Ecsponent Limited Financial Results for period ended 30 June 2018
Prevailing market and economic conditions during the 2018 financial period Macro environment
South African economy GDP growth Government rate debt: GDP -0.7% 53.1% Youth Unemployment unemployment rate 53.7% 27.2% Inflation rate USD/ZAR 5.1% 14.93 3
Challenges and opportunities abound
Vision We strive to achieve industry-leading and sustainable growth in stakeholder value to become the investment destination of choice in the niche market segments where we operate. 5
Group operations and investments Equity Holdings Credit Short and medium term debt facilities providing high gross profit and liquidity. Meet needs of: ▪ SME credit Longer term capital ▪ Enterprise development growth objectives. ▪ Specialist procurement and logistics Listed and private equity investments in high-growth areas, with high IP and barriers to entry, Investment Services offering high yields. Capital raising through investment products. Advisory services providing life insurance, retirement funding and short-term investment products. 6
Footprint and distribution Other investment products and services 7
Financial inclusion not addressed through traditional channels Continued drive for SME development An ageing global population High-growth Africa’s population explosion and opportunities growing middle class Growing demand for clean energy Rapid rise in healthcare costs Digital transformation 8
Financial inclusion not addressed through traditional channels Financial inclusion in Sub-Saharan Africa: ▪ Continued drive for SME up from 23% in 2011 development to 43% in 2017 In SA, 70% has access to transactional bank ▪ An ageing global population account with 27% withdrawing their money immediately and no further access to financial products Africa’s population explosion and growing middle class Exacerbates low savings rates - increasing ▪ pressure on social grant system Growing demand for clean energy Barriers: Perception of cost ▪ Distrust of system Rapid rise in healthcare costs ▪ Logistical and infrastructure barriers ▪ Convenience ▪ Lack of financial literacy ▪ Digital transformation 9
85% Financial inclusion not addressed Financial inclusion in Sub- ▪ through traditional channels Saharan Africa: up from of people in Africa 23% in 2011 to 43% in has a mobile Continued drive for SME 2017 phone development In SA, 70% has access to ▪ transactional bank account >50% with 27% withdrawing their An ageing global population money immediately and no of Africans are further access to financial under age of 20 products with high adoption Africa’s population explosion and Exacerbates low savings ▪ rates of technology growing middle class rates - increasing pressure 55% on social grant system Growing demand for clean energy Barriers: of economic trade Perception of cost ▪ in sub-Saharan Distrust of system ▪ Africa is informal Rapid rise in healthcare costs Logistical and infrastructure ▪ barriers Convenience ▪ Digital transformation Lack of financial literacy ▪ 10
Financial inclusion not addressed In SA, SMEs - through traditional channels account for > 90% of ▪ legitimate businesses Continued drive for SME employing > 50% of the ▪ development workforce Contributing > 1/3 of GDP ▪ Unsecured An ageing global population personal Similar in rest of Africa – where SME development is credit is encouraged by governments Africa’s population explosion and growing growing middle class Barriers: faster than Lack of skills and financial ▪ the South Growing demand for clean literacy energy Africa’s GDP Insufficient access to ▪ markets Red tape ▪ Rapid rise in healthcare costs Logistical and infrastructure ▪ barriers Lack of access to credit ▪ Digital transformation 11
Financial inclusion not addressed Globally, population aged 60 or over is growing faster through traditional channels than all younger age groups. The number of centenarians in the world is projected to Continued drive for SME increase from < 316 600 in 2011 to 3.2 million in 2050. development An ageing global population Population aged 60+ Africa’s population explosion and 1990: growing middle class 0.5 billion Growing demand for clean 2005: energy 0.9 billion 2050: Rapid rise in healthcare costs 2.1 billion 2100: Digital transformation 3.2 billion 12
