INTEGRATED REPORT 2019 - mettleinvestments.com · Mettle Investments Ltd is committed to the principles of effective corporate governance and application of the highest ethical standards

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A DIFFERENT KIND OF INSIGHT

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Mettle Investments Integrated Report 2019 3Contents

Contents

Business Overview

Chairman’s statement ............................................................................................................................. 6

Corporate governance ............................................................................................................................ 8

Annual Financial Statements

Directors’ responsibility and approval ................................................................................................... 18

Secretarial certificate ............................................................................................................................. 19

Directorate and administration ............................................................................................................. 20

Directors’ report .................................................................................................................................... 21

Independent auditor’s report ............................................................................................................... 23

Consolidated statement of financial position ....................................................................................... 30

Consolidated statement of comprehensive income .............................................................................. 31

Consolidated statement of changes in equity ....................................................................................... 32

Consolidated statement of cash flows ................................................................................................... 33

Accounting policies .............................................................................................................................. 34

Notes to the consolidated annual financial statements ........................................................................ 45

Company statement of financial position .............................................................................................. 87

Company statement of comprehensive income ................................................................................... 88

Company statement of changes in equity ............................................................................................ 88

Company statement of cash flows ....................................................................................................... 89

Notes to the company annual financial statements ............................................................................. 90

Shareholders’ profile ............................................................................................................................. 102

Annual General Meeting

Notice to shareholders ........................................................................................................................ 106

Form of proxy ....................................................................................................................................... 113

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BUSINESS OVERVIEW

01

Mettle Investments Integrated Report 20196

Chairman’s statement

Friedrich EsterhuyseChairman

It is worth mentioning that the “alternative investment” category is particularly wide but Mettle differentiates through a philosophy of ‘a different kind of insight’ which is evident in the investments made.

Business Overview

A different kind of insight The year under review saw the successful unbundling and listing of Mettle Investments Ltd (“Mettle” or “the company” or “the group”) on the Alternative Exchange of the JSE (“Altx”), providing a good platform to pursue strong organic growth in the alternative finance space.

It is worth mentioning that the “alternative investment” category is particularly wide but Mettle differentiates through a philosophy of ‘a different kind of insight’ which is evident in the investments made.

Stepping up Reward Investments (No.2) Ltd

Mettle acquired 90% of Reward Investments (No.2) Limited (“Reward”), a UK-based alternative finance company, prior to listing in May 2018. Reward owns 75% of Reward Finance Group Ltd which has two operating companies, namely Reward Capital and Reward Invoice Finance. Reward has made significant investments in people and technology as part of its growth strategy, succession planning and future-proofing programme.

A focus has been placed on recruiting young talent and all employees are registered with the UK Finance Learning Hub for ongoing compliance training. Management teams have also undergone training with the Chartered Banker Institute. Investment in IT infrastructure has been significant during the

year with a strong emphasis placed on security, data protection and improving efficiencies. A new web-based CRM system will improve the accuracy of data and provide an enhanced ability to analyse the Key Performance Indicators.

Reward has benefited from the continued uncertainty over Brexit in the United Kingdom 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.

The economy in the United Kingdom remains resilient and Reward’s loan and invoice discounting book increased to R1.2 billion (£63.1 million) by 28 February 2019 from R1 billion (£55.5 million) at date of acquisition by Mettle while it still has an unutilised £12 million external funding facility. Reward contributed R179.5 million (£9.9 million) to revenue and R37.1 million (£2.1 million) to profit attributable to shareholders for the nine and a half month period. Nevertheless, the board and management are monitoring the Brexit situation closely.

Mettle Investments Integrated Report 2019 7

The year that was Healthy fundamentals

Mettle generated revenue of R227 million for the financial year ended 28 February 2019 (2018: R44.2 million), a direct result of the Reward acquisition. Reward accounted for 79% of the group’s revenue. Profit attributable to shareholders decreased from R15.8 million to R15.4 million when compared to the prior year.

The group’s performance for the year was negatively impacted by once-off restructuring 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 (Pty) Ltd (“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).

The Rand has depreciated against the Pound since the acquisition of Reward 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.

Mettle’s net asset value per share grew by 55% from 128 cents to 198 cents.

The year ahead Strategy on track

The board and management will focus on growing the existing investments and portfolio companies, adding value and settling the newly acquired investments in the Mettle stable. Overall, the group and the portfolio companies are all well-capitalised and with funding lines in place, Mettle has a stable and diversified base to grow from.

Friedrich EsterhuyseChairman24 June 2019

Business Overview

Legal niche Christopher Finance (Pty) Ltd

Mettle extended its strategy of investing in niche lending opportunities by acquiring a 49% shareholding in Christopher Finance (Pty) Ltd (“Christopher Finance”) during November 2018. Christopher Finance provides working capital finance to selected firms of attorneys specialising in road accident and medical negligence claims. Since its acquisition by Mettle, Christopher Finance has secured R50 million in additional finance from the investor market. Christopher Finance contributed R1.9 million of equity accounted income for the four-month period.

Full spectrum empowerment Mettle Credit Services (Pty) Ltd

Mettle Credit Services (Pty) Ltd (“MCS”) provides a full spectrum of credit assessment, administration and account management services. During the year a strategic investor and B-BBEE company, Montsi Investments (“Montsi”), acquired a 51.1% shareholding in MCS reducing Mettle’s indirect shareholding in MCS to 48.9%. As a result of this strategic investment by Montsi, MCS is now a level 2 B-BBEE contributor, positioning the company well for future growth.

The future in renewables Mettle Solar Africa Ltd

Investment in the technology and renewable sectors was advanced with the acquisition of a 55% shareholding In Mettle Solar Africa Ltd (“MSA”) prior to the listing in May 2018. MSA is complementary to the competency of Mettle Solar Investments (Pty) Ltd, which lies in the design, installation, financing and maintenance of commercial and industrial solar photovoltaic systems across Sub-Saharan Africa and the adjacent Indian Ocean islands. MSA has completed 6 projects totalling R61 million in Kenya and the Seychelles. In addition, MSI has completed 22 projects (R225.9 million) in South Africa and Namibia.

Agreements have been signed with CDC Group Plc (“CDC”) to strengthen the capital base of MSI with a 40% shareholding, illustrating confidence in the MSI business model. CDC is the UK’s development finance institution for Africa and Asia. CDC will also provide a funding line to assist in growing the business across the African continent.


Corporate governance

Business Overview

Board and board committees The board takes overall responsibility for managing the group. The board is responsible for the long-term success of the group, develops strategy, determines the nature and extent of significant risks, and approves major transactions.

The board has established the following board committees, which report on their activities to the board: audit committee, remuneration committee and social and ethics committee.

The board has seven members:

Non-executive chairman: leads the board and ensures it operates effectively, and maintains a culture of openness and debate and effective communication with stakeholders.

Three executive directors: responsible for the day-to-day management of the group and implementation of strategy.

Three independent non-executive directors: provide an independent, external perspective, work with and challenge the executive directors, and contribute with a broad range of experience and expertise.

The composition of the board is reviewed on a regular and ongoing basis.

The process for appointing new directors is performed by the board as a whole, and new directors are obliged to retire and offer themselves for re-election at the first annual general meeting following their appointment.

All directors are subject to the retirement and re-election provisions of the memorandum of incorporation, which require one-third of the non-executive directors to retire per annum and, if they so wish, offer themselves for re-election at each annual general meeting. Due to the nature of the business, induction as well as ongoing training and development programmes for directors are implemented based on the experience and skills of the individual members of the board and are not driven through a pre-determined or formalised process. All directors have completed the Altx director induction training.

The Board meets a minimum of three times a year. The directors ensure that they allocate sufficient time to discharge their duties effectively.

In anticipation of the listing of the Company on the Altx in May 2018, John Aitken, Isak Visagie, Werner Maree and William Marais resigned as directors of the Company with effect from 19 April 2018. On the same day Thomas Flannery, Hermanus Troskie, Marco Wentzel and Bruce Chelius were appointed as directors of the Company. Mr Troskie resigned from the board on 12 September 2018 and was replaced by Mr Fenner on 18 September 2018.

Mettle Investments Ltd is committed to the principles of effective corporate governance and application of the highest ethical standards in the conduct of its business and affairs. During the year, the company reviewed the principles contained in the King IV Report on Corporate Governance (“King IV”) and assessed their relevance and applicability to the group. In compliance with the regulations of the JSE, a complete list of the King IV principles and the company’s compliance therewith appears on the company’s website – www.mettleinvestments.com/investor-information/corporate-governance.

Mettle Investments Integrated Report 2019 9Business Overview

The table below outlines the composition of the board and the attendance of board meetings for the period from listing on 23 May 2018 to 28 February 2019:

Name QualificationDate of

appointment Age Status

Meetings attended (out of 3)

Other significant directorships

Friedrich Hans Esterhuyse*

BAcc (Hons), MCom (Tax), CA

(SA)

30 January 2008

49 Non-independent non-executive

chairman

3 Tradehold Ltd

Hendrik Frederik Prinsloo

BCom, LLB, LLM, HDip (Tax)

30 January 2008

57 Chief executive officer

3 Reward Investments (No.2) Ltd

Thomas More Flannery**

n/a 19 April 2018 58 Executive director 3 Reward Finance Group Ltd

Justin John Rookledge

BBusSci Finance (Hons), CA (SA)

29 September 2016

42 Chief financial officer 3

Hermanus Roelof Willem Troskie*

B Juris, LLB, LLM 19 April 2018 48 Lead independent non-executive

0 Brait SE, Ardagh Group S.A., Puma Brandenburg Ltd,

Tradehold Ltd, Pestana International Holdings

S.A.

Raymond David Fenner*

BComm (Hons), Grad Dip Tax,

MCom, CA (SA)

18 September 2018

50 Lead independent non-executive

3

Marco Van Zyl Wentzel

n/a 19 April 2018 40 Independent non-executive director

3 Transhex Group Ltd, Stellar Capital Partners

Ltd

Bruce Andrew Chelius

CA (SA), CFA 19 April 2018 50 Independent non-executive director

3 Collins Private Equity Holdings (Pty) Ltd,

Nordland Operations (Pty) Ltd, Eveready

(Pty) Ltd

* The board is chaired by Mr Esterhuyse, who is a non-independent non-executive director, due to the fact that he was involved in the day-to-day management of the company during the preceding financial year. As a result, Mr Troskie was appointed as the lead independent director and later replaced by Mr Fenner as the lead independent director following the resignation of Mr Troskie on 12 September 2018.

** Mr Flannery is a British national and is the managing director of Reward Finance Group Ltd.


Corporate governance (continued)

Business Overview

The board is satisfied that it has effectively discharged its statutory duties and oversight role and wishes to report that:

• it has and continues to maintain an approvals framework that allows it appropriate insight into and influence over significant business transactions within the group;

• the current compliance strategy followed is appropriate for the structure of the group and the board is not aware of any instances of non-compliance to applicable laws and regulations; and

• the IT infrastructure and strategy is appropriate for the structure of the group.

It is the board’s view that its performance and that of its members are directly correlated to the success of the group. The performance evaluation of the board, its committees and all directors are reflected upon during the annual review of the group’s performance.

The board is satisfied that the company secretary has the correct qualifications and experience and is competent for this role. The board can also confirm the relationship between the company secretary and the board is at arms-length.

Audit committee report The audit committee has submitted the following, as required by section 94 of the Companies Act of South Africa, 2008.

Functions

The audit committee has adopted a formal charter, delegated to it by the board.

The audit committee wishes to report that it has:

• Monitored the integrity of the financial statements and formal announcements relating to financial performance and considered significant financial reporting issues, judgements and estimates. This included reviews of the interim results and the year-end annual financial statements and also an assessment of the quality, consistency and integrity of the group’s financial reporting, culminating in a recommendation to the board to adopt the year-end annual financial statements;

• held regular meetings with executive management to understand key issues;

• considered and reviewed the business combination financial reporting;

• reviewed the external auditor audit plan and reports on the annual financial statements;

• held a meeting with the external audit partner and manager without management present;

• reviewed the system of internal controls and risk management by review of the risk management and internal control reports presented to it and through discussions held with executive management, to ensure that the group is identifying, considering and mitigating, as far as possible, the risks for the group;

• reviewed the King IV Report on Corporate Governance and considered its recommendations and applicability to the group;

• reviewed the tax compliance and tax risk of the group;

• considered the JSE’s pro-active monitoring report for 2018 and its applicability to the group’s reporting;

• replaced BDO Cape Inc. with PricewaterhouseCoopers Inc. as the external auditor for 2019 due to the acquisition of the Reward Investments (No.2) Ltd group (already audited by PricewaterhouseCoopers LLP in Leeds) and its material contribution to the group’s results relative to the existing South African businesses;

• requested an auditor suitability pack from PricewaterhouseCoopers Inc., confirmed that the pack was presented in the format and contained all the items prescribed in paragraph 22.15 (h) of the JSE Listing Requirements, verified the suitability of PricewaterhouseCoopers Inc. for the role of external auditor, verified the independence of PricewaterhouseCoopers Inc. and noted the appointment of Mr JR de Villiers as the designated auditor;

• approved the audit fees and engagement terms of the external auditors; and

• determined the nature and extent of allowable non-audit services and approved the contract terms for the provision of non-audit services by the external auditors.


Members and attendance at meetings

The audit committee aims to fulfil the roles and responsibilities as required by the Companies Act of South Africa, 2008 and King IV. The audit committee consists of three members. The audit committee meets at least twice a year as per its charter. In the current financial year, three meetings were held on 2 May 2018, 30 October 2018 and 20 February 2019.

Name Qualification Date of appointment Age Meetings attended

HRW Troskie B Juris, LLB, LLM 19 April 2018, resigned 12 September 2018 49 1

BA Chelius CA (SA), CFA 19 April 2018 50 2

MVZ Wentzel 19 April 2018 40 2

RD Fenner CA (SA) 18 September 2018 50 2

All members, besides Mr Chelius, satisfied the requirements detailed in section 94 (4) of the Companies Act of South Africa, 2008 from their date of appointment. Mr Chelius provided consulting services to the group during the year. This has since been rectified from 1 March 2019 and Mr Chelius no longer receives a retainer for consulting services from any subsidiary company.

The external auditors attended and reported to all meetings of the audit committee. Members of executive management also attended the audit committee meetings by invitation.

Independence of external auditors

The audit committee reviewed a representation by the external auditors and, after conducting its own review, confirmed the independence of the auditors.

Expertise and experience of financial resources

The audit committee has satisfied itself that the financial director has appropriate expertise and experience. The audit committee has considered, and has satisfied itself of the appropriateness of the expertise and adequacy of resources of the finance function.

Statement on effectiveness of internal financial controls

The audit committee reviewed the financial reports and self-reporting questionnaires on the operating effectiveness of internal controls submitted by the group companies and through discussion with management and the external auditors herewith reports that internal financial controls were adequate and operated effectively for the financial year ended

28 February 2019.

The audit committee is satisfied that controls over the accuracy and consistency of the information presented in the Integrated Report are robust and that the Integrated Report presents a fair, balanced and understandable overview of the business of the group, and provides stakeholders with the necessary information to assess the group’s position, business model and strategy. It recommends the adoption of the Integrated Report to the board.

Remuneration committee report The remuneration committee is a sub-committee of the board and consists of three members.

1. Functions

Its main functions are:

• setting the remuneration policy for executive directors;

• determining the total individual remuneration packages of the executive directors;

• monitoring the performance of directors against conditions attached to variable annual remuneration and long-term incentive awards;

• approving the selection, appointment and terms of reference of any independent remuneration consultants; and

• to make recommendations to the board regarding the fees to be paid to non-executive directors and the chairman.


2. Members and attendance at meetings

Details of meetings held during the year are listed below:




Friedrich Hans Esterhuyse BAcc (Hons), MCom (Tax), CA (SA)

19 April 2018 49 Chairman 2

Bruce Andrew Chelius CA (SA), CFA 19 April 2018 50 Member 2

Marco Van Zyl Wentzel 19 April 2018 40 Member 2

Certain executive members of management attended the remuneration committee meeting by invitation.

3. Remuneration policy

The remuneration policy is to compensate executive directors and employees on a fair basis comparable with similar organisations, taking into consideration performance as an important factor in determining the remuneration of executive directors.

Remuneration is monitored and reviewed on an ongoing basis by the remuneration committee to ensure that the guaranteed and variable pay is market related and aligned with the group’s strategic objectives to create sustained value for all stakeholders.

When considering remuneration and increases, the remuneration committee measures executive remuneration and increases against those for employees across the group, by applicable jurisdiction.

The group has implemented an employee share option scheme, with the purpose of attracting, retaining, motivating and rewarding employees on a basis which aligns company performance and the interests of mid-tier and senior employees with those of shareholders. The letter of appointment of the trustees has not been received from the Master of the High Court

The performance measures that determine the levels of variable pay for executive directors are fully aligned with the group’s business strategy and the long term interests of shareholders and other stakeholders.

These measures are linked to consistent growth in shareholder value. This means that in any year that the group delivers weaker growth, variable pay is lower, and if it delivers stronger performance, variable pay is higher.

Non-executive directors’ fees are based on their relative contributions to the activities of the board, and recognise the responsibilities of the director throughout the year.

Non-executive directors do not participate in the company’s variable pay plans nor do they participate in the company’s share option scheme in order to maintain their independence.

4. Implementation report

The remuneration committee has monitored the implementation of the remuneration policy and is of the view that there were no deviations from the remuneration policy in the 2019 financial year.

There is no comparison of remuneration of executive directors received in 2019 and 2018 due to the acquisition of Reward Investments (No. 2) Ltd and the unbundling of Mettle Investments Ltd to shareholders of Tradehold Ltd both taking place after the 2018 financial year-end. The letter of appointment of the trustees has not been received from the Master of the High Court

In determining the total guaranteed package increases for executive directors, the remuneration committee referred to market conditions as well as comparative industry benchmarking in the relevant jurisdictions and market sectors.


Business Overview


The table below presents an analysis of the remuneration of executive directors received in the 2019 financial year in R’000:

Name Jurisdiction Salary Other

benefits Variable

remuneration Total

Hendrik Frederik Prinsloo South Africa 1 851 110 82 2 043

Thomas More Flannery* United Kingdom 1 870 170 - 2 040

Justin John Rookledge South Africa 1 372 128 325 1 825

*Remuneration from 15 May 2018 (acquisition date of Reward Investments (No.2) Ltd)

The table below presents the fees paid to non-executive directors in the 2019 financial year in R’000 (excluding VAT):

Name Directors’ fees Consulting fees Total

Friedrich Hans Esterhuyse 100 - 100

Raymond David Fenner 113 - 113

Marco Van Zyl Wentzel 100 - 100

Bruce Andrew Chelius 270 830 1 100

5. Shareholder engagement and voting

The company will table its remuneration policy and implementation report for two separate non-binding advisory votes by shareholders at the AGM, in line with King IV. In the event that 25% or more of the shareholders vote against these resolutions, the remuneration committee will engage with such dissenting shareholders to ascertain the reasons for the dissenting votes, address all valid and reasonable concerns raised, and disclose the full shareholder engagement process, response and resolutions in the remuneration report of the next financial year.

Social, ethics and transformation committee report 1. Functions

The social, ethics and transformation committee is a sub-committee of the board and consists of three members. The committee functions in accordance with a formal mandate adopted by the board. The main task of the committee is to monitor any issues concerning the social and ethical behaviour of the company as required in section 72(4) of the Companies Act no. 71 of 2008 read with Regulation 43 of the Companies Regulations, 2011.

The social and ethics committee has established a social and ethics governance framework for the group, and monitors compliance by the group’s subsidiaries.

2. Members and attendance at meetings

The committee meets at least twice a year. The membership and members attendance of the committee is set out below:




Bruce Andrew Chelius CA (SA), CFA 19 April 2018 50 Chairman 2

Hendrik Frederik Prinsloo BCom, LLB, LLM, HDip (Tax)

19 April 2018 57 Member 2

Justin John Rookledge BBusSci Finance (Hons), CA (SA)

19 April 2018 42 Member 2


3. Statement on social and ethics governance

The social and ethics committee wishes to report that it has reviewed the reports presented to it by executive management on social and ethics governance, which include policies and codes of conduct for social responsibility, health and safety, anti-bribery and corruption, anti-fraud, anti-money laundering, whistleblowing, procurement, gifts and conflicts of interest and compliance with relevant local legislation, as well as the implementation of such policies, and the monitoring of compliance with such codes of conduct, and it has also held discussions with management on these matters.

The social and ethics committee is satisfied that the group has adequate policies and procedures in place to prevent and detect non-compliance and unethical behaviour, and that no instances of unethical behaviour were detected during the year under review.

4. Social responsibility initiatives

The Gray Swan Charitable Trust (“the Trust”) was established in 2010 as a non-profit organisation. Its sole purpose is to enable Gray Swan Financial Services (Pty) Ltd and other companies and individuals to give generously to underprivileged children so they too can dream of a better future. The Trust collected R1.5 million during the year ended 28 February 2019 (2018: R1.2 million) of which R1.4 million (2018: R1.1 million) was distributed to beneficiaries.

The Trust partners with organisations that can competently steward resources while adhering to principles that the Trust values and relates to. The Trust discovered that the finest way to ensure sustainable giving is to not only give funds but to be personally involved. The main project of the Trust is called Walk with a Purpose which is a shoe donation initiative. The schools and children’s homes that are supported do not only benefit from shoe donations but learners are empowered with access to technology, enhanced security at schools and improved multi-media facilities.


Business Overview

Reward Finance Group Ltd chose to partner with a local charity for the first time. Manorlands Hospice was nominated because of the invaluable work they do in the local community supporting patients and their loved ones whose lives have been cut short by cancer, heart failure and lung disease. The Reward Finance Group Ltd team completed a year of fundraising activities including sponsored runs, bake-offs, raffles and a music quiz for over 200 local professionals and raised a phenomenal £9,000 which was then matched to increase the donation to Manorlands Hospice to £18,000 – one of the largest donations received during the year, allowing Manorlands Hospice to continue with their amazing work.

Risk management and internal control The board is satisfied that the executive directors’ intimate involvement in the operations of the group, as well as the robust management structure of its United Kingdom and South African operations is sufficient to provide it with appropriate and relevant information on risk management activities performed, risks identified and action plans in place to mitigate material risks as well as on internal control measures in place.

The United Kingdom and South Africa business components are each headed by an experienced qualified chief executive, assisted by an experienced and qualified finance director. These executives are responsible for the implementation of internal control, risk management and financial reporting policies, procedures and monitoring in accordance with the group corporate governance framework set by the board.

