Final Results

BWD Securities PLC 7 February 2002 7 February 2002 BWD SECURITIES PLC ('BWD') PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2001 BWD, the Investment Management and Administration Services Group Key Points: • Profit before tax* of £8.1m (2000: £10.4m) • Basic earnings per share* of 26.8p (2000: 36.1p) • Total dividend of 18.0p per share (2000: 18.0p) • Turnover of £37.9m (2000: £38.4m) • Group fee and other recurring income of £22.4 m (2000: £20.2m) • Group managed funds of £4.0bn (2000: £3.9bn) • Integration of Dennis Murphy Campbell proceeding well Mike Burns, Chief Executive of BWD Securities, commented: 'Against the background of challenging trading conditions over the year, we are very pleased with the performance of all our offices. The integration of our new London office is proceeding well, providing BWD with an excellent platform from which to expand its business in the South. We continue to reap the benefits of our strategy to reposition our main business as an investment management business, rather than a traditional stockbroker and believe our business is on solid foundations from which we can move forward in 2002.' *figures stated before goodwill amortisation and profit on disposal of properties For further information, please contact: BWD Securities PLC Michael Burns, Chief Executive Tel: 0151 227 2030 Hudson Sandler Nick Lyon/Jessica Rouleau Tel: 020 7796 4133 CHAIRMAN'S STATEMENT Financial Results The year to 30 November 2001 produced challenging trading conditions as investor confidence, already weakened by falling financial markets, was then further affected by the events of 11 September. Against such a backdrop, it is satisfying to be able to report profits before tax of £8.1 million (2000: £10.4 million) and basic earnings per share of 26.8p (2000: 36.1p). These figures are prior to goodwill amortisation of £622,000 (2000: £482,000) and an exceptional profit of £261,000 (2000: nil) arising from property disposals. Dividends The Directors are recommending a final dividend for the year of 12p (2000: 12p) which taken together with the interim dividend of 6p (2000: 6p), produces a total dividend for the year of 18p (2000: 18p). Acquisition In the latter half of the financial year BWD Rensburg acquired Dennis Murphy Campbell, a long established stockbroking business based in the City of London. This acquisition has not had a material impact on the 2001 financial results, which reflect only four months of trading but do include the full cost of integration. We expect to move this business into new larger premises in early summer 2002 as we fully intend to increase our presence in the City. Further details of this promising acquisition are provided in the Chief Executive's Review. Board and Employees I would like to take this opportunity to acknowledge the skill and commitment demonstrated by the Group's employees throughout the past year. This is evidenced by a further increase in fee and other recurring income being achieved, despite the adverse market conditions. Outlook Whilst recognising that difficult trading conditions may continue, the Board remains confident that all businesses within the Group will continue to trade profitably and are well positioned to take advantage as markets stabilise and investor confidence recovers. Alan Bottomley 6 February 2002 CHIEF EXECUTIVE'S REVIEW OF OPERATIONS Group fee and other recurring income increased by 11% to £22.4 million (2000: £20.2 million) despite a marginal decrease in group turnover to £37.9 million (2000: £38.4 million). Group fee and other recurring income now represents 73% of group operating expenses (2000: 70%). The last two years have been difficult for the securities industry. They have included the boom and bust of the dot.com bubble, recession in Europe, the collapse of the Japanese economy and the appalling events of 11 September, which occurred as the US economy was already weakening. Against this background, it is not surprising that the UK stock market has faltered. In the circumstances, I am very satisfied with the continuing advance of our fee and other recurring income. Most commentators have expressed confidence in the UK economy for the foreseeable future and consequently the outlook for investors looks positive. Behind the scenes, we, along with many others, have been busy preparing for the new regulator, the Financial Services Authority, which duly came into being on 1 December 2001. We genuinely hope that their risk-based approach to regulation, with which we agree in principle, remains uppermost in their minds. As we start the year we are conscious that there is a whole list of EU Directives that will further impact on our industry and for which we must begin to prepare. During last year the London Stock Exchange failed in its bid for LIFFE, which was sold to Euronext. Currently, Deutsche Borse plans to acquire the remaining shareholding in Clearstream, a European settlement system. Thus exchanges, clearing and settlement across Europe will continue to be actively discussed within the financial sector. This and the previous paragraph highlight the significant changes that we have adjusted to over the past year and provide an indication of the increasing level of resources necessary to ensure that we remain up to date with regard to the way business