Final Results

BWD Securities PLC 7 February 2001 BWD SECURITIES PLC (BWD) PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2000 BWD, the Investment Management and Administration Services Group - Key Points: * Profit before tax and goodwill amortisation at £10.4m - up 55% (1999:£6.7m) * Basic earnings per share before goodwill amortisation 36.1p - up 34% (1999: 26.9p) * Total dividend of 18.0p per share (1999: 14.5p) - up 24% * Turnover at £38.4m (1999: £27.0m) - up 42% * Group fee income at £20.2m (1999: £14.2m) - up 42% * BWD Rensburg managed client funds at £3.5bn (1999: £2.4bn) - up 46% * BWD Rensburg Unit Trusts at £284m (1999: £203m) - up 40% Mike Burns, Chief Executive of BWD Securities, commented: 'We are very pleased with the performance of all our offices, which are reaping the benefits of our strategy to reposition our main business as an investment management business, rather than a traditional stockbroker.' For further information, please contact: Michael Burns, Chief Executive Tel: 0151 227 2030 BWD Securities PLC Nick Lyon/Jessica Rouleau Tel: 020 7796 4133 Hudson Sandler CHAIRMAN'S STATEMENT Financial Results In my first year as Chairman I am pleased to report a 55% increase in the Group's profit before tax from £6.7 million to £10.4 million for the year ended 30 November 2000 and a 34% increase in basic earnings per share to 36.1p. These figures are all prior to goodwill amortisation. The prior year tax charge was reduced through the operation of an employee share scheme, which resulted in an exceptional increase in the 1999 basic earnings per share of 2.5p. The current year tax charge has now returned to its expected level; this primarily explains the differential between year on year growth in profits and earnings. Dividends The directors are recommending an increase in the total dividend per share for the year of 24% to 18p. Board and Employees I became Chairman following the last Annual General Meeting and on behalf of the Board I would like to pay tribute to my predecessor Peter Stanley, who led the Group during five years of impressive growth. Michael Dickinson retired as Finance Director on 30 November 2000, a position he held since the Company floated on the Stock Market in 1988. I would like to thank Michael for the significant contribution he made to the development of the Group during this twelve year period. I am pleased to report that Jonathan Wragg joined the Board as Finance Director on 1 December 2000. Jonathan has four years experience within the Group as Financial Controller and since May 1999, additionally as Company Secretary. This year has seen unprecedented levels of activity in the markets in which we operate. On behalf of the Board and the shareholders, I would like to thank all employees across the Group for their tremendous efforts during this time, particularly in ensuring that the high standards of client service upon which we pride ourselves were upheld throughout. London Stock Exchange During the past year the London Stock Exchange (LSE) demutualised. As a consequence the Group received 100,000 shares in the LSE which are included within the Group's balance sheet at nil historical cost. The Board recognises that as a user of the LSE, it is important at this critical time that we retain a voice regarding its future direction and development. Outlook The current year has started well across all Group businesses and the Board are confident that there are significant opportunities for future growth. Alan Bottomley 7 February 2001 CHIEF EXECUTIVE'S REVIEW OF OPERATIONS I am delighted to report that the past year has been an extremely busy and successful period for the Group in all its areas of operation. Over recent years we have pursued a consistent strategy of repositioning our main business as an investment management business rather than a traditional stockbroker. Turnover increased by 42% to £38.4 million, with an even balance between first and second halves. Given particularly active markets in the first half of the year, this achievement deserves recognition as it emphasises the Group's continuing progress towards its strategic goal of increasing fee income and becoming less dependent on transaction based revenue. I welcome the alterations to PEP regulations outlined by the Chancellor in his November statement which will take effect from 6 April 2001. Introducing equivalent investment criteria for PEPs and ISAs, together with allowing Single Company and General PEPs to be combined into one portfolio, is a welcome simplification of this area. Another area which I would urge the Chancellor to address is Capital Gains Tax, which the majority of clients, investment advisers and accountants find increasingly complex. Since demutualising last summer, the London Stock Exchange (LSE) has suffered poor publicity. This has arisen predominantly out of the contentious, aborted merger with Deutsche Borse and a failed bid from the Swedish company, OM Gruppen. Rumours of other alliances involving the LSE have also featured regularly in the financial press. This situation is unsettling for users and clients of the LSE which operates as the main UK market. Whilst I do not believe that this market can remain in its present form, I would prefer to see a joint venture as the precursor to the creation of a larger market involving European