TIDMTBGR
RNS Number : 0961J
Tiso Blackstar Group SE
27 March 2018
Tiso Blackstar Group SE
Unaudited Condensed Consolidated Financial Statements for the
six months ended
31 December 2017
Incorporated in England and Wales
Company number SE 000110
Registered as an external company with limited liability in the
Republic of South Africa under registration number
2011/008274/10
Share codes: TBGR and TBG
ISIN: GB00BF37LF46
("Tiso Blackstar" or the "Company" or the "Group")
Highlights
-- Good performance from core businesses despite tough trading
conditions in the six months to 31 December 2017.
-- An increase of 8.7% in earnings per share and an increase of
570.2% in headline earnings per share from the comparative
reporting period.
-- Combined EBITDA from core businesses up 6.2%, revenues up
2.4%.
-- Hirt & Carter Group delivered 16.3% revenue growth and
12.5% EBITDA improvement.
-- Media EBITDA is marginally lower as soft advertising flowing
from negative sentiment from political instability market impacted
revenues.
-- Broadcast and Content produced 71.6% growth in EBITDA.
-- Restructuring of Media legacy structures delivered good
savings while new revenues from digital and events showed promising
growth.
-- Successful launch of BusinessLive premium paywall product
created a significant new revenue stream from digital
subscribers.
-- Closure of loss-making Times newspaper and launch of digital
Times Select has had a positive impact on the bottom line in the
second half.
-- The start of the second half of the 2018 financial year has
seen improved trading, as improved business confidence drives
growth in marketing spend.
-- Hirt & Carter Group achieved growth across most units,
and its integration with Uniprint is expected to yield positive
results going forward.
-- Non-core results from steel interests and KTH pulled down a
good performance from the core results.
-- The operating environment has been exceptionally difficult,
but the performance of core Media and related operations in this
difficult period bodes well for the second half and beyond.
Overview
The six months to 31 December 2017 were some of the most
difficult in recent times, dogged by political uncertainty and the
resulting decline in business confidence and reduction in marketing
spend nationally.
The Group's core businesses performed exceptionally well under
such circumstances, delivering a mix of sustainable new revenue
streams and tight cost management. The core businesses delivered
combined growth in earnings and revenue and are well placed to
benefit from the improving economic climate.
Unfortunately, the results from the Group's non-core steel
interests, namely Robor Proprietary Limited ("Robor") and
Consolidated Steel Industries Proprietary Limited ("CSI"), as well
as Kagiso Tiso Holdings Proprietary Limited ("KTH") dragged down a
good performance from the core results, but plans are in place to
resolve and reduce exposure to these assets. By year end, the Group
is aiming for non-core assets not to be consolidated, as the Group
will have either reduced its controlling interest, disposed of them
entirely or classified them as non-current assets held for
sale.
The strong performance from the marketing solutions business
Hirt & Carter Group, solid earnings from Media and decent
earnings growth from the Broadcast and Content business, all
contributed to an overall commendable performance.
The restructuring of the Group's cost base and growth in new
revenue streams bodes well for the future as the economically
leveraged media environment benefits from expected macro-economic
improvement.
Core businesses
Blackstar Holdings Group Proprietary Limited ("BHG") - 100.0%
owned
BHG consists of the following segments: Media, Broadcast and
Content, and Hirt & Carter Group.
Media
Media remained hamstrung by a weak economy with political
uncertainty having an effect on advertising across the industry,
especially in the final quarter of the calendar year. Revenues in
the traditional Media business were down 5.9% from the comparative
reporting period but continued tight cost management limited EBITDA
declines to 4.6%.
Softer trading at the book distribution company, New Holland
S.A. Proprietary Limited trading as Booksite Afrika, and 50.0%
owned mobile solutions business Smartcall Technology Solutions
Proprietary Limited ("STS"), resulted in an overall decrease in
EBITDA. Early indications are that 2018 is expected to be less
pressured, with positive sentiment emerging and beginning to
reflect in marketing spend.
The brands entrenched themselves as leaders in quality
journalism, thanks to the editorial team's ground breaking and
award winning coverage of state capture allegations. The division
continues to invest in new talent and has made several key
appointments including Lukanyo Mnyanda as Editor of Business Day,
Sthembiso Msomi as Editor of Sowetan and Mapula Nkosi as Editor of
Sunday World.
