Wrap Text
Condensed Consolidated Reviewed Interim Results for the 6 months ended 30 September 2017
ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
("the Company" or "Ecsponent")
Condensed Consolidated Reviewed interim results for the 6 months ended
30 September 2017
The Board of Directors ("the Board") is pleased to advise shareholders of the continued
exponential growth of Ecsponent and its subsidiaries ("the Group") as reflected in the
further improved, consolidated results for the 6 months ended 30 September 2017.
The Company changed its financial year-end during the 2016 financial year, changing the reporting
date from 31 December to 31 March. The change resulted in the 31 March 2017 financial period
being extended to a 15-month period, commencing on 1 January 2016. As a result, the comparative
interim period ended on 30 June 2016, while the current interim period ended on 30 September 2017.
The Group"s sustained growth is the result of management"s continued focus on selected niche
markets of the Business Credit and Equity Investment business units. The directors envisage that
this strategy will continue to drive expansion to dominate the niche sectors of the markets in which
the Group operates.
RESULTS HIGHLIGHTS
Highlights of the Group's interim results ended 30 September 2017 compared to the comparative
interim results for the period ended 30 June 2016 ("Prior Period") are set out below:
- Revenue from continuing operations increased by 41.9% to R154.6 million compared to
R109 million in the Prior Period;
- Operating profits from continuing operations increased by 89.5% to R113.3 million compared
to R59.8 million in the Prior Period;
- Total profits after tax increased by 77.4% to R31 million compared to R17.5 million in the
Prior Period;
- Total assets increased by 88.2% to R1 462.6 million compared to R777.1 million in the Prior
Period; and
- Resultant earnings per share ("EPS") increased by 40.2% to 3.12 cents per share compared to
2.23 cents per share in the Prior Period;
- Headline earnings per share ("HEPS") increased by 72.2% to 1.7 cents per share compared to
0.99 cents per share in the Prior Period.
External revenue generated by the Group's Business Credit operations increased by 56.4% to
R142.2 million compared to R90.9 million in the Prior Period, comprising 87% of total revenue in the 2017
interim results. Funding for the Group's expansion strategy continues to be facilitated through
Ecsponent's preference share programme ("the Programme"), enabling the Company to raise capital
to fund investments on an ongoing basis. Continued market subscriptions of preference shares have
been very encouraging and the Company has raised approximately R1.1 billion in preference shares
issues since implementation in September 2014.
OPERATIONAL REVIEW
Group overview
Below is an overview of the Group's operations for the 2017 interim period end.
Investment Services
During the period under review both revenue and profitability in the Investment services business
units evidenced continued growth. The Group's ability to deliver effective investment and other
financial services products to the retail market is one of its core competencies. It is this distribution
channel that has successfully raised over R1.25 billion across the Group's footprint in just 3 years.
The Group's investment offering is now being expanded to include additional preference share
products as well as more traditional annuity and preservation fund products. The directors anticipate
further product roll out in the short to medium term which will provide additional profit opportunities
for the Group.
Total assets increased by 124% from R635m to R1 425m compared to the comparative period. As
a result, operating profit increased by 107.5% from R55m to R114m.
One of the Investment Services business unit's strategic objectives is to lower the Group's cost of
capital through the acquisition of institutional debt funding. The Group is well positioned to take
advantage of institutional funding due to its extremely low tier 1 debt ratio of below 1%. Reduced
funding cost would flow through to the Group's profits.
Business Credit
Business Credit deploys short-term capital through bespoke loan and funding products. The
unbanked/underbanked Small, Medium and Micro-sized Enterprises ("SMME") sector and the
provision of enterprise development solutions are specific target markets. All Business Credit
products are fully secured, as the Group does not take an unsecured position.
The Group's credit operations are centrally controlled which significantly improves both governance
and consistency across the operations. In addition, the centralised procurement and logistics
operations provide the critical mass required to support enterprise development in each of the
territories while securing the Group's interests in transactions.
The demand for credit in both of the SMME and Enterprise Development sectors has resulted in
continued, sustained growth of the business across the Group's footprint. As with Investment
Services, total assets increased by 148% from R645m to R1 597m compared to the comparative
period. As a result, operating profit increased by 143% from R84m to R205m.
Equity Holdings
The Group's equity investments are intended to provide medium to long term capital growth for the
Group. Investments are strategic, and business are targeted which have significant intellectual
properties which provide a barrier to entry for competitors. In addition, the target business must be
able to command significant margins and a robust business model.
At the end of the 2016/2017 financial period the group expanded its equity holdings to also include
listed equities. The first such investment is a 9.4% holding in the Frankfurt listed (Luxembourg
based) Fintech company MyBucks SA. This investment has the added advantage of providing a "hard
currency" hedge against local currency frailty.
The MyBucks acquisition immediately affected the performance of the business unit. Total assets
increased by 968% from R30m to R318m compared to the comparative period and operating profit
increased by R16.9m from a loss of R3.6m to a profit of R13.3m.
Geographical Footprint
The Group's operational footprint across Swaziland, Botswana and Zambia mirrors the product and
services offering which is successfully deployed in South Africa. Client facing operations are deployed
in country whilst the back-office infrastructure is managed from the central base in South Africa.
The performance of the footprint to date has been restricted by access to funding in countries outside
of the common monetary union.
