| Wed 31 May 2006, 7:15 | | Barnard Jacobs Mellet Holdings Limited - Audited r |
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BJM
BJM
Barnard Jacobs Mellet Holdings Limited - Audited results for the year
ended 31 March 2006
BARNARD JACOBS MELLET HOLDINGS LIMITED
Reg No: 1995/004798/06
Incorporated in the Republic of South Africa
ISIN: ZAE000014262 & Share code: BJM
Audited results for the year ended 31 March 2006
- Earnings increased by 506%
- Dividend per share increased by 650%
- Assets under administration increased by 66%
- Full year dividend 67,5 cents per share
CONSOLIDATED INCOME STATEMENT
31 March 31 March
2006 2005 Change
R"000 R"000 %
Operating income 342 259 240 225 42,5
Interest income 29 037 26 477 9,7
Operating costs (261 566) (226 492) 15,5
OPERATING PROFIT BEFORE FINANCE COSTS 109,730 40 210 172,9
Finance costs (2 097) (15 610) (86,6)
Preference dividends (1 396) (5 584)
Investment income - 3 321
PROFIT BEFORE TAXATION 106 237 22 337 375,6
Taxation (37 411) (10 081)
PROFIT ATTRIBUTABLE TO SHAREHOLDERS 68 826 12 256 461,6
Weighted average number of shares
in issue net of treasury stock ("000) 91 249 98 486
Headline earnings per share (cents) 59,97 7,20 732,9
Fully diluted headline earnings
per share (cents) 52,42 6,52 704,0
Basic earnings per share (cents) 75,43 12,45 505,9
Fully diluted earnings per
share (cents) 65,93 11,27 485,0
Dividends per share (cents) 38,00 1,50
Net asset value per share (cents) 396 326 21,2
RECONCILIATION OF HEADLINE EARNINGS PER SHARE
31 March 31 March
2006 2005 Change
R"000 R"000 %
Headline earnings 54 719 7 095 671,2
Liquidation distribution received 7 092 1 369
Sale of investments 7 772 3 772
(Loss)/profit on disposal of equipment (757) 20
Basic earnings 68 826 12 256 461,6
CONSOLIDATED BALANCE SHEET
31 March 31 March
2006 2005
R"000 R"000
ASSETS
Non-current assets
Equipment 3 543 4 493
Investments 45 225 5 641
Goodwill 3 692 3 692
Deferred tax assets 11 272 22 299
63 732 36 125
Current assets
Amounts receivable in respect of
stockbroking activities 3 498 133 2 109 356
Margin on derivative financial
instruments 7 742 14 352
Trade and other receivables 11 861 14 901
Listed securities holdings 187 002 278 725
Unlisted promissory notes 24 276 -
Cash and cash equivalents 363 317 552 317
4 092 331 2 969 651
4 156 063 3 005 776
EQUITY AND RESERVES
CAPITAL AND RESERVES
Share capital 833 990
Share premium 96 382 156 509
Non-distributable reserves 41 637 17 473
Accumulated profit 190 764 148 238
329 616 323 210
Non-current liabilities
Deferred tax liabilities 6 225 251
6 225 251
Current liabilities
Amounts payable in respect of
stockbroking activities 3 448 401 2 197 028
Listed securities sold short 269 360 282 630
Trade and other payables 80 862 59 520
Short-term interest-bearing liabilities - 121 159
Income tax payable 14 438 3 729
Shareholders for dividends 121 77
Bank overdraft 7 040 18 172
3 820 222 2 682 315
4 156 063 3 005 776
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-distri-
Share Share butable Accumulated
capital premium reserves profit Total
R"000 R"000 R"000 R"000 R"000
Balance at
1 April 2004 987 155 655 15 715 137 462 309 819
Foreign currency
translation reserve - - 155 - 155
Equity settled share-
based payments - - 997 - 997
BEE Credential
recognition - - 606 - 606
Treasury stock 3 854 - - 857
Profit for
the year - - - 12 256 12 256
Dividends paid - - - (1 480) (1 480)
Balance at
1 April 2005 990 156 509 17 473 148 238 323 210
Foreign currency
translation reserve - - (5 999) - (5 999)
Equity settled share-
based payments - - (2) - (2)
BEE Credential
recognition - - 606 - 606
Fair value adjustment
on Available-for-sale
instruments - - 36 134 - 36 134
Transfer to
accumulated profit - - (6 575) 6 575 -
Cancellation of
shares (121) (48 179) - - (48 300)
Treasury stock (36) (11 948) - - (11 984)
Profit for the
year - - - 68 826 68 826
Dividends paid - - - (32 875) (32 875)
Balance at
31 March 2006 833 96 382 41 637 190 764 329 616
CONSOLIDATED CASH FLOW STATEMENT