The closure of the unprofitable Times newspaper ushered in a new
era for digital journalism with the launch of Times Select, a
subscription-based digital product offering curated quality
reporting and commentary by some of the country's leading voices. A
major focus on distribution costs and restructuring of delivery
networks is underway and is expected to yield positive results in
the coming months, removing significant costs from newspaper
titles.
The most significant revenue impact was felt in government
advertising, while digital revenues began to improve in the final
quarter of 2017, driven by the Group's focus on multiple revenue
streams such as Native and Programmatic Advertising as well as new
revenues from digital subscribers to the BusinessLive digital
platform. Circulation declines continued to level off and revenue
streams from the Group's new events business more than doubled.
Magazines grew EBITDA by 33.0% from the comparative reporting
period thanks to a successful focus on niche publishing areas.
Broadcast and Content
EBITDA for the combined Broadcast and Content business was up
71.6% from the comparative reporting period despite 12.8% softer
revenues.
The TV channels business (Home Channel, Ignition, BDTV),
Blackstar TV, was similarly impacted by negative advertising
trends, with revenue down 7.3%, however EBITDA was up by 6.5%.
A focus on innovative new revenue streams helped limit this
impact and second half prospects are brighter. Television
Production business, Ochre, had a slow start due to limited new
commissioning from free to air channels, although it is well
positioned with a solid pipeline in the coming year. Radio
stations, Rise and Vuma, both continued to improve, growing
revenues and reducing losses. Vuma has trebled its audience over
the past year due to a new programming and music strategy, while
Rise has held steady. These remain in investment phase, as
expected, but are both growing audiences and advertising traction.
Combined, the two stations grew revenue by almost 8.7% and reduced
losses by almost 30.0%.
The Films business, Empire Entertainment ("Empire"), had a
better first half than the comparative reporting period, as the
effects of a restructuring after the market disruption in previous
years began to pay off. Revenue was up 3.2% and EBITDA nearly
tripled from the comparative reporting period.
The business was also appointed to represent Metro-Goldwyn-Mayer
("MGM"), in addition to Warner Bros and 20(th) Century Fox, while
Empire's independent films unit remains a market leader. The
business continues to diversify by investing directly in local
films through Indigenous Film Distribution, including the
internationally acclaimed film, Inxeba.
Music as an industry remains in transition with the shift to
digital, but Gallo Record Company is well positioned for the
anticipated growth in revenues from subscription streaming services
such as Spotify. The Group is actively pursuing new opportunities
for catalogues and frontline in South Africa and the rest of
Africa. Half year performance was muted, and the business will in
the short term be pressured by continued declines in physical
consumption. Gallo Music Publishing performed ahead of
expectations, but the bulk of performance is expected to be
delivered in the second half of the financial year. Music EBITDA
declined by 39.1% and revenues were down over 23.7% partly due to
timing differences.
Hirt & Carter Group
The Hirt & Carter Group delivered just over R1.0 billion in
sales for the six months to 31 December 2017, which equates to a
growth of 16.3% over the comparative reporting period.
The Hirt & Carter Group achieved growth across most of its
marketing solutions, driven by the ability to offer clients a
unique offering, including the integration of the labels, forms and
packaging products offered by Uniprint from July 2017.
In addition, the technology solutions unit, comprising the
Group's Software Solutions and digital engagement products
continued to gain traction with customers.
The Hirt & Carter Group achieved an EBITDA of R163.8
million, an increase of 12.5% over the comparative reporting
period. The tight management of overhead costs and the new digital
equipment acquired during the prior year in the Hirt and Carter
division ("H&C") continued to deliver the required contribution
to improved earnings. In the Uniprint division, earnings remained
flat due to pressure on pricing and margins on the commoditised
products. In addition, there has been no election work in the
period under review, compared to the comparative reporting period,
which usually delivers a strong margin contribution.
There has been a great deal of work done on the full integration
of H&C and Uniprint during the first six months, in preparation
for the move to new premises in Durban in July 2018. This
integration will unlock savings and translate into a better product
and service offering for our clients.
Africa (excluding South Africa)
This segment comprises the Group's African interests outside
South Africa: a 32.3% interest in Multimedia Group Limited
("Multimedia group") in Ghana, a 49.0% interest in Radio Africa
Limited ("Radio Africa group") in Kenya, and an effective 36.5%
interest in Cooper Communications Limited ("Coopers") which
includes Lagos Talk, Nigeria.
