Wrap Text
Condensed Consolidated Reviewed Second Interim Results for the 12 Months Ended 31 March 2018
ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
Debt Issuers Code: ECSP
("the Company" or "Ecsponent")
Condensed Consolidated Reviewed second interim results for the 12 months ended
31 March 2018 of Ecsponent and its subsidiaries ("the Group" or "Company")
The Board of Directors ("the Board") is pleased to present the consolidated results for the
twelve-month period ended 31 March 2018
Following a series of transactions, announced mid-2017, to further refine the Ecsponent group's
business focus, the Group has disposed of several non-core assets and achieved significant asset
growth. The Group has begun to leverage the rationalised structure, improving the spread of the
asset base to support further expansion and growth.
In line with the rationalisation process, the Company changed its financial year-end during the 2018
financial year, changing the reporting date from 31 March to 30 June. The change resulted in the
30 June 2018 financial period being extended to a 15-month period, commencing on 1 April 2017. This
followed on the Company's changed financial year-end for the 2017 financial year, where the
reporting date changed from 31 December to 31 March. The 2017 financial period was extended to
a 15-month period, commencing on 1 January 2016.
RESULTS HIGHLIGHTS
The financial results of the 12-month period ended 31 March 2018 reflect the impact of the
rationalisation of the Group's operations which has secured a base from which further growth can
be pursued after several years of already significant growth.
Due to the change in the financial year-end, the second current interim period comprises the
12-months ended 31 March 2018, while the comparative previous period is for the 15 months ended
31 March 2017.
Highlights of the Group's second interim results ended 31 March 2018 compared to the comparative
results for the period ended 31 March 2017 ("Prior Period") are set out below:
- Revenue from continuing operations increased by 17.9% to R379.5 compared to the 15-month
Prior Period;
- Operating profits from continuing operations increased by 4.8% to R240.2 compared to
R229.2 million for the 15-month Prior Period. When excluding the R66.7 million gain on
disposal of assets included in the Prior Period's operating profit, the increase in operating
profit amounts to 47.9%;
- Headline earnings per share ("HEPS") increased by 787.0% to 0.12623 cents per share
compared to 0.01423 cents per share in the Prior Period; and
- Total assets increased by 60.0% to R1 943.3 million compared to R1 214.8 million in the Prior
Period.
The Group's continued growth has translated into an increase of 260% in the Company's share price
to 36 cents per share at market close on Friday, 30 March 2018, compared to 10 cents per share on
31 March 2017.
Of the Group's R1 943.3 million total assets, R582.8 million, or 30% of total assets, are held outside
of the Common Monetary Area. These investments provide a hedge against a weakening Rand but
also expose the Group's results to short-term currency volatility.
In addition, at 31 March 2018 the Group held investments valued at R316.6 million, or 16.3% of
total assets, in listed shares. The valuations of these investments are subject to short-term share
price volatility.
The Company is considering hedging instruments to mitigate against short-term earnings volatility
arising from currency and price risk associated with above mentioned listed shares.
Capital Raising
The Group's preference share programme ("the Programme"), which raises capital to fund
investments, has continued to facilitate the Group's expansion strategy. The Programme provides
retail and institutional investors with returns over a five-year period, after which their capital
is returned.
As at 31 March 2018, the Group has raised R1.47 billion from the issue of preference
shares since implementation of the Programme in September 2014.
In addition to raising capital through the Programme, the Group has as a strategic objective of
lowering its cost of capital through securing further institutional debt funding.
The Company procured debt funding during the period under review of USD15 million (R184 million)
on market related terms. The Group deployed the funding to expand its African operations and
international asset base. Loans and Investments funded remain US dollar or Euro based to
avoid exposure to emerging market exchange rate risk, thereby providing additional foreign currency assets.
OPERATIONAL REVIEW
Group Overview
Below is an overview of the Group's operations for the 2018 interim period end.
