To view the PDF file, sign up for a MySharenet subscription.

ECSPONENT LIMITED - Condensed Consolidated Interim Results for the six months ended 31 December 2018

Release Date: 26/03/2019 09:52
Code(s): ECS     PDF:  
Wrap Text
Condensed Consolidated Interim Results for the six months ended 31 December 2018

ECSPONENT LIMITED
Incorporated in the Republic of South Africa
Registration number: 1998/013215/06
JSE Code: ECS - ISIN: ZAE000179594
(“the Company” or “Ecsponent”)

Condensed Consolidated Interim Results for the six months ended 31 December 2018


The Board is pleased to present the condensed consolidated results of the Group for the six months
ended 31 December 2018.

The financial results of the six-month period ended 31 December 2018 reflect the impact of the
various transactions which the Group has embarked upon in order to continue the balance sheet
growth trajectory. The financial results for the period represent a transition phase and shareholders
are advised to consider the substance of the Group giving due consideration thereto.

RESULTS – OVERVIEW
The financial results of the 6-month period ended 31 December 2018 continues to build on the
secure base established by more than seven years of steady growth, from which further growth can
be pursued.

Overview of the Group’s interim results ended 31 December 2018 compared to the comparative
results for the six-month period ended 30 September 2017 (“Prior Period”) are set out below:

-     Gross assets increased by 89.7% to R2.8 billion from R1.5 billion in the Prior Period.
-     Investment in Associates increased by 173.9% to R748 million from R273 million in the Prior
      Period.
-     Loans and Advances increased by 18.9% to R1.2 billion from R1 billion in the Prior Period.
-     Revenue from continuing operations increased by 29.5% to R200 million compared to the Prior
      Period.
-     Operating profits from continuing operations increased by 70.2% to R218 million compared to
      R128 million for the Prior Period.
-     Net cash inflows from financing activities increased by 40.8% to R408.3 million from
      R290 million for the Prior Period.
-     Significant increases in finance costs and taxation resulted in a reduction in total
      comprehensive income to R8.6 million from R34.2 million for the Prior Period.
-     Headline earnings per share (“HEPS”) and earnings per share (“EPS”) declined by 81.7% and
      89.8% respectively.

Of the Group’s R2 775 million total assets, R1 275 million, or 46.0% of total assets, are held outside
of the Common Monetary Area. These investments provide a hedge against a weakening Rand.
The Company continues to focus on mechanisms to mitigate against short-term earnings volatility,
that arise from the currency and price risks associated with offshore listed equities.

During the period, the Group deployed funding from international sources to expand its African
operations and international asset base. Current loan funding and investments funded remain
denominated in US dollar or Euro to avoid exposure to emerging market exchange rate risk, thereby
providing additional foreign currency assets. Post the reporting period, the Company announced the
conclusion of a term sheet which, once concluded, would result in a R700 million debt funding facility
being made available to the Group from Afreximbank.

OPERATIONAL REVIEW

Group Overview

Below is an overview of the Group’s operations for the 2018 interim period end.

Investment Services

The Group’s preference share programme (“the Programme”), which raises capital to fund
investments, has continued to facilitate the Group’s expansion strategy. The Programme provides
retail and institutional investors with returns over a five-year period, after which their capital is
returned.

As at 31 December 2018 the Group’s Investment Services business unit had raised approximately
R1.8 billion from the issue of preference shares, since implementation of the Programme in
September 2014.

In addition to raising capital through the Programme, the Investment Services unit has as a strategic
objective of lowering the cost of capital to the Group through securing further institutional debt
funding.

The Group’s ability to deliver effective investment and other financial services products to the retail
market is one of its core competencies. To leverage opportunities offered through the established
distribution channel, the Investment Services business unit introduced a R10 billion note programme
to the market. Between the mid-December launch date and period end of 31 December 2018, the
Investment Services business had placed R5.9 million under the note programme. These products
will give this business unit further ability to meet multiple investment needs of the investor base
and generate additional profit opportunities for the Group.

Credit
The Credit business unit provides secured credit to fund the business operations of qualifying
entities. The unit has distinct products that cater to the needs of specific unbanked and underbanked
Small to Medium Enterprises (SMEs). These products offer unique loan and funding products, which
are fully secured, thereby minimising its risk.

    -   The SME secured credit product provides wholesale funding to target niche businesses. The
        nature of these transactions is typically medium-term facilities, but with a short-term call-
        up to ensure liquidity for the group.
    -   Ecsponent’s supply chain and enterprise development solutions aim to integrate qualifying
        vendors into the formal supply chain of large corporate businesses.
    -   The bridging finance product provides short term asset funding which is secured by fixed
        property.

The Group controls all credit operations centrally, which significantly improves both governance and
consistency across the operations. In addition, the centralised procurement and logistics operations
provide the critical mass required to support enterprise development in each of the territories. At
the same time, it contributes to securing the Group’s interests in transactions related to the supply
chain and enterprise development activities.

The demand for credit from the SME sector remains buoyant and has resulted in continued, sustained
growth of the business across the Group’s footprint. Total assets increased by 41.3% from R1.6
billion to R2.3 billion compared to the Prior Period. Operating profit decreased by 17.8% from R204
million to R168 million.

Equity Holdings

The Equity Holdings business unit invests strategically in companies that are well-managed, self-
sufficient and provide a balance in the Group’s short-term and long-term asset base.
It targets businesses with significant intellectual property, which provide a barrier to entry for
competitors, command sizeable margins and employs a robust business model. As a result, the
Group holds investments in innovative and growing sectors, including Financial Services, Healthcare,
Digital Media and Fintech.

At 31 December 2018, the Group held 24.3% in MyBucks. This investment has the added advantage
of providing a foreign currency hedge against local currency frailty.

Total assets increased by 76% from R318 million to R560 million compared to the Prior Period and
revenue increased by 376.8% from R18.7 million to R89 million.

It is the Group’s intention to obtain a controlling interest in MyBucks. The investment will give the
Group access to financial services and related technology, which provides quantifiable value to its
operations.

Geographical Footprint

The Group’s operations in South Africa are mirrored across the operational footprint in Eswatini and
Botswana, with in-country client representation in each territory. In Zambia, the Group holds a 25%
interest in the local entity, which is registered as a deposit-taking financial institution.

Post the reporting period, the Group announced its investment in the Zimbabwean stock exchange
listed GetBucks Microfinance Bank Limited.

The back-office infrastructure of each territory is centrally managed from South Africa.

PROSPECTS
Key elements of the Group’s on-going growth strategy are:
• the continued focus on core businesses;
• ongoing investment in the Group’s credit operations, including the deployment of the new
   Afrexim facility, once this is approved;
-  growth in the Wealth business through increase assets under management (AUM) as well as
   product diversification.
-  consolidation of the Group’s interest in the listed MyBucks investment;
-  increased emphasis on high yield equity opportunities and sector diversification
• obtaining rand-based and foreign currency institutional funding; and
• aggressive cost rationalisation/reduction.

The abovementioned approach is aimed at the continued development of a robust and
complementary financial services Group which continues to provide sustainable returns.


REVIEW OF RESULTS AND FINANCIAL POSITION


The condensed consolidated interim financial results represent the trading results of the Company and
its subsidiaries which are active in the financial services and private equity markets.

FINANCIAL RESULTS

Presented below are the condensed consolidated financial statements for the 6 months ended 31
December 2018.

