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ANCHOR GROUP LIMITED - Unaudited interim results ended 30 June 2015, Declaration of Dividend, Detailed Cautionary & Renewal of Cautionary

Release Date: 06/08/2015 17:41
Code(s): ACG     PDF:  
Wrap Text
Unaudited interim results ended 30 June 2015, Declaration of Dividend, Detailed Cautionary & Renewal of Cautionary

ANCHOR GROUP LIMITED
(formerly Andotorque Investments Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2009/005413/06)
(“Anchor” or “the Company”)
ISIN Code: ZAE000193389      JSE Code: ACG


UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015, DECLARATION OF
DIVIDEND NUMBER 3, DETAILED CAUTIONARY ANNOUNCEMENT AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT


HIGHLIGHTS
- Adjusted HEPS up 52% to 20.8 cents per share (13.7 cents to 30 June 2014).
- Adjusted Headline Earnings up 244% to R29.2 million (R8.5 million to 30 June 2014).
- Assets under management and advice grew by 74% to R15 billion (R8.6 billion at
  31 December 2014).
- First material acquisition of Methwold Investments Proprietary Limited (“RCI”), with remaining
  cash balance of R218 million.
- Company remains under cautionary.
- Number of shareholders increased from 350 to over 3,500.
- Declaration of interim dividend of 11 cents per share.

COMMENTARY
Anchor Group began managing assets in 2012 and has grown rapidly to reach group-wide
assets at 30 June 2015 of R15 billion (R13.5 billion under management and R1.5 billion under
advice). These are primarily private client and retail assets, with recent growth in the corporate
and institutional markets.

The asset management subsidiary Anchor Capital Proprietary Limited (“Anchor Capital”), which
is the primary business in the group, runs segregated portfolios (both locally and internationally)
and has a series of funds in both the Collective Investment Scheme (“CIS”) and hedge
categories. In addition, with effect from 1 June 2015, Anchor Group acquired a controlling
interest in RCI.

The long term strategy of the Anchor Group is to become a major player in South African asset
management, with an increasing focus on offshore investment. This will be achieved by both
organic and acquisitive growth.

RESULTS
The turnover of the group grew by 184% to R80.1 million (2014: R28.2 million) for the six months
ended 30 June 2015. This was driven by growth in group-wide assets under management and
advice, which ended the period at R15 billion. This R6.4 billion increase represents 74% growth on
the assets under management of R8.6 billion at 31 December 2014. Of this increase, R3.8 billion
was by way of the acquisition of RCI with effect from 1 June 2015. The assets are comprised of
assets under management of R13.5 billion (31 December 2014: R7.3 billion) and assets under
advice of R1.5 billion (31 December 2014: R1.3 billion). The yield on average assets under
management for the period was 1.5% (2014: 1.6%). Anchor Capital continued to attract organic
net inflows in excess of R300 million per month.
Costs grew by 146% to R44.2 million (2014: R17.9 million) which primarily relate to:

1.   Variable costs growing in line with turnover.
2.   Investment in distribution capability to accelerate future growth.
3.   Compliance and systems to improve the client experience.
4.   Technology for a new internet based investment offering.
5.   Corporate finance and legal costs relating to completed and future acquisitions.

Turnover grew by 184% faster than the growth in costs, resulting in an operating margin of 45%
(2014: 36%), achieving positive operating leverage.

Operating profits grew by 251% to R35.8 million (2014: R10.2 million).

The share of profits from equity accounted associates was R0.9 million, reflecting a turnaround
from the prior period loss of R0.4 million. The major positive contributor, Anchor Securities, now
has over R2.7 billion of assets under management and advice (the R2 billion non-discretionary
component is not included in the Assets Under Management (“AUM”) figures mentioned
previously).

Headline earnings grew by 311% to R29.2 million (2014: R7.1 million), while adjusted headline
earnings grew by 244% to R29.2 million (2014: R8.5 million).

The dilutive impact of the weighted average number of shares is due to the issue of shares as
part of the listing, issue for cash as well as the employee share incentive scheme.

Adjusted headline earnings per share grew 52% to 20.8 cents (2014: 13.7 cents). Adjusted
headline earnings are calculated by the group in order to reflect the sustainable earnings of the
group.

The business is highly cash generative and 82% of operating profits were generated in cash. The
sharp increase in turnover saw an increase in working capital, although the nature of the
business is such that trade debtors are generally paid within 10 days of month end.

