To view the PDF file, sign up for a MySharenet subscription.

EFG - Efficient Group Limited - Unaudited interim financial results for the

Release Date: 30/03/2012 14:39
Code(s): EFG
Wrap Text

EFG - Efficient Group Limited - Unaudited interim financial results for the six months ended 29 February 2012 EFFICIENT GROUP LIMITED Incorporated in the Republic of South Africa (Registration nr: 2006/036947/06) Share code: EFG ISIN: ZAE 000151841 ("EFG" or "the Group") UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2012 1. Financial Results Statement of Comprehensive Income: During the reporting period Group revenue increased marginally by 1%. The expansion of the distribution network resulted in a 61% increase in revenue generated from financial services. The decrease in assets under management, a consequence of the cancellation of a significant external fund management mandate, resulted in a decrease in fixed fees earned by the asset management business. Asset management benefited from the positive market movement (ALSI 13%) resulting in slightly lower performance fees during the reporting period, compared to the comparative period (ALSI 19%). Despite the decrease in assets under management margins were maintained in the asset management and asset administration division. Variable costs increased in line with expectations as a result of the growth in the distribution network. Fixed expenses increased by 10% signifying the investment in the expansion of the distribution network, the increase in corporate governance and compliance expenses, and expenses related to the diversification strategy. The non-cash flow expenses consist of the amortisation of intangible assets and depreciation of equipment and systems. The increase in non- cash flow expenses resulted from the growth of the distribution network through business combinations and the investment in information technology. Higher interest received and return on investments (23%) countered the lower operating profit achieved in the reporting period. The Group`s share of comprehensive loss from associates had a negative impact on the profit for the reporting period. The Group reported a profit for the period of R 133 000. Statement of Financial Position: The increase in Plant and Equipment is a result of the investment in Information Technology. Market leading technology systems are of strategic importance for the success of the Group. The increase in goodwill relates to the acquisition of a financial services business. Loans receivable and long-term liability relate to financing of the balance of the Financial Advisory client base acquired during the reporting period. See acquisition activities below. Working capital increased marginally in line with the increase in business activity. 2. Acquisition Activities As part of the extension of the financial services distribution network Efficient Financial Services (Pty) Ltd: - with effect from 10 October 2011, acquired a 20% share in a Financial Advisory client base for R 610 000 which is payable in cash over a 24 month period. An Independent Financial Adviser was appointed to service the acquired client base. The aforementioned Independent Financial Adviser is also the beneficial owner of the balance of this client base. - acquired a 20% share in another two Financial Advisory client bases for R 34 000. The transactions were effective from October 2011 and February 2012 respectively and the purchase prices were settled in cash. - expanded its financial services offering into Namibia. A branch was opened in partnership (50% partnership) with BDO (Namibia), a leading international auditing firm. Initially this transaction will only require working capital. The partnership is effective from 13 October 2011 and is expected to be in operation from 1 April 2012. Efficient Capital acquired a 50% share in an Information Technology company. The maximum acquisition price is R 5.6 million and will be settled in cash (R3.5 million) and the balance by transferring software developed by Efficient Group. The effective date of this transaction was extended to 1 April 2012. The cash portion of the acquisition price will be utilised to expand the IT business. This is a strategic acquisition and significant to support our information technology needs and the commercialisation of investment and reporting software. As part of the Group`s initiative to incentivise senior personnel at a Group level rather than at subsidiary level, the Group acquired the non-controlling share of 10% held in Efficient Financial Services (Pty) Ltd from the managing director of the company. The total acquisition price is R 3.6 million and will be settled by issuing 2 085 500 Efficient Group Limited shares. The acquisition price will be adjusted based on the performance of Efficient Financial Services (Pty) Ltd over the next three years, relative to the performance of the Group. The effective date of the transaction is 1 September 2011. An acquisition price of R 9.6 million was adjusted to R 3.6 million since the Group`s Integrated Report. CONDENSED CONSOLIDATED Unaudited Unaudited Audited STATEMENTS OF COMPREHENSIVE INCOME Six Six Year Months Months ended ended % ended 29-Feb-12 28-Feb-11 Change 31-Aug-11 R`000 R`000 R`000
