Interim Results & Acquisition

BWD Securities PLC 22 June 2001 EMBARGOED UNTIL 07.30am 22 June 2001 PART I BWD SECURITIES PLC ('BWD') INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2001 AND ACQUISITION OF DENNIS MURPHY CAMPBELL BWD, the Investment Management and Administration Services Group, is pleased to announce its interim results for the six months ended 31 May 2001, the proposed acquisition of Dennis Murphy Campbell (the 'Acquisition') and associated £6.69 million placing of new BWD ordinary shares. BWD Interim Results highlights: * Profit before tax and goodwill amortisation at £4.4 million (2000: £5.4 million) * Basic earnings per share before goodwill amortisation 15.1p (2000: 18.8p) * Interim dividend of 6.0p per share (2000: 6.0p) * Group fee income at £10.7 million (2000: £9.4 million) Acquisition highlights: * Acquisition of Dennis Murphy Campbell, an established London based stockbroking business with £550 million of funds under management. * The Acquisition will create a base for BWD in the City of London from which to develop its investment management activities in the South East. It will result in BWD having over £4.4 billion of funds under management. * Initial consideration of £5.97 million with a deferred consideration of up to £4 million. Fund Raising highlights: * £6.69 million placing 1,194,532 of new BWD ordinary shares at 560p per share, comprising £5.69 million placing for cash and £1 million vendor placing. The placing has been fully underwritten by ING Barings Limited. * New Ordinary Shares rank pari passu with existing ordinary shares save for entitlement to the interim dividend of 6p per share. Mike Burns, Chief Executive of BWD Securities, commented: 'Despite the challenging trading environment I am pleased that our strategy to reposition our main business as an investment management business, rather than a traditional stockbroker has mitigated the effect of the fall in trading volumes. The acquisition announced today of Dennis Murphy Campbell is an important step in strengthening our presence throughout the UK.' For further information, please contact: BWD Securities PLC: Michael Burns, Chief Executive Telephone: 0151 227 2030 Hudson Sandler: Nick Lyon/Jessica Rouleau Telephone: 020 7796 4133 N M Rothschild & Sons Limited (Financial adviser to BWD) David M Forbes, Director Telephone: 0113 200 1900 ING Barings Limited (Corporate stockbroker to BWD) Ben Money-Coutts, Director Telephone: 020 7767 5700 This summary should be read with the full text of the following announcement. Further details of the acquisition of Dennis Murphy Campbell and BWD's interim results are set out in Parts II and III of this announcement. Part II BWD SECURITIES PLC ('BWD') PROPOSED ACQUISITION OF DENNIS MURPHY CAMPBELL 1. Introduction BWD announces that it has conditionally agreed to acquire Dennis Murphy Campbell, a private client stockbroking business based in the City of London, for an initial consideration of £5.97 million and deferred consideration of up to £4 million. Aspects of the acquisition of Dennis Murphy Campbell are conditional, inter alia, upon approval by The Securities and Futures Authority (the 'SFA'). Completion of the Acquisition is expected to take place after approval has been received from the SFA, on 20 July 2001. 2. Information on Dennis Murphy Campbell Dennis Murphy Campbell is a private client stockbroking business based in the City of London. Dennis Murphy Campbell currently has funds under management of £550 million and for the year ended 31 March 2001 generated partnership profits before tax of £1.0 million on turnover of £2.2 million. Dennis Murphy Campbell's income is primarily transaction related. The net assets of the Dennis Murphy Campbell business being acquired are negligible. 3. Reasons for the Acquisition BWD Rensburg ('BWDR'), a member of the BWD Group is one of the UK's leading dedicated private client investment management businesses, with total managed client funds of £3.6 billion. BWDR currently operates from eight regional offices located across the UK in Belfast, Chesterfield, Doncaster, Glasgow, Leeds, Liverpool, Manchester and Sheffield. The acquisition of Dennis Murphy Campbell will create a base for BWDR in the City of London and will provide BWDR with a strategically important platform from which to develop its private client investment management activities in South East England. 