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EFG
EFG
EFG - Efficient Group Limited - Unaudited interim financial results for the
six months ended 29 February 2012
EFFICIENT GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration nr: 2006/036947/06)
Share code: EFG
ISIN: ZAE 000151841
("EFG" or "the Group")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY
2012
1. Financial Results
Statement of Comprehensive Income:
During the reporting period Group revenue increased marginally by 1%.
The expansion of the distribution network resulted in a 61% increase
in revenue generated from financial services. The decrease in assets
under management, a consequence of the cancellation of a significant
external fund management mandate, resulted in a decrease in fixed fees
earned by the asset management business. Asset management benefited
from the positive market movement (ALSI 13%) resulting in slightly
lower performance fees during the reporting period, compared to the
comparative period (ALSI 19%). Despite the decrease in assets under
management margins were maintained in the asset management and asset
administration division.
Variable costs increased in line with expectations as a result of the
growth in the distribution network. Fixed expenses increased by 10%
signifying the investment in the expansion of the distribution
network, the increase in corporate governance and compliance expenses,
and expenses related to the diversification strategy.
The non-cash flow expenses consist of the amortisation of intangible
assets and depreciation of equipment and systems. The increase in non-
cash flow expenses resulted from the growth of the distribution
network through business combinations and the investment in
information technology.
Higher interest received and return on investments (23%) countered the
lower operating profit achieved in the reporting period. The Group`s
share of comprehensive loss from associates had a negative impact on
the profit for the reporting period. The Group reported a profit for
the period of R 133 000.
Statement of Financial Position:
The increase in Plant and Equipment is a result of the investment in
Information Technology. Market leading technology systems are of
strategic importance for the success of the Group. The increase in
goodwill relates to the acquisition of a financial services business.
Loans receivable and long-term liability relate to financing of the
balance of the Financial Advisory client base acquired during the
reporting period. See acquisition activities below. Working capital
increased marginally in line with the increase in business activity.
2. Acquisition Activities
As part of the extension of the financial services distribution
network Efficient Financial Services (Pty) Ltd:
- with effect from 10 October 2011, acquired a 20% share in a
Financial Advisory client base for R 610 000 which is payable in
cash over a 24 month period. An Independent Financial Adviser was
appointed to service the acquired client base. The
aforementioned Independent Financial Adviser is also the
beneficial owner of the balance of this client base.
- acquired a 20% share in another two Financial Advisory client
bases for R 34 000. The transactions were effective from October
2011 and February 2012 respectively and the purchase prices were
settled in cash.
- expanded its financial services offering into Namibia. A branch
was opened in partnership (50% partnership) with BDO (Namibia), a
leading international auditing firm. Initially this transaction
will only require working capital. The partnership is effective
from 13 October 2011 and is expected to be in operation from 1
April 2012.
Efficient Capital acquired a 50% share in an Information Technology
company. The maximum acquisition price is R 5.6 million and will be
settled in cash (R3.5 million) and the balance by transferring
software developed by Efficient Group. The effective date of this
transaction was extended to 1 April 2012. The cash portion of the
acquisition price will be utilised to expand the IT business. This is
a strategic acquisition and significant to support our information
technology needs and the commercialisation of investment and reporting
software.
As part of the Group`s initiative to incentivise senior personnel at a
Group level rather than at subsidiary level, the Group acquired the
non-controlling share of 10% held in Efficient Financial Services
(Pty) Ltd from the managing director of the company. The total
acquisition price is R 3.6 million and will be settled by issuing 2
085 500 Efficient Group Limited shares. The acquisition price will be
adjusted based on the performance of Efficient Financial Services
(Pty) Ltd over the next three years, relative to the performance of
the Group. The effective date of the transaction is 1 September 2011.
An acquisition price of R 9.6 million was adjusted to R 3.6 million
since the Group`s Integrated Report.
