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EFFICIENT GROUP LIMITED - Condensed reviewed group financial statements for the year ended 31 August 2012

Release Date: 09/11/2012 16:36
Code(s): EFG     PDF:  
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Condensed reviewed group financial statements for the year ended 31 August 2012

EFFICIENT GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2006/036947/06)
Share Code: EFG ISIN: ZAE 000151841
(Efficient)


CONDENSED REVIEWED GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST
2012
1. COMMENTARY

Considering the changes that have taken place in the financial services industry over the
past few years, we need to ensure that the practical roll-out of our business strategy is
aligned with prevailing industry trends at all times. Whilst changes in the regulatory
environment add additional costs to the business, they also provide us with an
opportunity for accelerated growth. We have therefore, over the past two years and in
line with our stated strategic intent, successfully invested in and implemented the
infrastructure to support the additional regulatory requirements and the concomitant
growth of our business, the scalability of which is now becoming evident.

Other changes and pressures affecting our industry include the uncertainty around global
growth, changes in consumer savings and spending patterns, the use of technology, the
multitude of regulatory initiatives, pressure on commissions and fees and the surfeit of
similar investment products offered by numerous financial services providers.

The importance of a strong brand, distribution channel relationships, product
competitiveness, the use of technology, product performance and differentiation, and
staff retention will play an ever increasing important role in ensuring the sustainability 
of our business as a financial services provider. Over the past few years the Efficient 
Group has invested comprehensively in these areas and we are pleased to report on the
substantial progress we have made with the majority of these key issues affecting our
business. We can confidently report that we have built a foundation for growth.

1.1 Financial Results

In line with the group strategy to, amongst others, invest in the expansion of its
distribution network (and the increase in support services associated with this growth),
investment in our brand and the realignment of the asset management division, fixed
expenses increased by 22%.

Although the success of the strategy rollout is already expressed in the growth in revenue
from the financial services division and the increase in performance fees, the full effect 
of this strategy is expected to materialise in the next two financial years.

The poor performance of our investments in associates and the subsequent impairment
of one of the investments is the main contributor to the loss reported by the group for
the year under review followed by the increase in expenses and lower fixed fees as a
result of the assets under management.

A substantial share of the groups revenue is based on the value of assets under
management, assets under administration and assets under advice.

Assets under management are represented by amounts invested in the unit trust funds,
unit trust funds of funds and private share portfolios managed by the asset management
division. The group has R 2 990 million (2011: R 2 965 million) assets under management.
Assets under administration are represented by unit trust funds and unit trust funds of
funds administrated by the group.

Administration of assets includes liability administration and asset administration such as
daily pricing of unit trust funds. The group administrates assets amounting to R 2 177
million (2011: R 1 566 million).

Assets under advice are represented by client investments under a mandate in favour of
Efficient Financial Services. Total investments by clients on a mandate amount to R 1 323
million (2011: R582 million).

Revenue increased by 14% compared to the previous financial year. For the 12 months
ended 31 August 2012, the group generated R 55 million in revenue. Performance fees
increased by 15%, in line with the growth in the JSE All Share Index.

The asset management division launched a fixed income fund to further enhance
revenue. The positive effect of the performance fees and revenue from the new fund was
eroded by lower fixed fees earned by the asset management division, mainly due to the
cancellation of the ABSA mandates as reported in the previous integrated report, and
lower fixed fee generating assets under management.

Asset administration revenue increased by 38% as a result of an increase in assets under
management, and the increase in white label administration.

Financial services almost doubled its revenue by increasing the number of independent
financial advisors from 17 to 36. In line with the increase in revenue the variable 
expenses also escalated and the net effect of the increase in revenue and variable 
expenses is the improvement of gross contribution (revenue less variable expenses) 
by financial services with 33%.

Fixed expenses increased by 22% due to the cost relating to the companys investment in
its brand and distribution network and the realignment of the asset management division.

The company is reporting an operating loss for the financial year under review. The
impairment of the investment in an associate and the losses from associates increased
the operating loss. The operating loss was reduced by higher investment income on
surplus funds and the profit with the sale of software developed by the Group.

Net tangible assets per share are reported at 59.94 cents (2011: 86.91 cents). The
decrease in the net tangible assets per share is mainly due to the increase in the long-
term liabilities (relating to the acquisitions of financial advisory client bases and the 
buy-out of the minority shareholder in Efficient Financial Services (Pty) Ltd) and the 
increase in trade and other receivables due to the increase in operational activities.

Cash and cash equivalents represent 66% (2011: 72%) of the net tangible assets. The 
reduction in cash and cash equivalents is due to the funding of the investment activities 
as detailed in the cash flow statement. The cash is reserved for the groups expansion and 
diversification strategy.

