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Summarised audited results for the year ended 31 December 2018 and declaration of dividend number 9
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
SUMMARISED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018 AND DECLARATION OF DIVIDEND NUMBER 9
HIGHLIGHTS
* Assets under management and advice decreased by 6% during 2018 to R49.0 billion (31 December 2017: R52.3 billion).
* Adjusted Headline Earnings up 1% at R76.6 million (R75.9 million to 31 December 2017).
* Adjusted HEPS from continuing operations down 2% at 38.4 cents per share (39.1 cents to 31 December 2017).
* Operating cash flow of R139m (R151m to 31 December 2017).
* Final dividend of 10 cents per share; total dividend of 20 cents per share for 2018 (10 cents per share in 2017).
COMMENTARY
Anchor began managing assets in 2012 and has grown to reach group-wide assets under management and advice at 31 December 2018 of R49 billion, down 6%
from R52.3 billion at 31 December 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 2018 year was difficult for the investment industry. The JSE Capped Swix was down 10.7%, the MSCI World was down 8.7% and the average USD/ZAR
exchange rate (R13.29) was 0.4% weaker compared to 2017. The JSE trading volumes, which indicate activity levels, were down 39% compared to 2017.
Against the above backdrop, Anchor has managed to grow the business by attracting over 1,700 new high net worth private clients in this reporting
period. Anchor's investment performance was ahead of industry benchmarks.
Anchor did well to hold profit levels in a negative environment. Operational leverage was negative with turnover down 3% and operating expenses up
3%. The operating margin decreased to 22% (27% in 2017). The operating margin was negatively influenced by:
* a decline in the profitability of the hedge fund businesses
* no Performance fees earned in 2018
* lower activity levels resulting in lower private client brokerage revenue
* A change in asset mix (more fixed income revenues, where fees are lower)
* Investment in distribution initiatives which are still building matching revenue.
The Group is well placed to take advantage of a more positive South African environment. The operating margin of 22% was the lowest since the
inception of the business and is expected to increase as the scale of the business increases and the investment markets improve.
RESULTS
Continuing Operations:
The turnover of the group decreased by 3% to R464 million (2017: R476 million), with average assets of R50.6 billion for the year. The yield on
average assets for the period decreased to 0.92% (2017: 0.97%). This was lower due to reduced activity levels, negative investment markets, and no
once-off items in revenue.
Costs grew by 3%, to R360 million (2017: R350 million).
Costs grew faster than turnover, resulting in an operating margin of 22% (2017: 27%). This resulted in operating profits declining by 18% to R104
million (2017: R127 million).
Other Income grew by 35% to R17 million (2017: R13 million). Other Income was positively impacted by the return on balance sheet assets, foreign
exchange gains, and interest income. This was largely due to the spot USD/ZAR exchange rate weakening by 16% for the year.
Finance costs decreased by 53% to R2 million, (2017: R4.4 million). The decrease is due to the repayment of debt.
Adjusted headline earnings from conituing operations per share was down 2% at 38.4 cents (2017: 39.1 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 with more than 100% of continuing profits generated in cash.
Shareholders' equity decreased to R870 million (2017: R1.12 billion), as a result of the loss for the period; incorporating the loss from the
discontinued associate Capricorn Fund Managers Malta Limited, ("CFM Malta"). The net asset value per share is 422 cents. Cash and other liquid
instruments were R144 million at 31 December 2018, which represents 70 cents per share.
Discontinued Operations:
CFM Malta, the offshore hedge-fund associate, was classified as a discontinued operation, due to the intention to close the entity.
The share of losses from the associate, and the impairment to fully write down the associate contributed to the loss of R298 million (2017: 2.1
million).
OPERATIONAL REVIEW
Private Clients and Asset Management
Assets under management at year-end were R33.9 billion (-5%, 2017: R35.6 billion) and assets under advice R15.1 billion (-10%, 2017: R16.7 billion).
Anchor does not own 100% of all of its subsidiaries. If one only includes Anchor's attributable share of assets under management the R33.9 billion
reduces to R32.4 billion (down 9% on 31 December 2017: R35.6 billion).
The business welcomed a record number of new clients during 2018 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 increase assets
under management in 2019.
* Offshore managed assets are R16 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 R400 million per month in 2018. This was offset by
negative markets, the closure of the Capricorn GEM fund and the loss of a large non-discretionary client, whose assets were not fee generating.