Reports on risk management and internal controls are submitted to the audit committee, and key considerations are elevated to the board as and when appropriate.


The board applies the following principal elements of internal control:

• an annual budgeting process, integrating both financial budgets and cash flow forecasts, together with the identification of risks inherent in each area of operation, which are subject to board approval;

• monthly preparation of individual component and consolidated management accounts, comparison of actual results with budgets and forecasts, and preparation of revised forecasts whenever deemed necessary, for review and consideration by the board;

• confirmation to the board of any changes in business, operational and financial risk in each area of the business;

• clearly defined authorisation procedures for capital expenditure and major corporate transactions established by the board, and

• limited authority levels designated to subsidiary board directors and senior management.

Integrity and ethics Mettle Investments Ltd at all times endeavours to maintain the highest standard of integrity in dealing with its clients, staff, the authorities, shareholders, suppliers and the investor community and, in doing so, to ensure the largest measure of credibility, trust and stability. Structures and procedures are in place for the reporting of unethical behaviour. The chief executive of each component is responsible for ethical behavior within his organisation, and provides reports to the audit committee and social and ethics committee on the policies and procedures in place to monitor integrity and ethics. The board is of the opinion that a high level of standards was being maintained by the group and it is not aware of any instances of unethical behaviour during the year ended 28 February 2019.

Gender and race diversity Mettle supports the principles and aims of gender and race diversity at board level, and has adopted a gender and race diversity policy. Should a vacancy on the board arise, or should there be a requirement for an additional board appointment, consideration will be given to the appointment of female and racially diverse director(s) so as to attain and maintain the voluntary target level of gender and race diversity.

Communications with stakeholdersThe company is committed to ongoing and effective communication with stakeholders. It subscribes to a policy of open and timeous communication in line with JSE guidelines and sound corporate governance.

Business Overview

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ANNUAL FINANCIALSTATEMENTS

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Directors’ responsibility and approval


The directors are required in terms of the Companies Act of South Africa, 2008 to maintain adequate accounting records and are responsible for the content and integrity of the consolidated and separate financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated and separate financial statements fairly present the state of affairs as at the end of the year and the results of its operations and cash flows for the year then ended, in accordance with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the consolidated and separate financial statements.

The consolidated and separate financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying, assessing,

managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated and separate financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the cash flow forecast for the year ended 29 February 2020 and, in light of this review and the current financial position, they are satisfied that the company and group has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on the consolidated and separate financial statements. The consolidated and separate financial statements have been examined by the company’s external auditors and their report is presented on pages 23 to 29.

The consolidated and separate financial statements were approved by the Board of Directors on 31 May 2019 and are signed on their behalf by:

FH EsterhuyseChairman

HF PrinslooChief executive officer


Secretarial certificate


In my capacity as company secretary, I hereby confirm, in terms of the Companies Act of South Africa, 2008 (“the Act”), that for the year ended 28 February 2019, Mettle Investments Ltd has filed all the required returns and notices in terms of the Act, and all such returns and notices are, to the best of my knowledge and belief, true, correct and up to date.

WD MaraisOn behalf of Mettle Corporate Finance (Pty) LtdCompany Secretary

31 May 2019


Directorate and administration

Directorate

FH Esterhuyse (49)B Acc Hons, M Com, CA (SA)Non-executive chairmanChairman of Remuneration Committee

RD Fenner (50)BCom Hons, Grad Dip (Tax), MCom Lead independent non-executive directorChairman of Audit and Risk Committee

MVZ Wentzel (40)Independent non-executive directorMember of Remuneration and Audit and Risk Committees

BA Chelius (50)CA (SA), CFAIndependent non-executive directorMember of Remuneration and Audit and Risk Committees Chairman of Social, Ethics and Transformation Committee

HF Prinsloo (57)BCom, LLB, LLM, HDip (Tax)Chief executive officer

TM Flannery (58)Executive director

JJ Rookledge (42)BBusSci Finance (Hons), CA (SA)Chief financial officer

Administration

Registered address1st Floor FedGroup PlaceWillie van Schoor AvenueBellville, 7530PO Box 3991Tygervalley, 7536Telephone: +27 21 915 3300

Company SecretaryMettle Corporate Finance (Pty) LtdPO Box 3991Tygervalley, 7536

Designated advisorQuestco Corporate Advisory (Pty) LtdYellowwood House Ballywoods Office Park33 Ballyclare DriveBryanston, 2191

Transfer secretariesComputershare Investor Services (Pty) LtdPO Box 61051Marshalltown, 2107Telephone: +27 11 370 5000

AuditorsPricewaterhouseCoopers Inc.


Mettle Investments Integrated Report 2019 21Annual Financial Statements

Directors’ report

1. Nature of businessThe company is an investment holding company with trading subsidiaries and associates in the asset-backed short-term lending, debtor finance, working capital finance, corporate finance, incremental housing finance, solar energy and fintech markets. The group operates in South Africa, Namibia, Kenya and the United Kingdom.

2. Subsidiary companiesAs detailed in the company’s pre-listing statement dated 14 May 2018, Tradehold Ltd invested a further R445.2 million in the company in May 2018.

These funds were utilised to settle related party borrowings due to Tradehold Ltd of R42 million and to make a R389.5 million investment in Reward Investments (No.2) Ltd (based in Leeds and Manchester in the United Kingdom).

The company now owns 90% of Reward Investments (No.2) Ltd. Reward Investments (No.2) Ltd owns 75% of Reward Finance Group Ltd which has two 100% owned operating companies, namely Reward Capital Ltd and Reward Invoice Finance Ltd.

The company’s principal subsidiaries are detailed in note 2.

3. Results of operationsThe group reports profit attributable to equity holders of the company of R15.4 million (2018: R15.8 million) and basic earnings per share of 7.14 (2018: 16.44) cents.

The consolidated and separate financial statements on pages 30 to 102 set out fully the financial position, results of operations and cash flows for the financial year ended 28 February 2019.

4. BorrowingsInterest-bearing borrowings are detailed in notes 15 and 16 and bank overdrafts are detailed in note 18.

5. DividendsNo dividends were declared or paid by the company during the year (2018: RNil).

6. Conversion to public companyThe company was converted to a public company on 19 April 2018. The company was unbundled from Tradehold Ltd and listed on the Alternative Exchange of the JSE on 23 May 2018 with 247,174,375 no par value shares issued (stated capital of R545.8 million).

7. Share capitalDetails of the authorised and issued share capital of the company are disclosed in note 14.

8. Going concernThe directors consider that the company and group has adequate resources to continue operating for the foreseeable future and that it is appropriate to adopt the going concern basis in preparing the consolidated and separate financial statements. The directors have satisfied themselves that the company and group is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements.

9. Events after the reporting dateThe company has provided a guarantee for the Rand equivalent of $3.1 million to Investec Bank (Mauritius) Ltd (via Investec Bank Ltd) for its $5 million funding facility provided to Mettle Solar Africa Ltd (the company’s 55% owned joint venture) in May 2019. The company had to place the required funds on deposit at Investec Bank Ltd. A 35% shareholder in Mettle Solar Africa Ltd has provided a similar guarantee for the remaining $1.9 million. This facility funds the construction of Mettle Solar Africa Ltd group’s solar projects in Kenya and the Seychelles.

The directors present their report which forms part of the consolidated and separate financial statements for the year ended 28 February 2019.


10. DirectorsHF PrinslooFH EsterhuyseJA Aitken resigned 19 April 2018IHJ Visagie resigned 19 April 2018WD Marais resigned 19 April 2018W Maree resigned 19 April 2018JJ RookledgeTM Flannery appointed 19 April 2018MVZ Wentzel appointed 19 April 2018BA Chelius appointed 19 April 2018HRW Troskie appointed 19 April 2018

and resigned 12 September 2018RD Fenner appointed 18 September 2018

At 28 February 2019 the directors of Mettle Investments Ltd held a direct interest of 0.3% and an indirect, beneficial interest of 6.2% of the issued ordinary share capital of the company (refer to note 31).

There has been no change in the shareholding of directors between 28 February 2019 and the date of this report.

11. Holding companyThe company has no holding company at 28 February 2019. An analysis of the main shareholders of the company are disclosed on page 102.

12. Company SecretaryMettle Corporate Finance (Pty) Ltd was appointed on 19 April 2018.

13. AuditorsPricewaterhouseCoopers Inc.

14. Registered officeFirst FloorFedGroup PlaceWillie van Schoor AvenueBellville7530

15. DomicileSouth Africa

Directors’ report (continued)



Independent auditor’s report

Our opinionIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Mettle Investments Limited (the Company) and its subsidiaries (together the Group) as at 28 February 2019, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

What we have auditedMettle Investments Limited’s consolidated and separate financial statements set out on pages 30 to 101 comprise:

• the consolidated statement of financial position and company statement of financial position as at 28 February 2019;

• the consolidated statement of comprehensive income and company statement of comprehensive income for the year then ended;

• the consolidated statement of changes in equity and company statement of changes in equity for the year then ended;

• the consolidated statement of cash flows and company statement of cash flows for the year then ended;

To the Shareholders of Mettle Investments Limited

• the accounting policies; and

• the notes to the financial statements.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

IndependenceWe are independent of the Group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B).

Materiality

Key audit matters

Group scoping

Overall group materiality• Overall group materiality: R7,700,000, which represents 0.5% of total assets

Group audit scope• Full scope audits have been performed in respect of the Company, two significant

subsidiaries, one joint venture and one associate. A full scope audit of property, plant and equipment was performed on an additional associate based on risk. In addition we performed analytical procedures over the remaining components.

Key audit matters• Recoverability of investments in associates and joint ventures

• Impairment of trade receivables

• Assessment of control or significant influence over investments

Report on the audit of the consolidated and separate financial statements

Our audit approachOverview



Independent auditor’s report (continued)

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and separate financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

MaterialityThe scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance

whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality R7,700,000

How we determined it 0.5% of total assets

Rationale for the materiality benchmark applied We chose total assets as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is the benchmark that is most representative of the current year’s operations. We chose 0.5% which is consistent with quantitative materiality thresholds used for investment holding companies in this sector.

How we tailored our group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

The group consists of seven subsidiaries and over twenty associates and joint ventures. Based on the relative contribution of the Company and each of the subsidiaries to the Group’s total assets, we performed full scope audits on the Company and two of its subsidiaries. The subsidiaries in scope are Reward Investments (No.2) Limited and Mettle Administrative Services Proprietary Limited. Additionally a full scope audit was performed on one associate (Lendcor Proprietary Limited) and one joint venture (Christopher Finance Proprietary Limited) as they have been scoped in due to the risk of material misstatement of the consolidated financial statements associated with those investments. An audit of property, plant and equipment was performed on an additional associate, being Metdecci Energy Investment Proprietary Limited, based on risk. In addition we performed analytical procedures over the remaining components.

In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by us, as the Group engagement team, or component auditors from other PwC network firms and other firms operating under our instructions. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis of our opinion on the consolidated financial statements as a whole.

Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.



Key audit matter How our audit addressed the key audit matter

Recoverability of investments in associates and joint ventures (Consolidated and separate financial statements)

Under International Financial Reporting Standards (IFRS), the Group and Company are required to test the recoverable amount of investments for impairment if there is an indicator of impairment. Assessing the recoverable amount requires significant judgement as it involves estimates around what a market participant would be willing to pay for the investment. Where impairment indicators were noted, management calculated the recoverable amount of the investment using current net asset value, approved future profitability, and the price that an external market participant would be prepared to transact at. Impairment indicators were identified for a number of investments in the current year.

Due to the judgement and estimation exercised in assessing the recoverability of investments in associates and joint ventures, we considered this a matter of most significance to our audit in the current year.

Refer to note 1 for the significant accounting judgement and to notes 6 and 7 in the consolidated financial statements for the disclosure relating to the recoverability of these balances and the impairments raised at the Group level. Refer to notes 3 and 4 in the separate financial statements for the disclosure at Company level.

We have reperformed the impairment assessments on the investments held by the Group and Company. Our testing included the following:

• We challenged the assumptions used by management in assessing whether impairment indicators were noted through the inspection of the underlying budgets, and consideration of the future plans of the underlying entities. We assessed whether these plans and budgets were feasible in light of current business operations and the environment in which the businesses operate. We found the assumptions to be reasonable.

• For those investments where management identified impairment indicators and performed impairment assessments, the impairment assessments were recalculated by comparing the carrying amount of the investments to the recoverable amount.

• We evaluated the recoverable amounts of impaired investments by :

• agreeing the values that management have included for the net asset value of the investments to the financial information of those investments

• agreeing future profitability to budgets and assessing the feasibility of the budgets

• inspecting draft agreements and correspondence with potential buyers.

The recoverable amounts were deemed reasonable.

• Where no assessment was performed by management (as there was no impairment indicator), we performed our independent assessment to determine if any indicators existed (with reference to net asset values / profitability). No additional impairment indicators were identified.

We have inspected the disclosures relating to the investments in associates and joint ventures. The disclosures were found to be in line with the requirements as per IFRS.




Impairment of trade receivables (Consolidated financial statements)

The Group has recognised trade receivables to the value of R1.2 billion, which is reflected after considering a loss allowance of R28 million.

The adoption of IFRS 9 - Financial Instruments (IFRS 9) from 1 January 2018 (previously IAS 39, Financial Instruments: Recognition and Measurement was applied) has resulted in a change in accounting policy in relation to impairment of financial assets.

Management assesses impairment on a per customer basis. The assessment considers the current ageing of the balance, past payment history, remaining term and value of security held.

The impairment of trade receivables was considered to be of most significance to the current year audit due to the following:

• the first-time adoption of IFRS 9 by the group;

• the degree of judgement applied by management in determining the recoverability of the receivables, which includes the probability of default; and

• The magnitude of the receivable balance.

Refer to note 1 for the significant accounting judgement and to note 12 for disclosure relating to impairment of trade and other receivables.

Our audit addressed the impairment of trade receivables as follows:

We tested the various factors that affect the judgement around the recoverability of the balance. The results of our testing indicated that the factors applied by management were reasonable. Our testing included:

• Testing the amount of time that the balances have been outstanding, by recalculating the aging of the balances with reference to their origination date;

• Assessing the credit worthiness of the underlying debtors with reference to their historical recovery patterns; and

• Comparing the data relating to historical write offs to previous financial information.

We tested the relevant controls related to the processes over credit origination and credit extension.

We inspected a sample of legal agreements and supporting documentation to test existence and the legal right to the security for impaired trade receivables. The application of the security in the assessment of recoverability was found to be appropriate.

In order to assess the reasonability of the probability of default applied by management, we compared the non-performing trade receivables in the prior period and the current period and found that estimates were in line with our expectations.





Assessment of control or significant influence over investments (Consolidated financial statements)

IFRS 10 - Consolidated Financial Statements (IFRS 10), outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The assessment of whether the Group has control over its investments in accordance with IFRS 10 is a matter of significant judgement and impacts how the investments are accounted for. Part of the assessment of power depends on how key decisions that affect returns are approved. The financial statements disclose the different approval frameworks for each investment. As a result, this is considered a matter of most significance to our audit in the current year.

Investments in associates and joint ventures accounts for R37.1 million and R29.0 million respectively in the group financial statements.

Refer to note 1 for the significant accounting judgement and to notes 2, 6 and 7 in the consolidated financial statements for the disclosure of the investments included in the Group.

We have assessed the classification of the investments held by the Group (with specific focus on the Mettle Solar entities, Christopher Finance and Lendcor investments) in terms of IFRS 10. We considered the Group’s power to control the activities that affects returns by inspecting the shareholder agreements of the investments to identify the terms of the investments and challenged management’s definition of control. We found management’s assessment of control to be in line with IFRS 10.

Other informationThe directors are responsible for the other information. The other information comprises the information included in the Mettle Investments Limited and its Subsidiaries Annual Financial Statements for the year ended 28 February 2019, which includes the Directors’ Report, the Report of the Audit Committee and the Secretarial Certification as required by the Companies Act of South Africa, which we obtained prior to the date of this auditor’s report, and the Mettle Investments Limited Integrated Report 2019, which is expected to be made available to us after that date. Other information does not include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.




If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financial statementsThe directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated and separate financial statementsOur objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and / or Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.



We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that PricewaterhouseCoopers Inc. has been the auditor of Mettle Investments Limited for 1 year.

PricewaterhouseCoopers Inc.Director: JR de VilliersRegistered AuditorCape Town31 May 2019


Mettle Investments Integrated Report 201930 Annual Financial Statements

Consolidated statement of financial position

Notes2019

R’0002018

R’000

Assets

Non-current assetsProperty, plant and equipment 3 1 693 592Goodwill 4 5 595 7 475Deferred taxation 5 1 644 1 142Investments in joint ventures 6 29 020 7 073Investments in associates 7 37 111 53 123Loans due from joint ventures 8 24 768 -Loans due from associates 9 47 647 32 390Financial assets at fair value through profit or loss 10 10 932 31 234Loan receivables 11 36 421 18 285Total non-current assets 194 831 151 314

Current assetsTaxation 11 1Loans due from associates 9 21 8 189Loan receivables 11 25 991 21 467Trade and other receivables 12 1 209 389 35 826Cash and cash equivalents 13 109 648 6 278Total current assets 1 345 060 71 761

Total assets 1 539 891 223 075

Equity and liabilitiesCapital and reservesStated capital 14 545 828 100 622Retained income 38 765 22 198

584 593 122 820Foreign currency translation reserve 28 572 -Common control reserve (123 560) -Capital and reserves attributable to the owners 489 605 122 820Non-controlling interest 60 317 -Total equity 549 922 122 820

Non-current liabilitiesDeferred taxation 5 771 309Borrowings 15 731 098 43 757Borrowings due to related parties 16 194 824 -Other financial liability 17 2 611 -Total non-current liabilities 929 304 44 066

Current liabilitiesBorrowings 15 2 658 8 106Borrowings due to related parties 16 - 42 000Bank overdrafts 18 19 241 1 355Taxation 7 800 82Provisions 19 4 884 329Trade and other payables 20 26 082 4 317Total current liabilities 60 665 56 189

Total equity and liabilities 1 539 891 223 075


Consolidated statement of comprehensive income

Notes2019

R’0002018

R’000

Revenue 21 226 977 44 190Other income 22 12 708 8 665Loss allowance 23 (11 565) (99)Operating expenses 24 (95 409) (28 385)Profit from operations 132 711 24 371Interest expense 25 (56 975) (6 905)Fair value loss on other financial liability 17 (2 611) -Impairment of goodwill 4 (1 880) -Impairment of investment in joint venture 6 (2 341) -Impairment of investments in associates 7 (12 860) -Profit/(loss) from joint ventures 6 1 379 (240)(Loss)/profit from associates 7 (8 114) 3 294Profit before taxation 49 309 20 520Taxation 26 (17 270) (4 686)Profit after taxation before non-controlling interest 32 039 15 834Other comprehensive incomeItems that may be subsequently reclassified to profitExchange difference on translation of foreign operation 33 807 -Total comprehensive income 65 846 15 834

Profit attributable to:Equity holders of the parent 15 417 15 834Non-controlling interest 16 622 -

32 039 15 834Total comprehensive income attributable to:Equity holders of the parent 43 989 15 834Non-controlling interest 21 857 -

65 846 15 834

Basic earnings per share (cents) 27 7.14 16.44Diluted earnings per share (cents) 27 7.14 16.44


Consolidated statement of changes in equity

Stated capitalR’000

Retained incomeR’000

Foreign currency

translation reserve

R’000

Common control reserve

R’000

Non-controlling

interestR’000

TotalR’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 (note 28C)

(123 560) 48 557 (75 003)

Profit after taxation 15 417 16 622 32 039

Profit on purchase of loan claim from related party (note 31)

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

Note 14



Consolidated statement of cash flows

Notes2019

R’0002018

R’000

Cash flows from operating activities (61 656) 5 696Net cash utilised in operations 28A (133 715) (2 328)Preference dividends received - 192Interest received 140 860 14 806Interest paid (53 161) (4 065)Taxation paid 28B (15 640) (2 909)

Cash flows from investing activities (349 152) (36 843)Acquisition of property, plant and equipment (1 053) (119)Proceeds on disposal of property, plant and equipment 94 -Cash outflow on acquisition of subsidiaries 28C (318 097) -Cash outflow on disposal of subsidiary 28D (1 853) -Additional investment in associate - (7 260)Acquisition of investments in joint ventures (19 919) (4 000)Acquisition of loans to joint ventures (21 250) -Investment in preference shares - (24 750)Proceeds on redemption of preference share investment - 84Disposal of financial assets at fair value through profit or loss 20 500 -Acquisition of financial assets at fair value through profit or loss - (30 001)Loans recovered from associates 28 951 15 215Loans advanced to associates (43 975) -Loan advanced to joint venture (430) -Loan receivables advanced (45 842) (39 411)Loan receivables recovered 51 598 46 773Proceeds on disposal of asset held for sale - 6 626Dividend received from joint venture 124 -Dividend received from associate 2 000 -

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

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 611Cash and cash equivalents at end of the year 13 90 407 4 923



The principal accounting policies applied in the preparation of these consolidated and the company’s separate annual financial statements are set out below. These policies have been consistently applied to all years presented in relation to the group’s consolidated and the company’s separate annual financial statements except for the adoption of:

• IFRS 9 Financial Instruments

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets.

The adoption of IFRS 9 from 1 March 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the financial statements. In accordance with the transitional provisions in IFRS 9, comparative figures have not been restated.

Classification and measurementIFRS 9 requires all debt instruments to be classified and measured on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. The group’s management has assessed which business models apply to the financial assets held by the group and has classified financial instruments into the appropriate IFRS 9 categories.

There has been no change to the classification of the group’s financial liabilities and they continue to be classified and measured at amortised cost.

All of the group’s other financial assets which were classified as loans and receivables satisfy the conditions for classification at amortised cost and hence there is no change to the classification and measurement of these assets.

Impairment of financial assetsIFRS 9 has introduced new expected credit loss (ECL) impairment requirements that result in the earlier recognition of credit provisions. The ECL requirements apply to debt financial assets measured at either amortised cost or at fair value through other comprehensive income, loan commitments where there is a present commitment to extend credit (unless these are measured at fair value through profit or loss) and financial guarantees.

ECL is, at a minimum, required to be measured through a loss allowance at an amount equal to the 12-month ECL of the financial asset. A loss allowance for full lifetime ECL is required for a financial asset if the credit risk of that financial instrument has increased significantly since initial recognition.

The group has the following types of financial assets measured at amortised cost that are subject to IFRS 9’s new ECL model:

• Trade receivables

• Loan receivables

• Loans due from joint ventures and associates

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 trade and loan receivables acquired as part of the acquisition of Reward Investments (No.2) Ltd 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 also resulted in enhanced disclosures about revenue, provided guidance for transactions that were not previously addressed comprehensively and improved guidance for multiple-element arrangements.