Ghanaian TV and radio business, Multimedia group, delivered a
strong performance, reporting a 26.0% rise in revenue and a 45.5%
increase in pre-tax profits for the six months ended 31 December
2017, when compared to the comparative reporting period. The
results were driven by the turnaround to profitability in the TV
business and improved economic prospects for the country. Kenya's
Radio Africa group had a difficult six months amid political
turmoil which impacted on advertising in the Kenyan market. It
reported a 12.9% decrease in revenue and a 44.4% decrease in EBITDA
for the six months ended 31 December 2017, when compared to the
comparative reporting period.
Non-core businesses
Tiso Blackstar management has been actively trying to sell the
non-core investments but market conditions have made it difficult
to achieve an acceptable solution. The Group hopes to resolve the
steel interests realisations over the upcoming months. The sale of
the KTH shareholding was inconclusive during the period under
review which also impacted overall performance.
KTH - 22.9% owned
Subsequent to the end of this reporting period, KTH commenced
negotiations with Tiso Blackstar on the basis that the intended
buy-back of the Group's investment of 213,235 ordinary shares in
KTH (constituting 22.9% of KTH's issued ordinary share capital,
excluding treasury shares), as announced on 6 July 2017 could no
longer be completed. Due to adverse market conditions in the latter
half of 2017, which resulted in a decline in the KTH portfolio
valuation, it was not in the best interests of KTH to continue with
the full quantum of the buy-back.
Based on this, all parties concerned have agreed to terminate
this agreement and pursue a transaction which would realise value
for Tiso Blackstar, which is expected to be achieved in two phases.
Phase one of this process has resulted in the Group signing a new
share purchase agreement with KTH and Kagiso Trust Strategic
Investments Proprietary Limited ("Kagiso"), on 23 March 2018,
whereby Kagiso has agreed to purchase 33,645 of the Group's holding
in the ordinary shares in KTH constituting 3.61% of KTH's issued
ordinary share capital (excluding treasury shares), for a cash
purchase price of R197.9 million. The proceeds are expected to be
received by 30 April 2018.
Following the implementation of this buy-back, the Group's
effective interest will be 20.01% of the issued ordinary shares of
KTH (excluding treasury shares). Despite the cancellation of the
intended transaction, the remaining interest in KTH will continue
to be classified as a non-current asset held for sale, as Tiso
Blackstar management are committed to a plan to sell. As part of
phase two, negotiations are currently underway, to successfully
realise this investment which has been identified as non-core to
the Group. The Group's remaining interest in KTH has subsequently
declined in value as a result of the adjustments to the KTH
portfolio valuation. In light of the events as detailed above, the
special dividend of R40.0 million, which was conditional upon
completion of the original KTH sale agreement, will be reconsidered
as part of phase two.
Steel businesses
The Group's steel interests comprise two principle assets, being
the Robor and CSI groups of companies.
Robor - 51.0% owned
Sales volumes in the South African steel and related fabrication
industries were negatively impacted during the first quarter of the
2018 financial year by the uncertainty created from the threat of
widespread industrial action.
Robor showed a recovery in sales to third parties mainly due to
significantly improved export sales, which now accounts for 22.0%
of total revenues, together with growth in sales in the group's
'value-adding' Mine Support Products Proprietary Limited ("MSP")
subsidiary, which is well set for a record year during the 2018
fiscal period.
Sales margins have shown a decrease of approximately 2.0%,
mainly as a consequence of ArcelorMittal's unilateral decision to
discontinue volumetric rebates.
During the period under review, Robor achieved profit after tax
of R7.8 million compared to a loss of R22.8 million incurred during
the comparative reporting period. The strong improvement in
profitability was driven by cost saving measures and revisions of
the group's property leases.
Robor anticipates continued growth in export sales, which it
expects will reach 30.0% of total revenues by year end. This growth
area, together with solid trading performances from both MSP and
Pro Fix Robor Proprietary Limited, form a robust trading platform
in anticipation of the long-awaited resurgence of sales into the
power transmission, telecommunications, water reticulation and the
renewable energy sectors.
CSI - 100.0% owned
CSI comprises two principle trading divisions, namely: Global
Roofing Solutions ("GRS") and Stalcor, both of which continue to
maintain their respective 'top tier' status in the markets in which
they operate.
