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METTLE INVESTMENTS LIMITED - Summary of the audited consolidated results of the Mettle Group for the year ended 28 February 2019

Release Date: 31/05/2019 17:18
Code(s): MLE     PDF:  
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Summary of the audited consolidated results of the Mettle Group for the year ended 28 February 2019

METTLE INVESTMENTS LIMITED
(Registration Number: 2008/002061/06)
Incorporated in the Republic of South Africa
JSE share code: MLE ISIN: ZAE000257622
("Mettle" or "the Company")


SUMMARY OF THE AUDITED CONSOLIDATED RESULTS OF THE METTLE GROUP 
FOR THE YEAR ENDED 28 FEBRUARY 2019

HIGHLIGHTS

    -   Reward Investments (No.2) Limited ("Reward") and Mettle Solar Africa Limited ("Mettle Solar Africa")
        acquired by Mettle from Tradehold Limited ("Tradehold") as part of a group restructure ("the
        Restructure")
    -   Mettle unbundled from Tradehold and listed on the JSE on 23 May 2018 with stated capital of R545.8
        million
    -   Net asset value per share increased by 55% from 128 cents to 198 cents
    -   Reward contributed R37.1m profit for a nine and a half month period
    -   South African results depressed by once-off Restructure costs and an impairment of an associate
        investment

DETAILS OF THE RESTRUCTURE

As detailed in Mettle's pre-listing statement dated 14 May 2018 ("PLS"), Tradehold invested a further R445.2
million in Mettle in May 2018 as part of the Restructure.

These funds were utilised as follows:
    - R42 million as settlement of related party borrowings due to Tradehold;
    - R389.5 million investment in Reward; and
    - R13.7 million purchase of a loan claim against Mettle Solar Africa from Tradehold Africa Limited (wholly
      owned subsidiary of Tradehold).

The Company now owns 90% of Reward (based in Leeds and Manchester in the UK). Reward owns 75% of Reward Finance 
Group Limited ("Reward Finance Group") which has two 100% owned operating companies, namely Reward Capital Limited
and Reward Invoice Finance Limited.

OVERVIEW OF BUSINESS AND FINANCIAL PERFORMANCE

The consolidated results of Mettle and its subsidiaries ("the Group") include the South African businesses for the
year and Reward for only nine and a half months.

Revenue increased to R227 million for the year ended 28 February 2019 (2018: R44.2 million), while profit
attributable to shareholders decreased to R15.4 million (2018: R15.8 million). Earnings per share decreased by
57% from 16.44 cents to 7.14 cents while headline earnings per share decreased by 9% to 14.69 cents (2018:
16.11 cents). The reconciliation between basic earnings and headline earnings is detailed in note 5.

Reward recorded strong growth and contributed R179.5 million (GBP9.9 million) to revenue and R37.1 million (GBP2.1
million) to profit attributable to shareholders. Had Reward been consolidated for the full year, the Group
revenue and profit attributable to shareholders would have been R268.8 million and R23.9 million, respectively.

Reward's loan and invoice discounting book increased to R1.2 billion (GBP63.1 million) by 28 February 2019 from
R1 billion (GBP55.5 million) at date of acquisition by Mettle while it still has an unutilised GBP12 million external
funding facility.

Reward has benefited from the continued uncertainty in the UK which has resulted in banks being hesitant to
lend to smaller businesses. This demise of the traditional bank overdraft product has continued to drive
demand for Reward's funding. Whatever the Brexit outcome, we do not expect the main banks to re-enter this
space as they continue to drive costs down by forcing customers to solely use digital banking. Reward's
business model is to use the traditional method of lending money by way of meeting the customer, getting to
know them and fully assessing the customer's needs and the quality of the security. This methodology
continues to be Reward's unique selling proposition. In addition, the alternative finance and fintech markets
continue to evolve both regionally and nationally.

The Group's performance for the year was negatively impacted by once-off Restructure costs of R4 million, new
recurring listing related costs of R2 million and an impairment of R12.8 million in the investment in associate,
Lendcor Proprietary Limited ("Lendcor").

