RNS No 7339c
WORLDSEC LIMITED
10th June 1998
WORLDSEC LIMITED
Worldsec Limited is pleased to release today its preliminary statement
of results for the year ended 31 December 1997.
The Chairman's Statement and extracts from the annual financial
statements are reproduced below. The results have been agreed with
the company's auditors, Deloitte Touche Tohmatsu, Certified Public
Accountants, Hong Kong.
INVESTORS RELATIONS
For further information please contact:
In the United Kingdom In Hong Kong
Mr. Alastair Gunn-Forbes Mr. Paul K.K. Cheng
Director Finance Director
+44 171 972 0880 +852 2867 7213
CHAIRMAN'S STATEMENT
RESULTS
The shares of Worldsec Limited (the "Company") were listed on the
London Stock Exchange Limited in March 1997. I am pleased to present
its first annual report as a public company.
The audited consolidated profit after taxation and minority interests
of the Company was $2.19m which represents an increase of 72% when
compared with the results of $1.27m for 1996.
Earnings per share based on the weighted average number of shares in
issue during the year amounted to US 19.2 cents, representing a slight
decline from earnings per share of US 19.7 cents in 1996.
DIVIDENDS
An interim dividend of US 2 cents per share has been paid. The
directors recommend the payment of a final dividend of US 2 cents per
share for 1997, making a total of US 4 cents per share. The total
dividend to shareholders for 1997 will amount to US$516,000,
representing a payout ratio of 24%.
THE YEAR IN REVIEW
Given its focus on the Asian equity markets, the Group was faced with
an extremely difficult and volatile operating environment in 1997.
This stemmed from deteriorating economic conditions in Asia. Over the
years, the Asian economies had developed rapidly on the back of strong
export led growth. However, in 1997, the sharp slowdown in export
growth which began the previous year exposed the risks from high
current account deficits, poor financial infrastructure and high debt
levels.
The operating environment for the Group was particularly difficult
after Thailand floated the Baht on 2 July setting in train a currency
crisis. Before that date, the stability of Asian currencies against
the US dollar had encouraged institutional borrowing of foreign
currencies on an un-hedged basis in order to benefit from lower
foreign interest rates. Throughout large parts of Asia there had been
over-investment in assets producing inferior returns relative to the
true cost of capital.
With the exception of Indonesia, the equity markets of the ASEAN
countries prior to the Baht flotation had been weak. In the second
half of the year, under the impact of the Asian currency crisis, share
prices in the ASEAN countries collapsed. The equity markets of China,
Hong Kong, South Korea and Taiwan which had all appreciated in the
first half of 1997 also fell sharply as investors reduced exposure to
the region.
Notwithstanding the turmoil throughout the region, brokerage turnover
for 1997 at US$20.92m was largely unchanged from the turnover of
US$20.64m recorded in 1996. The decline in our volume of business in
the ASEAN markets was offset by an increased turnover in the Greater
China market. Commission income derived from trades executed on the
Hong Kong stock market rose strongly due to the increased investor
interest surrounding the 30 June handover. Such interest was
reflected in the rise in the Hang Seng Index to a record high of
16,820 on 7 August 1997 and in the China related stocks.
The bulk of corporate finance revenue for 1997 was derived from the
Greater China markets, particularly Hong Kong. Due to the difficult
operating environment in the region, fund raising activities declined
significantly in the second half of 1997, leading the Group's
corporate finance division to concentrate on expanding its financial
advisory services. Despite poor market conditions, an increase in
turnover during 1997 of 26% or US$2.13m was achieved.
PROSPECTS
Amidst all the turmoil in the Asian equity market, it is important to
keep a sense of perspective. The Asian economies have an impressive
record of recovery from severe setbacks. The IMF has committed huge
resources to help the troubled Asian economies. Recent trade
statistics show that import growth throughout Asia is slowing and
merchandise trade and current account balances already reflect this.
Barring extreme political developments, we expect a greater degree of
exchange rate stability in Asian currency markets. This would help
repair confidence, paving the way for recovery.
Despite the problems that beset Asia, we see it as a major positive
factor that China is pushing ahead with a bold package of sweeping
reforms of its state-run enterprises, financial system and government
bureaucracy. China's economic growth target of 8% this year is
demanding. If China succeeds in implementing the reforms promulgated
by the National People's Congress in March 1998, it will go some way
towards building the foundation of a vibrant modern economy.
Similarly, other countries in the region are also introducing
financial reforms under the watchful eye of the IMF. The
implementation of these reforms will strengthen the economic fabric of
Asia.
It has always been the case in Asia that the quantum of risk is least
when perceptions are that risk is high. Such perceptions prevail
today and, consequently, the operating environment for Worldsec
remains very difficult. Commission income is falling due to the sharp
contraction in turnover, and, as a result, we are currently operating
at a loss. Nonetheless, our company is seeking to take advantage of
current conditions to expand its regional network and with this in
mind, we are considering the options available to strengthen our
capital base. Management is confident that this approach will pay
dividends when the Asian economies recover.
