Wrap Text
Unaudited Interim Financial Results for the six months ended 28 February 2013
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 28 FEBRUARY
2013
HIGHLIGHTS
- 40% increase in Revenue
- HEPS increased from 0.32 to 5.69 cents
The Group reports a loss after tax of R 248 000 for the six months ended 28
February 2013 (the reporting period), compared with a profit of R 133 000
for the six months ended 29 February 2012 (comparative period), as a result
of the impairment of the investment in Thebe Stockbroking (Pty)Ltd, as
disclosed in more detail in the business segmental results.
Fund management results continue to improve due to consistent results achieved
by the application of the embedded investment philosophy and process. The
successful rollout of the distribution business through Efficient Advise
continues to improve the financial results of the financial services business,
and the good returns achieved on surplus funds improved the overall performance
of the Group.
The Group reports headline earnings of R 2.3 million for the reporting period
(R 129 000 for the comparative period).
1.Financial Results
Statement of Comprehensive Income:
Revenue increased by 40% during the six months ended 28 February 2013. The
increase in revenue is mainly a result of the growth in the distribution network
(114% increase relative to the comparative period) and higher performance fees
(41% increase relative to the comparative period) earned by the asset management
division. Fixed fees earned during the reporting period from asset management and
administration are 2% lower than the fees earned in the comparative period due to
lower assets under management.
Operating expenses consist of:
Unaudited Unaudited Audited
Six Months Six Months Six Months
ended ended % ended
28-Feb-13 28-Feb-12 Change 31-Aug-12
R000 R000 R000 R000
Operating Expenses (34,837) (26,078) 34% (58,516)
Variable expenses (10,942) (5,377) 103% (13,213)
Fixed expenses (21,723) (18,409) 18% (40,871)
Non-cash flow expenses (2,172) (2,292) (-5%) (4,432)
Variable expenses consist mainly of commissions paid to our financial advisors and
asset administration costs. The increase in these expenses is attributable to and
in line with the expansion of the distribution network.
The increase in fixed expenses signifies the Groups investment in infrastructure
to support the growth in distribution, investment in the brand and realignment of
the asset management division.
Non-cash flow expenses relate to the amortisation of intangible assets and
depreciation of equipment. The depreciation charges for the reporting period were
lower than the charges for the comparative period.
The Group invested surplus cash in one of the unit trust funds managed by the asset
management division. The unrealised fair value adjustment on this investment
resulted in an increased return on surplus funds.
The Groups share of comprehensive losses from associates and the further
impairment of the investment in Thebe Stockbroking had a negative impact on the
profit for the reporting period.
The Group reported a loss of R 248 000 for the six months ended 28 February 2013.
Statement of Financial Position:
The terms of a loan to one of the Groups associates were amended to a loan with no
fixed repayment terms.
This loan now forms part of the equity accounted investments whereas it was
previously disclosed as a long-term receivable.
The net tangible asset value per share is 62.07 cents for the reporting period
compared to the net tangible asset value per share of 59.94 cents for the year
ended 31 August 2012.
The statement of financial position as at 29 February 2012 was restated due to a
prior year error as disclosed in the annual financial statements for the year ended
31 August 2012.
Cash flow:
The Group generated cash of R 4.3 million from operations as a result of profits
generated and the decrease in accounts receivable. An amount of R 1 million was
utilised for investment activities, including business acquisitions, increased
loans to associates and acquisition of equipment.
2. Business Segmental Results
The Group consists of three divisions namely Asset Management and -Administration,
Financial Services and Asset Finance.
Asset Management and Administration:
The focus of the asset management division, Efficient Select, is to deliver
consistent returns in line with specified investment objectives through a defined
Quality Investment Philosophy and disciplined investment process. Assets are
managed in a streamlined and competitive product range consisting of unit trust
investments (local and international) and private client share portfolios.
The contribution from the asset management division is dependent on the amount of
assets under management, fund performance relative to fund benchmarks, and where
applicable, a high watermark. Efficient Select is currently reviewing and
implementing a number of changes to product fee structures in order to align with
local and international best practices and market trends.
Efficient Select has R 2 544 million under management.
The administration of assets comprises liability- and asset administration.