Condensed Consolidated Interim Statement of Financial Position as at 31 December 2018

                                                                              Reviewed           Audited
                                                          31 December     30 September           30 June
                                                                 2018             2017              2018
                                                                Group            Group            Group
                                                 Notes          R’000            R’000             R’000
 ASSETS
 Non-current assets
 Investment in associates                          5           748 420          273 285           21 500
 Loans and advances                                6           193 511          895 770          803 599
 Other financial assets                            7           531 745                -          537 232
 Intangible assets and Goodwill                                 23 968            5 668            4 066
 Property, plant and equipment                                   3 591            6 296            4 005
 Deferred tax                                                   80 001           39 623           49 635
 Other non-current receivables                                     750            5 652                -

 Current assets
 Loans and advances                                6         1 090 644          184 638          434 753
 Other financial assets                            7            38 407                -          294 956
 Cash and cash equivalents                                      37 673           11 938           45 086
 Trade and other receivables                                    24 244           38 419           37 878
 Current tax receivable                                          1 541              254            2 440
 Inventories                                                       683            1 050              654

 TOTAL ASSETS                                                2 775 178        1 462 593         2 235 804


 EQUITY AND LIABILITIES
 Equity                                                        193 012          141 151          193 139
 Non-controlling interest                                          735          (12 431)             362

 Non-current liabilities
 Preference shares                                 8         1 920 795        1 232 459         1 694 362
 Note programme                                    9             5 972                -                 -
 Other financial liabilities                      10           227 491            7 282           150 523
 Finance lease liabilities                                         811                -               879
 Trade and other payables                                            -            3 431             1 616
 Deferred tax                                                  150 484           18 689            93 831

 Current liabilities
 Preference shares                                 8           100 308           12 438            7 613
 Other financial liabilities                      10           150 207                -           72 432
 Current tax payable                                             8 800           32 483              138
 Finance lease liabilities                                         158                -              158
 Trade and other payables                                       16 017           26 350           19 970
 Bank overdraft                                                    388              741              781

 TOTAL EQUITY AND LIABILITIES                                2 775 178        1 462 593         2 235 804


Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income for
the interim period ending 31 December 2018

                                                                                   Reviewed       Audited

                                                                        6 months    6 months    15 months
                                                                        ended 31    ended 30     ended 30
                                                                       December    September         June
                                                                            2018        2017         2018

                                                                          Group        Group       Group

                                                               Notes      R’000        R’000       R’000

 Revenue                                                                200 175      154 597      466 984
 Cost of sales                                                         (101 772)     (18 115)    (83 637)
 Other income                                                             79 554      22 286       52 162
 Operating expenses                                                     (62 200)     (45 422)   (175 838)
 Fair value adjustments                                                 102 622       15 127      153 951
 Loss from equity accounted investments                                    (233)       (274)      (1 173)
 OPERATING PROFIT                                                       218 146      128 199      412 449
 Net finance costs                                                     (161 578)     (82 832)   (260 585)
 PROFIT BEFORE TAXATION                                                   56 568      45 367      151 864
 Taxation                                                       11      (52 746)     (29 710)    (69 812)
 PROFIT FROM CONTINUING OPERATIONS                                         3 822      15 657       82 052
 Profit from discontinued operations                                           -      15 312       15 311
 PROFIT FOR THE PERIOD                                                     3 822      30 969       97 363
 Other comprehensive income / (loss)                                       5 176         478      (2 547)
 TOTAL COMPREHENSIVE INCOME                                                8 998      31 447       94 816
 (Profit)/Loss attributable to non-controlling interest                    (373)       2 718        4 807
 TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE                                   8 625      34 165       99 623
 TO ORDINARY SHAREHOLDERS


 Profit attributable to owners of the parent from:
 Continuing operations                                                     3 449      18 324       86 869
 Discontinued operations                                                       -      15 373       15 311
                                                                           3 449      33 697      102 180


 Total comprehensive income/(loss) attributable to:
 Owners of the parent                                                      8 625      34 165       99 623
 Non-controlling interest                                                   373       (2 718)     (4 807)
                                                                           8 998      31 447       94 816


 Basic and fully diluted earnings per share (cents) from        12         0.319       1.697        8.047
 continuing operations attributable to equity holders of the
 parent
Basic and fully diluted earnings per share (cents) from                       -         1.424       1.418
discontinued operations attributable to equity holders of
the parent

Basic and fully diluted earnings per share (cents)                12         0.319      3.121       9.465
attributable to equity holders of the parent

Condensed Statement of Changes in Equity for the 6 months ended 31 December 2018

                                  Notes    Share capital   Foreign currency    Accumulated      Total attributable         Non-    Total equity
                                                                 translation    profit/(loss)    to owners of the    controlling
                                                                    reserve                                 parent      interest
                                                  R’000               R’000            R’000                R’000         R’000          R’000

   Balance at 1 April 2017                      145 169                (398)        (37 785)             106 986        (11 429)        95 557

   Profit for the period                               -                   -        102 180              102 180         (4 817)        97 363

   Other comprehensive income                          -             (2 559)                -             (2 559)            12         (2 547)

   Issue of shares                                    1                    -                -                   1              -             1

   Disposal of subsidiaries                            -                   -        (13 469)             (13 469)        16 596          3 127

   Balance at 30 June 2018                      145 170              (2 957)          50 926             193 139            362        193 501

   Profit for the period                               -                   -           3 449                3 449           373          3 822

   Other comprehensive income                          -              5 176                 -               5 176              -         5 176

   IFRS 9 adjustment                2                  -                   -         (8 752)              (8 752)              -        (8 752)

   Balance at 31 December 2018                  145 170               2 219           45 623             193 012            735        193 747

Condensed Consolidated Cash Flow Statement for the 6 months ended 31 December 2018

                                                                         Reviewed       Audited
                                                              6 months    6 months    15 months
                                                              ended 31    ended 30     ended 30
                                                             December    September         June
                                                                  2018        2017         2018

                                                                Group        Group       Group

                                                                R’000        R’000       R’000

 Cash generated by operations                                   68 891     100 789      343 682

 Dividends received                                              5 500            -       3 000

 Finance cost                                                (122 138)     (61 176)   (203 723)

 Taxation paid                                                (10 527)     (16 649)    (33 647)

 Net cash (outflow) / inflow from operating activities        (58 274)      22 964      109 312



 Purchase of property, plant and equipment                        (60)            -     (1 405)

 Proceeds on disposal of property, plant and equipment            190             -           -

 Investment in intangible assets                              (19 915)            -        (80)

 Proceeds on disposal of associate                                   -            -      10 000

 Cash disposed of through sale of investment in subsidiary           -     (7 369)      (6 754)

 Investment in financial assets                                (2 494)            -   (327 801)

 Proceeds from financial assets                                  5 987            -           -

 Prepayments of loans and advances received                   293 331       56 381      303 081

 Disbursement of loans and advances                          (631 290)   (377 228)    (921 003)

 Other                                                               -       (193)            -

 Net cash outflow from investing activities                  (354 251)    (328 409)   (943 962)



 Proceeds on preference share issues                          266 919      294 702     685 667

 Proceeds from other financial liabilities                    199 464             -     184 287

 Repayment of other financial liabilities                     (58 065)     (4 664)     (13 452)

 Finance lease payments                                           (68)            -     (1 141)

 Net cash inflow from financing activities                    408 250      290 038      855 361

 Movement in cash and cash equivalents for the period          (4 275)     (15 407)      20 711
 Cash and cash equivalents at the beginning of the period      44 305       26 481        26 480

 Effect of exchange rate movement on cash balances             (2 745)         123       (2 886)

 Cash and cash equivalents at the end of the period             37 285      11 197       44 305



Notes to the Condensed Consolidated Financial Statements for the 6 months ended
31 December 2018

1.   ACCOUNTING POLICIES, BASIS OF PREPARATION OF RESULTS AND REVIEW OPINION

The condensed consolidated interim financial statements are prepared in accordance the JSE Limited
Listings Requirements for interim reports and the requirements of the Companies Act of South Africa
and in accordance with International Financial Reporting Standards (IAS) 34 Interim Financial
Reporting, 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 Financial Reporting
Standards Council.