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 10.9% per annum against a peer group average of
6.1% (source: MoneyMate).
Portfolio Bureau (Pty) Ltd performed in line with expectations. The contribution from Capricorn Fund Managers SA (Pty) Ltd ("CFM SA"), was lower than
the prior period with no performance fees. CFM SA has been acquired 100% by the Group, which increases the investment team and consolidates the hedge
fund offering of the Group.
Investment markets delivered unfavourable returns in 2018: the SA JSE Capped Swix index was down 10.7%, the MSCI World was down at 8.7% and the
average USD/ZAR exchange rate was 0.4% weaker compared to prior year. 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 17 CA(SA)s, 16 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. The conditions precedent have been fulfilled, and therefore the business has been deconsolidated in the results.
Anchor Stockbrokers is a Level II B-BBEE contributor and has excellent prospects to materially contribute to earnings, by capturing significant
institutional flows.
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 assets under management, and is based in Kwa-Zulu Natal. The purchase price was settled in shares.
Anchor repurchased 2.54 million shares, held as treasury shares, during 2018 and the share buy-back will continue in 2019.
Anchor purchased 100% of Erudite Financial Services (Pty) Ltd ("EFS") on 1 January 2019. EFS is a financial advisory business advising a book of 1
300 clients, with assets under advice of R1.3 billion.
Anchor has a stated, long-term intention of paying half of adjusted headline earnings as a dividend. The final dividend is 10 cents per share,
resulting in a total dividend of 20 cents per share for the year.
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 a longer track record is
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 in marketing and distribution capabilities
from inception, which is bearing fruit through the growth of assets under management. We are aiming for consequential financial leverage to follow in
coming years.
The Group's strategy is as follows:
1. To maintain top quartile investment performance with all investment product ranges across asset classes and geographies:
* The investment product range set is 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.
* 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 three 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.
* 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 2019.
* Acquiring quality financial advisory businesses with diverse client base, and good cash flow generation.
PROSPECTS
It is challenging to grow in the current investment environment. However, the business continues to generate consistent inflows, with over R5 billion
in 2018. We expect this to be sustained in 2019. After four years of flat investment markets Anchor's operating margin has come under pressure and is
currently well below management targets. There is potential for this to increase should the investment climate improve.
The key driver for the business is assets under management, which averaged R50.6 billion for the 2018 financial year. The 2019 financial year began
with R49 billion of assets under management, and the investment markets are positive year to date. The results for the forthcoming year will also 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, that the Rand hedge component is approximately 35%);
* acquisition of financial advisory businesses;
* the growth of the new stockbroking division, and
* an increase in shares in issue. The average shares in issue for 2018 were 199.6 million and the starting shares in issue at 1 January 2019 are 206
million.
A presentation on the results under review is available on www.anchorgroup.co.za.
CHANGES TO THE BOARD OF DIRECTORS
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, replacing Ms K Bissesor. The Board wishes to thank Ms K.Bissessor for her contribution during her tenure.
Summarised consolidated statement of comprehensive income
Restated
Audited Audited
Figures in R'000 % change 31-Dec-18 31-Dec-17
Continuing operations
Revenue -3% 463 727 476 283
Operating Expenses 3% -360 150 -349 520
Operating profit -18% 103 577 126 763
Other Income 35% 17 077 12 666
Movement in credit loss allowances n.m -1 181
Loss of control of subsidiary n.m -2 579
Fair value gain on previously held equity interests n.m 6 715
