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METTLE INVESTMENTS LIMITED - Condensed consolidated unaudited interim results for the six months ended 31 August 2018

Release Date: 12/11/2018 09:00
Code(s): MLE     PDF:  
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Condensed consolidated unaudited interim results for the six months ended 31 August 2018

METTLE INVESTMENTS LIMITED 
Incorporated in the Republic of South Africa
(Registration Number: 2008/002061/06)
JSE share code: MLE ISIN: ZAE000257622
("Mettle" or "the Group")

CONDENSED CONSOLIDATED UNAUDITED INTERIM RESULTS OF THE METTLE GROUP FOR THE SIX
MONTHS ENDED 31 AUGUST 2018

HIGHLIGHTS

-   Reward Investments (No.2) Limited ("Reward") and Mettle Solar Africa Limited ("Mettle Solar Africa")
    acquired by Mettle from Tradehold Limited ("Tradehold") as part of a group restructure ("the
    Restructure")
-   Mettle unbundled from Tradehold and listed on the JSE on 23 May 2018 with stated capital of
    R545.8 million
-   Net asset value per share increased by 55% from 128 cents to 199 cents
-   Profits for the period depressed by ‘once-off' Restructure costs and a non-recurring write down of a loan
    book in an associate

DETAILS OF THE RESTRUCTURE

As detailed in Mettle's pre-listing statement dated 14 May 2018 ("PLS"), Tradehold invested a further
R445.2 million in Mettle in May 2018 as part of the Restructure.

These funds were utilised as follows:

-   R42 million settlement of shareholder borrowings due to Tradehold;
-   R226.7 million subscription of ordinary shares in Reward (a wholly owned subsidiary of Tradehold prior
    to the Restructure);
-   R162.8 million purchase of a loan claim against Reward from Tradegro S.a.r.l (a wholly owned
    subsidiary of Tradehold), which Reward then capitalised through the issue of shares;
-   R6,499 purchase of 55% of the ordinary shares in Mettle Solar Africa (a joint venture) from Tradehold
    Africa Limited (wholly owned subsidiary of Tradehold); and
-   R13.7 million purchase of the loan claim against Mettle Solar Africa from Tradehold Africa Limited.

The Group now owns 90% of Reward (based in Leeds in the UK). Reward owns 75% of Reward Finance Group
Limited ("Reward Finance Group") which has three operating companies, namely Reward Capital, Reward
Invoice Finance and Reward Trade Finance.

THE METTLE BUSINESS

Following the Restructure, Reward is now the largest contributor to the profits and net asset value of Mettle.

Reward provides asset secured short and medium-term loans and invoice discounting to the UK small and
medium-sized enterprises ("SME") market. Loan sizes are between GBP50,000 and GBP2 million. Reward's
strategy is to target SMEs that are not adequately serviced by traditional banks.

The South African businesses are involved mainly in lending, financial advisory and solar power solutions.

FINANCIAL PERFORMANCE REVIEW

The results include the South African businesses for six months and Reward for only three and a half months.

Revenue increased to R84.1 million for the six-month period ended 31 August 2018 (2017: R20.5 million), while
profit attributable to shareholders increased to R9.4 million (2017: R5.9 million). Reward contributed
R60.8 million to revenue and R12.3 million (GBP0.7 million) to profit. Had Reward been consolidated for the full
six-month period, the profit attributable to shareholders would have increased by an additional GBP0.5 million.

Earnings per share decreased by 16.6% from 6.09 cents to 5.08 cents while headline earnings per share
decreased by 19.3% from 5.76 cents to 4.65 cents. The reconciliation between basic earnings and headline
earnings is detailed in note 4.

The performance for the period was negatively impacted by once off Restructure costs of R4 million, new
recurring listing related costs of R1 million and equity accounted losses of R2.8 million at Lendcor.

