ANCHOR GROUP LIMITED - Unaudited interim results for the half year ended 30 June 2018 and declaration of dividend number 8

Release Date: 03/09/2018 17:36
Code(s): ACG
 
Wrap Text
Unaudited interim results for the half year ended 30 June 2018 and declaration of dividend number 8

ANCHOR GROUP LIMITED


(Incorporated in the Republic of South Africa)


(Registration number 2009/005413/06)


("Anchor" or "the Company" or "the Group")


Share Code: ACG


ISIN: ZAE000193389





UNAUDITED INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2018 AND DECLARATION OF DIVIDEND NUMBER 8





HIGHLIGHTS





*  Top quartile investment performance and compelling long-term track record.


*  Cash and cash equivalents and short-term investments balance of R170 million (R206 million at 31 December 2017).


*  Assets under management and administration up 3.4% to R51.3 billion (R49.6 billion at 30 June 2017).


*  Adjusted Headline Earnings down 2% to R41.5 million (R42.5 million to 30 June 2017).


*  Adjusted HEPS down 4% to 21.0 cents per share (22.0 cents per share to 30 June 2017).


*  Interim dividend of 10.5 cents per share (nil at 30 June 2017).





COMMENTARY





Anchor began managing assets in 2012 and has grown rapidly to reach group-wide assets under management and 
advice at 30 June 2018 of R51.3 billion, up by 3% from R49.6 billion on 30 June 2017.





Anchor has three primary divisions - Private Clients, Asset Management and Stockbroking. The long term strategy of Anchor 
is to become a major player in South African asset management, with an increasing focus on offshore investment. 
This will be achieved by both organic and acquisitive growth. 





INTRODUCTION





The first half of 2018 was a difficult one for the investment industry, with activity levels and investment returns down on the previous year. 
The backdrop in South Africa remains challenging with slow economic growth persisting and investors being cautious. 
For the six month period the JSE Capped Swix was down 5.8% and the average USD/ZAR exchange rate was 6.4% stronger.





Anchor has reacted proactively to this environment by attracting over 1,200 new high net worth private clients 
during the reporting period and maintaining first quartile investment performance. 





Anchor has matured and consolidated in 2018. Turnover decreased by 3%, due to a combination of net AUM inflows, 
lower market levels and a stronger average USD/ZAR exchange rate. The Company incurred a loss due to the impairment 
of Capricorn Fund Managers Malta ("CFM Malta"), which is an offshore hedge fund associate.





Operating profits were down 13% (26.6% margin) from the first half of 2017 (29.8%), but up 18% on the second half 
of 2017 (23% margin). The operating margin was influenced by:


*  Organic growth in the private client and asset management businesses.


*  Effective cost management and monitoring.


*  Lower activity levels resulting in lower private client brokerage revenue.


*  A 6.4% stronger average USDZAR rate comparing the first halves of 2018 and 2017. 





The Company is well placed to take advantage of a more positive environment. In addition, there are a number 
of newer businesses which are still operating at low operating margins.





RESULTS





The turnover of the group decreased by 3% to R238 million (2017: R245 million), but was up 3% on the second half of 2017. 
The yield on average assets (R51.8 billion) for the period was 0.92% (2017: 1.03%). The yield on average assets was lower 
due to lower activity levels, and a stronger average USD/ZAR rate. There were no once-off items in revenue.





Operating expenses grew by 1% to R175 million (2017: R172 million). 





Profit before tax was negative R154 million (2017: R76 million) due to the impairment of CFM Malta.  CFM Malta had a difficult half year. 
The assets under management decreased by 29% during this period coupled with the emerging market crises decreased the fund 
Compounded Annual Growth Rate ("CAGR") from 10% to 7%. Both these factors in 2018 resulted in a decision to impair 
the carrying value of the associate.





The share of losses from equity accounted associates was a negative R1.3 million (2017: R0.8 million profit). 
CFM Malta had lower earnings during the first half of 2018.





Adjusted headline earnings per share declined by 4% to 21 cents (2017: 22 cents). Adjusted headline earnings are calculated 
by the Group in order to reflect the sustainable cash-flow earnings of the Group. 
This number is used as the basis to determine the dividend cover of the Group.