These interim financial results have not been reviewed or reported on by the Company’s auditors.

The accounting policies applied in the preparation of the condensed consolidated financial statements
are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial
statements.

The results of the Group were prepared under supervision of the Group’s financial director, Mr DP van
der Merwe CA (SA).

2.     NEW STANDARDS AND INTERPRETATIONS

With the adoption of IFRS 9 - Financial Instruments (“IFRS 9”) from 1 July 2018, the start of the
current interim reporting period, the Group’s accounting policies were adjusted to comply with the
standard.

IFRS 9 replaces the provisions of IAS 39 Financial Instruments: Recognition and Measurement
(“IAS 39”) that relate to the recognition, classification and measurement of financial assets and
financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge
accounting.

IFRS 9 introduces an expected credit loss model replacing the incurred loss impairment model
contained in IAS 39 for financial periods beginning on or after 1 January 2018

IFRS 9 adoption occurs without the need to restate comparative information (except for certain
aspects of hedge accounting), as allowed in terms of the standard. The reclassification and the
adjustments arising from the new impairment rules are consequently recognised in the opening
statement of financial position on 1 July 2018.

The following table show the adjustments recognised for each individual line item, these adjustments
are explained in more detail below.


         Extract of the                                                                  1 July 2018
                                     30 June 2018
          Statement of                                      IFRS 9 adjustment          Amended opening
       Financial Position       As originally presented
                                                                                           balance

     Assets
     Loans and advances                      1 238 352                   (12 116)                 1 226 236
     Other financial assets                    832 188                           -                  832 188
     Deferred tax asset                          49 635                     3 364                     52 999
     Other assets                              115 629                           -                  115 629
     Total assets                            2 235 804                    (8 752)                  2 227 052
     Preference shares                        1 701 975                          -                 1 701 975
     Other liabilities                         340 328                           -                   340 328
     Liabilities                             2 042 303                           -                 2 042 303
     Share Capital                              145 170                          -                   145 170
     Reserves                                   (2 957)                          -                    (2 957)
     Retained earnings                           50 926                   (8 752)                     42 174
     Attributable to
                                               193 139                    (8 752)                    184 387
     owners of the parent
     Non-controlling interest                       362                          -                       362
     Total equity                              193 501                    (8 752)                    184 749


Classification and measurement

On 1 July 2018 management assessed which business models applied to the financial assets held by
the Group and classified its financial instruments into the appropriate IFRS 9 categories. The Group’s
financial assets remain classified as carried at amortised cost.

Impairment of financial assets

The Loans and Advances and Trade Receivables financial asset classes of the Group is impacted by
IFRS 9’s new expected credit loss model and as a result the Group revised its impairment
methodology in terms of the requirements of IFRS 9. The impact of the change in impairment
methodology on the Group’s retained earnings and equity is disclosed above.

The Group applies the IFRS 9 expected loss model by formulating the expected future losses of
customers based on past behaviour, current exposure and future economic scenarios. Loans and
Advances and Trade Receivables are segmented into sub-risk categories to isolate different risk
behaviours across various countries and industries, as follows:

-    Category 1 – Fully performing receivables
-    Category 2 – Receivables with a significant increase level of credit risk
-    Category 3 – Receivables that are in default

The most notable change in the impairment modelling is the forward-looking nature of the model as
opposed to the incurred nature of the previous model. The categories were assessed for impairment
retrospectively.


3.   RECLASSIFICATION OF COMPARATIVE FIGURES

The Group announced a rationalisation process during 2016 designed to streamline and re-align its
operations to sustain increased strategic growth. The process continued into the 30 September
2017, the comparative period of the current interim reporting period.

The process resulted in the Group’s current structure focusing on the Credit, Equity Holdings and
Investment Services operations.

Certain of the comparative period’s figures have been reclassified to align the financial disclosures
to the revised Group structure with the objective of enhancing the users understanding of the
Ecsponent operations. It is, however, important to note that none of the comparative figures have
been restated and, as noted above, the accounting policies have been consistently applied.

Consolidated statement of financial position
Presented below are the 30 September 2017 Consolidated Statement of Financial
position figures before and after the reclassification.

     -   Column A contains the reclassified comparative figures for the period ended 30 September
         2017, as disclosed in the 31 December 2018 interim financial statements.

     -   Column B contains the figures as originally disclosed in the 30 September 2017 interim
         financial statements.

The following reclassifications occurred:

     -   Loans and Advances
         An additional asset class “Loans and Advances” has been disclosed in the statement of
         financial position and as a separate note (refer note 6 below). These assets were
         previously disclosed as part of the other financial asset class in the comparative results.
         The additional asset class was added to distinguish the Credit operation’s assets from
         those of the Equity Holding assets, which continue to be included under “Other Financial
         Assets”.

                                                 Column A                        Column B
                                                  R’000                           R’000

     Assets
     Non-current assets
     Loans and advances                                     895 770                      n/a

     Other financial assets                                         -                 895 770


     Current assets
     Loans and advances                                     184 638                       n/a

     Other financial assets                                         -                 184 638


     Total                                               1 080 408                  1 080 408



-   Preference share liability
    An additional liability classification “Preference shares” has been disclosed in the statement
    of financial position and as a separate note (refer note 8 below). The preference share
    liability was previously disclosed as part of the other financial liability classification in the
    comparative results.



                                                 Column A                        Column B
                                                  R’000                           R’000

     Liabilities
     Non-current liabilities
     Preference shares                                    1 232 459                    n/a

     Other financial liabilities                                    -             1 239 741


     Current liabilities
     Preference shares                                       12 438                     n/a
     Other financial liabilities                              7 282                   12 438


     Total                                               1 252 179                     1 252 179



-   Deferred revenue
    Deferred revenue is no longer a significant component of the core operations due to the
    rationalisation process. As a result, the deferred revenue liability has been included in the
    trade and other payable balance and disclosed separately in the accounting policy note.

                                                 Column A                        Column B
                                                  R’000                           R’000


     Liabilities
         Non-Current liabilities
         Trade and other payables                              3 431                       n/a

         Deferred revenue                                        n/a                       3 431

         Total non-current liabilities                        3 431                        3 431


         Current liabilities
         Trade and other payables                            26 350                       26 131

         Deferred revenue                                        n/a                         219

         Total current liabilities                           26 350                      26 350



Consolidated statement of profit and loss

The following reclassification of the 30 September 2017 comparative figures in the consolidated
statement of profit or loss occurred:

   -   The nature of the Group’s core operation predominantly gives raise to interest, investment
       and service income. The disclosure of “gross profit” in the statement of profit and loss has
       become irrelevant to the Group results. The 30 June 2018 statement of profit or loss no
       longer includes gross profit disclosure, and as a result, the comparative information has
       been adjusted accordingly.

   -   The Equity Holdings operations invest with the objective to earn a combination of
       investment income and capital appreciation. The comparative figures have been adjusted
       to include the fair value adjustments and income from equity investments relating to
       Ecsponent’s Equity Holdings operations in the Group’s operating results.