PROSPECTS
Key elements of the Group's on-going growth strategy are:
- the continued investment in the Group's credit operations;
- the continued growth of underlying assets through product and market extension;
- the continued focus on core businesses;
- obtaining local and forex-based institutional funding;
- aggressive trading and cost rationalisation/reduction; and
- increased emphasis on high yield equity opportunities.
The abovementioned approach is aimed at the continued development of a robust and
complementary financial services Group which continues to provide sustainable returns.
FINANCIAL RESULTS
Presented below are the reviewed condensed consolidated financial statements for the 6 months
ended 30 September 2017.
The group rationalisation as initially announced to shareholders on 20 December 2016 was concluded
during the current reporting period, resulting in the statement of profit and loss being presented in
two categories being Continued and Discontinued Operations. The comparative period has been "re-presented"
to reflect the abovementioned categories. Furthermore, the remaining current period assets and liabilities
related to the operations subject to the rationalisation (disposal groups) have been classified as
"Held for sale" in these financial statements, as required by IFRS 5.
Condensed Consolidated Interim Statement of Financial Position as at 30 September 2017
Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
Group Group Group
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 6 296 10 567 6 810
Intangible assets and goodwill 5 668 20 131 6 011
Investment in associates 6 273 285 - -
Other financial assets 7 895 770 70 980 667 089
Deferred tax 39 623 18 150 28 458
Other non-current receivables 5 652 4 314 4 656
Current assets
Inventories 1 050 2 045 1 222
Other financial assets 7 184 638 509 455 314 542
Trade and other receivables 38 419 100 401 36 150
Current tax payable 254 88 186
Cash and cash equivalents 11 938 40 936 25 380
Non-current assets held for sale 4 - - 124 313
TOTAL ASSETS 1 462 593 777 067 1 214 817
EQUITY AND LIABILITIES
Equity 141 151 47 322 106 986
Non-controlling interest (12 431) (26 569) (11 429)
Non-current liabilities
Other financial liabilities 9 1 239 741 517 441 922 796
Deferred revenue 3 431 11 396 2 538
Deferred tax 18 689 4 232 13 454
Current liabilities
Other financial liabilities 9 12 438 173559 16 524
Deferred revenue 219 3513 148
Current tax payable 32 483 15358 11 864
Trade and other payables 26 131 30790 20 778
Bank overdraft 741 25 469
Liabilities of disposal groups held for sale 4 - - 130 689
TOTAL EQUITY AND LIABILITIES 1 462 593 777 067 1 214 817
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income
for the interim period ending 30 September 2017
Re-presented
Reviewed Reviewed Audited
6 months 6 months 15 months
ended ended ended
30 September 30 June 31 March
2017 2016 2017
Group Group Group
R'000 R'000 R'000
Continuing operations
Revenue 154 597 108 954 321 795
Cost of sales (18 115) (18 591) (43 782)
GROSS PROFIT 136 482 90 363 278 013
Other income 22 286 19 115 88 543
Operating expenses (45 422) (49 672) (137 370)
OPERATING PROFIT 113 346 59 806 229 186
Fair value adjustments 15 127 - (11 017)
Income from equity accounted investment (274) - -
Net finance costs (82 832) (29 000) (130 351)
PROFIT BEFORE TAXATION 45 367 30 806 87 818
Taxation (29 710) (12 199) (23 094)
PROFIT FROM CONTINUING OPERATIONS 15 657 18 607 64 724
Profit from discontinued operations 4 15 312 (1 148) 2 852
PROFIT FOR THE PERIOD 30 969 17 459 67 576
Other comprehensive income / (loss) 478 113 282
TOTAL COMPREHENSIVE INCOME 31 447 17 572 67 858
Loss attributable to non-controlling interest 2 718 2 631 10 239
TOTAL COMPREHENSIVE INCOME 34 165 20 203 78 097
ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS
Profit attributable to owners of the parent from:
Continuing operations 18 324 20 187 75 160
Discontinued operations 15 373 (97) 2 852
33 697 20 090 78 012
Total comprehensive income/(loss) attributable to:
Owners of the parent 34 165 20 203 78 097
Non-controlling interest (2 718) (2 631) (10 239)
31 447 17 572 67 858
Basic and fully diluted earnings per share 1.697 2.236 8.074
(cents) from continuing operations attributable
to equity holders of the parent
Basic and fully diluted earnings / (loss) per 1.424 (0.011) 0.306
share (cents) from discontinued operations
attributable to equity holders of the parent
Basic and fully diluted earnings per share 3 3.121 2.226 8.380
(cents) attributable to equity holders of the
parent
Condensed Statement of Changes in Equity for the 6 months ended 30 September 2017
Share capital Foreign currency Common Accumulated Non- Total equity
translation control profit/(loss) controlling
reserve reserve interest
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 January 118 071 (483) (36 687) (2 711) (4 653) 73 537
2016
Total comprehensive profit - 85 - 78 012 (10 239) 67 858
for the year
Issue of shares 27 098 - - - - 27 098
Business combination and - - (56 824) - (18 155) (74 979)
common control
acquisitions
Realisation pf common - - 93 511 (93 511) -
control reserve
Disposal of subsidiaries - - - - 2 043 2 043
Purchase of non- - - - (19 575) 19 575 -
controlling interest
Balance at 1 April 2017 145 169 (398) - (37 785) (11 429) 95 557
Total comprehensive profit - 467 - 33 698 (2 718) 31 447
for the 6 months
Profit for the 6 months - - - 33 698 (2 729) 30 969
Other comprehensive - 467 - - 11 478
income
Disposal of subsidiary - - - - 1 716 1 716
Balance at 30 145 169 69 - (4 087) (12 431) 128 720
September 2017
Condensed Consolidated Cash Flow Statement for the 6 months ended 30 September 2017
Reviewed Reviewed Audited
6 months 6 months 15 months
ended ended ended 31
30 September 30 June March
