Final Results

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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