Chairman’s Statement

The period covering our financial year from April 2011 to March 2012 was very difficult indeed for the Group, as we report for the year a net loss (after tax) of HK$24,523,000.

Volatility in our home markets, economic disruptions in Europe, uncertain recovery in USA and weaknesses in other markets such as the Middle East where Quam has interests, were combined factors that dampened substantially our results.

We were let down by our global futures counterparty, MF Global HK, which declared bankruptcy in October last year, forcing us to take a provision of HK$7,000,000. This is in spite of the fact that we were dealing only with the Hong Kong subsidiary that was licensed and regulated by the Securities and Futures Commission.

In addition to providing for MF Global HK, we made an impairment of our interest in our Middle East associate together with this year's share of losses totalled HK$15,419,000, as well as an unfortunate loss as a result of an underwriting on an Australian listed company of HK$5,689,000 and the termination of a new team for the private equity operation based in Shanghai of HK$6,027,000, thus totaling HK$34,135,000. All these represent non-recurring losses.

All was not negative during the year. Our securities' operations increased substantially both in terms of market share and volume. We expanded our sales force and added an aggressive wealth management division.

Quam Capital also performed well with increased revenues and visibility, closing over 40 mandates ranging from IPOs to financial advisory and M&A deals.

Our Group is financially strong with good liquidity and although we anticipate this coming financial year will remain difficult, we are quietly confident that we have turned a page and will show better results for this year.

As a result of our overseas foray and the lack of positive results, we have decided to reduce our exposure to those markets and redeploy capital in Hong Kong and China by reinforcing our distribution platform in Hong Kong, expand aggressively our wealth management team, and enlarge further our capital markets capability.

I would like to thank all our clients, staff, suppliers and bankers for their continuing support.

Bernard POULIOT
Chairman

Last revision date: 16 July 2012