Shareholders? equity grew to R387 million (2014: R18.7 million), as a result of the profit generated
and the issue of new shares. The net asset value per share is 273 cents. Cash and other liquid
instruments were R218 million at 30 June 2015.

OPERATIONAL REVIEW

Asset management
Anchor Capital is proceeding well, with the growth in assets previously outlined. The business
welcomed a record number of new clients and private client inflows remain strong. We are
particularly pleased with growth from two new segments:

-    Anchor Capital began marketing to pension funds and other institutional clients and the
     initial signs are positive, although the sales cycle is longer than that to which we are
     accustomed. A number of institutional mandates were awarded, with the funds to flow in
     the second half of the year.
-    We received encouraging support from the financial advisor community and investments in
     Anchor-branded CIS assets increased by 106% to over R1.7 billion from R838 million at
     31 December 2014.

Group marketing initiatives are proving effective. Anchor Capital has achieved net inflows of
over R300 million per month consistently over the last two years, with a notable increase during
the past nine months since the listing of the company in September 2014. The profile created by
the listing of the business has had a materially positive impact on the number of new clients
joining Anchor Capital every day.

The investment performance of the Group has been excellent since inception and it is ahead of
stipulated benchmarks across all investment mandates, both locally and offshore. The majority
of assets are managed in segregated portfolios where the average client performance has
been excellent. The Group's flagship CIS, the Anchor BCI Equity Fund, was the top performing
unit trust in its category (out of +/-180) for the 12 months to June 2015, with a return of 30.1%
compared to a peer average of 5.5%. This fund is first in its category over 6 months, 1 year and
2 years.

The Anchor product suite was expanded during the period under review and now includes the
following:
-    In the local CIS category: Anchor BCI Equity, Anchor BCI SA Equity, Anchor BCI Managed,
     Anchor BCI Worldwide Flexible and Anchor BCI Flexible Income. Two fixed income funds and
     a property fund will be launched imminently.
-    Foreign CIS's on the Sanlam Ireland platform: Anchor Global Equity and Anchor Global
     Capital Plus.

Anchor Capital has a long term strategy of being a meaningful South African asset
management company and places a great deal of emphasis on fundamental research.
Accordingly it has constructed a large investment team relative to its size. The group has eight
CA's and 14 CFA's/CFA-candidates among its 20-strong investment team.

Acquisitions
With effect from 1 June 2015, Anchor acquired an initial 66% of the issued share capital of RCI for
R92 million which was settled by means of a cash amount of R73 million and the balance of R19
million through the issue of 1.9 million shares at R10 per share. The remaining 34% will be acquired
in four tranches based on a price earnings ratio of 8 times audited profit after taxation
commencing from the year ending 31 December 2016. Only one month of earnings are
included in the interim results to 30 June 2015.

STRATEGY AND NEW INITIATIVES
Anchor Capital is in its fourth year and has achieved a great deal, but it does typically take five
to 10 years to build an asset management business. Anchor Capital is a young and dynamic
asset management business, which maintains its focus on quality and investment excellence,
but also aims to do things differently and challenge the status quo. The private client market in
South Africa has shown a strong appetite to support a new player. To penetrate other segments
of the market, longer track records are required. The company now has a three year track
record in its current form and some of its CIS products now have a two year track record. As the
track record lengthens and the asset base grows, we become a viable asset management
alternative for bigger pools of assets. This is an industry where size begets size and we are
encouraged by the early successes in winning mandates with bigger clients. Our critical mass
has enabled us to conclude deals with South Africa?s major LISP's, which increases access to a
broader set of potential investors.

Anchor Capital has taken a non traditional approach to building an asset management
business by investing heavily in marketing and distribution capabilities , which is bearing fruit
through the growth of assets under management, and consequent financial leverage.
The Anchor Group?s strategy is as follows:

1. To build a world-class investment product range across asset classes and geographies:
   -   This is well underway and by year-end the business will have a CIS product range which
       will service all investment needs, managed by a now well-established, extremely
       competent and strongly performing investment process.
   -   We will build further capacity and capability in the fixed income, hedge and offshore
       categories, both organically and acquisitively. These initiatives should be complete by
       year-end and the focus thereafter will be to leverage off this product offering by
       increasing assets under management. It is unlikely that further material asset
       management acquisitions will follow next year, as the Anchor offering will be
       comprehensive and complete.
   -   There is a strong focus on offshore, both for funds which are Rand-based and for funds
       which have been externalised. A United Kingdom-domiciled asset management business
       is a strategic objective in the short term. The Group is considering various alternatives to
       achieve this objective.
2. To build distribution capacity and capability to generate growth in assets under
   management. This will be achieved in two ways:
   -   Marketing to traditional channels who outsource the asset management function to third
       party asset managers. This includes financial advisors, institutional investors, multi-
       managers and fund-of-funds. We continue to add high quality personnel to this pursuit.
   -   Marketing directly to clients, primarily in the private client space. We continue to employ
       individuals who can attract assets and should have over 25 individuals who sign on
       clients by year end. We will also pursue partnerships and acquisitions of businesses which
       have a distribution capability and existing client base. This strategy will prevail well
       beyond this financial year, although it is our intention to expand materially this year.

Aside from initiatives already mentioned, current and planned initiatives and achievements
include:

-   Anchor Financial Services: This business has been formed with a focus on gathering assets
    under management for Anchor Capital. In line with evolving regulations, distribution and
    asset management are best practiced in separate entities. Anchor Financial Services is
    spearheading Anchor Group?s thrust into the institutional and financial advisory markets
    through a combination of organic growth and strategic acquisitions and partnerships.
-   Utilising information technology: The group has been appointed as the asset manager to
    Bizank, a new internet-based investment offering, targeted at the 25 to 35 year-old category.
    It aims to be first to market in this category in South Africa. The proliferation of so-called
    “robo-advisors” is a global phenomenon and Bizank is set to be a major player in this space
    in South Africa. Bizank will launch in the second half of 2015.
-   New locations: The group is expanding its sales and portfolio management capabilities
    throughout the country. We have critical mass in Johannesburg, but aim to add professionals in
    our Cape Town, Durban and Pretoria offices. The sales force will more than double over the
    course of 2015. We are particularly pleased with the strides made in our new office in
    Durban, which now has 13 employees and is achieving impressive early successes. This office
    has a medium term target of R4 billion of assets under management.
-   New businesses: Anchor is a young, entrepreneurial group and will partner with other
    businesses, in various stages of development. Asset management is not a capital intensive
    industry and significant value can be created by backing talented individuals who have the
    skills to deliver investment performance and attract assets under management. The Group
    has backed three new ventures with capital and expertise.

PROSPECTS
The prospects for the remainder of 2015 are positive.

The key driver for the business is assets under management, which averaged R8.8 billion for the
six months under review. The second half of the 2015 financial year began with R13.5 billion of
assets under management. Assets under management and advice have grown by over
R1 billion in July 2015, which is a record month. The results for the forthcoming six month period
will also be influenced by:

-   The inclusion of RCI for a full six months, compared to one month in the first half of the year.
-   The result of the current negotiations which has resulted in the prevailing cautionary
    announcement.
-   The impact on assets under management from a significantly larger distribution force and
    the progress of Anchor Financial Services.
-   The performance of local and global markets and Anchor Capital?s relative performance,
-   The exchange rate between the Rand and other currencies (we estimate across the
    business that the Rand hedge component is approximately 70%).
-   An increase in shares in issue. The average shares in issue for the second half of 2014 was
    85.4 million and the starting shares in issue at 1 July 2015 are 142.2 million. This will be offset by
    the returns earned on the cash raised by the issue of shares and the subsequent deployment
    of this capital. The dilutive impact is lower in the second half of this financial year than the
    period under review.

In its listing prospectus, Anchor Group published a forecast of headline earnings per share of
27.6 cents for the financial year ended 31 December 2015. The Board of Directors has previously
released a trading statement indicating that it expects this forecast to be exceeded by at least
20%.

The Board of Directors is considering a move to the Main Board of the JSE after 31 December
2015.

A presentation on the results under review is available on www.anchorgroup.co.za.

CHANGES TO THE BOARD OF DIRECTORS
During the period, the following director changes occurred:

-   Mr Ivan Clark retired.
-   Mr David Rosevear was appointed as the new Financial Director.
-   Mr Nick Dennis was appointed as an independent non-executive director.
-   Mr Todd Kaplan changed his role from Financial Director to Chief Operating Officer.