  


The business is highly cash generative and 85% of profits were generated in cash.





Shareholders' equity decreased to R946 million (2017: R1.09 billion), as a result of the loss for the period, incorporating the impairment of CFM Malta. 
The net asset value per share is 475 cents. Cash and other liquid instruments were R170 million at 30 June 2018, which represents 85 cents per share.





OPERATIONAL REVIEW





Private Clients and Asset Management





Anchor is proceeding well in a challenging environment. Assets under management at the half year were R36.3 billion (+2%, 2017: R35.6 billion) 
and assets under advice R15 billion (-10%, 2017: R16.7 billion). The decline in Assets under advice was as a result of one large client withdrawing 
its non-discretionary shares held by Anchor. These assets were under advice, and not directly revenue-generating. Anchor attracted over R4.5 billion 
of new inflows in the period, with negative market returns and the non-discretionary withdrawal (referred to above) offsetting these inflows.


Anchor does not own 100% of all of its subsidiaries. When only including Anchor's attributable share of assets under management the R36.3 billion 
reduces to R32.5 billion (up +6.6% on 31 December 2017: R30.5 billion).





The business welcomed a record number of new clients and Group net inflows remain strong. We are pleased with the following:





*  Anchor Capital (Pty) Ltd ("Anchor Capital") has a strong institutional and private client pipeline of mandates and this should further

   increase Assets under management in 2018.


*  Offshore managed assets grew by 14% to just over R16.3 billion.


*  Anchor's fixed income business was launched late in 2015 and has grown meaningfully with a strong pipeline.





Group marketing initiatives are proving effective and Anchor has achieved new inflows of over R750 million per month in the first half of 2018.  





The investment performance of the Group has been strong since inception. The majority of assets are managed in segregated portfolios. 
Anchor Capital is relatively new to the Collective Investment Scheme ("CIS") space, with two of its Anchor-branded funds now having a five year track record. 
This includes the Anchor BCI Equity Fund, which since inception has averaged a compounded growth rate of 13.6% per annum against a peer group average of 7.9% 
and at the end of June 2017 was the top performing CIS in its category (source: MoneyMate).  





Portfolio Bureau (Pty) Ltd performed in line with expectations. The contribution from Capricorn Fund Managers SA (Pty) Ltd was lower than the prior period with 
no performance fees. CFM Malta is exploring the launch of a long only global emerging market fund, to leverage off the long term investment 
performance of an experienced team. 





Investment markets delivered unfavourable returns in 2018: the SA JSE Capped Swix index was  down 5.8%, the MSCI World was flat at 0.4% 
and the average USD/ZAR exchange rate was 6.4% stronger. Anchor's local performance was ahead of benchmarks.





As Anchor increases in size, so it becomes increasingly sensitive to market returns and exchange rates. To balance this, 
Anchor is focused on growing annuity revenue streams and increasing the mix of asset classes.





Anchor has a long-term strategy of being a meaningful South African asset management company and places a great deal of emphasis on fundamental research. 
Accordingly it has built a large investment team relative to its size. 
The Group has 15 CA(SA)s, 15 CFA charter holders and a 20 strong investment team. 





Stockbroking





Anchor Stockbrokers (Pty) Ltd continued to deliver a positive performance, in historically low market conditions. Anchor has sold 51% of this business 
to a consortium led by property entrepreneur Dr Sisa Ngebulana. The sale is subject to Competition Commission approval, 

and therefore has not been deconsolidated in the results. 




Upon completion of the sale, Anchor Stockbrokers will become a Level II B-BBEE contributor and 
has excellent prospects to materially contribute to earnings. 





CAPITAL ALLOCATION AND CORPORATE ACTIVITY





Anchor increased its stake in Anchor Securities Private Clients (Pty) Ltd ("ASPC") from 14% to 65%. 
ASPC is a high-quality Private Client business with more than R1.8 billion of AUM, and is based in Kwa-Zulu Natal. 
The purchase price was settled in shares.