Efficient Collective Investments administrates assets totalling R 2 275 million,
of which R 161 million are external funds. This division reported revenue of
R 22.3 million for the period under review, an increase of 14% to the comparative
period. Following the outsourcing of a component of the private share portfolio
management, margins were lower than during the comparative period and fixed expenses
increased by 33% resulting from the realignment project within the asset management
division. The division posted a profit after tax of R 4.3 million for the reporting
period compared to a profit of R 5.2 million for the comparative period.
Financial Services:
The core business of Efficient Financial Services trading as Efficient Advise entails
the delivery of comprehensive financial planning and investment management expertise
for the benefit of individual and corporate clients. This is achieved through the
provision of an integrated financial planning solution to appropriately address clients
requirements for financial planning, investment management, risk cover (including
short-term insurance and medical aid), employee benefit structures, cash management,
stockbroking, asset finance and fiduciary services.
Efficient Advise is focused on establishing a distribution network throughout southern
Africa. The distribution network consists of a national branch and advisory
infrastructure comprising 46 registered representatives, complimented by a highly
skilled support structure.
The financial services division reported revenue growth of 93% when compared to the
comparative period. This increase is directly linked to the expansion of the
distribution network. Variable costs increased in line with the growth in revenue and
the increase in fixed expenses is as a result of the greater support infrastructure.
This division reported a loss after tax of R 1.2 million (excluding stockbroking).
Part of the financial services offering is stockbroking through an associate, Thebe
Stockbroking . This associate reported a loss for the reporting period of R 282 000,
increasing the loss after tax reported by Efficient Advise.
EFG and Thebe Investment Corporation (Pty) Ltd, as joint shareholders in Thebe
Stockbroking, explored various avenues regarding the possibility of incorporating
the stockbroking business under the Efficient brand, unfortunately without success.
The EFG Board, in the absence of exercising control over Thebe Stockbroking or a change
in the strategic direction of that company, is not convinced that the future economic
benefits from Thebe Stockbroking will exceed the carrying value of this investment.
The investment was accordingly impaired, which further increased the loss of this
division.
At the end of February 2013, Efficient Advise had R 2 105 million of Assets under
Advice compared to R 1 323 million at the end of August 2012.
Asset Finance:
Efficient Asset Finance offers an asset finance intermediary service to the
Efficient Advise distribution channel as well as other markets.
This division reported revenue of R 1.5 million at a gross margin of 34%. Fixed
expenses amounted to R 589 000 for the reporting period and the division posted an
after tax loss of R 68 000.
3. Acquisition Activities
As part of the extension of the financial services distribution network Efficient
Financial Services (Pty) Ltd acquired various financial advisory client bases for
R 437 000. The transactions were effective at various dates during the reporting
period and the purchase prices are paid/payable in cash up to 12 months after the
effective dates.
4. Strategy
The Groups strategy is focused on:
- Enhancing distribution through the development of the distribution network;
- Increasing assets under management, administration and advice;
- Expanding the current product offering of the asset finance division to other
related services and products;
- Integrating the various media channels utilised in our communications with
clients and the market to ensure a focused and cohesive brand strategy.
5. Dividends
The companys 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 can be paid.
6. Basis of preparation
The interim results are presented on a consolidated basis and are prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards and presentation and disclosure 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 where indicated
differently. 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 Groups auditors, KPMG Inc. The condensed unaudited
interim financial results are prepared by Anton de Klerk, the Chief Financial
Officer of Efficient Group.
7. Change to the board of directors
Mickey Giles and Ronald Paterson resigned as directors and Jerry Mabena joined
the board during this period.
Steve Booysen Heiko Weidhase
Chairman Chief Executive Officer
10 April 2013
Non-executive directors: S Booysen*, Z Cele*,L Taylor*, J Mabena, and M Cassim.