is both transacted and regulated. Investment Management - Turnover £32.6 million; Operating profit before goodwill amortisation £6.1 million. BWD Rensburg - Fee paying clients' funds increased to £1.6 billion (2000: £1.5 billion) inclusive of ISA and PEP funds of £457 million (2000: £436 million). Other managed funds remained at £2 billion, bringing total clients' funds under management to £3.6 billion (2000: £3.5 billion). The acquisition of Dennis Murphy Campbell, an established City of London private client stockbroking business, was completed in July 2001. The consideration payable comprised an initial consideration of £5.97 million, with a deferred consideration of up to £4 million dependent upon performance over the period to 30 November 2004. This acquisition gives the business an excellent platform from which to expand its portfolio management activities in the South. I am pleased to report that the integration of this business into BWD Rensburg is proceeding well, with genuine enthusiasm being shown by our new colleagues for our fee based culture. Elsewhere in BWD Rensburg, steady progress continues to be made in transferring the remainder of clients into fee services and nominee accounts. In excess of 80% of all trades carried out in the business last year were nominee based. Capital for Companies had year end funds under management of £36 million (2000: £39 million) including an additional £8 million raised for Capital for Companies VCT plc during the year. Despite difficult market conditions, the business has continued to make selective investments on behalf of the two Venture Capital Trusts it manages, whilst providing attractive tax efficient returns to their shareholders. Unit Trust Managers - Net sales of £44 million over the year contributed to funds under management of £294 million (2000: £284 million). Given the testing market conditions this is a creditable result and reflects continued confidence in the ability of the investment team. As part of the business' commitment to further develop its product range, an Aggressive Growth Trust was successfully launched in September 2001. Administration Services - Turnover £5.3 million; Operating profit before goodwill amortisation £1.1 million. Northern Registrars - Has continued to steadily develop both the size and quality of its client base over the year. This growth has contributed to the business being able to achieve 93% of both prior year turnover and operating profits, despite market conditions having led to reduced levels of share transfer activity and corporate event work. Northern Administration - Collective funds administered on behalf of third parties increased by 60% to £0.9 billion. As its reputation in the market place has continued to grow, this business, which was established only four years ago, is now attracting the attention of an increasing number of potential clients. We remain firmly of the view that the scope for this business to expand is considerable. During the past year I have been delighted with the manner in which the Group's employees have met the particular challenges that have arisen from the adverse trading environment. The loyal support of our clients has also played a central role in the Group's continued success over this period and for this I would like to offer my gratitude. Given the solid foundations from which we are moving forward, I view the future with confidence. Michael Burns 6 February 2002 Consolidated profit and loss account for the year ended 30 November 2001 Note 2001 2000 Continuing operations Acquisitions Total £'000 £'000 £'000 £'000 Turnover 37,095 761 37,856 38,373 Operating expenses (29,987) (653) (30,640) (29,006) Goodwill amortisation (483) (139) (622) (482) Total administrative expenses (30,470) (792) (31,262) (29,488) _______ _______ _______ _______ Operating profit 6,625 (31) 6,594 8,885 _______ _______ Profit on disposal of properties 261 - Net interest receivable 885 987 _______ _______ Profit on ordinary activities before 7,740 9,872 taxation Tax on profit on ordinary activities 1 (2,615) (3,185) _______ _______ Profit on ordinary activities after 5,125 6,687 taxation Dividends 2 (3,789) (3,580) _______ _______ Retained profit for the year 1,336 3,107 _______ _______ Earnings per share before goodwill amortisation and profit on disposal of properties 3 Basic 26.8p 36.1p Diluted 26.2p 35.2p Earnings per share 3 Basic 24.9p 33.7p Diluted 24.4p 32.8p The Group has no material recognised gains and losses other than those included in the profits above and therefore no separate statement of total recognised gains and losses is presented. There is no material difference between the profit on ordinary activities before taxation and the retained profit for the year stated above and their historical cost equivalents. Consolidated balance sheet at 30 November 2001 2001 2000 £'000 £'000 Fixed assets Intangible assets 16,375 8,669 Tangible assets 6,279 6,135 Investments 511 769 _______ _______ 23,165 15,573 _______ _______ Current assets Debtors 31,318 36,977 Investments - 1,162 Cash at bank and in hand 22,468 15,366 _______ _______ 53,786 53,505 Creditors Amounts falling due within one year (37,722) (46,280) _______ _______ Net current assets 16,064 7,225 _______ _______ Total assets less current liabilities 39,229 22,798 Creditors Amounts falling