Anchor repurchased 0.85 million shares held as treasury shares during the half year of 2018 and 
the share buy-back has continued subsequent to the half year. 





Anchor has a stated, long-term intention of paying half of adjusted headline earnings as a dividend. The interim dividend is 10.5 cents per share. 
Given the strong balance sheet and anticipated cash generation, the Group intends paying a final dividend 
and intends to continue with the share repurchases.





STRATEGY AND NEW INITIATIVES





Anchor is in its eighth year of existence and continues to make progress.  Anchor is a young and dynamic asset management business, 
which maintains its focus on quality and investment excellence, but also aims to do things differently and challenge the status quo. 
The private client market in South Africa has shown a strong appetite to support a relatively new player, but to penetrate 
other segments of the market, longer track records are required. 





Anchor Capital now has a seven year track record in its current form and some of its CIS products have five year track records. 
As the track record lengthens and the asset base grows, we become a viable asset management alternative for bigger pools of assets. 
This is an industry where size begets size and we are encouraged by the early successes in winning mandates with bigger clients. 
Our critical mass has enabled us to conclude deals with South Africa's major platforms, which increases 
access to a broader set of potential investors.





Anchor Capital has taken a non-traditional approach to building an asset management business by investing heavily in marketing 
and distribution capabilities from inception, which is bearing fruit through the growth of assets under management. 
We are aiming for consequent financial leverage to follow in coming years.





The Group's strategy is as follows:





1.  To build a world-class investment product range across asset classes and geographies:


    *  This is now close to complete and Anchor now has a CIS product range which will service all investment needs, managed by a well-established,
       extremely competent and strongly performing investment process.


    *  Anchor hired a fixed income team in 2015 and has built further capacity and capability in the hedge and offshore categories, both organically

       and acquisitively. The focus now is to leverage off this product offering by increasing assets under management. 


    *  There is a strong focus on offshore, both for funds which are Rand-based and for funds which have been externalised. 





2.  To build distribution capacity and capability to generate growth in assets under management. This will be achieved in two ways:


    *  Marketing to traditional channels who outsource the asset management function to third party asset managers. This includes financial advisors,

       institutional investors, multi-managers and fund-of-funds. We continue to add high quality personnel to this pursuit.
    *  Marketing directly to clients, primarily in the private client space. We continue to employ individuals who can attract assets and have
       over 50 high quality investment professionals who sign on clients. We will also pursue partnerships and acquisitions of businesses which

       have a distribution capability and existing client base. This strategy will continue into 2018.





PROSPECTS





Anchor anticipates further net inflows for the remainder of 2018 and inflows in July and August have followed historical trends. 
Since 30 June 2018 the local market is up more than 4% and the USD/ZAR exchange rate is over 6% weaker, both of which are positive. 
Management is focussed on delivering on key metrics and creating a sound long-term business for Anchor.





On the assumption of reasonable investment markets, Anchor anticipates 2018 earnings being stronger than 2017. This prospect statement 
has not been reviewed or reported on by the company's auditors. The key driver for the business is assets under management, 
which averaged R51.8 billion for the first half of 2018. The second half of 2018 will be influenced by:





*  The performance of local and global markets and Anchor's relative performance.


*  The impact on assets under management from a larger distribution force and the progress of Anchor Financial Services.


*  The exchange rate between the Rand and other currencies (we estimate across the business, including Capricorn Fund Managers, that the Rand hedge

   component is approximately 60%).


*  An increase in shares in issue.


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



CHANGES TO THE BOARD OF DIRECTORS


There were no changes to the board of directors during the period under review, 





However post the period under review Ms K.Bissessor tendered her resignation and the Board wishes to thank Ms K.Bissessor 
for her contribution during her tenure. Ms. T. Mhlari was appointed as an independent non-executive director, 
and the chairperson of the Audit and Risk Committee with effect from 17 August 2018.