Cash of R 1.2 million (2011: R 8.7 million) was generated from operations for the 12
months ended 31 August 2012. Interest earned contributed R 1.5 million to the cash flow.
The dividend paid in terms of the 2011 financial year and tax paid, reduced the cash
inflow by R 1 million and R 1.1 million respectively. The cash utilised for investment
activities of R9.8 million relates mainly to the acquisition of financial advisory client 
base and loans to Marion Technology (Pty) Ltd.

1.2 Operating overview

Efficient Advise, our financial planning business, continued to make solid progress during
the financial year, especially in the expansion of our distribution footprint across South
Africa and in the expansion of its client base. Efficient Advise now has representation
through branches and advisory agencies in all nine provinces across South Africa. During
the year under review, 19 financial advisers joined Efficient Advise, growing the number
of advisers to 36. Further infrastructure and support services have been put in place to
underpin this divisions rapid expansion. Going forward the focus will remain on
increasing the number of advisors whilst ensuring that at Group level, through increased
spending on branding, advertising and the roll-out of technology, we assist this
distribution network to grow client numbers and revenue.

Efficient Advise was awarded Professional Practice status by the Financial Planning
Institute of South Africa.

Efficient Select, our asset management business, delivered investment performance to
clients in line with investment objectives and benchmarks. A fixed income division has
also successfully been established, expanding the range of asset classes managed by
Efficient Select.

Efficient Select received a Raging Bull award for the Efficient Active Allocation Fund in 
the Worldwide Asset Allocation Flexible Fund.

Efficient Transact, our asset administration business, remains focused on delivering
administrative services of the highest quality. Our strategy for Efficient Transact 
provides for the acquisition or development of further administrative financial services 
offerings.

Efficient Capital, through its subsidiary Efficient Asset Finance, concluded the 
acquisition of Zeal Finance, expanding the number of asset finance intermediaries from 
two to twelve. With financing agreements with most financial institutions in place, 
Efficient Asset Finance is well positioned for servicing the white and yellow goods 
markets.

1.3 Cash Dividend

A dividend of 2.60 cents per share was paid on 5 December 2011 from profits generated
in the 2011 financial year. No dividend was declared in respect of the 2012 financial year.

1.4 Changes to the board

Jerry Mabena joined the board in August 2012 as a Non-Executive Director after the
resignation of Lindiwe Gadd and her alternate Rapulane Mogototoane in June 2012.
Ronald Paterson and his alternate, Linda Whitfield also resigned in September 2012.
Mickey Giles resigned in October 2012.

1.5 Basis of preparation

The condensed preliminary group financial statements are prepared in accordance with
the recognition and measurement requirements of International Financial Reporting
Standards and presentation and disclosure requirements of IAS 34 (Interim Financial
Reporting), the JSE Listing Requirements, the Companies Act of South Africa 2008 and the
AC 500 series of Interpretation as issued by the APB. The accounting policies applied are
consistent with those applied in the previous reporting periods.

The condensed group financial statements of Efficient Group Limited for the year ended
31 August 2012 have been reviewed by the companys auditor, KPMG Inc. In their review
report dated 7 November 2012, which is available for inspection at the Companys
Registered Office, KPMG Inc state that their review was conducted in accordance with the
International Standard on Review Engagements 2410, Review of Interim Information
Performed by the Independent Auditor of the Entity, which applies to a review of group
preliminary financial information, and have expressed an unmodified conclusion on the
condensed group preliminary financial statements.

The reviewed condensed group financial statements are prepared by Anton de Klerk
(CA) SA, the Chief Financial Officer of Efficient Group.

2. CONDENSED PRELIMINARY GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2012

2.1 Condensed reviewed statements of         Group      Group     Company     Company
    financial position                        2012       2011        2012        2011
                                              R000       R000        R000        R000

Assets
Non-Current Assets

Equipment (Note 1)                             649      1 418         289          557

Goodwill                                    23 494     23 494           -            -

Intangible assets (Note 2)                  20 784     21 803           -            -

Investments                                  5 625      3 297     152 509      143 574

Equity accounted investments (Note 3)        6 865     10 678       2 934        8 944

Long-term receivable (Note 4)                2 902          -         895            -

Deferred tax                                   256        250         168          125

                                            60 575     60 940     156 795      153 200

Current Assets

Related party loans (Note 8.1)                   -          -      26 396       21 754

Trade and other receivables                  9 583      5 137         840          684

Cash and cash equivalents                   15 861     25 070         589       11 916

Short-term portion of long-term receivables  1 042          -         494            -

Tax receivable                                  19          -          36            -

                                            26 505     30 207      28 355       34 354

Total Assets                                87 080     91 147     185 150      187 554

Equity and Liabilities
Equity

Share capital and share premium (Note 5)    58 657     57 221     171 862      170 426