Revenue 26 304 26 092 1% 48 782 Asset Management fees - Fixed fees 6 483 9 544 (32%) 18 553 - Performance fees 7 411 7 991 (7%) 12 090 Asset Administration fees 5 576 4 184 33% 8 581 Financial Services fees 6 722 4 167 61% 8 916 Other 112 206 (46%) 642 Operating expenses (26 078) (22 412) (16%) (45 190) - Variable expenses (5 377) (3 483) (54%) (7 535) - Fixed expenses (18 409) (16 790) (10%) (33 466) - Non-cash flow expenses (2 292) (2 139) (7%) (4 189) Operating profit 226 3 680 94% 3 592
Finance income 729 791 (8%) 1 451 Dividends received - - - 110 Finance cost (24) (98) (76%) (165) Realised fair value adjustment of 247 - - - available-for-sale financial assets Other Income/(Expenses) (2) - - 48 Share of losses from associates (559) (203) 175% (241)
Profit before taxation 617 4 170 (85%) 4 795 Taxation (484) (1 439) (1 704) Profit for the period 133 2 731 (95%) 3 091
Other comprehensive income: Realised fair value adjustment of (6) - - available-for-sale financial assets Fair value adjustment of available- 97 49 (22) for-sale financial assets Total comprehensive income for the 224 2 780 (92%) 3 069 period
Profit for the period attributable to: Equity holders of the parent 133 2 717 3 104 Non-controlling interest - 14 (13) 133 2 731 3 091 Total Comprehensive income for the period attributable to: Equity holders of the parent 224 2 764 3 082 Non-controlling interest - 16 (13) 224 2 780 3 069 Number of shares in issue (`000) 40 760 39 939 39 939 Weighted average number of shares 40 760 39 939 39 939 (`000) Earnings per share (cents) 0.33 6.80 (95%) 7.77 Headline earnings per share (cents) 0.32 6.80 (95%) 7.77 Dividend per share 2.60 - 7.85 Reconciliation of earnings to headline earnings Profit for the period attributable 133 2 717 3 104 to equity holders of the parent Realised fair value adjustment of (6) - - available- for- sale financial assets through profit and loss Less: Taxation on realised fair value adjustment of available-for- 2 - - sale financial assets through profit and loss Headline earnings 129 2 717 3 104 CONDENSED CONSOLIDATED Unaudited Unaudited Audited STATEMENTS OF FINANCIAL POSITION as at as at as at 29-Feb-12 28-Feb-11 31-Aug-11 R`000 R`000 R`000 Non-current assets Plant and equipment 2 344 1 507 1 418 Investments 384 3 063 3 297 Equity accounted investments 10 119 10 716 10 678 Other intangible assets 20 854 25 302 21 803 Goodwill 21 731 20 259 21 731 Loans receivable 2 387 - - Deferred tax asset 337 985 250 58 156 61 832 59 177 Current assets Trade and other receivables 10 566 8 391 5 137 Cash and cash equivalents 24 291 22 639 25 070 34 857 31 030 30 207
Total assets 93 013 92 862 89 384 Equity Share capital and share premium 56 894 55 458 55 458 Treasury shares (149) (7 200) (149) Fair value adjustment reserve 88 66 (3) Shares to be issued 2 214 - - Non-controlling interest - 565 69 Accumulated earnings 18 453 31 322 22 938 77 500 80 211 78 313 Non-current liability Long-term liability 2 400 - - Deferred taxation liability 5 406 6 796 5 721 7 806 6 796 5 721 Current Liabilities Trade and other payables 6 736 5 567 5 078 Tax payable 971 288 272 7 707 5 855 5 350
Total equity and liabilities 93 013 92 862 89 384 - Net asset value per share (cents) 190.14 199.42 195.91 Net tangible asset value per share (cents) 85.66 85.34 86.91 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY R`000 Share Trea- Fair Shares Non- Accumu- Total capital sury value to be control- lated equity and shares adjust- issued ling earnings Share ment for interes premium avail- t
able-for- sale assets reserve
Balance at (7 200) 19 - 672 30 699 78 379 31 August 54 189 2010 Issue of - - - - - 1 269 share 1 269 capital Change in - 47 - 16 2 717 2 780 ownership - Total - - - (123) (2 094) (2 217) comprehen- - sive income for the period Balance at (7 200) 66 - 565 31 322 80 211 28 February 55 458 2011 Share (149) - - - - (149) repurchase - by the Share Incentive Trust Change in - - - (492) (3 141) (3 633) ownership - Cancel- 7 200 - - - (7 200) lation of - - treasury shares Dividend - - - (114) (3 241) (3 355) paid - Total - (69) - 110 5 198 5 239 comprehen- - sive income for the period Balance at (149) (3) - 69 22 938 78 313 31 August 55 458 2011 Issue of - - - - - 1 436 share 1 436 capital Shares to be 2 214 2 214 issued Change in - - - (69) (3 580) (3 649) ownership - Realised fair value - - (6) - - (6) adjustment of available- for-sale financial assets Total - 97 - - 133 230 comprehen- - sive income for the period Dividend - - - - (1 038) (1 038) paid - Balance at (149) 88 2 214 - 18 453 77 500 29 February 56 894 2012 CONDENSED CONSOLIDATED STATEMENTS OF CASH Unaudited Unaudited Audited FLOWS Six Six year Months Months ended ended ended 29-Feb-12 28-Feb-11 31-Aug-