Lendcor provides unsecured loans for home improvements to the lower LSM market through a network of
building supply merchants. During the financial year certain changes to the collection methodology relating to a
segment of its lending book were imposed. Lendcor adjusted its business rules to address these changes.
However, this has had a negative impact on the collectability of this portion of its lending book. As a result,
Lendcor incurred a R0.4 million loss for the year ended 28 February 2019 (2018: R12 million profit).

Mettle concluded the acquisition of 49% ordinary shares in, and a R7.5 million loan claim against, Christopher
Finance Proprietary Limited ("Christopher Finance") for a total consideration of R27.4 million in early November
2018. Christopher Finance provides working capital finance to selected firms of attorneys. The finance is
secured by claims for costs the attorneys have against reputable third parties. Christopher Finance contributed
R1.9 million of equity accounted income for the four-month period.

The remaining South African businesses have performed in line with budget.

The Rand has depreciated against the Pound since the acquisition of Reward by Mettle and ended the year at
R18.60 (from R16.88 at acquisition date). This resulted in a foreign currency translation reserve of R28.6
million.

Net asset value per share has increased by 55% to 198 cents (2018: 128 cents), while tangible net asset value
per share has increased by 63% to 196 cents (2018: 120 cents).

SHARE ISSUES

Mettle converted its ordinary shares from par value to no par value and increased its authorised ordinary share
capital from 200 million to 500 million shares in April 2018.

On 14 May 2018 Mettle issued 40.2 million ordinary shares to Tradehold in settlement of borrowings due to
related parties amounting to R42 million.

On 15 May 2018 Mettle issued 110.7 million ordinary shares to Tradehold for a consideration of R403.2 million.

ORDINARY DIVIDEND

The board has decided not to declare a final dividend.

PROSPECTS

The results for the year under review contain several once-off items that will not recur in future periods. In
addition, the results of Reward have only been included for nine and a half months. As such, the board of
directors of the Company ("the Board") expect the results for the year ended 29 February 2020 to more
accurately reflect the true operational potential of the Group's business.

Any reference to future financial performance included in this statement has not been reviewed or reported on
by the Group's external auditors and does not constitute an earnings forecast.

BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The summary consolidated financial statements are prepared in accordance with the requirements of the JSE
Limited Listings Requirements (the "Listings Requirements") for provisional reports, and the requirements of the
Companies Act, No 71 of 2008 applicable to summary financial statements.

The Listings Requirements require provisional reports to be prepared in accordance with 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 the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the
preparation of the consolidated financial statements from which the summary consolidated financial statements
were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of
the previous consolidated financial statements, except for the adoption of the following new standards that
became effective for the current reporting period beginning on 1 March 2018:

-   IFRS 9 Financial Instruments

    From 1 March 2018, the Group assesses the expected credit losses associated with its debt instruments
    carried at amortised cost, on a forward-looking basis. The impairment methodology applied depends on
    whether there has been a significant increase in credit risk.

    For trade receivables, the Group applies a combination of the staging model and simplified approach
    permitted by IFRS 9, which requires expected credit losses to be recognised based on the stage of the
    debt, within the general model, or on expected lifetime losses from initial recognition of the receivables.

    This had an immaterial impact on Group retained income at 1 March 2018. The loss allowance on the
    receivables acquired as part of the acquisition of Reward in May 2018 was calculated in terms of IFRS 9.

-   IFRS 15 Revenue from Contracts with Customers

    The standard required that companies recognise revenue to depict the transfer of goods or services to
    customers in an amount that reflects the consideration to which the company expects to be entitled in
    exchange for those goods or services.

    The standard had no impact on the manner in which the Group recognised its various revenue streams.
    Additional disclosure on these different revenue streams and the timing of their recognition is presented in
    note 4.

Certain new accounting standards and interpretations have been published that are not mandatory for the 28
February 2019 reporting period and have not been early adopted by the Group. The Group's assessment of the
impact of these new standards and interpretations is set out below:

-   IFRS 16 Leases

    IFRS 16 will result in almost all leases being recognised on the balance sheet by lessees, as the distinction
    between operating and finance leases is removed. Under the new standard, an asset (the right to use the
    leased item) and a financial liability to pay rentals are recognised. The only exceptions are short-term and
    low-value leases.

