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BWD Securities PLC (RBG)

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Tuesday 10 February, 2004

BWD Securities PLC

Final Results

BWD Securities PLC
10 February 2004


                                             10 February 2004


                           BWD SECURITIES PLC ('BWD')
            PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2003


BWD, the Investment Management Group -

Key Points:


  • Profit before tax, goodwill amortisation and exceptional items of £6.8m
    (2002: £8.0m)



  • Exceptional profit arising from the disposal of the Administration
    Services division of £10.5m.  No tax charge is expected to arise from this
    exceptional profit



  • Basic earnings per share before goodwill amortisation and exceptional
    items of 22.6p (2002: 25.4p)


  • Total dividend unchanged at 18.0p per share


  • Total clients' funds under management increased to £3.81bn (2002: £3.52bn)


  • Proposed change of name to Rensburg plc



Mike Burns, Chief Executive of BWD, commented:


'During such a difficult period, these results clearly demonstrate the
resilience of our business.  We now see most major economies showing signs of
strength and an improving outlook for corporate profits in the UK.  Consequently
we are looking to build upon the opportunities that will arise from this more
positive operating environment.'


For further information, please contact:

Michael Burns, Chief Executive                          Tel:  0151 227 2030
BWD Securities PLC


Nick Lyon                                               Tel:  020 7796 4133
Hudson Sandler



CHAIRMAN'S STATEMENT



This is my first statement to shareholders since becoming Chairman following
last year's Annual General Meeting and I should like to start by acknowledging
the tremendous contributions to the Group made both by my predecessor Alan
Bottomley, and by Tim Jason Wood who retired in September 2003 after serving as
a director for 15 years.  Both Alan and Tim in their own different ways worked
tirelessly on our behalf; I thank them warmly and wish them both well in their
deserved retirement.



Financial Results and Dividend



These are covered in detail in the Chief Executive's review and in the main body
of this report.  I do believe that the Company's performance in another very
volatile and difficult year for financial markets was extremely creditable, with
only an 11% fall in underlying earnings per share.  The successful disposal of
the Group's Administration Services division resulted in an exceptional profit
which somewhat distorts the reported numbers, but against underlying basic
earnings of 22.6p (pre-goodwill), the Directors are recommending a final
dividend of 12p (2002: 12p); taken with the interim dividend of 6p (2002: 6p),
this produces an unchanged total dividend for the year of 18p per share.



Disposal


The disposal of the Administration Services division and an associated property
for a cash consideration of £18.47 million and £1.42 million respectively was
concluded on 21 February 2003.  Despite significant effort, these disposal
proceeds have not yet been suitably re-invested into expanding the investment
management business.  The Board remains fully committed to achieving this goal.
Should opportunities fail to arise, however, then serious consideration will be
given to making additional returns to shareholders through the most appropriate
means.


Annual General Meeting and Proposed Change of Name



We look forward to welcoming shareholders to the meeting, which will this year
be held in our Head Office in Leeds on 30 March 2004.  At this meeting
shareholder approval will be sought, in particular, to change the name of the
Company to Rensburg plc.  Further details of this will be included within the
Annual Report & Financial Statements to be posted to shareholders on 25 February
2004.



Board and Employees



As mentioned above, I became Chairman at the conclusion of last year's Annual
General Meeting, and as a consequence of this Andrew Tyrie succeeded me as the
Senior Independent Non-Executive Director and Chairman of the Audit Committee.
I would like to thank Andrew, and the other independent non-executive director,
Katrina Michel, for their wholehearted support and expertise, which, between
them, covers so many aspects of our business.  However, the real impact on
profitability is made by the employees and on behalf of shareholders I would
like to record my appreciation to them all for another excellent result, in
conditions which have proved very testing for many companies in the financial
services business.



Outlook


Many challenges lie ahead, but I am confident that we have the management and
employees to continue to move the Company forward as one of the few remaining
specialist independent investment management businesses.



C.G. Clarke
9 February 2004


CHIEF EXECUTIVE'S REVIEW OF OPERATIONS



This year's financial results include the income and expenses arising from the
Group's Administration Services division up until its sale, which occurred
approximately a quarter of the way through the year; this is reflected by the
reductions in turnover of 11% and in fee and other recurring income of 8% when
compared with the prior year.  However, making this comparison within the
continuing Investment Management division, turnover fell by only 1.5% to £32.0
million and within this, fee and other recurring income increased by 5% to £20.6
million.  This increase in fee and other recurring income enabled such income
for the Group to cover 78% of total operating expenses, unchanged from the prior
year.