There were no other changes to the Board of Directors during the period under review.

ISSUE OF SHARES FOR CASH
No shares were issued for cash during the six months ended 30 June 2015.
Condensed consolidated statement of comprehensive income

                                                               6 months      6 months    12 months
                                            Percentage        Unaudited     Unaudited      Audited
 R ‘000                                         change        30-Jun-15     30-Jun-14    31-Dec-14
 Revenue                                         184%            80 084        28 172       82 367
 Operating Expenses                              146%          (44 261)      (17 965)     (53 732)
 Operating profit                                251%            35 823        10 207       28 635
 Accounting gain on acquisition of former
 Investment                                                           -             -        3 888
 Finance Income                                                   3 426             -        1 322
 Finance Costs                                    71%              (37)         (126)        (441)
 Share of profits from associates                321%               891         (403)          478
 Profit before taxation                          314%            40 103         9 678       33 882
 Taxation expense                                308%          (10 473)       (2 564)      (9 627)
 Profit for the period                           317%            29 630         7 114       24 255
 Other comprehensive income                                           -             -            -
 Total comprehensive income for the period       317%            29 630         7 114       24 255

 Attributable to:
 Owners of the parent                            311%            29 239         7 114       24 255
 Non-controlling interest                                           391             -            -
                                                 317%            29 630         7 144       24 255

 Earnings and headline earnings per share
 Earnings attributable to shareholders           317%            29 630         7 114       24 255
 Non-controlling interest                                           391             -            -
 Earnings attributable to owners of the
 parent                                          311%            29 239         7 114       24 255
 Accounting gain on acquisition of former
 investment                                                           -             -      (3 888)
 Related tax on sale of investment                                    -             -        1 089
 Headline earnings attributable to ordinary
 shareholders                                    311%            29 239         7 114       21 456
 Pre-existing share based commitment                                  -         1 391        1 391
 Adjusted headline earnings attributable to
 ordinary shareholders                           244%            29 239         8 505       22 847

 Number of shares in issue                       127%           142 159        62 600      140 295
 Weighted average number of shares in issue      127%           140 304        61 933       75 888
 Share incentives                                                 1 025             -        2 467
 Diluted weighted average number of shares
 in issue                                       128%            141 329        61 933       78 354
 Earnings per share (cents)                      81%               20.8          11.5         32.0
 Diluted earnings per share (cents)              80%               20.7          11.5         31.0
 Headline earnings per share (cents)             81%               20.8          11.5         28.3
 Diluted headline earnings per share (cents)     80%               20.7          11.5         27.4
 Adjusted headline earnings per share (cents)    52%               20.8          13.7         30.1
 Diluted adjusted headline earnings per share
 (cents)                                         51%               20.7          13.7         29.2

Condensed consolidated statement of financial position

                                                          6 months     6 months    12 months
                                            Percentage   Unaudited    Unaudited      Audited
 R '000                                         change    30-Jun-15    30-Jun-14   31-Dec-14
 Assets
 Non-Current Assets
 Equipment                                     77%           2 919        1 645        1 837
 Goodwill                                    3571%         114 511        3 119       24 401
 Intangible assets                           1027%           6 256          555        6 612
 Investments in associates                   2730%          21 194          749        9 907
 Other financial assets                                      1 183                       796
 Deferred tax                                 272%           1 606          432          526
                                             2172%         147 669        6 500       44 079
 Current Assets
 Other financial assets                       444%          20 852        3 832        8 615
 Current tax receivable                                         83
 Trade and other receivables                  214%          24 682        7 863       21 895
 Cash and cash equivalents                   1762%         218 420       11 728      303 108
                                             1027%         264 037       23 423      333 618
 Total Assets                                1271%         411 706       29 923      377 697

 Equity and Liabilities

 Equity
 Share Capital                               3686%         331 924         8 766     317 164
 Reserves                                     784%          21 196       (3 099)      15 389
 Retained income                              155%          33 316       13 060       20 535
 Equity Attributable to Equity Holders of    1964%         386 436       18 727      353 088
 Parent
 Non-controlling interest                                    1 520
 Total Equity                                1972%         387 956       18 727      353 088

 Liabilities
 Non-Current Liabilities
 Deferred Tax                                                1 845            -          847

