Robert Fleming Hldgs Int Res.
Jardine Matheson Hldgs Ld
29 November 1999
ROBERT FLEMING HOLDINGS LIMITED
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 1999
The following press release was issued today by the Group's 17%-owned
associate, Robert Fleming Holdings Limited.
For further information, please contact:
Forrest International Limited Tel :(852) 2522 6475 office)
David Dodwell Tel :(852) 2501 7902 (direct)
Full text of this and other Group announcements can be accessed through the
Internet at 'http://www.irasia.com/listco/sg/jml'.
FLEMINGS REPORTS FIRST HALF INTERIM PROFITS OF £110.1 MILLION
Flemings, the international asset management and investment banking group,
reports profits before tax for the six months to 30 September 1999 of
£110.1 million. This compares with £20.8 million in the first half of
1998/99, and with £70.0 million for the full year ended 30 March 1999. Other
first half highlights include:
* Earnings per share of 43.0p (1998/99 - 6.9p).
* Interim dividend increased to 9.5p per share (1998/99 - 8.5p).
* Group's capital resources now in excess of £1.4 billion.
* Annualised pre-tax return on equity increased to 20.5 per cent. Cost
income ratio improved to 79.2 per cent.
* Pre-tax profits performance strong in both business divisions.
Asset Management - £59.2 million; Investment Banking - £50.9 million.
* Funds under management up by 5.5 per cent to £70.4 billion.
* Strong recovery in Asia; enhanced earnings through the acquisition of
Jardine Fleming.
John Manser, Chairman of Flemings, said:
'We have created a much stronger and more competitive Flemings Group over
the last twelve months. This, together with a return to normal levels of
market activity, particularly in Asia, and the acquisition of Jardine
Fleming, has contributed to the sharply improved first half pre-tax profits of
£110.1 million.'
'I am also pleased to announce that, following my retirement from the Board on
31 March 2000, Roddie Fleming will succeed me as Chairman. Roddie has spent
23 years in the firm, including six years in the Far East, and I am
confident he will continue to make a valuable contribution to the future
development of the business.'
William Garrett, Group Chief Executive, said:
'Our strategy remains clear and focused; to build and sustain a world class
asset management and investment banking group. The successful integration of
Jardine Fleming and Fleming Martin now enables us to deliver global
capability to our clients, based on the local expertise and knowledge that
our businesses have built up over many years.'
Financial Review
The profit and loss account now includes the fully consolidated results of
Jardine Fleming Group Limited, which was acquired on 24 March 1999. This
has substantially increased levels of the operating income and operating
expenses for the Group, compared with prior periods.
Income Analysis
Operating income for the period totalled £469.6 million (1998/99 - £225.3
million). Adjusting for the consolidation of Jardine Fleming, underlying
operating income is some 45 per cent higher than the corresponding period.
This reflects significantly stronger performances in both our asset
management and investment banking businesses.
Expense Analysis
Operating expenses totalled £371.8 million (1998/99 - £202.9 million).
After adjusting for Jardine Fleming as above, underlying costs rose by some 19
per cent, largely reflecting provisions for performance related
compensation. The cost income ratio for the period improved to 79.2 per
cent compared to 88.5 per cent for the previous year.
Taxation
The tax charge for the period of £35.1 million represents an effective tax
rate of 31.9 per cent.
Board Changes
Roddie Fleming, currently Deputy Chairman, will become Chairman of the
Board on 1 April 2000, succeeding John Manser on his retirement on 31 March
2000.
Sir John Craven will join the Board as a non-executive director with effect
from 1 December 1999.
Business Review
Asset Management
Profit before taxation for the six months amounted to £59.2 million and
funds under management grew to £70.4 billion (US$116.0 billion) from £66.7
billion (US$107.4 billion).
The acquisition of Jardine Fleming at the end of last year has enabled us to
continue the globalisation of our businesses and management structures under
the banner of Fleming Asset Management. We are now making swift progress
with introducing global systems, standards and procedures which will provide
a solid platform for further expansion and growth.
The period witnessed a marked turnaround in the profitability of our Asian
businesses. The impact of cost control measures, taken during the recent
Asian financial crisis, is now showing through and enabling increased
revenues from higher funds under management to benefit the bottom line.
During the period, funds under management within our Asian businesses
increased from £15.1 billion (US$24.4 billion) to £20.7 billion (US$34.4
billion). Of this increase, net cash flows amounted to £1.6 billion
(US$2.6 billion). Investment performance has been excellent, particularly in
Japan where our fund management team has led the competition in
identifying investment value amongst a new wave of Japanese corporates.
In Europe and the UK, our pooled fund businesses have benefited from
increased volumes and higher market levels, with encouraging cashflows into
our Save & Prosper range of unit trusts in the UK and strong flows into our
pan-European Flagship range based in Luxembourg.
Our segregated business has been awarded a number of new and significant
Asian and specialist mandates from clients located both in Europe and Asia,
and steps recently taken to improve our UK balanced pension fund
performance are beginning to show some early indications of translating
into improved investment performance.
Fleming Private Asset Management has continued to expand its client base
and increase funds under management, and looks set to report another record
profit for the year. Our investment trust business has consolidated its
leading position in the UK investment trust market.
At Rowe Price-Fleming International, funds under management grew to £21.2
billion (US$34.8 billion) at the end of the period from £20.1 billion
(US$32.4 billion) at the beginning of the year, and profits remain
satisfactory.