South African downstream steel fabrication and distribution
businesses experienced unseasonably depressed sales in July and
August 2017 due to the impact of threatened widespread industrial
action.
CSI recorded EBITDA of R39.4 million during the period under
review compared to R45.5 million for the comparative reporting
period.
The group reported a loss after tax of R8.0 million for the six
months ended 31 December 2017 compared to a break-even position for
the comparative reporting period. This is mostly attributed to
significant exchange losses arising on revaluation of loans to
foreign subsidiaries as a result of the unexpected strengthening of
the volatile South African Rand during December 2017.
Until the South African trading conditions begin to improve and
the predictability of the group's African Footprint shows signs of
maturing, CSI's management focus will be on improved steel
procurement, cost savings and cash management. The group's sales
and manufacturing infrastructure remains well placed for growth
should general economic conditions improve.
Financial review
Tiso Blackstar generated a profit before interest and tax of
R206.1 million compared to R169.5 million for the comparative
reporting period. The Group reported improved basic earnings per
share and headline earnings per share of 19.02 cents and 20.44
cents, respectively for the current period, compared to 17.50 cents
and 3.05 cents, respectively for the comparative reporting period.
Tiso Blackstar's Trading Performance, defined as net profit (loss)
after adding back depreciation, amortisation, straight lining of
leases and share based payment expenses, amounted to R277.6 million
for the current reporting period.
Other gains (losses) of R27.7 million mainly comprise of the
following: a R5.4 million loss on disposal of assets; a R29.7
million gain arising on movements in other provisions and the
post-retirement medical aid ("PRMA") liability; a R3.2 million
foreign exchange gain arising on translation of foreign investments
and intergroup loans fixed in foreign currency; with the balance
relating to exceptional non-recurring expenses.
Share of profit of associates of R10.6 million comprises the
Group's share of profits in Radio Africa group, Multimedia group
and Coopers (Lagos Talk, Nigeria).
Other comprehensive loss of R24.9 million recognised directly to
equity (namely the Foreign currency translation reserve) mainly
arose on translation of BHG and CSI's African subsidiaries, and the
Group's African based associates to Rands.
The investment in KTH and the Group's interest in the wholly
owned property subsidiary Fantastic Investments 379 Proprietary
Limited ("Fantastic"), are disclosed as non-current assets held for
sale. The investment in KTH is held at its fair value less costs to
sell of R1.5 billion, and the consolidated assets and liabilities
of Fantastic are held at their carrying values of R14.3 million and
R10.7 million, respectively.
Bank overdrafts and other short term borrowing facilities of
R924.3 million include working capital facilities and bank
overdrafts held by the trading subsidiaries, of which R756.9
million are facilities held by non-core subsidiaries, namely CSI
and Robor. Tiso Blackstar generated cash from operations of R139.6
million during the reporting period.
Cash out flow from investing activities of R64.7 million mainly
comprise of acquisitions of assets of R69.6 million; proceeds on
disposal of assets of R3.5 million; the acquisition of Bothma
Branding Solutions Proprietary Limited ("Bothma") by the Hirt &
Carter Group of R12.3 million; and net movements in investments,
loans and receivables of R13.9 million.
Cash out flow from financing activities of R78.4 million mainly
comprise repayment of borrowings of R100.2 million (including
repayment of finance leases, instalment sale agreements and other
financial labilities) and a R12.5 million dividend paid to
shareholders in respect of the 2017 financial year.
During the current period, the Company repurchased a total of
300,000 Tiso Blackstar shares in the open market at an average
price per share of R7.19 and a total cost of R2.2 million. These
shares are held as treasury shares. At 31 December 2017, Tiso
Blackstar held 3,312,349 treasury shares, of which 3,012,349
treasury shares were awarded under the long term Management
Incentive Scheme in the prior period, and are not considered issued
for International Financial Reporting Standards ("IFRS")
purposes.
During the current period, 4,015,973 new shares were issued
under the long term Management Incentive Scheme but are also not
considered issued for IFRS purposes.
Black economic empowerment
The Group remains committed to transformation. BHG was proud to
achieve a level 2 Broad-Based Black Economic Empowerment ("B-BBEE")
contributor status with a procurement recognition level of 125.0%
and more than 51.0% black ownership. BHG was audited based on the
revised Broad-Based Black Economic Empowerment Codes of Good
Practice that came into effect on 1 May 2015.
