anchor group ltd financial results · financial results for the six months ended 30 june 2015....

Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834

Anchor Group LtdFinancial Results

For the six months ended 30 June 2015


What is Anchor Group?

Listed asset management group intent on becoming a major player in SA and global landscape

Primarily Anchor Capital

• SA’s“fastestgrowing”assetmanager,with>R15bnofassets

Majority stake in Robert Cowen Investments

Minority stakes in other asset management ventures

• Differentfocusorgeography;theyleverageoffACstructure

› AnchorFinancialServices(effective50%)–distributionforAnchorGroup

› CartesianCapital(19.9%)–black-ownedinstitutionalassetmanager

› AnchorSecurities(25%)–privateclientstockbrokingbusiness

› CorianCapital(30%)–experiencedfundoffundsmanager

Offices in Sandton, Durban, Pretoria, Cape Town, London

• >70degreedstaffacrossgroup(8CA(SA)’s,14CFA’s/CFAdelegates)


The Listing


Highlights first half of 2015

• TopperformingSAequitymanagerover1and2years

• AdjustedHEPSup52%to20.8centspershare(13.7centsto30June2014).

• AdjustedHeadlineEarningsup244%toR29.2million(R8.5millionto30June2014).

• Assetsundermanagementandadvicegrewby74%toR15billion(R8.6billionat31Dec2014).

• FirstmaterialacquisitionofRobertCowenInvestments,withremainingcashbalanceofR218million.

• Companyremainsundercautionary.

• Numberofshareholdersincreasedfrom350toover3500.

• Declarationofinterimdividendof11centspershare.

“Asset management base of business will be expanded and be complete by end 2015 and focus thereafter will be investment performance and leveraging off strong distribution capability to grow AUM, both locally and globally.”


The share - facts and figures• HighofR14.00reachedinJuly2015

• ListedatR2on16Sept2014(R60mraised)

• Issued40.3msharesatR6.20(R250mraised)on6Dec2014

• Sharesat30June2015=142.1m

• 42millionshareshavetradedsincelisting(5mpermonth)

• Navpershare=273c(>R218mcash)

0 200 400 600 800

1000 1200 1400 1600

Lis+ng

Oct-‐14

Nov-‐14

Dec-‐14

Jan-‐15

Feb-‐15

Mar-‐15

Apr-‐15

May-‐15

Jun-‐15

Jul-‐15

Aug-‐15

Anchor Capital share price (c)

Listing Oct. ‘14

Nov ‘14 Dec ‘14 Jan ‘15 Feb ‘15 Mar ‘15 Apr ‘15 May ‘15 Jun ‘15 Jul ‘15 Aug ‘15


Income Statement

6 months to 30 June 2015

6 months to 30 June 2014

12 months to 31 Dec 2014

% ch R’m R’m R’m

Revenue 184% 80,1 28,2 82,4

Costs 147% 44,3 18,0 53,8

Op profit 251% 35,8 10,2 28,6

Comprehensive income 317% 29,6 7,1 24,3

Headline earnings 311% 29,2 7,1 21,5

Adjusted headline earnings 244% 29,2 8,5 22,8

Op margin 23% 44,7% 36,2% 34,7%

Average AUM (R’bn) 138% 8,8 3,7 5,1

Yield on avg assets 1,5% 1,3% 1,6%

Earnings per share (cents) 81% 20,8 11,5 32,0

Headline earnings per share (cents) 81% 20,8 11,5 28,3

Adjusted headline earnings per share (cents) 52% 20,8 13,7 30,1

Diluted adjusted headline earnings per share (cents) 51% 20,7 13,7 29,2


Balance Sheet6 months to 30

June 20156 months to 30

June 201412 months to

31 Dec 2014

% ch R'm R'm R'm

Non current assets 2172% 147,7 6,5 44,1

- Goodwill and intangibles 3187% 120,8 3,7 31,0

- Investment in associates 2730% 21,2 0,7 9,9

- Other 175% 5,7 2,1 3,2

Current assets 1027% 264,0 23,4 333,6

- Other financial assets 446% 20,9 3,8 8,6

- Trade and other receivables 214% 24,7 7,9 21,9

- Cash and cash equivalents 1762% 218,4 11,7 303,1

Assets 1271% 411,7 29,9 377,7

Shareholders equity 1972% 388,0 18,7 353,1

Liabilities 112% 23,8 11,2 24,6

- Deferred tax NM 1,8 0,0 0,8

- Other financial liabilities -13% 3,6 4,1 4,0

- Current tax payable 229% 8,0 2,4 1,7

- Trade and other payables 123% 10,3 4,6 18,1

Equity and liabilities 1276% 411,7 29,9 377,7

Net asset value per share 812% 2,73 0,30 2,52


Earnings by six month periods

2 4,2 21 28

54

80

-‐2

1 3 9 14

29

-‐20

0

20

40

60

80

100

1H2012 2H2012 2H2013 1H2014 2H2014 1H2015

Income statement progression (R'm)