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 now presented (refer to note 21).

Accounting policies


Basis of preparation

Statement of compliance

The consolidated and separate annual financial statements of Mettle Investments Ltd are expressed in South African Rand and have been prepared in accordance with International Financial Reporting Standards (IFRS), interpretations issued by the Interpretations Committee of the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listing Requirements and the Companies Act of South Africa, 2008.

Preparation of the consolidated annual financial statements

The consolidated annual financial statements have been prepared under the historical cost convention, except for financial assets at fair value through profit or loss.

The preparation of consolidated annual financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated annual financial statements are disclosed in note 1.

Standards, interpretations and amendments that are not yet effective at 28 February 2019Certain new accounting standards and interpretations have been published that are not mandatory for 28 February 2019 reporting periods 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 approximately 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.

The group will apply the standard from its mandatory adoption date of 1 March 2019. The group intends to apply the simplified transition approach and will not restate comparative figures for the year prior to first adoption. Right-of-use assets for property leases will be measured on transition as if the new rules had always been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).

The group has not applied the following new and amended standards and interpretations that have been issued but are not yet effective, nor relevant to the group’s operations:

• Amendment to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

• Amendments to IAS 19 Employee Benefits

• Amendment to IFRS 3 Business Combinations

• Amendment to IFRS 9 Financial Instruments

• IFRS 17 Insurance Contracts

• Amendments to IAS 28 Investments in Associates and Joint Ventures

• Annual improvements cycle 2015 – 2017

• IFRIC 23 Uncertainty over Income Tax Treatments

Consolidation

Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.


Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for in equity.

Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of financial position respectively.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group

Investments in subsidiaries are accounted for at cost less impairment in the annual financial statements of the company. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

Common control transactions

The predecessor values method is used to account for common control transactions. The predecessor values method requires financial statements to be prepared using predecessor book values without any step up to fair value or restating comparatives. The difference between any consideration given and the aggregate book value of the assets and liabilities (at acquisition date) of the acquired entity are recorded as an adjustment to equity as a common control reserve. No additional goodwill is created by the transaction.

Disposal of subsidiaries

When the group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Associates

An associate is an entity over which the group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

An investment in an associate is accounted for using the equity method, except when the investment is classified as held-for-sale in accordance with IFRS 5 Non-current Assets Held for Sale. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the group’s share of net assets of the associate, less any impairment losses.

Losses in an associate in excess of the group’s interest in that associate are recognised only to the extent that the group has incurred a legal or constructive obligation to make payments on behalf of the associate.

Any goodwill on acquisition of an associate is included in the carrying amount of the investment, however, a gain on acquisition is recognised immediately in profit or loss.

Joint arrangements

Joint arrangements are those entities over whose activities the group has joint control, established by contractual agreement.

Interests in joint arrangements are accounted for as either a joint venture or a joint operation as permitted by IFRS 11. A joint arrangement is accounted for as a joint venture when the group, along with the other parties that have joint control of the arrangement, have rights to the net assets of the arrangement. Joint ventures are equity accounted in accordance with IAS 28 (revised). The equity method requires the group’s share of the joint venture’s post-tax profit or loss for the year to be presented


Accounting policies (continued)


separately in profit or loss and the group’s share of the joint venture’s net assets to be presented separately in the statement of financial position. Joint ventures with net liabilities are carried at zero value in the statement of financial position where there is no commitment to fund the deficit and any distributions are included in profit or loss for the year.

A joint arrangement is accounted for as a joint operation when the group, along with the parties that have joint control of the arrangement, have rights to the assets and obligations for the liabilities relating to the arrangement. Joint operations are accounted for by including the group’s share of the assets, liabilities, income and expenses on a line-by-line basis.

Intra-group balances and any unrealised gains and losses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the group’s interest in the joint venture concerned. Unrealised losses are eliminated in the same way, but only to the extent that there is no evidence of impairment.

The annual financial statements of the associate or joint venture are prepared for the same reporting period as the group. When necessary, adjustments are made to bring the accounting policies in line with those of the group. After application of the equity method, the group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss in profit or loss.

Upon loss of joint control over the joint venture, the group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

Investments in associates and joint ventures are accounted for at cost less provision for impairment in the annual financial statements of the company.

GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is disclosed separately on the face of the statement of financial position. Goodwill is tested annually for impairment in the respective subsidiary’s functional currency and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

Foreign currency translation

Functional and presentation currency

Items included in the consolidated annual financial statements of each of the group’s companies are measured using the currency of the primary economic environment in which each of the companies operate (the ‘functional currency’). The company’s presentation and functional currency is South African Rand.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss for the year.

Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amounts are recognised in other comprehensive income. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss.



Group companies

The results and financial position of all the group companies that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date;

• income and expenses for each profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

• all resulting exchange differences are recognised as a separate component of equity in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, such exchange differences are recognised in profit and loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Property, plant and equipmentAll property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Cost of an item of property, plant and equipment includes its purchase price and any directly attributable costs. Cost includes the cost of replacing part of an existing property, plant and equipment at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of an item of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of those parts that are replaced is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Depreciation is calculated on a straight-line basis to reduce the cost of an asset to its residual value over the asset’s useful life, as follows:

• Leasehold improvements ...................................term of the lease

• Office furniture and equipment ...........................................5 years

• Computer equipment and software ..............................2 - 3 years

• Motor vehicles ..............................................................................5 years

An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.

The assets’ residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at least at each financial year-end.

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

Impairment of non-financial assetsAssets that have an indefinite useful life – for example, goodwill – are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.




Financial assets

Classification

From 1 March 2018, the group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss), and

• those to be measured at amortised cost.

The classification depends on the group’s business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

The group reclassifies debt investments when and only when its business model for managing those assets changes.

Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset.

The group classifies its debt instruments at amortised cost:

• Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is recognised using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

The group subsequently measures all equity investments at fair value. Changes in the fair value of financial assets at fair value through profit or loss are recognised in the statement of profit or loss.

Impairment



For trade receivables in relation to Reward Capital, the group applies the general model. The group assesses at the end of each reporting period whether the credit risk on a financial instrument has increased significantly since initial recognition. Where there has been a significant increase in credit risk since initial recognition the group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses. Where there has not been a significant increase in credit risk since initial recognition the group measures the loss allowance for that financial instrument at an amount equal to 12-month expected credit losses.

For trade receivables in relation to Reward Invoice Factoring and South Africa, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables



The group recognises in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the end of the reporting period.

The group writes off financial assets, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. This will be the case where the debtor has not met the minimum contractual obligations for at least six months and has not made any payment at all within the last six months.

Financial instruments – until 28 February 2018The group has applied IFRS 9 retrospectively but has elected not to restate comparative figures. As a result, the comparative figures provided continues to be accounted for in accordance with the group’s previous accounting policy.

Classification

The group classified its financial instruments as financial assets at fair value through profit or loss, loans and receivables and financial liabilities measured at amortised cost. The classification depended on the purpose for which the financial instrument was acquired. Management determined the classification of its financial instruments at initial recognition.

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss included financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. A financial asset was classified in this category if acquired principally for the purpose of selling or repurchasing in the short-term. Financial assets at fair value through profit or loss comprised unit trust investments.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The group’s loans and receivables comprised loan receivables, loans due from associates, trade and other receivables and cash and cash equivalents.

Financial liabilities measured at amortised costAfter initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included as interest expense in profit or loss.

This category applied to borrowings, bank overdrafts, deferred consideration and trade and other payables.

Recognition and measurement

Financial assets were initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

Financial assets at fair value through profit or loss were subsequently carried at fair value. Movements in fair values were recognised in profit or loss.

Loans and receivables were subsequently carried at amortised cost using the effective interest rate method.

Financial liabilities measured at amortised cost were initially measured at fair value.

Financial assets were derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

Impairment

Assets carried at amortised costThe group assessed at the end of each reporting period whether there was objective evidence that a financial asset or group of financial assets was impaired. A financial asset or a group of financial assets was impaired and impairment losses were incurred only if there was objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) had an impact on the estimated future cash flows of the financial asset or group of financial assets that could be reliably estimated.

The group first assessed whether objective evidence of impairment existed.

The amount of the loss was measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset was reduced and the amount of the loss was recognised in profit or loss. If a loan had a variable interest rate, the discount rate for measuring any impairment loss was the current effective




interest rate determined under the contract. As a practical expedient, the group measured impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreased and the decrease could be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss was recognised in profit or loss.

Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Cash and cash equivalentsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Bank overdrafts are presented separately in current liabilities on the statement of financial position.

BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Trade and other payablesThese amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

ProvisionsProvisions for legal claims are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Financial guarantee contractsFinancial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value, and is subsequently at the higher of:

• the amount determined in accordance with the expected credit loss model under IFRS 9; and

• the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15.

The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments required under the debt instrument and



the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

The amount of the loss allowance is initially equal to 12-month expected credit losses. Where there has been a significant increase in the risk that the specified debtor will default on the contract, the calculation is for lifetime expected credit losses.

Expected credit losses for a financial guarantee contract are the cash shortfalls adjusted by the risks that are specific to the cash flows. Cash shortfalls are the difference between the expected payments to reimburse the holder for a credit loss that it incurs, and any amount that an entity expects to receive from the holder, the debtor or any other party.

Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

LeasesThe determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee

Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

Employee benefits

Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end

of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing where contractually obliged or where there is a past practice that has created a constructive obligation.

Revenue recognitionRevenue is recognised at the amount of the transaction price that is allocated to that performance obligation excluding amounts collected on behalf of third parties. Revenue is recognised when (or as) the entity satisfies a performance obligation by transferring a promised good or service to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

Service fee income

Initial set up fee income is deferred and recognised over the average term of the loan.

Recurring monthly minimum service fee income is recognised on a monthly basis.

Ad hoc income is recognised when the specific performance obligation is satisfied.

Administration and management fee income

Administration and management services are performed throughout the period and are recognised when the services are provided. The consideration is due on a monthly basis as the services are rendered.

Corporate finance fee income

Success fees are recognised once the related transaction is unconditional. Revenue from providing recurring services on a retainer basis are recognised monthly.

Fundraising fee income

Fundraising fee income is measured at the transaction price per the contract. The consideration is either due when the funding is available for draw down by the borrower or only when the funding is actually drawn down by the borrower. The fee income is recognised accordingly.

Secretarial and sponsor services

Revenue from providing these services is recognised in the accounting period in which the services are rendered.




Discounting income

Discounting income for factoring transactions is spread over the term of each transaction.

Interest income

Interest income from lending operations is recognised using the effective interest rate method. When a loan receivable is impaired, the group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan receivables is recognised using the original effective interest rate.

Dividend income

Dividend income is recognised when the right to receive payment is established.

Borrowing costsBorrowing costs are expensed in the period in which they are incurred unless it relates to a qualifying asset.

Income taxThe current tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the

related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Taxation rates

South AfricaThe normal company tax rate used for the year ended 28 February 2019 is 28% (2018: 28%). Deferred tax assets and liabilities at 28 February 2019 have been calculated using 28% (2018: 28%), being the rate that the group expects to apply to the periods when the assets are realised or the liabilities are settled. Capital gains tax is included at 80% (2018: 80%) of the company tax rate.

United KingdomThe normal company tax rate used for the year ended 28 February 2019 is 19%. Deferred tax assets and liabilities at 28 February 2019 have been calculated using 19%, being the rate that the group expects to apply to the periods when the assets are realised or the liabilities are settled.

Sales tax

Expenses and assets are recognised net of the amount of sales tax, except:

• When the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item, as applicable, or

• When receivables and payables are stated with the amount of sales tax included.



The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Segmental reportingOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The group has determined that its chief operating decision maker is the executive Board of directors of the group.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares

• by the weighted average number of ordinary shares outstanding during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

• the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.




1. Critical estimates and judgementsThe preparation of the annual financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying value of the asset or liability affected in the future.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are detailed below:

Consolidation decisions

Mettle Solar Investments (Pty) Ltd and Mettle Solar Africa LtdThe company is a 55% shareholder in both companies. There are two other shareholders owning 35% and 10%, respectively. The company has no control as all director and shareholder resolutions can only be approved with a 70% majority. As a result, these companies are not consolidated but rather equity accounted.

Impairment of investments in associates and joint ventures

Management reviewed the financial performance of all equity accounted investments to identify indications of impairment. This resulted in the following investments being tested for impairment for the reasons detailed below:

• Lendcor (Pty) Ltd – large decline in current year profitability and future budgeted profitability

• Incatorque (Pty) Ltd – continued losses and has yet to trade profitably

• Mettle Solar Investments (Pty) Ltd – continued accounting losses


Notes to the consolidated annual financial statements

The recoverable amounts were determined on a fair value less cost of disposal basis and compared to their carrying value. These calculations considered the investments’ current net asset value, approved future budgeted profitability and finally, the price that an external market participant would be prepared to transact at.

Impairments were recognised for the group’s equity accounted investments in Lendcor (Pty) Ltd and Incatorque (Pty) Ltd.

Measurement of expected credit loss allowance



The historical credit loss rates of the group (as well as Reward Finance Group Ltd prior to its acquisition by the company) have been low.

Management assesses impairment on a per customer basis. This assessment considers the current ageing of the balance, past payment history, remaining term and value of security held. As the majority of receivables are due within the next 12 months and can have up to two times security cover, changes in future macroeconomic factors does not have a significant impact on future expected credit losses.


2. Group informationInformation about subsidiaries

All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.

The principal subsidiaries at 28 February 2019 are detailed below:

Directly held

Name Principal activitiesCountry of

incorporation2019

%2018

%

Reward Investments (No.2) Ltd Investment holding company United Kingdom 90%Mettle Administrative Services (Pty) Ltd Factoring and debtor finance South Africa 100% 100%

Indirectly held

The following subsidiaries are all effectively 75% owned by Reward Investments (No.2) Ltd:

Name Principal activities Country of incorporation

Reward Finance Group Ltd Investment holding company United KingdomReward Capital Ltd Asset backed lending United KingdomReward Invoice Finance Ltd Invoice discounting United Kingdom

Non-controlling interest

The only non-controlling interest is in Reward Investments (No.2) Ltd and its 75% held subsidiaries detailed above. Refer to the segment information (note 29) for disclosures on the statement of financial position, statement of comprehensive income and statement of cash flows of these United Kingdom group companies.

3. Property, plant and equipment

2019

Cost

Balance at 1 March

2018R’000

AdditionsR’000

Acquisition of

subsidiaries (note 28C)

R’000

Disposal of subsidiary

(note 28D)R’000

Foreign currency

translation movement

R’000Disposals

R’000

Balance at 28 February

2019R’000

Leasehold improvements/fixtures and fittings

321 297 265 - 26 - 909

Computer equipment and software

307 699 682 (106) 77 (24) 1 635

Office equipment and furniture 587 57 50 (46) - (80) 568Vehicles 84 - - - - (15) 69

1 299 1 053 997 (152) 103 (119) 3 181

Notes to the consolidated annual financial statements (continued)



Accumulated depreciation

Balance at 1 March 2018

R’000Depreciation

R’000

Disposal of subsidiary

(note 28D)R’000

DisposalsR’000

Balance at 28 February 2019

R’000

Leasehold improvements/fixtures and fittings

147 369 - - 516

Computer equipment and software

199 407 (17) (11) 578

Office equipment and furniture 328 114 (2) (80) 360Vehicles 33 16 - (15) 34

707 906 (19) (106) 1 488

Net book value2019

R’0002018

R’000

Leasehold improvements/fixtures and fittings 393 174

Computer equipment and software 1 057 108Office equipment and furniture 208 259Vehicles 35 51

1 693 592

Equipment of R1.2 million forms part of the security provided to Foresight Group (refer to note 15).

2018

Cost


R’000Additions

R’000Disposals

R’000


R’000

Leasehold improvements/fixtures and fittings 326 - (5) 321Computer equipment and software 299 52 (44) 307Office equipment and furniture 520 67 - 587Vehicles 84 - - 84

1 229 119 (49) 1 299

Accumulated depreciation


R’000Depreciation

R’000Disposals

R’000


R’000

Leasehold improvements/fixtures and fittings 88 64 (5) 147Computer equipment and software 135 108 (44) 199Office equipment and furniture 224 104 - 328Vehicles 17 16 - 33

464 292 (49) 707



2019R’000

2018R’000

4. Goodwill

CostAt beginning and end of the year 18 623 18 623

Accumulated impairmentAt beginning of the year 11 148 11 148Impairment recognised in profit or loss 1 880 -At end of the year 13 028 11 148

Net book value 5 595 7 475

The goodwill is allocated to the following cash-generating units:Administrative services 2 905 2 905Corporate finance 2 690 2 690Specialised finance - 1 880

5 595 7 475

2019

The recoverable amounts of the cash-generating units were determined based on a fair value less cost of disposal calculation. The fair values used sustainable earnings before interest, tax, depreciation and amortisation and earnings multiples of two to four and are classified as level 3 in the fair value hierarchy. The valuation technique is unchanged from the prior year. The assumptions are

consistent with external sources of information.

R’000

An impairment was recognised in the following cash-generating unit:Specialised Finance: Resignation of key senior management 1 880

2018

The recoverable amounts of the cash-generating units were determined based on a fair value less cost of disposal calculation. The fair values used sustainable earnings before interest, tax, depreciation and amortisation and earnings multiples of two to four and are classified as level 3 in the fair value hierarchy. The valuation technique is unchanged from the prior year. The assumptions are consistent with external sources of information. No goodwill impairments were deemed necessary.




2019R’000

2018R’000

5. Deferred taxation

ReconciliationAt beginning of the year 833 2 163Acquisition of subsidiary (68) -Foreign currency translation movement (14) -Temporary differences charged to profit or loss 122 (1 330)At end of the year 873 833

AnalysisProvisions and payables 790 614Trade receivables 265 17Calculated tax losses 706 577Financial assets at fair value through profit or loss (261) (345)Property, plant and equipment (100) -Loan due from joint venture (508) -Prepayments (19) (30)

873 833

SplitAsset 1 644 1 142Liability (771) (309)

873 833

Calculated tax lossesAt end of the year 2 257 2 155Applied in the creation of deferred taxation assets (2 156) (2 063)

101 92

Deferred taxation assets are recognised on unused tax losses if future taxable income is probable. Budgets for the specific legal entity have been prepared based on the likely timing and quantum of future taxable profits.



Loans due from joint ventures (refer to note 8)• cumulative share of equity accounted loss (1 269) -

27 751 7 073

AnalysisIncatorque (Pty) Ltd (unlisted)• subscription for 50.4% of ordinary shares 3 313 3 313• allowance for impairment (2 341) -• cumulative share of loss (972) (548)

Gray Swan Financial Services (Pty) Ltd (unlisted)• subscription for 50% of ordinary shares 4 000 4 000• dividend received (124) -• cumulative share of profit 1 016 308

Mettle Credit Services (Pty) Ltd (unlisted)• 48.9% of ordinary shares 1 845 -• cumulative share of profit 412 -

Mettle Solar Africa Ltd (unlisted)• 55% of ordinary shares 6 -• cumulative share of loss (6) -

Christopher Finance (Pty) Ltd (unlisted)• 49% of ordinary shares 19 912 -• cumulative share of profit 1 959 -

29 020 7 073

Investments in joint ventures at 28 February 2019 include notional goodwill of R19.4 million (2018: R4.9 million).



2019R’000

2018R’000

6. Investments in joint ventures

ReconciliationAt beginning of the year 7 073 7 366Acquisition 21 764 4 000Reversal of estimate of future purchase price - (4 053)Dividend received (124) -Allowance for impairment (2 341) -Share of profit/(loss) 1 379 (240)At end of the year 27 751 7 073

Split as follows on the consolidated statement of financial position:

Investments in joint ventures• non-current 28 953 7 313• allowance for impairment (2 341) -• cumulative share of equity accounted profit/(loss) 2 408 (240)

29 020 7 073


Incatorque (Pty) Ltd

The company acquired the ordinary shares and loan claim in November 2016 for R3.3 million.

Incatorque (Pty) Ltd is a financial technology service provider providing bespoke payment technology solutions. It is a private company operating in South Africa.

The company and the other 49.6% shareholder both have the right to appoint 2 directors to the board. The operating plans of the joint venture need to be approved by 75% of shareholders.

An agterskot was payable linked to the targeted aggregate profit before tax of R11.8 million for the two-year period ending 28 February 2019. As a loss before tax was incurred for this two year period, no agterskot is payable.

An allowance for impairment has been recognised due to the continued losses incurred by Incatorque (Pty) Ltd. A loss of R0.8 million was incurred in the current year (2018: R1.1 million).

Gray Swan Financial Services (Pty) Ltd

The company subscribed for 50% of the ordinary shares in Gray Swan Financial Services (Pty) Ltd for R4 million in June 2017. Gray Swan Financial Services (Pty) Ltd is a leading independent investment advisory and wealth management company. The company needs to make a further subscription in 2021 based on the profit after tax for the financial years ending 29 February 2020 and 28 February 2021. This future subscription amount is reduced by the R4 million and is not expected to be a material amount.

The company and the other 50% shareholder both have the right to appoint an equal number of directors to the board. The operating plans of the joint venture need to be approved by both shareholders.


Mettle Credit Services (Pty) Ltd

Montsi Investments invested R1.8 million in Mettle Credit Services (Pty) Ltd on 31 May 2018 and became a 51.1% shareholder. As a result, the company’s indirect shareholding diluted to 48.9%.

Mettle Credit Services (Pty) Ltd provides debt collection and administration services to third parties. It is a private company operating in South Africa.

Each shareholder has the right to appoint two directors to the board. The operating plans of the joint venture need to be approved by both shareholders.

Mettle Solar Africa Ltd

The company acquired the ordinary shares and loan claim in May 2018 for R13.7 million.

Mettle Solar Africa Ltd is incorporated in Mauritius and its principal activity is generating green energy as well as the direct rendering of green energy services. The green technology includes rooftop and ground mounted solar photovoltaic systems in Kenya and the Seychelles.

The company does not control Mettle Solar Africa Ltd as all director and shareholder resolutions can only be approved with a 70% majority.

Christopher Finance (Pty) Ltd

The company acquired the ordinary shares and loan claim in November 2018 for R27.4 million.

Christopher Finance (Pty) Ltd is a niche financial services company providing working capital finance to selected firms of attorneys. The finance is secured by claims for costs the attorneys have against reputable third parties. It is a private company operating in South Africa.