2017 2016 2017
Group Group Group
R'000 R'000 R'000
Cash generated by operations 100 789 41 787 177 263
Finance cost (61 176) (21 046) (106 732)
Taxation paid (16 649) (470) (25 234)
NET CASH INFLOW FROM OPERATING ACTIVITIES 22 964 20 271 45 297
Proceeds / (cash disposed of) through sale of 5 (7 369) (2 616) (24 994)
investment in subsidiary
Investment in financial assets (377 228) (334 128) (797 841)
Proceeds from financial assets 56 381 116 792 133 063
Business combinations - 11 733 10 233
Other (193) (2 856) (4 439)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (328 409) (211 075) (683 978)
Proceeds from other financial liabilities 294 702 222 452 656 597
Repayment of other financial liabilities (4 664) - (18 899)
Proceeds from rights offer - - 19 465
Other - (65) (111)
NET CASH INFLOW FROM FINANCING ACTIVITIES 290 038 222 387 657 052
Movement in cash and cash equivalents for the period (15 407) 31 582 18 371
Cash and cash equivalents at the beginning of the 26 481 9 741 9 741
period
Effect of exchange rate movement on cash balances 123 (413) (1 631)
Cash and cash equivalents at the end of the period 11 197 40 910 26 481
Notes to the Condensed Consolidated Financial statements for the 6 months ended
30 September 2017
1. ACCOUNTING POLICIES, BASIS OF PREPARATION OF RESULTS AND REVIEW OPINION
The condensed consolidated interim financial statements have been prepared in accordance with
International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council and in the manner required by the Companies Act of
South Africa and the JSE Listings Requirements. The principle accounting policies applied in the
preparation of the condensed consolidated interim financial statements are in terms of the International
Financial Reporting Standards and are consistent with those applied in the comparative consolidated
annual financial statements.
The results of the Group, were prepared under supervision of the Group's financial director,
Mr. B Shanahan CA (SA).
These interim condensed consolidated financial statements for the period ended 30 September 2017
have been reviewed by Nexia SAB&T, who expressed an unmodified review conclusion. A copy of the
auditor's review report is available for inspection at the company's registered office together with the
interim condensed consolidated financial statements identified in the auditor's report.
2. REVIEW OF RESULTS AND FINANCIAL POSITION
The condensed consolidated interim financial results represent the trading results of the Company and
its subsidiaries which are active in the Investment services, Business credit and Equity holding markets.
The Group showed sustained improvement in its performance for the period under review. The expansion
strategy, substantially increased the portfolio of business credit assets. Funding for the expansion
strategy was secured through the registration of Ecsponent's listed preference share programme enabling
the company to raise capital to fund its investments on an ongoing basis. The market subscription of the
preference shares continues to reflect robust demand for the Company's products.
3. EARNINGS AND FULLY DILUTED EARNINGS PER SHARE
Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
BASIC AND HEADLINE EARNINGS R'000 R'000 R'000
Basic earnings 33 698 20 090 78 012
Headline earnings 18 325 8 900 132
Basic and diluted basic earnings per share (cents) 3.121 2.226 8.380
attributable to equity holders of the parent
Headline and diluted headline earnings per share 1.698 0.986 0.014
(cents) attributable to equity holders of the parent
Number of shares in issue 1 079 550 795 930 531 435 1 079 550 795
Weighted average number of shares 1 079 550 795 902 676 200 930 907 328
RECONCILIATION BETWEEN BASIC EARNINGS
AND HEADLINE EARNINGS
Basic earnings 33 698 20 090 78 013
(Profit) / Loss on disposal of property plant and - (25) 252
equipment
Impairment of intangible assets 65 - -
Gain on disposal of subsidiary - (11 165) (25 795)
Gain on disposal of discontinued operations (15 438) - (52 338)
Headline earnings 18 325 8 900 132
The calculation of earnings per share ("EPS") is based on the profit for the period attributable to
ordinary shareholders and the weighted average number of ordinary shares in issue during the period.
Headline earnings per share ("HEPS") are calculated in accordance with Circular 2/2015 issued by the
South African Institute of Chartered Accountants.
4. ASSETS CLASSIFIED AS HELD FOR SALE / DISCONTINUED OPERATIONS
The Group undertook a process of rationalising its operations and investments during the latter part of
2016. This included a series of financial transactions designed to streamline operations and re-align the
Group for increased strategic growth. The relevant recognition and disclosure requirements of IFRS 5
therefore resulted in the "re-presentation" of the financial results to disclose two categories being
Continuing and Discontinued operations (disposal groups). The comparative period Statement of Profit /
Loss has therefore been "re-presented" in accordance with these disclosure requirements.
The financial transactions as referred to above were concluded and finalised effective 31 March 2017,
except for the disposal of the Groups interest in the Botswana retail operation and the dilution through
the subscription agreement of the retail operation in Zambia. These two transactions were concluded
and finalised during the current reporting period ending 30 September 2017.
The combined results of the discontinued operations included in the profit for the year are set out
below. The comparative profit and cash flows from discontinued operations have been re-presented to
differentiate between those operations classified as discontinued during the current year.
