Final Results

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 ___________ ___________ This information is provided by RNS The company news service from the London Stock Exchange

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