* Independent
Executive directors: DD Roodt, H Weidhase, AT de Klerk
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 (Pty) Ltd
Efficient Group Unaudited Interim Financial Results For the six months ended
28 February 2013
CONDENSED CONSOLIDATED Unaudited Unaudited Audited
STATEMENT OF COMPREHENSIVE Six Months Six Months Year
INCOME ended ended % ended
28-Feb-13 28-Feb-12 Change 31-Aug-12
R'000 R'000 R'000
Revenue 36 880 26 304 40% 55 433
Asset Management fees
- Fixed fees 11 832 12 059 (2%) 23 983
- Performance fees 10 425 7 411 41% 13 917
Financial Services income 14 374 6 722 114% 17 007
Other 249 112 122% 526
Operating expenses (34 837) (26 078) 34% (58 516)
- Variable expenses (10 942) (5 377) 103% (13 213)
- Fixed expenses (21 723) (18 409) 18% (40 871)
- Non-cash flow expenses (2 172) (2 292) (5%) (4 432)
Operating profit/(loss) 2 043 226 804% (3 083)
Finance Income 721 729 (1%) 1 537
Finance Cost (10) (24) 58% (26)
Profit on sale of equipment - - - 436
Realised fair value adjustment of - 247 100% 247
investment designated at fair
value through profit or loss
Unrealised fair value adjustment
ofinvestment designated at fair
value through profit or loss 786 - - 285
Remeasurement of long-term liability 305 - - 316
Other Income/(expenses) 90 (2) 4600% (3)
Impairment of investment in
associates (2 555) - - (6 010)
Share of comprehensive losses from
associates (574) (559) 3% (1 983)
Profit/(loss) before taxation 806 617 31% (8 284)
Taxation (1 054) (484) (147)
Profit/(loss) for the period (248) 133 (286%) (8 431)
Other comprehensive income:
Realised fair value adjustment of
available-for-sale financial assets - (6) (100%) (6)
Unrealised fair value adjustment of
available-for-sale financial assets 35 97 (64%) 48
-
Total comprehensive income for the
period (213) 224 (195%) (8 389)
Profit/(loss) for the period
attributable to:
Equity holders of the parent (234) 133 (276%) (8 407)
Non-controlling interest (14) - - (24)
(248) 133 (286%) (8 431)
Total Comprehensive income/(loss)
for the period attributable to:
Equity holders of the parent (199) 224 (189%) (8 365)
Non-controlling interest (14) - - (24)
(213) 224 (195%) (8 389)
Number of shares in issue ('000) 40 760 40 760 40 760
Weighted average number of shares
('000) 40 760 40 760 40 380
Diluted Weighted average number
of shares ('000) 40 760 40 730 40 380
Earnings/(loss) per share (cents) (0.57) 0.33 (276%) (20.82)
Diluted earnings/(loss) per share
(cents) (1.11) 0.33 (441%) (21.38)
Headline earnings per share (cents) 5.69 0.32 1699% (6.71)
Diluted headline earnings per share
(cents) 5.15 0.32 1527% (7.28)
Headline earnings/(loss) are
calculated as follows:
Profit for the period atttributable
to equity shareholders of the parent (234) 133 (8,407)
Impairment of investment in
associate 2,555 - 6,010
Profit on disposal of equipment - - (436)
Taxation on disposal of equipment - - 122
Realised fair value adjustment of
available-for-sale financial assets
through profit and loss - (6) -
Less: Taxation on realised fair
value adjustment of available-
for-sale financial assets through
profit and loss - 2 -
Headline earnings/(loss) 2,321 129 (2,711)
CONDENSED CONSOLIDATED STATEMENT Unaudited
OF FINANCIAL POSITION Unaudited as at Audited
as at Restated as at
28-Feb-13 28-Feb-12 31-Aug-12
R'000 R'000 R'000
Non-current assets
Equipment 720 2 344 649
Goodwill 23 617 23 494 23 494
Intangible assets 19 364 20 854 20 784
Investments 6 446 384 5 625
Equity accounted investments 5 654 10 119 6 865
Long-term receivable 1 871 2 387 2 902
Deferred taxation asset 260 337 256
57 932 59 919 60 575
Current assets
Trade and other receivables 7 366 10 566 9 583
Cash and cash equivalents 19 210 24 291 15 861
Short-term portion of long-term
receivables 725 - 1 042
Taxation receivable 390 - 19
27 691 34 857 26 505
Total assets 85 623 94 776 87 080
Equity
Total equity attributable to equity
holders of the parent 68 281 79 263 68 480
Share capital and share premium 58 657 58 657 58 657
Shares to be issued - 2 214 -