The following disposal groups continued to be classified as held for sale for the period ended
30 September 2017:
Profit and loss – 6 months ended 30 September 2017 Botswana Zambia TOTAL:
R'000 R'000 R'000
Revenue 8 469 406 8 875
Cost of sales (1 580) (2) (1 582)
Gross profit 6 889 404 7 293
Other Income 125 514 639
Operating expenses (860) (31) (891)
Operating profit / (loss) 6 154 887 7 041
Investment revenue - - -
Finance Costs (6 112) (1 297) (7 409)
Profit / (loss) before taxation 42 (410) (368)
Taxation 70 173 243
Net profit / (loss) after tax 112 (237) (125)
Gain (loss) on measurement to fair value less cost to sell 10 452 6 384 16 836
Tax thereon (1 399) - (1 399)
Profit / (loss) for the period from discontinuing operations 9 165 6 147 15 312
Profit and loss – 6 months ended 30 June 2016 Botswana Zambia TOTAL:
R'000 R'000 R'000
Revenue 15 431 938 16 369
Cost of sales (2 335) - (2 335)
Gross profit 13 096 938 14 034
Other Income 21 - 21
Operating expenses (4 483) (2 352) (6 835)
Operating profit / (loss) 8 634 (1 414) 7 220
Investment revenue 147 7 154
Finance Costs (8 328) (1 311) (9 639)
Profit / (loss) before taxation 453 (2 718) (2 265)
Taxation 160 957 1 117
Net profit / (loss) after tax 613 (1 761) (1 148)
Gain (loss) on measurement to fair value less cost to sell - - -
Tax thereon - - -
Profit / (loss) for the period from discontinuing operations 613 (1 761) (1 148)
Assets classified as held for sale – Botswana Zambia Sub total Disposal TOTAL:
30 September 2017
R'000 R'000 R'000 R'000 R'000
Property, plant and equipment 930 692 1 622 (1 622) -
Intangible assets - 4 488 4 488 (4 488) -
Other financial assets 87 425 4 770 92 195 (92 195) -
Deferred tax 1 935 3 525 5 460 (5 460) -
Income tax receivable 103 - 103 (103) -
Trade Receivables 12 635 - 12 635 (12 635) -
Cash and cash equivalents 11 601 404 12 005 (12 005) -
114 629 13 879 128 508 (128 508) -
Liabilities of disposal groups
Other Financial Liabilities (103 157) (16 901) (120 058) 120 058 -
Deferred income (6 233) - (6 233) 6 233 -
Trade Payables (448) (24) (472) 472 -
Bank overdraft (4 636) - (4 636) 4 636 -
(114 474) (16 925) (131 399) 131 399 -
Cash flows from discontinued operations – 6 months Botswana Zambia TOTAL:
ended 30 September 2017
R'000 R'000 R'000
Net cash flows from operating activities (852) (384) (1 236)
Net cash flows from investing activities 2 485 (404) 2 081
Net cash flows from financing activities 4 218 752 4 970
Net cash flow movement 5 851 (36) 5 815
Business Business
Operating segment Credit Credit
Geographical segment Botswana Zambia
5. DISPOSALS
The Group concluded the remaining two transactions in relation to the process of rationalisation
detailed above, during the current reporting period. Refer below for more details regarding
these transactions.
Aggregated business disposals for the period Group
30 September
2017
R'000
Property, plant and equipment 1 622
Intangible assets 4 488
Deferred tax asset 5 460
Other financial assets 92 195
Income tax receivable 103
Trade and other receivables 12 635
Cash and cash equivalents 12 005
Loans from group companies (86 081)
Other financial liabilities (33 976)
Deferred income (6 233)
Trade and other payables (471)
Bank overdraft (4 636)
Total identifiable net assets / (liabilities) (2 889)
Non-controlling interest 1 716
Foreign currency translation reserve 685
Loans from group companies settled through loan implementation -
Net assets / (liabilities) derecognised (488)
Recognition of 25% investment in associate at fair value (3 698)
Profit / (loss) on disposal 16 836
Consideration receivable 12 650
The gains on disposals have been included in 'Other income' of profit or loss from
discontinued operations.
Net cash flow on disposal
Purchase consideration (*) -
Net cash (balance)/overdraft disposed off (7 369)
(7 369)
* The purchase considerations are payable on deferred payment terms and no balance was payable
at the effective date. All cash flow movements are therefore recognised through the movements in
Other financial asset.
Business disposals during the 2018 financial period
Disposal of 50% of Sure Choice (Pty) Ltd (Botswana) ("Botswana")
Ecsponent entered into an agreement to dispose of its 50% shareholding in Botswana, a subsidiary
which provides retail credit loans to individuals. The commercial terms of the agreement were concluded
on 29 June 2017. The total consideration of P10 million is payable in twelve equal instalments from
31 July 2017. Interest at 12.5% per annum accrued on the deferred consideration.
Fair value of the assets and liabilities disposed of are as follows: Group
30 September
2017
R'000
Property, plant and equipment 930
Deferred tax asset 1 935
Other financial assets 87 425
Income tax receivable 103
Trade and other receivables 12 635
Cash and cash equivalents 11 601
Loans from group company (69 597)
Other financial liabilities (33 560)
Deferred income (6 233)
Trade and other payables (448)
Bank overdraft (4 636)
Total identifiable net assets 155
Non-controlling interest 1 716
Foreign currency translation reserve 327
Net assets derecognised 2 198
Profit on disposal 10 452
Consideration receivable 12 650
Net cash flow on disposal
Purchase consideration (*) -
Net cash balance disposed of (6 965)
(6 965)
(*) The disposal proceeds are receivable on deferred payment terms and no balance was received at
the effective date. All cash flow movements are therefore recognised through the Other Financial Asset
movements.