 Current Liabilities
 Other financial liabilities                  -13%           3 569        4 123        4 001
 Current tax payable                          229%           8 012        2 438        1 703
 Trade and other payables                     123%          10 324        4 635       18 058
                                               96%          21 905       11 196       23 762
 Total Liabilities                            112%          23 750       11 196       24 609
 Total Equity and Liabilities                1276%         411 706       29 923      377 697

 Net asset value per share                    812%             273           30          252
 Net tangible asset value per share           682%             188           24          230

Condensed consolidated statement of cash flows
                                                   6 months      6 months    12 months
                                                  Unaudited     Unaudited      Audited
R ‘000                                            30-Jun-15     30-Jun-14    31-Dec-14
Cash flows from operating activities
Cash generated from operations                       29 358         9 451       25 916
Interest income                                       3 426            36        1 322
Finance costs                                          (37)         (133)        (441)
Tax paid                                            (5 392)             -     (10 718)
Net Cash from operating activities                   27 355         9 354       16 079

Cash flows from utilised in investing
activities
Purchase of equipment                               (1 250)       (1 136)      (1 661)
Expenditure on intangible asset                           -         (108)      (1 565)
Intangible asset acquired through                         -                    (3 800)
business combinations
Increase in investments in associates              (11 288)       (1 151)      (9 907)
Acquisition of subsidiary                          (70 855)                        339
Acquisitions of investments                        (12 624)         (493)      (6 071)
Net Cash utilised in investing
activities                                         (96 017)       (2 888)     (22 665)

Cash flows from financing activities
Repayment of other financial liabilities                432       (1 738)      (2 924)
Increase in stated capital / share
capital                                                   -                    308 398
Dividend paid                                      (16 458)                    (2 778)
Net Cash from financing activities                 (16 026)       (1 738)      302 696

Total cash and cash equivalents
movement for the year                              (84 688)         4 729      296 110
Cash and cash equivalents at the
beginning of the year                               303 108         7 000        7 000
Total cash and cash equivalents at
end of the year                                     218 420        11 728      303 110

Statement of Changes in Equity
                                                                  Equity                                              Total
                                                                 Reserve                                        Attributable
                                                                  due to                                          to equity
                                                               change in    Shares to              Retained       holders of         Non-
                                           Share     IFRS 2   control of   be issued      Total   income /      the group /   controlling     Total
 R ’000                                  capital    Reserve     interest    Reserve    Reserves       (loss)      company        interest    equity

 Balance at 01 January 2014                    1                                                     5 943            5 943         2 089     8 032
 Changes in equity
 Issue of shares to acquire non-
 controlling interest                      8 974                (3 099)                 (3 099)                       5 875      (2 089)       3 786
 Buy back of shares                      (1 600)                                              -                     (1 600)                  (1 600)
 Issue of shares to employee               1 391                                              -                       1 391                    1 391
 Total comprehensive Income for the
 six month period                                                                             -      7 114           7 114                     7 114
 Total changes                             8 765          -     (3 099)            -    (3 099)      7 114          12 780       (2 089)      10 691
 Balance at 30 June 2014                   8 766          -     (3 099)            -    (3 099)     13 057          18 723             -      18 723
 Changes in equity
 Issue of shares during the year         308 398                                              -                    308 398                   308 398
 Movement in reserve                                              3 099                   3 099     (6 885)         (3 786)                  (3 786)
 Shares to be issued to acquire
 subsidiary                                                                  14 760      14 760                     14 760                    14 760
 Share based payments                                  629                                  629                         629                      629
 Dividends Paid                                                                               -     (2 778)         (2 778)                  (2 778)
 Total comprehensive Income for the
 six month period                                                                             -     17 141          17 141              -     17 141
 Total changes                           308 398       629        3 099      14 760      18 488      7 478         334 364              -    334 364
 Balance at 31 December 2014             317 164       629            -      14 760      15 389     20 535         353 087              -    353 087
 Changes in equity
 Issue of shares to acquire subsidiary                                       18 640      18 640                      18 640                   18 640
 Acquisition of subsidiary                                                                    -                           -        1 129       1 129
 Movement in reserve                      14 760                            (14 760)   (14 760)                           -                        -
 Issue of shares during the year                                                              -                           -                        -
 Share based payments                                 1 927                               1 927                       1 927                    1 927
 Dividends Paid                                                                               -   (16 458)         (16 458)                 (16 458)
 Total comprehensive Income for the
 six month period                                                                             -     29 239           29 239          391      29 630
 Total changes                            14 760      1 927            -      3 880       5 807     12 781           33 348        1 520      34 868
 Balance at 30 June 2015                 331 924      2 556            -     18 640      21 196     33 316          386 435        1 520     387 955