Lendcor provides unsecured loans for home improvements to the lower LSM market through a network of
building supply merchants. The results of Lendcor have been negatively impacted by the changes to the bank
accounts into which SASSA grants are paid. This has resulted in a non-recurring provision against a portion of
Lendcor's loan book. Changes have been made to the business rules to ensure that this situation does not
recur.

Reward's loan and invoice discounting book grew to R1.2 billion (GBP60.5 million) by 31 August 2018 from
R1 billion (GBP57.5 million) at date of acquisition by Mettle. Reward has benefited from the continued
uncertainty in the UK which has resulted in banks being hesitant to lend to smaller businesses. A new office has
been opened in Manchester and additional qualified staff have been employed.

The remaining South African businesses have performed in line with budget.

The Rand has depreciated sharply against the Pound since the acquisition of Reward by Mettle and ended the
period at R19.09 (from R16.88 at acquisition date). This resulted in a foreign currency translation reserve of
R36.5 million in the Group results.

Net asset value per share has increased by 55% to 199 cents (2017: 128 cents), while tangible net asset value
per share has increased by 63% to 196 cents (2017: 120 cents).

SHARE ISSUES

Mettle converted its ordinary shares from par value to no par value and increased its authorised ordinary share
capital from 200 million to 500 million shares in May 2018.

On 14 May 2018 Mettle issued 40.2 million ordinary shares to Tradehold in settlement of borrowings due to the
shareholder amounting to R42 million.

On 15 May 2018 Mettle issued 110.7 million ordinary shares to Tradehold for a consideration of R403.2 million.

ORDINARY DIVIDEND

The board has decided not to declare an interim dividend.

PROSPECTS

The results for the period under review contain several ‘once off' items that will not recur in future periods. 
In addition, the results of Reward have only been consolidated into Mettle for three and a half months. As such,
the directors expect the results for the 6 months ended 28 February 2019 to more accurately reflect the true
operational potential of the Group's business.

Given the reliance of Mettle on the performance of Reward, the outcome of the Brexit negotiations is a source of
both risk and opportunity. Once the Brexit negotiations have been finalised, the directors will be able to make a
more accurate assessment of the potential impact on the business.

All businesses have sufficient facilities in place to support growth for the foreseeable future.

Mettle has concluded agreements for the acquisition of an indirect 49% shareholding in, and certain loan claims against, 
Christopher Finance Proprietary Limited as announced on SENS on 5 November 2018 (refer to note 8).

Any reference to future financial performance included in this statement has not been reviewed or reported on
by the Group's external auditors and does not constitute an earnings forecast.

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated unaudited interim financial statements are prepared in accordance with the
requirements of the JSE Listings Requirements for interim reports, and the requirements of the Companies Act,
No 71 of 2008 applicable to interim financial statements.
 
The JSE Listings Requirements require interim reports to be prepared in accordance with the framework
concepts and the measurement and recognition requirements of International Financial Reporting Standards
("IFRS") and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the
preparation of the condensed consolidated unaudited interim financial statements are in terms of IFRS and are
consistent with those accounting policies applied in the preparation of the previous consolidated annual financial
statements except for the adoption of the following new standards, amendments to publicised standards and
interpretations that became effective for the current reporting period beginning on 1 March 2018:

IFRS 9 Financial Instruments
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces the expected
credit loss model for the measurement of impairment allowances for financial assets. IAS 39 required an
impairment allowance when there was objective evidence of default. IFRS 9 stipulates that the impairment
allowance is based on the lifetime expected credit losses.

As the Group has historically incurred minimal bad debt write offs, the adoption of IFRS 9 has not had a material
impact.

IFRS 15 Revenue from Contracts with Customers
IFRS 15 replaces IAS 18 Revenue. IFRS 15 details the measurement, classification and disclosure of revenue
from contracts with customers and establishes a five-step model to recognise revenue. The risk and reward
criteria of IAS 18 no longer apply.

