Wrap Text
Unaudited Interim Financial Results and Dividend Declaration
EFFICIENT GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/036947/06)
JSE share code: EFG ISIN: ZAE000151841
("Efficient Group" or "the Group")
UNAUDITED INTERIM FINANCIAL RESULTS
For the six months ended 28 February 2017
Nature of business
The Efficient Group is a diversified financial services group focused on providing professional
advice, custom-designed products and quality service across the entire financial services value
chain. Our offering includes financial planning services, asset management, asset consulting,
asset administration, fiduciary services and advisory services. These products and services
are offered to clients throughout South Africa.
The Group has a three-pillared structure expressing how the business units are designed to meet
our clients' needs. The three clusters are Financial Services, Services and Solutions, and
Investments. Only two operational functions remain centralised from a control perspective, namely
finance and compliance.
HIGHLIGHTS
+ Revenue growth of 9%
+ EPS and HEPS = 20.22 cents
+ R15 billion Assets under Advice
+ R18 billion Assets under Management
+ R104 billion Assets under Administration
+ R25 billion Assets under Consulting
+ 107 Financial Advisors
1. Business clusters
The operating structure of the Group provides for three business clusters which are made up as
follows:
1. Financial Services
a. Efficient Advise
b. Efficient Wealth
c. Exceed Asset Management
d. Stead Wealth Management
e. AS Sure Investments (associate)
2. Investments
a. Boutique Investment Partners ("BIP")
b. Boutique Collective Investments ("BCI")
c. Efficient Select
d. Select Manager
e. Rudiarius Capital Management (associate)
3. Services and Solutions
a. Naviga Solutions
b. Efficient Board of Executors
c. Efficient Private Clients
The Financial Services cluster is structured to deliver comprehensive financial planning solutions
and to distribute associated proprietary and external financial products to identified target
markets through a national network of financial advisors. The cluster's current areas of operation
include Financial Planning, Investment Management, Life and Business Assurance, Short-term Insurance,
Employee Benefits, Healthcare, Trust and Executorship, Retirement Planning, Stockbroking and Cash
Management.
The Investments cluster is structured in such a way as to administer, manage and consult on
proprietary and co-branded collective investments for retail, portfolio and institutional investors.
The cluster's current areas of operation are collective investment scheme administration, fund and
private client wealth management, multi-management and investment consulting.
The Services and Solutions cluster is optimally structured to deliver customised, value-added
financial services and solutions to corporate and institutional clients. Current areas of operation
include model portfolio and multi-managed fund solutions. These solutions have been subjected to a
rigorous quantitative and qualitative due diligence process that is tailor-made to meet the needs of
financial advisors, individuals and institutional clients. The cluster also offers fiduciary services,
which include services such as the drafting of wills, the administration of deceased estates, and the
setting up and management of trusts. Efficient Private Clients, a new business unit that was launched
at the start of the Group's current financial year, is a boutique investment company that specialises
in private share portfolio management for both local and international investments.
2. Overview
The Efficient Group delivered revenue growth despite the 3% contraction by the JSE All Share Index
over the six months ending 28 February 2017 which negatively affected higher yielding Assets under
Management and Assets under Consulting. Assets under Advice and Assets under Administration continued
to grow, albeit at a slower pace. Total assets were up 13.4% from February 2016, although total assets
were down 1.27% for the six months ending 28 February 2017. The growth from February 2016 was primarily
in Assets under Administration.
The key focus over the past six months has been on:
+ Implementing a "Best in Class" strategy for Efficient Select;
+ Concluding the Vital Consult and Vital Wealth transactions;
+ Finalising and approving the consolidation of our Financial Services Cluster distribution strategy; and
+ Concluding various smaller advisory acquisitions.
Feb-17 Feb-16 Aug-16
Assets under Advice R15 billion R13.5 billion R14.8 billion
Assets under Management R18.2 billion R21 billion R22.3 billion
Assets under Administration R104.2 billion R84.3 billion R101.1 billion
Assets under Consulting R25.2 billion R24.5 billion R26.4 billion
Despite the poor performance of financial markets and a challenging economic environment, the Group's
strategy remains relevant. The challenging economic environment continues to create merger and acquisition
opportunities for the Group, and encourages our business units to focus on their product diversification
strategies. The progress with the implementation of the Group's Retail Distribution strategy, through the
recent Vital transaction and the consolidation of the Group's financial service offering, are indicative
of these opportunities.