The Company's ownership certificate and BHG's B-BBEE
Certificates are available on the Company's website
www.tisoblackstar.com/tbg/investors/publications.
Dividend
Tiso Blackstar has taken the prudent approach of not declaring
an interim dividend in light of its current gearing levels which
will be addressed as soon as some or most of the non-core
investments are realised in the near future.
The special dividend of R40.0 million, which was conditional
upon completion of the original KTH sale agreement, will be
reconsidered as part of phase two of the KTH disposal.
Post balance sheet events
Disposal of KTH
As previously mentioned, the initial sale transaction has been
cancelled subsequent to 31 December 2017 and a new transaction
entered into for the disposal of 3.61% of KTH's issued ordinary
share capital (excluding treasury shares) for a cash purchase price
of R197.9 million. Progress is also being made to dispose of the
Group's remaining interest in KTH.
Cancellation of AIM listing
On 13 March 2018, the Company announced that it has decided to
apply for the cancellation of the primary listing of its shares on
the Alternative Investment Market of the London Stock Exchange
("AIM") to be effective from 17 April 2018. The primary listing of
Tiso Blackstar shares on the exchange operated by the JSE Limited
("JSE") will continue and is not affected by the cancellation of
the AIM listing. On cancellation of the AIM listing, the shares
held on the United Kingdom ("UK") Register will be transferred to
the South African Register.
Tiso Blackstar's AIM shareholding has declined significantly
since listing on the JSE and the liquidity of the shares on AIM has
been low. The cancellation of the AIM listing will result in
substantial savings for the Company in both recurring and future
deal-related costs and will reduce complexity.
Debt restructure
Due to the failure to finalise the KTH sale as originally
envisaged, the Company is currently in discussions with its funders
about the restructuring of the KTH acquisition debt raised in
2015.
Outlook
Core operations have performed reasonably well during tough
economic conditions and the prospects for these media operations
look promising in the latter half of the financial year, assuming a
more positive recovery of the South African economy.
AD Bonamour
Chief Executive Officer
27 March 2018
Condensed consolidated statement of income and other
comprehensive income
-----------------------------------------------------------------------------------------
for the six months ended 31 December 2017
-----------------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
--------------------------------------- ------ ------------ ------------ ------------
31 December 31 December 30 June
--------------------------------------- ------ ------------ ------------ ------------
2017 2016 2017
--------------------------------------- ------ ------------ ------------ ------------
Unaudited Unaudited Audited
--------------------------------------- ------ ------------ ------------ ------------
Notes R'000 R'000 R'000
--------------------------------------- ------ ------------ ------------ ------------
Continuing operations
--------------------------------------- ------ ------------ ------------ ------------
Revenue 4,499,639 4,534,350 9,141,010
--------------------------------------- ------ ------------ ------------ ------------
Cost of sales (3,601,058) (3,684,806) (7,421,440)
--------------------------------------- ------ ------------ ------------ ------------
Gross profit 898,581 849,544 1,719,570
--------------------------------------- ------ ------------ ------------ ------------
Operating expenses (710,948) (605,633) (1,420,826)
--------------------------------------- ------ ------------ ------------ ------------
Depreciation and amortisation (103,706) (99,028) (184,470)
--------------------------------------- ------ ------------ ------------ ------------
Straight lining of leases 35,955 (17,989) 5,656
--------------------------------------- ------ ------------ ------------ ------------
Other income 58,520 19,534 93,849
--------------------------------------- ------ ------------ ------------ ------------
Operating profit 178,402 146,428 213,779
--------------------------------------- ------ ------------ ------------ ------------
Other gains (losses) 27,696 23,047 70,194
--------------------------------------- ------ ------------ ------------ ------------
Net profit 206,098 169,475 283,973
--------------------------------------- ------ ------------ ------------ ------------
Net finance costs (121,504) (114,116) (240,700)
--------------------------------------- ------ ------------ ------------ ------------
Finance income 2,696 4,211 8,175
-------------------------------------- ------ ------------ ------------ ------------
Finance costs 2 (124,200) (118,327) (248,875)
-------------------------------------- ------ ------------ ------------ ------------
Share of profit of associates
- equity accounted 10,570 995 7,395
--------------------------------------- ------ ------------ ------------ ------------
Profit before taxation 95,164 56,354 50,668
