Highlights from the Ecsponent’s Interim Results for the 6 months ended 30 June 2016:
- Total revenue increased by 74.7% to R116.7 million (2015: R66.8 million)
- Gross profits increased by 97.8% to R95.8 million (2015: R48.4 million)
- Operating profit increased by 166.7% to R58.4 million (2015: R21.9 million)
- Profits before tax increased by 61.5% to R28.5 million (2015: R17.7 million)
- Resultant earnings per share increased by 26.3% to 2.23 cents per share
27 September 2016 – African Financial Services company, Ecsponent Limited today announced strong interim results for the six months ended 30 June 2016. With an increased focus on growth in providing niche financial services in South Africa, Botswana, Swaziland and Zambia total, Revenue increased to R116.7 million, up almost 75 percent. Gross profit increased to R95.8 million, an improvement of close to 98 percent, compared to the six-month period ended 30 June 2015.
Financial Services South Africa
Eune Engelbrecht, CEO of Ecsponent Limited said, “The period reflected exponential growth particularly in the Financial Services division that provides secured credit to small and medium enterprises (SME). The strategic decision in early 2015 to exit the unsecured retail credit market in South Africa in favour of SME credit and enterprise finance has realised immediate benefits. Revenue increased by 378% to R142.6 million, resulting in an operating profit increase of 296.2% to R92.7 million.”
The change to SME credit has not only improved the margins of the South African business, but realised additional benefits such as the reduction of infrastructure costs. Additionally, this type of funding is assisting previously disadvantaged individuals who would often be disqualified from credit based on their limited credit record and the risk scoring models used by traditional institutions.
Funding for the Group’s expansion strategy in South Africa continues to be facilitated through its JSE-listed Preference Share programme. The Company has raised approximately R441 million in preference shares since implementation in 2014.
Financial Services Africa
Ecsponent has replicated the South African model at its operations in the rest of the continent.
“There is ongoing African growth opportunities for deposit taking and retail credit operations. The Group’s South African backbone provides central governance and control while each country of operation leverages the local infrastructure, systems, products, and management expertise to create compelling offerings unique to each market’s needs,” adds Engelbrecht.
Ecsponent Botswana’s performance reflected a steady improvement compared to the half year ended June 2015 with revenue growth of 51 percent to R23.2 million.
In Swaziland, the capital raising opportunities are built on the successes of the South African operations and provide ongoing liquidity to its credit operations. Swaziland grew revenue by 209.2% to R16.4 million, while operating profits increased by 1 401.8% to R7.4 million.
In Zambia, Ecsponent has a Tier 2 Deposit Taking Licence regulated by the Bank of Zambia and operations are directed from the head office in Lusaka. The Company has delayed its normally bold start up planning due to the uncertain business climate in this country. However, Ecsponent Zambia has begun providing credit to small and medium enterprises that qualify, as well as enterprise finance for secured transactions and the directors are confident that the Zambian operations will provide significant returns.
Private Equity highlights
Commenting on the Group’s private equity activities, Engelbrecht added, “Our biotechnology operations have invested in the development of a new and extensive range of products to complement the existing cord blood and tissue stem cell products. Development is now complete and commercialisation has begun. We expect to realise benefits during the second half of the year.”
“Looking forward to the next six months, we are excited by the opportunities created by the ongoing expansion strategy of the Group. Continued investment in credit operations and a focus on our core businesses will provide further impetus for continued success in the continent,” concludes Engelbrecht.
Read the full SENS announcement regarding Ecsponent’s 2016 interim results