Information  X 
Enter a valid email address

BWD Securities PLC (RBG)

  Print   

Tuesday 01 July, 2003

BWD Securities PLC

Interim Results

BWD Securities PLC
01 July 2003


                                  1 July 2003

                           BWD SECURITIES PLC ('BWD')
              INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2003


BWD, the Investment Management Group -

Key Points:

  • Profit before tax, goodwill amortisation and exceptional profit of £3.0m
    (2002: £4.5m)

  • 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
    profit of 9.5p (2002: 14.1p)

  • Interim dividend unchanged at 6.0p per share

  • BWD Rensburg managed client funds at £3.15bn (2002: £3.79bn)

  • BWD Rensburg Unit Trusts increased to £356m (2002: £325m)

Mike Burns, Chief Executive of BWD Securities, commented:

'Against the backdrop of an extremely difficult operating environment, the last
six months has seen the Group continue to trade profitably and significantly
strengthen its balance sheet through the disposal of its non-core Administration
Services division.  This leaves the Group well placed as equity markets recover
and investor confidence returns.'


For further information, please contact:

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

Nick Lyon                                               Tel:  020 7796 4133
Hudson Sandler


INTERIM STATEMENT

Financial Results

The first half of this financial year began with a further deterioration in
already difficult market and trading conditions.  Subsequently, there has been a
gradual recovery over the latter two months of the period, which has continued
to date.  The FTSE All-Share index averaged 1,839 over this half year compared
to 2,516 in the corresponding period in 2002.   Inevitably, these conditions
have impacted both the Group's fee and transaction based income over the period.

The Group's profit before tax, goodwill amortisation and exceptional items for
the six months ended 31 May 2003 was £3.0 million (2002: £4.5 million) from a
total income of £16.0 million (2002: £19.7 million). Fee and other recurring
income was £10.3 million (2002: £12.0 million).  Basic earnings per share before
goodwill amortisation and exceptional items was 9.5p (2002: 14.1p).

The above figures include the trading results of the Administration Services
division up until its disposal on 21 February 2003.  Including the associated
disposal of a freehold property which was occupied by the Administration
Services division, an exceptional profit of £10.5 million arose from this
disposal during the period.  No tax charge is expected to arise from this
exceptional profit.

Excluding the trading results of the Administration Services division, operating
profit before goodwill amortisation was £2.4 million (2002: £3.5 million) from a
total income of £14.8 million (2002: £17.2 million).  Fee and other recurring
income on this basis was £9.4 million (2002: £10.1 million).  Net interest
receivable rose to £0.45 million (2002: £0.33 million) reflecting the increase
in the Group's cash balances following the disposal mid-way through the period.

Dividend

The Directors have declared an unchanged interim dividend of 6.0p payable on 1
October 2003 to shareholders on the register at 22 August 2003.

Board

Christopher Clarke succeeded Alan Bottomley as Chairman at the Company's Annual
General Meeting on 31 March 2003.  As a consequence of this, Andrew Tyrie
succeeded Christopher Clarke as Senior Independent Non-Executive Director from
this date.

Operations

BWD Rensburg managed clients' funds were £3.15 billion (2002: £3.79 billion).
Fee paying funds included in these figures were £1.56 billion (2002: £1.77
billion).  Despite the challenging operating environment, it is pleasing to be
able to report that over the last six months the number of fee paying clients
has been increased by 3%.  Experience across the business indicates that since
the market reached its near eight year low point on 12 March 2003, clients are
beginning to commit new funds to the equity markets.

Capital for Companies currently manages a total of £27 million (2002: £34
million), this includes £24 million (2002: £32 million) on behalf of two Venture
Capital Trusts.

BWD Rensburg Unit Trust Managers increased the value of funds under management
to £356 million (2002: £325 million) against a reduction of 20.5% in the FTSE
All-Share index over the corresponding period.  The BWD UK Micro-Cap Growth
Trust launched in October 2002 has now been capped, having achieved its target
size of £20 million during May 2003.  The investment record of the fund
management team remains strong.

The cost base of the Group continues to be kept under regular review and modest
reductions in personnel levels have recently been made.  The Board remains
committed to retaining a well resourced operation, which will continue to offer
clients high levels of service and is ready to take full advantage of any market
recovery and associated return of investor confidence.

Outlook

The recent disposal of the Administration Services division leaves the Group
with an enhanced balance sheet which will assist in funding growth of the
investment management business. Although the Board continues to remain active in
identifying and exploring opportunities to grow by acquisition,  we recognise
that we must exercise caution in order that businesses are not acquired at
unrealistically high prices.

During the last quarter, the UK financial market has recovered from the lows
experienced during March 2003.  Whilst the sustainability of this recovery over
the short term is hard to gauge with certainty, over the longer term the Board
firmly believes that the private client market in which the Group operates has
potential for growth, as the onus on individuals to invest for their own futures
continues to increase.