Finance Costs -53% -2 073 -4 413
Share of (loss) / profits from associates and joint ventures -136% -104 285
Profit before taxation -10% 121 432 135 301
Taxation expense -8% -33 560 -36 384
Profit from continuing operations -11% 87 872 98 917
Discontinued operations
Loss on discontinued operations net of tax -298 977 -2 180
-211 105 96 737
Items that may be reclassified to profit or loss:
Other Comprehensive Income n.m 2 132 -554
Total Comprehensive (Loss)/Income for the period n.m -208 973 96 183
Total comprehensive income attributable to:
Owners of the parent n.m -234 035 62 783
Non-controlling interest -25% 25 062 33 400
n.m -208 973 96 183
Continuing operations:
Earnings per share (cents) -7% 31,5 33,7
Diluted earnings per share (cents) -7% 31,3 33,7
Headline earnings per share (cents) -13% 29,4 33,7
Diluted headline earnings per share (cents) -13% 29,2 33,7
Adjusted headline earnings per share (cents) -2% 38,4 39,1
Diluted adjusted headline earnings per share (cents) -2% 38,1 39,1
Discontinued operations:
Earnings per share (cents) n.m -149,7 -1,1
Diluted earnings per share (cents) n.m -149,0 -1,1
Headline earnings per share (cents) n.m -16,6 -1,1
Diluted headline earnings per share (cents) n.m -16,5 -1,1
Adjusted headline earnings per share (cents) 75% -2,0 -1,1
Diluted adjusted headline earnings per share (cents) 74% -2,0 -1,1
Total operations:
Earnings per share (cents) n.m -118,3 32,6
Diluted earnings per share (cents) n.m -117,6 32,6
Headline earnings per share (cents) -61% 12,8 32,6
Diluted headline earnings per share (cents) -61% 12,7 32,6
Adjusted headline earnings per share (cents) -4% 36,4 38,0
Diluted adjusted headline earnings per share (cents) -5% 36,2 37,9
Earnings and headline earnings per share
Continuing operations:
Earnings attributable to shareholders -11% 87 872 98 917
Non-controlling interest -25% 25 062 33 400
Earnings attributable to ordinary shareholders -4% 62 810 65 517
Loss of control of subsidiary n.m 2 579
Fair value gain on previously held equity n.m -6 715
Headline earnings attributable to ordinary shareholders -10% 58 674 65 517
Amortisation on Intangible Assets 41% 5 712 4 065
Cash gain on sale of subsidiary n.m 4 040
Movement in credit losses n.m 1 181
Equity settled share option costs 9% 6 986 6 393
Adjusted headline earnings attributable
to ordinary shareholders 1% 76 593 75 975
Discontinued operations:
Earnings attributable to shareholders n.m -298 977 -2 180
Earnings attributable to ordinary shareholders n.m -298 977 -2 180
Impairment of CFM Malta within Anchor Group n.m 265 822
Headline earnings attributable to ordinary shareholders n.m -33 155 -2 180
Impairment of loan within CFM Malta n.m 29 230
Adjusted headline earnings attributable
to ordinary shareholders 80% -3 925 -2 180
Total operations:
Earnings attributable to shareholders n.m -211 105 96 737
Non-controlling interest -25% 25 062 33 400
Earnings attributable to ordinary shareholders n.m -236 167 63 337
Loss of control of subsidiary 0% 2 579
Fair value gain on previously held equity n.m -6 715
Impairment of CFM Malta within Anchor Group n.m 265 822
Headline earnings attributable to ordinary shareholders -60% 25 519 63 337
Impairment of loan within CFM Malta n.m 29 230
Amortisation on Intangible Asset 41% 5 712 4 065
Cash gain on sale of subsidiary n.m 4 040
Movement in credit losses n.m 1 181
Equity settled share option costs 9% 6 986 6 393
Adjusted headline earnings attributable
to ordinary shareholders -2% 72 668 73 795
Number of shares in issue 5% 206 143 197 217
Weighted average number of shares in issue 3% 199 657 194 310
Employee share incentive scheme n.m 1 051 244
Diluted weighted average number of shares in issue 3% 200 708 194 554
Summarised consolidated statement of financial position
Restated
Audited Audited
Figures in R'000 % change 31-Dec-18 31-Dec-17
Assets
Non-Current Assets
Equipment -17% 6 045 7 325
Goodwill 6% 589 990 557 287
Intangible assets -2% 85 161 87 222
Investments in associates -78% 72 804 334 309
Other financial assets 48% 21 675 14 660
Deferred tax -63% 7 015 4 299
-22% 782 690 1 005 102
Current Assets
Current tax receivable 2% 2 338 2 288
Cash and cash equivalents -29% 66 204 93 672
Other financial assets -29% 77 709 109 611
Trade and other receivables -29% 49 682 69 764
Amounts receivable on stockbroking activities - 251 566
-63% 195 933 526 901
Total Assets -36% 978 623 1 532 003
Equity and Liabilities