Investment Banking
Improved trading conditions for our securities businesses in Asia and
Africa, combined with good banking profits and strong deal flow for our
corporate finance and capital markets teams, have underpinned a successful
first half with investment banking pre-tax profits of £50.9 million.
Highlights of the first half include:
Corporate Finance
* Advice to Centrica on its acquisition of the Automobile Association.
* Advice to Celltech on its merger with Chiroscience, forming the UK
flagship bio-pharmaceutical company.
* A high level of activity in Asia which included our appointment as
adviser in Hong Kong to Exchange Fund Investment Limited and in India to
the Andhra Pradesh State Electricity Board.
* In total, 41 transactions were completed (of which 19 were cross border)
with a value in excess of £5.5 billion (1998/99 - 37 transactions with a
value of £4.6 billion).
Securities
* Better profits were achieved, particularly from Asian securities,
reflecting our strong competitive position in more active markets. Major
contributors were Japan, Korea, Singapore and Thailand, with Ord Minnett
continuing to enjoy strong market conditions in Australia.
* In Southern Africa, Fleming Martin continued to perform well.
* Further cost efficiencies will accrue now Jardine Fleming and Fleming
Martin are wholly-owned.
Capital Markets
* Capital markets had an active first half, leading 16 issues and raising
US$2.25 billion in 11 countries.
* In Europe, the major transaction was the £433 million flotation of
Kingston Communications, a client of our banking division for over 10
years. In Scandinavia, Fleming Aros managed two issues, the US$400 million
IPO for ISS Group and US$200 million issue for Vestas Wind Systems.
Following our first IPO on the German Neuer Markt last year, we have
completed a further two issues, for TRIA Software and artnet.com.
* In Asia, our strength in the region was confirmed by lead management
roles in 14 issues. These included the flotation of Pacific Century
Insurance in Hong Kong; placings for JIT Holdings and Keppel Land in
Singapore; Synex Technology in Taiwan; ABS - CBN in the Philippines;
National Finance in Thailand; and Travel.com in Australia.
* Our structured finance and fixed income teams made a strong
contribution. The most notable transaction was the announcement of a
US$640 million treasury stock buyback for South African Breweries.
Banking
* Commercial banking's core activities continued to perform strongly,
benefiting from good deal flow in our targeted sectors. 37 new transactions
were completed with a value of over £350 million.
* Increase in retail deposits to a record £1.8 billion from onshore and
offshore activities.
* Establishment of a Luxembourg stock-lending business.
Outlook
Since the half year, a high level of activity has continued across the
Group. Recent transactions include:
* Our pivotal role in advising Lagardere and Aerospatiale Matra on the
merger of Aerospatiale Matra with DASA, creating the leading European
aerospace and defence company by sales.
* The proposed merger of Celltech and Medeva, creating an internationally
competitive, integrated bio-pharmaceutical group.
* The Hong Kong Tracker Fund, a unit trust product designed to track the
Hang Seng index, launched by Exchange Fund Investment Limited.
* The Government of India's sale of a 16 per cent shareholding in the Gas
Authority of India, raising US$217 million.
In addition, we have established a US$30 million internet joint venture
with Cable & Wireless HKT that seeks to create a major online share trading
service in Asia.
Whilst we anticipate a slow-down in business activity around the
Millennium, which will have some effect on our second half performance, the
outlook remains encouraging.
Media enquiries: Malcolm Wallis, Director of Group Corporate Communications
Tel: 0171 382 8380
Consolidated Profit and Loss Account
6 months to 6 months to 12 months to
September September March
1999 1998 1999
(unaudited) (unaudited) (audited)
£000 £000 £000
Net interest income 28,648 17,921 36,947
Dividend income 1,431 1,999 5,761
Net fees and commissions 365,312 169,500 398,771
Net dealing income 46,281 6,167 34,375
Other operating income 27,915 29,663 45,694
Operating income 469,587 225,250 521,548
Administration expenses (358,469) (194,674) (443,254)
Depreciation and
amortisation (13,286) (8,235) (18,550)
Specific provisions for bad
debt (3,312) (9,158) (8,786)
General provision for
contingencies _ (625) _
(375,067) (212,692) (470,590)
Group
operating profit 94,520 12,558 50,958
Share of operating results
in:
Joint ventures 14,142 3,468 9,549
Associates 1,408 4,738 9,530
Profit on ordinary
activities before tax 110,070 20,764 70,037
Tax (35,112) (11,462) (39,156)
Profit on ordinary
activities after tax 74,958 9,302 30,881
Minority interests (3,020) 923 371
Profit attributable to
shareholders 71,938 10,225 31,252
Dividends (15,888) (12,304) (37,495)
Profit retained 56,050 (2,079) (6,243)
Basic earnings per share 43.0p 6.9p* 21.1p
Diluted earnings per share 42.3p 6.8p 20.7p
Dividend per share 9.5p 8.5p 25.5p
Total operating income:
Group 469,587 225,250 521,548
Share of joint ventures 55,803 57,285 118,121
525,390 282,535 639,669
*Earnings per share have been restated to comply with Financial Reporting
Standard 14.
The half year figures are non-statutory and have not been audited. The
statutory accounts for the year ended 31 March 1999 received an unqualified
audit report and have been delivered to the Registrar of Companies.
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