Final Results - Pre-tax Profits Up 22%

BWD Securities PLC 8 February 2000 BWD Securities PLC (BWD) the investment management group, announces its final results for the year ended 30 November 1999 Key Points : * Pre-tax profits at £6.6m (1998 £5.4m) - up 22% * Basic earnings per share at 26.7p (1998 19.2p) - up 39% * Total dividend for year at 14.5p (1998 12p) - up 21% * Turnover at £27m (1998 £22.3m) - up 21% * Group fee income at £14.2m (1998 £10.8m) - up 31% * BWD Rensburg managed client funds at £2.4bn (1998 £2bn) - up 20% * BWD Rensburg Unit Trusts at £203m (1998 £95m) - up 114% Since the year end, we have seen that the positive trends established in 1999 are continuing into the current financial year. This, together with a full year's contribution from last year's acquisitions provides us with real confidence for the future. For further information, please contact: Michael Burns, Chief Executive Tel: 0151 227 2030 Michael Dickinson, Group Finance Director Tel: 01484 607722 CHAIRMAN'S STATEMENT Financial Results I am pleased to report a 22% increase in the group's profit before tax from £5,434,000 to £6,610,000 for the year ended 30 November 1999. Profit after tax was £5,083,000 (1998 £3,675,000) representing basic earnings per share of 26.7p (1998 19.2p) an increase of 39%. The fall in the tax charge and the corresponding increase in earnings per share is accounted for by the operation of an employee share scheme which provides corporation tax relief on the value above the option price of the shares allotted to employees under the SAYE share option scheme. This has resulted in an exceptional increase in earnings per share of 2.5p. Dividends The directors are recommending an increase in the total dividend for the year of 21% to 14.5p (1998 12p). This is in line with the increase in profits but does not reflect the exceptional tax credit mentioned in the preceding paragraph. Acquisitions Both BWD Rensburg and Northern Registrars expanded their businesses by acquisition towards the end of the financial year. The total consideration was almost £9 million although the impact on the 1999 financial results is minimal. Full details are given in the Chief Executive's Review and in the remainder of the Report and Financial Statements. Board I am delighted to welcome Christopher Clarke to the Board, who was appointed as a non-executive Director of the Company in October 1999. He is Managing Director of Witan Investment Company plc which is one of the UKs largest investment trusts. He has a wealth of experience in investment management and we will also benefit from his broad knowledge of the financial markets in which we operate. I will be retiring from the Board at the Annual General Meeting when it is intended that Alan Bottomley, who joined the Board in 1997, will succeed me as Chairman. I have been proud to be associated with the group during the past five years when profits have increased from £2.5 million to £6.6 million accompanied by a substantial increase in the Company's share price. On behalf of the Board and our shareholders I congratulate the executive directors and all the group's employees on their excellent work during my time as Chairman. Peter Stanley 8 February 2000 Chief Executive's Review of Operations We have continued to concentrate on growing our businesses with an emphasis on recurring fees as opposed to transaction based revenue. Towards the end of the financial year we acquired Nicholson Barber, the Sheffield based investment management company and stockbroker. We also added to our company registration business, Northern Registrars, with the acquisition of KPMG's registration business. The impact on the group's income and profits from these acquisitions for the financial year under review is minimal. We have also invested further in our collective investment businesses with the establishment of a new unit trust, investing in mid-cap stocks and a venture capital trust specialising in AIM stocks. Group turnover increased by 21% to £27 million and fee income, which now represents 67% of group costs compared to 60% in 1998 increased by 31% to £14.2 million. Investment Management -(Turnover £23.7 million;Operating profit £5.2 million) BWD Rensburg - increased its managed clients' funds (including PEP and ISA schemes) by 20% to £2.41 billion. Fee paying funds under management included in this figure increased by 30% to £1.15 billion. In line with industry experience sales of ISAs were disappointing in the early part of the year but have improved in the last quarter. These figures exclude funds taken on with the Nicholson Barber acquisition. Nicholson Barber is a regional investment management and stockbroking business with offices in Chesterfield, Derby, Doncaster and Sheffield and was acquired for a maximum total consideration of £8.79 million. The Nicholson