Treasury shares                              (149)      (149)           -            -

Accumulated income                           9 933     22 938       8 777       15 839

Fair-value-adjustment reserve                   39         (3)          -            -

Total equity attributable to equity holders 68 480     80 007     180 639      186 265
of the parent 

Non-controlling interest
parent                                        (44)        69            -            -

Non-Current Liabilities

Long-term liabilities (Note 6)               2 298         -        1 898            -

Deferred tax                                 4 854      5 721           -            -

                                             7 152      5 721       1 898            -

Current Liabilities
Trade and other payables                     9 615      5 078       2 613        1 289

Short-term portion of long-term liability    1 250          -           -            -

Tax payable                                    627        272           -            -

                                            11 492      5 350       2 613        1 289
                                                          
Total Liabilities                           18 644     11 071       4 511        1 289

Total Equity and Liabilities                87 080     91 147     185 150      187 554

Net asset value per share (cent)            169.59     200.32
Net tangible asset value per share (cent)    59.94      86.91
 
2.2 Condensed reviewed statements of         Group      Group     Company      Company
comprehensive income                          2012       2011        2012         2011
                                              R000       R000        R000         R000

Continuing operations
Revenue                                     55 433     48 782      11 758       10 687

Operating expenses                         (58 516)   (45 190)    (13 133)     (11 461)

Operating (loss)/profit                     (3 083)     3 592      (1 375)        (774)

Dividends received                               -        110           -            -

Finance income                               1 537      1 451         815          700

Finance cost                                   (26)      (165)          -            -

Profit on sale of equipment                    436         48           4           34

Other expenses                                  (3)         -           1            -

Realised fair value adjustment of              247          -           -            -
investment designated at fair value 
through profit or loss

Unrealised fair value adjustment of            285          -         285            -
investment designated at fair value 
through profit or loss

Remeasurement of long-term liability           316          -         316            -

Impairment of investment in associates      (6 010)         -      (6 010)           -

Share of losses from associates             (1 983)      (241)          -            -

(Loss)/profit before taxation               (8 284)     4 795      (5 964)         (40)

Taxation                                      (147)    (1 704)        (60)        (310)

(Loss)/profit for the year                  (8 431)     3 091      (6 024)        (350)

Other comprehensive income:
Realised fair value adjustment of 
available-for-sale financial assets             (6)         -            -           -

Unrealised fair value adjustment of 
available-for-sale financial assets             48        (22)           -           -

Total comprehensive (loss)/income for 
the year                                    (8 389)     3 069       (6 024)       (350)

(Loss)/profit for the year attributable to:
Equity holders of the parent                (8 407)     3 104       (6 024)       (350)

Non-controlling interest                       (24)       (13)           -           -

                                            (8 431)     3 091       (6 024)       (350)

Total comprehensive (loss)/income for the 
year attributable to:

Equity holders of the parent                (8 365)     3 082       (6 024)       (350)

Non-controlling interest                       (24)      (13)            -           -

                                            (8 389)     3 069       (6 024)       (350)

(Loss)/Earnings per share (cents) (Note 7)  (20.82)      7.77

Diluted (loss)/earnings per share (cents) 
(Note 7)                                    (21.38)      7.77
 

2.3 Condensed reviewed        Ordinary  Treasury     Non-  Accumula- Fair value   Total 
statements ofchanges        shares and    shares control-       ted     adjust-  equity
in equity                       share                ling    income    ment for
                              premium            interest            available-
                                                                        for-sale
                                                                         -assets
                                                                         reserve

Group                           R'000     R'000     R'000     R'000    R'000      R000

Balance at 31 August 2010      54 189    (7 200)      672    30 699       19     78 379
Prior year adjustment
- Issue of share capital        1 763         -         -         -        -      1 763

Restated balance as at 31 
August 2010                    55 952    (7 200)      672    30 699       19     80 142

Issue of share capital          1 269         -         -         -        -      1 269

Share repurchase by the Share 
Incentive Trust                    -       (149)        -         -        -       (149)

Acquisition of minority interest 
in Efficient Collect
Investments (Pty) Ltd              -          -      (476)     (424)       -       (900)

Cancellation of treasury shares    -      7 200         -    (7 200)       -          -

Dividend paid                      -          -      (114)   (3 241)       -     (3 355)

Total comprehensive income for 
the year                           -          -       (13)    3 104      (22)     3 069

Balance at 31 August 2011     57 221       (149)       69    22 938       (3)    80 076

Issue of share capital         1 436          -         -         -        -      1 436

Acquisition of minority 
interest in Efficient 
Financial Services (Pty) Ltd       -           -      (69)   (3 580)       -     (3 649)


Disposal of 20% of the 
investment in Efficient Asset
Finance (Pty) Ltd                  -           -      (20)       20        -          -