Profit before tax of £6.8 million (2002: £8.0 million) and basic earnings per
share of   22.6p (2002: 25.4p) were achieved, despite the loss of contribution
from the Administration Services division and the difficult prevailing
conditions.  These figures are prior to goodwill amortisation of £917,000 (2002:
£952,000) and exceptional profits in 2003 of £10.5 million arising from the
disposal of the Group's Administration Services division and £390,000 arising
from a sale of 11% of our shareholding in the London Stock Exchange plc.  No tax
charge is expected to arise from the exceptional profit on the sale of the
Administration Services division.



Investment Management - Turnover £32.0 million (2002: £32.5 million); Operating
profit before goodwill amortisation £5.5 million (2002: £6.3 million).



Around Christmas 2002 we suggested to our clients that the worst of the bear
market appeared to be behind us.  We felt that recovering economies and low
interest rates were making equities look particularly attractive; nevertheless,
shares continued to decline until that notable day in March 2003 when the yield
on equities exceeded that on gilts for the first time since 1959.



Our first half year was consequently difficult, however the improvement since
the end of the war in Iraq has been marked, with the summer months being
noticeably busier than usual.  As we look forward, we now see most major
economies showing signs of strength and an improving outlook for corporate
profits in the UK.



BWD Rensburg Investment Management - Fee paying clients' funds increased by 13%
to £1.78 billion (2002: £1.57 billion).  We have continued the drive to convert
clients into fee paying services and to review those that do not reward us
fairly for our services; this accounts for the small decline in the other
managed funds to £1.62 billion (2002: £1.65 billion).  Total clients' funds
under management increased to £3.40 billion (2002: £3.22 billion).



We continue to manage two Venture Capital Trusts; these funds, which have
historically been separately disclosed, are included within the fee paying
clients' funds stated above.



As with any financial services organisation, personnel costs are our largest
expense.  During the period of weak markets, we have examined our cost base and
have reduced our headcount within the investment management business by 57 to
337 over the last two financial years.  It is a credit to our employees that
over the last few years our client bank has increased and service levels
maintained, despite the reductions in headcount and difficult market conditions
that have prevailed.



In spring 2003, the Lord Mayor of London formally opened our new office in
Throgmorton Avenue; this provides a more attractive working environment for our
growing team based in the Capital.  Earlier in the year our Glasgow operation
moved to a modern open-plan office and we expect our Belfast operation to move
to similarly improved premises within the first half of this year.  We believe
it is important that our offices should be of a high standard to ensure optimal
performance from our employees and to provide a conducive environment in which
to meet and conduct business with our clients.



Although a continual process, considerable time has been devoted during this
year to reviewing our IT platforms.  This investment is central to us achieving
our aim of delivering improved service levels to our clients, whilst complying
with the ever-increasing requirements placed upon us by the Financial Services
Authority and the European Union in particular.  We intend during the current
financial year to implement significant enhancements to our IT platforms, but
only once rigorous testing has been undertaken and genuine benefits to our
clients and to our working practices can be clearly seen.  The latest
enhancement was completed during December 2003 when our Self-Invested Personal
Pension ('SIPP') administration system went live, enabling us to now offer our
clients a comprehensive in-house pension service.



BWD Rensburg Unit Trust Managers - Net sales of £63 million over the year,
combined with the improvement in the leading UK financial indices, contributed
to an increase in funds under management of 37% to £406 million (2002: £296
million).  Achievement of this level of net sales in the poor operating
environment is further testimony to the high regard held for the sales and fund
management teams within this business.


Administration Services - Turnover £1.2 million (2002: £5.0 million); Operating
profit before goodwill amortisation £0.16 million (2002: £1.0 million).


Following formal approval by shareholders, the disposal of the Administration
Services division of the Group which comprised Northern Registrars, the
Connaught St Michaels group and Northern Administration was completed on 21
February 2003.



Finally, as we look forward to an improved operating environment in 2004 and
beyond, I would like to express my gratitude to the Group's employees for
achieving such a resilient performance during this past, challenging, year.