Condensed consolidated statement of comprehensive income 





                                                              Unaudited   Unaudited   Audited


Figures in R'000                                    % change  30-Jun-18   30-Jun-17  31-Dec-17





Revenue                                                  -3%    238 220    245 436    476 283 


Operating Expenses                                        1%   -174 777   -172 389   -349 520 


Operating profit                                        -13%     63 443     73 047    126 763 


Other Income                                             47%     10 376      7 082     12 666 


Fair value gain (loss) on acquisition 


of former associate                                    -836%      4 321       -587 


Finance Costs                                           -42%     -1 419     -2 465     -4 413 


Impairment of associate                                  n.m   -229 948 


Share of losses from associates                          59%     -1 310       -824     -1 895 


(Loss) Profit before taxation                          -303%   -154 537     76 253    133 121 


Taxation expense                                         -9%    -20 248    -22 161    -36 384 


(Loss) Profit for the period                           -423%   -174 785     54 092     96 737 


Other Comprehensive Income                              -51%       -167       -342       -554 


Total Comprehensive (Loss) Income                      -425%   -174 952     53 750     96 183 


(Loss) Profit for the period attributable to:


Owners of the parent                                   -608%   -189 297     37 247     63 337 


Non-controlling interest                                -14%     14 512     16 845     33 400 


                                                       -423%   -174 785     54 092     96 737 


Total comprehensive (Loss) income attributable to:


Owners of the parent                                   -613%   -189 464     36 905     62 783 


Non-controlling interest                                -14%     14 512     16 845     33 400 


                                                       -425%   -174 952     53 750     96 183 


(Loss) Earnings per share (cents)                      -598%      -95,8       19,3       32,6 


Diluted (loss) earnings per share (cents)              -600%      -95,6       19,1       32,6 


Headline earnings per share (cents)                      -6%       18,4       19,6       32,6 


Diluted headline earnings per share (cents)              -5%       18,3       19,4       32,6 


Adjusted headline earnings per share (cents)             -4%       21,0       22,0       38,0


Diluted adjusted headline earnings per share (cents)     -4%       21,0       21,8       37,9


Earnings and headline earnings per share 


Earnings attributable to shareholders                          -174 785     54 092     96 737 


Non-controlling interest                                -14%     14 512     16 845     33 400 


Earnings attributable to ordinary shareholders         -608%   -189 297     37 247     63 337 


Fair value gain / (loss) on acquisition 


of former associate                                    -836%     -4 321        587


Impairment of associate                                  n.m    229 948 


Headline earnings attributable to 


ordinary shareholders                                    -4%     36 330     37 834     63 337 


Amortisation on Intangible Asset                         31%      2 356      1 793      4 065 


Equity settled share option costs                        -4%      2 818      2 928      6 393 


Adjusted headline earnings attributable 


to ordinary shareholders                                 -2%     41 504     42 555     73 795 


Number of shares in issue ('000)                          3%    199 326    194 436    197 217 


Weighted average number of shares 


beginning of year ('000)                                  2%    197 217    193 436    194 310


Weighted average shares issued 


during the year                                                   1 837          -        857 


Weighted average treasury shares 


bought during the year                                           -1 524          -       -281 


Weighted average number of shares end of the year         2%    197 529    193 436    194 883 


Employee share incentive scheme                          -8%        513        560        244 


Diluted weighted average number of shares in issue        2%    198 042    194 996    195 127





Condensed consolidated statement of financial position 





                                                             Unaudited   Unaudited   Audited


Figures in R'000                                    % change  30-Jun-18   30-Jun-17  31-Dec-17


Assets


Non-Current Assets


Equipment                                               -21%      6 364      8 091      7 325 


Goodwill                                                 13%    592 991    525 212    557 287 


Intangible assets                                        12%     90 697     80 719     87 222 


Investments in associates                               -66%    105 193    310 463    334 309 


Financial assets                                         43%     17 132     11 998     14 660 


Deferred tax                                            223%      6 421      1 988      4 299 


                                                        -13%    818 798    938 471  1 005 102 


Current Assets


Current tax receivable                                  -80%      2 029     10 096      2 288 


Cash and cash equivalents                               -10%     69 509     76 838     93 672 


Financial assets                                        -18%    100 670    122 108    111 882 


Trade and other receivables                             -16%     70 856     84 455     69 764 