Condensed consolidated segmental information

30 June 2015                        Anchor Group      Anchor   Ripple Effect 4    Eliminations      Total
R ‘000                                               Capital 
Revenue                                   11 472      72 643             1 455         (5 486)     80 084
Operating expenses                       (6 098)    (42 253)           (1 396)           5 486   (44 261)
Operating profit                           5 374      30 390                59               -     35 823
Other Income                                   -           -                 -               -          -
Interest Income                            2 921         505                 -               -      3 426
Share of profits from associates             953        (62)                 -               -        891
Finance Costs                               (37)                             -               -       (37)
Profit before tax                          9 211      30 833                59               -     40 103

31 December 2014                    Anchor Group      Anchor   Ripple Effect 4    Eliminations      Total
                                                     Capital
Revenue                                    2 415      78 125             3 564         (1 737)     82 367
Operating expenses                       (2 912)    (49 305)           (3 254)           1 737   (53 734)
Operating profit                           (497)      28 820               310               -     28 633
Other Income                                   -       3 888                 -               -      3 888
Interest Income                            1 034         289                 -               -      1 322
Share of profits from associates             340         138                 -               -        478
Finance Costs                              (396)        (45)                 -               -      (441)
Profit before tax                            480      33 090               310               -     33 880

30 June 2014                        Anchor Group      Anchor   Ripple Effect 4    Eliminations      Total
                                                     Capital
Revenue                                        -      27 120             1 052               -     28 172
Operating expenses                       (1 453)    (14 867)           (1 645)               -   (17 965)
Operating profit                         (1 453)      12 253             (593)               -     10 207
Interest Income                                -           -                 -               -          -
Share of profits from associates                       (403)                 -                      (403)
Finance Costs                              (126)           -                 -                      (126)
Profit before tax                        (1 579)      11 850             (593)               -      9 678
                                                          
30 June 2015              Anchor Group    Anchor Capital    Ripple Effect 4   Eliminations     Total
Assets                         313 268           117 195              3 117       (23 480)   410 100
Non-Current Assets              82 730            11 944              1 059         50 330   146 063
Current Assets                 230 538           105 251              2 057       (73 809)   264 037
Liabilities                      1 248            61 301              4 368       (44 773)    22 144
Non-Current Liabilities              -            18 865                  -       (18 626)       239
Current Liabilities              1 248            42 436              4 368       (26 147)    21 905
Equity                         312 020            55 894            (1 251)         21 293   387 956

                                                           
31 December 2014          Anchor Group    Anchor Capital    Ripple Effect 4   Eliminations     Total
Assets                         319 579            91 891              3 857       (37 629)   377 698
Non-Current Assets              19 644            26 910              1 079        (3 554)    44 079
Current Assets                 299 935            64 981              2 778       (34 075)   333 619
Liabilities                        533            64 243              4 704       (44 870)    24 609
Non-Current Liabilities            215            43 992                  -       (43 360)       847
Current Liabilities                318            20 251              4 704        (1 510)    23 763
Equity                         319 046            27 648              (847)          7 241   353 088
                                                            
30 June 2014              Anchor Group    Anchor Capital    Ripple Effect 4    Eliminations    Total
Assets                           8 460            21 598                910         (1 045)   29 923
Non-Current Assets               2 826             2 864                653             157    6 500
Current Assets                   5 634            18 734                257         (1 202)   23 423
Liabilities                      5 068             7 338                500         (1 710)   11 196
Non-Current Liabilities
Current Liabilities              5 068             7 338                500         (1 710)   11 196
Equity                           3 392            14 260                410             665   18 727

BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies and method of measurement and recognition applied in the
preparation of these condensed consolidated unaudited interim results are in terms of
International Financial Reporting Standards (“IFRS”) and are consistent with those applied in the
audited annual financial statements for the previous year ended 31 December 2014.

The unaudited results are prepared in accordance with IFRS and are presented in terms of the
minimum disclosure requirements set out in International Accounting Standards (“IAS”) 34 –
Interim Financial Reporting, as well the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council, the JSE Listings Requirements and the requirements of the
Companies Act of South Africa.