CONDENSED CONSOLIDATED Unaudited Unaudited Audited
STATEMENTS OF COMPREHENSIVE INCOME Six Six Year
Months Months
ended ended % ended
29-Feb-12 28-Feb-11 Change 31-Aug-11
R`000 R`000 R`000
Revenue 26 304 26 092 1% 48 782
Asset Management fees
- Fixed fees 6 483 9 544 (32%) 18 553
- Performance fees 7 411 7 991 (7%) 12 090
Asset Administration fees 5 576 4 184 33% 8 581
Financial Services fees 6 722 4 167 61% 8 916
Other 112 206 (46%) 642
Operating expenses (26 078) (22 412) (16%) (45 190)
- Variable expenses (5 377) (3 483) (54%) (7 535)
- Fixed expenses (18 409) (16 790) (10%) (33 466)
- Non-cash flow expenses (2 292) (2 139) (7%) (4 189)
Operating profit 226 3 680 94% 3 592
Finance income 729 791 (8%) 1 451
Dividends received - - - 110
Finance cost (24) (98) (76%) (165)
Realised fair value adjustment of 247 - - -
available-for-sale financial assets
Other Income/(Expenses) (2) - - 48
Share of losses from associates (559) (203) 175% (241)
Profit before taxation 617 4 170 (85%) 4 795
Taxation (484) (1 439) (1 704)
Profit for the period 133 2 731 (95%) 3 091
Other comprehensive income:
Realised fair value adjustment of (6) - -
available-for-sale financial assets
Fair value adjustment of available- 97 49 (22)
for-sale financial assets
Total comprehensive income for the 224 2 780 (92%) 3 069
period
Profit for the period attributable
to:
Equity holders of the parent 133 2 717 3 104
Non-controlling interest - 14 (13)
133 2 731 3 091
Total Comprehensive income for the
period attributable to:
Equity holders of the parent 224 2 764 3 082
Non-controlling interest - 16 (13)
224 2 780 3 069
Number of shares in issue (`000) 40 760 39 939 39 939
Weighted average number of shares 40 760 39 939 39 939
(`000)
Earnings per share (cents) 0.33 6.80 (95%) 7.77
Headline earnings per share (cents) 0.32 6.80 (95%) 7.77
Dividend per share 2.60 - 7.85
Reconciliation of earnings to
headline earnings
Profit for the period attributable 133 2 717 3 104
to equity holders of the parent
Realised fair value adjustment of (6) - -
available- for- sale financial
assets through profit and loss
Less: Taxation on realised fair
value adjustment of available-for- 2 - -
sale financial assets through
profit and loss
Headline earnings 129 2 717 3 104
CONDENSED CONSOLIDATED Unaudited Unaudited Audited
STATEMENTS OF FINANCIAL POSITION as at as at as at
29-Feb-12 28-Feb-11 31-Aug-11
R`000 R`000 R`000
Non-current assets
Plant and equipment 2 344 1 507 1 418
Investments 384 3 063 3 297
Equity accounted investments 10 119 10 716 10 678
Other intangible assets 20 854 25 302 21 803
Goodwill 21 731 20 259 21 731
Loans receivable 2 387 - -
Deferred tax asset 337 985 250
58 156 61 832 59 177
Current assets
Trade and other receivables 10 566 8 391 5 137
Cash and cash equivalents 24 291 22 639 25 070
34 857 31 030 30 207
Total assets 93 013 92 862 89 384
Equity
Share capital and share premium 56 894 55 458 55 458
Treasury shares (149) (7 200) (149)
Fair value adjustment reserve 88 66 (3)
Shares to be issued 2 214 - -
Non-controlling interest - 565 69
Accumulated earnings 18 453 31 322 22 938
77 500 80 211 78 313
Non-current liability
Long-term liability 2 400 - -
Deferred taxation liability 5 406 6 796 5 721
7 806 6 796 5 721
Current Liabilities
Trade and other payables 6 736 5 567 5 078
Tax payable 971 288 272
7 707 5 855 5 350
Total equity and liabilities 93 013 92 862 89 384
-
Net asset value per share (cents) 190.14 199.42 195.91
Net tangible asset value per share (cents) 85.66 85.34 86.91
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
R`000 Share Trea- Fair Shares Non- Accumu- Total
capital sury value to be control- lated equity
and shares adjust- issued ling earnings
Share ment for interes
premium avail- t
able-for-
sale
assets
reserve
Balance at (7 200) 19 - 672 30 699 78 379
31 August 54 189
2010
Issue of - - - - - 1 269
share 1 269
capital
Change in - 47 - 16 2 717 2 780
ownership -
Total - - - (123) (2 094) (2 217)
comprehen- -
sive income
for the
period
Balance at (7 200) 66 - 565 31 322 80 211
28 February 55 458
2011
Share (149) - - - - (149)
repurchase -
by the Share
Incentive
Trust
Change in - - - (492) (3 141) (3 633)
ownership -
Cancel- 7 200 - - - (7 200)
lation of - -
treasury
shares
Dividend - - - (114) (3 241) (3 355)
paid -
Total - (69) - 110 5 198 5 239
comprehen- -
sive income
for the
period
Balance at (149) (3) - 69 22 938 78 313
31 August 55 458
2011
Issue of - - - - - 1 436
share 1 436
capital
Shares to be 2 214 2 214
issued
Change in - - - (69) (3 580) (3 649)
ownership -
Realised
fair value - - (6) - - (6)
adjustment
of available-
for-sale
financial
assets
Total - 97 - - 133 230
comprehen- -