There was no impact from the adoption of IFRS 15 on the interim financial statements.

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is
not yet effective.

The Group's reportable segments reflect those components of the Group that are regularly reviewed by the
chief executive officer and other senior executives who make strategic decisions.

Tangible net asset value per share
Tangible net asset value per share excludes goodwill and intangible assets from the calculation of the Group's
net asset value, being the same manner in which tangible net asset value was calculated in the PLS. This is not
a defined term under IFRS and may not be comparable with similar measures disclosed by other companies.

PREPARATION OF FINANCIAL RESULTS

The preparation of the financial results for the six months ended 31 August 2018 was supervised by the Group
financial director, Justin Rookledge BBusSci Finance (Hons), CA(SA).

These financial results have not been audited or independently reviewed by the Group's external auditors,
PricewaterhouseCoopers Inc.

The directors take full responsibility for the preparation of these interim results.

CHANGES TO BOARD AND COMPANY SECRETARY

The following changes to the Mettle board have taken place since the previous financial year end, being
28 February 2018:

JA Aitken                         Resigned on 19 April 2018
WD Marais                         Resigned on 19 April 2018
W Maree                           Resigned on 19 April 2018
IHJ Visagie                       Resigned on 19 April 2018
BA Chelius                        Appointed on 19 April 2018
TM Flannery                       Appointed on 19 April 2018
HRW Troskie                       Appointed on 19 April 2018 and resigned on 12 September 2018
MVZ Wentzel                       Appointed on 19 April 2018
RD Fenner                         Appointed on 18 September 2018

RD Fenner is the lead independent non-executive director and chairman of the audit and risk committee.

Mettle Corporate Finance Proprietary Limited was appointed as company secretary on 19 April 2018.

FH Esterhuyse                    HF Prinsloo
Chairman                         CEO
9 November 2018

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                                     Unaudited       Audited
                                                                                     31 August   28 February
                                                                                          2018          2018
                                                                                         R'000         R'000
ASSETS
Non-current assets
Property, plant and equipment                                                            1 703           592
Goodwill                                                                                 7 475         7 475
Deferred taxation                                                                        1 129         1 142
Investments in joint ventures                                                            7 173         7 073
Investments in associates                                                               49 466        53 123
Loans due from associates                                                               35 016        32 390
Loans due from joint ventures                                                           16 651             -
Financial assets at fair value through profit or loss                                   32 297        31 234
Loan receivables                                                                        29 263        18 285
Total non-current assets                                                               180 173       151 314

Current assets
Taxation                                                                                     -             1
Loans due from associates                                                                    -         8 189
Loan receivables                                                                     1 196 451        21 467
Trade and other receivables                                                             31 999        35 826
Cash and cash equivalents                                                               91 500         6 278
Total current assets                                                                 1 319 950        71 761

Total assets                                                                         1 500 123       223 075

EQUITY AND LIABILITIES
Capital and reserves
Stated capital                                                                         545 828       100 622
Retained income                                                                         31 599        22 198
                                                                                       577 427       122 820
Foreign currency translation reserve                                                    36 530             -
Common control reserve                                                               (121 226)             -
Non-controlling interest                                                                55 723             -
Total equity                                                                           548 454       122 820

Non-current liabilities
Deferred taxation                                                                        1 303           309
Borrowings                                                                             888 012        43 757
Total non-current liabilities                                                          889 315        44 066

Current liabilities
Borrowings                                                                              30 783         9 462
Borrowings due to shareholders                                                               -        42 000
Taxation                                                                                 9 043            82
Provisions                                                                                 184           329
Trade and other payables                                                                22 344         4 316
Total current liabilities                                                               62 354        56 189

Total equity and liabilities                                                         1 500 123       223 075

Net asset value per share (cents)                                                          199           128
Tangible net asset value per share (cents)                                                 196           120

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                                     Unaudited      Reviewed
                                                                                     31 August     31 August
                                                                                          2018          2017
                                                                                         R'000         R'000