M. H. Burns
9 February 2004



Consolidated profit and loss account
for the year ended 30 November 2003


                                                                    2003                                 2002
                                                         12 months ended 30 November                12 months
                                                   Continuing    Discontinued                           ended
                                                   operations      operations           Total          30 Nov
                                                        £'000           £'000           £'000           £'000
                                        Note

    Turnover                                          32,005           1,245          33,250          37,499


       Operating expenses                            (26,467)         (1,088)        (27,555)        (30,194)

       Goodwill amortisation                            (869)            (48)           (917)           (952)

    Total administrative expenses                    (27,336)         (1,136)        (28,472)        (31,146)
                                                     _______         _______         _______         _______

    Operating profit                                   4,669             109           4,778           6,353

    Profit on disposal of subsidiaries   1                 -          10,472          10,472               -

    Profit on disposal of fixed asset                    390               -             390               -
    investments                                      _______         _______         _______         _______

    Profit on ordinary activities before               5,059          10,581          15,640           6,353
    interest                                         _______         _______

    Net interest receivable                                                            1,150             721
                                                                                     _______         _______

    Profit on ordinary activities                                                     16,790           7,074
    before taxation

    Tax on profit on ordinary activities 2                                            (1,928)         (2,517)
                                                                                      _______        _______

    Profit on ordinary activities                                                     14,862           4,557

    after taxation

    Dividends                            3                                            (3,933)         (3,913)
                                                                                     _______         _______


    Retained profit for the year                                                      10,929             644

                                                                                     _______         _______


    Earnings per share before            4
    goodwill amortisation and
    exceptional items


         -Basic                                                                         22.6p           25.4p

         -Diluted                                                                       22.1p           25.0p

    Earnings per share                   4



         -Basic                                                                         68.2p           21.0p

         -Diluted                                                                       66.8p           20.7p


    Dividend per share                                                                  18.0p           18.0p


    Statement of total recognised gains and losses

                                                                                        2003            2002
                                                                                       £'000           £'000

    Profit for the financial year                                                     14,862           4,557
                                                                                     _______

    Prior year adjustment                                                                                302
                                                                                                     _______

    Total gains recognised since last annual report                                                    4,859
                                                                                                     _______



Consolidated balance sheet

at 30 November 2003

                                                                                         2003          2002
                                                                                        £'000         £'000
Fixed assets

Intangible assets                                                                      14,555        19,038

Tangible assets                                                                         3,267         5,281

Investments                                                                               500           500
                                                                                      _______       _______

                                                                                       18,322        24,819
                                                                                      _______       _______

Current assets


Debtors                                                                                23,662        27,103

Cash at bank and in hand                                                               35,420        21,618
                                                                                      _______       _______
                                                                                       59,082        48,721
Creditors


Amounts falling due within one year                                                   (32,108)      (38,469)
                                                                                      _______       _______
Net current assets                                                                     26,974        10,252

                                                                                      _______       _______
Total assets less current liabilities                                                  45,296        35,071


Creditors


Amounts falling due after more than one year                                           (3,340)       (4,024)

Provisions for liabilities and charges                                                    (92)         (122)

                                                                                      _______       _______
Net assets                                                                             41,864        30,925

                                                                                      _______       _______
Capital and reserves


Called up share capital                                                                 2,208         2,208

Share premium account                                                                   9,244         9,234

Capital redemption reserve                                                                100           100

Revaluation reserve                                                                         -           275

Other reserves                                                                          6,086         6,086

Profit and loss account                                                                24,226        13,022
                                                                                      _______       _______
Equity shareholders' funds                                                             41,864        30,925
                                                                                       _______       _______



Consolidated cash flow statement
for the year ended 30 November 2003


                                                                                          2003          2002

                                                                      Note               £'000         £'000



Net cash inflow from operating activities                               a                6,813         8,780


Returns on investment and servicing of finance


Interest received                                                                        1,240         1,444

Interest paid                                                                             (313)         (456)

Taxation paid                                                                           (2,022)       (2,559)


Capital expenditure and financial investment


Purchase of tangible fixed assets                                                         (817)         (614)

Proceeds from sale of tangible fixed assets                                              1,432           820

Proceeds from sale of fixed asset investments                                              390             -

Acquisitions and disposals


Purchase of subsidiary undertakings                                                          -        (4,400)

Costs associated with acquisition                                                            -          (107)

Cash acquired with subsidiary                                                                -           838

Proceeds from sale of subsidiary undertakings                                           18,469             -

Costs associated with disposal                                                            (704)            -

Cash disposed of with subsidiary undertakings                                           (1,704)            -

Equity dividends paid                                                                   (3,920)       (3,898)

                                                                                       _______       _______
Cash inflow/(outflow) before financing                                                  18,864          (152)


Financing


Issue of ordinary share capital                                                             10            52

Decrease in debt                                                                        (4,000)            -

Redemption of loan notes                                                                (1,072)         (750)
                                                                                       _______       _______



Increase/(decrease) in cash in the year                                 b               13,802          (850)

                                                                                       _______       _______


Notes to the consolidated cash flow statement
a. Reconciliation of operating profit to operating cash flows


