- 15-month results build on the last seven years’ exponential growth
- Revenue from continuing operations up 45.1% from R321.8 million to R466.9 million
- Operating profit from continuing operations up 89% from R218.2 million to R412.4 million
- HEPS increased more than 100% to 6.991 cents per share
- Further scalability and de-risking through new transactions worth an aggregate R1.2 billion
Johannesburg, 18 September 2018 – JSE-listed African financial services group, Ecsponent Limited (“Ecsponent” or “the Company” or “the Group”) today reported results for the 15-month period ended 30 June 2018.
The results continue the strong growth trajectory reflected by the Group over the past seven years, further increasing its total assets by 84% from R1.2 billion to R2.2 billion.
Ecsponent Chief Executive, Terence Gregory commented:
“We are very proud of the performance. A key objective during the reporting period was to consolidate the business on the three key platforms that underpin our growth: secured credit solutions, targeted investment services and private and listed equity holdings.
“The business has reached a scale that enables us to capitalise on growth opportunities, and we have announced transactions of around R1.2 billion some of which are still to be approved by shareholders.
“These opportunities will be implemented in the current year and are expected to incrementally contribute to portfolio growth and cash flows in the medium term.
“More importantly, they allow us to significantly grow the portfolio and diversify the group across sectors and geographies, introducing further hard currency revenue streams to the business.”
R811.9 million of Ecsponent’s total assets are held outside the Common Monetary Area. These foreign denominated assets provide a hedge against rand weakness. At year-end, Ecsponent held a 12.1%-interest in the Frankfurt-listed fintech company, MyBucks SA, providing an added advantage of a natural Euro hedge against local currency volatility as well as access to the group’s technology.
The group continued to build its asset base through several corporate actions and merger and acquisition activities. These included the consolidation of the group’s biotech holdings into a healthcare group and its media monitoring business into a digital media and marketing group. As a result, Ecsponent’s portfolio of listed and private equity investments increased by 257% from R232.9 million to R832.2 million. Of these investments, 12.4% or R280.7 million, are held in listed shares with short-term price volatility hedged through an option agreement. The equity holdings platform generated R138.9 million in operating profit, representing 33.7% to total operating profit during the reporting period.
Management continues to consider strategic investment opportunities into companies that are well-managed, profit-focused and complementary to balancing the current short- and long-term revenue streams of the business.
“Our strategy is to take significant but minority stakes in businesses with substantial intellectual property. This provides for a high barrier to entry and commands significant premiums in the market if applied through a robust operating model.
“We currently hold investments in innovative and fast-growing market sectors such as fintech, healthcare and digital media,” elaborated Gregory.
The demand for credit from the SME sector remains buoyant and has resulted in continued, sustained growth across the group’s footprint. Total loan and advances assets increased by 65.4% from R748.7 million to R1.2 billion at the reporting date.
Targeted investment services
The group continued to leverage its extensive broker network and established distribution channel and introduced additional preference and ordinary shares, and bond products to the South African market. These products are expected to enhance the group’s ability to meet a wider range of the market’s investment needs, leading to additional revenue opportunities.
During the period, a range of traditional investment products focussing on compulsory retirement funds was also introduced to the market and the group successfully enhanced its product offering in Swaziland by obtaining a license to act as a Collective Investment Scheme (CIS) Manager in that country.
In the current year, management will remain focused on its core business platforms with continued investment in the group’s credit operations and emphasis on high-yield equity investment opportunities.
“We are excited about the implementation of the transaction pipeline that will allow us to diversify the business and, once completed, will enable us to access additional rand-based and foreign currency institutional funding. We are aggressively rationalising costs in the business, and a major drive is a reduction in our cost of funding,” concluded Gregory.