Refer below for an extract of the 30 September 2017 consolidated statement of profit or loss as
disclosed in the 30 September 2017 interim financial statements. The effect of the
abovementioned reclassifications to the comparative figures for 31 December 2018 is to increase
the operating profit to R128.2 million from the R113.3 million as disclosed in 30 September 2017
financial statements. The profit before taxation, however, remains unchanged at R45.4 million.

                                                                                       30 September
                                                                                           2017

                                                                                             R’000


 Revenue                                                                                     154 597

 Cost of sales                                                                               (18 115)

 Gross profit                                                                                136 482

 Other income                                                                                 22 286

 Operating expenses                                                                          (45 422)

 Operating profit                                                                             113 346

 Fair value adjustments                                                                        15 127

 Income from equity accounted investments                                                       (274)

 Finance costs                                                                               (82 832)

 Profit before taxation                                                                        45 367

4. FINANCIAL INSTRUMENT – FAIR VALUE AND RISK MANAGEMENT
Financial instruments measured in the statement of financial position at fair value require disclosure.
Financial instruments of the Group carried at fair value are disclosed below.

Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs
to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:

-      Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
       that the entity can access at the measurement date;
-      Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable
       for the asset or liability, either directly or indirectly; and
-      Level 3 inputs are unobservable inputs for the asset or liability.



                                                                         31 December 2018

    Financial instrument carried at fair value                   Carrying      Fair value -    Fair value –
                                                                   value -         Level 1          Level 3
                                                            Designated at
                                                                fair value
                                                                                     R’000           R’000
                                                                      R’000

    Other financial assets                                         503 297          37 528         465 769




                                                                   Reviewed 30 September 2017

    Financial instrument carried at fair value                   Carrying      Fair value -    Fair value –
                                                                   value -         Level 1          Level 3
                                                            Designated at
                                                                fair value
                                                                                     R’000           R’000
                                                                      R’000

    Other financial assets                                                 -               -                 -




                                                                        Audited 30 June 2018

    Financial instrument carried at fair value                   Carrying      Fair value -    Fair value –
                                                                   value -         Level 1          Level 3
                                                            Designated at
                                                                fair value
                                                                                     R’000           R’000
                                                                      R’000

    Other financial assets                                         766 461         280 700         485 761
 
Measurements of fair value – reconciliation of Level 1 fair values


 Financial instrument carried at fair value                             Reviewed     Audited
                                                             Group         Group      Group
                                                       31 December             30
                                                              2018     September     30 June
                                                                             2017
                                                                                        2018
                                                              R’000         R’000

                                                                                       R’000
 Fair value gains/(loss) recognised in profit and           122 614              -   (82 557)
 loss




 Financial instrument carried at fair value                             Reviewed     Audited
                                                       31 December             30    30 June
                                                               2018    September        2018
                                                              R’000          2017
                                                                                       R’000
                                                                            R’000
 Opening balance at the start of the period                 280 700              -   232 980
 Purchases & revaluations                                     9 339              -    88 234
 Transfer of realised gains recognised in profit and        122 614              -   (40 514)
 loss
 Disposal of financial instrument                         (375 125)              -          -
 Balance at the end of the period                            37 528              -   280 700


Measurements of fair value – reconciliation of Level 3 fair values

Other financial assets designated as at fair value through profit and loss

 Financial instrument carried at fair value                             Reviewed     Audited
                                                       31 December            30     30 June
                                                              2018     September
                                                                            2017        2018

                                                                             R’000
                                                              R’000                    R’000

 Fair value (loss)/gains recognised in profit and          (19 992)              -   225 702
 loss




 Financial instrument carried at fair value                             Reviewed     Audited
                                                       31 December            30     30 June
                                                              2018     September
                                                                            2017        2018
                                                              R’000
                                                                             R’000     R’000

 Opening balance at the start of the period                 485 761              -          -
 Purchases & revaluations                                               -        -     260 059

 Transfer of realised gains recognised in profit and            (19 992)         -     238 904
 loss

 Impairment                                                             -        -     (13 202)

 Balance at the end of the period                               465 769          -     485 761




Measurements of fair value – valuation techniques and significant unobservable inputs

The following table reflects the valuation techniques used in measuring Level 3 fair values, as well as
the significant unobservable inputs used:

 Type                                  Valuation technique              Significant unobservable
                                                                        inputs

 Option agreement                      The Black Scholes formula             -   A 0% dividend yield
                                       was applied to determine                  on the underlying
                                       the value of the European                 listed equity was
                                       option contract.                          assumed
                                                                             -   A two year period
                                                                                 of historic price
                                                                                 history was used to
                                                                                 calculate average
                                                                                 price volatility at
                                                                                 46.36%
                                                                             -   A risk free rate of
                                                                                 0.2% based on
                                                                                 Euro bonds was
                                                                                 applied.
                                                                             -   Option strike price
                                                                                 of Euro 18
                                                                             -   31 December 2018
                                                                                 spot Euro rate to
                                                                                 convert to reporting
                                                                                 currency
 Preference shares                     Dividend discount model to            -   Dividend growth rate
                                       determine the present                     of 0%
                                       value of                              -   22% discount rate
                                       future dividend flows.                -   Actual dividend
                                                                                 payments

 Capitis Equities - S12J portfolio Each individual asset class               -   Discount rate of 22%
                                   within the portfolio’s fair               -   0% dividend yield
                                   value was determined



FINANCIAL INSTRUMENTS
The carrying amount of all significant financial instruments approximates the fair value.

FINANCIAL RISK MANAGEMENT
The Group's financial risk management objectives and policies are consistent with those disclosed in
the consolidated annual financial statements as at and for the year ended 30 June 2018.


5.   INVESTMENT IN ASSOCIATES

                                                                        Reviewed              Audited

                                                         31                  30               30 June
                                                   December           September                  2018
                                                       2018                2017
                                                                                               Group
                                                         Group               Group
                                                         R‘000               R‘000             R‘000


 Cost of investment in associates                       374 146             273 559            22 119

 Reclassification from other financial assets           375 125                   -

 Reclassification from investment in                           -                  -            10 000
 subsidiary
                                                       749 271             273 559            32 119

 Share of post-acquisition reserves net of
 dividends received                                       (851)               (274)           (1 173)

 Disposal of investment in associate                           -                  -           (9 446)
                                                         748 420             273 285            21 500
 Total investment in associates

At 31 December 2018 the Group had significant influence over MyBucks S.A. Limited (“MyBucks”)
and Ecsponent Financial Services Ltd (“Ecsponent Zambia”) by virtue of its interest in these
companies shareholding and voting powers.

Details of the Group’s material associates are as follows:

                                                   Proportion of
                                                                              Proportion of voting
                   Principl      Place of        ownership interest
 Name of                                                                          power (%)
                      e        incorporati             (%)
 associate
                   activity         on           Dec      Sept      June      Dec     Sept     June
                                                2018      2017      2018     2018     2017     2018
 MyBucks S.A       Financial
 Limited           Services    Luxembourg       24.3%        9.4%   12.1%     24.3%   22.2%    12.1%
 Ecsponent         Financial
 Financial         Services
 Services Ltd                  Zambia           25.0%     25.0%     25.0%     25.0%   25.0%    25.0%




                                                                        Reviewed              Audited

                                                         31                  30               30 June
                                                   December           September                  2018
                                                       2018                2017
                                                                                               Group
                                                         Group               Group
                                                         R‘000               R‘000             R‘000
 MyBucks S.A. Limited
 Equity method of accounting                         727 152               269 861

 Fair value                                          727 152               269 861
 

 Ecsponent Financial Services Ltd
 Equity method of accounting                          21 268                 3 424            21 500

 Fair value (unlisted)                                28 823                 3 424            27 469



The financial period end of MyBucks and Ecsponent Financial Services Ltd (Zambia) is 30 June
annually. The financial management accounts of these entities were used for the purpose of applying
the equity method of accounting for the interim period to 31 December 2018.