Revenue                                                                                 84 112        20 472
Other income                                                                            12 474         2 563
Operating expenses                                                                    (46 965)      (11 961)
Profit from operations                                                                  49 621        11 074
Interest expense                                                                      (20 674)       (3 196)
(Loss)/profit from equity accounted investments                                        (6 128)            81
Profit before taxation                                                                  22 819         7 959
Taxation                                                                               (7 733)       (2 091)
Profit after taxation before non-controlling interest                                   15 086         5 868
Other comprehensive income
Items that may be subsequently reclassified to profit
Exchange difference on translation of foreign operation                                 43 015             -
Total comprehensive income                                                              58 101         5 868

Profit attributable to:
Equity holders of the parent                                                             9 401         5 868
Non-controlling interest                                                                 5 685             -
                                                                                        15 086         5 868
Total comprehensive income attributable to:
Equity holders of the parent                                                            45 931         5 868
Non-controlling interest                                                                12 170             -
                                                                                        58 101         5 868
Earnings per share (cents):
- basic                                                                                   5.08          6.09
- diluted                                                                                 5.08          6.09

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                 Foreign
                                                                currency      Common         Non-
                                          Stated   Retained  translation     control  controlling
                                         capital     income      reserve     reserve     interest      Total
                                           R'000      R'000        R'000       R'000        R'000      R'000
Equity at 28 February 2017               100 622      6 364            -           -            -    106 986
Profit after taxation                                15 834                                           15 834
Equity at 28 February 2018               100 622     22 198            -           -            -    122 820
Issue of ordinary shares                 445 206                                                     445 206
Acquisition of subsidiary                                                  (121 226)       49 464   (71 762)
Profit after taxation                                 9 401                                 5 685     15 086
Other comprehensive income                                        36 530                    6 485     43 015
Dividends paid to non-controlling interest                                                (5 911)    (5 911)
Equity at 31 August 2018                 545 828     31 599       36 530   (121 226)       55 723    548 454

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                       Unaudited    Reviewed
                                                                                       31 August   31 August
                                                                                            2018        2017
                                                                                           R'000       R'000
Cash flows from operating activities
Profit from operations                                                                    49 621      11 074
Non-cash items                                                                          (10 830)     (8 764)
Changes in working capital                                                                 7 314     (8 679)
Cash generated from/(utilised in) operations                                              46 105     (6 369)
Interest received                                                                          4 382       7 282
Interest paid                                                                           (20 674)       (216)
Dividends paid to non-controlling interest                                               (5 911)           -
Taxation paid                                                                            (5 061)     (1 235)
Net cash inflow/(outflow) from operating activities                                       18 841       (538)

Cash flows from investing activities
Acquisition of property, plant and equipment                                               (393)        (53)
Proceeds on disposal of property, plant and equipment                                         81           -
Acquisition of investment in joint venture                                                   (6)     (4 000)
Cash outflow on acquisition of subsidiaries                                            (318 097)           -
Cash outflow on disposal of subsidiary                                                   (1 853)           -
Purchase of financial assets at fair value through profit or loss                              -    (30 474)
Loans advanced to associates                                                             (5 434)     (9 940)
Loans recovered from associates                                                            8 189           -
Loans advanced to joint ventures                                                        (14 140)           -
Loan receivables advanced                                                              (883 809)    (36 781)
Loan receivables recovered                                                               803 449      40 632
Dividend received from associate                                                           2 000           -
Dividend received from joint venture                                                         124           -
Proceeds on disposal of asset held for sale                                                    -       6 626
Net cash outflow from investing activities                                             (409 889)    (33 990)

Cash flow from financing activities
Issue of ordinary shares                                                                 403 206           -
Repayment of borrowings                                                                 (10 254)     (1 571)
Receipt of borrowings                                                                     72 942      55 500
Repayment of borrowings due to shareholder                                                     -       (613)
Receipt of borrowings due to shareholder                                                       -       1 650
Net cash inflow from financing activities                                                465 894      54 966