Financial inclusion not addressed Home to through traditional channels >1 bn Population estimate people Continued drive for SME 2.4 bn 60% development by 2050 Younger urbanisation 60% by 2050 An ageing global population than 25 years <40% Spends over $30bn pa access to Africa’s population explosion and on food imports electricity growing middle class Mobile phone >80% penetration Growing demand for clean energy >100m mobile money Rapid rise in healthcare costs accounts Since 2012, seed funding & venture Digital transformation capital up by >1400% 12
Financial inclusion not addressed Africa’s Electricity demand is growing twice as fast as through traditional channels other parts of the world. Africa will need over 34k Terawatts by 2040 as result of: Continued drive for SME Growing population ▪ development Economic progress ▪ An ageing global population Needs about US$ 70 in renewable energy investment Africa’s population explosion and growing middle class Growing demand for clean energy Rapid rise in healthcare costs Digital transformation 14
Financial inclusion not addressed through traditional channels Continued drive for SME Medical cost drivers development Demographics An ageing global population Socio-economic and lifestyle factors Africa’s population explosion and growing middle class General inflation Medical technology and innovation Growing demand for clean energy Medication spending Payment models Rapid rise in healthcare costs 15 Digital transformation 15
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Opportunities Financial inclusion not addressed through traditional channels Medicinal Plants Current US$72 bn Industry Projection US$111 bn by 2023 Continued drive for SME development Current US$198,7 bn Global Nutraceutical Projection US$285 bn by 2021 Market An ageing global population Grew at a CAGR of 13.5% Vitamins Supplements between 2013 and 2016 (RSA) Africa’s population explosion and growing middle class Self-Monitoring Current US$30.7 bn Medical Devices Projection US$46.9 bn by 2023 Growing demand for clean energy Current US$ 5.4 trillion Pharmaceutical Projected to triple by 2060 Market Rapid rise in healthcare costs Projected to grow at a CAGR Global Stem Cell of 36.52% between 2017-2021 Market Digital transformation The fastest-growing sector of Post-Acute Care/Frail healthcare 17
Financial inclusion not addressed through traditional channels “Digital economy is a powerful catalyst, Continued drive for SME and driver of inclusiveness , by linking development communities to each other in a sort of “global village”, sharing information, An ageing global population ideas and products, and allowing countries to rise up the value chain. Africa’s population explosion and growing middle class It must be allowed to grow, by allowing Growing demand for clean our “young adults” to sow economic and energy social opportunities for more and more citizens. Rapid rise in healthcare costs Andrew W. Wyckoff, Director of the OECD's Directorate for Science, Technology and Innovation Digital transformation 18
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Growing investment spread 20
Perpetual initiatives Continuous Raise Acquisitive Secured Secured learning & credit capital growth credit activities development activities Optimisation Reduce cost of Invest in Further of group cost capital organic growth geographic structure expansion 21
Results overview
Results highlights 23
Results highlights 24
Results highlights 807% 25
Synergistic business units deliver exponential results 18
Contribution 27
Credit ▪ Deployed in excess of R1.3b in short and medium term debt ▪ Largest contributor to groups revenue ▪ Credit = 60% of the Group’s assets Enterprise Development ▪ Facilitated over R90m in transactions for the period ▪ Generated R63m in revenue for the group ▪ 113 transactions concluded 28
Investment Services Rolled out new products in period Class D 12.5% fixed rate monthly dividend New investment Raised Provided investors R1.6bn Class E with dividends of products R241m 11.25% fixed rate in preference share monthly dividend including Ecsponent investments Class G Living and Retirement to date Annuities, Provident 10% fixed rate Fund and Umbrella Fund monthly dividend 29
Equity Holdings Total assets >30% Revenue R280.7 million/ 18.7% 23.6% 12.4% outside Common from R293.0 million to from R76.6 million to Monetary Area of assets in listed R347.9 million R94.7 million equities 30
Financial review
Building on previous years’ of exponential growth *15 month financial periods. 32
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