RNS Number:4558C
Worldsec Ld
23 April 2001
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 2000.
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 profit after taxation of the Company was US$0.41m
(1999: profit of US$1.35m).
Earnings per share based on the weighted average number of shares in issue
during the year amounted to US 3 cents (1999: US 10 cents).
THE YEAR IN REVIEW
The new millennium started full of promise. Asia was benefitting from a
recovery in export demand and investor sentiment was positive, buoyed by
strength on Wall Street, particularly on the NASDAQ. In March, the Hong Kong
Stock Exchange and Futures Exchange plus the clearing houses associated with the
two Exchanges were reorganised into one company which was floated on the
Exchange. Our group, as part of its normal business, held memberships on both
Exchanges and accordingly was allocated shares in the merged entity. A
substantial portion of these shares were disposed of during the year at a
profit.
As a result of export-led growth the Asian economies excluding Japan, recorded
healthy growth during the year. This growth was led largely by the electronics
sector. Singapore, South Korea and Taiwan with their greater exposure to the
cyclical recovery in the electronics sector fared particularly well, and Hong
Kong, despite its limited exposure to this sector, also posted a strong economic
performance, with real GDP growth of 10.5% in 2000.
Chairman's Statement
Due to the fascination of investors with technology stocks, international
investor interest focused on the North Asian stockmarkets together with
Singapore. Other markets such as Indonesia, the Philippines and Thailand were
marginalised; their ability to attract institutional investor interest was not
helped by political and financial problems. With our Hong Kong and Southern
Asian focus, we did not benefit from the activity in the South Korea and Taiwan
markets. This resulted in nearly 90% of our turnover being generated from the
Hong Kong market.
The encouraging start to the year was not maintained. Hong Kong investors,
particularly retail investors, participated with enthusiasm in the so-called new
economy euphoria and when this bubble burst, the collapse was dramatic. One
measure of the damage is the performance of the GEM index which fell 70% from
its March peak to end the year at 309. The collapse of new economy stocks is
not unique to Hong Kong but its impact on the local stock market was probably
more severe than the impact of this sector's collapse in other stock markets
because of the huge retail participation in Hong Kong. The collapse in the
market has adversely affected our retail business and resulted in a substantial
bad debt provision.
PROSPECTS
The current year has begun on a negative note as investors question whether or
not the US is in recession. Even more pertinent is the question concerning the
timing and pattern of recovery in the US - will it be V shaped, a quick rebound,
or will recovery be a long drawn affair? Closer to home, the prognosis for the
Japanese economy and the outlook for the year is directly relevant to the
prospects for the Asian economies and stock markets. Fortunately the economic
prospects for China seem less clouded with real GDP growth this year of 7.5%
being the consensus estimate. Therefore, we are encouraged by the fact that so
much of our business is now dependent on the Hong Kong stock market.
As stated previously, we have been seeking to merge with a stronger partner and
have held substantive negotiations with several interested parties in the last
two years but without success to date.
Our strategic focus has been undermined by the Asian crisis and must now be
carefully re-examined, particularly given the changes in the competitive
environment. We are, therefore, looking at restructuring the Group in order to
improve our performance.