Increase holding in MyBucks
By 31 December 2018 the Group held 24.3% of the MyBucks issued share capital after increasing
its interest in MyBucks in a range of stepped acquisitions from its initial investment on 30 March
2017.

At 30 September 2017 the Group had a direct equity holding of 9.4% in Mybucks. Ecsponent
indirectly controlled a further 12.8% of the total voting rights in terms of a voting pool agreement
with a customer of Ecsponent. Via the direct equity holding and the voting pool agreement Ecsponent
controlled 22.2% of the MyBucks voting powers and as a result classified MyBucks as an associate
in the 30 September 2017 results.

The Group acquire a further stake in MyBucks during February 2018 increasing its shareholding to
12.1% at 30 June 2018. The voting pool arrangement was, however, cancelled prior to the period
end resulting in the Group losing control of the voting pool shares and significant influence. The
MyBucks investment was accordingly classified as a financial instrument held at fair value in the
30 June 2018 audited results.

Ecsponent continued to acquire additional shares during the current interim period and increased its
shareholding to 24.3% effective on 14 December 2018, the date on which the final condition
precedent was fulfilled to acquire a further 11.8% or 1 498 600 shares in MyBucks.

The MyBucks investment was classified as a financial instrument at fair value at the start of the
current interim period until the acquisition on 14 December 2018. In determining the cost of the
MyBucks associate investment for equity accounting purposes the fair value of the existing holding
together with the cost of the additional MyBucks shares was classified as the cost of the associate.

Transfer out of level 1
The fair value of the MyBucks investment classified at level 1 at 30 June 2018 was transferred to
level 3 for the interim reporting period prior to the transfer to the cost of the associate on
14 December                                                                                2018.

Management deemed the transfer to level 3 appropriate due to the inactive market, with thin trading
volumes of less than 0.5% of the number of MyBucks shares in issue during the 6 months interim
period. In addition, the volume of MyBucks shares traded during the interim period reduced by 40%
in comparison to the volumes traded in the preceding six-months.

Summarised financial information for the 6 months ended 31 December 2018
                                                                                            Ecsponent
                                                                 MyBucks
                                                                                             Zambia
                                                                          R‘000                   R‘000


 Post-tax loss from continuing operations                               (70 543)                   (931)

 Total comprehensive loss                                               (78 792)                   (931)

 Total assets                                                         3 468 551                    40 383

 Total liabilities                                                    3 194 478                    60 159




6.   LOANS AND ADVANCES

                                                                             Reviewed           Audited
                                                               Group               Group          Group


                                                                  31     30 September           30 June
                                                            December                2017           2018
                                                                2018

                                                               R ‘000              R ‘000         R ‘000
 Loans and advances carried at amortised cost
 Business credit                                              1 308 386        1 080 408         1 281 443
 The business funding advances are secured, via a
 cession of the underlying equity and/or assets with
 targeted security cover ranging between 100% – 150%.
 The advances bear interest at fixed interest rates based
 on the entity risk profile, ranging between 19% – 28%
 (Sept 2017: 24% – 30%) and repayment terms are
 facility specific, ranging between 2 – 3 years.
 Supply chain funding                                          34 553                   -          36 788
 Enterprise development and supply chain advances
 are of short-term nature with an average transaction
 cycle of 15 – 60 days. These advances provide high
 yielding annualised returns. Ecsponent secures funding
 via the terms of the transactions and where appropriate
 additional covering security is obtained.

 Total loans and advances                                   1 342 939        1 080 408         1 318 231


 Credit Impairments                                          (58 784)                   -       (79 879)
 Impairments         for   non-performing   loans   and      (23 262)                   -       (22 289)
 advances
 Impairments for performing loans and advances               (35 522)                   -       (57 590)


 Net loans and advances after credit
 impairments                                                1 284 155        1 080 408         1 238 352
 Non-current assets                                           193 511          895 770           803 599
 Current assets                                              1 090 644         184 638           434 753
 Total Loans and Advances                                    1 284 155       1 080 408         1 238 352




7.   OTHER FINANCIAL ASSETS
                                                                         Reviewed      Audited
                                                                Group       Group       Group

                                                          31 December           30     30 June
                                                                 2018    September        2018
                                                                              2017


                                                                R ‘000      R ‘000       R ‘000

 At fair value through profit and loss –
 designated

 Option agreement                                               218 912            -     238 904

 In June 2018, the Group entered into a put option
 agreement with MHMK Group Limited and
 Sunblaze Investment Holdings Incorporated, the
 Option Issuers. In terms of the agreement the
 Group holds an unconditional and nonexclusive
 option to require the Option Issuers to purchase,
 jointly or severally, all or any portion of the Option
 Shares, being the total number of MyBucks SA
 ordinary shares held by Ecsponent as at 31
 December 2021, at an Option Strike price of €18.
 The option can be exercised directly after the
 Option Period’s expiration date being 31
 December 2021, during the 30-day Option
 Exercise Period which follows. The Black-Scholes
 model was used to value the investment at year
 end.

 Preference shares                                            100 000            -     100 000

 The preference share investment comprises 1 666
 667 preference shares held in VSS Financial
 Services (Pty) Ltd (“VSS”). The preference shares
 are cumulative perpetual instruments with VSS
 holding the right to redeem or to convert to an
 alternative class of share. Dividends are declared
 at the discretion of the VSS board.

 Capitis Equities (Pty) Ltd                                   146 857            -     146 857

 The company invested in a Section 12J company,
 Capitis Equities (Pty) Ltd, by acquiring a 19%
 stake in the ordinary shares of the entity. The
 company further invested in the qualifying 12J
 investment portfolio of Capitis. The Board
 assesses the portfolio’s fair value on a regular
 basis and at a minimum at each reporting period.
 Listed shares – Go Life

 The Group acquired 68.2 million ordinary shares             37 528             -        43 740
 in Go Life International, a healthcare company
 registered in the Republic of Mauritius. The
 Company’s primary listing is on the Mauritian
 stock exchange with a secondary listing on the
 JSE’s Alt X.

 Listed shares – MyBucks                                        -               -      236 960

 The Group acquired foreign denominated listed
 equities of the issued share capital of the Mybucks
 Group, as part of its private equity portfolio. The
 shares are listed on the Frankfurt stock exchange.
 Due to the additional investment in the listed
 equities in the current 6-month period, this
 investment has been reclassified to an Investment
 in Associate as at 31 December 2018.

 Other Financial Assets at amortised cost

 Getbucks Botswana – Bond                                 66 855                -          65 727

 Bond issued by GetBucks Botswana, listed on the
 Botswana stock exchange. The bond has a fixed
 coupon rate of 18% per annum and matures on 31
 December 2021.