Dilution of shareholding in Ecsponent Financial Services Ltd ("Zambia")
The issue of 1 500 000 new shares by Zambia, equating to 75% of the total issued share capital in the
company after the issue, to GetBucks Limited ("GetBucks MU"), for a subscription price equal to ZMW
7 500 000, payable in cash ("the EFS Zambia Subscription"), resulting in a dilution of Ecsponent's
interest from 100% to 25%, resulting in the loss of control.
Fair value of the assets and liabilities derecognised are as follows: Group
30 September
2017
R'000
Property, plant and equipment 692
Deferred tax asset 3 525
Intangible asset 4 488
Other financial assets 4 770
Cash and cash equivalents 404
Loans from group company (16 485)
Other financial liabilities (414)
Trade and other payables (24)
Total identifiable net assets (3 044)
Foreign currency translation reserve 358
Net assets derecognised (2 686)
Recognition of 25% investment in associate at fair value (3 698)
Profit on disposal 6 384
Consideration receivable -
Net cash flow on disposal
Net cash balance disposed of (404)
(404)
6. INVESTMENT IN ASSOCIATE
The Group acquired 9.4% of the listed share capital of MyBucks SA effective on 30 March 2017. The
group further entered into an agreement with one of its customers whereby it obtained approval to vote
on behalf of a further 12.8% of the total voting rights of MyBucks SA, pushing the Group's total voting
rights in relation to its investment in MyBucks SA to 22.2%, resulting in significant influence and the
classification as an Investment in an Associate. This agreement was concluded on 29 September 2017.
The issue of 1 500 000 new shares by Ecsponent Financial Services Ltd in Zambia led to a dilution of
Ecsponent's interest from 100% to 25% and a consequent loss of control. The Company does, however
retain significant influence through its voting rights and therefore classifies this investment as an
associate in accordance with IAS 28.
Investment in associates consists of: Sep 2017
At cost: R'000
MyBucks SA. 269 861
Ecsponent Financial Services Ltd Zambia 3 698
273 559
Share of post-acquisition results net of dividend received (274)
273 285
At market value
MyBucks SA. - Listed shares 269 861
Ecsponent Financial Services Ltd Zambia - Unlisted equities 3 424
The following information relates to the Company's investments in its associates:
Proportion of
Place of ownership interest
Name of companies Holding company incorporation (%)
Sep 2017 Mar 2017
Ecsponent Financial Services Zambia Ecsponent Ltd SA Lusaka, Zambia 25% 100%
MyBucks S.A Ecsponent Ltd (BOT) Luxembourg 9.4% 9.4%
The above associates are accounted for using the equity method in these consolidated financial
statements.
The financial period end date of MyBucks SA is 30 June annually. No change of reporting date was
required or made as MyBucks is a listed vehicle on the Frankfort stock exchange and the period end
was within the maximum range of 3 months difference. For the purposes of applying the equity
method of accounting, the financial statements of MyBucks SA for the period ended 30 June 2017
have been used, and no adjustments were required for the effects of significant transactions between
that date and the reporting date for the Group.
The financial period end date of Zambia is still 31 March annually. No change of reporting date was
therefore required. For the purposes of applying the equity method of accounting, the management
accounts of Zambia for the period ended 30 September 2017 have been used.
As at 30 September 2017, the group had significant influence over MyBucks SA and EFS Zambia by
virtue of its voting powers affecting returns and the appointment of directors at the shareholders
meeting of the group.
7. OTHER FINANCIAL ASSETS
The other financial asset category incorporates secured business funding and purchase price repayment
facilities. Total other financial assets increased by 86% compared to the comparative period. Provided
below is the detail regarding the Group's other financial assets:
Reviewed Reviewed Audited
Group Group Group
30 September 30 June 31 March
2017 2016 2017
R'000 R '000 R '000
At fair value through profit and loss –
designated
Listed shares - - 232 980
On 30 March 2017, the Group acquired
1 100 000 foreign denominated listed equities,
representing 9.4% of the issued share capital
of the MyBucks Group, as part of its private
equity portfolio. The shares are listed on the
Frankfurt stock exchange. The investment
was reclassified during the period. Please
refer to note 4 and 5 above for more detail.
Loans and receivables
Employee benefit loans - 80 397 -
Retail employee benefits loan book in
Botswana. The investment in this subsidiary
was disposed of during the current financial
period. Please refer to note 5 above for more
detail. The comparative period's statement of
financial position was not represented to
disclose these assets as "held for sale".
Business funding – advances (per industry)
- Fintech 470 534 130 685 339 770
The Business funding advances are secured,
via a cession of the underlying equity and/or
assets, ranging between 125 - 150%. The
advances bear interest at fixed interest rates
based on the entity risk profile, ranging
between 24 - 30% (2017: 24 - 30%) and
repayment terms are facility specific, ranging
between 1 - 4 years.
- Financial services and Investments 599 326 369 353 408 881
The Business funding advances are secured,
via a cession of the underlying equity and/or
assets, ranging between 125 - 150%. The
advances bear interest at fixed interest rates
based on the entity risk profile, ranging
between 24 - 30% (2017: 24 - 30%) and
repayment terms are facility specific, ranging
between 2 - 5 years.