Amounts receivable on stockbroking activities            82%    378 058    207 726    251 566 


                                                         24%    621 122    501 223    529 172 


Total Assets                                              0%  1 439 920  1 439 694  1 534 274 


Equity and Liabilities


Equity


Share capital                                             3%    938 096    909 010    913 902 


Reserves                                                -20%      5 712      7 175      6 308 


Retained income                                        -116%    -25 197    157 755    183 845 


Equity Attributable to Equity Holders of Parent         -14%    918 611  1 073 940  1 104 055 


Non-controlling interest                                 52%     27 866     18 358     27 492 


Total Equity                                            -13%    946 477  1 092 298  1 131 547 


Liabilities 


Non Current Liabilities


Other financial liabilities                              16%     41 369     35 737     52 714 


Deferred Tax                                             -2%     23 327     23 889     19 308 


                                                          9%     64 696     59 626     72 022


Liabilities 


Current Liabilities


Financial liabilities                                   -10%     37 094     41 353     37 094 


Trade and other payables                                -49%      9 028     17 636     26 800 


Current tax payable                                     -72%      5 338     19 256     14 357 


Amounts payable on stockbroking activities               80%    377 287    209 525    252 454 


                                                         49%    428 747    287 770    330 705 


Total Liabilities                                        42%    493 443    347 396    402 727 


Total Equity and Liabilities                              0%  1 439 920  1 439 694  1 534 274 


Net asset value per share (cents)                       -16%        475        565        574 


Net tangible asset value per share (cents)              -47%        132        251        247





Condensed consolidated statement of cash flows





                                                             Unaudited   Unaudited   Audited


Figures in R'000                                    % change  30-Jun-18   30-Jun-17  31-Dec-17


Cash flows from operating activities


Cash generated from operations                           31%     55 332     42 335    140 736 


Interest income                                         -45%      3 926      7 082      6 538 


Finance costs                                          -158%    (1 419)      2 465    (4 413)


Tax paid                                                 17%   (26 750)   (22 797)   (29 750)


Net cash from operating activities                        7%     31 089     29 085    113 111 


Cash flows utilised in investing activities


Purchase of equipment and intangible assets              n.m    (7 635)      (285)    (9 256)


Cash acquired through acquisition of subsidiary         -97%      1 132     41 381      4 363 


Proceeds of financial assets                            -76%      4 232     17 728     22 892 


Advances to investments in associates                   -85%    (4 615)   (31 301)   (21 499)


Net cash utilised in investing activities              -125%    (6 886)     27 523    (3 500)


Cash flows from financing activities


Proceeds from Increase in stated 


capital / share capital                                -100%          -      5 002      4 299 


Decrease of other financial liabilities                 -12%   (15 011)   (16 963)   (39 891)


Purchase of ACG shares                                          (3 425)               (5 121)


Dividends paid                                          -34%   (30 014)   (45 651)   (53 292)


Net Cash from financing activities                      -16%   (48 450)   (57 612)   (94 075)


Total cash and cash equivalents 


movement for the year                                -2 315%   (24 247)    (1 004)     15 536 


Cash and cash equivalents at 


the beginning of the year                               -20%     93 672     78 184     78 184 


Effect of exchange rate movement on cash balances      -125%         84       -342        -48 


Total cash and cash equivalents at end of the year      -10%     69 509     76 838     93 672








Condensed consolidated statement of changes in equity





Figures in R'000                                                                                                         Total


                                                                                                                         attri-


                                                                                                                        butable


                                                     Foreign                                                          to equity 


                                                    currency                            Share                           holders       Non-


                                                      transl                            based                            of the   control-


                                            Share      ation    Equity    Treasury    payment      Total   Retained     group /       ling      Total


                                          Capital    Reserve    Reserve     shares    reserve   reserves     Income     company   interest     equity  





Balance at 01 January 2017                904 010      1 159     -5 805                10 236       5 590    149 526  1 059 126     18 366  1 077 492 


Profit for the year                                                                                           37 247     37 247     16 845     54 092 


Other comprehensive income                            -1 501                                       -1 501                -1 501                -1 501 