Christopher Clarke                                       Michael Burns
Chairman                                                 Chief Executive

30 June 2003


Consolidated Profit and Loss Account

                                                            2003                            2002           2002
                                                    6 months ended 31 May               6 months      12 months
                                                                                           ended          ended
                                             Continuing    Discontinued       Total       31 May         30 Nov
                                                  £'000           £'000       £'000        £'000          £'000
                                  Note

Turnover                           1            14,787           1,245      16,032       19,653         37,499


   Operating expenses                          (12,387)         (1,088)    (13,475)     (15,525)       (30,194)

   Goodwill amortisation                          (434)            (48)       (482)        (450)          (952)

Total administrative expenses                  (12,821)         (1,136)    (13,957)     (15,975)       (31,146)
                                               _______         _______     _______      _______        _______

Operating profit                   1             1,966             109       2,075        3,678          6,353
                                               _______          _______
Profit on disposal of subsidiaries 2                                        10,472            -              -

Net interest receivable                                                        451          330            721
                                                                           _______      _______        _______

Profit on ordinary activities                                               12,998        4,008          7,074
before taxation

Tax on profit on ordinary          2                                          (942)      (1,399)        (2,517)
activities
                                                                            _______     _______        _______

Profit on ordinary activities                                               12,056        2,609          4,557
after taxation

Dividends                                                                   (1,308)      (1,304)        (3,913)
                                                                           _______      _______        _______


Retained profit for the period                                              10,748        1,305            644

                                                                           _______      _______        _______

Earnings per share before goodwill 3
amortisation and profit on disposal
of subsidiaries                     

     -Basic                                                                    9.5p        14.1p         25.4p

     -Diluted                                                                  9.4p        13.9p         25.0p

Earnings per share                 3


     -Basic                                                                   55.4p        12.1p       21.0p

     -Diluted                                                                 54.6p        11.8p       20.7p

Dividend per share                                                             6.0p         6.0p       18.0p


The Group has no 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.


Consolidated Balance Sheet                                                Restated
                                                             2003             2002          2002
                                                           31 May           31 May        30 Nov
                                                            £'000            £'000         £'000
Fixed assets

Intangible assets                                         14,990           15,925        19,038

Tangible assets                                            3,088            6,066         5,281

Investments                                                  500              511           500
                                                         _______          _______       _______

                                                          18,578           22,502        24,819
                                                         _______          _______       _______

Current assets


Debtors                                                   26,111           27,107        27,103

Cash at bank and in hand                                  32,845           22,047        21,618
                                                         _______          _______       _______

                                                          58,956           49,154        48,721
Creditors

Amounts falling due within one year                      (32,486)         (31,173)      (38,469)
                                                         _______          _______       _______

Net current assets                                        26,470           17,981        10,252
                                                         _______          _______       _______

Total assets less current liabilities                     45,048           40,483        35,071

Creditors


Amounts falling due after more than one year              (3,272)          (8,761)       (4,024)

Provisions for liabilities and charges                      (103)            (136)         (122)

                                                         _______          _______       _______


Net assets                                                41,673           31,586        30,925

                                                         _______          _______       _______
Capital and reserves


Called up share capital                                    2,208            2,208         2,208

Reserves                                                  39,465           29,378        28,717
                                                         _______          _______       _______

Equity shareholders' funds                                41,673           31,586        30,925
                                                         _______          _______       _______


Consolidated Cash Flow Statement

                                                                  2003             2002               2002
                                                              6 months         6 months          12 months
                                                                 ended            ended              ended
                                                                31 May           31 May             30 Nov
                                                                 £'000            £'000              £'000
                                            Note


Net cash inflow from
operating activities                           (a)               1,633           2,740          8,780

Returns on investment and servicing of finance


Net interest received                                              432             673            988

Taxation paid                                                   (1,045)         (1,008)        (2,559)


Capital expenditure and financial investment


Purchase of tangible fixed assets                                 (495)           (377)          (614)

Proceeds from sale of tangible fixed assets                      1,430              93            820

Acquisitions and disposals


Purchase of subsidiary undertakings                                  -               -         (4,400)

Costs associated with acquisition                                    -               -           (107)

Cash acquired with subsidiary undertakings                            -              -            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                                           (2,609)         (2,594)        (3,898)

                                                               _______         _______        _______

Cash inflow/(outflow) before financing                          15,407            (473)          (152)


Financing


Issue of ordinary share capital                                      -              52             52

Decrease in debt                                                (4,000)              -              -

Redemption of loan notes                                          (180)              -           (750)
                                                               _______         _______        _______


Increase/(decrease) in cash in the period      (b)              11,227            (421)         (850)