    The Group expects to recognise right-of-use assets of R4.9 million on 1 March 2019 and lease liabilities of
    R5.4 million. Retained income at 1 March 2019 will reduce by approximately R0.5 million.

    There are no other standards and interpretations that are not yet effective and that would be expected to
    have a material impact on the Group in the current or future reporting periods and on foreseeable future
    transactions.

The Group's reportable segments reflect those components of the Group that are regularly reviewed by the
chief executive officer and other senior executives who make strategic decisions.

Tangible net asset value per share
Tangible net asset value per share excludes goodwill and intangible assets from the calculation of the Group's
net asset value, being the same manner in which tangible net asset value was calculated in the PLS. This is not
a defined term under IFRS and may not be comparable with similar measures disclosed by other companies.

The Board takes full responsibility for the preparation of this provisional report.

AUDIT OPINION

These summary consolidated financial statements for the year ended 28 February 2019 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an
unmodified opinion on the consolidated financial statements from which these summary consolidated financial
statements were derived.

A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on
the consolidated financial statements are available for inspection at the Group's registered office, together with
the financial statements identified in the respective auditor's reports.

The auditor's report does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial
information from the Group's registered office.

PREPARATION OF FINANCIAL RESULTS

The preparation of the financial results was supervised by the Group financial director, Justin Rookledge
BBusSci Finance (Hons), CA (SA).

CHANGES TO BOARD AND COMPANY SECRETARY

The following changes to the Board and Company Secretary took place during the financial year:

JA Aitken                      Resigned on 19 April 2018
WD Marais                      Resigned on 19 April 2018
W Maree                        Resigned on 19 April 2018
IHJ Visagie                    Resigned on 19 April 2018
BA Chelius                     Appointed on 19 April 2018
TM Flannery                    Appointed on 19 April 2018
HRW Troskie                    Appointed on 19 April 2018 and resigned on 12 September 2018
MVZ Wentzel                    Appointed on 19 April 2018
RD Fenner                      Appointed on 18 September 2018

RD Fenner is the lead independent non-executive director and chairman of the audit and risk committee.

Mettle Corporate Finance Proprietary Limited was appointed as Company Secretary on 19 April 2018.


FH Esterhuyse                  HF Prinsloo
Chairman                       CEO
31 May 2019


STATEMENT OF FINANCIAL POSITION
                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000
ASSETS
Non-current assets
Property, plant and equipment                                                    1 693              592
Goodwill                                                                         5 595            7 475
Deferred taxation                                                                1 644            1 142
Financial assets at fair value through profit or loss                           10 932           31 234
Investments in joint ventures                                                   29 020            7 073
Investments in associates                                                       37 111           53 123
Loans due from joint ventures                                                   24 768                -
Loans due from associates                                                       47 647           32 390
Loan receivables                                                                36 421           18 285
Total non-current assets                                                       194 831          151 314

Current assets
Tax asset                                                                           11                1
Loans due from associates                                                           21            8 189
Loan receivables                                                                25 991           21 467
Trade and other receivables                                                  1 209 389           35 826
Cash and cash equivalents                                                      109 648            6 278
Total current assets                                                         1 345 060           71 761

Total assets                                                                 1 539 891          223 075

EQUITY AND LIABILITIES
Capital and reserves
Stated capital                                                                 545 828          100 622
Retained income                                                                 38 765           22 198
                                                                               584 593          122 820
Foreign currency translation reserve                                            28 572                -
Common control reserve                                                       (123 560)                -
Capital and reserves attributable to the owners                                489 605          122 820
Non-controlling interest                                                        60 317                -
Total equity                                                                   549 922          122 820

Non-current liabilities
Deferred taxation                                                                  771              309
Borrowings                                                                     731 099           43 757
Borrowings due to related parties                                              194 824                -
Other financial liability                                                        2 611                -
Total non-current liabilities                                                  929 305           44 066