Revenue Adjusted headline earnings


• Added>R1bninJuly2015

• >R16bnatendJuly2015

Our growth• Grownassetsby74%in2015(R6.2bn)toR15bnat30June2015

• Grownfromnumber150to+/-number25assetmanagerinSAin3years

• Consistentlyadding+/-R300mpm/R3.6bnperyearforlast8quarters

• Pipelineindicatesthatthiscanbesustained

0

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16000

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1Q2013

2Q2013

3Q2013

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2Q2014

3Q2014

4Q2014

1Q2015

2Q2014

Jul-‐15

Anchor Group AUM (R'm)

12 months

12 months

6 months

2013 2014Jun 2015

AUM Opening AUM 0,9 2,8 7,3

New RCI assets 3,8

Increase in AUM 1,9 4,5 2,4

Closing AUM 2,8 7,3 13,5

Advice 1,3 1,5

Total assets 2,8 8,6 15,0


How assets grew in 1H2015• Boostedbystronginvestmentperformance(whilemarketonlygrewby<3%)

• Arecordnumberofnewclients

• Privateclient/wealthbusinesscontinuedtogrowatsustainedpace

• CIS(unittrust)businessstartedtogainstrongtractiononthebackofbeingthetopperformingSAequityassetmanager(nowoverR2.5bn)

• Wonourfirstinstitutionalmandatesandastrongmarketingthrusttothissegmentofthemarket

0

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800

Apr/13

May/13

Jun/13

Jul/1

3

Aug/13

Sep/13

Oct/13

Nov/13

Dec/13

Jan/14

Feb/14

Mar/14

Apr/14

May/14

Jun/14

Jul/1

4

Aug/14

Sep/14

Oct/14

Nov/14

Dec/14

Jan/15

Feb/15

Mar/15

Apr/15

May/15

Jun/15

Jul/1

5

Anchor BCI equity fund AUM (R'm)


Equity Performance to end June 2015

No.1General

Equity Fund*

in South Africa

As measured by Funds Data

Source:FundsDataOnline12 months to June 2015

* Past performance is no indication of future results and an investment in equities involves capital risk. Investors should consider the suitability of an investment relative to their risk profile and financial situation.Anchor Capital is an authorised Financial Services Provider. FSB # 39834


• Tobuildaworld-classinvestmentproductrangeacrossassetclassesandgeographies,

• Tobuilddistributioncapacityandcapabilitytogenerategrowthinassetsundermanagement.

Strategy – investment and distribution


To build a world-class investment product range across asset classes and geographies

• Investmentteamcomplete–20investmentprofessionals

• Organicallyandbyacquisition

• CompleteCIS(unittrust)productrange

• FixedIncometeam(starts1September2015)

• Increasehedgefundcriticalmass(currently<5%ofassets)totakeadvantageofnewregulationsandnextphaseofindustrygrowth

• Globalise–twonewjurisdictionsplannedbyyearend

“These initiatives should be complete by year-end and the focus thereafter will be to leverage off this product offering by increasing assets under management. It is unlikely that further material asset management acquisitions will follow next year, as the Anchor offering will be comprehensive and complete.”

Strategy 1


CIS (unit trust) product range

Strategy 1

Current funds Funds to be launched in 2015

Anchor BCI Equity Anchor BCI Property

Anchor BCI SA Equity Anchor Fixed Income funds x2

Anchor BCI Managed Anchor BCI Global Equity feeder fund

Anchor BCI Worldwide Flexible Anchor BCI Global Capital Plus feeder fund

Anchor BCI Flexible Income Anchor Long Short Hedge Fund

Various restricted funds

Over R2.5 billion of assets


• Marketingtotraditionalchannelswhooutsourcetheassetmanagementfunctiontothirdpartyassetmanagers.Thisincludesfinancialadvisors,institutionalinvestors,multi-managersandfund-of-funds.Wecontinuetoaddhighqualitypersonneltothispursuit.

• Marketingdirectlytoclients,primarilyintheprivateclient/wealthspace.Wecontinuetoemployindividualswhocanattractassetsandshouldhaveover25individualswhosignonclientsbyyearend.Wewillalsopursuepartnershipsandacquisitionsofbusinesseswhichhaveadistributioncapabilityandexistingclientbase.Thisstrategywillprevailwellbeyondthisfinancialyear,althoughitisourintentiontoexpandmateriallythisyear.

New Durban group office has 13 staff and achieving early successes – objective of R4 billion AUM in medium term.

To build distribution capacity and capability to generate growth in AUM

“Perform and wait”

“Go and gather”

Strategy 2


• We take investment very seriously

› Weinvestigateeveryopportunitythoroughlyandhaveaverybiginvestmentteamforoursize

• Culture

› Weownthebusinessandhavehadimmensedrivetosecureanddeliverforclients

• Trust

› Wehaveearnedthetrustofclientsandagreatdealofourbusinesshascomefromreferrals

• Making clients money

› Wehaveperformedwellandaddedtomarketperformancethroughinnovativemoney-makingideas

• Extremely active marketing

› Bigfocusoncoldcalls,TV,radio,internetandbiggestsuccesshasbeendailynewsletter,with6,000recipients.Weputoutregularhighqualityresearch

• Tick all the boxes

› Wegotthestoryright:Rightshareholders,investmentteam,product,pedigreeetc.