Dividend paid                      -           -        -    (1 038)       -     (1 038)

Total comprehensive loss for 
the year                           -           -      (24)   (8 407)      42     (8 389)

Balance at 31 August 2012     58 657        (149)     (44)    9 933       39     68 436

Company                        R'000        R'000    R'000    R'000    R'000      R000

Balance at 31 August 2010    167 394            -        -   19 324        -    186 718

Prior year adjustment

- Issue of share capital       1 763            -        -        -        -      1 763

Restated balance as at 31 
August 2010                  169 157            -        -   19 324        -    188 481

Issue of share capital         1 269            -        -        -        -      1 269

Dividend paid                      -            -        -   (3 135)       -     (3 135)

Total comprehensive loss for 
the year                           -            -        -     (350)       -       (350)

Balance at 31 August 2011    170 426            -        -   15 839        -    186 265

Issue of share capital         1 436            -        -        -        -      1 436

Dividend paid                      -            -        -   (1 038)       -     (1 038)

Total comprehensive loss for 
the year                           -            -        -   (6 024)       -     (6 024)

Balance at 31 August 2012    171 862            -        -    8 777        -    180 639
                                                                   
                                                Group        Group     Company      Company
2.4 Condensed reviewed statements of             2012         2011        2012         2011
cash flows                                      R'000        R'000       R'000        R'000

Cash flows from operating activities

Cash receipts from customers                   50 987       49 480      11 602       10 622

Cash paid to suppliers and employees         (49 746)      (40 758)    (11 444)     (10 745)

Cash generated by /(utilised from) 
from operations                                 1 241        8 722         158         (123)

Finance income                                  1 537        1 451         815          700

Interest paid                                    (26)         (165)          -            -

Dividends received                                 -           110           -            -

Dividends paid                                (1 038)       (3 355)     (1 038)      (3 135)

Taxation paid                                 (1 154)         (742)       (140)        (321)

Net cash inflow/(outflow) from operating 
activities                                       560         6 021        (205)      (2 879)

Cash flows from investing activities

Acquisition of business                       (2 453)       (1 193)          -            -

Long-term loan to associate                   (2 265)            -           -            -

Increase in long-term receivable              (1 624)            -      (1 389)           -

Acquisition of available-for-sale financial 
asset                                         (5 000)       (2 300)     (5 000)           -

Proceeds on the disposal of available-for-
sale financial assets                          3 247             -           -            -

Acquisition of non-controlling interest            -          (900)          -            -

Proceeds from disposal of equipment                1             -           -            -

Acquisition of equipment                      (1 675)         (772)     (2 212)        (233)

                                              (9 769)       (5 165)     (8 601)        (233)

Cash flows from financing activities

Share repurchase                                   -          (149)          -            -

(Decrease) / increase in related party loans       -             -      (2 521)       4 693

                                                   -          (149)     (2 521)       4 693

Total cash and cash equivalents movement for 
the year                                      (9 209)          707     (11 327)       1 581

Total cash and cash equivalents at the 
beginning of year                             25 070        24 363      11 916       10 335

Total cash and cash equivalents at the end 
of the year                                   15 861        25 070         589       11 916
      
2.5 Notes to condensed reviewed group financial statements

                                           Opening Disposals Additions Depreciation Closing
1. Equipment                               Balance                                  Balance

Group - Aug 2012                             R000     R000     R000     R000      R000

Furniture, fixtures and office equipment       421       (2)       83      (218)       284

Computer equipment                             828   (1 545)    1 592      (552)       323

Leasehold improvements                         132        -         -       (99)        33

Other fixed assets                              37        -         -       (28)         9

Total                                        1 418   (1 547)    1 675      (897)       648

Group - Aug 2011                             R000    R000     R000     R000      R000

Furniture, fixtures and office equipment       448        -       184      (211)       421

Computer equipment                             657        8       582      (419)       828

Leasehold improvements                         231        -         -       (99)       132

Other fixed assets                              73        -         6       (42)        37
 
Total                                        1 409        8       772      (771)     1 418

Company - Aug 2012                            R000     R000      R000       R000      R000

Furniture, fixtures and office equipment       242        -        12       (109)      145

Computer equipment                             176   (2 121)    2 199       (149)      105

Leasehold improvements                         132        -         -        (99)       33

Other fixed assets                               7        -         1         (2)        6

Total                                          557   (2 121)    2 212       (359)      289

Company - Aug 2011                            R000     R000      R000       R000      R000

Furniture, fixtures and office equipment       289        -        51        (98)      242

Computer equipment                             138        -       182       (144)      176

Leasehold improvements                         231        -         -        (99)      132

Other fixed assets                               9        -         -         (2)        7

Total                                          667        -       233       (343)      557