4. Consideration Payable The consideration payable for Dennis Murphy Campbell comprises an initial consideration of £5.97 million and deferred consideration of up to £4 million. The initial consideration is to be satisfied as to £3.0 million in cash (including £1.0 million by way of a vendor placing detailed below) and £2.97 million by the issue of 506,906 new BWD ordinary shares (the 'Consideration Shares') at a price per share of 585.9 pence. Deferred consideration of up to a maximum value of £4.0 million comprising £ 3.9 million of interest bearing loan notes and £0.1 million of cash may be payable to the vendors and certain key employees. Such deferred consideration will be dependent upon the amount by which Dennis Murphy Campbell's funds under management are converted onto a fee-paying basis, and the returns generated on non fee based funds over the period from completion of the Acquisition to 26 November 2004. 5. Fund raising In order to finance the Acquisition, BWD announces the terms of an unconditional cash placing of 1,015,960 new BWD ordinary shares (the 'Subscription Shares') at a price per share of 560 pence to raise £5.69 million (the ' Cash Placing') and the terms of a conditional vendor placing of 178,572 new BWD ordinary shares (the 'Vendor Placing Shares') at a price per share of 560 pence to raise £1.0 million (the 'Vendor Placing'). The Vendor Placing is conditional, inter alia, upon completion of the Acquisition, which in turn is conditional upon approval by the SFA. The Cash Placing and the Vendor Placing have been fully underwritten by ING Barings Limited, BWD's corporate stockbroker. The proceeds of the Cash Placing and Vendor Placing will be used to satisfy the cash element of the initial consideration for the Acquisition, with the balance of the proceeds being used to meet transaction costs in relation to the Acquisition, to provide the group with additional working capital in accordance with regulatory capital requirements and to meet a proportion of the deferred consideration. The Consideration Shares, the Subscription Shares and the Vendor Placing Shares will all rank pari passu with BWD's existing issued ordinary shares, save that they will not rank for the interim dividend of 6.0 pence per share declared by BWD today, payable to shareholders on the register at 24 August 2001. Dealings in the Subscription Shares are expected to commence on 28 June 2001. Dealings in the Consideration Shares and the Vendor Placing Shares are expected to commence on 20 July 2001, the expected day of completion. Application will be made to the UK Listing Authority for 1,701,438 new ordinary BWD shares to be admitted to the Official List and to the London Stock Exchange for the admission of the new ordinary BWD shares to trading on its market for listed securities. N M Rothschild & Sons Limited advised BWD in relation to the Acquisition and associated fund raising. ING Barings Limited advised BWD in relation to the associated fund raising. For further information please contact: BWD Securities PLC: Michael Burns, Chief Executive Telephone: 0151 227 2030 Hudson Sandler: Nick Lyon/Jessica Rouleau Telephone: 020 7796 4133 N M Rothschild & Sons Limited (Financial adviser to BWD) David M Forbes, Director Telephone: 0113 200 1900 ING Barings Limited (Corporate stockbroker to BWD) Ben Money-Coutts, Director Telephone: 020 7767 5700 N M Rothschild and Sons Limited and ING Barings Limited, which are regulated by The Securities and Futures Authority Limited, are acting exclusively for BWD Securities PLC in connection with the Cash Placing and the Vendor Placing and no-one else, and will not regard any other person as their customer or be responsible to any other person for providing the protections afforded to customers of NM Rothschild and Sons Limited and ING Barings Limited nor for providing advice to any such person in relation to the contents of this announcement or any matter referred to herein. Part III BWD SECURITIES PLC ('BWD' or the 'Company') INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2001 Financial Results During the period, the financial markets in which all the Group's businesses operate have been particularly challenging. Trading volumes have fallen from the record levels experienced during the first half of 2000, and declining market indices have impacted on funds under management and consequently fees generated from those funds. Whilst these conditions have inevitably had an affect on the business, our strategy of increasing fee income as a proportion of total income has helped mitigate the effects of this downturn. This is evidenced by a 7% reduction in total income to £18.6 million (2000: £19.9 