Each shareholder has the right to appoint one director to the board for every 17% owned. However, all material decisions require 75% approval. These decisions include approving the budget, operating plans, distribution policy and any change in the chief executive officer.


6. Investments in joint ventures (continued)

The summarised financial information has been amended to reflect adjustments made by the company when using the equity method, including modifications for differences in accounting policies. The summarised financial information is detailed below:

2019R’000

2018R’000

Incatorque (Pty) LtdSummarised statement of financial positionCurrentCash and cash equivalents 313 938Other current assets (excluding cash) 524 466

837 1 404

Financial liabilities (excluding trade payables) (59) (37)Non-currentOther assets 1 247 1 153

Financial liabilities (1 055) (700)Other liabilities - (10)

(1 055) (710)

Net assets 970 1 810Interest held 50.4% 50.4%Group’s share of net assets 488 912Goodwill 1 853 1 853Allowance for impairment (2 341) -Carrying amount - 2 765

Summarised statement of comprehensive incomeRevenue 1 814 1 575Interest expense (4) (4)Depreciation and amortisation (247) (251)Operating expenses (2 729) (2 828)Loss before tax (1 166) (1 508)Tax 325 421Loss for the year (841) (1 087)

Interest held 50.4% 50.4%Group’s share of the loss for the year (424) (548)

Gray Swan Financial Services (Pty) LtdSummarised statement of financial positionCurrentCash and cash equivalents 5 588 5 963Other current assets (excluding cash) 1 576 650

7 164 6 613

Other current liabilities (including trade payables) (308) (196)




2019R’000

2018R’000

Non-currentOther assets 864 134Other liabilities (4 000) (4 000)

Net assets 3 720 2 551Interest held 50.0% 50.0%Group’s share of net assets 1 860 1 276Goodwill 3 032 3 032Carrying amount 4 892 4 308

Summarised statement of comprehensive incomeRevenue 10 425 6 710Other income 382 70Interest income 465 322Interest expense - (18)Depreciation and amortisation (128) (70)Operating expenses (9 148) (6 118)Profit before tax 1 996 896Tax (580) (280)Profit for the year (2018: 9 months) 1 416 616

Interest held 50.0% 50.0%Group’s share of the profit for the year (2018: 9 months) 708 308

Mettle Credit Services (Pty) LtdSummarised statement of financial positionCurrentCash and cash equivalents 3 716Other assets (excluding cash) 1 349

5 065

Other liabilities (including trade payables) (532)

Non-currentOther assets 105Other liabilities (20)

Net assets 4 618Interest held 48.9%Group’s share of net assets 2 257Goodwill -Carrying amount 2 257



2019R’000


Summarised statement of comprehensive incomeRevenue 8 464Interest income 211Depreciation and amortisation (65)Operating expenses (7 434)Profit before tax 1 176Tax (333)Profit for the period (9 months) 843

Interest held 48.9%Group’s share of the profit for the period (9 months) 412

Mettle Solar Africa LtdThis financial information is denominated in US Dollars and has been translated at an exchange rate of R13.99.Summarised statement of financial positionCurrentCash and cash equivalents 1 663Other assets (excluding cash) 7 456

9 119

Financial liabilities (49 684)Other liabilities (including trade payables) (251)

(49 935)Non-currentOther assets 57 374Financial liabilities (including related party loans) (27 060)

Net liabilities (10 502)Interest held 55.0%Group’s share of net liabilities (5 776)Goodwill 4 501Carrying amount (set off against investment in and loan to joint venture) (1 275)

Summarised statement of comprehensive incomeRevenue 5 136Interest income 7Interest expense (3 427)Depreciation and amortisation (1 985)Operating expenses (2 363)Loss before tax (2 632)Tax 313Loss for the period (9 months) (2 319)

Interest held 55.0%Group’s share of the loss for the period (9 months) (1 275)




2019R’000

Christopher Finance (Pty) LtdSummarised statement of financial positionCurrentCash and cash equivalents 5 345Other assets (excluding cash) 151 904

157 249

Other liabilities (including trade payables) (103 561)

Non-currentOther assets 15 413Other liabilities (44 986)

Net assets 24 115

Interest held 49.0%Group’s share of net assets 11 816Goodwill 10 055Carrying amount 21 871

Summarised statement of comprehensive incomeRevenue 2 518Interest income 12 418Interest expense (6 128)Operating expenses (3 257)Profit before tax 5 551Tax (1 553)Profit for the period (4 months) 3 998

Interest held 49.0%Group’s share of the profit for the period (4 months) 1 959

Dividends of R0.1 million were received from joint ventures (namely, Gray Swan Financial Services (Pty) Ltd) during the year (2018: RNil).

There are no contingent liabilities relating to the group’s interests in joint ventures.



2019R’000

2018R’000

7. Investments in associates

ReconciliationAt beginning of the year 45 813 35 260Additional investment - 7 260Share of (loss)/profit (8 114) 3 294Allowance for impairment (12 860) -Disposal (940) -Dividend received (2 000) -At end of the year 21 899 45 814

Split as follows on the consolidated statement of financial position:

Investments in associates• non-current 44 371 60 383• share of equity accounted loss (7 260) (7 260)

37 111 53 123Loans due from associates (refer to note 9)• share of equity accounted loss (15 212) (7 309)

21 899 45 814AnalysisGondotrix (Pty) Ltd - 2 893Mettle Solar Investments (Pty) Ltd - -Lendcor (Pty) Ltd 34 977 35 176• allowance for impairment (6 452) -Lendcor Holdings (Pty) Ltd 14 994 15 054• allowance for impairment (6 408) -

37 111 53 123

Lendcor (Pty) Ltd provides unsecured loans for home improvements to the lower living standards measure (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 (Pty) Ltd 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 (Pty) Ltd incurred a R0.4 million loss for the year ended 28 February 2019 (2018: R12 million profit). Its budgeted profit for the year ending 29 February 2020 is also expected to be lower than its 2018 profits. As a result, an allowance for impairment was recognised. This also took into account its current net asset value and the price that an external market participant would be prepared to transact at.

Investments in associates at 28 February 2019 include notional goodwill of R6.3 million (2018: R19.2 million).

The group’s share of the revenue, results, total assets and total liabilities of its associates, are as follows:

2019Interest held

%

TotalassetsR’000

Total liabilities

R’000Revenue

R’000Profit/(loss)

R’000

UnlistedGondotrix (Pty) Ltd 490 48Mettle Solar Investments (Pty) Ltd 55.0 72 037 87 249 9 028 (7 903)Lendcor (Pty) Ltd 49.9 108 454 83 821 42 996 (199)Lendcor Holdings (Pty) Ltd 49.9 7 430 10 - (60)

187 921 171 080 52 514 (8 114)




2018Interest held

%

TotalassetsR’000

Total liabilities

R’000Revenue

R’000Profit/(loss)

R’000

UnlistedGondotrix (Pty) Ltd 50.0 3 142 308 8 168 1 853Mettle Solar Investments (Pty) Ltd 55.0 62 573 77 141 13 078 (6 361)Lendcor (Pty) Ltd 49.9 101 901 77 068 38 220 5 997Lendcor Holdings (Pty) Ltd 49.9 11 509 1 902 - 1 805

179 125 156 419 59 466 3 294

Material associates are determined by their contribution of profitability. Additional information on material associates is detailed below:

Gondotrix (Pty) Ltd

The company acquired the remaining 50% of Gondotrix (Pty) Ltd on 31 March 2018 for R1. Gondotrix owned 100% of Mettle Credit Services (Pty) Ltd. Mettle Credit Services (Pty) Ltd is accounted for as a joint venture after the subscription for shares by Montsi Investments in May 2018 (refer to note 28D).

The group received dividends of R2 million (2018: RNil) in March 2018. The group’s 50% interest in Gondotrix (Pty) Ltd was accounted for using the equity method in the consolidated annual financial statements until 31 March 2018. Gondotrix (Pty) Ltd is now consolidated as a wholly owned subsidiary.

The financial information is detailed below:

2019R’000

2018R’000

Current assets 6 118Non-current assets 167Current liabilities (617)Net assets 5 668Interest held 50.0%Group’s share of net assets 2 834Goodwill 58Carrying amount 2 892

Revenue 981 16 335Operating expenses (849) (11 188)Profit before tax 132 5 147Tax (37) (1 441)Profit for the month (2018: year) 95 3 706

Interest held 50.0% 50.0%Group’s share of profit for the month (2018: year) 48 1 853



7. Investments in associates (continued)

Lendcor Holdings (Pty) Ltd

Lendcor Holdings (Pty) Ltd owns 30.1% (2018: 30.1%) of Lendcor (Pty) Ltd. Lendcor Holdings (Pty) Ltd is a private company operating in South Africa. The group received dividends of RNil (2018: RNil) during the year. The group’s 49.9% (2018: 49.9%) interest in Lendcor Holdings (Pty) Ltd is accounted for using the equity method in the consolidated annual financial statements.


2019R’000

2018R’000

Current assets 1 3 803Non-current assets 14 888 19 261Current liabilities (21) (3 811)

Carrying amount 8 586 15 054

(Loss)/income from associate (120) 3 617Tax - -(Loss)/profit for the year (120) 3 617

Interest held 49.9% 49.9%Group’s share of (loss)/profit for the year (60) 1 805

Lendcor (Pty) Ltd

Lendcor (Pty) Ltd provides incremental housing finance. Lendcor (Pty) Ltd is a private company operating in South Africa. The group received dividends of RNil (2018: RNil) during the year. The group’s 49.9% (2018: 49.9%) interest in Lendcor (Pty) Ltd is accounted for using the equity method in the consolidated annual financial statements.


2019R’000

2018R’000

Current assets 144 222 145 905Non-current assets 73 122 58 305Current liabilities (33 660) (23 688)Non-current liabilities (134 318) (130 756)Net assets 49 366 49 766Interest held 49.9% 49.9%Group’s share of net assets 24 634 24 833Goodwill 10 343 10 343Allowance for impairment (6 452) -Carrying amount 28 525 35 176

Revenue 86 164 76 594Impairment allowance (31 153) (11 432)Operating expenses (43 100) (39 654)Interest expense (12 813) (9 344)(Loss)/profit before tax (902) 16 164Tax 502 (4 146)(Loss)/profit for the year (400) 12 018

Interest held 49.9% 49.9%Group’s share of the (loss)/profit for the year (199) 5 997




Mettle Solar Investments (Pty) Ltd

The Mettle Solar Investments (Pty) Ltd group installs, finances and operates solar photovoltaic systems. The Mettle Solar Investments (Pty) Ltd group companies are private companies operating in South Africa and Namibia.

The group received no dividends during the year (2018: RNil). The group’s 55% (2018: 55%) interest is accounted for using the equity method in the consolidated annual financial statements.


2019R’000

2018R’000

Current assets 14 375 12 501Non-current assets 116 602 101 267Current liabilities (4 892) (7 580)Non-current liabilities (including related party loans) (153 744) (119 477)Net liabilities (27 659) (13 289)Interest held 55.0% 55.0%Group’s share of net liabilities (15 212) (7 309)Goodwill - -Carrying amount (set off against loan to associate) (15 212) (7 309)

Revenue 16 415 23 778Other income 140 4 806Operating expenses (11 649) (12 995)Interest expense (16 452) (23 718)Equity accounted loss (3 014) (4 318)Loss before tax (14 560) (12 447)Tax 191 882Loss for the year (14 369) (11 565)

Interest held 55.0% 55.0%Group’s share of loss for the year (7 903) (6 361)

The Mettle Solar Investments (Pty) Ltd group has capital commitments of R9.2 million which will be funded from existing available shareholder facilities.

The other associates have no capital commitments.

A Mettle Solar Investments (Pty) Ltd group company received an assessment from the South African Revenue Service in May 2018, relating to the 2017 tax year. The balance amounts to R1 million (including penalties and interest), with the company’s share being R0.6 million. This assessment is being disputed and based on external tax advice received, no provision has been recorded.




2019R’000

2018R’000

8. Loans due from joint ventures

Incatorque (Pty) Ltd 430 -

The unsecured loan is interest free and subordinated in favour of other creditors of Incatorque (Pty) Ltd. The company has deferred repayment for at least a year.

Mettle Solar Africa Ltd 16 507 -• loan 17 776 -• share of equity accounted loss (refer to note 6) (1 269) -

The loan is US Dollar denominated and accrues interest at US prime plus 3% (which amounted to 8.5% at year-end). The loan was translated at a closing rate of R13.99. Repayment is not expected in the foreseeable future.

The company is still negotiating with an external party regarding an aggregate subscription for shares in Mettle Solar Investments (Pty) Ltd and Mettle Solar Africa Ltd of R106.7 million in exchange for a 40% shareholding. The current shareholders will capitalise their loan claims as part of the transaction.

Christopher Finance (Pty) Ltd 7 831 -

The unsecured loan accrues interest at prime plus 2% and is subordinated in favour of its other funders.

24 768 -There are no expected credit losses on these loans.

9. Loans due from associatesLendcor (Pty) Ltd - 6 286The unsecured loan accrued interest at prime and was repaid in March 2018.

Lendcor Holdings (Pty) Ltd 21 1 902The unsecured loan accrues interest at prime and is repayable on demand.

Mettle Solar Investments (Pty) Ltd 47 647 30 105• loan 62 859 37 414• share of equity accounted loss (refer to note 6) (15 212) (7 309)

The unsecured loan accrues interest at prime plus 3% and repayment is not expected in the foreseeable future.


Mettle Solar Namibia (Pty) Ltd - 2 286The unsecured mezzanine loan accrued interest at prime plus 3% and was repaid in February 2019.

47 668 40 579Less: non-current portion (47 647) (32 390)

21 8 189


2019R’000

2018R’000

10. Financial assets at fair value through profit or loss

Mandatorily at fair valueGray Swan Sanlam Collective Investments Cautious Fund of Funds 10 932 10 448Gray Swan Sanlam Collective Investments Moderate Fund of Funds - 10 410Gray Swan Sanlam Collective Investments Aggressive Fund of Funds - 10 376

10 932 31 234ReconciliationAt beginning of the year 31 234 -Purchases - 30 001Fair value adjustment 198 1 233Disposals (20 500) -At end of the year 10 932 31 234

The unit trust investment is valued at the year-end closing price and secures the overdraft detailed in note 18. The fair value is classified as level 1 in the fair value hierarchy.

11. Loan receivablesBridging finance

The loan accrued interest at prime plus 3.5% (settled monthly) and was repaid in April 2018.

- 707

Mettle Administrative Services (Pty) Ltd is the general partner of the Mettle Debt Fund En Commandite Partnership. The following loans all have shared security with the limited partner. The general partner and the limited partner both have capital invested in these loans:

The loans accrue interest at 10.5% and are repayable in twenty (2018: nine) instalments, with the last repayment due in June 2020 (2018: February 2019). The loans are secured by the following:

9 774 2 727

• first priority aircraft mortgage bonds;• cession of the insurance and reinsurance over the aircraft;• cession of the shares and loans claims in and against the borrower;• cession of Tradehold Ltd shares; and• guarantees from various parties linked to the borrower.

The loan accrued interest at prime plus 4.5% (settled monthly) and was repaid in March 2018.

- 14 541

The loan to Christopher Finance (Pty) Ltd (joint venture) accrues interest at prime plus 7% which is payable monthly. The loan capital is repayable in December 2019. The loan is secured by a debtors book and certain pledged proceeds. The repayment of the loan has also been guaranteed by various companies related to the borrower. 17 869 12 249

The loan accrues interest at prime plus 5% which is payable monthly. The loan is repayable in July 2021. The loan is secured by production rebate credit certificates (two times cover) and a reversionary cession over certain book debts. 2 041 2 048

The loan accrued interest at prime plus 3% and was repaid in March 2018. - 914



2019R’000

2018R’000

11. Loan receivables (continued)

Property development financeThe unsecured loan accrues interest at prime and will only be recovered when a property development is complete. This is expected to take place in the next year. 1 108 5 860

Vehicle financeThe secured loans accrue interest rate at an average rate that is 10.85% (2018: 10.89%) above the prime interest rate which was 10.25% at year end. The average remaining term of these loans is 20.1 (2018: 28.3) months. 456 924

Key persons loans (related parties)EAF Investments Ltd 16 249 -

Reward Finance Group Ltd advanced £1.2 million to EAF Investments Ltd in April 2017. EAF Investments Ltd is a shareholder in Reward Finance Group Ltd and is controlled by Nick Smith who is also a director of Reward Finance Group Ltd. The loan is repayable after 10 years and accrues interest at sterling three-month Libor plus 2.5%. Dividends payable to EAF Investments Ltd are used to repay the loan. EAF Investments Ltd received dividends of R4m during the period from 15 May 2018 to 28 February 2019. The loan is secured by its 10% shareholding in Reward Finance Group Ltd. The sterling three-month Libor rate was 0.9% at 28 February 2019.

JE&K Ltd 12 665 -

Reward Finance Group Ltd advanced £0.76 million to JE&K Ltd in April 2018. JE&K Ltd is a shareholder in Reward Finance Group Ltd and is controlled by David Harrop who is also a director of Reward Finance Group Ltd. The loan is repayable after 10 years and accrues interest at sterling three-month Libor plus 2.5%. Dividends payable to JE&K Ltd are used to repay the loan. JE&K Ltd received dividends of R2m during the period from 15 May 2018 to 28 February 2019. The loan is secured by its 5% shareholding in Reward Finance Group Ltd. The sterling three-month Libor rate was 0.9% at 28 February 2019.

Sterling Libor is to be replaced by another reference rate by the end of 2021. The group is assessing the impact of this change on the above Libor-linked loan receivables for future financial periods.

Francois van Themaat (director of associate) 2 942 2 714

The loan accrues interest at prime less 2% and is repayable by 15 April 2019. The loan is limited recourse, secured by 172,170 (2018: 166,667) Tradehold Ltd shares and 166,667 (2018: Nil) company shares. The Tradehold Ltd closing share price was R12.50 and the company's closing share price was R0.90.

Teniam Holdings (Pty) Ltd (company of director of subsidiary) - 857

The loan accrued interest at prime less 2% and was secured by 45,342 Tradehold Ltd shares. The individual resigned during the year and the loan was settled by the proceeds from the disposal of the security (R0.7 million). No further recovery was possible due to the limited recourse nature of the loan.

63 104 43 541


2019R’000

2018R’000

Loss allowance:Property development finance - (3 624)Vehicle finance (52) (65)Key persons (640) (100)

62 412 39 752Less: non-current portion (36 421) (18 285)Bridging finance (7 298) (14 297)Vehicle finance (209) (517)Key persons (28 914) (3 471)

25 991 21 467

Interest rate analysisFixed 9 774 2 727Variable 53 330 40 814

63 104 43 541

There is sufficient excess security for these loan receivables. As a result, there is a minimal loss allowance for expected credit losses.

The loss allowance is calculated on a specific basis per counterparty after taking security into account.

Ageing of loan receivables

2019

Capital before impairment

allowanceR’000

Allowance for impairment

R’000

Not past due 63 095 683Past due less than 3 months 9 9

63 104 692

2018

Not past due 43 420 3 733Past due less than 3 months 93 28Past due more than 3 months 28 28

43 541 3 789At 28 February 2019, loan receivables of R63.1 million were fully performing (2018: R43.4 million).

2019R’000

2018R’000

The movement in the loss allowance is as follows:At beginning of the year 3 789 4 429Impairment recognised in profit or loss 707 78Loans written off (3 804) (718)At end of the year 692 3 789

Loan receivables of R30.8 million (2018: R35.4 million) are pledged as security for the Small Enterprise Finance Agency SOC Ltd borrowings (refer to note 15).

Loan receivables of R28.9 million form part of the security provided to Foresight Group (refer to note 15).



2019R’000

2018R’000

12. 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 437Other receivables 1 348 355Fee accruals 483 947Prepayments 69 87Value added tax 4 -

1 209 389 35 826

Reward CapitalReward Invoice

Factoring

Reconciliation2019

R’0002019

R’000At beginning of the year - -Acquisition of subsidiary 765 638 189 204Advances 556 806 1 315 659Interest and fees 134 201 45 155Foreign currency translation movement 81 952 19 725Receipts (including interest and fees) (556 445) (1 347 022)Write offs (4 521) -At end of the year 977 631 222 721

The majority of the South African trade receivables relate to trade debtor factoring in the panel beating and medical industries. These amounts have already been recovered after year-end.

Reward Finance Group Ltd provides asset secured short and medium-term loans and invoice discounting to the United Kingdom small and medium-sized enterprises (SME) market. Loan sizes are between £50 000 and £2 million and loan periods vary between 2 and 24 months. Reward Finance Group Ltd’s strategy is to target SME’s that are not adequately serviced by traditional banks. Trade receivables are secured by a combination of properties, receivables, debentures and equity shares to the value of £157.6 million.


Trade receivables of R31.5 million (2018: R30.3 million) are pledged as security for the Small Enterprise Finance Agency SOC Ltd borrowings (refer to note 15).

Trade and other receivables of R1.2 billion forms part of the security provided to Foresight Group (refer to note 15).

Trade and other receivables include amounts of R98.8 million that contractually fall due in excess of one year. These amounts are reflected as current as they form part of the normal operating cycle.

Ageing of South African trade receivables

Capital before loss allowance

2019R’000

Loss allowance2019

R’000


2018R’000

Loss allowance2018

R’000

Not past due 33 093 245 33 340 -Past due 1 – 29 days - - 473 -Past due 30 – 59 days 880 137 76 -Past due 60 – 89 days - - 82 82Past due > 180 days 1 153 879 548 -

35 126 1 261 34 519 82

No loss allowance was recognised in the prior year for the amount past due by more than 180 days as the customer is a client of the group for the past 11 years and has never not settled its account. The amount was subsequently received in April 2018.