3. Financial results
The Group generated a net profit after tax of R18 million for the six months ended 28 February 2017
("the reporting period"), compared to a profit after tax of R19 million for the six months ended 28
February 2016 ("comparative period").
The Group reported headline earnings of R18 million (February 2016: R19 million) and headline earnings
of 20.22 cents per share (February 2016: 21.26 cents) for the reporting period.
Revenue of R465 million was 9% higher than revenue reported for the comparative period. The Financial
Services cluster achieved organic revenue growth of 26%, while revenue from asset administration services
increased by 10%. Lower revenue from asset management was reported due to lower Assets under Management.
Operating expenses consist of:
R'000 Unaudited six Unaudited six % Change Audited year
months ended months ended ended
28-Feb-17 29-Feb-16 31-Aug-16
Operating expenses (440 792) (404 063) 9% (830 566)
- Variable expenses (319 747) (293 729) 9% (604 828)
- Fixed expenses (65 629) (60 538) 8% (124 765)
- Staff incentive provisions (9 480) (8 278) 15% (19 037)
- Profit share (36 130) (32 394) 12% (63 927)
- Non-cash flow expenses (9 806) (9 124) 7% (18 009)
The increase in variable expenses correlates with the movement in revenue. The Gross Contribution %
for the reporting period remained the same as for the comparative period at 31%.
Fixed expenses increased by 8%.
The profit share provision is linked to the performance of the asset administration and consulting
business units. The increase in the provision is in line with the higher profits generated by these
business units.
Non-cash flow expenses consist of amortisation cost and depreciation. The increase in the non-cash
flow expenses is mainly related to the amortisation cost of the intangible assets acquired through
the business combination over the reporting period and comparative period.
The Group generated cash of R34 million from operating activities during the six months under review.
Cash generated from operating activities was reduced by R21 million due to the increase in working
capital.
Cash of R30 million was used as follows:
+ Investment activities that mainly consisted of the acquisitions of independent financial advisor
client bases and the renovation cost of the Head Office in Pretoria; and
+ Financing activities, that mainly consisted of the repayment of vendor finance, and repayment of
and proceeds from borrowings from Standard Bank.
The net tangible asset value per share improved by 3.98 cents per share compared to the net tangible
asset value per share at 31 August 2016. The debt service cover ratio decreased from 6.31 times at
the end of August 2016 to 5.28 times at the end of the reporting period. The debt equity ratio at
the end of February 2017 is 21.07%.
4. Business segmental results
Financial Services
The focus during the six months under review was on finalising the consolidation and single brand
strategy for our Financial Services cluster. The strategy includes consolidating the various entities
operating in the Group's Financial Services cluster into one legal entity, integrating the various
brands under one Efficient Wealth brand and optimising infrastructure and human resources to obtain
economies of scale to further enhance the capabilities and service delivery to our clients.
The Financial Services cluster continued to grow Assets under Advice by 1.48% to R 15 billion.
Revenue grew by 12% from R74 million to R83 million. The increased growth is a result of organic
growth. The cluster posted profit after tax of R6 million, an improvement of 58%.
Services and Solutions
Due to the successful launch of Efficient Private Clients ("EFPC"), revenue increased by 16% during
the reporting period. Although EFPC did not reach a breakeven level and reported a loss for the
reporting period, it is well positioned in terms of people, processes, products and services to
benefit from the increased demand being experienced in the private client segment and from our
growing distribution network. Assets under Management at Naviga Solutions ("Naviga") decreased
resulting in lower revenue from this business unit. The Services and Solutions cluster reported a
profit of R4 million (Feb 2016: R7 million).
We expect the change to the "Best in Class" strategy in the Investments cluster to deliver
sustainable and benchmark beating results for clients whilst having a positive impact at Naviga
in terms of growing assets under management. For the period under review, Naviga continued to
invest in technology through FutureSight and recently released a new version of its Astute
integrated client relationship and financial needs analysis software.