million) of which Group fee income increased by 14% to £10.7 million (2000: £ 9.4 million). The Group's profit before tax and goodwill amortisation for the six months ended 31 May 2001 was £4.4 million (2000: £5.4 million). Basic earnings per share before goodwill amortisation was 15.1p (2000: 18.8p). Dividend The Directors have declared an interim dividend of 6.0p (2000: 6.0p) payable on 1 October 2001 to shareholders on the register at 24 August 2001. Operations BWD Rensburg increased managed clients' funds by 9% to £3.6 billion. (2000: £ 3.3 billion). Fee paying funds included in these figures increased by 14% to £1.6 billion (2000: £1.4 billion). We are delighted to be able to announce today that agreement has been reached to acquire the business of Dennis Murphy Campbell, an established London-based stockbroking business with funds under management of approximately £550 million. Subject to regulatory approval, this deal will be completed on 20 July 2001 and will give the Company an excellent platform from which to increase its business. BWD Rensburg Unit Trust Managers increased the value of funds under management by 34% to £312 million (2000: £233 million). The achievement of such growth in the difficult markets experienced over the period is attributable to the business's continued strong investment performance record, together with success in increasing sales to IFAs. Capital for Companies increased the value of funds under management to £43 million (2000: £41 million) including an additional £7 million raised during the period for Capital for Companies VCT plc. The VCT market has now become an established part of the tax efficient investment scene. Northern Registrars has continued to perform well, despite a slowdown in the level of both share transfer activity and corporate events. The Company remains committed to developing new services and is now providing a complete All Employee Share Ownership Plan administration service. Northern Administration continues to develop and has recently completed a successful transfer of the whole of Kleinwort Benson Unit Trust Limited's unit trust administration. This transfer takes the level of collective funds now administered by the business to in excess of £1 billion. Outlook Against a backdrop of difficult market conditions, the underlying strength of all Group businesses has continued to increase. Taken with the acquisition of Dennis Murphy Campbell, this reinforces our confidence for the future. Alan Bottomley Michael Burns Chairman Chief Executive 22 June 2001 Notes to Editors: * BWD is an investment management business with offices in Liverpool, Leeds, Sheffield, Manchester, Chesterfield, Doncaster, Glasgow and Belfast. From these offices, BWD offers a full range of financial services to private and corporate clients, including investment management, financial planning and stockbroking. * BWD also owns Northern Registrars and Northern Administration, located in Huddersfield, which provide clients with share registration and administration services. * BWD continues to concentrate on growing its businesses, through fee-based, as opposed to transaction-based, revenue. Consolidated Profit and Loss Account 2001 2000 2000 6 months 6 months 12 months ended ended ended 31 May 31 May 30 Nov £'000 £'000 £'000 Note Turnover 18,579 19,895 38,373 Operating expenses (14,656) (14,975) (29,006) Goodwill (240) (240) (482) amortisation Total administrative (14,896) (15,215) (29,488) expenses _______ _______ _______ Operating profit 3,683 4,680 8,885 Net interest receivable 448 472 987 _______ _______ _______ Profit on ordinary 4,131 5,152 9,872 activities before taxation Tax on profit on ordinary (1,359) (1,669) (3,185) activities _______ _______ _______ Profit on ordinary 2,772 3,483 6,687 activities after taxation Dividends (1,194) (1,193) (3,580) _______ _______ _______ Retained profit for the 1,578 2,290 3,107 period _______ _______ _______ Basic 1 earnings per share -before goodwill 15.1p 18.8p 36.1p amortisation -after goodwill 13.9p 17.6p 33.7p amortisation Diluted 1 earnings per share -before goodwill 14.8p 18.3p 35.2p amortisation -after goodwill 13.6p 17.1p 32.8p amortisation Dividend per share 6.0p 6.0p 18.0p Turnover and operating profit relate entirely to continuing operations. 