Reward Capital Reward Capital

Ageing of Reward Capital and Reward Invoice Factoring trade receivables


2019R’000

Loss allowance 2019

R’000Stage 1 855 581 4 191Stage 2 11 135 55Stage 3 110 915 8 822

977 631 13 068

Reward Invoice Factoring

Reward Invoice Factoring


2019R’000

Loss allowance 2019

R’000

Not past due 201 465 1 006Past due less than 90 days 8 325 43Impaired 12 931 12 614

222 721 13 663

2019R’000

2018R’000

Movement in the South African loss allowance:At beginning of the year 82 121Impairment recognised in profit or loss 1 490 21Receivables written off (311) (60)At end of the year 1 261 82



2019R’000

12. Trade and other receivables (continued)

Movement in the Reward Capital loss allowance:At beginning of the year -Acquisition of subsidiary 14 605Impairment recognised in profit or loss 1 576Receivables written off (4 521)Foreign currency translation movement 1 408At end of the year 13 068

Movement in the Reward Invoice Factoring loss allowance:At beginning of the year -Acquisition of subsidiary 5 125Impairment recognised in profit or loss 7 791Foreign currency translation movement 747At end of the year 13 663

Reward Capital

2019R’000

Reward Invoice

Factoring2019

R’0002019

R’000

Trade receivables without external credit rating:Group 1 – new customers (less than 6 months 278 475 48 335 326 810Group 2 – existing customers with no past defaults 534 594 151 934 686 528

Group 3 – existing customers with some past defaults 141 494 8 789 160 283964 563 209 058 1 173 621

2019R’000

2018R’000

13. Cash and cash equivalents

Cash at bank and in hand 109 648 6 278

Cash and cash equivalents include the following for the purpose of the statement of cash flows:

Cash and cash equivalents 109 648 6 278Bank overdrafts (refer to note 18) (19 241) (1 355)

90 407 4 923

R0.2 million (2018: R0.2 million) is pledged to Nedbank Ltd as securities for a rental guarantee issued to a subsidiary’s landlord and a credit card with a credit limit of R0.1 million. Cash and cash equivalents of R8.8 million (2018: R5.6 million) are pledged as security for the Small Enterprise Finance Agency SOC Ltd borrowings (refer to note 15).

Cash and cash equivalents of R95.4 million forms part of the security provided to Foresight Group (refer to note 15).


2019R’000

2018R’000

14. Stated capital

Ordinary sharesAuthorised500 million shares of no par value (2018: 200 million shares of R0.00001 each)

Issued247 174 375 fully paid up shares of no par value 545 828

96 291 720 fully paid up shares of R0.00001 each 1Share premium 100 621

100 622

The following amendments to share capital took place in April 2018:• authorised and issued share capital was converted to no par value; and

• authorised share capital was increased to 500 million no par value ordinary shares.

The following share issues took place during the year:• on 14 May 2018 the company issued 40 192 618 ordinary shares to Tradehold Ltd in settlement of borrowings amounting to

R42 million (refer to note 16).

• on 15 May 2018 the company issued 110 690 037 ordinary shares to Tradehold Ltd for a consideration of R403.2 million.

On 28 May 2018, Tradehold Ltd distributed its ordinary shares in the company to its shareholders.

2019R’000

2018R’000

Preference sharesAuthorisedNil (2018: 1 000) class A cumulative redeemable preference shares of R1 each - 1

The preference shares were cancelled in April 2018.



2019R’000

2018R’000

15. Borrowings

Foresight Group 684 414 -

The borrowings accrue interest at a fixed rate of 6.5% which is payable quarterly. The current facility limit is £50 million. The repayment date is four years from each individual draw down with the first repayment due in August 2021. Foresight Group has a debenture over all assets of Reward Finance Group Ltd (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 Ltd to Reward Investments (No.2) Ltd (R432.1 million) and Sandy Ltd (R55.8 million) are subordinated in favour of Foresight Group.

The financial covenant, which measures the Reward Finance Group Ltd consolidated net asset value plus subordinated debt as a percentage of the outstanding principal amount, must be at least 60%. This covenant measured 82.5% at year-end.

There are two loan book covenants:• less than 15% of the loan book must be in recovery phase (2.3% at year-end); and• bad debts must be less than 5% (0.4% for the current year).

There have been no covenant breaches during the year.

Small Enterprise Finance Agency SOC Ltd 49 342 49 303

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

FirstRand Bank Ltd - 2 560

The R33 million facility accrued interest at prime less 1% and expired on 31 August 2018. The facility was guaranteed by Tradegro Holdings (Pty) Ltd (a wholly owned subsidiary of Tradehold Ltd) and secured by the Gray Swan Sanlam Collective Investments unit trust investments (refer to note 10).

733 756 51 863ReconciliationAt beginning of the year 51 863 22 584Acquisition of subsidiary 558 357 -Receipts 72 336 62 000Interest expense 47 530 6 886Foreign currency translation movement 58 753 -Repayments (including interest) (55 083) (39 607)At end of the year 733 756 51 863

Maturity analysisWithin 1 year 2 658 8 1062 to 5 years 731 098 43 757

733 756 51 863Interest rate analysisFixed 684 414 -Variable 49 342 51 863

733 756 51 863


2019R’000

2018R’000

16. Borrowings due to related parties

Tradehold Ltd (former holding company) - 42 000

The borrowings were interest free and secured by the amounts advanced by the company to Mettle Administrative Services (Pty) Ltd and Mettle Solar Investments (Pty) Ltd. The loan was settled via a share issue (refer to note 14).

Tradegro S.àr.l. (subsidiary of Tradehold Ltd) 139 011 -

The borrowings are unsecured and accrue interest at sterling three-month Libor plus 6.5%. The capital and capitalised interest is repayable on 28 May 2020. The sterling three-month Libor rate was 0.9% at 28 February 2019.

Sandy Ltd 55 813 -

The borrowings were advanced on 31 January 2019 and 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 this £6 million facility ends on 30 September 2019. The borrowings are subordinated in favour of Foresight Group (refer to note 15). Sandy Ltd is connected to the Wiese family. The CH Wiese Family Trust holds shares in the Titan group of companies, which is a major shareholder of the company.

194 824 42 000The borrowings of £1.1 million owed by Reward Finance Group Ltd to Ms CH Wiese, when the company acquired Reward Investments (No.2) Ltd, were unsecured, accrued interest at sterling three-month Libor plus 4% and were repaid on 31 January 2019.

ReconciliationAt beginning of the year 42 000 68 562Acquisition of subsidiary 144 408 -Receipts 54 252 1 650Interest expense 8 697 -Foreign currency translation movement 15 767 -Settlement via issue of ordinary shares (42 000) -Cession in settlement of the consideration due for the disposal of the preference share investment

- (25 581)

Repayments (including interest) (28 300) (2 631)At end of the year 194 824 42 000

Maturity analysisWithin 1 year - 42 0002 to 5 years 194 824 -

194 824 42 000Interest rate analysisFixed 55 813 42 000Variable 139 011 -

194 824 42 000



2019R’000

2018R’000

17. Other financial liability

Put option contract 2 611 -

The remaining shareholder in Lendcor Holdings (Pty) Ltd can put their 50.1% shares to the company. 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 (Pty) Ltd and R12.9 million. This put option can only be exercised during the period from 1 June 2021 to 31 August 2021. The measurement of this liability considers the current net asset value of Lendcor (Pty) Ltd (refer to note 7) and the future budgeted profit after tax of Lendcor (Pty) Ltd.

18. Bank overdraftsFirstRand Bank Ltd 10 928 -

The R15 million overdraft facility is secured by the Gray Swan Sanlam Collective Investments unit trust investment of R10.9 million (refer to note 10) and is reviewed annually. The facility accrues interest at prime plus 1%.

Nedbank Ltd 8 313 1 355

The R10 million (2018: R5 million) unsecured overdraft facility is reviewed annually. The overdraft facility accrues interest at prime.

19 241 1 355

Interest rate analysisVariable 19 241 1 355

19. ProvisionsBonusAt beginning of the year 329 340Acquisition of subsidiary 826 -Paid (325) (250)Foreign currency translation movement 185 -Charged to profit or loss 3 869 239At end of the year 4 884 329

The bonus provision represents management's best estimate of the constructive obligation in respect of bonuses relating to the current year.

20.Trade and other payablesTrade payables 985 487Other payables and accruals 5 526 434Receivables with credit balances 5 896 -Cash security account 811 1 164Deferred income 8 256 796Value added tax 2 083 355Bonuses 1 096 607Audit fees 1 246 281Leave pay 183 193

26 082 4 317


2019R’000

2018R’000

The leave pay accrual represents management's best estimate of the obligation in respect of leave pay that arose from prior services rendered.

The average credit period for purchases of goods and services is 30 days. No interest is charged on trade payables. The company has policies in place to ensure that trade payables are paid within the credit period time.

21. Revenue

Fee income (South Africa) 18 961 15 814• Fundraising 5 750 2 728• Management and administration 7 718 5 177• Corporate finance 4 824 6 598• Secretarial and sponsor services 669 1 311

Service fee income (United Kingdom) 50 299 -• Initial set up 12 248 -• Monthly 23 711 -• Ad hoc 14 340 -

Discounting income (South Africa) 16 066 14 333• Panel beaters 15 350 13 587• Medical 716 746

Interest income 141 651 14 043• Loan receivables 132 907 5 305• Loan receivables – key persons loans 916 869• Loans due from joint ventures 1 392 -• Loans due from associates 6 436 7 869

226 977 44 190

Interest income – financial assets measured at amortised cost 141 651 14 043

Split of interest income• United Kingdom 129 166 -• South Africa 12 485 14 043

141 651 14 043

Timing of revenue recognition• At a point in time 21 140 7 395• Over time 205 837 36 795

226 977 44 190



2019R’000

2018R’000

22.Other income

Expense recoveries 9 013 4 860Interest income – deferred consideration on disposal of subsidiary - 67Interest income – cash and cash equivalents 723 913Foreign exchange differences 1 815 -Bargain purchase gain 823 -Loss on disposal of subsidiary (85) -Gain on remeasurement of contingent consideration - 158Held for sale fair value adjustment - 326Profit on disposal of property, plant and equipment 81 -Fair value adjustment on financial assets at fair value through profit or loss 198 1 233Preference dividend income - 192Profit on disposal of preference shares - 916Bad debts recovered 49 -Prescribed debt 91 -

12 708 8 665

23.Loss allowance

Loan receivables 707 78Trade and other receivables• South Africa 1 490 21• Reward Capital 1 577 -• Reward Invoice Factoring 7 791 -

11 565 99

24.Operating expenses

Auditors’ remuneration• current year 1 491 489• prior year underprovision 230 -Legal, professional and consultancy fees 12 052 2 678Securities transfer tax 1 555 -Depreciation of property, plant and equipment 906 292Property operating lease rentals 3 738 1 318Salaries, bonus, wages and commissions 60 532 20 705Directors’ fees 682 -Travel expenses 2 065 613Information technology costs 2 474 535Marketing and entertainment 3 689 52Other expenses 5 995 1 703

95 409 28 385

25.Interest expense

Borrowings 47 531 6 886Borrowings due to related parties 8 697 -Bank overdrafts 747 19

56 975 6 905

Interest expense – financial liabilities measured at amortised cost 56 975 6 905


2019R’000

2018R’000

26.Taxation

Current taxation• current year 17 387 3 356• prior year underprovision 5 -

Deferred taxation• current year (122) 1 330

17 270 4 686

Details of the group's calculated tax losses are disclosed in note 5.

% %Reconciliation of taxation rateTaxation as a percentage of profit before taxation 35.0 22.8(Loss)/profit from associates and joint ventures (3.8) 4.2Non-deductible expenses (4.6) (0.7)Non-deductible goodwill impairment (1.1) 0.0Non-deductible impairment of investments in associates (7.3) 0.0Non-deductible impairment of investment in joint venture (1.3) 0.0Non-deductible fair value loss on other financial liability (1.5) 0.0Utilisation of taxation losses not previously recognised 0.3 1.7IFRS exempt income (bargain purchase gain) 0.5 0.0United Kingdom tax rate differential 11.8 0.0Statutory tax rate 28.0 28.0

Cents per share Cents per share

27. Earnings per share

Basic earnings per share 7.14 16.44Diluted earnings per share 7.14 16.44Headline earnings per share 14.69 16.11Diluted headline earnings per share 14.69 16.11

R’000 R’000

Basic earnings per shareProfit attributable to owners of the company 15 417 15 834

‘000 ‘000

Weighted average number of ordinary shares for the year 215 868 96 292

Diluted earnings per shareThe company has no dilutive potential ordinary shares.



2019R’000

2018R’000

27. Earnings per share (continued)

Headline earnings per shareHeadline earnings is calculated below:Profit attributable to owners of the company 15 417 15 834Bargain purchase gain (823) -Loss on disposal of subsidiary 85 -Impairment of goodwill 1 880 -Impairment of investment in joint venture 2 341 -Impairment of investments in associates 12 860 -Held for sale fair value adjustment - (326)Profit on disposal of property, plant and equipment (81) -Tax impact of adjustments 22 -

31 701 15 508

‘000 ‘000

Weighted average number of ordinary shares for the year 215 868 96 292

R’000 R’000

28.Notes to the statement of cash flows

A Reconciliation of profit before taxation to cash utilised in operationsProfit before taxation for the year 49 309 20 520Increase in allowance for impairment – trade receivables 10 946 21Increase in allowance for impairment – loan receivables 618 78Depreciation of property, plant and equipment 906 292Interest income (142 373) (15 022)Interest expense 56 975 6 905Foreign exchange differences (1 815) -Bargain purchase gain (823) -Loss on disposal of subsidiary 85 -Gain on remeasurement of contingent consideration - (158)Profit on disposal of property, plant and equipment (81) -Profit on disposal of preference shares - (916)Preference dividend income - (192)Fair value adjustment on financial assets at fair value through profit or loss (198) (1 233)Fair value loss on other financial liability 2 611 -Impairment of goodwill 1 880 -Impairment of investment in joint venture 2 341 -Impairment of investments in associates 12 860 -Held for sale fair value adjustment - (326)Prescribed debt (91) -(Profit)/loss on from joint ventures (1 380) 240Loss/(profit) from joint associates 8 114 (3 294)Operating (loss)/profit before working capital changes (116) 6 915

Increase in trade and other receivables (144 077) (8 913)Increase/(decrease) in provisions 3 603 (11)Increase/(decrease) in trade and other payables 6 875 (319)

(133 715) (2 328)


2019 R‘000

2018R’000

B Taxation paid

Liability at beginning of the year (81) (21)Current taxation charge in profit or loss (17 392) (3 356)Acquisition of subsidiaries (5 607) -Disposal of subsidiary 186 -Withholding tax credit 31 387Foreign currency translation movement (566) -Liability at end of the year 7 789 81

(15 640) (2 909)

C Subsidiaries acquired

Gondotrix (Pty) LtdThe company acquired the remaining 50% of Gondotrix (Pty) Ltd from the other shareholder on 31 March 2018 for R1. Gondotrix (Pty) Ltd owned 100% of Mettle Credit Services (Pty) Ltd.

The subsidiary had the following assets and liabilities on acquisition date:

Fair value of identifiable net assetsEquipment 153Trade and other receivables 1 186Deferred taxation 5Cash and cash equivalents 1 413Taxation (121)Trade and other payables (874)

1 762Fair value of consideration transferredConsideration settled in cash -Fair value of equity interest (associate) held before business combination (939)

(823)Cash flow on acquisition of the subsidiaryCash and cash equivalents acquired with the subsidiary 1 413Consideration settled in cash -

1 413



Reward Investments (No.2 Ltd)

The company acquired 90% of Reward Investments (No.2) Ltd on 15 May 2018 via a subscription of shares which diluted the existing shareholding of Tradehold Ltd. Reward Investments (No.2) Ltd owns 75% of Reward Finance Group Ltd. 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 Ltd.

2019 R‘000

28.Notes to the statement of cash flows (continued)

The subsidiary had the following assets and liabilities on acquisition date:

Recognised amounts of identifiable net assetsEquipment 844Loan receivables 30 435Trade and other receivables 936 705Cash and cash equivalents 70 001Borrowings (558 357)Borrowings due to related parties (144 408)Deferred taxation (68)Trade and other payables (14 332)Provisions (826)Taxation (5 486)

314 508Non-controlling interest (48 557)

265 951Fair value of consideration transferredConsideration settled in cash 389 511Common control reserve 123 560

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

(319 510)

The Rand:Pound exchange rate on acquisition date was R16.88.

The group has included revenue of R179.5 million and profit attributable to equity holders of the parent of R37.1 million relating to this acquisition (refer to note 29).

Had Reward Investments (No.2) Ltd been consolidated for the full year, the consolidated group revenue and profit attributable to equity holders of the parent would have been R268.8 million and R23.9 million, respectively.


D Subsidiary disposedMettle Credit Services (Pty) Ltd

Montsi Investments invested R1.8 million in Mettle Credit Services (Pty) Ltd on 31 May 2018 and became a 51.1% shareholder. As a result, the company’s indirect shareholding diluted to 48.9%.

2019 R‘000

The subsidiary had the following assets and liabilities on disposal date:

Carrying amounts of assets and liabilitiesEquipment 133Trade and other receivables 1 028Deferred taxation 5Cash and cash equivalents 1 853Taxation (186)Trade and other payables (903)

1 930Fair value of retained equity interest 1 845Loss on disposal (85)

Cash flow on disposal of the subsidiaryCash disposed with the subsidiary 1 853

29. Segment informationSegments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The CODM is the person or group that allocates resources to and assesses the performance of the operating segments of a company. The operating segments have been determined based on the reports reviewed by the executive board of directors in making strategic decisions. The results from the South African operations and the investments within South Africa have been combined into one segment as they have the same economic characteristics.

The executive board of directors monitor the business based on the following operating segments:• United Kingdom

• South Africa

There were no transactions between the operating segments.

The amounts provided to the board of directors in respect of total assets and total liabilities are measured in a manner consistent with that of the annual financial statements. These assets and liabilities are allocated based on the operations of the segment and the physical location of the asset. As all assets and liabilities have been allocated to the reportable segments, reconciliations of reportable segments’ assets to total assets, and of reportable segments’ liabilities to total liabilities, are not presented.



The segment information for the reportable segments for the year ended 28 February 2019 is detailed below:

United KingdomR’000

South AfricaR’000

TotalR’000

Condensed statement of comprehensive incomeRevenue 179 462 47 515 226 977Other income 1 416 11 292 12 708Operating expenses (54 368) (41 041) (95 409)Loss allowance (9 367) (2 198) (11 565)Fair value loss on other financial liability - (2 611) (2 611)Impairment of goodwill - (1 880) (1 880)Impairment of equity accounted investments - (15 201) (15 201)Interest expense (50 591) (6 384) (56 975)Profit/(loss) from operations 66 552 (10 508) 56 044Loss from equity accounted investments - (6 735) (6 735)Profit/(loss) before taxation 66 552 (17 243) 49 309Taxation (12 815) (4 455) (17 270)Profit/(loss) before non-controlling interest 53 737 (21 698) 32 039Non-controlling interest (16 622) - (16 622)Net profit/(loss) 37 115 (21 698) 15 417

Condensed statement of financial positionInvestments in joint venture - 29 020 29 020Investments in associates - 37 111 37 111Loans due from joint ventures - 24 768 24 768Loans due from associates - 47 647 47 647Loan receivables 28 914 33 498 62 412Trade and other receivables 1 174 818 34 571 1 209 389Cash and cash equivalents 99 607 10 041 109 648Other assets 1 190 18 706 19 896Total assets 1 304 529 235 362 1 539 891

Borrowings 684 414 49 342 733 756Borrowings due to related parties 194 824 - 194 824Bank overdrafts - 19 241 19 241Other payables 33 336 8 812 42 148Total liabilities 912 574 77 395 989 969

Capital and reserves attributable to the owners 331 638 157 967 489 605Non-controlling interest 60 317 - 60 317Total equity 391 955 157 967 549 922

Total assets include additions to the following non-current assets:Property, plant and equipment 849 204 1 053Joint ventures - 21 764 21 764

Statement of cash flowsCash flows from operating activities (65 190) 3 534 (61 656)Cash flows from investing activities (320 359) (28 793) (349 152)Cash flows from financing activities 477 372 11 136 488 508

91 823 (14 123) 77 700

As the group only had one business segment at 28 February 2018, which was managed as a single pool of capital irrespective of the sector in which the group’s businesses traded, no segment information was provided.


30. Financial risk management Financial instruments by category

Financial assets

2019Amortised cost

R’000

2018Amortised cost

R’000

Loans due from associates 47 668 40 578Loans due from joint ventures 24 768 -Loan receivables 62 412 39 752Trade and other receivables * 1 209 316 35 740Cash and cash equivalents 109 648 6 278

* Excludes value added taxation and prepayments as these are not financial assets

The financial assets at fair value through profit or loss are measured at fair value (refer to note 10).

Financial liabilities

2019Amortised cost

R’000

2018Amortised cost

R’000

Borrowings 733 756 51 864Borrowings due to related parties 194 824 42 000Bank overdrafts 19 241 1 355Trade and other payables ** 15 743 3 166

** Excludes value added taxation and deferred income as these are not financial liabilities

The other financial liability is measured at fair value (refer to note 17).

The group is exposed to market risk, credit risk and liquidity risk. The group’s senior management oversees the management of these risks and seeks to minimise the potential adverse effects on the group’s financial performance.


Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency risk, interest rate risk and price risk.

Currency risk

The group’s results can be significantly impacted by the Rand Pound Sterling exchange rate due to the contribution of the United Kingdom businesses to the group profit. The average exchange rate used to convert Pound Sterling denominated income and expenses was R18.08.

A 5% change represents management’s assessment of the possible change in the average Rand Pound Sterling exchange rate during the year. If the Rand had

strengthened/weakened by 5% against Pound Sterling, then the group’s profit attributable to equity holders of the parent for the year ended 28 February 2019 would have decreased/increased by R1,856,175.

Refer to the segment information (note 29) for all Pound Sterling denominated assets and liabilities. The year-end exchange rate was R18.60. Any change in the year-end exchange rate only impacts the foreign currency translation reserve and the non-controlling interest.

Cash flow interest rate risk

The group’s cash flow interest rate risk arises from borrowings issued at variable rates and cash and cash equivalents, loan receivables and loans due from associates and joint ventures held at variable rates.


30. Financial risk management (continued)

The sensitivity analysis below has been determined based on the variable rate interest bearing borrowings, cash and cash equivalents and loan receivables of the group outstanding at the reporting date. A 100 (2018: 100) basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 (2018: 100) basis points higher/lower and all other variables were held constant, the group’s profit before tax for the year ended 28 February 2019 would decrease/increase by R1,543,167 (2018: increase/decrease by R452,321).

Price risk

The group’s price risk arises from its financial assets at fair value through profit or loss. As this is an investment in a cautious fund of funds unit trust, there is less price risk due to the asset allocation composition of the unit trust.

Gray Swan Financial Services (Pty) Ltd (joint venture) manages this unit trust investment and provides performance feedback regularly.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The group is exposed to credit risk from its operating activities (trade and loan receivables) and from its financing activities, including deposits with banks and financial institutions.

Each individual business unit assesses the credit quality of its customers by considering its financial position, past experience and other factors. Individual credit limits are set for high volume transaction businesses by the specific board. These credit limits are reviewed regularly and revised if necessary.

