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Summary of the Audited Consolidated Results of the Mettle Group for the year ended 28 February 2018
METTLE INVESTMENTS LIMITED
(Registration Number: 2008/002061/06)
Incorporated in the Republic of South Africa
JSE share code: MLE ISIN: ZAE000257622
("Mettle" or "the Group")
SUMMARY OF THE AUDITED CONSOLIDATED RESULTS OF THE METTLE GROUP FOR THE YEAR
ENDED 28 FEBRUARY 2018
KEY INFORMATION
- Mettle unbundled from Tradehold Limited ("Tradehold") and listed on the
JSE on 23 May 2018 with stated capital of R545.8 million
- Reward Investments (No. 2) Limited ("Reward") and Mettle Solar Africa
Limited ("Mettle Solar Africa") acquired by Mettle from Tradehold post
year-end, effective 1 March 2018, as part of a group restructure ("the
Restructure")
- Financial period under review excludes assets acquired through the
Restructure
BACKGROUND
For the period under review Mettle owned South African assets only. These
South African based businesses hold various investments mainly in asset
backed lending, asset management, financial advisory and solar power
solutions.
Following the acquisition of Reward and Mettle Solar Africa post year-end,
Mettle owns financial services businesses primarily in the UK and in
South Africa. In the UK it has, through Reward Finance Group Limited
("Reward Finance Group"), an indirect holding of 67.5% in the three
operating Reward Finance Group companies, namely Reward Capital, Reward
Invoice Finance and Reward Trade Finance.
Reward and Mettle Solar Africa are not included in these financial results
of the Group for the financial year ended 28 February 2018. The interim
financial results of the Group for the period ending 31 August 2018 will
include these two businesses for the first time. Shareholders are referred
to the Tradehold integrated report released on 30 May 2018, for more
information on Reward and Mettle Solar Africa (previously "Tradehold Solar
Limited").
As published in the Tradehold financial results for the same period,
Reward's total loan book grew 28.6% from R664.0 million to R854.2 million
while turnover increased by 6.2% to R151.1 million. Net after-tax profit
attributable to the shareholders of Reward Finance Group was R54.9 million
(2017: R53.1 million).
More information on the Group following the Restructure is provided in the
pre-listing statement published on 14 May 2018.
FINANCIAL PERFORMANCE
Mettle (excluding Reward and Mettle Solar Africa) generated revenue of R44.2
million for the financial year ended 28 February 2018 (2017: R42.9 million),
an increase of 3.1%, while profit attributable to shareholders increased by
3.3% to R15.8 million (2017: R15.3 million). Mettle's net asset value was
R122.8 million (2017: R107.0 million), an increase of 14.8%, with net
tangible asset value increasing by 15.9% to R115.3 million (2017: R99.5
million).
SHARE ISSUES
On 14 May 2018 Mettle issued 40 192 618 ordinary shares to Tradehold
in settlement of borrowings amounting to R42 000 000.
On 15 May 2018 Mettle issued 110 690 037 ordinary shares to Tradehold for a
consideration of R403 206 516.
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The summarised consolidated financial statements for the year ended 28
February 2018 are prepared in accordance with the requirements of the JSE
Listings Requirements for preliminary reports, and the requirements of the
Companies Act, No 71 of 2008 (the "Companies Act") applicable to summarised
financial statements.
The JSE Listings Requirements require preliminary reports to be prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS) and the
SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and to also, as a minimum, contain the information
required by IAS 34 Interim Financial Reporting. The accounting policies
applied in the preparation of the consolidated financial statements from
which the summary consolidated financial statements were derived, are in
terms of IFRS and are consistent with those accounting policies applied in
the preparation of the previous consolidated annual financial statements.
The Group has adopted all new and amended accounting pronouncements issued
by the International Accounting Standards Board that are effective for
financial years commencing 1 March 2017. None of the new or amended
accounting pronouncements that are effective for the financial year
commencing 1 March 2017 had a material impact on the Group.