Equity
Share capital 5% 961 332 913 902
Reserves -20% 5 020 6 308
Retained income -163% -114 991 183 845
Equity Attributable to Equity Holders of Parent -23% 851 361 1 104 055
Non-controlling interest -3% 18 585 19 259
Total Equity -23% 869 946 1 123 314
Liabilities
Non Current Liabilities
Other financial liabilities -58% 20 844 49 983
Deferred Tax -13% 21 817 19 308
-44% 42 661 69 291
Liabilities
Current Liabilities
Other financial liabilities -18% 35 791 43 521
Trade and other payables -11% 25 956 29 066
Current tax payable -70% 4 269 14 357
Amounts payable on stockbroking activities - 252 454
-81% 66 016 339 398
Total Liabilities -74% 108 677 408 689
Total Equity and Liabilities -36% 978 623 1 532 003
Net asset value per share (cents) -26% 422 570
Net tangible asset value per share (cents) -61% 94 243
Summarised consolidated statement of cash flows
Restated
Audited Audited
Figures in R'000 % change 31-Dec-18 31-Dec-17
Cash flows from operating activities
Cash generated from / (used) from operations -8% 139 486 151 240
Interest income 21% 7 901 6 538
Finance costs -53% (2 073) (4 413)
Tax paid 47% (43 850) (29 750)
Net cash from operating activities -18% 101 464 123 615
Cash flows utilised in investing activities
Purchase of Equipment and Intangible assets -28% (11 837) (9 256)
Proceeds on disposal of intangible asset n.m 3 171
Cash acquired on acquisition of Subsidiary n.m (7 863) 4 363
Proceeds / (Purchase) in financial assets -54% 9 552 20 621
Net movement in investments in associates 26% (27 076) (21 499)
Net cash utilised in investing activities n.m (34 053) (5 771)
Cash flows from financing activities
Increase in stated capital / share capital -65% 1 503 4 299
Increase of other financial liabilities -43% (22 601) (39 891)
Purchase of ACG shares n.m (10 406) (5 121)
Dividends paid 4% (63 914) (61 525)
Net Cash from financing activities -7% -95 418 -102 308
Total cash and cash equivalents movement for the year n.m (28 007) 15 536
Cash and cash equivalents at the beginning of the year 20% 93 672 78 184
Effect of exchange rate movement on cash balances n.m 539 -48
Total cash and cash equivalents at end of the year -29% 66 204 93 672
Summarised consolidated statement of changes in equity
Figures in R'000 Restated
Share Foreign Share Total
Capital currency Foreign based Restated attri-
translation Equity Treasury payment Total Retained butable Restated
Reserve Reserve shares reserve reserves Income to equity Non-
holders of con- Restated
the group/ trolling Total
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 - - - - - 63 337 63 337 33 400 96 737
Other comprehensive income - -554 - - -554 - -554 - -554
Total Comprehensive income
for the year - -554 - - -554 63 337 62 783 33 400 96 183
Issue of shares for Acquisitions
of subsidiaries 9 892 - - - - - 9 892 - 9 892
Treasury shares -5 121 -5 121 -5 121 - -5 121
Share based payments - - - 6 393 6 393 - 6 393 - 6 393
Dividends - - - - - (29 018) -29 018 (24 274) -53 292
Total contributions by and
distributions to owners of
company recognised directly
in equity 9 892 - - -5 121 6 393 1 272 -29 018 -17 854 -24 274 -42 128
Opening balance as
previously reported 913 902 605 -5 805 -5 121 16 629 6 308 183 845 1 104 055 27 492 1 131 547
Prior year error - - - - - - - -8 233 -8 233
Restated balance as at 01 January 2018
913 902 605 -5 805 -5 121 16 629 6 308 183 845 1 104 055 19 259 1 123 314
Loss for the year -236 167 -236 167 25 062 -211 105
Other comprehensive income 2 132 2 132 2 132 2 132
Total comprehensive (loss)/income
for the year 2 132 2 132 -236 167 -234 035 25 062 -208 973
Issue of shares 47 430 - 47 430 47 430
Change in accounting
policy - IFRS 9- opening retained earnings adjustment -21 806 -21 806 -2 129 -23 935
Changes in ownership - ASPC - - - -3 869 -3 869
Shares of ACG held in subsidiary -10 406 -10 406 -10 406 -10 406
Change in ownership - Methwold 3 313 3 313
Share based payments 6 986 6 986 6 986 6 986
Dividends - -40 863 -40 863 -23 051 -63 914
Total contributions by and
distributions to owners of
company recognised directly
in equity 47 430 - - -10 406 6 986 -3 420 -62 669 -18 659 -25 736 -44 395
Balance at 31 December 2018 961 332 2 737 - 5 805 - 15 527 23 615 5 020 - 114 991 851 361 18 585 869 946
Condensed consolidated segmental information (R' 000)
Statement of Comprehensive Incomes
31-Dec-18 Non-Asset Asset
Management Management Stockbroking Eliminations Total