31 March 31 March
2006 2005
R"000 R"000
Cash (utilised in)/generated
from operations (60 630) 420 813
Cash generated from investing activities 70 205 32 937
Cash utilised in financing activities (181 444) (104 472)
Net (decrease)/increase in cash and
cash equivalents (171 869) 349 278
Cash and cash equivalents at beginning
of year 534 145 183 728
Effect of exchange rate fluctuations
on cash held (5 999) 1 139
Cash and cash equivalents at end of year 356 277 534 145
SEGMENTAL ANALYSIS
South Africa International Total
R"000 R"000 R"000
March 2006
Revenue 280 473 90 823 371 296
Assets 3 685 287 470 776 4 156 063
Liabilities 3 379 869 446 578 3 826 447
March 2005
Revenue 197 790 68 912 266 702
Assets 2 562 196 443 580 3 005 776
Liabilities 2 270 093 412 473 2 682 566
RECONCILIATION OF CHANGES IN BASIS OF PREPARATION
Assets Liabilities Equity
Audited Audited Audited
31 March 31 March 31 March
2005 2005 2005
R"000 R"000 R"000
Impact of converting to IFRS
on assets, liabilities and
equity
As previously reported 3 031 809 2 676 471 355 338
Adjustments (26 284) 5 844 (32 128)
- IAS 16: Revaluation of
residual values in
equipment 53 - 53
- IAS 39: Valuation of listed
securities holdings and listed
securities sold short (53) 528 (581)
- IAS 39: Shares reserved
for BEE (27 979) - (27 979)
- IAS 17: Recognition of
leases on a straight-line
basis - 89 (89)
- IAS 18: Revenue recognition - 5 227 (5 227)
- Adjustment to deferred tax 1 695 - 1 695
IFRS 3 005 525 2 682 315 323 210
As
previously
reported Adjustments IFRS
31 March 2005 R"000 R"000 R"000
Impact of converting to IFRS
on the income statement
Operating income 236 851 3 374 240 225
Interest income 26 477 - 26 477
Revenue 263 328 3 374 266 702
Operating costs (225 943) (549) (226 492)
Operating profit before
finance costs 37 385 2 825 40 210
Finance charges (15 610) - (15 610)
Preference dividends (5 584) - (5 584)
Income from investments 4 661 (1 340) 3 321
Profit before tax 20 852 1 485 22 337
Taxation (8 995) (1 086) (10 081)
Profit for the year 11 857 399 12 256
Non-
distri Accumu-
Share Share butable lated
capital premium reserve profit Total
31 March 2005 R"000 R"000 R"000 R"000 R"000
Impact of converting
to IFRS on the
statement of changes
in equity
Opening equity
previously reported
at 1 April 2004 1 102 182 093 15 602 144 330 343 127
Adjustments (115) (26 438) 113 (6 868) (33 308)
- IAS 16: Revaluation
of residual values
in equipment - - - 42 42
- IAS 39: Shares reserved
for BEE (115) (26 438) - (259) (26 812)
- IFRS 2: Recognition
of BEE credentials - - 113 (113) -
- IAS 39: Valuation
of listed securities
holdings and listed
securities sold
short - - - (451) (451)
- IAS 17: Recognition
of leases on a
straight-line basis - - - (267) (267)
- IAS 18: Revenue
recognition - - - (8 600) (8 600)
- Adjustment to
deferred tax - - - 2 780 2 780
Equity at 1 April
2004 under IFRS 987 155 655 15 715 137 462 309 819
Previously reported
movements to Equity 3 854 1 152 10 202 12 211
Adjustments - - 606 574 1 180
- IAS 16: Revaluation
of residual values
in equipment - - - 12 12
IAS 39: Shares
reserved for BEE - - - (1 167) (1 167)
- IFRS 2: Recognition
of BEE credentials - - 606 (606) -
- IAS 39: Valuation
of listed securities
holdings and listed
securities sold
short - - - (131) (131)
- IAS 17: Recognition
of leases on a
straight-line basis - - - 178 178
- IAS 18: Revenue
recognition - - - 3 373 3 373
- Adjustment to
deferred tax - - - (1 085) (1 085)
Equity at 31 March
2005 under IFRS 990 156 509 17 473 148 238 323 210
REVIEW OF RESULTS
BJM had an exceptional year with profitability accelerating during the second
half of the financial year to produce one of the best performances in the
Group"s 21-year history. Profit of R69 million for the year is 462% higher than
the previous year and represents 19% of revenue. Basic earnings of 75 cps
represent an increase of 506% while headline earnings of 60 cps represent an
increase of 733%. Net asset value rose by 21% from 326 cps to 396 cps.