 Total Other Financial Assets                           570 152                 -        832 188



 Non-current assets

 At fair value through profit and loss –                465 769                 -        485 761
 designated

 At amortised cost                                        65 976                -          51 471

                                                        531 745                 -        537 232

 Current assets

 At fair value through profit and loss –                  37 528                -        280 700
 designated

 At amortised cost                                           879                -          14 256

                                                          38 407                         294 956



 Total Other Financial Assets                           570 152                 -        832 188



8.   PREFERENCE SHARES

Ecsponent’ s business model requires funding for both organic business growth and to pursue further
acquisitions. Funding is deployed in the growth of credit assets and the acquisition of new equity
investments. Preference shares are considered a reliable source of funding for these on-going
business needs and accordingly the Company has registered a R5 billion preference share
programme (“the programme”). The Programme was approved by the JSE on 8 September 2014
and again on 15 December 2015. By 31 December 2018 Ecsponent Limited had received subscription
investments of R1.6 billion from the South African programme and a further combined R262 million
in the Swaziland and Botswana markets.

The preference share capital is classified as debt and separately disclosed in the Condensed
Consolidated Statement of Financial Position as at 31 December 2018 in line with the principles of
IFRS. Consequently, the preference share dividends are classified as finance costs and disclosed as
such in the Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income
for the 6-month period ended 31 December 2018.


                                                                           Reviewed      Audited
                                                               Group          Group        Group


                                                                  31    30 September     30 June
                                                            December           2017         2018
                                                                2018

                                                               R ‘000         R ‘000       R ‘000
 Held at amortised cost
 Preference shares issued by Ecsponent
 Limited (South Africa)
 Preference share – Class A                                    76 069         73 523       75 316

 Initial issue price redeemable after five years. Monthly
 dividends are paid at a rate of 10% per annum.
 Preference share – Class B                                   543 694        280 628     417 931

 Preference share redeems at 170% of the initial issue
 price after five years. No monthly dividends are paid.

 Preference share – Class C                                   718 881        703 744     713 021

 Initial issue price redeemable after five years. Monthly
 dividends are paid at a rate of prime plus 4% per
 annum.
 Preference share – Class D                                   250 091           935      137 414

 Initial issue price redeemable after five years. Monthly
 dividends are paid at a rate of 12.5% per annum.
 Preference share – Class E                                   149 511              -       86 311

 Initial issue price redeemable after five years. Monthly
 dividends are paid at a rate of 11.25% per annum.
 Preference share – Class G                                     4 104              -        3 007

 Initial issue price redeemable after five years. Monthly
 dividends are paid at a rate of 10% per annum.
 Preference shares issued by Ecsponent
 Swaziland Limited
 Preference share – Class A                                   139 816         84 960       139 878

 Five-year income provider with a variable rate
 redeemable, convertible unit of E1 000 comprising E1
 preference share and E999 claim. Rate of 15% paid
 monthly.
 Preference share – Class B                                 120 384          82 168        111 303

 Five-year capital growth provider with a zero-rate
 redeemable, convertible unit of E1 000 comprising E1
 preference share and E999 claim. Redeem at the end
 of five years at E2 000.
 Preference shares issued by Ecsponent
 Botswana Limited
 Preference share – Class A                                    13 932         15 077             13 560
 Five-year income provider with a variable rate
 redeemable, convertible unit of P1 000 comprising P1
 preference share and P999 claim. Rate of 15% paid
 monthly.
 Preference share – Class B                                     4 621          3 862              4 234
 Five-year capital growth provider with a zero-rate
 redeemable, convertible unit of P1 000 comprising P1
 preference share and P999 claim. Redeem at the end
 of five years at P2 000.



       Total preference shares                                2 021 103         1 244 897          1 701 975


       Non-current liabilities                                1 920 795         1 232 459          1 694 362
       Current liabilities                                      100 308            12 438              7 613
       Total preference shares                                2 021 103         1 244 897          1 701 975




      Reconciliation of the number of preference shares in issue:

                                                    Ecsponent Limited (South Africa)

                                 Class A      Class B           Class C        Class D         Class E           Class G

Reported at the
beginning of the
period                           783 069    3 688 644         7 344 514       1 418 825        892 920            31 110

Issues during the
period                                 -      732 346                 -        744 711         455 530            11 200

Reserved for issue at
period end                             -      247 220                 -        412 050         215 880                 -

                             783 069       4 668 210          7 344 514   2 575 586         1 564 330             42 310

Weighted average
issue price per
share (Rands)                     96.80       100.00            100.00          100.00             100.00         100.00

                                                                 Ecsponent Swaziland Limited

                                                                         Class A            Class E

 Reported at the beginning of the period                                 148 208             92 705

 Redemption of preference shares during the period                         (858)              (247)

                                                                         147 350            92 458

 Weighted average issue price per share (Rand)                              1.00              1.00



                                                                  Ecsponent Botswana Limited

                                                                         Class A            Class B

 Reported at the beginning of the period                                  10 350              2 027

 Repayment of preference shares during the period                              -                  -

                                                                          10 350             2 027

 Weighted average issue price per share (Pula)                              1.00              1.00

 Weighted average issue price per share (Rand)                              1.31              1.31



9.   NOTE PROGRAMME
                                                                             Reviewed       Audited
                                                                Group              Group     Group


                                                                   31     30 September      30 June
                                                             December               2017      2018
                                                                 2018

                                                                R ‘000             R ‘000    R ‘000
 Held at amortised cost
 Notes issued by Ecsponent Limited (South
 Africa)
 Note 1 – Fixed Rate                                               10

 Initial issue price redeemable after three years. Monthly
 interest is paid at a rate of 9% per annum.
 Note 2 – Fixed Rate                                              388

 Initial issue price redeemable after three years. Monthly
 interest is paid at a rate of 10% per annum

 Note 3 – Fixed Rate                                            4 114

 Initial issue price redeemable after three years. Monthly
 interest is paid at a rate of 12% per annum
 Note 4 – Zero Coupon                                             879
 Note redeems at 137.49% of the initial issue price after
 three years. No monthly interest is paid.
 Note 5 – Floating Rate                                           581

 Initial issue price redeemable after three years. Monthly
 interest is paid at a rate of prime plus 1.5% per annum.



 Total notes in issue                                              5 972



 Non-current liabilities                                           5 972

 Current liabilities                                                    -

 Total notes in issue                                              5 972



 Reconciliation of the number of listed notes in issue:

                                            Ecsponent Limited (South Africa)
                                Fixed rate       Fixed rate      Fixed rate       Floating       Zero –
                                   Note 1           Note 2          Note 3       rate Note      Coupon
                                                                                                  Note
 Reported at the                             -               -              -               -         -
 beginning of the
 period
 Issue of listed Notes               10 000                  -              -      100 000       100 000
 during the period
 Listed Notes reserved                       -       400 000       1 500 000       500 000       800 000
 for issue at period end
                                     10 000          400 000       1 500 000       600 000        900 000
 Weighted average
 issue price per Note               100.00            100.00         100.00         100.00        100.00
 (Rands)




10. OTHER FINANCIAL LIABILITIES

The other financial liabilities category incorporates external funding facilities with either banks,
individuals or corporate funding entities. Provided below is the detail regarding the Group’s other
financial liabilities:
                                                                                Reviewed         Audited
                                                                  Group            Group          Group

                                                             31 December               30        30 June
                                                                    2018        September           2018
                                                                                     2017

                                                                  R ‘000           R ‘000         R ‘000

 Held at amortised cost
Scipion Active Trading Fund                                         144 774            -          138 385

USD 10 million term loan facility that bears interest
at 10% plus 12-month LIBOR screen rate
amortised and payable monthly. 50% of the capital
is payable by May 2021 and the remaining 50% is
payable by July 2021.
This loan is secured over 1 100 000 MyBucks SA
Limited shares

Norsad Finance (Botswana) Limited                                     70 393            -               -

USD 5 million term loan facility that bears interest
at the three-month LIBOR plus 11% per annum,
payable quarterly. The loan is repayable during
July 2022.
 