Investment Services
The Group's ability to deliver effective investment and other financial services products to the retail
market is one of its core competencies. To leverage opportunities offered through the established
distribution channel, the Investment Services business unit introduced additional preference share
products to the market. These products will give the Investment Services unit the ability to meet
multiple investment needs of the investor base and lead to additional profit opportunities for the
Group. The Investment Services business unit enhanced its product offering in Swaziland by
obtaining a license to act as a Collective Investment Scheme (CIS) Manager in Swaziland.
Additionally, it introduced a range of traditional investment products to the market, specifically
focusing on compulsory retirement funds.
Credit
The Credit business unit provides secured credit to fund the business operations of qualifying
entities. The unit has two distinct models that cater to the needs of specific unbanked and
underbanked Small to Medium Enterprises (SMEs). Both models offer unique loan and funding
products, that are fully secured so that the Group never takes an unsecured position, thereby
minimising its risk.
- The Secured Credit model provides wholesale funding to target niche businesses. The nature
of these transactions is typically medium-term facilities, but with a short-term call-up to
ensure liquidity for the group.
- Ecsponent's Supply Chain Solution and Enterprise Development solutions aim to integrate
qualifying vendors into the formal supply chain of large corporate businesses.
The Group controls all credit operations centrally, 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. At
the same time, it contributes to securing the Group's interests in transactions related to the supply
chain and enterprise development activities.
The demand for credit from the SME sector remains buoyant and has resulted in continued, sustained
growth of the business across the Group's footprint. Total assets increased by 20.9% from R1 151.4
million to R1 391.9m compared to the comparative period. Operating profit increased by 144% from
R160 million to R390 million.
Equity Holdings
The Equity Holdings business unit invests strategically in companies that are well-managed, self-
sufficient and provide a balance in the Group's short-term and long-term asset base.
It targets businesses with significant intellectual property, which provide a barrier to entry for
competitors, command significant margins and employs a robust business model. As a result, the
Group holds investments in innovative and growing sectors, including biotechnology, digital media
and Fintech.
At 31 March 2018, the group held 12% in the Frankfurt listed (Luxembourg based) Fintech company
MyBucks SA. This investment has the added advantage of providing a foreign currency hedge against
local currency frailty.
Total assets increased by 18.7% from R293.0 million to R347.9 million compared to the comparative
period and revenue increased by 23.6% from R76.6 million to R94.7 million.
Post 31 March 2018, the Group announced its intention to increase its stake in the Fintech company
in the near future. The investment will give the Group access to financial services and related
technology, which provides quantifiable value to its operations.
Geographical Footprint
The Group's operations in South Africa are mirrored across the operational footprint in Swaziland
and Botswana, with in-country client representation in each territory. In Zambia, the Group holds a
25% stake in the local entity, which is registered as a deposit-taking financial institution under the
GetBucks brand.
The back-office infrastructure of each territory is centrally managed from South Africa.
PROSPECTS
Key elements of the Group's on-going growth strategy are:
- the continued focus on core businesses;
- the continued investment in the Group's credit operations;
- increased emphasis on high yield equity opportunities and sector diversification
- obtaining rand-based and foreign currency institutional funding; and
- aggressive cost rationalisation/reduction.
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 12 months
ended 31 March 2018.
The Group's 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.