Current liabilities
Borrowings                                                                       2 658            8 107
Borrowings due to related parties                                                    -           42 000
Bank overdrafts                                                                 19 241            1 355
Taxation                                                                         7 800               82
Provisions                                                                       4 885              329
Trade and other payables                                                        26 080            4 316
Total current liabilities                                                       60 664           56 189

Total equity and liabilities                                                 1 539 891          223 075

Net asset value per share (cents)                                                  198              128
Tangible net asset value per share (cents)                                         196              120


STATEMENT OF COMPREHENSIVE INCOME
                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000

Revenue                                                                        226 977           44 190
Other income                                                                    12 708            8 665
Loss allowance                                                                (11 565)             (99)
Operating expenses                                                            (95 409)         (28 385)
Profit from operations                                                         132 711           24 371
Interest expense                                                              (56 975)          (6 905)
Fair value loss on other financial liability                                   (2 611)                -
Impairment of goodwill                                                         (1 880)                -
Impairment of equity accounted investments                                    (15 201)                -
(Loss)/profit from equity accounted investments                                (6 735)            3 054
Profit before taxation                                                          49 309           20 520
Taxation                                                                      (17 270)          (4 686)
Profit after taxation before non-controlling interest                           32 039           15 834

Other comprehensive income
Items that may be subsequently reclassified to profit
Exchange difference on translation of foreign operation                         33 807                -
Total comprehensive income                                                      65 846           15 834

Attributable to:
Equity holders of the company                                                   15 417           15 834
Non-controlling interest                                                        16 622                -
                                                                                32 039           15 834
Total comprehensive income attributable to:
Equity holders of the parent                                                    43 989           15 834
Non-controlling interest                                                        21 857                -
                                                                                65 846           15 834
Earnings per share (cents):
- basic                                                                           7.14            16.44
- diluted                                                                         7.14            16.44
Dividends per share                                                                  -                -


STATEMENT OF CHANGES IN EQUITY
                                                                  Foreign
                                                                 currency     Common        Non-          
                                         Stated    Retained   translation    control controlling
                                        capital      income       reserve    reserve    interest       Total
                                          R'000       R'000         R'000      R'000       R'000       R'000

Equity at 28 February 2017              100 622       6 364                                          106 986
Profit after taxation                                15 834                                           15 834
Equity at 28 February 2018              100 622      22 198             -          -           -     122 820
Issue of ordinary shares                445 206                                                      445 206
Acquisition of subsidiary                                                  (123 560)      48 557    (75 003)
Profit after taxation                                15 417                               16 622      32 039
Profit on purchase of loan claim from
related party                                         1 150                                            1 150
Other comprehensive income                                         28 572                  5 235      33 807
Dividends paid to non-controlling
interest                                                                                (10 097)    (10 097)
Equity at 28 February 2019              545 828      38 765        28 572  (123 560)      60 317     549 922


STATEMENT OF CASH FLOWS
                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000

Cash flows from operating activities
Profit from operations                                                         132 711           24 371
Non-cash items                                                               (132 826)         (17 457)
Changes in working capital                                                   (133 600)          (9 242)
Cash utilised in operations                                                  (133 715)          (2 328)
Interest received                                                              140 860           14 806
Preference dividends received                                                        -              192
Interest paid                                                                 (53 161)          (4 065)
Taxation paid                                                                 (15 640)          (2 909)
Net cash (outflow)/inflow from operating activities                           (61 656)            5 696

Cash flows from investing activities
Acquisition of property, plant and equipment                                   (1 053)            (119)
Proceeds on disposal of property, plant and equipment                               94                -
Cash outflow on acquisition of subsidiaries                                  (318 096)                -
Cash outflow on disposal of subsidiary                                         (1 853)                -
Acquisition of investments in joint ventures                                  (19 919)          (4 000)
Acquisition of loans to joint ventures                                        (21 250)                -
Additional investment in associate                                                   -          (7 260)
Investment in preference shares                                                      -         (24 750)
Proceeds on redemption of preference share investment                                -               84
Purchase of financial assets at fair value through profit or loss                    -         (30 001)
Proceeds on disposal of financial assets at fair value through
profit or loss                                                                  20 500                -
Loans recovered from associates                                                 28 951           15 215
Loans advanced to associates                                                  (43 975)                -
Loans advanced to joint venture                                                  (430)                -
Loan receivables advanced                                                     (45 843)         (39 411)
Loan receivables recovered                                                      51 598           46 773
Dividend received from associate                                                 2 000                -
Dividend received from joint venture                                               124                -
Proceeds on disposal of asset held for sale                                          -            6 626
Net cash outflow from investing activities                                   (349 152)         (36 843)