Investments
This cluster contributed revenue of R404 million (Feb 2016: R376 million) and profit of R18
million (Feb 2016: R16 million). The Investment cluster managed to increase Assets under
Administration to R104 billion, a 3% increase, despite negative financial markets during the
reporting period. Assets under Management decreased to R13 billion (Feb 2016: R17 billion) in
the six months ended 28 February 2017.
The "Best in Class" strategy was finalised during the reporting period and the implementation
commenced in March 2017. This strategy is focussed on the optimisation of the investment return
expectations of the end client. The strategy is implemented through the outsourcing of the
Efficient Select single manager funds to asset management companies who, we believe, have the
ability to deliver long -term investment results.
Acquisition activities during the reporting period
Effective 1 September 2016, Efficient Select merged its Private Client business with that of Uhuru
Asset Management to form a company, EFPC. After the merger, Efficient Group holds 51% of the issued
share capital of EFPC. The purchase consideration was R4.8 million. The purchase consideration was
settled by a cash payment of R1.9 million and the balance by transferring the Efficient Select
Private Client book to EFPC.
Subsequent events
Subsequent to the reporting period, Efficient Financial Services acquired Vital Consult National
Holdings ("Vital Consult") as a going concern ("Vital Consult Acquisition"). Vital Consult is a
category I licensed financial services provider based in Cape Town with a distribution footprint
in the Western Cape, Eastern Cape and Gauteng. Vital Consult currently manages 174 registered
financial advisors on its own licence and 23 product supplier agents on a third-party license.
Vital Consult's total Assets under Advice are approximately R1.7 billion. The Vital Consult
Acquisition is strategically important to the Group as it will increase Efficient Financial
Services' distribution footprint to approximately 300 registered financial advisors and the
Financial Services clusters' Assets under Advice to approximately R16.6 billion.
The Vital Consult Acquisition is also the first step in a larger consolidation project, aimed
at aligning the Group's financial services offering, operations and other synergies, to better
serve its clients and strengthen its position in the financial services industry. The transaction
is effective from 1 March 2017 and the purchase price of R2 million will be settled in cash.
Simultaneously with the Vital Consult Acquisition, Efficient Group acquired the entire issued
share capital of Vital Consult Wealth Management ("Vital Wealth"), a category II licensed
financial services provider ("Vital Wealth Acquisition"). Vital Wealth is still in its infancy
and currently has approximately R41 million in Assets under Management, managed in two collective
investment scheme portfolios.
The effective date for the Vital Wealth Acquisition is 1 March 2017 and the purchase price of
R5 million will be settled in cash upon certain conditions being met, including agreed Assets
under Management targets.
The Group's Head Office and part of Efficient Financial Services are housed in the Pretoria office.
The Group acquired this property for a purchase price of R9.6 million from Midnight Storm
Investments 299 (a related party), and registered in the deeds office during March 2017. The
purchase price is financed through a bond over the property. The Group also started with a
renovation project to optimise the office space. The increase in Property and Equipment, since
August 2016, is therefore mainly related to the renovation project and excludes the purchase price
of the property that was only registered in March 2017.
5. Strategy
The business strategy of Efficient Group is to be a diversified financial services provider
offering customised products, professional services and added value through the financial services
value chain.
Our key focuses remain:
+ Ongoing implementation of the Group's merger, acquisition and integration strategies;
+ Ongoing implementation of the Group's sector, product and services diversification strategy; and
+ Ongoing implementation of the Group's retail distribution strategy.
To achieve our goals, we will continue to focus on the core aspects of our business: delivering
client-focused and customised products and solutions; maintaining a solid yet flexible operational
structure; expanding our national footprint; expanding into new sectors; and growing both organically
and through mergers and acquisitions.
6. Dividend
Dividends are declared at the discretion of the board of directors after taking the financial
position of the company into consideration. As a guideline, 80% of free cash flow is paid as a
dividend. Based on this policy the directors determined that 1.63000 cents per share dividend will
be paid to shareholders. An interim dividend of 1.58824 cents per share was paid for the comparative
period.