Revenue 48 073 355 625 110 505 (50 477) 463 727
Operating expenses (19 914) (267 610) (92 802) 20 176 (360 150)
Operating profit 28 159 88 015 17 704 (35 078) 103 577
Other Income 39 538 14 991 6 864 (44 316) 17 077
Fair value on disposal of subsidiary (2 579) (2 579)
Fair value gain on business combination 6 715 6 715
Movement in credit allowances (1 181) (1 181)
Share of profits from associates
and joint venture -
continuing operation (104) (104)
Share of profits from associates and joint (298 977) (298 977)
venture- discontinued operations
Finance costs - (4 891) (1 579) 4 397 (2 073)
Taxation - - (33 560)
Profit after tax (233 963) 103 649 22 989 (70 220) (211 105)
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) 126 763
Other Income 8 106 8 093 3 259 (6 792) 12 666
Share of profits from associates -
continuing operation 285 - - - 285
Share of profits from associates -
discontinued operation (2 180) - - - (2 180)
Finance Costs (548) (5 081) (1 491) 2 707 (4 413)
Taxation - - (36 384)
Profit after tax 39 308 104 779 39 540 (48 326) 96 737
Statements of financial position
31-Dec-18 Non-Asset Asset
Management Management Stockbroking Eliminations Total
Assets 805 300 408 366 497 591 (732 634) 978 623
Non Current Assets 725 912 279 630 7 316 (230 168) 782 690
Current Assets 79 388 128 736 490 275 (502 466) 195 933
Liabilities (42 348) (63 324) (461 540) 458 535 (108 677)
Non Current Liabilities (20 668) (21 993) (657) 657 (42 661)
Current liabilities (21 680) (41 330) (460 882) 457 877 (66 016)
Equity 762 952 345 042 36 052 (275 414) 869 946
31-Dec-17 Non-Asset Asset
Management Management Stockbroking Eliminations Total
Assets 1 098 078 419 567 297 114 (282 756) 1 532 003
Non Current Assets 988 442 251 717 8 889 (243 946) 1 005 102
Current Assets 109 636 167 850 288 225 (38 810) 526 901
Liabilities (65 416) (88 417) (277 144) 22 291 (408 686)
Non Current Liabilities (57 041) (15 152) (17 237) 20 139 (69 291)
Current Liabilities (8 378) (73 265) (259 907) 2 152 (339 395)
Equity 1 032 659 331 150 19 970 159 513 1 123 314
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies and method of measurement and recognition applied in the preparation of these condensed consolidated financial results are in
terms of International Financial Reporting Standards ("IFRS") and are consistent with those applied in the audited annual financial statements for
the previous year ended 31 December 2017 except for the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue which became effective in the
current year.
The summarised consolidated financial statements are prepared in accordance with the requirements of the JSE Listings Requirements for provisional
reports and the requirements of the Companies Act of South Africa. The summarised consolidated financial results have been prepared in accordance
with International Financial Reporting Standards ("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 financial director, Omair Khan CA(SA), was responsible for the preparation of the condensed consolidated financial results, which process was
overseen by the CEO, Mr Peter Armitage CA(SA).
Any reference to future financial performance included in this announcement has not been reviewed or reported on by the group's external auditors.
These consolidated financial statements for the year ended 31 December 2018 have been audited by BDO South Africa Inc, who expressed an unmodified
opinion. The auditor's report does not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that,
in order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's report together with the
accompanying financial information from the Company's registered office.
These summarised consolidated financial statements have been derived from the Anchor Group's audited annual financial statements but is not itself
audited. The directors take full responsibility for the preparation of the provisional report and that the financial information has been correctly
extracted from the underlying annual financial statements.
EVENTS AFTER THE REPORTING PERIOD
Three significant subsequent events have occurred post the year end.
* On 1 January 2019, Anchor has purchased 100% of Erudite Financial Services Pty Ltd ("EFS").
* On 20 March 2019, Anchor Capital Mauritius Limited ("ACM") earned a $4.96 million fee from Astoria due to the termination of the investment
management agreement between ACM and Astoria Limited.