Cash flow from financing activities
Issue of ordinary shares                                                       403 206                -
Repayment of borrowings                                                       (11 255)         (35 560)
Receipt of borrowings                                                           72 336           62 000
Repayment of borrowings due to related parties                                (19 934)          (2 631)
Receipt of borrowings due to related parties                                    54 252            1 650
Dividends paid to non-controlling interest                                    (10 097)                -
Net cash inflow from financing activities                                      488 508           25 459

Net increase/(decrease) in cash and cash equivalents                            77 700          (5 688)
Effect of changes in exchange rate                                               7 784                -
Cash and cash equivalents at beginning of the year                               4 923           10 611
Cash and cash equivalents at end of the year                                    90 407            4 923

As presented on the statement of financial position
Cash and cash equivalents                                                      109 648            6 278
Bank overdrafts                                                               (19 241)          (1 355)
                                                                                90 407            4 923


SUPPLEMENTARY INFORMATION

1.   BUSINESS COMBINATIONS

     Acquisition of Reward

     Mettle acquired 90% of Reward on 15 May 2018 via a subscription for shares which diluted the existing 
     shareholding of Tradehold. Reward owns 75% of Reward Finance Group. IFRS 3 Business Combinations was 
     not applicable as this transaction was a combination of businesses under common control due to the
     common shareholding of the Company and Tradehold.

     Reward had the following assets and liabilities on acquisition date:                       Audited
                                                                                                   2019
                                                                                                  R'000
     Recognised amounts of identifiable net assets
     Equipment                                                                                      844
     Loan receivables                                                                            30 435
     Trade and other receivables                                                                936 705
     Cash and cash equivalents                                                                   70 001
     Borrowings                                                                               (558 357)
     Borrowings due to related parties                                                        (144 408)
     Deferred taxation                                                                             (68)
     Trade and other payables                                                                  (14 332)
     Provisions                                                                                   (826)
     Taxation                                                                                   (5 486)
                                                                                                314 508
     Non-controlling interest                                                                  (48 557)
                                                                                                265 951
     Fair value of consideration transferred
     Consideration settled in cash                                                              389 511
     Common control reserve                                                                     123 560

     Cash flow on acquisition of subsidiary
     Cash and cash equivalents acquired with the subsidiary                                      70 001
     Consideration settled in cash                                                            (389 511)
                                                                                              (319 510)

     The Group has included revenue of R179.5 million and profit attributable to equity holders of the parent
     of R37.1 million relating to Reward (refer to note 7). Had Reward been consolidated for the full year,
     the Group revenue and the profit attributable to shareholders would have been R268.8 million and
     R23.9 million, respectively.


                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000
2.   TRADE AND OTHER RECEIVABLES

     Trade receivables   
     South Africa                                                               35 126           34 519
     Reward Capital                                                            977 631                -
     Reward Invoice Factoring                                                  222 721                -

     Loss allowance
     South Africa                                                              (1 262)             (82)
     Reward Capital                                                           (13 068)                -
     Reward Invoice Factoring                                                 (13 663)                -
                                                                             1 207 485           34 457
     Other receivables                                                           1 904            1 369
                                                                             1 209 389           35 826


                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000
3.   BORROWINGS

     Non-current
     Small Enterprise Finance Agency SOC Limited ("SEFA")                       46 683           43 757
     Foresight Group ("Foresight")                                             684 415                -
                                                                               731 098           43 757
     Related parties
     Sandy Limited ("Sandy")                                                    55 813                -
     Tradegro S.ar.l. ("Tradegro")                                             139 011                -
                                                                               194 824                -
     Current
     SEFA                                                                        2 658            5 547
     FirstRand Bank Limited ("FirstRand")                                            -            2 560
                                                                                 2 658            8 107
     Bank overdrafts
     Nedbank Limited ("Nedbank")                                                 8 313            1 355
     FirstRand                                                                  10 928                -
                                                                                19 241            1 355