The salient dates for this dividend payment are as follows:
Last date to trade "cum" dividend Tuesday, 16 May 2017
Securities trade "ex" dividend Wednesday, 17 May 2017
Record date Friday, 19 May 2017
Payment date Monday, 22 May 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 17 May 2017 and
Friday, 19 May 2017, both days inclusive. The dividend will be transferred to dematerialised
shareholders' CSDP/broker accounts on Monday, 22 May 2017. Certificated shareholders' dividend
payments will be posted on or paid to certificated shareholders' bank accounts on or about, 22 May 2017.
Shareholders are advised of the following additional information:
+ The dividend has been declared out of profits generated during the reporting period;
+ The local dividend withholding tax rate is 20%;
+ The gross local dividend amount is 1.63 cents per share;
+ The net local dividend amount for shareholders:
+ Exempt from payment of dividend withholding tax is 1.63 cents per share; and
+ Liable to pay the dividends withholding tax is 1.30400 cents per share;
+ The issued share capital of the company is 90 592 973 shares; and
+ The company's tax reference number is 9071679170.
7. Basis of preparation
The interim results for the six months ended 28 February 2017 are presented on a consolidated basis
and 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 Listings Requirements, the Companies Act, 2008 (Act 71 of 2008)
of South Africa and the SAICA Financial Reporting Guides as issued by the Accounting Practices Board.
The accounting policies applied are consistent with those applied in the previous interim period and
previous financial year-end, except where indicated differently. No material events occurred after
the interim period which requires an adjustment to the financial information. These interim results
have not been audited or reviewed by the Group's auditors, KPMG Inc. The summarised unaudited
interim financial results are prepared by Ernes Smit CA(SA), the Group Financial Manager of
Efficient Group.
8. Changes to the board of directors
There were no changes to the board of directors during the reporting period.
The unaudited interim results for the six months ended 28 February 2017 were approved by the board
of directors on 24 April 2017 and are signed on their behalf by:
Steve Booysen Heiko Weidhase
Chairman Chief Executive Officer
24 April 2017
SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
R'000 Unaudited six Unaudited six % Change Audited year
months ended months ended ended
28-Feb-17 29-Feb-16 31-Aug-16
Revenue 464 968 428 235 9% 879 978
Asset management fees 42 328 54 349 (22%) 95 363
Asset administration and
consultation fees 340 214 309 399 10% 630 887
Financial services income 78 495 62 288 26% 147 735
Other 3 931 2 199 79% 5 993
Operating expenses (440 792) (404 063) 9% (830 566)
Operating profit 24 176 24 172 0% 49 412
Dividends received 35 120 (71%) 226
Finance income 6 975 6 375 9% 13 900
Finance cost (2 424) (1 588) 53% (3 630)
Profit on sale of equipment - 23 (>100%) 25
Fair value adjustment of
investments designated at fair
value through profit or loss 98 (219) >100% 108
Other (Expenses)/Income (302) 461 (>100%) (915)
Share of profits from associates,
net of taxation 509 822 (38%) 1 823
Remeasurement of liabilities at
fair value through profit or loss (3 247) (3 569) (9%) (6 589)
Profit before taxation 25 820 26 597 (3%) 54 360
Taxation (7 932) (7 340) 8% (16 845)
Profit for the period 17 888 19 257 (7%) 37 515
Other comprehensive income
Items that may subsequently be
reclassified to profit or loss
Unrealised fair value adjustment
of available-for-sale financial
assets, net of taxation (14) 145 (>100%) 61
Total comprehensive income for
the period 17 874 19 402 (8%) 37 576
Profit for the period attributable
to
Equity holders of the parent 18 263 19 226 (5%) 37 538
Non-controlling interest (375) 31 (>100%) (23)
17 888 19 257 37 515
Total comprehensive income for the
period attributable to
Equity holders of the parent 18 249 19 371 (6%) 37 599
Non-controlling interest (375) 31 (>100%) (23)
17 874 19 402 37 576
Number of shares in issue at the
end of the period ('000) 90 593 90 593 90 593
