 -
Dividends per share 2 cents 40 cents
Dividends per share has been calculated by dividing the
total net dividends for the financial period/year by
12,900,000 being the number of ordinary shares in the
Company in issue from 27 March 1997, when the entire share
capital of the Company was listed on the London Stock
Exchange Limited, to 30 June 1997.
The interim dividend of 2.00 US cents per share will be
payable on 31 October 1997 to shareholders on the
principal register of members and the international branch
register of members at the close of business on 3 October
1997. The share registers will be closed from 6 October
1997 to 10 October 1997, inclusive. The dividend,
declared in United States Dollars, will also be available
in Pound Sterling calculated by reference to a rate
prevailing five business days prior to the payment date.
Shareholders on both registers will receive United States
Dollars unless they elect for the alternative currency by
notifying the Company's registrars by 4.00 p.m. (local
time) on 15 October 1997.
5. EARNINGS PER SHARE
Earnings per share has been calculated by dividing the
profit for the financial period/year by 12,900,000 being
the number of ordinary shares in the Company in issue from
27 March 1997, when the entire share capital of the
Company was listed on the London Stock Exchange Limited,
to 30 June 1997.
6. INTANGIBLE ASSETS
Intangible assets represent pre-operating expenses which
are amortised over a period of three years on the straight
line basis.
7. INVESTMENTS
As at As at
30 June 31 December
1997 1996
US$'000 US$'000
Exchange memberships 4,953 4,962
Unlisted investments - at cost 580 580
5,533 5,542
Exchange memberships are stated at the directors'
valuation as at 31 August 1996.
8. CASH AT BANKS AND IN HAND
As at As at
30 June 31 December
1997 1996
US$'000 US$'000
Cash on hand and at banks - 26,741 12,733
general accounts
Cash at banks - trust accounts 32,557 33,727
59,298 46,460
9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
As at As at
30 June 31 December
1997 1996
US$'000 US$'000
Bank loans and overdrafts 3,586 810
Obligations under hire 9 17
purchase contracts
Trade creditors 61,369 59,359
Amounts owed to related - 5,192
companies
Taxation and social security 370 79
Dividend payable 258 -
Other creditors, accruals 2,587 1,701
and deferred income
68,179 67,158
10. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
The amount represents the long term portion of the
obligations under hire purchase contracts.
11. PROVISIONS FOR LIABILITIES AND CHARGES
Deferred taxation represents the tax effect of the excess
of depreciation allowances claimed for tax purposes over
the depreciation charged in the financial statements.
Other timing differences are not significant.
There was no movement in the provision for deferred
taxation during the Period.
As at As at
30 June 31 December
1997 1996
US$'000 US$'000
Provision for deferred tax 30 30
The Group had no significant unprovided deferred taxation
at 30 June 1997.
12. EQUITY MINORITY INTEREST
The equity minority interest relates to a 50 per cent
interest in Worldsec Capital Management Inc., a company
incorporated in Taiwan.
13. CALLED UP SHARE CAPITAL
The Company was incorporated on 19 December 1995 with an
authorised and issued share capital of US$12,000 divided
into 12 shares of US$1,000 each and subsequently on 13
December 1996 subdivided into 120,000 shares of par value
US$0.10 each.
By resolutions of the shareholders of the Company passed
on 26 February 1997, the authorised and issued share
capital of the Company was consolidated into 12,000 shares
of par value US$1.00 each and the authorised share capital
of the Company was then increased to US$50,000,000 by the
creation of an additional 49,988,000 shares of par value
US$1.00 each.
By resolutions of the shareholders of the Company passed
on 26 February 1997, the Company issued 6,438,000 shares
of par value US$1.00 each to complete the Group
reorganisation.
On 27 March 1997, 6,450,000 shares were issued for a gross
proceed before expenses of US$18,576,000 to provide
additional working capital to the Group. All the shares
issued by the Company totalling 12,900,000 shares of par
value US$1.00 each were listed on the London Stock
Exchange on the same day.
14. RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW
FROM OPERATING ACTIVITIES
Six
months Year ended
ended 31 December
30 June 1996
1997
US$'000 US$'000
Operating profit 890 1,426
Depreciation 220 680
Amortisation of deferred 21 43
expenditure
Exchange difference (22) 68
Increase in debtors (7,249) (14,627)
Decrease in cash at banks - 1,170 2,652
trust accounts
Increase in trade creditors 2,010 8,639
(Decrease) increase in amounts
owed by/to related companies (4,131) 147
Increase (decrease) in other
creditors, accruals and 886 (536)
deferred income
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (6,205) (1,508)
15. ANALYSIS OF CASH AND CASH EQUIVALENTS
As at As at
30 June 31 December
1997 1996
US$'000 US$'000
Cash on hand and at banks - 26,741 12,733
general accounts
Bank loans and overdrafts (3,586) (810)
23,155 11,923
16. INTERIM REPORT
The interim report will be posted to shareholders on or
about 26 September 1997.
END
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