Condensed Consolidated Interim Statement of Financial Position as
at 31 March 2018
Reviewed Audited
12 months 15 months
ended ended
31 March 31 March
2018 2017
Group Group
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 9 870 6 810
Intangible assets and goodwill 5 327 6 011
Investment in associates 6 318 550 -
Other financial assets 7 1 065 009 667 089
Deferred tax 38 057 28 458
Other non-current receivables 1 000 4 656
Current assets
Inventories 1 119 1 222
Other financial assets 7 428 294 314 542
Trade and other receivables 50 981 36 150
Current tax receivable 254 186
Cash and cash equivalents 24 854 25 380
Non-current assets held for sale 4 - 124 313
TOTAL ASSETS 1 943 315 1 214 817
EQUITY AND LIABILITIES
Equity 119 279 106 986
Non-controlling interest (8 200) (11 429)
Non-current liabilities
Other financial liabilities 10 143 807 872
Preference share liability 10 1 495 343 921 925
Deferred revenue 15 401 2 538
Deferred tax 576 13 454
Current liabilities
Other financial liabilities 10 61 949 10 475
Preference share liability 10 12 185 6 048
Deferred revenue 2 800 148
Current tax payable 68 025 11 864
Trade and other payables 30 290 20 778
Finance lease liabilities 1 070 -
Bank overdraft 790 469
Liabilities of disposal groups held for 4 - 130 689
sale
TOTAL EQUITY AND LIABILITIES 1 943 315 1 214 817
Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income
for the interim period ending 31 March 2018
Reviewed Audited
12 months 15 months
ended ended
31 March 31 March
2018 2017
Group Group
R'000 R'000
Continuing operations
Revenue 379 529 321 795
Cost of sales (63 721) (43 782)
GROSS PROFIT 315 808 278 013
Other income 25 644 88 543
Operating expenses (108 870) (137 370)
Fair value adjustments 7 608 -
OPERATING PROFIT 240 190 229 186
Fair value adjustments - (11 017)
Loss from equity accounted investment (595) -
Net finance costs (192 985) (130 351)
PROFIT BEFORE TAXATION 46 610 87 818
Taxation 11 (49 289) (23 094)
LOSS/PROFIT FROM CONTINUING (2 679) 64 724
OPERATIONS
Profit from discontinued operations 4 15 312 2 852
PROFIT FOR THE PERIOD 12 633 67 576
Other comprehensive income/(loss) 1 164 282
TOTAL COMPREHENSIVE INCOME 13 797 67 858
Loss attributable to non-controlling interest 4 103 10 239
TOTAL COMPREHENSIVE INCOME 17 900 78 097
ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS
Profit attributable to owners of the parent from:
Continuing operations 1 424 75 160
Discontinued operations 15 312 2 852
16 736 78 012
Total comprehensive income/(loss) attributable
to:
Owners of the parent 17 900 78 097
Non-controlling interest (4 093) (10 239)
13 807 67 858
Basic and fully diluted earnings per share 0.132 8.074
(cents) from continuing operations attributable
to equity holders of the parent
Basic and fully diluted earnings/(loss) per share 1.418 0.306
(cents) from discontinued operations
attributable to equity holders of the parent
Basic and fully diluted earnings per share 3 1.550 8.380
(cents) attributable to equity holders of the
parent
Condensed Interim Statement of Changes in Equity for the 12 months ended 31 March 2018
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 - 1 164 - 16 736 (4 093) 13 807
for the 12 months
Profit for the 12 months - - - 16 736 (4 103) 12 633
Other comprehensive - 1 164 - - 10 1 174
income
Disposal of subsidiary - - - - 7 322 7 322
Adjustments to Retained - - - (5 607) (5 607)
earnings
Balance at 31 March 2018 145 169 766 - (26 656) (8 200) 111 079
Condensed Consolidated Cash Flow Statement for the 12 months ended 31 March 2018
Reviewed Audited
12 months 15 months
ended ended
31 March 31 March
2018 2017
Group Group
R'000 R'000
Cash generated by operations 251 208 177 263
Interest Income - -
Finance cost (143 428) (106 732)
Taxation paid (17 766) (25 234)
NET CASH INFLOW FROM OPERATING ACTIVITIES 90 014 45 297
Proceeds/(cash disposed of) through sale of 5 (7 369) (24 994)
investment in subsidiary
Investment in financial assets (835 289) (797 841)
Proceeds from financial assets 109 557 133 063
Business combinations - 10 233
Investments in associates (57 885) -
Purchase of PPE (4 040) (4 439)
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (795 026) (683 978)
Proceeds from other financial liabilities 710 819 656 597
Repayment of other financial liabilities (9 471) (18 899)
Proceeds from rights offer - 19 465
Other - (111)
NET CASH INFLOW FROM FINANCING ACTIVITIES 701 348 657 052
Movement in cash and cash equivalents for the period (3 664) 18 371
Cash and cash equivalents at the beginning of the period 26 481 9 741
Effect of exchange rate movement on cash balances 1 247 (1 631)
Cash and cash equivalents at the end of the period 24 064 26 481
Notes to the Condensed Consolidated Reviewed Financial statements for the interim
12 months ended 31 March 2018
1. ACCOUNTING POLICIES, BASIS OF PREPARATION OF RESULTS AND REVIEW OPINION
The condensed consolidated reviewed 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 reviewed 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 the supervision of its financial director, Mr. DP van der
Merwe CA (SA).