Disposal proceeds facility 10 548 - -
Repayment facility relating to the Botswana
disposal, bearing interest at 12.5%, repayable
over 12 equal monthly installments.
TOTAL OTHER FINANCIAL ASSETS 1 080 408 580 435 981 631
Total included in non-current assets 895 770 70 980 667 089
Total included in current assets 184 638 509 455 314 542
8. PREFERENCE SHARE CAPITAL
Ecsponent's business model requires funding for both existing business growth and to pursue further
acquisitions. Funding is deployed in the growth of Business Credit assets and the acquisition of new assets
which contribute to the growth strategy. Preference shares are considered a reliable source of funding
for these on-going business needs and accordingly the Company has registered a R5 billion preference
share programme. The Programme was approved by the JSE on 8 September 2014 and again on
15 December 2015. By 30 September 2017 Ecsponent Limited had received subscription investments of R1.1 billion.
Reconciliation of the number of preference shares in issue:
Ecsponent Limited (South Africa)
Class A Class B Class C Class D
Reported at the beginning of the period 415 595 1 657 701 6 024 439 -
Issue of preference shares during the period 358 074 895 265 1 290 075 10 000
773 669 2 552 966 7 314 514 10 000
Weighted average issue price per share (Rands) 96.76 100.00 100.00 100.00
Ecsponent Limited (Swaziland)
Class A Class E
Reported at the beginning of the period 53 195 000 53 727 700
Issue of preference shares during the period 36 991 000 19 174 000
90 186 000 72 901 700
Weighted average issue price per share 1.00 1.00
(converted to Rand)
Ecsponent Limited (Botswana)
Class A Class B
Reported at the beginning of the period 11 750 000 2 067 000
Repayment of preference shares during the period - -
11 750 000 2 067 000
Weighted average issue price per share
(Pula) 1.00 1.00
Weighted average issue price per share (Rand) 1.27 1.27
9. OTHER FINANCIAL LIABILITIES
The preference share capital is classified as debt and disclosed as other financial liabilities in the
Condensed Consolidated Statement of Financial Position as at 30 September 2017 in line with the
principles of IFRS. Consequently, the preference share dividends are classified as funding costs and
disclosed as such in the Condensed Consolidated Statement of Profit and Loss and Other Comprehensive
Income for the 6 months ended 30 September 2017.
The other financial liabilities category incorporates external funding facilities with either banks, individuals
or corporate funding entities. Provided below is the detail regarding the Group's other financial liabilities:
Reviewed Reviewed Audited
Group Group Group
30 September 30 June 31 March
2017 2016 2017
R'000 R'000 R'000
Held at amortised cost
Preference share liability 1 244 897 508 828 927 973
Esperite NV Group 6 390 6 445 6 197
Capital bank - Term loan facilities(#) - 34 647 -
Getbucks (Pty) Ltd - - 4 241
Ecsponent Capital (RF) Limited - 1 082 -
Ecsponent Projects (Pty) Ltd - 684 -
Ecsponent Investment Holdings – purchase price - 118 957 -
facility
Debentures(#) - 11 452 -
Capital protected investments(#) - 2 668 -
Other 892 6 237 909
TOTAL OTHER FINANCIAL LIABILITIES 1 252 179 691 000 939 320
Total included in non-current liabilities 1 239 741 517 441 922 796
Total included in current liabilities 12 438 173 559 16 524
(#) The liabilities related to disposal groups held for sale were reclassified to "held for sale" for the
31 March 2017 period end results. These items were not reclassified or re-presented for the comparative
period. The assets and liabilities held for sale were disposed of during the current reporting period.
Refer to note 4 and 5 above for more detail.
10. RELATED PARTY DISCLOSURES
The group has transacted with the following related parties during the period:
Relationship
Alexander Mason (Pty) Ltd – Represented by G. Manyere
Shareholders with significant (also being a Non-executive director on the MyBucks SA
influence Group Board)
Esperite NV
Associate companies where the MyBucks SA and its subsidiaries
Company has significant influence Ecsponent Financial Services Ltd (Zambia)
Below is a summary of the relevant balances and transactions in this regard:
Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
R'000 R'000 R'000
Related party balances
Investments in:
Associate companies 273 285 - -
Loans Owing (to) / by:
Associate companies 481 082 - -
Shareholders with significant influence (6 390) (6 445) (6 197)
Amounts included in Trade receivable / (Trade Payable):
Associate companies (4 347) - -
Related party transactions
Interest received from / (paid to):
Associate companies 780 - -
11. FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT
Financial instruments measured in the Consolidated Statement of Financial Position at fair value require
certain disclosures which are set out below.
Financial instrument carried at fair value Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
Listed equities (Level 1) - - 232 980
Financial instrument carried at fair value (level 3) Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
Opening balance at the start of the period - 8 874 8 874
Revaluations 126 126
Disposal of financial instrument - (9 000) (9 000)
Balance at the end of the period - - -
Financial instrument carried at fair value (level 1) Reviewed Reviewed Audited
30 September 30 June 31 March
2017 2016 2017
Opening balance at the start of the period 232 980 - -
Purchases 1 000 - 262 570
Revaluation 35 881 (29 590)
Transfer to investment in associate (269 861) - -
Balance at the end of the period - - 232 980
The listed equities carried at fair value through profit and loss as reported in the prior financial period
was reclassified as an Investment in associate with effect from 29 September 2017. For more details
related to this transaction, please refer to note 6 above.