Total comprehensive income     


for the period                                        -1 501                                       -1 501     37 247     35 746     16 845     52 591 


Issue of shares                             5 000                                                      -                  5 000                 5 000 


Share based payments                                                                    3 086       3 086                 3 086                 3 086 


Changes in ownership interest 


- control not lost                                                                                                                    -220       -220 


Dividends                                                                                              -     -29 018    -29 018    -16 633    -45 651 


Total contributions by and 


distributions to owners of 


company recognised directly in equity       5 000    - 1 501          -          -      3 086      1 585     -29 018    -20 932    -16 853    -37 785 


Balance at 30 June 2017                   909 010      - 342    - 5 805          -     13 322      7 175     157 755  1 073 940     18 358  1 092 298 


Profit for the period                                                                                         26 090     26 090     16 555     42 645 


Other comprehensive income                               947                                         947                    947                   947 


Total comprehensive income 


for the period                                           947                                         947      26 090     27 037     16 555     43 592 


Issue of shares                             4 892                                                      -                  4 892                 4 892 


Shares of ACG held in subsidiary                                            -5 121                 -5 121                -5 121                -5 121 


Share issue costs                                                                                       -                     -                     -         


Share based payments                                                                    3 307       3 307                 3 307                 3 307 


Dividends                                                                                               -          -          -     -7 421     -7 421 


Total contributions by and 


distributions to owners of company 


recognised directly in equity               4 892          -          -     -5 121      3 307      -1 814          -      3 078     -7 421     -4 343 


Balance at 01 January 2018                913 902        605    - 5 805    - 5 121     16 629       6 308    183 845  1 104 055     27 492  1 131 547 


Profit for the period                                                                                       -189 297   -189 297     14 512   -174 785 


Other comprehensive income                              -167                                         -167                  -167                  -167 


Total comprehensive 


income for the period                                   -167                                         -167   -189 297   -189 464     14 512   -174 952 


Issue of shares                            24 194                                                      -                 24 194                24 194 


Shares of ACG held in subsidiary                                            -3 425                -3 425                 -3 425                -3 425 


Acquisition of subsidiary ASPC                                                                         -                      -     -3 869     -3 869 


Share based payments                                                                    2 996      2 996                  2 996                 2 996 


Dividends                                                                                              -     -19 745    -19 745    -10 269    -30 014 


Total contributions by and 


distributions to owners 


of company recognised 


directly in equity                         24 194          -          -     -3 425      2 996       -429     -19 745      4 020    -14 138    -10 118 


Balance at 30 June 2018                   938 096        438    - 5 805    - 8 546     19 625      5 712    - 25 197    918 611     27 866    946 477





Condensed consolidated segmental information (R' 000)





Income statement


30-Jun-18                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Revenue                                               23 256               178 085                66 708               (29 828)               238 221 


Operating expenses                                   (9 287)             (127 121)               (51 019)                12 649             (174 779)


Operating profit                                      13 969                50 964                15 689               (17 179)                63 442 


Other Income                                           3 005                 7 356                 2 259                (2 244)                10 376 


Fair value on acquisition of associate                     -                 4 321                                                              4 321 


Share of losses from associates                      (1 310)                     -                                            -               (1 310)


Impairment of associate                            (229 948)                                                                                (229 948)


Finance costs                                              -                (2 970)                 (781)                 2 333               (1 418)


(Loss) Profit before tax                           (214 285)                59 671                17 166               (17 089)             (154 537)





30-Jun-17                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Revenue                                                6 471               246 906                                      (7 941)               245 436 


Operating expenses                                   (8 881)             (174 244)                                       10 736             (172 389)


Operating profit                                     (2 410)                72 662                     -                  2 795                73 047 


Other Income                                          21 797               (1 519)                                     (13 196)                 7 082 


Share of losses from associates                        (824)                                                                  -                 (824)


Fair value adjustment associate acquisition            (587)                                                                                    (587)


Finance Costs                                              -               (3 777)                                        1 312               (2 465)


Profit before tax                                     18 563                66 779                     -                (9 089)                76 253 