These condensed consolidated reviewed interim financial statements for the period ended 31 March
2018 have been reviewed by Nexia SAB&T Inc., 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 condensed consolidated reviewed interim financial statements identified in the
auditor's report.
2. REVIEW OF RESULTS AND FINANCIAL POSITION
The condensed consolidated reviewed interim financial results represent the trading results of the
Company and its subsidiaries which are active in the Investment services, Credit and Equity Holding
markets. There remained increased expansion to the portfolio of business credit and equity assets.
Funding for the expansions was sustained through the Group's listed preference share programme. The
market subscription of the preference shares continues to reflect healthy demand for the Company's
products.
3. EARNINGS AND FULLY DILUTED EARNINGS PER SHARE
Reviewed Audited
31 March 31 March
2018 2017
BASIC AND HEADLINE EARNINGS R'000 R' 000
Basic earnings 16 736 78 012
Headline earnings 1 363 132
Basic and diluted basic earnings per share (cents) 1.55000 8.38000
attributable to equity holders of the parent
Headline and diluted headline earnings per share 0.12623 0.01423
(cents) attributable to equity holders of the parent
Number of shares in issue 1 079 550 795 1 079 550 795
Weighted average number of shares 1 079 550 795 930 907 328
RECONCILIATION BETWEEN BASIC EARNINGS
AND HEADLINE EARNINGS
Basic earnings 16 736 78 013
(Profit)/Loss on disposal of property plant and - 252
equipment
Impairment of intangible assets 65 -
Gain on disposal of subsidiary - (25 795)
Gain on disposal of discontinued operations (15 438) (52 338)
Headline earnings 1 363 132
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 4/2018 issued by the
South African Institute of Chartered Accountants.
4. 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 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.
The combined results of the discontinued operations included in the profit for the year are set out below
The following disposal groups continued to be classified as held for sale for the period ended
31 March 2018:
Profit and loss – 12 months ended 31 March 2018 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
Assets classified as held for sale – Botswana Zambia Subtotal Disposal TOTAL:
31 March 2018
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 – 12 months ended 31 March 2018
Botswana Zambia TOTAL:
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
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 interim reporting period. Refer below for more details regarding
these transactions.
Aggregated business disposals for the period Group
31 March
2018
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 of (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 assets.
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
31 March
2018
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 movements in Other
Financial Assets.
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
31 March
2018
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
Investment in associates consists of:
31 March
2018
R'000
At cost:
Ecsponent Financial Services Ltd Zambia 22 119
22 119
Share of post-acquisition results net of dividend received (596)
21 523
Market value – Ecsponent Financial Services Ltd Zambia 21 523
At fair value:
MyBucks SA - Listed shares* 295 019
Fair value adjustment 2 008
297 027
*Fair value hierarchy is level 1
Total Investments in Associates
Held at cost 21 523
Held at fair value 297 027
318 550
Proportion
Name of companies Holding Place of of ownership
company incorporation interest
(%)
Mar 2018 Mar 2017
Ecsponent Financial Services
Zambia Ecsponent Ltd SA Lusaka, Zambia 25.0% 100.0%
MyBucks SA Ecsponent Ltd (BOT) Luxembourg 12.0% 9.4%
The investment in the Zambian associate is accounted for using the equity method in these
consolidated financial statements. The investment in MyBucks has been accounted for using the fair
value model.
The investment in MyBucks was reported on a fair value basis as part of other financial assets in the Prior Period.