• Willingness of market to support new player

• Market fatigue with vanilla offerings of big existing players

• Nimble – Appropriate range of product

• We have grown the product range in response to where we see market demand

Why have we achieved success so far?


The basic modelAssets (R'm) 4,000 6,000 8,000 10,000 15,000

Yield 1.20% 1.15% 1.10% 1.05% 1.00%TO 48 69 88 105 150Margin 40.0% 42.0% 45.0% 47.5% 50.0%Op profit 19.2 28.98 39.6 49.875 75PAT 15.7 23.8 32.5 40.9 61.5

Turnover 100Fixed costs 30Margin 70Incentives 21Profit margin 49

• Businesshasbuilt-in“inflation”of15%perannum,onaverage

• Allprofitsincash,virtuallynoworkingcapital

• Simplebusiness

› 20invoicespermonth,paidwithin15days

› Expenses80%rentandstaff

• Around70%Randhedge

• Verylittlefixedinvestmentrequired

• Fixedcostsnowinplace

› Somestep-upwithgrowth,butinprincipleonlysalesandPMcosts(directrevenuedrivers)willbeadded

• Businessmodelhas50%operatingmargin,alreadyat>40%

• Largelyannuityearnings,+/-15%ofassetshaveperformancefees

• Sticky,diversifiedbasewhichwillberesilienttomarketfluctuations

Attractions of business and model


MikeTeke – Chairman,PresidentofChamberofMines

PeterArmitage – CIOInvestecWealth

DavidRosevear – DirectorBidvest

MatthewN-Young – Sales,Investec

SeanAshton – SeniorPortfolioManagerInvestec

GlenBaker – SeniorPortfolioManagerRMB

PeterLittle – SeniorPortfolioManagerCreditSuisse

NickDennis – SeniorPortfolioManagerPictet

DavidGibb – HeadofEquities,Stanlib

DaleFranklin – MDSasfinAssetManagement

FerdiSchenck – Co-founderSygnia,AllanGrayops

NeilBrown – CEOCitadelWealth

DarrylHannington – CFA,Investec

LeeCairns – WealthManager,Citadel

Key individuals - previous experience


In the pipeline …

Robo-advisor

• AnchorCapitalappointedasassetmanagertoSA’sfirstrobo-advisor,Bizank,tobelaunchedin2015

Anchor Financial Services

• Developingnewexcitingpartnershipstoaccessdistribution

Globalisation

• Twonewjurisdictionsbyyearend

New CIS schemes (unit trusts)

• Sixnewfundsbyyearend


Bizank

• AnchorCapitalappointedassetmanagertoSA’sfirstrobo-advisor

• Onlineassetmanagement

• Easilyaccessible,bespokeinvestmentadvice

• Disruptortotraditionalmoneymanagement


Earnings outlook

• Dividedby+/-142mshares

• Excludesnewideasandacquisitions

• Majorriskismarketperformance

>R14bn at July 2015

Function of AUM and yield

•R220m capital

•5% pa = R11m

• 10% pa = R22m

• 15% pa = R33m

•Depends on timing of acquisitions

R'bn 12 months 12 months 6 months 6 months2013 2014 1H2015 2H2015

Starting AUM 0.9 2.9 5.7 13.5Ending AUM 2.9 8.6 13.5 ?Avg AUM 1.9 5.7 8.8 >13.5

"Core business" 5 21 21 ?Earnings on capital 0 1 8 ?Total earnings 5 22 29 ?

R'bn 12 months 12 months 6 months 6 months2013 2014 1H2015 2H2015

Starting AUM 0.9 2.9 5.7 13.5Ending AUM 2.9 8.6 13.5 ?Avg AUM 1.9 5.7 8.8 >13.5

"Core business" 5 21 21 ?Earnings on capital 0 1 8 ?Total earnings 5 22 29 ?


Earnings influenced by …

• GrowthinAUMandmarginachieved

• TheinclusionofMethwold(RobertCowenInvestments)forafullsixmonths,comparedtoonemonthinthefirsthalfoftheyear

• Theresultofthecurrentnegotiationswhichhasresultedintheprevailingcautionaryannouncement

• TheimpactonassetsundermanagementfromasignificantlylargerdistributionforceandtheprogressofAnchorFinancialServices

• MarketperformanceandAnchorCapital’srelativeperformance

• Exchangerate(weestimateRandhedgecomponentisapproximately70%)

• Increaseinsharesinissue.Theaveragesharesinissueforthesecondhalfof2014was85.4millionandthestartingsharesinissueat1July2015are142.2million


Thank you

anchor group ltd financial results · financial results for the six months ended 30 june 2015....

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