Operating revenue rose by 43% to R342 million while operating costs rose by a
much lower 15% with the whole increase fully attributable to variable cost
increases in manpower and settlement charges. Gross revenue, including interest
from investments, was 39% higher at R371 million while total costs were 7%
higher at R265 million. Domestic equity brokerage rose by 51% to R171,3 million,
outpacing market volume growth of 47%, and implying further gains in market
share. Gross equity brokerage, including that of the international offices, rose
by 49% to R255 million.
The Group"s presence in the retail investment market continues to show
remarkable growth with assets under administration having risen by 66% to R20
billion, together with an appreciable increase in contribution to Group
profitability.
The strategic management actions implemented in the prior year resulted in a
sound performance and represent a good platform for continued success. The
strong market during the year had a major positive impact on the business, but
it is gratifying to note that growth in many areas far exceeded market volume
growth. Major contributions came from BJM Securities, BJM Private Client
Services and BJM USA, with the restructured UK operation now starting to make a
meaningful contribution. All businesses in the Group returned profitable
results.
The Group currently holds 203 950 JSE shares worth R44,8 million at the market
price of R220 per share prevailing at the financial year-end. This value is
included in the NAV of 396 cps. It is the intention to distribute these shares
as a dividend in specie, subject to shareholder approval at the next AGM.
BJM changed its basis of preparation from South African Statements of General
Accepted Accounting Practice (GAAP) to International Financial Reporting
Standards (IFRS) as required by the Listings Requirements of the JSE Limited.
The impact of IFRS 2 on BJM"s BEE transaction resulted in the de-recognition of
the investment in the unlisted cumulative redeemable preference shares issued by
the BEE consortium. The BEE consortium"s rights are instead reflected in equity
and the benefit derived by BJM is recognised in the income statement over the
period in which conditions are imposed on the BEE consortium. This treatment
results in a ten-year recognition from inception of the transaction and amounts
to R605 614 per annum. The dividend accrued from the investment in the
preference shares is not recognised, and any cash received is a direct credit to
equity.
Management regards this treatment as being unnecessarily conservative and the
treatment is contradicted by the reality of repayments by the Mazwai Consortium
that are ahead of the required schedule.
Prospects
Continued favourable market conditions, together with continued success in
gaining market share and enhancing performance from all subsidiaries should
result in a continuation of the positive performance achieved to date.
Dividends
Notice is hereby given that the Board declared a final ordinary dividend of 38,5
cents per share in respect of the year ended 31 March 2006. This brings the
total dividend for the year to 67,5 cents. The dividend will be paid on Monday,
26 June 2006.
The last day to trade in the shares for purposes of entitlement to the dividends
will be Thursday, 15 June 2006. The shares will commence trading ex-dividend on
Monday, 19 June 2006 and the record date will be Friday, 23 June 2006.
Share certificates may not be dematerialised or rematerialised between Monday,
19 June 2006 and Friday, 23 June 2006, both days inclusive.
Basis of preparation
Barnard Jacobs Mellet Holdings Limited changed its basis of preparation from
South African Statements of General Accepted Accounting Practice (GAAP) to
International Financial Reporting Standards (IFRS) as required by the Listings
Requirements of the JSE Limited. Being a first-time adopter of IFRS for the 2006
financial year, the Group"s date of transition to IFRS is 1 April 2004. The
Group"s opening balance sheet on 1 April 2004 and the comparative information
for 2005 was restated to comply with IFRS.
The following elections were made in accordance with IFRS 1:
Business combinations: The Group elected not to apply retrospectively the
requirements of IFRS 3 for business combinations that occurred prior to the
transitional date. As a result, the carrying amount of goodwill is the amortised
amount on 31 March 2004. Previously amortised goodwill, and goodwill eliminated
against reserves, were not reinstated.
The following summarises the impact of the changes from GAAP to IFRS:
1. IAS 18 - Revenue recognition
Previously the Group recognised revenue for services rendered when the services
were provided regardless if the Group had an ongoing involvement in the product
or services provided. Under IAS 18 these fees must be spread over the period
that the Group must provide ongoing involvement or services. This only affected
the income the Group received from some of its structured products.