Capitis Equities (Pty) Ltd                                            90 484             -             -

This loan facility bears interest at 8% per annum
and is repayable on 28 February 2019.

GetBucks Ltd (Mauritius)                                               27 079             -             -

USD 2.5 million loan facility bears interest at 17%
per annum and has no fixed terms of repayment.

Ever Prosperous Worldwide Limited                                       29 528             -           72 432

USD 6 million loan is unsecured, bears interest at
2.5% per month and was repayable by 31
December 2018, terms extended to repayment in
full by 31 March 2019.

Colyn Promissory Note                                                   12 654             -            12 138

This loan bears interest at 8% per annum, interest
is payable monthly, and the capital is repayable by
20 March 2021.

Ecsponent Eswatini Collective Investment                                  2 784              -              -
Scheme

This loan facility bears interest at 15% per annum,
payable monthly. The loan is repayable within 12
months.

Esperite NV Group                                                            -             6 390            -

The loan was unsecured, interest free and
repayable on demand.

Other                                                                        2                 892          -

Total Other Financial Liabilities                                           377 698           7 282         222 955



Non-current liabilities                                                     227 491            7 282         150 523

Current liabilities                                                          150 207              -            72 432

                                                                              377 698           7 282          222 955
11. RECONCILIATION OF THE TAX EXPENSE


Reconciliation between the applicable tax rate and average effective tax rate.


                                                                                 Reviewed      Audited
                                                                   Group            Group       Group

                                                                     31               30       30 June
                                                               December        September          2018
                                                                   2018             2017

                                                                         %                %         %



  Applicable tax rate                                                 28.00         28.00        28.00



  Disallowable charges - preference share dividends                   31.63         45.51        26.73

  Disallowable charges – penalties                                         -               -      0.01

  Exempt income                                                       (8.13)               -     (0.51)

  Effect of unused tax losses and tax offsets not
  recognised as deferred tax asset                                         -        (2.94)            -

  Income from equity accounted investments                                 -          0.17        (0.22)

  Different tax rates applied in foreign subsidiaries                 41.75         (1.67)       (2.18)

  Capital gains tax                                                   (0.39)        (1.03)       (5.10)

                                                                      92.86         68.04        46.73




12. EARNINGS AND FULLY DILUTED EARNINGS PER SHARE

                                                                           Reviewed            Audited
                                                            Group             Group             Group
                                                               31                 30           30 June
                                                         December         September               2018
                                                             2018               2017



 BASIC AND HEADLINE EARNINGS                                  R’000            R’ 000           R’ 000

 Basic earnings                                               3 449            33 697          102 810

 Headline earnings                                            3 359            18 325           75 476
 Basic and fully diluted earnings per share (cents)
 attributable to equity holders of the parent                    0.319           3.121            9.465

 Headline and fully diluted headline earnings per
 share (cents) attributable to equity holders of the
 parent                                                          0.311           1.698            6.991
 



 Number of shares in issue                                1 079 555       1 079 550      1 079 555
                                                                364             795            364

 Weighted average number of shares                        1 079 555       1 079 550      1 079 551
                                                                364             795            326




 RECONCILIATION BETWEEN BASIC EARNINGS
 AND HEADLINE EARNINGS

 IAS 33 Basic earnings                                        3 449          33 697        102 180

 IAS 16 (Profit) / Loss on disposal of property plant
 and equipment                                                  (90)               -              5

 IAS 38 Impairment of intangible assets                            -             66             811

 IFRS 3 Gain on disposal of subsidiary and/or
 associate                                                         -               -           (399)

 IFRS 5 Gain on disposal groups held for sale                      -               -        (3 905)

 IFRS 5 Gain on disposal of discontinued operations                -       (15 438)        (15 438)

 IFRS 10 Gain on disposal of subsidiary                            -               -        (7 780)

 Headline earnings                                            3 359          18 325          75 474


13. CONDENSED CONSOLIDATED SEGMENTAL INFORMATION

The segments identified are based on the operational and financial information reviewed by
management for performance assessment and resource allocation. There has been no change in the
basis of operational segmentation or in the basis of measurement of segment profit or loss since the
2018 annual financial statements.

The continued expansion of the Group has resulted in the need for geographic segmentation in
addition to the operational segmentation.

Period ended 31 December 2018

 Operating Segment               Total Assets   Revenue         Operating
                                                             profit / (loss)
                                       R’ 000      R’ 000             R’000

 Business credit                    2 256 384     138 001          168 178
 Investment services                2 201 529     181 669          172 408
 Equity holdings                      560 047      89 174           84 754
 Corporate                              4 385      12 617            3 952
 Eliminations                     (2 247 167)   (221 286)        (211 146)
 Discontinued operations                    -           -                -
 Group total                        2 775 178    200 175           218 146



 Geographic Segment              Total Assets   Revenue         Operating
                                                             profit / (loss)
                                       R’ 000      R’ 000             R’000

 South Africa                       3 878 907     326 557          304 545
 Botswana                             795 499      24 437           57 292
 Swaziland                            188 669      61 636           57 930
 Namibia                                    -           -                -
 Zambia                                     -          26            (135)
 Mauritius                            159 270       8 805            9 660
 Eliminations                     (2 247 167)   (221 286)        (211 146)
 Discontinued operations                    -           -                -
 Group total                        2 775 178    200 175           218 146



Period ended 30 September 2017

 Operating Segment               Total Assets   Revenue         Operating
                                                             profit / (loss)
                                       R’ 000      R’ 000             R’000

 Business credit                    1 597 124     198 122           204 576
 Investment services                1 425 394      38 842           113 987
 Equity holdings                      318 269      18 701            13 275
 Corporate                             12 767      11 896            (9 017)
 Eliminations                     (1 890 961)    (104 089)         (185 597)
 Discontinued operations                    -      (8 875)          (23 878)
 Group total                        1 462 593     154 597            113 346
 


 Geographic Segment              Total Assets   Revenue         Operating
                                                             profit / (loss)
                                       R’ 000      R’ 000             R’000

 South Africa                       2 579 809     213 948          249 596
 Botswana                             431 853      20 405           43 598
 Swaziland                            341 562      32 471           28 720
 Namibia                                  330         330              104
 Zambia                                     -         407              803
 Eliminations                     (1 890 961)   (104 089)        (185 597)
 Discontinued operations           -               (8 875)        (23 878)
 Group total                       1 462 593       154 597         113 346



Year ended 30 June 2018

 Operating Segment                             Total Assets               Revenue             Operating
                                                                                           profit / (loss)
                                                      R’ 000                 R’ 000                 R’000

 Business credit                                   1 422 870                497 576              363 354
 Investment services                                 375 771                362 409              288 994
 Equity holdings                                     617 150                 41 336              138 955
 Corporate                                            16 307                 37 984                  724
 Eliminations                                      (196 294)              (472 321)            (379 578)
 Discontinued operations                                   -                 (8 875)              (7 040)
 Group total                                       2 235 804               458 109               405 409



 Geographic Segment                            Total Assets               Revenue             Operating
                                                                                           profit / (loss)
                                                      R’ 000                 R’ 000                 R’000