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 2001 2000 2000 31 May 31 May 30 Nov £'000 £'000 £'000 Fixed assets Intangible assets 8,429 8,911 8,669 Tangible assets 6,237 6,044 6,135 Investments 769 384 769 _______ _______ _______ 15,435 15,339 15,573 _______ _______ _______ Current assets Debtors 31,050 36,004 36,977 Investments 1,162 1,162 1,162 Cash at bank and in hand 15,309 13,162 15,366 _______ _______ _______ 47,521 50,328 53,505 Creditors Amounts falling due within one year (35,339) (43,733) (46,280) _______ _______ _______ Net current assets 12,182 6,595 7,225 _______ _______ _______ Total assets less current liabilities 27,617 21,934 22,798 Creditors Amounts falling due after more than one year (6,779) (3,529) (3,529) Provisions for liabilities and charges (232) (209) (251) _______ _______ _______ Net assets 20,606 18,196 19,018 _______ _______ _______ Capital and reserves Called up share capital 2,033 2,032 2,032 Reserves 18,573 16,164 16,986 _______ _______ _______ Equity shareholders' funds 20,606 18,196 19,018 _______ _______ _______ Consolidated Cash Flow Statement 2001 2000 2000 6 months 6 months 12 months ended ended ended 31 May 31 May 30 Nov £'000 £'000 £'000 Note Net cash (outflow)/inflow from operating activities (a) (411) 3,879 10,844 Returns on investment and servicing of finance Net interest received 504 522 987 Taxation paid (1,448) (318) (1,875) Capital expenditure and financial investment Purchase of tangible fixed assets (733) (1,053) (1,745) Purchase of fixed asset investments - - (257) Proceeds from sale of tangible fixed assets 110 50 158 Proceeds from sale of fixed asset investments - - 2 Equity dividends paid (2,387) (1,984) (3,177) _______ _______ _______ Cash (outflow)/inflow before financing (4,365) 1,096 4,937 Financing Issue of ordinary share capital 9 46 51 Decrease in short term borrowings (711) (362) (362) Increase in long term borrowings 4,000 - - _______ _______ _______ (Decrease)/increase in cash in the period (b) (1,067) 780 4,626 _______ _______ _______ Notes to the Cash Flow Statement a. Reconciliation of operating profit to operating cash flows 2001 2000 2000 6 months 6 12 months months ended ended ended 31 May 31 May 30 Nov £'000 £'000 £'000 Operating profit 3,683 4,680 8,885 Amortisation of goodwill 240 240 482 Depreciation charges 536 610 1,026 (Profit)/loss on disposal of tangible fixed (15) (45) 32 assets Shares subject to grant of a nil cost option - 130 - Decrease in debtors 5,890 5,914 4,976 Decrease in creditors and provisions (10,745) (7,650) (4,557) _______ _______ _______ Net cash (outflow)/inflow from operating (411) 3,879 10,844 activities _______ _______ _______ b. Analysis and reconciliation of net funds At 1 Dec Cash Other At 31 May 2000 flows changes 2001 £'000 £'000 £'000 £'000 Cash in hand, at bank 15,366 (57) - 15,309 Overdrafts - (1,010) - (1,010) Debt due after one year (3,529) (4,000) 750 (6,779) Debt due within one year (1,000) 711 (750) (1,039) _______ _______ _______ _______ Net Funds 10,837 (4,356) - 6,481 _______ _______ _______ _______ Notes to the Cash Flow Statement (Continued) b. Analysis and reconciliation of net funds continued 2001 2000 2000 6 months 6 12 months months ended ended ended 31 May 31 May 30 Nov £'000 £'000 £'000 (Decrease)/increase in cash in the (1,067) 780 4,626 period Cash outflow from decrease in debt 711 362 362 Cash inflow from increase in debt (4,000) - - _______ _______ _______ Movement in net funds in the period (4,356) 1,142 4,988 Net funds at beginning of period 10,837 5,849 5,849 _______ _______ _______ Net funds at end of period 6,481 6,991 10,837 _______ _______ _______ Notes 1. Basic earnings per share before goodwill amortisation is calculated with reference to earnings for shareholders of £3,012,000 (May 2000: £ 3,723,000; Nov 2000: £7,169,000) and the weighted average number of Ordinary Shares in issue during the six months ended 31 May 2001 of 19,892,456 (May 2000:19,842,799; Nov 2000: 19,865,843). Basic earnings per share after goodwill amortisation is calculated with reference to earnings for shareholders of £2,772,000 (May 2000: £3,483,000; Nov 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 period. The number of additional shares used for the diluted calculation is 472,298 Ordinary Shares (May 2000: 525,742; Nov 2000: 505,873). 2. The information contained in the 2000 consolidated balance sheet, profit and loss account and cash flow statement does not constitute full accounts and has been extracted from the latest published accounts for the year ended 30 November 2000 which have been delivered to the Registrar of Companies. The report of the auditors on these accounts 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 2000 and 31 May 2001 are unaudited.

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