Net increase in cash and cash equivalents                                                 74 846      20 438
Effect of changes in exchange rate                                                         7 394           -
Cash and cash equivalents at beginning of the period                                       4 922      10 611
Cash and cash equivalents at end of the period                                            87 162      31 049

As presented on the statement of financial position
Cash and cash equivalents                                                                 91 500      31 049
Bank overdraft (included in current borrowings)                                          (4 338)           -
                                                                                          87 162      31 049
SUPPLEMENTARY INFORMATION

1.   BUSINESS COMBINATIONS

     Acquisition of Gondotrix

     Mettle acquired the other 50% of Gondotrix Proprietary Limited ("Gondotrix") on
     31 March 2018 for R1. Gondotrix owns 100% of Mettle Credit Services
     Proprietary Limited ("MCS"). MCS provides a full spectrum of credit assessment,
     administration and account management services.

     Gondotrix had the following assets and liabilities on acquisition date:
                                                                                                   Unaudited
                                                                                                       R'000
     Recognised amounts of identifiable net assets
     Equipment                                                                                           157
     Trade and other receivables                                                                       1 189
     Cash and cash equivalents                                                                         1 413
     Trade and other payables                                                                          (875)
     Taxation                                                                                          (121)
                                                                                                       1 763
     Fair value of consideration transferred
     Consideration settled in cash                                                                         -
     Fair value of equity interest (associate) held before business combination                        (940)
     Bargain purchase gain                                                                               823

     Cash flow on acquisition of subsidiary
     Cash and cash equivalents acquired with the subsidiary                                            1 413
     Consideration settled in cash                                                                         -
                                                                                                       1 413
     Disposal of Mettle Credit Services

     Montsi Investments invested R1.8 million in MCS on 31 May 2018 and became a
     51.1% shareholder. As a result, Mettle's indirect shareholding in MCS diluted to
     48.9%.

     MCS is now a level 2 B-BBEE contributor.

     MCS had the following assets and liabilities on disposal date:

     Equipment                                                                                           138
     Trade and other receivables                                                                       1 028
     Cash and cash equivalents                                                                         1 853
     Trade and other payables                                                                          (903)
     Taxation                                                                                          (186)
                                                                                                       1 930
     Fair value of retained equity interest                                                          (1 845)
     Loss on disposal                                                                                     85

     Cash flow on disposal of subsidiary
     Cash and cash equivalents disposed with the subsidiary                                          (1 853)
     Proceeds on disposal                                                                                  -
                                                                                                     (1 853)
     Acquisition of Reward
     
     Mettle acquired 90% of Reward on 15 May 2018. Reward owns 75% of Reward
     Finance Group.
     
     IFRS 3 Business Combinations was not applicable as this transaction was a
     combination of businesses under common control.
     
     Reward had the following assets and liabilities on acquisition date:
                                                                                                   Unaudited
                                                                                                       R'000
     Recognised amounts of identifiable net assets
     Equipment                                                                                           844
     Loan receivables                                                                                969 824
     Trade and other receivables                                                                         877
     Cash and cash equivalents                                                                        70 001
     Borrowings                                                                                    (558 357)
     Borrowings – related parties                                                                  (144 408)
     Trade and other payables                                                                       (14 618)
     Taxation                                                                                        (6 414)
                                                                                                     317 749
     Non-controlling interest                                                                       (49 464)
                                                                                                     268 285
     Fair value of consideration transferred
     Consideration settled in cash                                                                   389 511
     Common control reserve                                                                          121 226
     
     Cash flow on acquisition of subsidiary
     Cash and cash equivalents acquired with the subsidiary                                           70 001
     Consideration settled in cash                                                                 (389 511)
                                                                                                   (319 510)
     The Rand:Pound exchange rate on acquisition date was R16.88.
     