11 R`000 R`000 R`000 Cash (utilised by)/generated from operations (1 252) 3 962 8 722 Finance income 729 791 1 451 Finance cost (24) (98) (165) Dividends received from associates - - 110 Dividends paid (1 038) (2 217) (3 355) Tax paid (358) (525) (742) Net cash (outflow)/inflow from operating (1 943) 1 913 6 021 activities
Acquisition of business - - (1 193) Increase in Loans Receivable (467) - - Disinvestment/(acquisition) of available-for- 3 247 (1 994) (2 300) sale financial assets Acquisition of non-controlling interest - - (900) Acquisition of intangible assets (134) (1 205) - Purchase of equipment (1 482) (438) (772) Net cash inflow/(outflow) from investing 1 164 (3 637) (5 165) activities Share repurchase by the Share Incentive Trust - - (149) Net cash outflow from financing activities - - (149) Movement in cash and cash equivalents for the (779) (1 724) 707 period Cash and cash equivalents at the beginning of 25 070 24 363 24 363 the period Cash and cash equivalents at the end of the 24 291 22 639 25 070 period SEGMENTAL ANALYSIS Asset Asset Financial Asset Other Total
Management Adminis Services Finance tration For the six R`000 months ended 29 February 2012 (Unaudited) Revenue 3 894 8 821 6 634 88 (3 133) 26 304 - External 10 691 8 821 6 634 88 70 26 304 - Inter- 3 203 - - - (3 203) - segment Profit for 3 609 1 632 (201) (64) (4 843) 133 the period Net asset 24 296 3 629 1 595 (163) 48 143 77 500 value
For the six R`000 months ended 28 February 2011 (Unaudited) Revenue 17 535 8 056 4 167 - (3 666) 26 092 - External 13 702 8 056 4 167 - 167 26 092
- Inter- 3 833 - - - (3 833) - segment Profit for 5 849 790 329 - (4 237) 2 731 the period Net asset 20 017 910 1 594 - 57 690 80 211 value For the year R`000 ended 31 August 2011 (Audited) Revenue 30 644 15 943 8 916 - (6 721) 48 782 - External 23 363 15 943 8 916 - 560 48 782 - Inter- 7 280 - - - (7 280) - segment Profit for 9 418 1 906 296 - (8 529) 3 091 the year Net asset 20 590 2 002 1 116 - 54 605 78 313 value
Other consists of consolidation entries, amortisation of intangible assets and support services expenses. Management review the operating results of the operating segments before the allocation of support services expenses. The comparative figures were restated due to the change in the composition of the reportable segments. 3. Dividends The company`s dividend policy is to declare dividends biannually at the discretion of the board of directors, determined by the financial position of the Group and equal to 80% of free cash flow of the Group. Free cash flow is calculated after making provision for cash reserves equal to three months` operating expenses, capital expenditure and budgeted acquisitions. Based on this policy the directors determined that no interim dividend will be paid. 4. Basis of preparation The interim results are presented on a consolidated basis and are prepared in accordance with the International Financial Reporting Standards, the requirements of IAS 34 (Interim Financial Reporting), the JSE Listings Requirements, and the Companies Act of South Africa and the AC 500 series of Interpretation as issued by the APB. The accounting policies applied are consistent with those applied in the previous interim period and previous financial year-end, except for the change in the allocation of support services charges. No material events occurred after the interim period which requires an adjustment to the financial information. These interim results have not been audited or reviewed by the Group`s auditors, PKF (Jhb) Inc. The condensed unaudited interim financial results are prepared by Anton de Klerk, the Chief Financial Officer of Efficient Group. Steve Booysen Heiko Weidhase Chairman Chief Executive Officer 30 March 2012 Non-executive directors: S Booysen*, MJ Giles*,Z Cele*,L Taylor*, L Gadd, M Cassim and R Paterson. Alternate non-executive directors: L Whitfield and RS Mogototoane * Independent Executive directors: DD Roodt, H Weidhase, AT de Klerk Registration number: 2006/036947/06 Registered address: 81 Dely Road, Hazelwood, 0081 Business address: 81 Dely Road, Hazelwood, Pretoria, 0081 Company secretary: Adv Rudi Barnard Transfer secretaries: Link Market Services South Africa (Pty) Ltd Sponsor: Java Capital Date: 30/03/2012 14:39:19 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story