* On 28 February 2019, Anchor has acquired the remaining 52,51% stake in CFM SA. The acquisition will ensure a consolidated hedge fund offering to
clients and increases the research coverage within the Group.
RESTATEMENT OF FINANCIAL STATEMENTS
During the preparations of the Statement of Financial Position, it was identified that a restatement had to be made due to the following reasons:
1. Correction of an error IAS 8: A balance relating to dividends paid to NCI was incorrectly classified as trade and other payables.
2. Correction of an error IAS 8: Balances were mapped incorrectly to Other financial liabilities, Trade payables, and Other financial assets.
3. CFM Malta was reclassified as a discontinued operation.
The impact of this error and the restatement is provided below:
As previously Restated
reported Adjustment balance
Statement of Financial Position:
Current assets
Other financial assets 111 882 - 2 271 109 611
Equity
Non controlling interests 27 492 - 8 233 19 259
Non current Liabilites
Other financial liabilities 52 714 -2 731 49 983
Current Liabilities
Other financial liabilities 37 094 6 427 43 521
Trade and other payables 26 800 2 266 29 066
Statement of profit and loss and
other comprehensive income
Share of profits / (losses)
from associates -1895 -2180 285
Loss on discontinued operations 0 -2180 -2180
Statement of Cash Flows
Cash flows from operating activities
Cash generated from operations 140 736 10 504 151 240
Cash flows from investing activities
Proceeds/(Purchase) of financial assets 22 892 - 2 271 20 621
Cash flows from financing activities
Dividends paid - 53 292 - 8 233 - 61 525
DISCONTINUED OPERATIONS
During 2018, management decided to close down the CFM Malta associate. CFM Malta was mainly responsible for managing the CFM GEMS fund. The GEMS fund
had a great historic track record, however since acquisition the fund has underperformed. There were material outflow in this business after June
2018, and in September a decision was taken to close the fund. The share of losses and the impairment of the associate are highlighted below:
The statement of comprehensive income below discloses the share of losses and impairment separately as compared to consolidated statement of
comprehensive income.
2018 2017
Investment in associate at cost 322 396 322 396
Historic share of profits 6 480 8 660
Share of losses in associate in current year - 33154 - 2 180
Share buybacks - 4 800 - 4 800
Dividends - 25 100 - 26 449
Impairment of associate 265 822
Carrying value at Year End - 297 627
Summarised statement of loss and
other comprehensive Income 2018 2017
Revenue 11 913 32307
Other Expenses -44 195 -37447
Taxation -872 644
Total Comprehensive Income -33154 -4496
DIVIDEND
As stated, the Company has a long-term intention of paying half of its adjusted headline earnings as a dividend going forward.
For the second six-month period ended 31 December 2018 the Company declared a final gross dividend (Number 9) of 10 cents per share (2017: 10 cents).
For the year ended 31 December 2018, the company has declared a gross dividend of 20 cents per share (2017: 10 cents).
The dividend will be subjected to a dividend withholding tax rate of 20% or 2 cents per ordinary share and accordingly the net dividend is 8 cents,
while the dividend payable to shareholders who are exempt from dividend withholding tax is 10 cents per share.
Anchor's tax reference number is 9527/450/16/8. There are 208 790 965 ordinary shares in issue at the declaration date.
The salient dates for the dividend are as follows:
Last date to trade 'cum' dividend Monday, 15 April 2019
Shares commence trading 'ex' dividend Tuesday, 16 April 2019
Record date (date shareholders recorded in share register) Thursday, 18 April 2019
Payment date Tuesday, 23 April 2019
Shareholders may not dematerialise or rematerialise their share certificates between Tuesday, 16 April 2019 and Thursday, 18 April 2019, both dates
inclusive. Payment of the dividend will be made to shareholders to Tuesday, 23 April 2019, in respect of dematerialised shares, certificated
shareholders' dividend payments will be deposited on/or about Tuesday, 23 April 2019.
For and on behalf of the board
Peter Armitage Mike Teke
Chief Executive Officer Chairman
28 March 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
TRANSFER SECRETARIES
Link Market Services South Africa Proprietary Limited
(Registration number 2000/007239/07)
13th Floor,19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000)
REGISTERED OFFICE
25 Culross Road, Bryanston, Sandton, 2191
POSTAL ADDRESS
PO Box 1337, Gallo Manor, 2052
WEBSITE: www.anchorgroup.co.za
Date: 28/03/2019 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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