Barber business has a reputation for supplying quality independent financial advice to both private and corporate clients and at the time of acquisition had advisory funds of approximately £700 million. The acquisition will strengthen our position as a leading UK regional investment management group and I am pleased to be able to report that the integration of the business into BWD Rensburg is proceeding well. Unit Trust Managers - doubled funds under management for the third year running to £203 million. Our fund managers received individual industry performance awards and consistency of performance was recognised by two group awards from 'Micropal'. A new unit trust was launched in July 1999 to invest in mid-cap stocks which by the end of the year was valued at £14 million. We are continuing to invest in this increasingly important part of our group activities and plan to further develop the product range through the formation of an open ended investment company (OEIC) during 2000. Capital for Companies - successfully launched BWD Aim VCT plc, a £12 million managed venture capital trust specialising in companies traded on the Alternative Investment Market. This VCT is currently raising a further £9 million, which, if achieved, will increase funds managed by Capital for Companies to £40 million. Both VCTs are listed on the London Stock Exchange and have provided valuable income and capital gains tax benefits for subscribers as well as above average investment returns. Administration Services -(Turnover £3.3 million;Operating profit £0.4 million) Northern Registrars - continues to attract new business and acts as registrar to 200 companies which are either fully listed or on the AIM market. The Company acquired the KPMG registration business in August 1999 and this has now been successfully integrated. Current developments include the design of systems to administer the All Employee Share Scheme proposed by the current Government. The Company has benefited from the high levels of share transfer and corporate event activity during the year. Northern Administration - has now fully developed its integrated collective investment scheme system which provides valuation, accounting, registration and settlement functions for its unit trust customers. Following a study during the year we strengthened the management and financial controls. These consultancy costs have been written off and as a result the company is well placed to benefit from the demand for administration services as collective investment schemes continue to grow. I have referred in my previous reports to our continued investment in people, systems, and working environment. During the year we extended and refurbished our freehold property at Woodsome Park, Huddersfield at a cost of £1.2 million. The property is now occupied by our Administration Services businesses together with our group accounting and human resources departments. We are also currently re-locating our two Sheffield businesses to new premises. Since the year end, we have seen that the positive trends established in 1999 are continuing into the current financial year. This, together with a full year's contribution from last year's acquisitions provides us with real confidence for the future. You will have noted that Peter Stanley is retiring as Chairman at the AGM and I would like to thank him for his friendship, guidance and advice over the past five years. I would also like to thank my fellow Directors and the group's employees for their efforts and achievements. Without the wholehearted commitment and enthusiasm of our people and their willingness to change and adapt as our business develops these excellent results could not happen. Michael Burns 8 February 2000 Consolidated Profit and Loss Account For the year ended 30 November 1999 Note 1999 1998 £'000 £'000 ___________________________________________________________________________ Turnover Continuing operations 26,600 22,340 Acquisitions 360 - ______ ______ 26,960 22,340 Administrative expenses (21,341) (17,948) ______ ______ Operating profit Continuing operations 5,530 4,392 Acquisitions 89 - ______ ______ 5,619 4,392 Interest receivable 991 1,042 ______ ______ Profit on ordinary activities before taxation 6,610 5,434 Tax on profit on ordinary activities 1 (1,527) (1,759) Profit on ordinary activities after taxation 5,083 3,675 Dividends 2 (2,853) (2,274) Retained profit for the year 2,230 1,401 Earnings per share - Basic 3 26.7p 19.2p - Diluted 3 25.8p 18.8p Consolidated Balance Sheet 30 November 1999 1999 1998 £'000 £'000 ____________________________________________________________________________ Fixed Assets Intangible assets 9,151 - Tangible assets 5,606 5,662 Investments 514 594 _____ _____ 15,271 6,256 ______ _____ Current Assets Debtors 41,939 21,510 Investments 1,162 - Cash at