28 November 2017

Ecsponent Limited (Ecsponent) today announced interim results for the period ended 30 September 2017. The financial services group has continued its exponential growth, underpinned by the group’s strategic focus on select niche markets and business units, registering stellar results with all-round growth.

 

Key features

Highlights of the group’s September 2017 interim results compared to the June 2016 interim results are set out below:

  • Revenue from continuing operations up by 41.9%
  • Operating profits from continuing operations up by 89.5%
  • Total profits after tax up by 77.4%
  • Total assets up by 88.2%
  • Earnings per share (“EPS”) up by 40.25%
  • Headline earnings per share (“HEPS”) up by 72.2%

 

Interim results commentary


Commenting on these results, Ecsponent CEO Terence Gregory said the group’s overall performance was driven by management’s adherence to its strategic roadmap. “These results have been achieved amid challenging market conditions and proves the resilience of Ecsponent’s strategy of focusing on selected niche markets and a geographically diversified footprint with strong positioning in key growth markets. We expect this strategy will continue to drive expansion to dominate the group’s chosen market sectors,” Gregory said.

 

Building on the group’s ongoing upward trajectory, external revenue generated by Ecsponent’s Business Credit operations grew by a staggering 56% to R142.2 million from R90.9 million, comprising 87% of total revenue in the 2017 interim results.

 

“The group’s ability to deliver effective investment and other financial services products to the retail market is one of its core competencies. It is this distribution channel that has fuelled the group’s expansion strategy by having successfully raised over R1.25 billion across the group’s footprint in just three years,” said Gregory.

 

The group’s investment offering is being expanded to include additional preference share options as well as more traditional investment products like annuities and retirement preservation funds. The introduction of these products through its existing distribution channels will provide additional profit opportunities for the group.

 

Another of the Investment Services business unit’s strategic objectives is to lower the group’s average cost of capital through the acquisition of institutional debt funding. The group is well positioned to take advantage of institutional funding due to its extremely low tier 1 debt ratio of below 1%. Reduced funding cost would flow through to the group’s profit, and post this reporting period on 1 November 2017, the group announced that it had secured an international funding facility for USD 10 million from a UK-based corporate financier.

 

Combined, the capital raised from retail and intuitional sources generates substantial growth momentum in the group’s Business Credit division. Total assets increased by 148% from R645 million to R1 597 million compared to the comparative period. As a result, operating profit increased by 143% from R84 million to R205 million.

 

The demand for credit in both the SME and Enterprise Development sectors is strong across the continent and has resulted in continued, sustained growth of the Business Credit division across the group’s footprint. The offset for capital raised through these operations is therefore secured.

 

The group’s third business unit, Equity Holdings, expanded by adding listed equities to its portfolio which previously focused only on private equity. The first of these involved taking a 9.4% holding in the Frankfurt-listed (Luxembourg-based) Fintech company MyBucks. “This investment has the added advantage of providing a ‘hard currency’ hedge against local currency frailty,” said Gregory.

 

The listed equity acquisition positively affected the performance of the Equity Holdings business unit. Total assets increased by 968% from R30 million to R318 million compared to the previous 2016 period and operating profit increased by R16.9 million from a loss of R3.6m to a profit of R13.3m.

 

Gregory concluded: “Against the backdrop of local and international uncertainty on political and economic fronts, we remain optimistic about the opportunities for growth in our chosen markets. Our approach remains unchanged as we aim to develop a robust and complementary financial services group that continues to provide sustainable returns.”