sive income
for the
period
Dividend - - - - (1 038) (1 038)
paid -
Balance at (149) 88 2 214 - 18 453 77 500
29 February 56 894
2012
CONDENSED CONSOLIDATED STATEMENTS OF CASH Unaudited Unaudited Audited
FLOWS
Six Six year
Months Months
ended ended ended
29-Feb-12 28-Feb-11 31-Aug-
11
R`000 R`000 R`000
Cash (utilised by)/generated from operations (1 252) 3 962 8 722
Finance income 729 791 1 451
Finance cost (24) (98) (165)
Dividends received from associates - - 110
Dividends paid (1 038) (2 217) (3 355)
Tax paid (358) (525) (742)
Net cash (outflow)/inflow from operating (1 943) 1 913 6 021
activities
Acquisition of business - - (1 193)
Increase in Loans Receivable (467) - -
Disinvestment/(acquisition) of available-for- 3 247 (1 994) (2 300)
sale financial assets
Acquisition of non-controlling interest - - (900)
Acquisition of intangible assets (134) (1 205) -
Purchase of equipment (1 482) (438) (772)
Net cash inflow/(outflow) from investing 1 164 (3 637) (5 165)
activities
Share repurchase by the Share Incentive Trust - - (149)
Net cash outflow from financing activities - - (149)
Movement in cash and cash equivalents for the (779) (1 724) 707
period
Cash and cash equivalents at the beginning of 25 070 24 363 24 363
the period
Cash and cash equivalents at the end of the 24 291 22 639 25 070
period
SEGMENTAL
ANALYSIS
Asset Asset Financial Asset Other Total
Management Adminis Services Finance
tration
For the six R`000
months ended
29 February
2012
(Unaudited)
Revenue 3 894 8 821 6 634 88 (3 133) 26 304
- External 10 691 8 821 6 634 88 70 26 304
- Inter- 3 203 - - - (3 203) -
segment
Profit for 3 609 1 632 (201) (64) (4 843) 133
the period
Net asset 24 296 3 629 1 595 (163) 48 143 77 500
value
For the six R`000
months ended
28 February
2011
(Unaudited)
Revenue 17 535 8 056 4 167 - (3 666) 26 092
- External 13 702 8 056 4 167 - 167
26 092
- Inter- 3 833 - - - (3 833) -
segment
Profit for 5 849 790 329 - (4 237) 2 731
the period
Net asset 20 017 910 1 594 - 57 690 80 211
value
For the year R`000
ended 31
August 2011
(Audited)
Revenue 30 644 15 943 8 916 - (6 721) 48 782
- External 23 363 15 943 8 916 - 560 48 782
- Inter- 7 280 - - - (7 280) -
segment
Profit for 9 418 1 906 296 - (8 529) 3 091
the year
Net asset 20 590 2 002 1 116 - 54 605 78 313
value
Other consists of consolidation entries, amortisation of intangible assets
and support services expenses.
Management review the operating results of the operating segments before the
allocation of support services expenses. The comparative figures were
restated due to the change in the composition of the reportable segments.
3. Dividends
The company`s dividend policy is to declare dividends biannually at
the discretion of the board of directors, determined by the financial
position of the Group and equal to 80% of free cash flow of the Group.
Free cash flow is calculated after making provision for cash reserves
equal to three months` operating expenses, capital expenditure and
budgeted acquisitions. Based on this policy the directors determined
that no interim dividend will be paid.
4. Basis of preparation
The interim results are presented on a consolidated basis and are
prepared in accordance with the International Financial Reporting
Standards, the requirements of IAS 34 (Interim Financial Reporting),
the JSE Listings Requirements, and the Companies Act of South Africa
and the AC 500 series of Interpretation as issued by the APB. The
accounting policies applied are consistent with those applied in the
previous interim period and previous financial year-end, except for
the change in the allocation of support services charges. No material
events occurred after the interim period which requires an adjustment
to the financial information. These interim results have not been
audited or reviewed by the Group`s auditors, PKF (Jhb) Inc. The
condensed unaudited interim financial results are prepared by Anton de
Klerk, the Chief Financial Officer of Efficient Group.
Steve Booysen Heiko Weidhase
Chairman Chief Executive Officer
30 March 2012
Non-executive directors: S Booysen*, MJ Giles*,Z Cele*,L Taylor*, L Gadd, M
Cassim and R Paterson.
Alternate non-executive directors: L Whitfield and RS Mogototoane
* Independent
Executive directors: DD Roodt, H Weidhase, AT de Klerk
Registration number: 2006/036947/06
Registered address: 81 Dely Road, Hazelwood, 0081
Business address: 81 Dely Road, Hazelwood, Pretoria, 0081
Company secretary: Adv Rudi Barnard
Transfer secretaries: Link Market Services South Africa (Pty) Ltd
Sponsor: Java Capital
Date: 30/03/2012 14:39:19 Produced by the JSE SENS Department.
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