Financial Instruments
The carrying amount of all financial assets and liabilities approximates the fair value. Directors consider
the carrying value of financial instruments of a short term nature, that mature in 12 months or less, to
approximate the fair value of such assets or liability classes. The carrying value of longer term assets
are considered to approximate their fair value as these instruments bear interest at interest rates
appropriate to the risk profile of the asset or liability class.
Financial Risk Management
The Group's financial risk management objectives and policies are consistent with those disclosed in the
consolidated annual financial statements as at and for the year ended 31 March 2017.
12. SUMMARISED CONSOLIDATED SEGMENTAL INFORMATION
The segments identified are based on the operational and financial information reviewed by
management for performance assessment and resource allocation. The group rationalisation as
concluded in the prior financial period also resulted in a change to the basis of operational segmentation
and in the basis of measurement of segment profit or loss since the 2017 annual financial statements.
The change has therefore resulted in the re-presentation of the comparative and prior period results, in
order to reflect the same basis of measurement for comparative purposes.
The Group has the following operating segments:
- Investment Services (previously "Financial Services"). The core change was as a result of the
disposal of the asset management operations. The division also changed on the basis of
introducing new products to the market, changing the segment to a profit centre and not only a
capital raising vehicle.
- Business Credit (previously part of "Financial Services"). The deployment of capital in the
Group is now managed separately as a profit centre through the products offered as secured
SMME lending and Enterprise Development. The Group disposed of all its retail lending operations.
- Equity Holdings (previously "Private Equity"). At the end of the 2017 financial period the group
expanded its equity holdings to also include listed equities. This division houses all the equity
investments that do not fall within the financial services environment.
- Corporate (unchanged). This segment represents the Group's shared services operations.
The continued expansion of the Group has resulted in the need for geographic segmentation in addition
to the operational segmentation.
Period ended 30 September 2017
Operating Segment Total Assets Revenue Operating profit
/ (loss)
R'000 R'000 R'000
Business credit 1 597 124 198 122 204 576
Investment services 1 425 394 38 842 113 987
Equity holdings 318 269 18 701 13 275
Corporate 12 767 11 896 (9 017)
Eliminations (1 890 961) (104 089) (185 597)
Discontinued operations - (8 875) (23 878)
Group total 1 462 593 154 597 113 346
Geographic Segment Total Assets Revenue Operating profit
/ (loss)
R'000 R'000 R'000
South Africa 2 579 809 213 948 249 596
Botswana 431 853 20 405 43 598
Swaziland 341 562 32 471 28 720
Namibia 330 330 104
Zambia - 406 803
Eliminations (1 890 961) (104 089) (185 597)
Discontinued operations - (8 875) (23 878)
Group total 1 462 593 154 597 113 346
Period ended 30 June 2016 (Re-presented)
Operating Segment Total Assets Revenue Operating profit
/ (loss)
R' 000 R'000 R'000
Business credit 644 616 110 495 84 325
Investment services 635 308 73 660 54 942
Equity holdings 29 790 20 021 (3 614)
Corporate 4 921 8 553 (4 108)
Eliminations (537 568) (87 406) (64 519)
Discontinued operations - (16 369) (7 220)
Group total 777 067 108 954 59 806
Geographic Segment Total Assets Revenue Operating profit
/ (loss)
R' 000 R' 000 R'000
South Africa 1 149 233 171 883 114 517
Botswana 126 209 23 242 10 918
Swaziland 24 742 16 431 7 409
Namibia 194 234 136
Zambia 14 257 938 (1 435)
Eliminations (537 568) (87 406) (64 519)
Discontinued operations - (16 369) (7 220)
Group total 777 067 108 954 59 806
Year ended 31 March 2017 (Re-presented)
Operating Segment Total Assets Revenue Operating profit
/ (loss)
R'000 R'000 R'000
Business credit 1 151 412 249 942 160 070
Investment services 1 083 560 92 996 17 309
Equity holdings 293 007 76 649 (18 106)
Corporate 7 355 112 951 57 748
Eliminations (1 320 517) (165 900) 19 170
Discontinued operations (124 313) (44 843) (7 005)
Group total 1 090 504 321 795 229 186
Geographic Segment Total Assets Revenue Operating profit
/ (loss)
R' 000 R' 000 R'000
South Africa 1 944 539 406 740 168 382
Botswana 425 344 75 300 28 277
Swaziland 152 731 47 981 24 418
Namibia 187 626 19
Zambia 12 533 1 891 (4 075)
Eliminations (1 320 517) (165 900) 19 170
Discontinued operations (124 313) (44 843) (7 005)
Group total 1 090 504 321 795 229 186
13. EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any material event, other than the matters listed below, which occurred
after the reporting date and up to the date of this report, which require disclosure.
Institutional funding
Investment Services, as stated above, has as a strategic objective of lowering the cost of capital to the
Group through the acquisition of institutional debt funding.
The Company procured debt funding during the period under review of USD10 million (ZAR135 million)
on market related terms. The funding will be deployed by the Group's secured Business Credit division to
expand its African operations. Loan funding provided to clients throughout the region will remain US
dollar based to avoid exchange rate risk and provide additional hard currency assets.
Issue of additional classes of Preference Shares
Refer Corporate Actions section below
14. CORPORATE ACTIONS
During the financial period ended 30 September 2017, the following corporate actions were implemented
and/or initiated with the objective of expanding the Group's Preference Share product range thereby
providing additional investment products with enhanced flexibility to clients in response to
market demands.