David Archibald Evelyn Lyle
Non-Executive Chairman
23 April 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2000
Year ended 31 December
Notes 2000 1999
US$'000 US$'000
Turnover 1 14,052 15,792
Fees and commissions payable (2,579) (4,135)
11,473 11,657
Gain on disposal of investments 6,608 1,152
Recovery of doubtful receivables 1,208 -
Other operating income 2,819 1,530
22,108 14,339
Staff costs (10,331) (8,089)
Provision for doubtful receivables (5,518) -
Other operating costs (4,719) (5,099)
Operating profit 1 1,540 1,151
Interest receivable and similar income 828 769
Interest payable and similar charges (1,689) (458)
Profit on ordinary activities before taxation 679 1,462
Tax on profit on ordinary activities 2 (266) (119)
Profit for the year before minority interest 413 1,343
Equity minority interest - 3
Profit for the financial year 413 1,346
Earnings per share 3 3 cents 10 cents
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2000
2000 1999
US$'000 US$'000
Fixed assets
Intangible assets 1,270 -
Tangible fixed assets 1,060 1,181
Investments 1,771 5,203
Purchased goodwill 788 986
4,889 7,370
Current assets
Investments 3,087 -
Debtors 18,051 35,728
Bank deposits and cash 41,223 42,639
62,361 78,367
Creditors: Amounts falling due within one year (34,983) (53,298)
Net current assets 27,378 25,069
Total assets less current liabilities 32,267 32,439
Provisions for liabilities and charges (32) (32)
Equity minority interest - (7)
Net assets 32,235 32,400
Capital and reserves
Called up share capital 13,367 13,367
Share premium 11,664 11,664
Special reserve 625 625
Profit and loss account 6,488 5,323
Revaluation reserve 1,204 2,206
Currency translation reserve (1,113) (785)
Equity shareholders' funds 32,235 32,400
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2000
Year ended 31 December
Note 2000 1999
US$'000 US$'000
Cash (outflow)/inflow from operating activities 4 (8,766) 2,419
Returns on investments and servicing of finance
Interest received from banks and deposit taking companies 828 769
Interest paid on bank loans and overdrafts (1,689) (458)
Net cash (outflow)/inflow from returns on investments
and servicing of finance (861) 311
Taxation
Tax refunded/(paid) 100 (205)
Capital expenditure and financial investment
Purchase of tangible fixed assets (272) (186)
Sale of tangible fixed assets 5 39
Net cash outflow from capital expenditure and financial
investment (267) (147)
Net cash (outflow)/inflow before use of liquid resources and
financing (9,794) 2,378
Management of liquid resources
(Increase)/decrease in time deposits of maturity
exceeding 1 day (473) 260
(Decrease)/increase in cash (10,267) 2,638
NOTES TO THE PRELIMINARY STATEMENT OF ANNUAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2000
1. ANALYSIS OF TURNOVER, OPERATING PROFIT AND NET ASSETS
The turnover attributable to the different classes of the Group's business
is as follows:
Year ended 31 December
2000 1999
US$'000 US$'000
Analysis by class of business:
Broking and related services 12,509 13,876
Corporate finance 1,543 1,916
14,052 15,792
Geographical analysis of turnover:
Hong Kong 12,090 10,624
Thailand 824 3,039
Malaysia 349 321
Singapore 260 504
Philippines 136 812
Others 393 492
14,052 15,792
The operating profit attributable to the different classes
of the Group's business is as follows:
Broking and related services 1,147 638
Corporate finance 393 513
1,540 1,151
The net assets utilised in the Group relate substantially to broking
activities.
2. TAX ON PROFIT ON ORDINARY ACTIVITIES
Year ended 31 December
2000 1999
US$'000 US$'000
The charge comprises:
UK Corporation Tax at 30% (1999: 30.25%)
current year 85 86
Hong Kong Profits Tax at 16% (1999:16%)
current year 144 17
Other overseas taxation 37 16
266 119
3. EARNINGS PER SHARE
Calculation of earnings per share was based on the
following:
Year ended 31 December
2000 1999
Profit for the financial year US$413,000 US$1,346,000
Weighted average number of shares
in issue 13,367,290 13,367,290
Earnings per share 3 cents 10 cents
4. RECONCILIATION OF OPERATING PROFIT TO NET CASH (OUTFLOW)/INFLOW FROM
OPERATING ACTIVITIES
Year ended 31 December
2000 1999
US$'000 US$'000
Operating profit 1,540 1,151
Depreciation 289 440
Provision for doubtful receivables 5,518 -
Amortisation of intangible assets 115 -
Amortisation of purchased goodwill 198 197
Exchange difference (205) (48)
Increase in investments held as current
assets (1,321) -
Decrease/(increase) in trade debtors 12,682 (24,138)
(Increase)/decrease in other debtors and
prepayments (768) 381
(Increase)/decrease in cash at bank - trust
accounts (15,700) 19,763
(Decrease)/increase in trade creditors (10,718) 4,901
Decrease in other creditors and accruals (396) (228)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES (8,766) 2,419
5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Year ended 31 December
2000 1999
US$'000 US$'000
(Decrease)/increase in cash (10,267) 2,638
Cash outflow/(inflow) from increase/
(decrease) in liquid
resources 473 (260)
Movement in net funds (9,794) 2,378
Net funds brought forward 22,052 19,674
Net funds carried forward 12,258 22,052
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