--------------------------------------- ------ ------------ ------------ ------------
Taxation (32,887) (28,679) (58,508)
--------------------------------------- ------ ------------ ------------ ------------
Profit (Loss) from continuing
operations 62,277 27,675 (7,840)
--------------------------------------- ------ ------------ ------------ ------------
Profit (Loss) from discontinued
operation, net of taxation 3 507 12,136 (7,607)
--------------------------------------- ------ ------------ ------------ ------------
Profit (Loss) for the period 62,784 39,811 (15,447)
--------------------------------------- ------ ------------ ------------ ------------
Profit (Loss) for the period
attributable to:
--------------------------------------- ------ ------------ ------------ ------------
Equity holders of the parent 50,449 46,745 7,823
--------------------------------------- ------ ------------ ------------ ------------
Non-controlling interests 12,335 (6,934) (23,270)
--------------------------------------- ------ ------------ ------------ ------------
62,784 39,811 (15,447)
--------------------------------------- ------ ------------ ------------ ------------
Other comprehensive (loss)
income, net of taxation
--------------------------------------- ------ ------------ ------------ ------------
Items that may subsequently
be reclassified to profit
and loss:
--------------------------------------- ------ ------------ ------------ ------------
Currency translation differences
on the translation of
foreign operations and associates (25,241) (45,522) (70,471)
--------------------------------------- ------ ------------ ------------ ------------
Actuarial gains on PRMA 340 - 2,667
--------------------------------------- ------ ------------ ------------ ------------
Other comprehensive loss,
net of taxation 4 (24,901) (45,522) (67,804)
--------------------------------------- ------ ------------ ------------ ------------
Total comprehensive income
(loss) for the period 37,883 (5,711) (83,251)
--------------------------------------- ------ ------------ ------------ ------------
Total comprehensive income
(loss) attributable to:
--------------------------------------- ------ ------------ ------------ ------------
Equity holders of the parent 25,548 1,223 (58,701)
--------------------------------------- ------ ------------ ------------ ------------
Non-controlling interests 12,335 (6,934) (24,550)
--------------------------------------- ------ ------------ ------------ ------------
37,883 (5,711) (83,251)
--------------------------------------- ------ ------------ ------------ ------------
Basic earnings per ordinary
share (in cents) attributable
to equity holders 5 19.02 17.50 2.95
--------------------------------------- ------ ------------ ------------ ------------
Diluted earnings per ordinary
share (in cents) attributable
to equity holders 5 18.71 17.50 2.93
--------------------------------------- ------ ------------ ------------ ------------
Basic earnings per ordinary
share (in cents) attributable
to equity holders from continuing
operations 5 18.83 12.95 5.82
--------------------------------------- ------ ------------ ------------ ------------
Diluted earnings per ordinary
share (in cents) attributable
to equity holders from continuing
operations 5 18.53 12.95 5.78
--------------------------------------- ------ ------------ ------------ ------------
Weighted average number
of shares in issue (net
of treasury shares, in thousands) 5 265,259 267,175 265,279
--------------------------------------- ------ ------------ ------------ ------------
Weighted average number
of shares in issue (in thousands) 5 269,578 267,175 266,879
--------------------------------------- ------ ------------ ------------ ------------
Condensed consolidated statement of financial position
------------------------------------------------------------------------------------
as at 31 December 2017
------------------------------------------------------------------------------------
Company registration number: SE 000110
------------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
----------------------------------- ------ ------------ ------------ ----------
31 December 31 December 30 June
----------------------------------- ------ ------------ ------------ ----------
2017 2016 2017
----------------------------------- ------ ------------ ------------ ----------
Unaudited Unaudited Audited
----------------------------------- ------ ------------ ------------ ----------
Notes R'000 R'000 R'000
----------------------------------- ------ ------------ ------------ ----------
ASSETS
------------------------------------ ------ ------------ ------------ ----------
Non-current assets 3,889,149 3,866,350 3,964,466
------------------------------------ ------ ------------ ------------ ----------
Property, plant and equipment 950,503 904,632 965,816
------------------------------------ ------ ------------ ------------ ----------
Investment property - 17,617 12,674
------------------------------------ ------ ------------ ------------ ----------
Straight lining of leases
asset - 210 169
------------------------------------ ------ ------------ ------------ ----------
