Jacques Magliolo
The Board of Executive Corporation (BOECorp) has once again proved to investors that it is a financial force to be taken seriously.
In the first six months of its present fiscal year, the company has more than satisfied its shareholders, producing a 94,4 percent annualised increase in attributable income.
Other annualised figures are just as impressive. While debtors and cash decreased by 18 percent, the company’s creditors and other borrowings fell by a phenomenal 87 percent. In addition a reduction in liabilities, and the group’s higher share capital and reserves means that debt:equity fell during the past six months to 1,4 percent from last year’s 46 percent.
Higher shareholders’ funds, however, mean that interim earnings and dividends per share were diluted. earnings per share were 4,3 cents (1994: 3,1 annualised) and dividends were one cent (1994: 0,6 cents).
BOECorp’s only asset is a 50 percent investment in BOE, which also showed its mettle. Its attributable income rose by 45 percent to R16-million. However, BOE also increased its share issue by 1,5-million shares to 16- million shares during the period under review and thus dampened bottom-line growth.
On a fully diluted basis, earnings per share rose by 31 percent to 100,7 cents and the interim dividend increased by 19 percent to 25 cents. BOE directors indicate that this is more impressive, given that costs were held to a 10 percent increase.
Management attributes BOE’s success to a number of factors. Both BOE Asset Management and BOE Merchant Bank experienced buoyant trading and contributed towards profits, and a R19,8-million extraordinary profit was derived from the sale of a part ownership in Boland Bank. BOE still retains some 2,7-million of Boland Bank’s shares at a market value of R70-million.
Although it may be difficult for both BOECorp and BOE to improve on these results during the second six months of their financial period, there are a number of significant projects under way at BOE which could see results continue to improve.
BOE intends to recapitalise and rename Discount House Merchant Bank, which it recently acquired. The Merchant Bank will concentrate on investment and corporate activities.
The first half financial results should help BOE raise its R144-million rights issue, which directors say has already received positive response from shareholders.
However, a note of warning is issued by Irish & Menell Rosenberg technical analyst Tony Henfrey: “The share has performed well in the past 12 months (climbing from 1 950 cents to 3 900 cents), but a 34-week trend shows that there is little upward movement left in the share. At these levels BOE is overbought.”