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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
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