                                                               _______         _______        _______

Notes to the Cash Flow Statement

a.  Reconciliation of operating profit to operating cash flows

                                                                  2003             2002          2002
                                                              6 months         6 months     12 months
                                                                 ended            ended         ended
                                                                31 May           31 May        30 Nov
                                                                 £'000            £'000         £'000


Operating profit                                                   2,075         3,678          6,353

Amortisation of goodwill                                             482           450            952

Depreciation                                                         279           548          1,006

Profit on disposal of tangible fixed assets                           (5)          (51)          (163)

Loss on disposal of fixed asset investments                            -             -             11

(Increase)/decrease in debtors                                      (571)        4,144          4,494

Decrease in creditors and provisions                                (627)       (6,029)        (3,873)
                                                                 _______       _______        _______

Net cash inflow from operating activities                          1,633         2,740          8,780
                                                                 _______       _______        _______
a.  Net cash inflow/(outflow) from operating
activities comprises:

Continuing operations                                              1,776         2,567          8,189

Discontinued operations                                             (143)          173            591
                                                                 _______       _______        _______

                                                                   1,633         2,740          8,780
                                                                 _______       _______        _______


b.  Analysis and reconciliation of net funds
                                              At 1 Dec              Cash          Other     At 31 May
                                                  2002             flows        changes          2003
                                                 £'000             £'000          £'000         £'000


Cash and deposits                               21,618            11,227             -         32,845

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

Debt due within one year                        (4,416)            4,180        (1,500)        (1,736)
                                               _______           _______       _______        _______

Net funds                                       17,202            15,407        (2,482)        30,127
                                               _______           _______       _______        _______


                                                                    2003          2002           2002
                                                                6 months      6 months      12 months
                                                                   ended         ended          ended
                                                                  31 May        31 May         30 Nov
                                                                   £'000         £'000          £'000

Increase/(decrease) in cash in the period                         11,227          (421)          (850)

Repayment of debt                                                  4,180             -            750

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

Movement in net funds in the period                               12,925          (421)          (100)

Net funds at beginning of period                                  17,202        17,302         17,302
                                                                 _______       _______        _______

Net funds at end of period                                        30,127        16,881         17,202
                                                                 _______       _______        _______


Notes

1.  In the 2002 Report and Financial Statements, the Board announced that,
subject to shareholder and regulatory approval, the Group had reached agreement 
to dispose of its Administration Services division for a total cash 
consideration of £18.47m.  The Administration Services division comprised a 
group of companies, the parent of which was Northern Registrars Limited.  The
disposal was completed on 21 February 2003 and the results of the division to 
the date of disposal are reported as discontinued operations.  The segmental 
analysis of the Group is as follows:


                                               Turnover                       Operating profit
                                         2003        2002        2002        2003        2002         2002
                                     6 months    6 months   12 months    6 months    6 months    12 months
                                     ended 31    ended 31    ended 30    ended 31    ended 31     ended 30
                                          May         May    November         May         May     November

                                        £'000       £'000       £'000       £'000       £'000        £'000

Continuing operations                  14,787      17,235      32,530       1,966       3,110        5,437

Discontinued operations                 1,245       2,418       4,969         109         568          916
                                       ______      ______      ______      ______      ______       ______

                                       16,032      19,653      37,499       2,075       3,678        6,353

                                       ______      ______      ______      ______      ______       ______



Continuing operations comprise the Group's investment management activities.

2.  The net 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 net assets of the division at the date of disposal included
goodwill of £3,566,000.  The gain on the disposal of the subsidiary undertakings
is not expected to give rise to a charge to corporation tax.

3.  Basic earnings per share before goodwill amortisation and profit on disposal
of subsidiaries is calculated with reference to earnings for shareholders of
£2,066,000 (May 2002: £3,059,000; Nov 2002: £5,509,000) and the weighted average
number of shares in issue during the period of 21,762,412 (May 2002: 21,652,532;
Nov 2002: 21,695,323). Basic earnings per share is calculated with reference to
earnings for shareholders of £12,056,000 (May 2002: £2,609,000; Nov 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 period.  The number of
additional shares used for the diluted calculation is 312,992 (May 2002:
400,656; Nov 2002: 295,417).

4.  The 2002 Report and Financial Statements set out the effect of the
implementation of FRS 19 for the first time during the year ended 30 November
2002.  The comparative figures at 31 May 2002 have been restated to recognise
deferred tax assets at that date.  There is no material effect on the profit and
loss account for the six months ended 31 May 2002.

5.  The information contained in the 30 November 2002 consolidated balance
sheet, profit and loss account and cash flow statement does not constitute full
financial statements and has been extracted from the latest published financial
statements for year ended 30 November 2002, which have been delivered to the
Registrar of Companies.  The report of the auditors on these financial
statements was unqualified.  The consolidated profit and loss accounts and cash
flow statements for the six month periods and the consolidated balance sheets at
31 May 2002 and 31 May 2003 are unaudited.


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

a d v e r t i s e m e n t