For Immediate Release
JM Financial announces unaudited results for the quarter and half year ended September 30, 2008
Mumbai, October 27, 2008: The Board of Directors of JM Financial Limited, at its meeting held today, considered and approved the unaudited financial results for the quarter and half year ended September 30, 2008.
Consolidated Results – Key Highlights:
FY 09 – Q2 compared to FY 08 – Q2
Ø Total income at Rs. 121.68 crore compared to Rs. 191.24 crore.
Ø Net profit before tax at Rs. 20.18 crore compared to Rs. 87.24 crore.
Ø Net profit after tax, minority interest and share of associates, at Rs. 20.89 crore compared to Rs 44.80 crore.
FY 09 – H1 compared to FY 08 – H1
Ø Total income at Rs. 251.50 crore compared to Rs. 317.05 crore.
Ø Net profit before tax at Rs. 52.29 crore compared to Rs. 133.37 crore.
Ø Net profit after tax, minority interest and share of associates, at Rs. 39.23 crore compared to Rs. 63.95 crore.
Post the effect of sub-division and issue of bonus shares, the company’s paid up share capital has increased to Rs. 74.97 crore from Rs. 29.98 crore. On a consolidated basis, the adjusted Earnings Per Share (EPS), on weighted average number of shares, for the quarter ended September 30, 2008 is Re. 0.28 (not annualised).
In view of the strain on money markets and capital markets due to the aftermath of the global financial crisis, volumes in all our businesses are under pressure. Despite adverse market conditions, the company has achieved a consolidated profit of Rs. 20.89 crore for FY09 – Q2 (Rs. 18.34 crore in FY09- Q1). The volumes have decreased substantially on account of unfavourable market conditions and as a result the corresponding profits have also declined. The company has carried out certain cost cutting measures owing to weak market conditions.
Mr. Nimesh Kampani, Chairman and Managing Director, JM Financial said, "India is experiencing some very difficult times. Global markets have been going through a major turmoil and the repercussions have been felt far and wide. Emerging economies such as India, have also taken a beating despite strong fundamentals.”
He added, “JM Financial now offers a complete bouquet of products in financial services, with various businesses set up and acquired by the company. Our Asset Reconstruction Company has recently received the necessary approval from the Reserve Bank of India and recent developments in the financial markets are likely to present interesting opportunities for acquisition of distressed assets for this business.
Investment banking and securities:
Capital market activities continue to remain adversely impacted due to steep corrections in the global and Indian equity markets during the year. In CY2007, India was the 2nd best performing market globally, but in CY 2008 to date, India (ê 47.4%) has been the 3rd worst performing market, behind the Russian RTSI indices (ê 68%) and the Shanghai Composite (ê 62.8%).
The investment banking pipeline continues to remain strong with several mandated transactions. However, given the crash in the equity capital market there is a serious concern on the timing of the transactions. In view of the difficult market conditions for capital raising, we continue to focus on mergers & acquisitions and private equity syndication.
During the quarter, income from the equity brokerage business has also declined. However, the investment advisory and distribution business will continue to focus on growing its franchise by creating a centralised team to service its new franchisees. Once the market stablises, these investments will enable the Group to expand its business and clientele.
The Institutional equity business is still in its early stages and is rapidly expanding its client base. The contribution from this business will be more visible in stable market scenario.
Securities funding and fund based activities:
During the quarter, NBFC industry faced a severe liquidity crunch, which has not only made borrowing costly but also posed a threat of refinancing the maturities of the borrowing. As a cautionary measure, the NBFC slowed down on various lending practices such as IPO financing, margin financing.
As a conservative approach in this business, we have made a provision on standard assets although our loans have been serviced regularly. Such a provision on standard assets made during the quarter is Rs. 11.48 crore, which includes Rs. 7.38 crore on account of revision in the rate of provisioning.
Asset reconstruction business has received the formal Certificate of Registration from the RBI. The existing pipeline deals are being pursued actively for conducting detailed evaluation and due diligence prior to acquisition. Give the turmoil in the markets; we believe that we will have several interesting distressed assets purchase and restructuring opportunities in the ARC business.
Alternative Asset Management:
The combined AUM / AUA of the private equity fund, real estate fund, and special situations group stands at around Rs. 3,300 crore. There was no deal concluded during the quarter in view of the bearish capital market and high valuation expectation by the promoters in case of private equity as well as real estate funds.
In line with our strategy of expanding the geographical presence, asset management company (AMC) now has 82 branches all over India. AMC is in the process of completing formalities with the new investors who have agreed to take up 12% of equity capital in the company. The performance of the schemes of JM Financial Mutual Fund has been affected due to falling markets and the AUM as on September 30, 2008 was Rs.9,085 crore.
The unaudited financial results are attached. Both, the press release and unaudited financial results, are available on our website - www.jmfinancial.in
About JM Financial
JM Financial is an integrated financial services group offering a wide range of capital market services to its corporate and individual clients. The Group’s businesses include investment banking, institutional equity sales, trading, research and broking, private and corporate wealth management, equity broking, portfolio management, asset management, commodity broking, fixed income broking, non-banking finance products, private equity and asset reconstruction. For more information, log on to www.jmfinancial.in.
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Forward - Looking statements
This press release (‘document’) containing JM Financial Group’s activities, projections and expectations for the future, may contain certain forward-looking statements based upon the information currently available with the Company or any of its subsidiaries, joint ventures and associate companies. The financial results in future may vary from the forward-looking statements contained in this document due to uncertainties and unforeseen events that may impact the businesses of the JM Financial Group. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.
This document is for information purposes only and any action taken by any person on the basis of the information contained herein is that person’s responsibility alone and neither JM Financial Group nor any of their directors or employees will be liable in any manner for the consequences of such actions.