AUDIT OPINION
The consolidated annual financial statements for the year ended 28 February
2018 have been audited by BDO Cape Inc., who expressed an unmodified opinion
thereon.
This summarised report is extracted from the audited annual financial
statements but is not itself audited. The directors of the Group take full
responsibility for the preparation of the summarised consolidated financial
statements and that the financial information has been correctly extracted
from the underlying audited annual consolidated financial statements.
A copy of the audited consolidated financial statements and of the auditor's
report thereon are available for inspection at the Group's registered
office.
The auditor's report does not necessarily report on all of the information
contained in this announcement. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with
the accompanying financial information from the Group's registered office.
PREPARATION OF FINANCIAL RESULTS
The preparation of the financial results was supervised by the Group
financial director, Justin Rookledge BBusSci Finance (Hons), CA (SA).
CHANGES TO BOARD AND COMPANY SECRETARY
The following changes to the Mettle board and company secretary have taken
place subsequent to the end of the financial year:
IHJ Visagie 19 April 2018 Resignation
JA Aitken 19 April 2018 Resignation
WD Marais 19 April 2018 Resignation
W Maree 19 April 2018 Resignation
TM Flannery 19 April 2018 Appointment
HRW Troskie 19 April 2018 Appointment
MVZ Wentzel 19 April 2018 Appointment
BA Chelius 19 April 2018 Appointment
Mettle Corporate Finance Proprietary Limited was appointed as company
secretary with effect from 19 April 2018.
FH Esterhuyse HF Prinsloo
Chairman CEO
31 May 2018
STATEMENT OF FINANCIAL POSITION
Audited Audited
28 February 28 February
2018 2017
R R
ASSETS
Non-current assets
Property, plant and equipment 592 407 765 202
Goodwill 7 475 084 7 475 084
Investments in joint ventures 7 072 760 7 366 045
Investments in associates 53 122 613 43 467 369
Loans due from associates 32 389 747 55 281 188
Deferred tax asset 1 142 074 2 162 987
Financial assets at fair value through
profit or loss 31 233 697 -
Loan receivables 18 285 456 35 728 461
Total non-current assets 151 313 838 152 246 336
Current assets
Asset held for sale - 6 300 000
Tax asset 746 4 538
Loans due from associates 8 188 730 -
Loan receivables 21 466 996 11 247 673
Trade and other receivables 35 826 847 26 935 116
Cash and cash equivalents 6 277 769 12 044 803
Total current assets 71 761 088 56 532 130
Total assets 223 074 926 208 778 466
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital and premium 100 621 766 100 621 766
Retained income 22 197 688 6 363 257
Total equity 122 819 454 106 985 023
Non-current liabilities
Borrowings 43 756 880 16 131 236
Borrowings due to shareholders - 68 562 990
Deferred tax liability 308 763 -
Other financial liabilities - 4 053 044
Total non-current liabilities 44 065 643 88 747 270
Current liabilities
Borrowings 9 461 626 7 886 601
Borrowings due to shareholders 42 000 000 -
Other financial liabilities - 1 693 037
Taxation 81 815 25 421
Provisions 329 000 340 000
Trade and other payables 4 317 388 3 101 114
Total current liabilities 56 189 829 13 046 173
Total equity and liabilities 223 074 926 208 778 466
Net asset value per share (cents) 127.55 111.11
Tangible net asset value per share (cents) 119.79 103.34
STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
28 February 28 February
2018 2017
R R
Revenue 44 189 814 42 863 323
Other income 8 665 427 6 519 560
Interest expense (6 904 839) (2 670 464)
Operating expenses (28 484 664) (26 982 855)
Profit from operations 17 465 738 19 729 564
Impairment of goodwill - (2 414 748)
Profit from equity accounted investments 3 054 241 3 167 209
Profit before taxation 20 519 979 20 482 025
Taxation (4 685 548) (5 154 273)