 South Africa                                      1 448 080                792 554              550 965
 Botswana                                            795 912                 48 115              147 491
 Swaziland                                           171 966                 97 960               85 551
 Namibia                                                 194                     508                  (5)
 Mauritius                                             2 112                     168                8 025
 Zambia                                               13 834                      -                    -
 Eliminations                                      (196 294)               (472 321)            (379 578)
 Discontinued operations                                   -                 (8 875)              (7 040)
 Group total                                       2 235 804                 458 109              405 409


14. RELATED PARTY DISCLOSURES

The Group entered related party transactions with its holding company and related subsidiaries during
the financial period. Below is a summary of the relevant balances and transactions in this regard:

                                                                             Reviewed           Audited
                                                                 Group           Group            Group
                                                                 31                30           30 June
                                                           December         September              2018
                                                               2018              2017
                                                                 R’000            R’000
                                                                                                   R’000
 Related party balances
 Investment in associate companies                              748 420         273 285           21 500


 Other Financial Assets
 Associate companies                                            166 856                -              -
 Loans owing (to) / by:
 Associate companies                                             315 603        481 082               -
 Shareholders with significant influence                                -        (6 390)              -


 Amounts included in trade receivables / (trade
 payables)
 Associate companies                                               -            (4 347)              -


 Other financial assets
 MHMK Capital Limited - option agreement                          218 912                      238 904




15. ACQUISITIONS

The following acquisitions / investments were concluded during the financial period:

MyBucks S.A. Limited
R352.1 million acquisition of an additional 1 498 600 MyBucks S.A. Limited shares at an average
price of Euro 14.25 per share. Total investment in MyBucks SA Limited ordinary shares after the
transaction amounts to 3 095 530 shares comprising a total holding of 24.3%.

The acquisition was approved by general meeting of Ecsponent shareholders during the period and
was effective on 14 December 2018.

GetBucks SMME Lending (Pty) Ltd
During the current 6-month period, the Group acquired 100% of a specialist finance company for R10
million to complement its SMME lending offerings. The company was subsequently renamed to
Ecsponent Business Credit (Proprietary) Limited.



16. CORPORATE ACTIONS

In addition to the transactions mentioned above the following corporate actions were implemented
during the period under review:

Capitis Equities
Shareholders approved on 5 September 2018 a further investment of up to R243 million in Capitis
Equities, a section 12J entity. The approval provides the Ecsponent directors with the authority to
increase its current investment of R156 million to a maximum of R400 million.

The board periodically re-evaluates the allocation of investment funding to its portfolio of
investments. At 31 December 2018 the Group had not utilised the approval to make any further
investments in Capitis Equities.

R10 billion Domestic Medium Term Note Programme
The company announced on 7 December 2018 the listing of the initial issue under its R10 billion
Domestic Medium Term Note Programme.
The initial issue comprised of:
     -    Fixed rate notes paying interest monthly at a rate of 9% per annum, with the capital
          redeemable on 14 December 2021;
     -    Floating rate notes paying interest monthly at a rate of prime plus 1.5% per annum, with
          the capital redeemable on 14 December 2021; and
     -    Zero coupon notes issued at an initial issue price of R100 with capital redeemable at
          R137.49 on 14 December 2021, providing an implied yield of 10.66% per annum;


17. EVENTS AFTER THE REPORTING PERIOD

The directors are not aware of any material event, other than the matters listed below, which occurred
after the reporting date and up to the date of this report, which require disclosure.

Acquisition of Pink Orchid
Shareholders approved in the general meeting held on 22 January 2019 the acquisition of Pink Orchid
(Pty) Ltd a company incorporated in Mauritius for R185 million. The transaction resulted in Ecsponent
obtaining:

    -   A further 1 953 874 MyBucks shares increasing its holding to 39.7% of MyBucks; and
    -   34.89% of Getbucks Zimbabwe Limited.

Recapitalisation of MyBucks and Ecsponent taking a controlling interest

Ecsponent concluded an agreement in March 2019 enabling it to take a controlling interest in the
Frankfurt-listed fintech company, MyBucks.

In terms of the agreement Ecsponent converts the loans it advanced to MyBucks’, together with
predetermined assets to the value of R450 million or EUR27,829,312 (at exchange rate of EUR16.17)
into MyBucks shares at a subscription price of EUR1.00 per MyBucks share.

The resultant issue of 27,829,312 MyBucks shares to Ecsponent, increase the Ecsponent shareholding
from 39,7% to a controlling stake, at an average price of EUR2.89 per share. The final shareholding
percentage being dependent on confirmation of the extent to which other shareholders participate in
the capitalisation.

The MyBucks acquisition is subject to, inter alia, Ecsponent obtaining shareholder approval for the
acquisition. The effective date of the acquisition will be the date of fulfilment of all conditions
precedent.

18. DIVIDENDS

No ordinary dividends have been declared or proposed for the year.

Preference Share dividends of R134 million accrued to investors for the 6 months ended 31
December 2018. The dividends are classified as finance costs and included in the finance cost
expense in the Condensed Consolidated Statement of Profit and Loss and Comprehensive Income.

The Company has six classes of preference shares in issue with the following summarised dividend
terms:
 -  Class A – 10% fixed rate monthly dividend;
 -  Class B – 0% monthly dividend, but redeeming at a rate equal to 170% of the Initial Issue
    Price;
 -  Class C – prime plus 4% floating rate monthly dividend;
 -  Class D – 12.5% fixed rate monthly dividend;
 -   Class E – 11.25% fixed rate monthly dividend; and
 -   Class G – 10% fixed rate monthly dividend.


19. CONTINGENCIES

The directors are not aware of any material contingent liability which existed at the reporting date and
up to the date of this report that requires disclosure.


20. DIRECTOR CHANGES

Mr. G Manyere, appointed as non-executive vice chairman in March 2017 was appointed as an
executive director on 1 February 2019.

Mr. BR Topham resigned as an independent non-executive director on 31 January 2019.


21. COMPANY SECRETARY

L du Preez-Cilliers continued in office as the company secretary for the Group.


22. AUDITORS

At the Annual General Meeting held on 2 November 2018, shareholders reappointed Nexia SAB&T as
the independent external auditors of the Group for the 2019 financial year.


23. GOING CONCERN

The directors believe that the Group has adequate financial resources to continue in operation for the
foreseeable future and accordingly the Condensed Consolidated Interim Financial Statements for the 6
months ended 31 December 2018 have been prepared on a going concern basis. The directors have
satisfied themselves that the Group is in a sound financial position and that it has access to sufficient
equity and borrowing facilities to meet its foreseeable cash requirements.

The directors are not aware of any new material changes that may adversely affect the Group. The
directors are also not aware of any material non-compliance with statutory or regulatory requirements
or of any pending changes to legislation which may affect the Group.

For and on behalf of the Board




TP Gregory
Pretoria
26 March 2019

Directors: RJ Connellan* (Chairman), KA Rayner*, W Oberholzer*, P Matute #, G Manyere
(Executive Director), TP Gregory (Chief Executive Officer) and DP van der Merwe (Financial
Director).
(* Independent Non-Executives)
(# Non-Executive)
Company Secretary: L Du Preez-Cilliers
Registered Office: 43 Garsfontein Road, Waterkloof, Pretoria, 0145, PO Box 39660, Garsfontein
East 0060
Transfer Secretaries: Computershare Investor Services Proprietary Limited, (Registration number
2004/003647/07), 2nd Floor, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, (PO Box
61051, Marshalltown, 2107)
Auditors: Nexia SAB&T Inc.
Sponsor: Questco Corporate Advisory (Pty) Ltd

Date: 26/03/2019 09:52:00 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.

Share This Story