                                                                                    2003          2002
                                                                                   £'000         £'000

Operating profit                                                                   4,778         6,353

Amortisation of goodwill                                                             917           952

Depreciation                                                                         462         1,006

Profit on disposal of tangible fixed assets                                          (47)         (163)

Loss on disposal of fixed asset investments                                            -            11

Decrease in debtors                                                                2,157         4,494

Decrease in creditors and provisions                                              (1,454)       (3,873)
                                                                                 _______       _______

Net cash inflow from operating activities                                          6,813         8,780
                                                                                 _______       _______

Net cash inflow/(outflow) from operating activities comprises:-

Continuing operations                                                              6,956         8,189

Discontinued operations                                                             (143)          591
                                                                                  _______       _______
                                                                                   6,813         8,780
                                                                                  _______       _______




b. Analysis and reconciliation of net funds


                                                     At 1 Dec           Cash        Other      At 30 Nov

                                                         2002           Flow      Changes           2003
                                                        £'000          £'000        £'000          £'000

Cash and deposits                                      21,618         13,802            -         35,420

Debt due after one year                                     -              -         (982)          (982)

Debt due within one year                               (4,416)         5,072       (1,500)          (844)
                                                      _______        _______       _______       _______
Net Funds                                              17,202         18,874       (2,482)        33,594
                                                      _______        _______      _______        _______


                                                                                     2003           2002
                                                                                    £'000          £'000

Increase/(Decrease) in cash                                                        13,802           (850)

Repayment of debt                                                                   5,072            750

Issue of loan notes                                                                (2,482)             -
                                                                                  _______        _______

Movement in net funds in the year                                                  16,392           (100)

Net funds brought forward                                                          17,202         17,302
                                                                                  _______        _______

Net funds at 30 November                                                           33,594         17,202
                                                                                  _______        _______


Notes



1.  Disposal



On 21 February 2003, the Group sold the entire issued share capital of Northern
Registrars Limited to Capita IRG plc.  Northern Registrars Limited was the
parent of a group of companies that comprised the Administration Services
division of the Group.  Details of the net assets sold and the consideration
received are as follows:


                                                                                                       £'000
Tangible fixed assets                                                                                  2,399
Debtors                                                                                                1,587
Creditors                                                                                               (548)
Cash                                                                                                   1,704
Goodwill                                                                                               3,566
                                                                                                       8,708
Costs associated with the disposal                                                                       704
Profit on disposal                                                                                    10,472
Consideration received in cash                                                                        19,884




The profit on disposal of the Administration Services division of £10,472,000
comprises a profit on disposal of the subsidiary undertakings of £10,809,000 and
a loss on the disposal of the property occupied by the division of £337,000.
The turnover, operating profit and cashflows shown in the profit and loss
account and cashflow statement under discontinued operations relate entirely to
the Administration Services division.  The profit arising on disposal of the
subsidiary undertakings is not expected to give rise to a charge to corporation
tax.



2.         Corporation tax



Corporation tax at 30% (2002: 30%)


3.         Dividends


                                                                                         2003          2002
                                                                                        £'000         £'000

Interim paid of 6.0p per share (2002: 6.0p)                                             1,311         1,304

Final proposed of 12.0p per share (2002: 12.0p)                                         2,622         2,609
                                                                                       _______       _______

                                                                                        3,933         3,913
                                                                                      _______        _______


The Directors are recommending a final dividend of 12.0p per share (2002:
12.0p), which together with the interim dividend of 6.0p per share (2002: 6.0p)
makes a total dividend for the year of 18.0p per share (2002: 18.0p).  The
proposed dividend, to be paid on 7 April 2004 to shareholders who are on the
register at the close of business on 12 March 2004, is calculated on 21,850,255
ordinary shares.  This excludes 233,750 ordinary shares held by the Employee
Share Ownership Trust for which all dividends have been waived.



4.         Earnings per share



Basic earnings per share before goodwill amortisation and exceptional items is
calculated with reference to earnings for shareholders of £4,917,000 (2002:
£5,509,000) and the weighted average number of shares in issue during the year
of 21,796,791 (2002: 21,695,323).  Basic earnings per share is calculated with
reference to earnings for shareholders of £14,862,000 (2002: £4,557,000).



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 438,568 shares (2002:
295,417).



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 2002 have been delivered to
the Register of Companies, and those for 2003 will be delivered following the
Company's Annual General Meeting.  The independent auditor has reported on the
accounts for both 2002 and 2003; its 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 25 February 2004 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.






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