The principal activities of Reward Finance Group Ltd are to target the SME finance market and support SMEs in the United Kingdom with short-term asset-based funding and debt factoring services. The business model is to provide short-term capital to cash-strapped companies. Trade receivables are secured by a combination of properties, receivables, debentures and equity shares to the value of £157.6 million.

The value of the underlying security is paramount in any lending decision. In addition, personal guarantees are also taken in support of facilities.

Credit policy is managed through credit limits defined at all stages of the customer life cycle, including new account sanctioning, customer management and collections and recovery activity as well as reviewing the security held. Customer lending decisions are managed principally through an affordability assessment which determines a customer’s ability to repay an outstanding credit amount. In the event of default, the security pledged is called upon.

Pre-lending due diligence of all new facilities includes: assessment of the borrower’s financial standing, full credit reference searches, know-your-customer anti–money laundering checks, review of management and their previous directorships, together with an assessment of the security value backed up by professional valuations when required.

Invoice finance clients are subject to a further review of their financial systems, liquidity and book debts. New facilities are underwritten in accordance with delegated authorities which require a minimum of two experienced lenders to sanction them. Legal documentation is outsourced to external solicitors who provide written confirmation that security is in order prior to draw down of facilities.

All clients are subject to continual monitoring via a credit reference agency, client facilities are subject to an internal monthly review and reporting regime to ensure they are performing within agreed parameters.

Invoice finance clients are subject to periodic audits. Invoice finance debtor credit limits are set in accordance with credit reference agency ratings and supported by credit insurance where required, such limits are subject to on-going monitoring.

Early stage client defaults are overseen at director level, working with the client to rectify the position. Thereafter suitable professional advisors (accountants, solicitors, insolvency professionals) will be utilised to recover amounts due.

At the reporting date, the group did not consider there to be any significant concentration of credit risk, which has not been insured or adequately provided for. The maximum exposure to credit risk (after loss allowance) is R1.45 billion (2018: R122.8 million).




2019Carrying value

R’000Within 1 year

R’0001 to 2 years

R’000

More than 2 years

R’000

Total payments

R’000

Borrowings 733 756 52 458 96 626 741 618 890 702Borrowings due to related parties 194 824 3 907 155 706 63 301 222 914Bank overdrafts 19 241 19 241 - - 19 241Trade and other payables 15 743 15 743 - - 15 743

963 564 91 349 252 332 804 919 1 148 600

The company is already engaging with the Small Enterprise Finance Agency SOC Ltd to extend the borrowings due in March 2020.

The bank overdrafts are reviewed annually and there is currently no reason why these facilities will not continue.

The company is also engaging with potential new funders to finance the repayment of the borrowings due to Tradegro S.àr.l in May 2020. In addition, Reward Finance Group Ltd is liaising with the Foresight Group regarding an increased facility and revising its required financial covenant.


2018Carrying value


R’0001 to 2 years

R’000More than 2 years

R’000

Total payments

R’000

Borrowings 51 863 8 106 5 547 49 304 62 957Borrowings due to related parties 42 000 42 000 - - 42 000Bank overdrafts 1 355 1 355 - - 1 355Trade and other payables 3 166 3 166 - - 3 166

98 384 54 627 5 547 49 304 109 478

Liquidity risk

Liquidity risk is the risk that the group will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk arises from existing commitments associated with its borrowings and the requirement to raise funds in order to meet these commitments.

Cash flow forecasting is performed in the operating companies of the group and aggregated by group finance. Group finance monitors rolling forecasts of the group’s

liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn borrowing facilities at all times so that the group does not breach borrowing limits or covenants (where applicable).

The table below analyses the group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.




Fair value

The fair values of financial instruments are measured in accordance to the following fair value measurement hierarchy:

• Level 1: Quoted prices in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices that are observable for the asset or liability.

• Level 3: Inputs for the asset or liability that are not based on observable market data.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes observable market data requires significant judgement by the group. The group considers observable data to be such market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

The fair value of financial assets and liabilities are determined as follows:

• Cash and cash equivalents, trade and other payables and bank overdrafts

The carrying amounts reported in the statement of financial position approximate fair values because of the short-term maturities of these assets and liabilities.

• Borrowings

The carrying amounts reported in the statement of financial position approximate fair values. Fair values of borrowings are estimated using discounted cash flow models based on prevailing market rates for similar types of borrowings, with maturities consistent with those remaining for the borrowings being valued.

• Trade and loan receivables and loans due from joint ventures and associates

The carrying amounts reported in the statement of financial position approximate fair values. Discounted cash flow models are used for trade and loan receivables. The discount yields in these models use calculated rates that reflect the return a market participant would expect to receive on instruments with similar remaining maturities, cash flow patterns, credit risk, collateral and interest rates.

The only financial assets measured at fair value are the financial assets at fair value through profit or loss (refer to note 10). These financial assets are unit trust investments measured at quoted prices (level 1).

The only financial liability measured at fair value is the other financial liability (refer to note 17). The valuation of the put option considers the exercise period, exercise price, current net asset value and future profitability of the underlying company (level 3).

Capital risk management

The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’, ‘borrowings due to related parties’ and ‘bank overdrafts’ as shown in the group statement of financial position) less cash and cash equivalents. Total capital is calculated as ‘total equity’ as shown in the consolidated statement of financial position less non-controlling interest plus net debt.


The gearing ratios are as follows:

2019R’000

2018R’000

Total borrowings 947 822 95 218Less: cash and cash equivalents (refer to note 13) (109 648) (6 278)Net debt 838 174 88 940Capital and reserves attributable to the owners 489 604 122 820Total capital 1 327 778 211 760Gearing ratio 63% 42%

31. Related parties

Related parties of the Mettle Investments group include its directors, key management, shareholders, joint ventures and associates. Transactions are concluded on an arm’s length basis.

Transactions2019

R’0002018

R’000

Fee income from associatesMettle Credit Services (Pty) Ltd - 133Mettle Solar (RF) (Pty) Ltd 204 240Mettle Solar Operations (Pty) Ltd 73 -Mettle Solar Investments (Pty) Ltd 240 -Metdecci Energy Investment (Pty) Ltd 1 010 -Lendcor (Pty) Ltd - 50

Fee income from joint ventureChristopher Finance (Pty) Ltd 320 -

Fee income from other related partiesTradehold Ltd (former holding company) 4 571 4 629Frontier Property Fund (Tradehold company) - 2 000Mettle Debt Fund En Commandite Partnership relating to:Christopher Finance (Pty) Ltd 431 -Metdecci Energy Investment (Pty) Ltd 213 95

Interest income from associatesLendcor Holdings (Pty) Ltd 4 119Lendcor (Pty) Ltd 9 645Mettle Solar (RF) (Pty) Ltd - 447Mettle Solar Namibia (Pty) Ltd 316 1 938Mettle Solar SPV 1 (Pty) Ltd - 113Mettle Solar SPV Riverside (Pty) Ltd - 29Mettle Solar SPV FVT (RF) (Pty) Ltd - 198Mettle Solar SPV Axis (Pty) Ltd - 233Mettle Solar Investments (Pty) Ltd 6 107 4 097Mettle Solar Finance (RF) (Pty) Ltd - 49

Interest income from joint venturesChristopher Finance (Pty) Ltd 285 -Christopher Finance (Pty) Ltd (loan receivable) 992 -Mettle Solar Africa Ltd 1 108 -




31. Related parties (continued)

2019R’000

2018R’000

Interest income from other related parties

Aapstert Investments (Pty) Ltd (company associated to F Esterhuyse, a director) - 561Karen Nordier (director of former holding company) - 22Francois van Themaat (director of associate) 228 217Teniam Holdings (Pty) Ltd (company of former director of subsidiary) (107) 68

Dividends receivedAssociatesImpex Treasury Solutions (Pty) Ltd - 293Gondotrix (Pty) Ltd 2 000 -

Joint ventureGray Swan Financial Services (Pty) Ltd 124 -

Other related partiesAapstert Investments (Pty) Ltd - 192

Interest expense to other related partiesTradegro S.àr.l. 7 784 -Sandy Ltd 241 -Ms CH Wiese 672 -

Ms CH Wiese is a beneficiary of the CH Wiese Family Trust, which holds the shares of the Titan group of companies, which is a major shareholder of the company. The loan was repaid in full on 31 January 2019 (refer to note 16).

Fees and expenses paid to joint ventureMettle Credit Services (Pty) Ltd 499 501

Fees and expenses paid to other related partiesMoorgarth Properties (Luxembourg) S.àr.l 728 -Moorgarth Group Ltd 362 -

Expense recoveriesTradehold Ltd (former holding company) 7 162 307Collins Property Projects (Pty) Ltd (Tradehold company) 144 131Moorgarth Group Ltd (Tradehold company) 1 416 1 060Reward Investments (No.2) Ltd (Tradehold company) - 221Imbali Props 21 (Pty) Ltd (Tradehold company) - 1 633Saddle Path Props (Pty) Ltd (Tradehold company) - 700Nguni Property Developments (Pty) Ltd (Tradehold company) - 628Mettle Solar (RF) (Pty) Ltd (associate) 42 182

Key management personnel remuneration (including directors)Salaries and other short-term employee benefits 12 320 13 219

The remuneration includes 8 (2018: 6) employees for on average 8.5 (2018: 12) months.

The company purchased the loan claim against Mettle Solar Africa Ltd from Tradehold Africa Ltd in May 2018 at a discount. The gain of R1.1 million has been recorded in equity.


Directors’ remuneration

2019

Non-executive fees

R’000Consulting fees

R’000SalaryR’000

Other benefits

R’000Bonus (9)

R’000Total

R’000

FH Esterhuyse (1) 100 - - - - 100JA Aitken (2) 20 - - - - 20MVZ Wentzel (3) 100 - - - - 100BA Chelius (3) (4) 270 830 - - - 1 100HRW Troskie (3) (5) 79 - - - - 79RD Fenner (6) 113 - - - - 113HF Prinsloo - - 1 851 110 82 2 043TM Flannery (3) (7) (8) - - 1 870 170 - 2 040JJ Rookledge - - 1 372 128 325 1 825WD Marais (2) - - 205 - - 205W Maree (2) - - 219 - - 219

682 830 5 517 408 407 7 844

1 Paid to his employer, Collins Property Projects (Pty) Ltd2 Resigned 19 April 20183 Appointed 19 April 20184 Paid R0.2 million by Lendcor (Pty) Ltd (associate) and R0.6 million by Mettle Specialised Finance (Pty) Ltd (subsidiary)5 Resigned 12 September 20186 Appointed 18 September 20187 From 15 May 2018 (acquisition date of Reward Investments (No.2) Ltd)8 Translated at R18.08:£19 Bonuses paid during the financial year

2018SalaryR’000

Other benefitsR’000

Bonus (2)R’000

TotalR’000

FH Esterhuyse (1) 2 127 373 1 650 4 150HF Prinsloo 1 850 - 346 2 196JJ Rookledge 1 383 117 250 1 750WD Marais 1 464 86 353 1 903W Maree 1 585 35 200 1 820

8 409 611 2 799 11 819

1 98.4% of remuneration was recovered from the Tradehold Ltd group2 Bonuses paid during the financial year



31. Related parties (continued)

Directors’ interest in the company’s shares

The interest of the directors in the issued shares in the company at 28 February 2019 and at the date of approval of these annual financial statements is as follows:

Direct beneficial’000

Indirect beneficial’000

Total’000

FH Esterhuyse - 3 300 3 300MVZ Wentzel - 668 668BA Chelius - 1 721 1 721HF Prinsloo - 9 592 9 592TM Flannery - 13 13JJ Rookledge 683 - 683

683 15 294 15 977

The company was 100% owned by Tradehold Ltd at 28 February 2018.

Director’s interest in subsidiary’s shares

Truly Alternative Ltd owns 10% in Reward Finance Group Ltd and received dividends of R4 million during the period from 15 May 2018 to 28 February 2019. TM Flannery co-owns and jointly controls Truly Alternative Ltd.

Balances2019

R’0002018

R’000

Loan receivable – Christopher Finance (Pty) Ltd 17 869 -Receivable due by Metdecci Energy Investment (Pty) Ltd 1 010 -

This amount was received in April 2019.

Refer to notes 6, 7, 8, 9 and 11 for terms of the investments in and loans due from related parties. Refer to note 16 for the borrowings due to related parties.

32. Operating lease commitments

2019R’000

2018R’000

Property rentals• Due within one year 2 070 685• Due between one and five years 4 368 125

6 438 810

33. Contingent liabilities Investec Bank Ltd approved a R100 million rooftop funding facility for Mettle Solar Finance (RF) (Pty) Ltd in March 2017. The company has agreed to subordinate all its claims against Mettle Solar Investments (Pty) Ltd group companies in favour of Investec Bank Ltd.

In May 2019, the company has provided a guarantee for the Rand equivalent of $3.1 million to Investec Bank (Mauritius) Ltd (via Investec Bank Ltd) for its $5 million funding facility provided to Mettle Solar Africa Ltd (the company’s 55% owned joint venture). The company had to place the required funds on deposit at Investec Bank Ltd. A 35% shareholder of Mettle Solar Africa Ltd has provided a similar guarantee for the remaining $1.9 million. This facility funds the construction of the group’s solar projects in Kenya and the Seychelles.


Company statement of financial position

Notes2019

R’0002018

R’000

Assets

Non-current assetsInvestments in subsidiaries 2 417 505 10 840Investments in associates 3 37 827 42 522Investments in joint ventures 4 4 006 7 313Financial assets at fair value through profit or loss 5 10 932 31 234Amounts due from related parties 6 140 410 86 691Loan receivables 7 - 3 471Total non-current assets 610 680 182 071

Current assetsAmounts due from related parties 6 5 166 16 109Loan receivables 7 2 302 -Trade and other receivables - 91Total current assets 7 468 16 200

Total assets 618 148 198 271

Equity and liabilitiesCapital and reservesStated capital 8 545 828 100 622(Accumulated loss)/retained income (66) 1 877Total shareholders’ funds 545 762 102 499

Non-current liabilitiesDeferred taxation 10 671 309Borrowings 11 46 684 43 757Other financial liability 12 2 611 -Total non-current liabilities 49 966 44 066

Current liabilitiesBorrowing due to related party 13 - 42 000Borrowings 11 2 657 8 106Bank overdrafts 23 19 241 1 355Taxation 79 43Trade and other payables 443 202Total current liabilities 22 420 51 706

Total equity and liabilities 618 148 198 271


Company statement of comprehensive income

Company statement of changes in equity

Notes2019

R’0002018

R’000

Revenue 14 23 827 14 821Other income 15 2 023 10 586Interest expense 16 (6 246) (6 629)Allowances for impairments 17 (9 175) (146)Fair value loss on other financial liability 12 (2 611) -Operating expenses 18 (8 647) (1 510)(Loss)/profit before taxation (829) 17 122Taxation 19 (2 264) (2 281)Total comprehensive (loss)/income (3 093) 14 841

StatedcapitalR’000

Accumulated loss

R’000Total

R’000

Balance at 28 February 2017 100 622 (12 964) 87 658

Total comprehensive income 14 841 14 841Balance at 28 February 2018 100 622 1 877 102 499Issue of ordinary shares 445 206 445 206Total comprehensive loss (3 093) (3 093)Profit on purchase of loan claim from related party (note 20) 1 150 1 150Balance at 28 February 2019 545 828 (66) 545 762


Company statement of cash flows

Notes2019

R’0002018

R’000

Cash flow from operating activitiesNet cash (utilised in)/generated by operations 22A (23 317) 8 559Dividends received 9 624 192Interest received 12 699 14 051Interest paid (6 209) (3 789)Taxation paid 22B (1 833) (1 550)Net cash (utilised in)/generated by operating activities (9 036) 17 463

Cash flow from investing activitiesPurchase of financial assets at fair value through profit or loss - (30 001)Disposal of financial assets at fair value through profit or loss 20 500 -Acquisition of investments in subsidiaries (407 215) -Acquisition of loan to subsidiary (9 745) -Additional investment in subsidiaries - (8 300)Loan receivables recovered 673 24 758Investment in preference shares - (24 750)Redemption of preference share investment - 84Proceeds on disposal of asset held for sale - 6 626Acquisition of loan to joint venture (13 703) -Acquisition of investment in joint venture (6) (4 000)Additional investment in associate - (7 260)Net cash utilised in investing activities (409 496) (42 843)

Cash flow from financing activitiesIssue of ordinary shares 403 206 -Receipt of borrowing from related party - 1 650Repayment of borrowing from related party - (2 631)Receipt of borrowings - 62 000Repayment of borrowings (2 560) (35 560)Net cash generated by financing activities 400 646 25 459

Net (decrease)/increase in cash and cash equivalents (17 886) 79Cash and cash equivalents at beginning of the year (1 355) (1 434)Cash and cash equivalents at end of the year 23 (19 241) (1 355)


Notes to the company annual financial statements

1. Accounting policiesRefer to the accounting policies in the consolidated annual financial statements on pages 34 to 44.

2019R’000

2018R’000

2. Investments in subsidiaries

Unlisted at costMettle Specialised Finance (Pty) Ltd – 100% (2018: 100%) ordinary shares 3 001 3 001• allowance for impairment (3 001) (2 451)Mettle Corporate Finance (Pty) Ltd – 100% (2018: 100%) ordinary shares 1 990 1 990Mettle Vehicle Finance (Pty) Ltd – 100% (2018: 100%) ordinary shares - -Mettle Administrative Services (Pty) Ltd – 100% (2018: 100%) ordinary shares 8 300 8 300Reward Investments (No.2) Ltd – 90% (2018: 0%) ordinary shares 389 511 -Gondotrix (Pty) Ltd – 100% (2018: 50%) ordinary shares - -Imali Medical Claims (Pty) Ltd – 100% (2018: 0%) ordinary shares 17 704 -

417 505 10 840

2019

The following took place during the year ended 28 February 2019:• acquired the remaining 50% ordinary shares in Gondotrix (Pty) Ltd for nominal value.

• R226.7 million subscription of ordinary shares in Reward Investments (No.2) Ltd.

• R162.8 million purchase of a loan claim against Reward Investments (No.2) Ltd which was then capitalised.

• acquired the ordinary shares and loan claim (refer to note 6) in Imali Medical Claims (Pty) Ltd.

2018

The following took place during the year ended 28 February 2018:• invested R8.3 million in Mettle Administrative Services (Pty) Ltd.

• an impairment allowance was recognised due to the losses incurred by Mettle Specialised Finance (Pty) Ltd.

The principal subsidiary investments are disclosed in note 2 in the consolidated annual financial statements.

2019R’000

2018R’000

3. Investments in associates

Unlisted (at cost)

Lendcor Holdings (Pty) Ltd• 49.9% (2018: 49.9%) ordinary shares 20 686 20 686• allowance for impairment (13 098) (8 403)Mettle Solar Investments (Pty) Ltd – 55% (2018: 55%) ordinary shares 7 260 7 260Lendcor (Pty) Ltd – 49.9% (2018: 49.9%) ordinary shares 22 979 22 979

37 827 42 522

The summarised financial information is disclosed in note 7 in the consolidated annual financial statements.


2019

The company acquired the remaining 50% ordinary shares in Gondotrix (Pty) Ltd on 31 March 2018 for nominal value. The investment is now classified as a subsidiary (refer to note 2).

2018

The company capitalised Mettle Solar Investments (Pty) Ltd with R7.3 million after Mettle Solar Namibia (Pty) Ltd had repaid its senior loan.

2019R’000

2018R’000

4. Investments in joint ventures

Unlisted (at cost)Incatorque (Pty) Ltd• subscription for 50.4% of ordinary shares 3 313 3 313• allowance for impairment (3 313) -

Gray Swan Financial Services (Pty) Ltd• subscription for 50% of ordinary shares 4 000 4 000

Mettle Solar Africa Ltd• 55% ordinary shares 6 -

4 006 7 313

The summarised financial information is disclosed in note 6 in the consolidated annual financial statements.

Incatorque (Pty) Ltd

The company acquired the ordinary shares and loan claim in November 2016 for R3.3 million. Incatorque (Pty) Ltd is a financial technology provider providing bespoke payment technology solutions.

The company and the other 49.6% shareholder both have the right to appoint 2 directors to the board. The operating plans of the joint venture need to be approved by 75% of shareholders.

An agterskot was payable linked to the targeted aggregate profit before tax of R11.8 million for the two year period ended 28 February 2019. As a loss before tax was incurred for this two year period, no agterskot is payable.

An allowance for impairment has been recognised due to the continued losses incurred by Incatorque (Pty) Ltd. A loss of R0.8 million was incurred in the current year (2018: R1.1 million).

Gray Swan Financial Services (Pty) Ltd

The company subscribed for 50% of the ordinary shares for R4 million in June 2017. Gray Swan Financial Services (Pty) Ltd is a leading independent investment advisory and wealth management company. The company needs to make a further subscription in 2021 based on the profit after tax for the financial years ending 29 February 2020 and 28 February 2021. This future subscription amount is reduced by the R4 million and is not expected to be a material amount.

The company and the other 50% shareholder both have the right to appoint an equal number of directors to the board. The operating plans of the joint venture need to be approved by both shareholders.



Mettle Solar Africa LtdThe company acquired the ordinary shares and loan claim in May 2018 for R13.7 million. Mettle Solar Africa Ltd is incorporated in Mauritius and its principal activity is generating green energy as well as the direct rendering of green energy services. The green technology includes rooftop and ground mounted solar photovoltaic systems in Kenya and the Seychelles.

The company does not control Mettle Solar Africa Ltd as all director and shareholder resolutions can only be approved with a 70% majority.

2019R’000

2018R’000

5. Financial assets at fair value through profit or loss

Mandatorily at fair valueGray Swan Sanlam Collective Investments Cautious Fund of Funds 10 932 10 448Gray Swan Sanlam Collective Investments Moderate Fund of Funds - 10 410Gray Swan Sanlam Collective Investments Aggressive Fund of Funds - 10 376

10 932 31 234

The unit trust investment is valued at the year-end closing price and secures the overdraft detailed in note 23. The fair value is classified as level 1 in the fair value hierarchy. The proceeds from the disposal of the Moderate and Aggressive Fund of Funds amounted to R20.5 million.