31-Dec-17                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Revenue                                               55 292               372 050                129 850              (80 909)               476 283 


Operating expenses                                  (23 827)             (270 283)               (92 078)                36 668             (349 520)


Operating profit                                      31 465               101 767                 37 772              (44 241)               126 764 


Other Income                                           8 106                 8 093                  3 259               (6 792)                12 666 


Share of losses from associates                      (1 895)                     -                      -                    -                (1 895)


Finance Costs                                          (548)               (5 081)                (1 491)                 2 707               (4 413)


Profit before tax                                     37 128               104 779                 39 540              (48 327)               133 121 


 





Financial Position





30-Jun-18                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Assets                                               855 093               424 006                424 713             (263 893)             1 439 919 


Non Current Assets                                   788 523               267 968                  7 222             (244 915)               818 798 


Current Assets                                        66 570               156 038                417 492              (18 978)               621 122 


Liabilities                                         (58 095)              (56 756)              (398 722)                19 208             (493 443)


Non Current Liabilities                             (33 861)              (30 355)               (17 800)                17 319              (64 696)


Current liabilities                                 (23 312)              (26 401)              (380 922)                 1 889             (428 747)


Equity                                               796 998               367 250                 25 992             (244 685)               946 476 





31-Jun-17                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Assets                                               983 358               657 416                      -             (201 080)             1 439 694 


Non Current Assets                                   874 673               257 103                                    (193 305)               938 471 


Current Assets                                       108 685               400 313                                      (7 775)               501 223 


Liabilities                                         (47 662)             (326 745)                      -                27 011             (347 396)


Non Current Liabilities                             (19 022)              (61 367)                                    (207 381)             (287 770)


Current Liabilities                                 (28 640)             (265 378)                                      234 392              (59 626)


Equity                                               935 696               330 671                      -             (174 069)             1 092 298 





31-Dec-17                                          Non-Asset                Asset


                                                  Management            Management           Stockbroking          Eliminations                 Total


Assets                                             1 098 078               421 838                297 114             (282 756)             1 534 274 


Non Current Assets                                   988 442               251 717                  8 889             (243 946)             1 005 102 


Current Assets                                       109 636               170 121                288 225              (38 810)               529 172 


Liabilities                                         (65 416)              (90 691)              (268 911)                22 291             (402 727)


Non Current Liabilities                             (63 468)              (11 456)               (17 237)                20 139              (72 022)


Current Liabilities                                  (1 948)              (79 235)              (251 674)                 2 152             (330 705)


Equity                                             1 032 662               331 147                28 203              (260 465)             1 131 547





BASIS OF PREPARATION AND ACCOUNTING POLICIES





The accounting policies and method of measurement and recognition applied in the preparation of these condensed consolidated unaudited interim results 
are in terms of International Financial Reporting Standards ("IFRS") and are consistent with those applied in the audited annual financial statements 
for the year ended 31 December 2018, except for IFRS 15 and IFRS 9 which were adopted during the period. 





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





These unaudited results have been compiled under the supervision of the Financial Director, Omair Khan CA (SA). 





The directors are not aware of any matters or circumstances subsequent to 30 June 2018 that require any additional disclosure or 
adjustment to the financial statements. The interim results have not been reviewed or reported on by the Company's auditors.





BUSINESS COMBINATIONS





ASPC





Anchor increased its stake in ASPC from 14% to 65%. ASPC is high quality Private Client business with more than R1.8 billion of AUM, 
and is based in Kwa-Zulu Natal.





Provisional fair value of assets acquired and liabilities assumed





Equipment                                     459 


Deferred tax                                3 082 


Trade and other receivables                 2 323 


Cash and cash equivalents                   1 132 


Loans from intragroup companies          (17 201)


Trade and other payables                    (760)


Total net identifiable assets            (10 965)


Non-controlling Interests                 (3 869)


Goodwill                                   35 704





IMPAIRMENT OF ASSOCIATE





The carrying value of CFM Malta was tested for impairment at 30 June 2018. The value in use is determined using 
the discounted cash flow model. Cash flows were projected on actuals results and a five year forecast. 