A register containing the information required by paragraph 25(3) of Part C of Chapter 2 of 
the Companies Regulations 2011 is available for inspection at the registered office of the 
Company

                                           Opening  Disposals  Acquired Amortisation Closing
                                           Balance              through              Balance
2. Intangible assets                                           business
                                                             combination  
                                                                                                            
Group - Aug 2012                            R000      R000       R000     R000     R000

Trade Names                                 1 039          -           -      (66)      973

Customer contracts and customer 
relationships                              20 764     (2 320)      4 833    (3 466)   19 811

Total                                      21 803     (2 320)      4 833    (3 532)   20 784

Group - Aug 2011                            R000      R000       R000     R000    R000

Trade Names                                 1 105          -           -       (66)    1 039

Customer contracts and customer 
relationships                              22 842          -       1 274    (3 352)   20 764

Total                                      23 947          -       1 274    (3 418)   21 803

The remaining useful life of the trade names is 15 years, and customer contracts and customer 
relationships are between 5 and 9 years.

3. Equity accounted investments

Name                                          Country of        Proportion         Principal
                                           incorporation      of ownership        activities
                                                                  interest

C & A Financial Services (Pty) Ltd                 RSA             49.0%   Financial Services

Thebe Stockbroking (Pty) Ltd                       RSA             25.1%   Financial Services

 Marion Technology (Pty) Ltd                       RSA             50.0%          IT Services

 Efficient Financial Services (Namibia) (Pty) Ltd  NAM             50.0%   Financial Services

 The Equity accounted investment                            Group                  Company
 consists of:
                                                     2012           2011     2012        2011

                                                    R000          R000    R000       R000

C & A Financial Services (Pty) Ltd                    434            316        -           -

Thebe Stockbroking (Pty) Ltd                        2 837         10 362    2 841       8 944

Marion Technology (Pty) Ltd                         3 594              -        -           -

Efficient Financial Services (Namibia) (Pty) Ltd        -              -       93           -

                                                    6 865         10 678    2 934       8 944

Reconciliation of the Equity  accounted investments          Group                  Company

                                                     2012          2011        2012      2011

                                                    R000         R000       R000     R000

Opening balance                                      10 678      10 919       8 944     8 944

Loss for the year                                   (1 983)        (241)          -         -

Impairment of investment in associate               (6 010)           -      (6 010)        -

Elimination of inter-company profit on sale of 
equipment to associate                                (285)           -           -         -

Realisation of inter-company profit on sale of 
equipment to associate                                  75            -           -         -

                                                     2 475       10 678       2 934     8 944

Long-term loan to associate                          4 390            -           -         -

Investment in associate                              6 865       10 678       2 934     8 944


4. Long-term receivable                               2012         2011        2012      2011

                                                     R000        R000       R000     R000

Marion Technology (Pty) Ltd                          1 389            -       1 389         -

The loan to Marion Technology forms part of the 
acquisition of the 50% share in Marion Technology 
(Pty) Ltd. This loan is unsecured and repayable in 
36 monthly instalments of R43 460.65 and bears
interest at prime plus 2%

L. Benade                                            2 555            -           -         -

The loan to L. Benade forms part of the acquisition 
of a customer base. This loan is unsecured and 
repayable in seven monthly instalments of R20 758.36, 
and then in 53 monthly instalments of R60 477.18. 
The loan bears interest at prime rate.

Less: Short-term portion of long-term receivable    (1 042)           -         (494)        -

                                                     2 902            -          895         -

During the year under review, the number of shares authorised and in issue changed as follows:

5. Share Capital                          Number of shares         R/share          R000
                                                      000

Authorised

As at 31 August 2011                               361 350     0.00000277             1.0

Issued:

At beginning of year                                39 939     0.00000277             0.11

Add: Issue of ordinary shares (February 2012)          821     0.00000277             0.02

Issued share capital at the end of year             40 760     0.00000277             0.13
                                                              
                                                             Group                  Company
6. Long-term liabilities
                                                      2012         2011        2012      2011

                                                     R000        R000       R000     R000

Vendor finance                                       1 650           -            -         -

This liability forms part of the acquisition of a 
customer base as referred to in the business 
combination note. This loan is unsecured and interest 
free. It is repayable in two instalments,one of 
R1 250 000 on 1 March 2013 and the balance on
1 March 2014.

Shares to be issued                                 1 898            -        1 898

This liability relates to the acquisition of the 
non-controlling share (10%) held in Efficient 
Financial Services (Pty) Ltd from the managing director
of that company. The amount is re-measured at the end 
of each reporting period.