                                                                               947 821           53 219


     The borrowings from SEFA accrue interest at prime plus 1%. Interest is payable semi-annually with 
     capital repayable in March 2020. The borrowings are secured by Group cash balances and loan and 
     trade receivables of R71.1 million (2018: R63.9 million). The R50 million facility has been fully 
     drawn down.

     The borrowings from Foresight accrue interest at a fixed rate which is payable quarterly. The
     current facility limit is GBP50 million. The repayment date is four years from each individual draw
     down with the first repayment due in August 2021. Foresight has a debenture over all assets
     of Reward Finance Group (including shares in its subsidiaries). The carrying value of these
     assets (equipment, loan receivables, trade and other receivables and cash and cash
     equivalents) amount to R1.3 billion at year-end. The amounts owed by Reward Finance
     Group to Reward (R432.1 million) and Sandy (R55.8 million) are subordinated in favour of
     Foresight.

     The borrowings from Sandy are unsecured and accrue interest at a fixed rate of 7% which is
     payable monthly. The borrowings are repayable on 31 January 2023. The availability period
     for the remaining GBP3 million of this facility ends on 30 September 2019.

     The borrowings from Tradegro are unsecured, accrue interest at sterling three-month Libor
     plus 6.5%. The capital and capitalised interest are repayable on 28 May 2020. The sterling
     three-month Libor rate was 0.9% at year-end.

     The R33 million facility from FirstRand accrued interest at prime less 1% and expired on 31
     August 2018.

     The unsecured R10 million (2018: R5 million) overdraft facility from Nedbank accrues interest
     at prime which is settled monthly. This facility is reviewed annually.

     The R15 million overdraft facility from FirstRand accrues interest at prime plus 1% which is
     settled monthly. This facility is secured by the financial assets at fair value through profit or
     loss (unit trust investment) of R10.9 million and is reviewed annually.

                                                                               Audited          Audited
                                                                                  2019             2018
                                                                                 R'000            R'000

4.    REVENUE

     Fee income
     - Administration and management                                             7 718            5 177
     - Corporate finance                                                         4 824            6 598
     - Fundraising                                                               5 750            2 728
     - Secretarial and sponsor services                                            669            1 311
     Service fee income                                                         50 299                -
     Discounting income                                                         16 066           14 333
     Interest income                                                           141 651           14 043
                                                                               226 977           44 190

     Timing of revenue recognition
     - At a point in time                                                       21 140            7 395
     - Over time                                                               205 837           36 795
                                                                               226 977           44 190

     Revenue is split in geographical regions in note 7.

5.   EARNINGS PER SHARE

     Basic earnings per share (cents)                                             7.14            16.44
     Diluted earnings per share (cents)                                           7.14            16.44
     Headline earnings per share (cents)                                         14.69            16.11
     Diluted headline earnings per share (cents)                                 14.69            16.11

     Basic earnings per share

     Basic earnings per share is calculated by dividing the profit
     attributable to equity holders of the parent with the weighted
     average number of ordinary shares in issue for the period.

     Profit attributable to equity holders of the parent                        15 417           15 834

     Weighted average number of ordinary shares ('000)                         215 868           96 292

     Diluted earnings per share

     The Group has no dilutive potential ordinary shares.

     Headline earnings per share

     Headline earnings per share is calculated by dividing the headline
     earnings with the weighted average number of ordinary shares in
     issue for the period.

     Profit attributable to equity holders of the parent                        15 417           15 834
     Bargain purchase gain on acquisition of subsidiary                          (823)                -
     Loss on disposal of subsidiary                                                 85                -
     Impairment of goodwill                                                      1 880                -
     Impairment of equity accounted investments                                 15 201                -
     Profit on asset held for sale                                                   -            (326)
     Profit on disposal of property, plant and equipment                          (81)                -
     Tax impact of adjustments                                                      22                -
     Headline earnings                                                          31 701           15 508
    
     Weighted average number of ordinary shares ('000)                         215 868           96 292


6.   FAIR VALUE DISCLOSURES

     The Group's financial instruments are measured at amortised cost besides the financial assets at fair
     value through profit or loss of R10.9 million and other financial liability of R2.6 million.

