BJM generated after-tax profit of R78.4 million for the six months ended 30 September 2006 representing an increase of 116% on the R36.2 million for the comparative period. Profit generated from operations amounted to R31.6 million, 44% higher than the comparative period's R22 million, while the disposal of the group's holding of JSE shares resulted in an after-tax profit of R57 million.
Basic earnings per share of 94c represents an increase of 155% while headline earnings per share of 25c, which includes an STC expense of R10.6 million paid on the final FY06 dividend and the dividend in specie distribution, represents an increase of 12%. Notwithstanding the distribution of R105.5 million in capital to shareholders by means of dividends, net asset value rose by 9% to 406cps from 371cps. The value of BJM Private Client Services and Finsettle Services is not reflected in NAV. Operating income rose by 19% to R173 million while operating costs rose by 17%. The cost increases are fully attributable to both fixed and variable cost increases in manpower and to variable settlement charges which are a function of increased turnover. Domestic equity brokerage rose by 30% to R103 million, while gross equity brokerage, including that of the international offices, rose by 23% to R139 million.
The group's presence in the retail investment market continues to grow with assets under administration having risen by 23% year-on-year to R22 billion together with an appreciable increase in contribution to group profitability. The strong market during the period continued to have a positive impact on the business and the entrenchment of the business model continues to produce acceptable returns. Major contributions have come from BJM Securities, BJM Private Client Services and BJM USA.
The group resolved to distribute its holding of JSE shares to its shareholders as a dividend in specie and this resulted in one JSE share being distributed for every 70 BJM shares held. STC of R6.3 million and CGT of R9.4 million were incurred as a result of this distribution. The group elected to fund these costs by selling the remaining JSE shares withheld from the dividend in specie for this purpose. The residual balance of R5 million will be declared as a special cash dividend payable simultaneously with the interim dividend.
Prospects
The group is well positioned to take advantage of continued favourable market conditions but it should be noted that margins have recently come under pressure from increased competition and structural change within the industry.
Dividends
The board has declared an interim ordinary dividend of 13.5cps in respect of the six months ended 30 September 2006. The board has further declared a special dividend of 5cps in respect of the non-recurring income from the sale of the balance of the JSE shares. Both dividends will be paid on Monday, 11 December 2006.
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