Total comprehensive income 15 834 431 15 327 752
Attributable to:
Equity holders of the company 15 834 431 15 327 752
Non-controlling interest - -
15 834 431 15 327 752
Earnings per share (cents):
- basic 16.44 15.92
- diluted 16.44 15.92
Dividends per share - -
STATEMENT OF CHANGES IN EQUITY
(Accumulated
Share Share loss)/retained
capital premium income Total
Equity at
29 February 2016 963 100 620 803 (8 964 495) 91 657 271
Total comprehensive
income for the year 15 327 752 15 327 752
Equity at
28 February 2017 963 100 620 803 6 363 257 106 985 023
Total comprehensive
income for the year 15 834 431 15 834 431
Equity at
28 February 2018 963 100 620 803 22 197 688 122 819 454
STATEMENT OF CASH FLOWS
Audited Audited
28 February 28 February
2018 2017
R R
Cash flows from operating activities
Profit from operations 17 465 738 17 314 816
Non-cash items (10 550 200) (9 923 576)
Changes in working capital (9 242 346) (998 840)
Cash (utilised in)/generated from operations (2 326 808) 6 392 400
Interest received 14 805 801 4 179 949
Preference dividends received 191 593 -
Interest paid (4 065 196) (2 670 464)
Taxation paid (2 908 945) (3 570 410)
Net cash inflow from operating activities 5 696 445 4 331 475
Cash flows from investing activities
Acquisition of property, plant and equipment (119 075) (849 075)
Acquisition of investment in joint venture (4 000 000) (3 313 001)
Additional investment in associate (7 260 000) -
Investment in preference shares (24 750 000) -
Proceeds on redemption of preference
share investment 84 150 -
Purchase of financial assets at fair value
through profit or loss (30 000 970) -
Loans repaid by/(advanced to) associates 15 215 208 (23 430 077)
Loan receivables advanced (39 411 000) (49 660 704)
Loan receivables recovered 46 772 354 18 335 924
Proceeds on disposal of property, plant
and equipment - 32 299
Proceeds on disposal of associate - 819 334
Dividends and distributions received - 6 294 808
Proceeds on disposal of asset held for sale 6 626 333 -
Net cash outflow from investing activities (36 843 000) (51 770 492)
Cash flow from financing activities
Repayment of borrowings (35 560 287) (980 737)
Receipt of borrowings 62 000 000 9 000 000
Repayment of borrowings due to shareholder (2 631 505) -
Receipt of borrowings due to shareholder 1 650 000 42 582 112
Net cash inflow from financing activities 25 458 208 50 601 375
Net (decrease)/increase in cash and cash
equivalents (5 688 347) 3 162 358
Cash and cash equivalents at beginning
of the year 10 610 697 7 448 339
Cash and cash equivalents at end of the year 4 922 350 10 610 697
As presented on the statement of financial position
Cash and cash equivalents 6 277 769 12 044 803
Bank overdraft (included in current borrowings) (1 355 419) (1 434 106)
4 922 350 10 610 697
SUPPLEMENTARY INFORMATION
Audited Audited
28 February 28 February
2018 2017
R R
1. FINANCIAL ASSETS AT FAIR VALUE
THROUGH PROFIT OR LOSS
Gray Swan Sanlam Collective Investments
Fund of Funds unit trust investments 31 233 697 -
The unit trust investments are measured
at the year-end closing price and secure
the FirstRand Bank Limited borrowings
(refer to note 2).
Reconciliation
Purchase 30 000 970 -
Fair value adjustment during the year 1 232 727 -
31 233 697 -
2. BORROWINGS
Non-current
Small Enterprise Finance Agency SOC Limited 43 756 880 16 131 236
Current
Small Enterprise Finance Agency SOC Limited 5 546 647 6 452 495
FirstRand Bank Limited 2 559 560 -
Nedbank Limited 1 355 419 1 434 106
9 461 626 7 886 601
53 218 506 24 017 837
The borrowings from Small Enterprise
Finance Agency SOC Limited accrue interest
at prime plus 1%. Interest is payable
semi-annually with capital repayable in
March 2020. The borrowings are secured
by the Group's cash balances and loan and
trade receivables of R63 884 377
(2017: R24 968 862). The R50 000 000
facility has been fully drawn down.