The Financial Manager, Omair Khan CA(SA), was responsible for the preparation of the
unaudited results.

BUSINESS COMBINATION OF METHWOLD INVESTMENT PROPRIETARY LIMITED
On 1 June 2015, the group acquired 66% of the voting equity interest of Methwold Investments
Proprietary Limited ("Methwold"), which resulted in the group obtaining control over Methwold.
Methwold is an investment holding company which holds 100% in Robert Cowen Investments
Proprietary Limited (together known as RCI), which is a niche asset management business that
manages segregated portfolios for private clients and institutions and holds 100% in Apollo
Trustees (Pty) Limited (“Apollo”) which provides trust management services.

The Goodwill of R89 272 500 arising from the acquisition consists largely of meaningful synergies,
inter alia, in research, unit trust and offshore investments, and a trusted brand.

Fair value of assets acquired and liabilities assumed                                    R '000
Equipment                                                                                   120
Cash and cash equivalents                                                                 1 970
Trade and other receivables                                                               4 650
Trade and other payables                                                                (3 418)
Total identifiable net assets                                                             3 322
Non-controlling Interest                                                                (1 129)
Goodwill                                                                                 89 272
                                                                                         91 465

Acquisition date fair value of consideration paid
1,864m Shares issued at R10                                                              18 640
Cash paid                                                                                72 825
                                                                                         91 465

Anchor will acquire the remaining 34% of RCI in four (4) annual tranches based on a price
earnings ratio of 8 times audited profit after taxation commencing from the year ending
31 December 2016. The purchase consideration for the remaining 34% has been capped at a
maximum of the initial purchase consideration.

DIVIDEND
As stated, the company has an intention of paying out half of its earnings as a dividend going
forward as a listed business.

For the six month period ended 30 June 2015, the company has declared an interim gross
dividend (Number 3) of 11 cents per share (2014: 3 cents). The dividend was declared out of
income reserves.

The dividend will be subject to a dividend withholding tax rate of 15% or 1.65 cents per ordinary
share. As no STC credits are available for utilisation, shareholders, unless exempt or qualifying for
a reduced withholding tax rate, will receive a net dividend of 9.35 cents per share.

Anchor's tax reference number is 9527/450/16/8. The number of ordinary shares in issue at the
declaration date is 142.2 million.

The salient dates for the dividend will be as follows:

 Last date to trade „cum? dividend                                       Friday, 21  August 2015
 Shares commence trading „ex? the dividend                               Monday, 24  August 2015
 Record date (date shareholders recorded in share register)              Friday, 28  August 2015
 Payment date                                                            Monday, 31  August 2015

Shareholders may not dematerialise or rematerialise their share certificates between Monday,
24 August 2015 and Friday, 28 August 2015, both dates inclusive.

DETAILED CAUTIONARY ANNOUNCEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Further to the last cautionary announcement dated 1 July 2015, Anchor Group has signed a
memorandum of understanding regarding the acquisition of a business in the asset
management industry. The purchase price will comprise less than 20% of the Anchor Group
market capitalisation as at 5 August 2015. The effective date of the acquisition is 1 July 2015,
subject to certain conditions precedent, including the formal legal agreement and regulatory
approvals, where necessary. A terms announcement is expected to be made shortly.

Accordingly, shareholders are advised to continue to exercise caution until a further
announcement is made.

For and on behalf of the Board

Peter Armitage                                                                  Dave Rosevear
Chief Executive Officer                                                  Chief Financial Officer
6 August 2015

DIRECTORS
Executive Directors: Peter Armitage (Chief Executive Officer), Todd Kaplan (Chief Operating
Officer), Dave Rosevear (Chief Financial Officer)
Non-executive directors: Mike Teke (Chairman), Paul Nkuna (independent), Alastair Adams
(independent) Nick Dennis (independent)

DESIGNATED ADVISOR
Arbor Capital Sponsors Proprietary Limited

TRANSFER SECRETARIES
Link Market Services South Africa Proprietary Limited
(Registration number 2000/007239/07)
11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)

REGISTERED OFFICE
25 Culross Road, Bryanston, Sandton, 2191
POSTAL ADDRESS
PO Box 1337, Gallo Manor, 2052

WEBSITE: www.anchorgroup.co.za

Date: 06/08/2015 05:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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