Class D, E, F and G Preference Shares
The Board proposed amendments to the Company's Memorandum of Incorporation (MOI) amending the
terms of the Company's unissued Preference Shares comprising of Class D, Class E, Class F and Class G.
Shareholders approved the proposed amendments on 14 August 2017 via written consent in terms of
Section 60 of the Companies Act.
These amended classes of preference shares, contain provisions for conversion into ordinary shares on
certain default events. Specific approval for the issue of convertible Class G Preference Shares was
previously obtained from shareholders in a general meeting held on 3 May 2016.
A Prospectus was issued during September 2017 offering Class D, E and G Preference Shares to the
public. The Company listed 10 000 Class D, 10 000 Class E and 2 500 Class G Preference Shares on
4 October 2017, subject to the directors' general authority to issue shares.
Specific approval for the issue of convertible Class D and E Preference Shares was obtained from
shareholders in a general meeting on 20 October 2017, with the meeting taking place after the current
interim period end date.
Amendment of the Memorandum of Incorporation
The Board proposed amendments to the Company's MOI amending the terms of the Company's issued
Preference Shares comprising of Class A, Class B and Class C to incorporate voluntary redemption terms
at the option of the company.
Ordinary shareholders and Preference Shareholders with investments in Class A, B and/or C Preference
Shares approved the proposed amendments to the MOI in general meetings held on 2 November 2017.
15. SHARE CAPITAL
No ordinary shares were issued during the 6 months ended 30 September 2017.
Number of Issued share Total
shares capital
'000 R'000 R'000
Opening balance 1 January 2016 901 588 118 072 118 072
Acquisition of Clade Investment Management 19 096 4 000 4 000
Odd lot Offer - repurchase and cancellation (543) (112) (112)
Shares issued pursuant to the Directors' Issue 11 629 2 112 2 112
Director share issue - incentives 12 022 1 631 1 631
Capitalisation of share issue expenses - (898) (898)
Proceeds from rights offer 135 758 20 364 20 364
Closing balance 31 March 2017 1 079 550 145 169 145 169
Movement for the current period - - -
Closing balance 30 September 2017 1 079 550 145 169 145 169
16. DIVIDENDS
No ordinary dividends have been declared or proposed for the year.
The Company has issued and listed three additional classes of Preference Shares. Six classes are now in
issue with the following dividend terms:
- Class A – 10% fixed rate monthly dividend;
- Class B – 0% monthly dividend, but redeeming at a rate equal to 170% of the Initial Issue Price;
- Class C – prime plus 4% floating rate monthly dividend.
- Class D – 12.5% fixed rate monthly dividend;
- Class E – 11.25% fixed rate monthly dividend
- Class G – 10% fixed rate monthly dividend
Preference Share dividends and interest of R77.3million accrued to investors for the 6 months ended
30 September 2017. The dividends are classified as finance costs and included in the finance cost expense
in the Condensed Consolidated Statement of Profit and Loss and Comprehensive Income.
17. CONTINGENCIES
The directors are not aware of any material contingent liability which existed at the reporting date and
up to the date of this report that requires disclosure.
18. DIRECTOR CHANGES
No changes to the Group's directors took place during the 6 months ended 30 September 2017. The
Group Financial Director, Bryan Shanahan will be pursuing new ventures and will therefore leave the
employment of the Group with effect from 31 January 2017. Dirk van der Merwe (current Group
Company secretary) will take over from Mr Shanahan with effect from 1 February 2017.
19. COMPANY SECRETARY
No changes to the Group's company secretary took place during the 6 months ended 30 September
2017. The new incumbent for the Company secretary position will be filled within the next two months.
20. AUDITORS
Nexia SAB&T continued in office as auditors for the Group for 2018 interim financial period.
At the Annual General Meeting held on 4 August 2017, shareholders reappointed Nexia SAB&T as the
independent external auditors of the Group for the 2017/2018 financial year.
21. GOING CONCERN
The directors believe that the Group has adequate financial resources to continue in operation for the
foreseeable future and accordingly the Condensed Consolidated Interim Financial Statements for the
6 months ended 30 September 2017 have been prepared on a going concern basis. The directors have
satisfied themselves that the Group is in a sound financial position and that it has access to sufficient
equity and borrowing facilities to meet its foreseeable cash requirements.
The directors are not aware of any new material changes that may adversely affect the Group's ability to
continue as a going concern. The directors are also not aware of any material non-compliance with
statutory or regulatory requirements or of any pending changes to legislation which may affect the Group.
For and on behalf of the Board
TP Gregory
Pretoria
28 November 2017
Directors: RJ Connellan* (Chairman), KA Rayner*, BR Topham*, W Oberholzer*, P Matute(#),
G Manyere (Vice Chairman)(#), TP Gregory (Chief Executive Officer) and B Shanahan (Financial Director).
(* Independent Non-Executives)
((#)Non-Executive)
Company Secretary: DP van der Merwe
Registered Office: Fintech Campus, on Lynnwood, Cnr Botterklapper and Ilanga Street, The Willows,
Pretoria East, PO Box 39660, Garsfontein East 0060
Transfer Secretaries: Computershare Investor Services Proprietary Limited, (Registration number
2004/003647/07), 2nd Floor, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, (PO Box 61051,
Marshalltown, 2107)
Auditors: Nexia SAB&T Inc.
Sponsor: Questco Corporate Advisory (Pty) Ltd
Date: 28/11/2017 07:30:00 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.