and possibly US exchanges. There is a danger that the development of alternative markets such as Tradepoint and JIWAY will, by fragmenting liquidity, increase market volatility. It does appear contradictory that whilst the Financial Services Authority is presently consolidating the numerous UK regulatory authorities under one umbrella, a move which I welcome, UK markets are moving in the opposite direction. Investment Management - Turnover £33.2 million; Operating profit before goodwill amortisation £8.2 million. BWD Rensburg - Fee paying clients' funds have increased by 34% to £1.5 billion. This figure includes ISA and PEP funds of £436 million, which have increased by 37%. Other managed funds now stand at £2 billion, putting total clients' funds under management at £3.5 billion. In common with other world financial markets, the UK is reducing settlement periods. On 5 February 2001 this period was further shortened to three days (T+3). Clients who have traditionally used certificates and transfer forms are now finding that the best way of meeting the new deadlines is by using our nominee company. As a result more of our clients are moving to fee paying services and benefiting from a broader number of other services. The integration of Nicholson Barber, which was acquired towards the end of 1999 has now been successfully completed. In particular, our two Sheffield operations were brought together in April onto a prestigious new site. The organic growth of our offices continues to strengthen our position as a leading regional investment management business. We continue to develop our services, with each of our offices now being able to offer personal financial planning to their clientele. This development is a further step towards improving and enlarging the service we provide to all our clients. Unit Trust Managers - Funds under management have grown by 40% to £284 million. Against the backdrop of the markets, this is an excellent result. We continue to expand not only the investment team, but also the sales and marketing effort as we grow our sales into the key IFA market. Capital for Companies - This business has been very active throughout the year. In the first half of the year £10.6 million was raised for BWD Aim VCT and funds under management at the year end were £39 million. More recently a prospectus has been issued to raise an additional £8 million for Capital for Companies VCT. Administration Services - Turnover £5.2 million; Operating profit before goodwill amortisation £1.2 million. Northern Registrars - Has had its busiest year ever. This is due to the significant volume increases in share transfer activity, to a full corporate events diary, and as a consequence of continuing to attract new business. Development of new services to clients together with the maintenance of existing high standards of client service remain the business's priority. Northern Administration - This business is still at an early stage in its development and we are confident of its potential for profitable growth. I am delighted to report that we have recently reached agreement with Kleinwort Benson Unit Trusts Limited for the transfer of the whole of their unit trust administration, during the second quarter of 2001. Following such a busy year, my review would be incomplete without thanking both the Group's employees, who have worked tirelessly as a team during the past year to produce these excellent results, together with all our clients for their support. Given the proven ability of our employees and the opportunities that lie ahead, I look forward to the future with confidence. Michael Burns 7 February 2001 Consolidated Profit and Loss Account for the year ended 30 November 2000 Note 2000 1999 £'000 £'000 ________________________________________________________________________________ Turnover 38,373 26,960 Operating expenses (29,006) (21,293) Goodwill amortisation (482) (48) _______ _______ Operating profit 8,885 5,619 Net interest receivable 987 991 _______ _______ Profit on ordinary activities before taxation 9,872 6,610 Tax on profit on ordinary activities 1 (3,185) (1,527) _______ _______ Profit on ordinary activities after taxation 6,687 5,083 Dividends 2 (3,580) (2,853) _______ _______ Retained profit for the year 3,107 2,230 _______ _______ Basic earnings per share 3 - before goodwill amortisation 36.1p 26.9p - after goodwill amortisation 33.7p 26.7p Diluted earnings per share 3 - before goodwill amortisation 35.2p 26.1p - after goodwill amortisation 32.8p 25.8p _________ ________ Turnover and operating profit relate entirely to continuing operations. Statement of Total Recognised Gains and Losses 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. Consolidated Balance Sheet at 30 November 2000 2000 1999 £'000 £'000 _______________________________________________________________________________ Fixed Assets Intangible assets 8,669 9,151 Tangible assets 6,135 5,606 Investments 769 514 _______ _______ 15,573 15,271 _______ _______ Current Assets Debtors 36,977 41,939 Investments 1,162 1,162 Cash at bank and in hand 15,366 12,514 _______ _______ 53,505 55,615 Creditors Amounts falling due within one year (46,280) (51,253) _______ _______ Net Current Assets 7,225 4,362 _______ _______ Total Assets less Current Liabilities 22,798 19,633 Creditors Amounts falling due after more