The facility from FirstRand Bank Limited
accrues interest at prime less 1% and is
repayable by 31 August 2018. The facility
is guaranteed by Tradegro Holdings
Proprietary Limited (a wholly owned
subsidiary of Tradehold) and secured by the
Gray Swan Sanlam Collective Investments unit
trust investments (refer to note 1). The total
facility is R33 000 000.
The unsecured R5 000 000 (2017: R5 000 000)
overdraft facility with Nedbank Limited accrues
interest at prime which is settled monthly.
Nedbank Limited reviews the facility annually.
3. EARNINGS PER SHARE
Basic earnings per share (cents) 16.44 15.92
Diluted earnings per share (cents) 16.44 15.92
Headline earnings per share (cents) 16.11 15.63
Diluted headline earnings per share (cents) 16.11 15.63
Basic earnings per share
Basic earnings per share is calculated
by dividing the profit attributable to
equity holders of the company with the
weighted average number of ordinary shares
in issue for the year.
Profit attributable to equity holders
of the company 15 834 431 15 327 752
Weighted average number of ordinary
shares during the year 96 291 720 96 291 720
Diluted earnings per share
The Group has no dilutive potential
ordinary shares.
Headline earnings per share
Headline earnings per share is calculated
by dividing the headline earnings with the
weighted average number of ordinary
shares in issue for the year.
Profit attributable to equity holders
of the company 15 834 431 15 327 752
Impairment of goodwill - 2 414 748
Profit on disposal of associate - (395 193)
Profit on disposal of property, plant
and equipment - (32 299)
Profit on asset held for sale (326 333) (2 267 761)
Tax impact of adjustments - 9 044
Headline earnings 15 508 098 15 056 291
Weighted average number of ordinary
shares during the year 96 291 720 96 291 720
4. FAIR VALUE DISCLOSURES
The only financial assets measured at fair value are the financial
assets at fair value through profit or loss.
These financial assets are unit trust investments measured at quoted
prices (level 1).
5. SEGMENT INFORMATION
As the Group currently only has one business segment which is managed
as a single pool of capital irrespective of the sector in which the
Group's businesses trade, no segmental information is provided.
6. RELATED PARTY TRANSACTIONS
Related party transactions for the current year are similar to those
disclosed in the Group's annual financial statements for the year
ended 28 February 2017 and the interim financial information for the
period ended 31 August 2017.
No new significant related party transactions have taken place.
7. EVENTS AFTER THE REPORTING DATE
Mettle settled the R42,000,000 owed to Tradehold with an issue of
ordinary shares.
Tradehold subscribed for further ordinary shares in Mettle
(R403,206,516) which was utilised as follows:
- subscribed for ordinary shares in Reward (a wholly owned subsidiary
of Tradehold) amounting to R226,656,666;
- purchased a portion of the loan claim against Reward from Tradegro
S.a.r.l. (wholly owned subsidiary of Tradehold) for R162,840,000;
- Reward capitalised the above loan claim acquired by Mettle through
the issue of shares;
- purchased 55% of the ordinary shares in Mettle Solar Africa from
Tradehold Africa Limited (wholly owned subsidiary of Tradehold) for
R6,499; and
- purchased the loan claim against Mettle Solar Africa from Tradehold
Africa Limited for R13,703,351.
As a result, the Group now owns 90% of Reward (which owns 75% of Reward
Finance Group). IFRS 3 Business Combinations was not applicable as this
transaction was a combination of businesses under common control.
The 55% investment in Mettle Solar Africa Limited is classified as a
joint venture as the Group does not have the power to appoint the
majority of directors and the relevant activities that significantly
affects the Group's returns require approval of 75% of shareholders.
Cape Town
31 May 2018
Designated Advisor
Questco Corporate Advisory (Pty) Ltd
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