At 30 September 2017 Ecsponent obtained significant influence and classified the investment in MyBucks as an equity
accounted associate. The application of the fair value model in the current reporting period has had no material
impact on the financial results previously reported.
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 31 March 2018 have been used.
As at 31 March 2018, 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 credit advance listed ordinary and preference
shares, a listed bond, secured business funding and purchase price repayment facilities. Provided below
is the detail regarding the Group's other financial assets:
Reviewed Audited
Group Group
31 March 31 March
2018 2017
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.
Listed Bond 61 681 -
The bond relates to the investment in the
GetBucks Listed Bond in Botswana. This is
listed on the Botswana Stock Exchange. The
annual rate of this financial instrument
is 1.55%.
Preference shares 100 000 -
The preference share investment comprises
1 666 667 preference shares held in VSS
Financial Services (Pty) Ltd.
Loans and receivables
Business funding – advances (per industry)
- Fintech 493 631 339 770
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 825 830 408 881
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 12 161 -
Repayment facility relating to the Botswana
disposal, repayable over 12 months.
TOTAL OTHER FINANCIAL ASSETS 1 493 303 981 631
Total included in non-current assets 1 065 009 667 089
Total included in current assets 428 294 314 542
8. TRADE AND OTHER RECEIVABLES
The trade and other receivables are made up of the following:
Reviewed Audited
Group Group
31 March 31 March
2018 2017
R '000 R '000
Trade receivables 24 951 27 622
Deposits 462 267
VAT 9 072 7 228
Prepayments 15 693 5 432
Other receivables 1 803 257
TOTAL TRADE AND OTHER RECEIVABLES 51 981 40 806
Total included in non-current liabilities 1 000 4 656
Total included in current liabilities 50 981 36 150
9. PREFERENCE SHARE CAPITAL
Ecsponent's business model requires funding for both organic business growth and to pursue further
acquisitions. Funding is deployed in the growth of Credit assets and the acquisition of new equity
investments. Preference shares are considered a reliable source of funding for these ongoing 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 31
March 2018, Ecsponent Limited had received subscription investments of R1.47 billion.
Reconciliation of the number of preference shares in issue:
Ecsponent Limited (South Africa)
Class A Class B Class C Class D Class E Class G
Reported at the 415 595 1 657 701 6 024 439 - - -
beginning of the
period
Issue of preference 367 474 1 553 535 1 320 075 634 725 649 270 19 050
shares during the
period
783 069 3 211 236 7 344 514 634 725 649 270 19 050
Weighted average 96.89 100.00 100.00 100.00 100.00 100.00
issue price per
share (Rand)
Ecsponent Limited (Swaziland)
Class A Class E
Reported at the 53 195 000 53 727 700
beginning of the
period
Issue of preference 70 763 000 31 605 000
shares during the
period 123 958 000 85 332 700
Weighted average 1.00 1.00
issue price per
share (converted to
Rand)
Ecsponent Limited (Botswana)
Class A Class B
Reported at the 11 750 000 2 067 000
beginning of the
period
Repayment of -1 400 000 -
preference shares
during the period 10 350 000 2 067 000
Weighted average
issue price per 1.00 1.00
share (Pula)
Weighted average 1.21 1.21
issue price per
share (Rand)
10. OTHER FINANCIAL LIABILITIES
The preference share capital is classified as debt and separately disclosed in the Condensed Consolidated
Statement of Financial Position as at 31 March 2018 in line with the principles of IFRS. Consequently, the
preference share dividends are classified as finance costs and disclosed as such in the Condensed
Consolidated Statement of Profit and Loss and Other Comprehensive Income for the 12 months ended
31 March 2018.
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 Audited
Group Group
31 March 31 March
2018 2017
R '000 R '000
Held at amortised cost
Preference share liability 1 507 528 927 973
Esperite NV Group 6 226 6 197
Scipion 122 336 -
GetBucks (Pty) Ltd - 4 241
Everprosperous 61 949 -
Other 15 245 909
TOTAL OTHER FINANCIAL LIABILITIES 1 713 284 939 320
Total included in non-current liabilities 1 639 150 922 797
Total included in current liabilities 74 134 16 523
11. RECONCILIATION OF THE TAX EXPENSE
Reconciliation between the applicable tax rate and average effective tax rate.