                                                    3 548            -        1 898          -

Less: Short-term portion                           (1 250)           -            -          -

                                                    2 298            -        1 898          -


7. Earnings per ordinary share                                       Group           Group
                                                                      2012            2011
                                                                     R000           R000

Weighted average number of ordinary shares

Number of shares in issue at the end of the year                    40 760          39 939

Less: issue of ordinary shares during the year                        (821)           (233)

                                                                    39 939          39 706

Add: Weighted average number of ordinary shares issued during the 
year                                                                   441             233

Weighted average number of ordinary shares in issue                 40 380          39 939

(Loss)/Earnings per share (cents)                                   (20.82)           7.77

Attributable (loss)/earnings                                        (8 407)          3 104

Weighted average number of ordinary shares in issue                 40 380          39 939

Diluted (loss)/earnings per share (cents)                           (21.38)           7.77

Diluted (loss)/earnings                                             (8 635)          3 104

Weighted average number of ordinary shares in issue                 40 380          39 939

Diluted (loss)/earnings are calculated as follows                   (8 635)          3 104

Attributable (loss)/earnings                                        (8 407)          3 104

Less: Re-measurement of long-term liability                           (316)              -

Add: Taxation on re-measurement of long-term liability                  88               -

Headline (loss)/earnings per share                                   (6.71)           7.77

Headline (loss)/earnings                                            (2 711)          3 104

Weighted average number of ordinary shares in issue                 40 380          39 939

Diluted headline (loss)/earnings per share                           (7.28)           7.77

Diluted headline (loss)/earnings                                    (2 939)          3 104

Weighted average number of ordinary shares in issue                 40 380          39 939

Headline (loss)/earnings are calculated as follows                  (2 711)          3 104

Attributable (loss)/earnings                                        (8 407)          3 104

Add: Impairment of investment in associate                           6 010               -

Less: Profit on disposal of equipment                                 (436)              -

Add: Taxation on profit on disposal of equipment                       122               -

Diluted headline (loss)/earnings are calculated as follows          (2 939)          3 104

Headline (loss)/earnings                                            (2 711)          3 104

Less: Re-measurement of long-term liability                           (316)              -

Add: Taxation on re-measurement of long-term liability                  88               -


8.     Related Parties

                                                          Group                  Company
8.1 Loans to related parties
                                                    2012         2011       2012       2011

                                                     R000      R000      R000      R000

Efficient Collective Investments (Pty) Ltd               -          -      2 639      2 367

Efficient Select (Pty) Ltd                               -          -     11 960     16 235

Efficient Financial Services (Pty) Ltd                   -          -      6 118      2 459

Efficient Asset Finance (Pty) Ltd                        -          -        921        278

Efficient Share Incentive Scheme Trust                   -          -        149        149

Efficient Capital (Pty) Ltd                              -          -      4 537          -

C & A Financial Services (Pty) Ltd                       -          -         21          -

Efficient International Investments (Pty) Ltd            -          -         51        266

                                                         -          -     26 396     21 754

The loans are unsecured, bear no interest and have no fixed repayment terms.

Included in the equity accounted investments is an amount of R93 000 owed by Efficient 
Financial Services (Namibia) (Pty) Ltd to Efficient Financial Services (Pty) Ltd and an amount 
of R4 297 000 owed by Marion Technology (Pty) Ltd to the Group.

Included in long-term receivable is an amount of R1 389 000 owed by Marion Technology (Pty) 
Ltd. Included in trade and other receivables is an amount of R260 809 owed by Marion 
Technology (Pty) Ltd, and included in trade and other payables an amount of R155 616 owed to 
Marion Technology (Pty) Ltd.

Included in long-term liability is an amount of R1 898 000 that relates to a share-base 
payment with a prescribed officer of the company.
                                                          Group                    Company
8.2 Related party transactions
                                                     2012        2011        2012       2011

                                                    R000       R000       R000      R000

Rent paid - Midnight Storm Investments 
299 (Pty) Ltd                                         735         600         448        340

Administration fees and rent received - 
Efficient Select (Pty) Ltd                              -           -       5 171      6 752

Administration fees and rent received - 
Efficient International Investments (Pty) Ltd           -           -         474        834

Administration fees and rent received - 
Efficient Collective Investments (Pty) Ltd              -           -       1 666      1 063

Administration fees and rent received - 
Efficient Financial Services (Pty) Ltd                  -           -       5 177      1 794

Information Technology services paid - 
Marion Technology (Pty) Ltd                           761           -         618          -

Rent received from Marion Technology 
(Pty) Ltd                                              13           -           -          -

Interest received from Marion Technology 
(Pty) Ltd                                              72           -           -          -

Service fees received by Efficient 
Collective Investments (Pty) Ltd from:                  -           -           -          -

Efficient Prudential Fund                           2 101       1 289           -          -

Efficient Prudential Fund of Funds                  5 660       3 684           -          -

Efficient Flexible Fund of Funds                    1 781       2 157           -          -

Efficient Money Market Fund                           256         305           -          -