Conditions had materially changed in this business from March 2018. The AUM had decreased from USD 143 million, 
to USD 100 million, and the CAGR of the Global Emerging Market fund, which is the main generator of revenue had decreased from 10% to 7%. 





Key assumptions and inputs:


                                           Jun-18     Dec-17


Inputs:


AUM (USD ' millions)                          100        143


CAGR of fund                                   7%        10%





Assumptions:


Growth rate:                                   6%         6%


AUM net flows (USD ' millions):           minimal         20


USDZAR Rate:                                13,71      11,89


GBPZAR Rate:                                18,09      16,91





Assessed recoverable amount (R'000)        66 086    341 892








FAIR VALUE HEIRACHY 


The following items in the Statement of Financial Position are carried at fair value through Profit and Loss: 





                                          Level 1    Level 2    Level 3


Non-current Assets


Financial assets                                                 17 132


Current Assets


Financial assets                          100 670





Financial asset are listed and unlisted investments. 





At level 3 are unlisted investments. The significant judgments and assumptions involved in the valuation have not changed since last reported. 
The value in use was determined by discounting the future cash flows generated from the continuing use and was based on the cash flows that 
were projected on actual operating results and a 5 year forecast. Cash flows beyond this were extrapolated using a constant growth rate 
of 8%, and discounted using a rate between 15% to 20%.





EVENTS AFTER THE REPORTING PERIOD





The directors are not aware of any material events after the reporting period.





DIVIDEND





As stated, the Company has a long-term intention of paying out approximately half of its adjusted headline earnings as a dividend going forward as a listed business. 





For the year ended 31 December 2017, the Company declared a gross dividend (Number 7) of 10 cents per share (2016: 15 cents). 
The total dividend declared for the year amounts to 10 cents (2016: 32 cents).





For the first half of 2018 the Company declared an interim gross dividend (Number 8) of 10.50000 cents per share (2017: 0 cents).





The dividend will be subjected to a dividend withholding tax rate of 20% or 2.10000 cents per ordinary share and 
accordingly the net dividend is 8.40000 cents, while the dividend payable to shareholders who are exempt 
from dividend withholding tax is 10.50000 cents per share. 





Anchor's tax reference number is 9527/450/16/8.  There are 203 998 429 ordinary shares in issue at the declaration date.





The salient dates for the dividend are as follows:





Last date to trade 'cum' dividend                                      Tuesday, 18 September 2018


Shares commence trading 'ex' dividend                                  Wednesday, 19 September 2018


Record date (date shareholders recorded in share register)             Friday, 21 September 2018


Payment date                                                           Tuesday, 25 September 2018





Shareholders may not dematerialise or rematerialise their share certificates between Wednesday, 19 September 2018 and Friday, 21 September 2018, 
both dates inclusive. Payment of the dividend will be made to shareholders to Tuesday, 25 September 2018, in respect of dematerialised shares, 
certificated shareholders' dividend payments will be deposited on/or about Tuesday, 25 September 2018.











For and on behalf of the board








Peter Armitage                          Mike Teke


Chief Executive Officer                 Chairman





03 September 2018





DIRECTORS


Executive Directors: Peter Armitage (Chief Executive Officer), Todd Kaplan (Chief Operating Officer), Omair Khan (Financial Director)


Non-executive directors: Mike Teke (Chairman), Paul Nkuna (Lead independent), Alastair Adams (Independent), 
Nick Dennis (Independent), Tinyiko Mhlari (Independent) 








DESIGNATED ADVISOR


Java Capital Proprietary Limited





TRANSFER SECRETARIES


Link Market Services South Africa Proprietary Limited


(Registration number 2000/007239/07)


13th Floor,19 Ameshoff Street, Braamfontein, 2001


(PO Box 4844, Johannesburg, 2000)





REGISTERED OFFICE


25 Culross Road, Bryanston, Sandton, 2191 





POSTAL ADDRESS


PO Box 1337, Gallo Manor, 2052





WEBSITE: www.anchorgroup.co.za
Date: 03/09/2018 05:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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