Reviewed Audited
Group Group
31 March 31 March
2018 2017
% %
Applicable tax rate 28.00 28.00
Different tax rates applied in foreign subsidiaries 4.22 0.05
Previously unrecognised deferred tax asset - (0.48)
Disallowable charges - preference share dividends 77.49 22.30
and miscellaneous
Disallowable charges - penalties - 0.54
Income from equity accounted investments (0.36) -
Exempt income (1.80) -
Effect of unused tax losses and tax offsets not - (4.00)
recognised as deferred tax asset
Capital gains tax* (1.80) (24.88)
105.75 21.53
12. RELATED PARTY DISCLOSURES
The Group has transacted with the following related parties during the period:
Relationship
Mason Alexander (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 Audited
31 March 31 March
2018 2017
R'000 R'000
Related party balances
Investments in:
Associate companies 318 550 273 285
Other financial assets owing (to)/by:
Associate companies 500 615 -
Shareholders with significant influence (6 226) (6 197)
Amounts included in Trade receivable/(Trade Payable):
Associate companies (272) -
Related party transactions
Interest received from/(paid to):
Associate companies 780 -
13. FINANCIAL INSTRUMENTS – FAIR VALUE AND RISK MANAGEMENT
Group – 31 March 2018 Carrying Carrying Carrying Fair
amounts amounts amounts value
R'000 R'000 R'000 R'000
Designated Loans & Non- Level 1
at fair value receivables/ financial
Liabilities at instruments
amortised
cost
Financial assets measured at
fair value
Other financial assets – listed 19 600 19 600
equities
Financial assets that are not
measured at fair value
Other financial assets 1 473 703
Trade receivables 26 754 25 227
Cash and cash equivalents 24 854
Financial liabilities that are
not measured at fair value
Cash and cash equivalents (790)
Preference shares (1 507 528)
Other financial liabilities (205 756)
Trade and other payables (26 724) (3 566)
Group – 31 March 2017 Carrying Carrying Carrying Fair
amounts amounts amounts value
R'000 R'000 R'000 R'000
Designated Loans & Non- Level 1
at fair value receivables/ financial
Liabilities at instruments
amortised
cost
Financial assets measured at
fair value
Other financial assets – listed 232 980 232 980
equities
Financial assets that are not
measured at fair value
Other financial assets 748 651
Trade receivables 27 880 12 926
Cash and cash equivalents 25 380
Financial liabilities that are
not measured at fair value
Cash and cash equivalents (469)
Preference shares (927 973)
Other financial liabilities (11 347)
Trade and other payables (16 012) (4 766)
Financial instrument carried at fair value (level 1) Reviewed Audited
31 March 31 March
2018 2017
Opening balance at the start of the period 232 980 -
Purchases 14 000 262 570
Revaluation 5 600 (29 590)
Transfer to Investment in Associate (232 980) -
Balance at the end of the period 19 600 232 980
Financial Instruments
Financial assets at fair value through profit and loss are recognised at fair value, which is therefore equal
to their carrying amounts.
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.
Risk Management
The Group's risk management objectives and policies, relating to capital risk, financial risk, liquidity
risk, interest rate risk, credit risk and foreign exchange risk, are consistent with those disclosed in the
consolidated annual financial statements as at and for the year ended 31 March 2017. This note is a
condensed disclosure note, the full version is available on the Group's website, at the issuer's registered
offices and upon request. This announcement is itself not reviewed but extracted from the underlying
reviewed information.
14. 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 on 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 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 division changed by introducing new
products to the market, changing the segment to a profit centre and not only a capital raising vehicle.