2. IFRS 2 - Share-based payments
In recognition of services rendered and acting as an incentive for retaining key
staff, a certain portion of an employee"s remuneration package could consist of
payment in the form of shares. The services received in return for the stock
grants are amortised in the income statement on a straight-line basis over the
vesting period, with the corresponding credit recognised in equity, for
transactions settled in equity instruments or as a liability where settlement is
in cash. Under previous GAAP, equity-settled transactions were classified as
accounts payable in the Group financial statements.
Application of IFRS 2 resulted in the reclassification of the liability to
equity at the date of transition. Comparative financial information was
accordingly restated. This adoption has not had any financial impact on the
Group.
The impact of applying substance to the BEE transaction is the de-recognition of
the investment in the unlisted preference shares. Instead the BEE consortium"s
rights are reflected in equity and the benefit derived by BJM is recognised in
the income statement over the period in which conditions are imposed on the BEE
parties under IFRS 2. This recognition is spread over a ten-year period from
inception of the transaction and amounts to R605 614 per annum. The dividend
accrued from the investment in the cumulative redeemable preference shares is
not recognised, and any cash received is a direct credit to equity.
3. IAS 16 - Revaluation of residual values in equipment
In calculating depreciation charges an entity reduces the depreciable amount of
an asset by its residual value. Previously under GAAP, the estimated residual
value was fixed on recognition of the asset and was not subject to reassessment.
IAS 16 requires the residual value of the assets to be reassessed at each
balance sheet date. Annual increases in asset values result in annual upward
adjustments of residual values. The continued reassessment of residual values
typically leads to a reduction in depreciation charges and depreciation charges
cease when the carrying value of an asset equals the residual value.
4. IAS 17 - Leases
IAS 17 requires operating lease costs to be accounted for on a straight-line
basis over the lease period. Future lease increases in terms of lease contracts
are calculated and the average lease expense is then recognised in equal amounts
over the lease period. Although this accounting treatment is in line with the
recognition method of GAAP, it was previous practice in the South African
community to recognise the lease expenses on a payment basis. This change
resulted in higher lease costs in previously reported periods with a reduction
in the 2005 opening equity and a decrease in the 2005 and 2006 lease cost.
5. IAS 39 - Change of the fair value of Financial Instruments designated as
Available-for-Sale
Under GAAP the Group elected to recognise any changes in the fair value of
financial instruments classified as available-for-sale in the income statement.
In terms of IAS 39, changes in the fair value of financial assets designated as
available-for-sale should be recognised directly in equity. Where the fair value
of the financial instrument drops below cost and the decrease is considered to
be an impairment, the difference should be recognised in the income statement.
Similarly, realised gains and losses will be recognised in the income statement.
All the financial assets classified as available-for-sale on the balance sheet
in the past were accounted for at cost as no reliable fair value could be
calculated. In the case of BJM, these assets refer to JSE shares (previously JSE
Rights). The profit on disposal was accounted for in the income statement,
whereas the fair value adjustment on the remaining shares was accounted for in
equity. No adjustments were made to the opening balances or the comparative
figures.
6. IAS 39 - Valuation of listed securities holdings and listed securities sold
short
Under previous GAAP the Group valued their listed securities holdings and listed
securities sold short at closing prices at the end of the financial year. With
the changes in IAS 39, the valuation of listed securities holdings and listed
securities sold short changes. Listed securities holdings are valued at the last
available bid price while listed securities sold short are valued at the last
available offer price.
This resulted in a decrease in the values of listed securities holdings held on
the transition date and an increase in the value of listed securities sold short
held on the same date. The effect on the comparative numbers of this valuation
method was the same as the effect on the transition date. Where bid and offer
prices were not freely available, the prevailing ruling prices were used.
Except for the changes listed above, the accounting policies and methods of
computation used in the preparation of these results are consistent in all
material respects with those adopted in the year ended 31 March 2005.
Auditors report
The auditors, KPMG Inc., issued their opinion on the Group financial statements
for the year ended 31 March 2006.
A copy of the auditors" unqualified report is available for inspection at the
company"s registered office.
Kevin Jacobs
(Co-Chief Executive Officer)
Andile Mazwai
(Co-Chief Executive Officer)
Johannesburg
30 May 2006
Directors:
JA Bester (Chairman), HSC Bester, KG Jacobs* (Co-CEO), AM Mazwai* (Co-CEO), AR
Martin, SM Mellet, TS Seopa, L Wilson*
*Executive
Company Secretary:
A de Villiers
Registered Office:
Barnard Jacobs Mellet House
5 Sturdee Avenue
Rosebank, 2196
Transfer Secretaries:
Ultra Registrars (Pty) Limited
11 Diagonal Street
Johannesburg, 2000
Date: 31/05/2006 07:15:39 AM Produced by the JSE SENS Department