Weighted average number of ordinary
shares in issue at the end of the
period, net of treasury shares ('000) 90 302 90 365 90 352
Diluted weighted average number of
shares, net of treasury shares ('000) 90 302 90 365 90 352
Basic and diluted earnings per
share (cent) 20,22 21,28 (5,0%) 41,55
Headline and diluted headline
earnings per share (cent) 20,22 21,26 (4,9%) 41,53
Headline and diluted headline
earnings are calculated as follows
Attributable earnings 18 263 19 226 37 538
Profit on sale of equipment - (23) (25)
Taxation on profit on sale of
equipment - 6 7
Headline and diluted headline
earnings 18 263 19 209 37 520
SUMMARISED STATEMENT OF FINANCIAL POSITION
R'000 Notes Unaudited six Unaudited six Audited year
months ended months ended ended
28-Feb-17 29-Feb-16 31-Aug-16
Assets
Non-current assets
Property and equipment 1 36 079 3 549 27 353
Goodwill 2 157 361 153 505 155 050
Intangible assets 2 131 606 134 346 132 365
Investments 1 146 1 313 1 383
Equity accounted investments 11 853 11 252 11 726
Long-term receivables 3 550 1 504 3 436
Deferred tax 9 746 19 834 12 172
351 341 325 303 343 485
Current assets
Trade and other receivables 85 138 81 089 79 676
Cash and cash equivalents 73 465 68 056 90 118
Investments 3 084 1 340 6 503
Short-term portion of long-term receivables 113 692 3 741
Tax receivable 196 2 214 550
161 996 153 391 180 588
Total assets 513 337 478 694 524 073
Equity and liabilities
Equity attributable to equity holders of
the parent 235 282 205 715 222 473
Share capital and share premium 150 325 150 325 150 325
Treasury shares (532) (389) (440)
Fair-value adjustment reserve 44 142 58
Accumulated income 85 445 55 637 72 530
Non-controlling interest 1 941 (2 389) (2 443)
Total equity 237 223 203 326 220 030
Non-current liabilities 124 350 128 304 116 456
Long-term liabilities 94 276 94 705 85 465
Deferred tax 30 074 33 599 30 991
Current liabilities 151 764 147 064 187 587
Related party loans - 958 -
Trade and other payables 123 627 113 615 139 547
Short-term portion of long-term liabilities 26 066 28 923 47 847
Taxation payable 2 071 3 568 193
Total liabilities 276 114 275 368 304 043
Total equity and liabilities 513 337 478 694 524 073
Net asset value per share (cent) 259,71 227,08 246,28
Net tangible asset value per share (cent) (26,88) (54,59) (30,86)
1 Renovation of the Group's Hazelwood offices are underway and scheduled for completion during the
next six months. Construction costs amounting to R8.6 million have been capitalised in the financial
records of the Group.
2 During the reporting period, the Group acquired independent financial advisory client bases amounting
to R3.8 million. Share portfolio mandates, amounting to R6.6 million, were acquired through the Group's
investment in Efficient Private Clients.
SEGMENTAL ANALYSIS
R'000 Financial Services and Investments Other Total
Services Solutions
For the six months ended
28 February 2017:
Revenue 82 758 17 231 404 010 (39 031) 464 968
External 78 692 16 112 380 884 (10 720) 464 968
Inter-segment 4 066 1 119 23 126 (28 311) -
Profit/(Loss) for the period 5 807 4 119 17 876 (9 914) 17 888
Assets 56 725 29 548 175 463 251 601 513 337
Liabilities (48 666) (504) (127 129) (99 815) (276 114)
For the six months ended
29 February 2016:
Revenue 74 297 14 839 376 341 (37 242) 428 235
External 68 736 14 434 343 641 1 424 428 235
Inter-segment 5 561 405 32 700 (38 666) -
Profit/(Loss) for the period 3 674 6 891 16 120 (7 428) 19 257
Assets 45 144 18 346 133 954 281 250 478 694
Liabilities (47 613) (3 990) (91 288) (132 477) (275 368)
For the year ended
31 August 2016:
Revenue 152 868 30 265 785 895 (89 050) 879 978
External 148 848 29 456 701 412 262 879 978
Inter-segment 4 020 809 84 483 (89 312) -
Profit/(Loss) for the period 6 958 12 527 31 719 (13 689) 37 515
Assets 55 833 19 610 180 191 268 439 524 073
Liabilities (53 691) (4 004) (135 662) (110 686) (304 043)
Other consists of consolidation entries, amortisation of intangible assets, Efficient Group, Efficient
Capital, Efficient Group Central Services, Efficient Group Swaziland, Efficient Board of Executors and
Efficient Group Share Trust. All operations take place in southern Africa.