6. Amounts due from related partiesAmounts due from subsidiaries

Mettle Administrative Services (Pty) LtdThe loan was interest free until 28 February 2018. From 1 March 2018, interest accrues at prime (settled monthly). The company received loan repayments of R8 3 million during the prior year resulting in the profit on loan settlement of R4 million (refer to note 15). 2 633 2 697

The loan accrues interest at prime plus 1% (settled semi-annually) and is repayable in March 2020. The loan is secured by Mettle Administrative Services (Pty) Ltd's cash balances and loan and trade receivables of R71.1 million (2018: R63.9 million). 49 341 49 303

Mettle Vehicle Finance (Pty) LtdThe interest free loan is secured by Mettle Vehicle Finance (Pty) Ltd’s loan receivables of 0.4 million (2018: R0.9 million) and is repayable by 30 June 2019. 143 540

Mettle Specialised Finance (Pty) LtdThe unsecured loan is interest free and repayable on demand. 2 333 2 373

Imali Medical Claims (Pty) LtdThe unsecured loan was acquired in November 2018 and is repayable once the amount due by Christopher Finance (Pty) Ltd to Imali Medical Claims (Pty) Ltd is recovered. R2.2 million of the loan is interest free with the balance accruing interest at prime plus 2%. 10 030 -

Gondotrix (Pty) LtdThe unsecured loan is interest free and repayable on demand. 10 -


Notes to the company annual financial statements (continued)


2019R’000

2018R’000

Amounts due from associates

Lendcor (Pty) LtdThe unsecured loan accrued interest at prime and was repaid in March 2018. - 6 286

Lendcor Holdings (Pty) LtdThe unsecured loan accrues interest at prime and is repayable on demand. 21 1 902

Mettle Solar Investments (Pty) LtdThe unsecured loan accrues interest at prime plus 3% and repayment is not expected in the foreseeable future.

62 859 37 413


Mettle Solar Namibia (Pty) LtdThe unsecured mezzanine loan accrued interest at prime plus 3% and was repaid in February 2019.

- 2 286

Amounts due from joint ventures

Incatorque (Pty) LtdThe unsecured loan currently accrues no interest and repayment has been deferred for at least a year.

430 -

Mettle Solar Africa LtdThe loan is US Dollar denominated and accrues interest at US prime plus 3% (which amounted to 8.5% at year-end). The loan was translated at a closing rate of R13.99.

17 776 -


145 576 102 800

Maturity analysis

Within 1 year 5 166 16 109

2 to 5 years 140 410 86 691

145 576 102 800

7. Loan receivables

Related partiesFrancois van Themaat (director of associate) 2 942 2 714

• loss allowance (640) -

The loan accrues interest at prime less 2% and is repayable by 15 April 2019. The loan is limited recourse, secured by 172,170 (2018: 166,667) Tradehold Ltd shares and 166,667 (2018: Nil) company shares. The Tradehold Ltd closing share price was R12.50 and the company's closing share price was R0.90.




2019R’000

2018R’000

7. Loan receivables (continued)

Teniam Holdings (Pty) Ltd (company of director of subsidiary) - 857• loss allowance - (100)The loan accrued interest at prime less 2% and was secured by 45,342 Tradehold Ltd shares. The individual resigned during the year and the loan was settled by the proceeds from the disposal of the security (R0.7 million). No further recovery was possible due to the limited recourse nature of the loan.

2 302 3 471Maturity analysisWithin 1 year 2 302 -2 to 5 years - 3 471

2 302 3 471The expected credit loss is calculated on a specific basis per counterparty after taking security into account.

8. Stated capitalAuthorised500 million shares of no par value (2018: 200 million shares of R0.00001 each)

Issued247 174 375 fully paid up shares of no par value 545 828

96 291 720 fully paid up shares of R0.00001 each 1Share premium 100 621

100 622The following amendments took place in April 2018:• authorised and issued share capital was converted from par value to no par value;

and• authorised share capital was increased to 500 million no par value shares.The following share issues took place during the year:• on 14 May 2018 the company issued 40 192 618 ordinary shares to Tradehold Ltd

in settlement of borrowings amounting to R42 million (refer to note 13).

• on 15 May 2018 the company issued 110 690 037 ordinary shares to Tradehold Ltd for a consideration of R403.2 million.

On 28 May 2018, Tradehold Ltd distributed its ordinary shares in the company to its shareholders.

9. Preference share capitalAuthorisedNil (2018: 1 000) class A cumulative redeemable preference shares of R1 each - 1The preference shares were cancelled in April 2018.

10. Deferred taxationReconciliationAt beginning of the year 309 -Temporary differences charged to profit or loss 362 309At end of the year 671 309


2019R’000

2018R’000

AnalysisFinancial assets at fair value through profit or loss 261 345

Loan due from joint venture 508 -

Trade and other payables (98) (36)

671 309

11. Borrowings

Small Enterprise Finance Agency SOC Ltd 49 341 49 303

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

FirstRand Bank Ltd - 2 560The R33 million facility accrued interest at prime less 1% and expired on 31 August 2018. The facility was guaranteed by Tradegro Holdings (Pty) Ltd (a wholly owned subsidiary of Tradehold Ltd) and secured by the Gray Swan Sanlam Collective Investments unit trust investments (refer to note 5).

49 341 51 863Maturity analysisWithin 1 year 2 657 8 1062 to 5 years 46 684 43 757

49 341 51 863

12. Other financial liabilityPut option contract 2 611 -

The remaining shareholder in Lendcor Holdings (Pty) Ltd can put their 50.1% shares to the company. 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 (Pty) Ltd and R12.9 million. This put option can only be exercised during the period from 1 June 2021 to 31 August 2021. The measurement of this liability considers the current net asset value of Lendcor (Pty) Ltd (refer to note 7 in the consolidated annual financial statements) and the future budgeted profit after tax of Lendcor (Pty) Ltd.

13. Borrowing due to related partyTradehold Ltd - 42 000

The borrowing was interest free and secured by the amounts advanced to Mettle Administrative Services (Pty) Ltd and Mettle Solar Investments (Pty) Ltd (refer to note 6). The loan was settled via a share issue (refer to note 8).

14. RevenueInterest income• Related parties (refer to note 20) 14 203 14 239• External parties - 98Dividend income (refer to note 20) 9 624 484

23 827 14 821Timing of revenue recognition• At a point in time 9 624 484• Over time 14 203 14 337

23 827 14 821



2019R’000

2018R’000

15. Other income

Profit on loan settlement - 4 048Gain on revision of joint venture purchase price estimate - 4 053Fair value adjustment on financial assets at fair value through profit or loss 198 1 233Foreign exchange differences 1 815 -Interest income – cash and cash equivalents 10 -Profit on disposal of preference shares - 916Gain on remeasurement of contingent consideration (subsidiary) - 158Held for sale fair value adjustment - 33Expense recoveries - 145

2 023 10 586

16. Interest expense

Related parties 78 43External parties 6 168 6 586

6 246 6 629

17. Allowances for impairmentsInvestment in subsidiary 550 680Investment in joint venture 3 313 4 053Investment in associate 4 695 -Amount due from associate - (4 687)Related party loan receivable 617 100

9 175 146

18. Operating expensesDirectors’ emoluments (not for services as directors) 6 332 11 819• paid by subsidiaries (6 332) (11 819)Directors’ fees 682 20Payroll costs 108 -Professional and secretarial fees 3 257 670Professional and secretarial fees – Mettle Corporate Finance (Pty) Ltd 800 -Securities transfer tax 1 555 -Management fee expense – Mettle Specialised Finance (Pty) Ltd 460 410Audit fees – current year 580 227Audit fees – prior year underprovision 230 -Other expenses 975 183

8 647 1 510Individual directors' remuneration is disclosed in note 31 in the consolidated annual financial statements.

19. Taxation

Current taxation 1 902 1 972

Deferred taxation 362 309

2 264 2 281


2019%

2018%

Reconciliation of tax rateTaxation as a percentage of (loss)/profit before taxation (273.1) 13.3Exempt income (325.1) 0.8Income of a capital nature 0.0 22.7Utilisation of capital losses not previously recognised (16.9) 0.0Non-deductible fair value loss on other financial liability 88.2 0.0Non-deductible impairment of investment in subsidiary 18.6 (7.7)Non-deductible expenses 111.9 0.0Non-deductible impairment of investment in joint venture 158.6 0.0Non-deductible impairment of loan receivable 21.6 0.0Non-deductible operating expenses 244.2 (1.1)Statutory tax rate 28.0 28.0

2019R’000

2018R’000

20.Related partiesRelated parties include the company's directors, shareholders, subsidiaries, joint ventures and associates. Transactions are concluded on an arm’s length basis.

TransactionsDividend income• Mettle Corporate Finance (Pty) Ltd (subsidiary) 2 500 -• Mettle Administrative Services (Pty) Ltd (subsidiary) 5 000 -• Impex Treasury Solutions (Pty) Ltd (associate) - 292• Gondotrix (Pty) Ltd (former associate) 2 000 -• Gray Swan Financial Services (Pty) Ltd (joint venture) 124 -• Aapstert Investments (Pty) Ltd (company associated to F Esterhuyse, a director) - 192

9 624 484

Interest income• Mettle Solar (RF) (Pty) Ltd (associate) - 447• Mettle Solar Namibia (Pty) Ltd (associate) 316 1 938• Mettle Solar SPV 1 (Pry) Ltd (associate) - 113• Mettle Solar SPV Riverside (Pty) Ltd (associate) - 29• Mettle Solar SPV FVT (RF) (Pty) Ltd (associate) - 198• Mettle Solar Investments (Pty) Ltd (associate) 6 107 4 097• Mettle Solar SPV Axis Ltd (associate) - 233• Mettle Solar Finance (RF) (Pty) Ltd (associate) - 49• Lendcor Holdings (Pty) Ltd (associate) 4 119• Lendcor (Pty) Ltd (associate) 9 645• Mettle Administrative Services (Pty) Ltd (subsidiary) 6 253 5 503• Aapstert Investments (Pty) Ltd (company associated to F Esterhuyse, a director) - 561• Karen Nordier (director of holding company) - 22• Francois van Themaat (director of associate) 228 217• Teniam Holdings (Pty) Ltd (company of director of subsidiary) (107) 68• Mettle Solar Africa Ltd (joint venture) 1 108 -• Imali Medical Claims Ltd (subsidiary) 285 -

14 203 14 239



2019R’000

2018R’000

20.Related parties (continued)

Interest expense• Mettle Corporate Finance (Pty) Ltd (subsidiary) 78 43

Professional and secretarial fees• Mettle Corporate Finance (Pty) Ltd (subsidiary) 800 -

Management fee expense• Mettle Specialised Finance (Pty) Ltd (subsidiary) 460 410

The company purchased the loan claim against Mettle Solar Africa Ltd from Tradehold Africa Ltd in May 2018 at a discount. The gain of R1.1 million has been recorded in equity.

BalancesThe investments in group companies are disclosed in notes 2, 3 and 4.The terms of the amounts due from related parties are disclosed in note 6.The terms of the key persons’ loan receivables are disclosed in note 7.The terms of the borrowing is disclosed in note 13.

21. Financial risk management

Financial instrument by categoryFinancial assetsAt amortised costAmounts due from related parties 145 576 102 800Trade and other receivables - 91Loan receivables 2 302 3 471

147 878 106 362At fair valueFinancial assets at fair value through profit or loss 10 932 31 234

Financial liabilitiesAt amortised costBorrowings due to related party - 42 000Borrowings 49 341 51 863Bank overdrafts 19 241 1 355Trade and other payables 443 202

69 025 95 420At fair valueOther financial liability 2 611 -

The company is exposed to market risk, credit risk and liquidity risk. Senior management oversees the management of these risks and seeks to minimise the potential adverse effects on the company’s financial performance.


Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency risk, interest rate risk and price risk.

Currency riskThe company is exposed to Rand US Dollar currency risk on its loan due from Mettle Solar Africa Ltd (joint venture). The risk is mitigated as the company is a 55% shareholder and the shareholders provide funding pro rata to their shareholding.

A 5% change in the Rand US Dollar exchange rate is considered reasonable. If the Rand had strengthened/weakened against the US Dollar by 5%, then the company’s profit before tax for the year ended 28 February 2019 would have decreased/increased by R888,801.

The company was not exposed to currency risk at 28 February 2018.

Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result of changes in interest rates. The company is exposed to cash flow interest rate risk on its floating rate borrowings, amounts due from related parties and its bank overdrafts.

The sensitivity analysis below has been determined based on all interest-bearing loan assets and liabilities at the reporting date. A 100 (2018: 100) basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 (2018:100) basis points higher/lower and all other variables were constant, the company’s loss before tax for the year ended 28 February 2019 would have decreased/increased by R625,969 (2018: profit increased/decreased by R474,439).

Price risk

The company’s price risk arises from its financial assets at fair value through profit or loss. As this is an investment in a cautious fund of funds unit trust, there is less price risk due to the asset allocation composition of the unit trust.

Gray Swan Financial Services (Pty) Ltd (joint venture) manages this unit trust investment and provides performance feedback regularly.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation and cause the company to incur a financial loss. Credit risk arises on cash and cash equivalents, loan receivables, trade and other receivables and amounts due from related parties. The company only deposits cash with major banks of high credit standing. The maximum exposure to credit risk is R147.9 million (2018: R106.4 million).

Liquidity risk

Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities. The company’s risk to liquidity is a result of the funds available to cover future commitments. The company’s exposure to liquidity risk relates to borrowings, amounts due to group companies, the financial liability and trade and other payables. The company manages liquidity risk through an ongoing review of future commitments and credit facilities.




The table below analyses the company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

2019

Carrying value


R’000

Between1 and 2 years

R’000After 2 years

R’000Total

R’000Borrowings 49 341 5 316 49 613 - 54 929Bank overdrafts 19 241 19 241 - - 19 241Trade and other payables 443 443 - - 443

69 025 25 000 49 613 - 74 613

2018Borrowing due to related party 42 000 42 000 - - 42 000Borrowings 51 863 8 106 5 547 49 303 62 956Bank overdraft 1 355 1 355 - - 1 355Trade and other payables 202 202 - - 202

95 420 51 663 5 547 49 303 106 513

Capital risk management

The company manages its capital to ensure that it will be able to continue as a going concern while enhancing the return to its shareholders. The capital structure of the company consists of equity, comprising issued ordinary share capital. Refer to note 8 for more detail.

The company is not subject to any externally imposed capital requirements, except that in terms of the Companies Act of South Africa, 2008, it must ensure that following any share repurchase or payments to shareholders, the assets of the company, as fairly valued, equal or exceed the liabilities of the company, as fairly valued, and it appears that the company will be able to pay its debts as they become due in the ordinary course of business for a period of twelve months after the date on which the test is considered.


2019R’000

2018R’000

22.Notes to the statement of cash flowsA Reconciliation of (loss)/profit before taxation to cash

(utilised in)/generated by operations(Loss)/profit before taxation (829) 17 122Interest income (14 212) (14 336)Dividend income (9 624) (484)Interest expense 6 246 6 629Profit on loan settlement - (4 047)Profit on disposal of preference shares - (916)Gain on remeasurement of contingent consideration - (158)Held for sale fair value adjustment - (33)Allowance for impairment of investment in subsidiary 550 680Allowance for impairment of investment in joint venture 3 313 -Allowance for impairment of investment in associate 4 695 -Fair value adjustment on financial assets at fair value through profit or loss (198) (1 233)Foreign exchange differences (1 815) -Reversal of allowance for impairment of loan to associate - (4 687)Fair value loss on other financial liability 2 611 -Allowance for impairment of related party loan receivable 616 100

Operating loss before working capital changes (8 647) (1 363)(Increase)/decrease in amounts due from related parties (15 002) 6 262Decrease in trade and other receivables 91 5 024Increase/(decrease) in trade and other payables 241 (1 364)

(23 317) 8 559B. Taxation paid

Liability at beginning of year (43) (7)Taxation charge in profit or loss (2 264) (2 281)Movement in deferred taxation 362 309Withholding tax credit 33 386Liability at end of the year 79 43

(1 833) (1 550)

23. Bank overdraftsNedbank Ltd 8 313 1 355

The R10 million (2018: R5 million) unsecured overdraft facility is reviewed annually. The overdraft facility accrues interest at prime.

FirstRand Bank Ltd 10 928 -The R15 million overdraft facility is secured by the Gray Swan Sanlam Collective Investments unit trust investment of R10.9 million (refer to note 5) and is reviewed annually. The facility accrues interest at prime plus 1%.

19 241 1 355


Shareholders’ profile

The distribution of shareholders at 28 February 2019 is:

Number of shareholders

Percentage of shareholders

Number of shares held

Percentage holding

Non-public shareholders 21 1.3 191 893 499 77.6

Public shareholders 1 614 98.7 55 280 876 22.4

1 635 100.0 247 174 375 100.0

The major shareholders at 28 February 2019 are:

ShareholderNumber of

shares heldPercentage

holding

Granadino Investments (Pty) Ltd 82 369 947 33.3Titan Global Investments (Pty) Ltd 28 695 605 11.6Teez Away Trading (Pty) Ltd 28 586 285 11.6Metcap 14 (Pty) Ltd 12 594 834 5.1Cream Magenta 140 (Pty) Ltd 12 573 610 5.1Titan Share Dealers (Pty) Ltd 10 236 344 4.1Prinsloo Family Investments (Pty) Ltd 9 591 972 3.9

NA

IRO

BI,

KE

NY

A

ANNUAL GENERALMEETING

03

Mettle Investments Integrated Report 2019106 Annual General Meeting

Notice to shareholders

Mettle Investments Limited(Incorporated in the Republic of South Africa)(Registration number 2008/002061/06)JSE code: MLE ISIN: ZAE000257622(“Mettle” or “the Company”)

Notice is hereby given, in terms of section 62(1) of the Companies Act, 71 of 2008, as amended (“the Act”), that the annual general meeting (“AGM”) of the shareholders of Mettle will be held in the boardroom, located on the 3rd Floor of the Pepkor Building at 36 Stellenberg Road, Parow Industria, at 10 am on 14 August 2019.

The purpose of the AGM is to consider and, if approved, pass the ordinary and special resolutions set out in this notice, with or without modification:

Attendance and voting

In terms of section 59(1)(a) and (b) of the Act, the board of directors (“the Board”) has set the record date for the purpose of determining which shareholders are entitled to:

• receive notice of the AGM, i.e. the notice record date (being the date on which a shareholder must be registered in the Company’s share register in order to receive notice of the AGM) as 21 June 2019; and

• participate in and vote at the AGM, i.e. the meeting record date (being the date on which a shareholder must be registered in the Company’s share register in order to participate in and vote at the AGM) as 8 August 2019.

Accordingly, the last day to trade in order to be registered in the Company’s share register on the meeting record date is 5 August 2019.

Please note that all participants at the AGM will be required to provide reasonably satisfactory identification before being entitled to participate in or vote at the AGM. Forms of identification that will be accepted include original and valid identity documents, driver’s licences and passports.

Presentation of the annual financial statements The Audited Annual Financial Statements of Mettle and its subsidiaries (“Group”) for the year ended 28 February 2019, incorporating the Directors’ Report, Independent Auditor’s Report, Audit and Risk Committee Report and Social and Ethics Committee Report have been distributed and accompany this notice of AGM and are accordingly presented to shareholders.

Ordinary Resolution Number 1

That the Audited Annual Financial Statements and the Independent Auditor’s Report for the year ended 28 February 2019, be accepted and adopted.

Additional information

An electronic copy of the Integrated Report incorporating the Audited Annual Financial Statements, the Audit and Risk Committee Report, the Directors’ Report, the Independent Auditor’s Report and the Chairman’s Statement is available online at: www.mettleinvestments.com.

Voting requirement

Ordinary Resolution Number 1 will require the support of more than 50% (fifty percent) of the total number of votes exercisable by shareholders, present in person or represented by proxy, to be approved.


That PricewaterhouseCoopers Inc, as nominated by the Company’s Audit and Risk Committee, be appointed as independent auditors of the Company to hold office until the conclusion of the next AGM of the Company. It is to be noted that Mr JR de Villiers is the individual and designated auditor who will undertake the Company’s audit for the financial year ending 29 February 2020.

Voting requirement



That Mr MVZ Wentzel who retires as director in terms of the Company’s Memorandum of Incorporation (“MOI”) and, being eligible, offers himself for re-election to the Board, be re-elected as a non-executive director.


Shareholders are referred to page 9 of the Corporate Governance report contained in this Integrated Report and https://mettleinvestments.com/about-us/directors for a brief CV of all directors standing for re-election.

Mettle Investments Integrated Report 2019 107Annual General Meeting

Voting requirement



That Mr FH Esterhuyse who retires as director in terms of the MOI and, being eligible, offers himself for re-election to the Board, be re-elected as a non-executive director.



Voting requirement



That Mr RD Fenner who was appointed as director to fill the vacancy arising from the resignation of Mr HRW Troskie with effect from 18 September 2018, be re-appointed as an independent non-executive director.



Voting requirement



That, subject to the provisions of the Act and in accordance with the JSE Limited (“JSE”) Listings Requirements (“Listings Requirements”), the Board is hereby authorised to issue ordinary shares of no par value, or options or securities convertible into ordinary shares, for cash from time to time, subject to the following conditions:

• that this authority is valid until the Company’s next AGM, provided it shall not extend beyond 15 months from the date that this authority is given;

• that the equity securities which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such securities or rights that are convertible into a class already in issue;

• that securities which are the subject of the issue for cash may not exceed 50% of the Company’s listed equity securities as at the date of this notice of AGM (this number of shares being 123,587,187, excluding treasury shares);

• any ordinary shares issued under this authority during the period of its validity must be deducted from the above number of ordinary shares and the authority shall be adjusted accordingly to represent the same allocation ratio on the event of a subdivision or consolidation of ordinary shares during the same period;

• that in determining the price at which an issue of securities for cash may be made in terms of this authority, the maximum discount permitted will be 10% of the weighted average traded price as determined over the 30 business days prior to the date that the price of the issue is agreed between the Company and the party subscribing for the securities;

• that any such issue will only be made to public shareholders as defined by the Listings Requirements and not to related parties; and

• upon any issue of securities which, together with prior issues of securities during the validity period of this authority, will constitute 5% or more of the total number of ordinary shares in issue prior to that issue, the Company shall publish an announcement in terms of paragraph 11.22 of the JSE Listings Requirements, giving full details hereof, including (i) the number of ordinary shares issued, (ii) the average discount to weighted average traded price of the ordinary shares over the 30 business days prior to the date that the issue is agreed in writing between the Company and the party/ies subscribing for the shares; and, (iii) in respect of the issue of options and convertible securities issued for cash, the effects of the issue on net asset value per share, net tangible asset value per share, earnings per share, headline earnings per share and, if applicable, diluted earnings and headline earnings per share; or (iv) in respect of an issue of shares for cash, an explanation including supporting information (if any), of the intended use of funds.


Reason and effect

The reason and effect of this resolution is to empower the Board to issue shares, options or securities convertible into shares for cash or for acquisitions within the limits imposed by the above terms.