Efficient CPI + 2% Fund of Funds                      394         163           -          -

Efficient CPI + 4% Fund of Funds                    1 661          97           -          -

Efficient CPI + 6% Fund of Funds                      596         109           -          -

Efficient Active Quant Fund                           784       1 673           -          -

Efficient General Equity Fund                       2 029       2 258           -          -

Efficient Active Allocation Fund                    1 341       1 393           -          -

Efficient Fixed Income Fund                           628           -           -          -

Efficient Property Fund                             1 487       2 732           -          -



8.3 Transactions with directors and prescribed            Group                   Company
officers (including their families)
                                                      2012     2011           2012       2011
                                                                                        

                                                     R000    R000          R000      R000

Remuneration paid to executive directors and prescribed officers
- Remuneration                                       9 800    9 353          5 693      4 545
- Share-based payment                                  (49)      99            (28)       (40)

                                                     9 751    9 452          5 665      4 505
9.      Business Combinations


The group had the following business combinations and other acquisitions during the year under
review:

On 1 September 2011 the Group purchased the non-controlling share (10%) held in Efficient 
Financial Services (Pty) Ltd from the managing director of that company. The total acquisition 
price is R3 649 625, and will be settled by issuing 820 500 Efficient Group Ltd shares on 
fulfilment of the suspensive conditions and a further allocation of shares when certain 
performance conditions are met over the next three years. This transaction forms part of the 
groups initiative to incentivise senior personnel on a group level rather than on a subsidiary 
level. This additional allocation will be limited to 1 265 000 shares.

The Group purchased a 50% share in Marion Technology (Pty) Ltd, an Information Technology company, 
in partnership with Marion IT Solutions (Pty) Ltd effective 1 April 2012. The acquisition price of 
R5 625 000 was settled in cash of R3,5 million and the balance by transferring software developed
by Efficient Group Ltd to the acquired entity. The acquisition price was credited to a loan in 
favour  of Efficient Group Ltd. This was a strategic acquisition that is important to support our 
information technology needs and the commercialisation of the Efficient Group investment reporting 
and information software.

Acquisition of a Financial Advisory Client base was purchased for a net amount of R580 000 and is 
payable in 4 instalments which is reviewed on the due date based on the profit guaranteed by the 
 financial advisor. Efficient Financial Services (Pty) Ltd appointed an Independent Financial Adviser 
to service the acquired client base. The effective date of this transaction was 1 November 2011.

The Group also purchased 6 other Financial Advisory Client bases from various Independent Financial 
Advisers for a total purchase price of R450 653 which will be settled on different dates, in cash, 
based on the agreements.

Efficient Asset Finance acquired an asset-based finance business for a total purchase consideration 
of R1 08 million. Part of the purchase consideration (R756 000) was paid in cash on fulfilment of 
the suspensive conditions. The balance is payable on the first anniversary of the agreement
subject to the achievement of anticipated turnover. The transaction was effective 1 June 2012.

The fair value acquisition is as follows:
                                                            
                                                                               Group
                                                                                     
                                                                         2011           2012

                                                                        R000          R000

Acquisition

Cash and cash equivalents                                                   -              4

Gross trade receivables                                                   643             103

Equipment                                                                  18               8

Intangible assets                                                       4 833           1 274

Deferred tax                                                             (550)           (238)

Trade payables                                                           (517)           (112)

Net assets acquired                                                     4 427             994

Goodwill                                                                    -           1 472

Less: Fair value of shares issued                                           -          (1 269)

Less: Long-term liability raised as part of the purchase price         (1 650)              -

Less: Other creditors raised as part of the purchase price               (324)              -

Less: Cash of business acquired                                             -              (4)

Cash paid on acquisition                                                2 453           1 193

Disposal

Intangible assets                                                      (2 320)              -

Long-term receivable                                                    2 320               -

                                                                            -               -

Net cash paid (received) on aquisition/(disposal) of business           2 453           1 193

10. Dividend paid

A dividend of 2.60 cents per share was paid on 5 December 2011 from profits generated in the 
2011 financial year.


11. Impairment of investment in associate

                                                                      Group        Company
Thebe Stockbroking (Pty) Ltd is a black empowered stockbroking 
company focusing on both the retail (private wealth) and          2012    2011    2012    2011
institutional market. The institutional division is not            
profitable due to low volumes and the research cost required     R000   R000   R000   R000
to attract institutional

business.                                                                                                
The value in use was determined by discounting the future cash   6 010       -   6 010       -
flows generated from the continuing use of the private wealth 
division and was based on cash flows that were projected on a 
4-year forecast. Cash flows beyond this were extrapolated 
using a constant growth rate of 5%, which does not exceed the 
long-term average growth rate for the industry. The cash flows 
are discounted using a WACC of 21.31%.