SUMMARISED STATEMENT OF CHANGES IN EQUITY
R'000 Share Treasury Fair- Accumulated Total Non- Total
capital shares value income control Equity
and share adjustment ling
premium reserve interest
Balance at
31 August 2015 150 325 (389) (3) 41 982 191 915 (2 420) 189 495
Dividends declared - - - (5 571) (5 571) - (5 571)
Total comprehensive
income for the period
- Profit - - - 19 226 19 226 31 19 257
- Other comprehensive
income - - 145 - 145 - 145
Balance at
29 February 2016 150 325 (389) 142 55 637 205 715 (2 389) 203 326
Repurchase of company's
own equity instruments - (51) - - (51) - (51)
Dividends declared - - - (1 419) (1 419) - (1 419)
Total comprehensive
income for the period
- Profit/(Loss) - - - 18 312 18 312 (54) 18 258
- Other comprehensive
income - - (84) - (84) - (84)
Balance at
31 August 2016 150 325 (440) 58 72 530 222 473 (2 443) 220 030
Repurchase of company's
own equity instruments - (92) - - (92) - (92)
Dividends declared - - - (5 348) (5 348) - (5 348)
Non-controlling
shareholding in Efficient
Private Clients - - - - - 4 759 4 759
Total comprehensive
income for the period
- Profit/(Loss) - - - 18 263 18 263 (375) 17 888
- Other comprehensive
income - - (14) - (14) - (14)
Balance at
28 February 2017 150 325 (532) 44 85 445 235 282 1 941 237 223
SUMMARISED STATEMENT OF CASH FLOWS
R'000 Unaudited six Unaudited six Audited year
months ended months ended ended
28-Feb-17 29-Feb-16 31-Aug-16
Cash flows from operating activities
Cash generated by operations 33 764 33 739 66 544
Interest received 6 975 6 375 13 900
Interest paid (2 424) (1 588) (3 630)
Taxation paid (4 191) (7 118) (15 199)
Dividends received 417 622 1 236
Changes in working capital
Increase in trade and other receivables (5 462) (6 834) (5 478)
(Decrease)/Increase in trade and other payables (15 920) (23 072) 2 860
Net cash inflow from operating activities 13 159 2 124 60 233
Cash flows from investing activities
Acquisition of businesses (4 256) (1 094) (1 967)
Decrease/(Increase) in long-term receivable 3 514 1 079 (3 751)
Acquisition of investments (92) - -
Proceeds on disposal of investments 4 115 40 861 35 844
Proceeds on disposal of equipment - - 117
Acquisition and development of intangible assets (1 985) (777) (1 217)
Acquisition of property (8 622) - (23 984)
Acquisition of equipment (921) (288) (1 133)
Net cash (outflow)/inflow from investing activities (8 247) 39 781 3 909
Cash flows from financing activities
Proceeds from/(Repayment of) long-term liabilities 12 137 (23 108) 29 000
Repayment of long-term liabilities (8 008) - (14 881)
Repayment of vendor finance (20 346) - (35 025)
Increase Increase in related party loans - 997 39
Dividends paid (5 348) (5 571) (6 990)
Net cash outflow from financing activities (21 565) (27 682) (27 857)
Movement in cash and cash equivalents for the period (16 653) 14 223 36 285
Cash and cash equivalents at the beginning of the period 90 118 53 833 53 833
Cash and cash equivalents at the end of the period 73 465 68 056 90 118
ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
The fair values of financial assets and liabilities measured at fair value in the statement of
financial position can be summarised as follows:
Unaudited at 28 February 2017 FAIR VALUE HIERARCHY LEVEL
R'000 Level 1 Level 2 Level 3 Total
Financial assets
Financial assets at fair value through profit or loss
Unit-linked investments 2 376 - - 2 376
Available-for-sale financial assets
Unit-linked investments 1 146 - - 1 146
3 522 - - 3 522
Financial liabilities
Financial liabilities at fair value through profit or loss
Business acquisition forward purchase liabilities - - (67 969) (67 969)