- 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 business credit
provision 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 investment 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 31 March 2018
Operating Segment Total Assets Revenue Operating
profit/(loss)
R' 000 R' 000 R'000
Credit 1 391 864 291 277 390 340
Investment Services 348 317 177 626 259 966
Equity Holdings 347 927 94 747 (17 063)
Corporate 12 708 37 616 (3 420)
Eliminations (157 501) (212 862) (382 592)
Discontinued operations - (8 875) (7 041)
Group total 1 943 315 379 529 240 190
Geographic Segment Total Assets Revenue Operating
profit/(loss)
R' 000 R' 000 R'000
South Africa 1 233 538 474 511 499 299
Botswana 688 111 44 037 54 349
Swaziland 165 138 81 804 75 295
Namibia 194 508 (5)
Zambia 13 835 406 885
Eliminations (157 501) (212 862) (382 592)
Discontinued operations - (8 875) (7 041)
Group total 1 943 315 379 529 240 190
Year ended 31 March 2017 (Re-presented)
Operating Segment Total Assets Revenue Operating
profit/(loss)
R' 000 R' 000 R'000
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
15. 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. Refer to
www.ecsponentlimited.com for the full announcement and relevant details of each of these matters.
- The Company announced the following transactions on 23 May 2018:
- a proposed investment into Capitis Equities (Pty) Ltd, a black woman owned (as defined by
the Black Economic Empowerment Act 2003) venture capital company, with specialist skills
focused on the acquisition and management of equity investments. The board approved an
immediate investment of R156 million, with further investments of up to R400 million by the
end of 30 June 2019, subject to shareholder approval.
- The proposed acquisition of a further 1 498 610 MyBucks SA ("MyBucks") shares, comprising
an additional investment of 11.568% in MyBucks. The proposed acquisitions comprise:
- the acquisition of 352 612 shares from DTM Capital (Pty) Ltd in settlement of DTM's
loan owing to the Ecsponent Group; and
- the acquisition of 1 145 998 shares from Coronado Trading 258 (Pty) Ltd.
- On 18 June 2018, it announced the disposal of the going concern business of Return on Innovation
(Pty) Ltd, a 100% subsidiary of the Company, to iKGB Media Information Services (Pty) Ltd for
R7.3 million.
- The disposal of the Group's 50% equity holding in Cryo-Save South Africa (Pty) Ltd and Salveo
Swiss Technologies Ltd, to Go Life International for R10 million, effective 30 June 2018.
- The Group entered into a securitisation transaction of a retail loan book with GetBucks SA,
to the value
16. CORPORATE ACTIONS
The following corporate actions were implemented during the period under review 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.
Amendments to Classes 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.
Amendments to Classes A, B and C Preference Shares
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.
17. SHARE CAPITAL
No ordinary shares were issued during the 12 months ended 31 March 2018.
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 31 March 2018 1 079 550 145 169 145 169
18. 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 R182million accrued to investors for the 12 months ended 31
March 2018. 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.
19. 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.
20. DIRECTOR CHANGES
Dirk van der Merwe (previous Group Company Secretary) took over the role of Financial Director from
Bryan Shanahan with effect from 1 February 2018.
Eune Engelbrecht resigned as a non-executive director effective 31 May 2017.
21. COMPANY SECRETARY
Lezanne du Preez-Cilliers was appointed as the company secretary for the Group on 1 February 2018.
22. AUDITORS
Nexia SAB&T Inc. continued in office as the Group's auditors for the 2018 interim financial period. At the
Annual General Meeting held on 4 August 2017, shareholders reappointed Nexia SAB&T Inc. as the
independent external auditors of the Group for the 2017/2018 financial year.
23. 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 12
months ended 31 March 2018 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
29 June 2018
Directors: RJ Connellan* (Chairman), KA Rayner*, BR Topham*, W Oberholzer*, P Matute #, G
Manyere (Vice Chairman) #, TP Gregory (Chief Executive Officer) and DP van der Merwe (Financial Director).
(* Independent Non-Executives)
(# Non-Executive)
Company Secretary: L Du Preez-Cilliers
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: 29/06/2018 05:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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