12. Events after reporting date


No significant events occurred subsequent to the financial year that require any additional 
disclosure or adjustment to the annual financial statements


13. Contingent liabilities and capital commitments

The company issued a guarantee in favour of Old Mutual properties in terms of a lease 
agreement for Efficient Select (Pty) Ltd offices in Cape Town. Thebe Stockbroking (Pty) Ltd is 
a co-defendant in a matter in which the plaintiff is claiming damages of R 17.6 million plus 
interest. Thebe Stockbroking (Pty) Ltd disputes this claim and has, to this extent, instructed 
its lawyers to vigorously defend the claim. At the reporting date the litigation matter was
yet to be resolved. The carrying amount of the investment is R2.8 million.
 
14. Prior period error

During the 2008 financial year, Efficient Group acquired FHS Financial Services (Pty) Ltd. 
The purchase consideration was settled by issuing Efficient Group shares. As part of the 
acquisition shares were issued to an option holder of FHS Financial Services (Pty) Ltd. 
This issue was not previously recognised. As a result the calculation of goodwill did not 
include the fair value of these shares. The following adjustment has been made at the
beginning of the 2010 financial year:
                                                         Group                  Company

                                                         R000                    R000

                                                        Dr/(Cr)                  Dr/(Cr)


Statement of financial position

Assets

Non-current assets

Goodwill                                                 1 763                       -

Investment in subsidiaries                                   -                   1 763

Equity

Share capital and premium                               (1 763)                 (1 763)


Other than the entries above, no further changes were made to the 2010, 2011 and 2012 periods
 presented.

No impairment of this goodwill or investments were necessary in any of these years and as the 
consideration does not vary subsequent to the issue of the shares, there is no further impact 
on profit or loss. There has been no impact on basic or diluted earnings per share and headline 
earnings per share as the shares issued as consideration were previously included in the 
calculations.

 15. Segmental analysis


The Group is organised into 3 main business segments:
1. Asset management, and includes the following companies and divisions:
Efficient Select and Efficient International Investments.
2. Asset administration, and includes the following companies:
Efficient Collective Investments.
3. Financial services, and includes the following companies
Efficient Financial Services, C&A Financial Services, Efficient Asset Finance and Thebe 
Stockbroking.

                                                Asset
                     Asset Management  Administration   Financial Services   Other      Total

 2012                          R000            R000           R000        R000      R000

 Revenue                      26 097           19 000          19 633       (9 297)    55 433

 - External                   18 983           19 000          17 008          442     55 433

 - Inter - segment             7 114                -           2 625       (9 739)         -

Expenses                      27 606           16 362          15 424         (876)    58 516

Interest received / (paid)       201              354             284           672     1 511

Net loss for the year           (683)           2 286          (8 673)       (1 361)   (8 431)
 
Assets                        26 213            6 422           5 073        49 372    87 080
 
Liabilities                    6 259            2 615           4 661         5 109    18 644

Acquisition of equipment         350               47             139         1 139     1 675

Depreciation and amortisation  2 488               52             474         1 415     4 429

Share of loss from associates      -                -          (1 489)         (494)   (1 983)

Impairment of investment in 
associate                          -                -          (6 010)            -    (6 010)

                                                 Asset
                     Asset Management   Administration  Financial Services     Other     Total

 2011                           R000            R000           R000         R000     R000

 Revenue                       30 643           15 943           8 916        (6 720)   48 782

 - External                    23 363           15 943           8 916           560    48 782

 - Inter - segment              7 280                -               -        (7 280)        -

 Expenses                      25 503           14 638           9 721        (4 672)   45 190

 Interest received / (paid)       430              229             131           496     1 286

 Net profit for the year        4 063            1 141            (876)       (1 237)    3 091

 Assets                        42 496            5 356           5 190        38 105    91 147

 Liabilities                   21 906            3 354           4 074       (18 263)   11 071

 Acquisition of equipment         383               27             132           238       780

 Depreciation and amortisation  2 479               22             294         1 394     4 189

 Share of profit from associates    -                -            (241)            -      (241)



Other consists of consolidation entries, amortisation of intangible assets and Efficient Capital. 
Transactions between segments take place at arms length.

3. CORPORATE INFORMATION

Non-Executive Directors
Dr S Booysen (Chairman) *, Z Cele*, L Taylor *, M Cassim, J Mabena
(*) Independent

Executive Directors
DD Roodt, H Weidhase, AT De Klerk

Registered and Business address
81 Dely Road, Hazelwood, 0081

Company Secretary
Adv Rudi Barnard

Corporate Advisor, Legal Advisor and Sponsor
Java Capital 

Reporting Accountants and Auditors
KPMG Inc.

Transfer Secretaries
Link Market Services South Africa

09 November 2012


Date: 09/11/2012 04:36:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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