- - (67 969) (67 969)
Unaudited at 29 February 2016 FAIR VALUE HIERARCHY LEVEL
R'000 Level 1 Level 2 Level 3 Total
Financial assets
Financial assets at fair value through profit or loss
Unit-linked investments 1 340 - - 1 340
Available-for-sale financial assets
Unit-linked investments 1 313 - - 1 313
2 653 - - 2 653
Financial liabilities
Financial liabilities at fair value through profit or loss
Business acquisition forward purchase liabilities - - (92 096) (92 096)
- - (92 096) (92 096)
Unaudited at 31 August 2016 FAIR VALUE HIERARCHY LEVEL
R'000 Level 1 Level 2 Level 3 Total
Financial assets
Financial assets at fair value through profit or loss
Unit-linked investments 6 503 - - 6 503
Available-for-sale financial assets
Unit-linked investments 1 383 - - 1 383
7 886 - - 7 886
Financial liabilities
Financial liabilities at fair value through profit or loss
Business acquisition forward purchase liabilities - - (81 906) (81 906)
- - (81 906) (81 906)
There were no transfers of any financial instruments between fair value hierarchy levels 1, 2 and 3
during any of the reporting periods. The carrying values of all financial instruments not presented
at fair value on the statement of financial position are reasonable approximations of their fair values.
Unit-linked investments are included in the Investments line on the statement of financial position.
Business acquisition forward purchase liabilities are included in the Long-term liabilities line on
the statement of financial position.
VALUATION TECHNIQUES AND INPUTS USED IN THE FAIR VALUE MEASUREMENT OF LEVEL 3 FINANCIAL INSTRUMENTS
Business acquisition forward purchase liabilities
Business acquisition forward purchase liabilities are valued at the present value of the expected
payments set out in the contracts, discounted using discount rates between 7.75% and 10.88%.
The unobservable inputs used for calculating the forward purchase liability fair values include
budgets and forecasts with estimated annual profit growth rates, planned independent financial
advisor book buys and free cash flows.
As there is a contractual maximum purchase price that was used in calculating the forward purchase
liabilities, or the liabilities are directly linked to the performance of the related entity, the
Group's profit is not materially sensitive to the inputs of the models applied when calculating fair
value.
R'000 Unaudited six Unaudited six Audited year
months ended months ended ended
28-Feb-17 29-Feb-16 31-Aug-16
Opening balance (81 906) (110 342) (92 096)
Fair value adjustments for the period
recognised in profit or loss (3 247) (3 569) (4 810)
Settlements 17 184 21 815 15 000
Closing balance (67 969) (92 096) (81 906)
SIGNIFICANT RELATED PARTY TRANSACTIONS AND SUBSEQUENT EVENTS
For significant related party transactions and subsequent events, refer to section 4 (Business
segmental results) in the highlights commentary.
Non-executive directors: S Booysen*, Z Cele*, L Taylor*, J Rosen*, J Mabena, A du Preez (*Independent)
Alternate director: T du Preez (for A du Preez)
Executive directors: DD Roodt, H Weidhase, AT de Klerk and R Walton
Registered address: 81 Dely Road, Hazelwood, 0081
Business address: 81 Dely Road, Hazelwood, Pretoria, 0081
Company secretary: Jonathan Nyahuye
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Merchantec Capital
Efficient Group Ltd is a JSE-listed financial services company.
Tel: +27 (87) 944 7999 81 Dely Road, Hazelwood, Pretoria, 0081
http://www.efgroup.co.za
Date: 25/04/2017 12:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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