David Archibald Evelyn Lyle
Non-Executive Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1997
Year ended 31 December
Notes 1997 1996
US$'000 US$'000
Turnover 1 23,682 22,328
Fees and commissions payable (3,382) (4,779)
_____________________________
20,300 17,549
Other operating income 1,025 664
_____________________________
21,325 18,213
Staff costs (12,774) (9,710)
Other operating costs (6,576) (7,077)
_____________________________
Operating profit 1,975 1,426
Interest receivable and similar income 1,192 688
Interest payable and similar charges (293) (444)
_____________________________
Profit on ordinary activities before taxation 2,874 1,670
Tax on profit on ordinary activities 2 (674) (396)
_____________________________
Profit on ordinary activities after taxation 2,200 1,274
Minority interest (12) (2)
_____________________________
Profit for the financial year 2,188 1,272
Equity dividends 3 (516) (5,122)
_____________________________
Retained profit for the year (transfer from
reserves) 1,672 (3,850)
_____________________________
Earnings per share 4 19 cents 19 cents
_____________________________
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 1997
THE GROUP
31 December THE COMPANY
1997 1996 31 December 1997
US$'000 US$'000 US$'000
Fixed assets
Intangible assets 15 52 -
Tangible fixed assets 1,354 1,992 -
Investments 4,428 5,542 -
Interest in subsidiaries - - 18,370
__________________ _________
5,797 7,586 18,370
__________________ _________
Current assets
Debtors 14,730 30,297 105
Amounts owed by related
companies - 1,061 -
Bank deposits and cash 67,437 46,460 5,779
__________________ _________
82,167 77,818 5,884
__________________ _________
Creditors: Amounts falling due
within one year (52,804)(67,158) (316)
__________________ _________
Net current assets 29,363 10,660 5,568
__________________ _________
Total assets less current liabilities 35,160 18,246 23,938
__________________ _________
Creditors: Amounts falling due after
more than one year - (10) -
Provisions for liabilities and charges (30) (30) -
Equity minority interest (209) (177) -
__________________ _________
Net assets 34,921 18,029 23,938
__________________ _________
Capital and reserves
Called up share capital 12,900 6,450 12,900
Share premium 10,776 - 10,776
Revaluation reserve 3,664 4,890 -
Special reserve 625 625 -
Currency translation reserve (754) 26 -
Profit and loss account 7,710 6,038 262
__________________ _________
Equity shareholders' funds 34,921 18,029 23,938
__________________ _________
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
1997 1996
US$'000 US$'000
Analysis by class of business:
Broking 20,920 20,644
Corporate finance 2,127 1,684
Investment advisory 635 -
_________ _________
23,682 22,328
_________ _________
Geographical analysis of turnover:
Hong Kong 17,057 11,026
Malaysia 999 2,136
Philippines 608 1,763
Singapore 1,449 1,274
Thailand 1,525 4,707
Taiwan 673 31
Others 1,371 1,391
_________ _________
23,682 22,328
_________ _________
The operating profit attributable to the different classes
of the Group's business is as follows:
Analysis by class of business:
Broking 945 729
Corporate finance 923 697
Investment advisory 107 -
_________ _________
1,975 1,426
_________ _________
The net assets utilised in the Group relate substantially to
broking activities.
2. TAX ON PROFIT ON ORDINARY ACTIVITIES
Year ended 31 December
1997 1996
US$'000 US$'000
The charge comprises:
UK Corporation Tax at 31% (1996: 33%)
current year 153 157
Hong Kong Profits Tax at 16.5%
current year 482 163
Other overseas taxation 39 76
______ ______
674 396
______ ______
3. EQUITY DIVIDENDS
Year ended 31 December
1997 1996
US$'000 US$'000
Interim dividend of US 2 cents per share 258 -
Final dividend of US 2 cents per share 258 -
Dividends paid by subsidiary undertakings to former
holding company - 5,122
_____________________________
516 5,122
_____________________________
Dividend per share 4 cents 79 cents
_____________________________
Dividend per share for the year ended 31 December 1996 has been
calculated by reference to 6,450,000 shares being the number of
ordinary shares in the Company in issue immediately prior to the
listing of the entire share capital of the Company on the London
Stock Exchange Limited.
The final dividend of US 2 cents per share proposed by the
directors will be considered by the members of the Company at the
forthcoming Annual General Meeting on 23 July 1998.
4. EARNINGS PER SHARE
The earnings per share for the year ended 31 December 1997 has
been calculated by reference to the profit attributable to
shareholders of US$2,188,000 and the weighted average of
11,397,945 shares in issue during the year. The earnings per
share for the year ended 31 December 1996 has been calculated by
reference to 6,450,000 shares being the number of ordinary shares
in the Company in issue immediately prior to the listing of the
entire share capital of the Company on the London Stock Exchange
Limited.
END
FR NFLKEFEEPEFN
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