     The Group has included revenue of GBP3.4 million and profit attributable to equity holders of the parent
     of GBP0.7 million relating to Reward (refer to note 6).
     
     Had Reward been consolidated for the full six-month period, its contribution to revenue and profit
     attributable to equity holders of the parent would have increased to GBP5.8 million and GBP1.2 million,
     respectively.
                                                                               Unaudited             Audited
                                                                               31 August         28 February
                                                                                    2018                2018
                                                                                   R'000               R'000
2.   BORROWINGS

     Non-current
     Small Enterprise Finance Agency SOC Limited ("SEFA")                         43 890              43 757
     Foresight Group ("Foresight")                                               698 809                   -
     Tradegro S.a.r.l ("Tradegro")                                               145 313                   -
                                                                                 888 012              43 757

     Current
     Christina Wiese ("Wiese")                                                    20 999                   -
     Small Enterprise Finance Agency SOC Limited ("SEFA")                          5 425               5 547
     FirstRand Bank Limited ("FirstRand")                                             21               2 560
     Nedbank Limited ("Nedbank")                                                   4 338               1 355
                                                                                  30 783               9 462

                                                                                 918 795              53 219

     The borrowings from SEFA accrue interest at prime plus 1%. Interest is payable semi-annually
     with capital repayable in March 2020. The borrowings are secured by Group cash balances
     and loan and trade receivables of R68.8 million. The R50 million facility has been fully drawn
     down.

     The borrowings from Foresight accrue interest at a fixed rate of 6.5% which is payable
     quarterly. The facility limit is GBP45 million until 31 December 2018 and GBP50 million from
     1 January 2019. The repayment date is four years from each individual draw down with the
     first repayment due in August 2021. Foresight has a debenture over all assets of Reward
     Finance Group (including shares in its subsidiaries). The carrying value of these assets
     amount to R1.1 billion at the end of the period. The amounts owed by Reward Finance Group
     to Reward (R374.3 million) and Wiese (R21 million) are subordinated in favour of Foresight.

     The borrowings from Tradegro (related party) are unsecured, accrue interest at sterling three-
     month LIBOR plus 6.5% and are repayable on 28 May 2020. Interest is capitalised.

     The borrowings from Wiese (related party) are unsecured, accrue interest at sterling three-
     month LIBOR plus 4% and repayable on demand. Interest is paid monthly.

     The R33 million facility from FirstRand accrued interest at prime less 1% and expired on
     31 August 2018. The facility was secured by the Gray Swan Sanlam Collective Investments
     unit trust investments (R32.3 million). The terms of this facility were revised in October 2018.
     The R15 million overdraft facility is now secured by R10 million of the above unit trust
     investments and accrues interest at prime plus 1%. This facility is reviewed annually.

     The unsecured R5 million overdraft facility from Nedbank accrues interest at prime which is
     settled monthly. This facility has been increased to R10 million in October 2018. This facility is
     reviewed annually.
                                                                                     Unaudited      Reviewed
                                                                                     31 August     31 August
                                                                                          2018          2017
                                                                                         R'000         R'000

3.   REVENUE

     Fee income                                                                         10 069         5 926
     Service fees                                                                       16 614             -
     Discounting income                                                                  8 256         6 642
     Interest income                                                                    49 173         7 904
                                                                                        84 112        20 472
     Revenue is split in geographical regions in note 6.

4.   EARNINGS PER SHARE

     Basic earnings per share (cents)                                                     5.08          6.09
     Diluted earnings per share (cents)                                                   5.08          6.09
     Headline earnings per share (cents)                                                  4.65          5.76
     Diluted headline earnings per share (cents)                                          4.65          5.76

     Basic earnings per share

     Basic earnings per share is calculated by dividing the profit
     attributable to equity holders of the parent with the weighted
     average number of ordinary shares in issue for the period.

