RNS Number:9762M
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
END
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