due after more than one year (9,064) (3,529) Provisions for liabilities and charges (238) (251) _______ _______ Net assets 29,927 19,018 _______ _______ Capital and reserves Called up share capital 2,204 2,032 Share premium account 9,186 3,686 Capital redemption reserve 100 100 Revaluation reserve 275 275 Other reserves 6,086 2,185 Profit and loss account 12,076 10,740 _______ _______ Equity shareholders' funds 29,927 19,018 _______ _______ Consolidated cash flow statement for the year ended 30 November 2001 Note 2001 2000 £'000 £'000 Net cash inflow from operating activities a 6,946 10,844 Returns on investment and servicing of finance Interest received 1,076 1,169 Interest paid (456) (182) Taxation paid (3,559) (1,875) Capital expenditure and financial investment Purchase of tangible fixed assets (1,362) (1,745) Purchase of fixed asset investments - (257) Net proceeds from sale of properties 1,423 - Proceeds from sale of tangible fixed assets 117 158 Proceeds from sale of fixed asset investments 10 2 Acquisitions and disposals Purchase of subsidiary undertakings (2,000) - Costs associated with acquisition (301) - Equity dividends paid (3,582) (3,177) _______ _______ Cash (outflow)/inflow before financing (1,688) 4,937 Financing Issue of ordinary share capital 5,603 51 Increase/(decrease) in debt 4,000 (362) Redemption of loan notes (813) _ _______ _______ Increase in cash in the year b 7,102 4,626 _______ _______ Notes to the consolidated cash flow statement a. Reconciliation of operating profit to operating cash flows 2001 2000 £'000 £'000 Operating profit 6,594 8,885 Amortisation of goodwill 622 482 Depreciation 1,113 1,026 (Profit)/loss on disposal of tangible fixed assets (12) 32 Profit on disposal of fixed asset investments (8) - Shares subject to grant of a nil cost option 256 - Decrease in debtors 5,912 4,976 Decrease in creditors and provisions (7,531) (4,557) _______ _______ Net cash inflow from operating activities 6,946 10,844 _______ _______ b. Analysis and reconciliation of net funds At 1 Dec Cash Other At 30 Nov 2000 Flow Changes 2001 £'000 £'000 £'000 £'000 Cash and deposits 15,366 7,102 - 22,468 Debt due after one year (3,529) (4,000) 3,113 (4,416) Debt due within one year (1,000) 813 (563) (750) _______ _______ _______ _______ Net Funds 10,837 3,915 2,550 17,302 _______ _______ _______ _______ The net effect of other changes above of £2,550,000 represents the reclassification of deferred consideration in respect of the acquisition of Nicholson Barber Limited during the year ended 30 November 1999, which does not represent borrowings until such time as the deferred consideration becomes payable. 2001 2000 £'000 £'000 Increase in cash 7,102 4,626 Repayment of debt 813 362 Loans drawn down (4,000) - Reclassification of deferred consideration 2,550 - _______ _______ Movement in net funds in the year 6,465 4,988 Net funds at 1 December 2000 10,837 5,849 _______ _______ Net funds at 30 November 2001 17,302 10,837 _______ _______ Notes 1. Corporation tax Corporation tax at 30% (2000: 30%) 2. Dividends 2001 2000 £'000 £'000 Interim paid of 6.0p per share (2000: 6.0p) 1,195 1,193 Proposed final of 12.0p per share (2000: 12.0p) 2,594 2,387 _______ _______ 3,789 3,580 _______ _______ The Directors are recommending a final dividend of 12.0p per share (2000: 12.0p), which together with the interim dividend of 6.0p per share (2000: 6.0p) makes a total dividend for the year of 18.0p per share (2000: 18.0p). The proposed dividend, to be paid on 8 April 2002 to shareholders that are on the register at the close of business on 15 March 2002, is calculated on 21,615,811 ordinary shares. This excludes 421,250 ordinary shares held by the Employee Share Ownership Trust for which all dividends have been waived. 3. Earnings per share Basic earnings per share before goodwill amortisation and profit on disposal of properties is calculated with reference to earnings for shareholders of £5,516,000 (2000: £7,169,000) and the weighted average number of shares in issue during the year of 20,585,873 (2000: 19,865,843). Basic earnings per share is calculated with reference to earnings for shareholders of £5,125,000 (2000: £6,687,000). Diluted earnings per share is the basic earnings per share, adjusted for the effect of the conversion into fully paid shares of the weighted average number of all employee share options outstanding during the year. The number of additional shares used for the diluted calculation is 443,699 shares (2000: 505,873). Basis of preparation The financial information in this press release does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985, but is derived from the accounts. Statutory accounts for 2000 have been delivered to the Register of Companies, and those for 2001 will be delivered following the Company's Annual General Meeting. The independent auditors have reported on the accounts for both 2000 and 2001; their reports were unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985. Full Accounts The full accounts will be posted to shareholders on 26 February 2002 and will be available at the Company's registered office from this date, and on the Group's website at www.bwd-securities.co.uk. This information is provided by RNS The company news service from the London Stock Exchange

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