bank and in hand 12,514 10,106 ______ ______ 55,615 31,616 Creditors Amount falling due within one year (51,253) (26,436) _____ _____ Net Current Assets 4,362 5,180 _____ _____ Total Assets Less Current Liabilities 19,633 11,436 Creditors Amounts falling due after more than one year (3,529) - Provisions for Liabilities and Charges (244) (320) _____ _____ Net Assets 15,860 11,116 ______ ______ Capital and Reserves Called up share capital 2,027 1,927 Share premium account 5,671 1,679 Capital redemption reserve 100 100 Revaluation reserve 275 275 Other reserves 154 154 Profit and loss account 7,633 6,981 ______ ______ Equity Shareholders' Funds 15,860 11,116 ______ ______ Consolidated Cash Flow Statement For the year ended 30 November 1999 1999 1998 Note £'000 £'000 _____________________________________________________________________________ Net cash inflows from operating activities (a) 7,340 5,316 Returns on investment and servicing of finance Interest received 1,053 918 Taxation paid (1,780) (1,248) Capital expenditure and financial investment Purchase of tangible fixed assets (1,824) (1,231) Purchase of fixed asset investments (204) (787) Proceeds from sale of tangible fixed assets 96 228 Proceeds from sale of fixed assets investments 38 - Acquisitions and disposals Purchase of subsidiary undertakings (2,500) - Net cash acquired with subsidiary undertakings 454 - Equity dividends paid (2,471) (1,675) ______ _____ Cash inflow before financing 202 1,521 Financing Issue of ordinary share capital 432 264 Purchase of own shares - (1,210) _____ _____ Increase in cash in the year (b) 634 575 ______ _____ Notes to the consolidated cash flow statement (a) Reconciliation of operating profit to operating cash flows 1999 1998 £'000 £'000 Operating profit 5,619 4,392 Depreciation charges 825 745 Amortisation of goodwill 48 - Profit on disposal of tangible fixed assets (62) (87) Shares subject to grant of a nil cost option 257 274 Decrease in provisions (76) (125) Increase in debtors (20,992) (7,486) Increase in creditors 21,721 7,603 ______ _____ Net cash inflow from operating activities 7,340 5,316 ______ ______ (b) Analysis and reconciliation of net funds At Cash Acquisitions* Other At 1 December Flow non-cash 30 November 1998 changes 1999 £'000 £'000 £'000 £'000 £'000 Cash in hand, 10,106 2,408 - - 12,514 at bank Overdrafts - (1,774) - - (1,774) Debt due after one year - - - (3,529) (3,529) Debt due within one year - - (362) (1,000) (1,362) ______ _____ _____ ______ ______ Net funds 10,106 634 (362) (4,529) 5,849 ______ _____ _____ ______ ______ * Excluding cash and overdrafts 1999 1998 £'000 £'000 Increase in cash in the year 634 575 Loans acquired with subsidiary (362) - Loan notes issued upon acquisition of subsidiary (4,529) - _____ ______ Movement in net funds in the year (4,257) 575 Net funds at 1 December 1998 10,106 9,531 ______ _____ Net funds at 30 November 1999 5,849 10,106 ______ ______ Major non-cash transactions A certain proportion of the consideration for the acquisition of subsidiary undertakings during the year comprised shares and loan notes. Notes 1. Corporation tax at 30.33% (1998 31%). The reduction in the effective tax rate is accounted for by the operation of an employee share scheme which provides corporation tax relief on the value above the option price of the shares allotted to employees under the SAYE share option scheme. 2. The directors are recommending a final dividend of 10p (1998 8.5p), which together with the interim dividend of 4.5p (1998 3.5p) makes a total dividend for the year of 14.5p (1998 12p). The proposed dividend to be paid on 7 April 2000 to shareholders that are on the register at the close of business on 10 March 2000 is calculated on 19,836,975 Ordinary shares. This excludes 430,000 Ordinary Shares held by the Employee Share Ownership Trust for which all dividends have been waived. 3. Basic earnings per share is calculated with reference to earnings for shareholders of £5,083,000 (1998 £3,675,000) and the weighted average number of shares in issue during the year of 19,046,421 (1998 - 19,128,207). 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 619,096 shares (1998 - 447,566). All share capital held at 30 November 1999 by the Employee Share Ownership Trust, for which a nil cost option had not been granted, is excluded from the calculation of diluted earnings per share. Auditors Approval The abridged financial information presented herein is based on the full accounts of the Group for 1999 on which the auditors have given an unqualified report. The full accounts have not yet been filed with the Registrar of Companies. Full Accounts The full accounts will be posted to shareholders on 23 February 2000 and will be available at the Company's registered office from this date.

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