     Profit attributable to equity holders of the parent                                 9 401         5 868

     Weighted average number of ordinary shares (‘000)                                 185 072        96 292

     Diluted earnings per share

     The Group has no dilutive potential ordinary shares.

     Headline earnings per share

     Headline earnings per share is calculated by dividing the headline
     earnings with the weighted average number of ordinary shares in
     issue for the period.

     Profit attributable to equity holders of the parent                                 9 401         5 868
     Bargain purchase gain on acquisition of subsidiary                                  (823)             -
     Loss on disposal of subsidiary                                                         85             -
     Profit on disposal of property, plant and equipment                                  (81)             -
     Profit on asset held for sale                                                           -         (326)
     Tax impact of adjustments                                                              23             -
     Headline earnings                                                                   8 605         5 542

     Weighted average number of ordinary shares (‘000)                                 185 072        96 292

5.   FAIR VALUE DISCLOSURES

     The Group's financial instruments are measured at amortised cost besides the financial assets at fair
     value through profit or loss.

     These financial assets are unit trust investments measured at quoted prices (level 1).

     The carrying value of all other financial instruments approximate fair value.

6.   SEGMENT INFORMATION

     The Group has two reportable segments at 31 August 2018 (after the acquisition of Reward in the UK).

                                                                   Unaudited     Unaudited
                                                                      United         South         Unaudited
                                                                     Kingdom        Africa             Total
                                                                       R'000         R'000             R'000

     Revenue                                                          60 835        23 277            84 112
     Profit/(loss) attributable to equity holders of the parent       12 305       (2 904)             9 401
     Total assets                                                  1 262 877       237 246         1 500 123
     Total liabilities                                               890 034        61 635           951 669

     There were no transactions between the segments.

7.   RELATED PARTIES

     Certain Group companies concluded transactions with each other in the ordinary course of business.
     These intergroup transactions and balances are eliminated on consolidation.

     Related party balances and transactions for the current period are similar to those disclosed in the
     Group's annual financial statements for the year ended 28 February 2018 besides for those that took
     place as part of the Restructure and those detailed below:
                                                                                                   Unaudited
                                                                                                   31 August
                                                                                                        2018
                                                                                                       R'000

     Loan to EAF Investments Limited ("EAF")                                                          18 090

     Reward Finance Group advanced GBP1.2 million to EAF in April 2017. EAF is a
     shareholder in Reward Finance Group and the company is controlled by Nick
     Smith who is also a director of Reward Finance Group. The loan is repayable
     after 10 years and accrues interest at sterling three-month LIBOR plus 2.5%.
     Dividends payable to EAF are used to repay the loan. The loan is secured by
     its 10% shareholding in Reward Finance Group.

     Loan to JE&K Limited ("JE&K")                                                                    13 628

     Reward Finance Group advanced GBP0.76 million to JE&K in April 2018. JE&K is a
     shareholder in Reward Finance Group and the company is controlled by David
     Harrop who is also a director of Reward Finance Group. The loan is repayable
     after 10 years and accrues interest at sterling three-month LIBOR plus 2.5%.
     Dividends payable to JE&K are used to repay the loan. The loan is secured by
     its 5% shareholding in Reward Finance Group.

     The terms of the related party borrowings due to Tradegro and Wiese are disclosed in note 2.

8.   EVENTS AFTER THE REPORTING DATE

     Mettle has concluded agreements for the acquisition of an indirect 49% shareholding in, and certain
     loan claims against, Christopher Finance Proprietary Limited. The total purchase consideration of
     R27.2 million will be settled in cash. The suspensive conditions should be fulfilled by 15 November 2018.

     Shareholders are referred to the SENS announcement released on 5 November 2018 for more details.

DESIGNATED ADVISOR
Questco Corporate Advisory Proprietary Limited
Date: 12/11/2018 09:00:00 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
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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