Treasury shares (149) (149) (149)
Fair-value adjustment reserve 74 88 39
Retained earnings 9 699 18 453 9 933
Non-controlling interest (58) - (44)
Total Equity 68 223 79 263 68 436
Non-current liability 5 972 7 806 7 152
Long-term liabilities 1 994 2 400 2 298
Deferred taxation liability 3 978 5 406 4 854
Current liabilities 11 428 7 707 11 492
Trade and other payables 9 092 6 736 9 615
Short-term portion of long-term liability 1 250 - 1 250
Taxation payable 1 086 971 627
Total equity and liabilities 85 623 94 776 87 080
Net asset value per share (cents) 167.52 194.46 169.59
Net tangible asset value per share (cents) 62.07 85.66 59.94
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES
IN EQUITY
R'000 Share
capital Shares Fair-value Non-control
and Share to be Treasury adjustment Retained ling Total
premium issued shares reserve earnings interest Equity
Balance at 31
August 2011 57 221 - (149) (3) 22 938 69 80 076
Issue of share
capital 1 436 - - - - - 1 436
Shares to be
issued - 2 214 - - - - 2 214
Acquisition of
minority interest
in Efficient
Financial Services
(Pty) Ltd - - - - (3 580) (69) (3 649)
Realised fair value
adjustment of
available-for-sale
financial asset - - - (6) - - (6)
Total comprehensive
income for the period - - - 97 133 - 230
Dividend paid - - - - (1 038) - (1 038)
Balance at 29
February 2012
(Restated) 58 657 2 214 (149) 88 18 453 - 79 263
Shares to be issued
transferred to long
term liability - (2 214) - - - - (2 214)
Disposal of 20% of
the investment in
Efficient Asset
Finance (Pty) Ltd - - - - 20 (20) -
Total comprehensive
income for the period - - - (49) (8 540) (24)(8 613)
Balance at 31
August 2012 58 657 - (149) 39 9 933 (44) 68 436
Total comprehensive
income for the period - - - 35 (234) (14) (213)
Balance at 28
February 2013 58 657 - (149) 74 9 699 (58) 68 223
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS Unaudited Unaudited Audited
Six Months Six Months year
ended ended ended
28-Feb-13 28-Feb-12 31-Aug-12
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 5 745 (1 252) 1 241
Finance income 536 729 1 537
Finance cost (10) (24) (26)
Dividends paid - (1 038) (1 038)
Tax paid (1 968) (358) (1 154)
Net cash flow from operating activities 4 303 (1 943) 560
Cash flows from investing activities
Acquisition of business (188) (134) (2 453)
Long-term loan to associate (526) - (2 265)
Decrease/(Increase) in long-term receivable 144 (467) (1 624)
Acquisition of available-for-sale financial
asset - - (5 000)
Proceeds on disposal of available-for-sale
financial asset - 3 247 3 247
Acquisition of non-controlling interest - - -
Proceeds on disposal of equipment - - 1
Acquisition of equipment (384) (1 482) (1 675)
Net cash outflow from investing activities (954) 1 164 (9 769)
Movement in cash and cash equivalents for
the period 3 349 (779) (9 209)
Cash and cash equivalents at the beginning
of the period 15 861 25 070 25 070
Cash and Cash equivalents at the end of
the period 19 210 24 291 15 861
SEGMENTAL ANALYSIS
R'000 Asset Financial Asset Other Total
Management Services Finance
and
Administration
For the six months ended
28 February 2013:
Revenue 22 257 12 833 1 541 249 36 880
Profit for the period 4 257 (4 065) (68) (372) (248)
Net asset value 28 051 (3 151) (38) 43 361 68 223
For the six months ended 29
February 2012:
Revenue 19 512 6 634 88 71 26 305
Profit for the year 5 241 (201) (64) (4 843) 133
Net asset value 27 925 1 595 (163) 49 906 79 263
For the year ended 31 August
2012:
Revenue 45 097 18 641 992 (2 183) 62 547
- External 45 097 16 016 992 442 62 547
- Inter-segment - 2 625 (2 625) -
Profit for the year 1 603 (8 552) (121) (1 361) (8 431)
Net asset value 23 761 632 (220) 44 263 68 436
"Other consists of consolidation entries, amortisation of intangible assets and
Efficient Capital. The comparative figures were restated due to the change in
the composition of the reporting segments.
Transactions between segments take place at arm's length.
Date: 24/04/2013 05:30:00 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.