than one (3,529) (3,529) year Provisions for Liabilities and Charges (251) (244) _______ _______ Net Assets 19,018 15,860 _______ _______ Capital and Reserves Called up share capital 2,032 2,027 Share premium account 3,686 5,671 Capital redemption reserve 100 100 Revaluation reserve 275 275 Other reserves 2,185 154 Profit and loss account 10,740 7,633 _______ _______ Equity Shareholders' Funds 19,018 15,860 _______ _______ Consolidated Cash Flow Statement for the year ended 30 November 2000 2000 1999 Note £'000 £'000 _______________________________________________________________________________ Net cash inflow from operating activities a 10,844 7,340 Returns on investment and servicing of finance Interest received 1,169 1,052 Interest paid (182) - Taxation paid (1,875) (1,780) Capital expenditure and financial investment Purchase of tangible fixed assets (1,745) (1,824) Purchase of fixed asset investments (257) (204) Proceeds from sale of tangible fixed assets 158 96 Proceeds from sale of fixed asset investments 2 38 Acquisitions and disposals Purchase of subsidiary undertakings - (2,500) Net cash acquired with subsidiary undertakings - 454 Equity dividends paid (3,177) (2,470) _______ _______ Cash inflow before financing 4,937 202 Financing Issue of ordinary share capital 51 432 Decrease in debt (362) - _______ _______ Increase in cash in the year b 4,626 634 _______ _______ Notes to the Consolidated Cash Flow Statement a. Reconciliation of operating profit to operating cash flows 2000 1999 £'000 £'000 _______________________________________________________________________________ Operating profit 8,885 5,619 Amortisation of goodwill 482 48 Depreciation charges 1,026 825 Loss/(Profit) on disposal of tangible 32 (51) fixed assets Profit on disposal of fixed asset - (11) investments Shares subject to grant of a nil cost - 257 option Decrease/(Increase) in debtors 4,976 (20,992) (Decrease)/Increase in creditors and (4,557) 21,645 provisions _______ _______ Net cash inflow from operating 10,844 7,340 activities _______ _______ b. Analysis and reconciliation of net funds At 1 Dec Cash At 30 Nov 1999 Flow 2000 £'000 £'000 £'000 _______________________________________________________________________________ Cash in hand, at bank 12,514 2,852 15,366 Overdrafts (1,774) 1,774 - Debt due after one year (3,529) - (3,529) Debt due within one year (1,362) 362 (1,000) _______ _______ _______ Net Funds 5,849 4,988 10,837 _______ _______ _______ 2000 1999 £'000 £'000 _______________________________________________________________________________ Increase in cash in the year 4,626 634 Repayment of debt 362 - Loans acquired with subsidiary - (362) Loan notes issued upon acquisition - (4,529) _______ _______ Movement in net funds in the year 4,988 (4,257) Net funds at 1 December 1999 5,849 10,106 _______ _______ Net funds at 30 November 2000 10,837 5,849 _______ _______ Notes 1. Corporation tax Corporation tax at 30% (1999 30.33%) 2. Dividends 2000 1999 £'000 £'000 Interim paid of 6.0p per share (1999: 4.5p) 1,193 869 Proposed final of 12.0p per share (1999: 10.0p) 2,387 1,984 _______ _______ 3,580 2,853 _______ _______ The directors are recommending a final dividend of 12.0p per share (1999: 10.0p), which together with the interim dividend of 6.0p per share (1999: 4.5p) makes a total dividend for the year of 18.0p per share (1999: 14.5p). The proposed dividend to be paid on 9 April 2001 to shareholders that are on the register at the close of business on 16 March 2001 is calculated on 19,889,365 ordinary shares. This excludes 430,000 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 is calculated with reference to earnings for shareholders of £7,169,000 (1999: £5,131,000) and the weighted average number of shares in issue during the year of 19,865,843 (1999: 19,046,421). Basic earnings per share after goodwill amortisation is calculated with reference to earnings for shareholders of £6,687,000 (1999: £ 5,083,000) 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 505,873 shares (1999: 619,096). All share capital held at 30 November 2000 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. BASIS OF PREPARATION The results are an abridged extract from the financial statements for the year ended 30 November 2000 which have not yet been delivered to the Registrar of Companies. The auditor's report on the full financial statements has yet to be signed. The results have been prepared on a basis consistent with the accounting policies set out on page 24 of BWD Securities PLC's annual report and financial statements for the year ended 30 November 1999. The preliminary financial statements should therefore be read in conjunction with the 1999 annual report and financial statements. The financial information as set out in this report is unaudited and does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The comparative figures for the year ended 30 November 1999 have been taken from, but do not constitute, the Company's statutory financial statements for that financial year. Those financial statements have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report was unqualified. Full Accounts The full accounts will be posted to shareholders on 26 February 2001 and will be available at the Company's registered office from this date.

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