Voting requirement

In terms of the Listing Requirements, Ordinary Resolution Number 6 will require the support of more than 75% (seventy five percent) of the total number of votes exercisable by shareholders, present in person or represented by proxy, to be approved.


That the following independent directors of the Company be elected, each by way of separate resolutions, as members of the Audit and Risk Committee of the Company, until the conclusion of the next AGM of the Company:

7.1 The election of RD Fenner as a member of the Audit and Risk Committee of the Company, subject to the passing of Ordinary Resolution Number 5;

7.2 The election of BA Chelius as a member of the Audit and Risk Committee of the Company; and

7.3 The election of MVZ Wentzel as a member of the Audit and Risk Committee of the Company, subject to the passing of Ordinary Resolution Number 3.

Reason and effect

The reason and effect of these resolutions is to appoint the Company’s Audit and Risk Committee, which will be valid until the next AGM.


Shareholders are referred to page 9 of the Corporate Governance report contained in this Integrated Report and https://mettleinvestments.com/about-us/directors for a brief CV of all directors elected to serve on the Audit and Risk Committee

Voting requirement



Resolved as a non-binding advisory vote that the remuneration policy of the Company, as set out on page 12 of the Integrated Report of which this notice forms part, be and is hereby endorsed

through a non-binding advisory vote as recommended in terms of the King Code IV report on Corporate Governance for South Africa 2016 (“King Code IV”).

Reason and effect

In terms of principle 14 of the King Code IV, the Company’s remuneration policy should be tabled to the shareholders for a non-binding advisory vote at the AGM. Accordingly, the shareholders are requested to endorse the Company’s remuneration policy by way of a non-binding advisory vote in the same manner as an ordinary resolution.

Voting requirement

The approval of the Company’s remuneration policy is not a matter that is required to be resolved or approved by shareholders and therefore no minimum voting threshold is required for the non-binding advisory vote.

Nevertheless, for record purposes, the non-binding advisory vote on the Company’s remuneration policy will require the support of more than 50% (fifty percent) of the total number of votes exercisable by shareholders, present in person or represented by proxy, to be approved. The Company’s remuneration policy contains the measures that the Company will take if 25% or more of votes are cast against the policy at the AGM. The Board will also take the outcome of the votes into consideration when considering the Company’s remuneration policy.


Resolved as a non-binding advisory vote that the remuneration implementation report of the Company, as set out on page 12 of the Integrated Report, be and is hereby endorsed through a non-binding advisory vote as recommended in terms of the King Code IV.

Reason and effect

In terms of principle 14 of the King Code IV, the Company’s remuneration implementation report should be tabled to the shareholders for a non-binding advisory vote at the AGM. Accordingly, the shareholders are requested to endorse the Company’s remuneration implementation report by way of a non-binding advisory vote in the same manner as an ordinary resolution.

Voting requirement

The approval of the Company’s remuneration implementation report is not a matter that is required to be resolved or approved by shareholders and therefore no minimum voting threshold is required for the non-binding advisory vote.


Notice to shareholders (continued)


Nevertheless, for record purposes, the non-binding advisory vote on the Company’s remuneration implementation report will require the support of more than 50% (fifty percent) of the total number of votes exercisable by shareholders, present in person or represented by proxy, to be approved. The Company’s remuneration policy contains the measures that the Company will take if 25% or more of votes are cast against the policy at the AGM. The Board will also take the outcome of the votes into consideration when implementing the Company’s remuneration policy.


Resolved that any director of the Company or the Company Secretary of the Company be and is hereby authorised to do all such things, sign all such documents and take all such actions as may be necessary for or incidental to the implementation of the ordinary and special resolutions to be proposed at the AGM.

Reason and effect

The reason for Ordinary Resolution Number 10 is to authorise any director or the Company Secretary of the Company to attend to the necessary requirements to implement the special and ordinary resolutions passed at the AGM and to sign all documentation required to record that the Company will be authorised to attend to any matter regarding the implementation of the special and ordinary resolutions on behalf of the Company.

Voting requirement


Special Resolution Number 1

Resolved as a Special Resolution that the directors’ fees (excluding VAT) to be paid by the Company for services rendered during the reporting period from 1 March 2019 to 29 February 2020 be confirmed to be as follows:

RD Fenner (or replacement): .................................................. R360,000BA Chelius (or replacement): .................................................. R360,000MVZ Wentzel: ................................................................................ R250,000FH Esterhuyse: .............................................................................. R250,000Any other non-executive director: ....................................... R250,000

Reason and effect

In terms of section 66(8) and (9) of the Act, non-executive directors’ fees for their services to the Company, must be approved by way of a special resolution passed by shareholders of the Company within the previous two years. Accordingly, the reason for and effect of Special Resolution Number 1 is to approve the payment of and the basis for calculating the remuneration payable by the Company to its non-executive directors for the period ending 29 February 2020.

Voting requirement:

Special Resolution Number 1 will require the support of more than 75% (seventy five percent) of the total number of votes exercisable by shareholders, present in person or represented by proxy, to be approved.


Resolved as a Special Resolution that the Company be and is hereby authorised, in terms of section 45(3)(ii) of the Act and the MOI of the Company, to, on the instructions of its Board, provide direct or indirect financial assistance to a director or prescribed officer of the Company or of a related or inter-related company, or to a related or inter-related company or corporation, or to a member of a related or inter-related company or corporation, or to a person related to any such company, corporation, director, prescribed officer or member.


If the Board provides the aforesaid financial assistance the Company will, in compliance with section 45(5) of the Act, provide written notice to all shareholders and to any trade union representing its employees, within 10 business days after the Board adopts the resolution, if the total value of all loans, debts, obligations or assistance contemplated in this resolution, together with any previous such resolution during the financial year, exceeds one-tenth of 1% of the Company’s net worth at the time of the resolution; or within 30 business days after the end of the financial year, in any other case.

The Board considers that such a general authority should be put in place in order to assist the Company inter alia to make loans to persons, including subsidiaries as well as to grant letters of support and guarantees in appropriate circumstances. The existence of a general authority would void the need to refer each instance to shareholders for approval. This general authority would be valid up to and including the 2020 AGM of the Company.



Section 45 Board resolution will be subject to and effective to the extent that Special Resolution Number 2 is adopted by shareholders and the provision of any such direct or indirect financial assistance by the Company, pursuant to such resolution, will always be subject to the Board being satisfied that immediately after providing such financial assistance, the Company will satisfy the solvency and liquidity test as referred to in section 45(3)(b)(ii) of the Act and the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company.

Reason and effect

The reason and effect of the Special Resolution Number 2 is to grant the Board the general authority to provide direct or indirect financial assistance to a director or prescribed officer of the Company or to a related or inter-related company or members or persons related to such company, director, prescribed officer or corporation.

Voting requirement



Resolved as a Special Resolution that the Company be and is hereby authorised, in terms of section 44(3)(ii) of the Act and the MOI of the Company, to, on the instructions of its Board, provide direct or indirect financial assistance by way of loan, guarantee, the provision of security or otherwise to any person for the purpose of or in connection with the subscription of any options or securities, issued or to be issued by the Company or a related or inter-related company or for the purchase of any securities of the Company or a related or inter-related company.


The Board considers that such a general authority should be put in place in order to assist the Company inter alia to make loans to persons, including subsidiaries as well as to grant letters of support and guarantees in appropriate circumstances, for the purpose of the subscription or purchase of shares in the capital of the Company. The existence of a general authority would avoid the need to refer each instance to shareholders for approval. This general authority would be valid up to and including the 2020 AGM of the Company.

The section 44 Board resolution will be subject to and effective to the extent that Special Resolution Number 3 is adopted by shareholders and the provision of any such direct or indirect financial assistance by the Company, pursuant to such resolution, will always be subject to the Board being satisfied that immediately after providing such financial assistance, the Company will satisfy the solvency and liquidity test as referred to in section 44(3)(b)(ii) of the Act; and that terms under which the financial assistance is proposed to be given are fair and reasonable to the Company.

Reason and effect

The effect of the Special Resolution and the reason there for is to grant the Board the general authority to provide direct or indirect financial assistance by way of a loan, guarantee, the provision of security or otherwise to any person for the purpose of, or in connection with the subscription of any option, or any securities, issued or to be issued by the Company or a related or inter-related company or for the purchase of any securities of the Company or a related or inter-related company.

Voting requirement



Resolved as a Special Resolution that the mandate given to the Company (or any of its wholly-owned subsidiaries) providing authorisation, by way of a general authority contemplated in the Listings Requirements and sections 46 and 48 of the Act, read with sections 114 and 115 of the Act, to acquire the Company’s own securities, upon such terms and conditions and in such amounts as the directors may from time to time decide, but subject to the provisions of MOI, the Act and the Listings Requirements, be extended, subject to the following terms and conditions:

• authorisation be given by the MOI;

• any repurchase of securities must be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the Company and the counter-party;

• this general authority will be valid until the Company’s next AGM, provided that it shall not extend beyond fifteen months from date of passing of this Special Resolution;




• a paid press announcement will be published as soon as the Company has cumulatively repurchased 3% of the initial number (i.e. the number of that class of share in issue at the time that the general authority is granted) of the relevant class of securities and for each 3% in aggregate of the initial number of that class acquired thereafter, containing full details of such repurchases in compliance with the Listings Requirements;

• repurchases by the Company in aggregate in any one financial year may not exceed 20% of the Company’s issued share capital as at the date of passing of this Special Resolution or 10% of the Company’s issued share capital in the case of an acquisition of shares in the Company by a subsidiary of the Company;

• repurchases may not be made at a price greater than 10% above the weighted average of the market value of the securities for the five business days immediately preceding the date on which the transaction is effected;

• repurchases may not be undertaken by the Company (or any of its wholly-owned subsidiaries) during a prohibited period; unless the Company has a share repurchase programme in place, the dates and quantities of shares to be traded during the relevant period are fixed and full details of the programme have been submitted to the JSE in writing prior to the commencement of the prohibited period. The Company must instruct an independent third party, which makes its investment decisions in relation to the issuer’s securities independently of, and uninfluenced by, the Company, prior to the commencement of the prohibited period to execute the repurchase programme submitted to the JSE; and

• at any point in time, the Company may only appoint one agent to effect any repurchase.

The Board intends either to hold the shares purchased in terms of this authority as treasury shares or to cancel such shares, whichever may be appropriate at the time of the repurchase of shares.

The Board is of the opinion that, after considering the effect of the maximum repurchase permitted and for a period of fifteen months after the date of this notice of AGM:

• the Company (or its wholly-owned subsidiary) and the Group will be able, in the ordinary course of business, to pay its debts as they become due;

• the assets of the Company (or its wholly-owned subsidiary) and the Group will be in excess of the liabilities

of the Company and the Group, the assets and liabilities being recognised and measured in accordance with the accounting policies used in the latest audited annual financial statements;

• the working capital of the Company (or its wholly-owned subsidiary) and the Group will be adequate for ordinary business purposes;

• the share capital and reserves are adequate for the ordinary business purposes of the Company (or its wholly-owned subsidiary) and the Group; and

• a repurchase undertaken by the Company must be approved by a resolution of the Board confirming that it has authorised the repurchase, that the Company and its subsidiary/ies have passed the solvency and liquidity test and that, since the test was performed, there have been no material changes to the financial position of any company of the Group.

Reason and effect

The effect of Special Resolution Number 4 and the reason therefore is to extend the general authority given to the directors in terms of the Act and the Listings Requirements for the acquisition by the Company (or any of its wholly-owned subsidiaries) of its own securities, which authority shall be used at the directors’ discretion during the course of the period so authorised.

Additional Information

In terms of the Listings Requirements, the following disclosures are required with reference to the general authority to repurchase the Company’s shares set out in Special Resolution Number 4, some of which are set out elsewhere in the Integrated Report:

• Major shareholders of the Company – refer page 102;

• Share capital – refer page 67.

Voting requirement


Social and Ethics Committee

The chairperson of the social and ethics committee will give verbal feedback on the activities of this committee for the past period as required in terms of regulation 43(5)(c) of the Companies Regulations, 2011.



Directors’ Responsibility Statement

The directors, whose names are given on page 20 of the Integrated Report, collectively and individually, accept full responsibility for the accuracy of the information pertaining to the above Ordinary and Special Resolutions and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the above Ordinary and Special Resolutions contain all information required by law and the JSE Listings Requirements.

Material change

Other than the facts and developments reported on in the Integrated Report, there have been no material changes in the affairs, financial or trading position of the Company and its subsidiaries since the signature date of the Integrated Report and the distribution date hereof.

Voting Requirements

In compliance with section 62(3)(c) of the Act and/or the Listings Requirements it is confirmed that a voting majority of 50% is required for the approval of Ordinary Resolutions Number 1 to 5, as well as 7 to 10. For Ordinary Resolution Number 6, a 75% voting majority is required by the Listings Requirements. The Special Resolutions require a 75% voting majority in terms of the MOI and the Listings Requirements.

Proxies

All registered shareholders of the Company will be entitled to attend and vote in person or by proxy at the AGM. A form of proxy is attached for completion by certificated shareholders and dematerialised shareholders with own name registration who are unable to attend in person. Shareholders are requested to deliver their forms of proxy to Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, South Africa (PO Box 61051, Marshalltown, 2107, South Africa) so as to arrive by no later than 48 hours before the commencement of the AGM, alternatively may be handed to the chairman of the AGM immediately prior to the proxy exercising such shareholder’s rights at the AGM. If the form of proxy is validly executed and received after this time, the chairman of the AGM is obliged to accept such proxy. Certificated Shareholders and Dematerialised Shareholders with own name registration who complete and lodge forms of proxy, will nevertheless be entitled to attend and vote in person at the AGM, should they subsequently decide to do so. Dematerialised

Shareholders, other than own name registration, must inform their CSDP or broker of their intention to attend the AGM and obtain the necessary authorisation (letter of representation) from the CSDP or broker to attend the AGM, or provide their CSDP or broker with their voting instructions, should they not be able to attend the AGM in person. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.

Electronic participation

Shareholders or their proxies may participate in the AGM by way of telephone conference call. Shareholders or their proxies who wish to participate in the AGM via the teleconference facility will be required to advise the Company thereof by no later than 10:00 on 12 August 2019 by submitting, by email to Mr William Marais at [email protected], the relevant contact details, email address, cellular number and landline, as well as full details of the shareholder’s title to the shares issued by the Company and proof of identity, in the form of copies of identity documents and share certificates (in the case of certificated shareholders), and (in the case of dematerialised shareholders) written confirmation from the shareholder’s CSDP confirming the shareholder’s title to the dematerialised shares. Upon receipt of the required information, the shareholder concerned will be provided with a secure code and instructions to access the electronic communication during the AGM.

By order of the Board

Mettle Corporate Finance (Pty) Ltd

Company Secretary21 June 2019Tygervalley7530




Form of proxy


METTLE INVESTMENTS LIMITED(Registration number: 2008/002061/06)Incorporated in the Republic of South AfricaJSE code: MLE ISIN: ZAE000257622 (“Mettle” or “the Company”)

FOR USE BY CERTIFICATED SHAREHOLDERS AND OWN NAME DEMATERIALISED SHAREHOLDERS AT THE ANNUAL GENERAL MEETING OF THE COMPANY TO BE HELD AT 10:00 ON 14 AUGUST 2019 IN THE BOARDROOM AT 3rd FLOOR, PEPKOR BUILDING, 36 STELLENBERG ROAD, PAROW INDUSTRIA, 7493

Certificated shareholders or dematerialised shareholders with “own name” registration who are entitled to attend and vote at the annual general meeting (AGM), are entitled to appoint one or more proxies to attend, speak and vote in their stead. A proxy need not be a shareholder and shall be entitled to vote on a show of hands or poll.

Dematerialised shareholders, other than dematerialised shareholders with “own-name” registrations, must not return this form of proxy to the Company’s Transfer Secretaries or deliver it to the Chairman of the AGM.

Shareholders who have dematerialised their shares with a CSDP or broker, other than with own name registration, must arrange with the CSDP or broker concerned to provide them with the necessary authorisation to attend the annual general meeting or the shareholders concerned must instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.

I/We (full names and surname in block letters) ................................................................................................................................................................................of (full address) . ...............................................................................................................................................................................................................................................email address .....................................................................................................................................................................................................................................................as a shareholder of Mettle Investments Limited, being the registered holder of.........................shares in the Company, hereby appoint:1. ....................................................................................................................................................................................................................................................or2. ...................................................................................................................................................................................................................................................or3. THE CHAIRMAN OF THE MEETING

as my/our proxy to attend, speak and vote on my/our behalf, as indicated below, at the annual general meeting of shareholders of Mettle Investments Limited to be held at 10:00 on 14 August 2019 and at any adjournment thereof:

Indicate with an X in the appropriate block:

Ordinary resolutions In favour of Against AbstainAdoption of the Annual Financial Statements 1.Appointment of PricewaterhouseCoopers Inc as independent auditors 2.Re-election of Mr MVZ Wentzel to the Board 3.Re-election of Mr FH Esterhuyse to the Board 4.Re-appointment of Mr RD Fenner to the Board 5.General authority to directors to issue shares for cash 6.Election of members of Audit and Risk Committee: 7.Mr RD Fenner 7.1Mr BA Chelius 7.2Mr MVZ Wentzel 7.3Non-binding advisory vote on the remuneration policy 8.Non-binding advisory vote on the remuneration implementation report 9.General authority of the directors 10.


Form of proxy (continued)

Special resolutions In favour of Against AbstainConfirmation of the directors' remuneration 1.Financial assistance in terms of section 45 of the Act 2.Financial assistance in terms of section 44 of the Act 3.General authority to acquire shares in terms of sections 46 and 48 of the Act 4.

Signed at .............................................................................................................................................. this ............................. day of ............................. 2019



Notes:• A shareholder entitled to attend and vote at the annual general meeting shall be entitled to appoint one or more persons, who

need not be shareholders of the Company as his/her proxy to attend and speak, to vote, abstain and give or refuse consent to a decision contemplated in section 60 of the Companies Act, 71 of 2008 (“Act”), in his/her place.

• If a proxy form, duly signed, is lodged without specific directions as to which way the proxy is to vote, the proxy will be deemed to have been authorised to vote as s/he thinks fit.

• If the proxy is signed under power of attorney or on behalf of a company, such power or authority, unless previously registered with the company, must accompany it.

• Shareholders who have dematerialised their shares with a CSDP or stockbroker, other than own name registration, must arrange with the CSDP or stockbroker concerned to provide them with the necessary authorisation to attend the AGM or the shareholders concerned must instruct them as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholder and the CSDP or stockbroker concerned.

• Any alteration to the form of proxy must be signed, not initialled.

• Where there are joint holders of shares and if more than one of such joint holders is present or represented, then the person whose name appears first in the register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof.

• The completion and lodging of this form of proxy will not preclude the signatory from attending the AGM and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such signatory wish to do so.

• Forms of proxy must be deposited at Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196, South Africa (PO Box 61051, Marshalltown, 2107, South Africa) so as to arrive by no later than 48 hours before the commencement of the AGM. The chairman of the AGM is obliged to accept the form of proxy to be effective for purposes of voting at the AGM if the form of proxy is validly executed and received after this time but before the commencement of the AGM.

Summary of rights established by section 58 of the Act, as required in terms of sub-section 58(8)(b)(i):

1. A shareholder may at any time appoint any individual, including a non-shareholder of the Company, as a proxy to participate in, speak and vote at a shareholders’ meeting on his/her behalf (section 58(1)(a)), or to give or withhold consent on behalf of the shareholder to a decision in terms of section 60 (shareholders acting other than at a meeting) (section 58(1)(b)).

2. A proxy appointment must be in writing, dated and signed by the shareholder, and remains valid for one year after the date on which it was signed or any longer or shorter period expressly set out in the appointment, unless it is revoked in terms of paragraph 6.3 below or expires earlier in terms of paragraph 10.4 below (section 58(2)).

3. A shareholder may appoint two or more persons concurrently as proxies and may appoint more than one proxy to exercise voting rights attached to different securities held by the shareholder (section 58(3)(a)).

4. A proxy may delegate his/her authority to act on behalf of the shareholder to another person, subject to any restriction set out in the instrument appointing the proxy (“proxy instrument”) (section 58(3)(b)).

5. A copy of the proxy instrument must be delivered to the Company, or to any other person acting on behalf of the Company, before the proxy exercises any rights of the shareholder at a shareholders’ meeting (section 58(3)(c)) and in terms of the Memorandum of Incorporation (“MOI”) of the Company.

6. Irrespective of the form of instrument used to appoint a proxy:

6.1. the appointment is suspended at any time and to the extent that the shareholder chooses to act directly and in person in the exercise of any rights as a shareholder (section 58(4)(a));

6.2. the appointment is revocable unless the proxy appointment expressly states otherwise (section 58(4)(b)); and

6.3. if the appointment is revocable, a shareholder may revoke the proxy appointment by cancelling it in writing or by making a later, inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the Company (section 58(4)(c)).



7. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of the date stated in the revocation instrument, if any, or the date on which the revocation instrument was delivered as contemplated in paragraph 6.3 above (section 58(5)).

8. If the proxy instrument has been delivered to a Company, as long as that appointment remains in effect, any notice required by the Act or the MOI to be delivered by the Company to the shareholder must be delivered by the Company to the shareholder (section 58(6)(a)), or the proxy or proxies, if the shareholder has directed the Company to do so in writing and paid any reasonable fee charged by the Company for doing so (section 58(6)(b)).

9. A proxy is entitled to exercise, or abstain from exercising, any voting right of the shareholder without direction, except to the extent that the MOI or proxy instrument provides otherwise (section 58(7)).

10. If a Company issues an invitation to shareholders to appoint one or more persons named by the Company as a proxy, or supplies a form of proxy instrument:

10.1. the invitation must be sent to every shareholder entitled to notice of the meeting at which the proxy is intended to be exercised (section 58(8)(a));

10.2. the invitation or form of proxy instrument supplied by the Company must:

10.2.1. bear a reasonably prominent summary of the rights established in section 58 of the Act (section 58(8)(b)(i));

10.2.2. contain adequate blank space, immediately preceding the name(s) of any person(s) named in it, to enable a shareholder to write the name, and if desired, an alternative name of a proxy chosen by the shareholder (section 58(8)(b)(ii)); and

10.2.3. provide adequate space for the shareholder to indicate whether the appointed proxy is to vote in favour of or against any resolution(s) to be put at the meeting, or is to abstain from voting (section 58(8)(b)(iii));

10.3.the Company must not require that the proxy appointment be made irrevocable (section 58(8)(c)); and

10.4.the proxy appointment remains valid only until the end of the meeting at which it was intended to be used, subject to paragraph 7 above (section 58(8)(d)).

Form of proxy (continued)


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