     These financial assets are unit trust investments measured at quoted prices (level 1).

     The other financial liability is an option contract whereby the remaining shareholder in Lendcor Holdings
     Proprietary Limited can put their 50.1% shares to Mettle. The exercise price is the greater of a proportional
     share of six times the profit after tax for the year ending 28 February 2021 of Lendcor and R12.9 million and 
     can only be exercised during the period from 1 June 2021 to 31 August 2021. The valuation of the put option
     considers the exercise period, exercise price and current net asset value and future profitability of
     Lendcor (level 3).

     The carrying value of all other financial instruments approximate fair value.

7.   SEGMENT INFORMATION

     The Group has two reportable segments at 28 February 2019 (after the acquisition of Reward).

                                                                       Audited     Audited
                                                                        United       South     Audited
                                                                       Kingdom      Africa       Total
                                                                         R'000       R'000       R'000
 
     Revenue                                                           179 462      47 515     226 977
     Profit/(loss) attributable to equity holders of the parent         37 115    (21 698)      15 417
     Total assets                                                    1 304 529     235 362   1 539 891
     Total liabilities                                                 912 573      77 396     989 969

     There were no transactions between the segments. The Group only had one reportable segment at 28
     February 2018.

8.   RELATED PARTIES

     Certain Group companies concluded transactions with each other in the ordinary course of business.
     These intergroup transactions and balances are eliminated on consolidation.

     Related party balances and transactions for the current year are similar to those disclosed in the
     Group's annual financial statements for the year ended 28 February 2018 besides for those that took
     place as part of the Restructure and those detailed below:
                                                                                                Audited
                                                                                                   2019
                                                                                                  R'000
     Loan to EAF Investments Limited ("EAF")                                                     16 249

     Reward Finance Group advanced GBP1.2 million to EAF in April 2017. EAF is a
     shareholder in Reward Finance Group and is controlled by Nick
     Smith who is also a director of Reward Finance Group. The loan is repayable
     after 10 years and accrues interest at sterling three-month Libor plus 2.5%.
     Dividends payable to EAF are used to repay the loan. EAF received dividends
     of R4 million during the period from 15 May 2018 to year-end. The loan is
     secured by its 10% shareholding in Reward Finance Group. The sterling
     three-month Libor rate was 0.9% at year-end.

     Loan to JE&K Limited ("JE&K")                                                               12 665

     Reward Finance Group advanced GBP0.76 million to JE&K in April 2018. JE&K is a
     shareholder in Reward Finance Group and is controlled by David
     Harrop who is also a director of Reward Finance Group. The loan is repayable
     after 10 years and accrues interest at sterling three-month Libor plus 2.5%.
     Dividends payable to JE&K are used to repay the loan. JE&K received dividends
     of R2 million during the period from 15 May 2018 to year-end. The loan is secured
     by its 5% shareholding in Reward Finance Group. The sterling three-month Libor
     rate was 0.9% at year-end.

     The terms of the related party borrowings due to Tradegro and Sandy are disclosed in note 3.

9.   EVENTS AFTER THE REPORTING DATE

     The Company has provided a guarantee for the Rand equivalent of USD3.1 million to Investec Bank
     (Mauritius) Limited (via Investec Bank Limited) for its USD5 million funding facility provided to 
     Mettle Solar Africa (the Company's 55% owned joint venture) in May 2019. The Company had to place 
     the required funds on deposit at Investec Bank Limited. A 35% shareholder of Mettle Solar Africa 
     has provided a similar guarantee for the remaining USD1.9 million. This facility funds the construction 
     of Mettle Solar Africa's solar projects in Kenya and the Seychelles.


     Cape Town
     31 May 2019

     Designated Advisor
     Questco Corporate Advisory Proprietary Limited



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