Goodwill 1,200,376 1,139,846 1,224,936
------------------------------------ ------ ------------ ------------ ----------
Intangible assets 1,277,384 1,296,419 1,289,933
------------------------------------ ------ ------------ ------------ ----------
Investments in associates
- equity accounted 336,538 392,172 346,161
------------------------------------ ------ ------------ ------------ ----------
Other investments, loans
and receivables 30,097 34,320 29,704
------------------------------------ ------ ------------ ------------ ----------
Deferred taxation 94,251 81,134 95,073
------------------------------------ ------ ------------ ------------ ----------
Current assets 4,211,007 4,270,488 4,453,348
------------------------------------ ------ ------------ ------------ ----------
Inventories 1,016,673 1,057,827 1,088,622
------------------------------------ ------ ------------ ------------ ----------
Straight lining of leases
asset 6 - 3,282
------------------------------------ ------ ------------ ------------ ----------
Other financial assets 687 - -
------------------------------------ ------ ------------ ------------ ----------
Trade and other receivables 1,556,178 1,393,037 1,656,453
------------------------------------ ------ ------------ ------------ ----------
Current tax assets 41,933 26,411 30,090
------------------------------------ ------ ------------ ------------ ----------
Cash and cash equivalents 6 81,277 273,213 174,901
------------------------------------ ------ ------------ ------------ ----------
Non-current assets held for
sale 3 1,514,253 1,520,000 1,500,000
------------------------------------ ------ ------------ ------------ ----------
TOTAL ASSETS 8,100,156 8,136,838 8,417,814
------------------------------------ ------ ------------ ------------ ----------
EQUITY AND LIABILITIES
------------------------------------ ------ ------------ ------------ ----------
Capital and reserves attributable
to the Group's equity holders 3,376,923 3,465,863 3,378,132
------------------------------------ ------ ------------ ------------ ----------
Share capital and premium 3,255,248 3,255,248 3,255,248
------------------------------------ ------ ------------ ------------ ----------
Treasury shares (30,281) (20,494) (27,079)
------------------------------------ ------ ------------ ------------ ----------
Other reserves (37,761) 6,651 (1,739)
------------------------------------ ------ ------------ ------------ ----------
Retained earnings 189,717 224,458 151,702
------------------------------------ ------ ------------ ------------ ----------
Non-controlling interests 221,018 200,936 190,762
------------------------------------ ------ ------------ ------------ ----------
TOTAL EQUITY 3,597,941 3,666,799 3,568,894
------------------------------------ ------ ------------ ------------ ----------
LIABILITIES
------------------------------------ ------ ------------ ------------ ----------
Non-current liabilities 1,189,454 1,669,855 1,737,972
------------------------------------ ------ ------------ ------------ ----------
Borrowings 623,623 1,059,656 1,069,260
------------------------------------ ------ ------------ ------------ ----------
Straight lining of leases
liability 25,091 34,072 83,907
------------------------------------ ------ ------------ ------------ ----------
Other financial liabilities 9,152 - 8,491
------------------------------------ ------ ------------ ------------ ----------
Finance leases and instalment
sale obligations 117,030 136,721 135,956
------------------------------------ ------ ------------ ------------ ----------
Post-retirement benefits
liabilities 37,611 71,837 54,355
------------------------------------ ------ ------------ ------------ ----------
Provisions 9,081 20,016 11,246
------------------------------------ ------ ------------ ------------ ----------
Deferred taxation 367,866 347,553 374,757
------------------------------------ ------ ------------ ------------ ----------
Current liabilities 3,312,761 2,800,184 3,110,948
------------------------------------ ------ ------------ ------------ ----------
Borrowings 532,344 135,331 120,885
------------------------------------ ------ ------------ ------------ ----------
Straight lining of leases
liability 4,163 55,787 -
------------------------------------ ------ ------------ ------------ ----------
Other financial liabilities 5,852 - 6,660
------------------------------------ ------ ------------ ------------ ----------
Finance leases and instalment
sale obligations 60,582 44,535 59,495
------------------------------------ ------ ------------ ------------ ----------
Post-retirement benefits
liabilities 5,412 9,518 7,551
------------------------------------ ------ ------------ ------------ ----------
Provisions 75,273 18,285 115,441
------------------------------------ ------ ------------ ------------ ----------
Trade and other payables 1,632,495 1,618,872 1,882,123
------------------------------------ ------ ------------ ------------ ----------
Current tax liabilities 61,680 22,364 31,951
------------------------------------ ------ ------------ ------------ ----------
Bank overdrafts and other
short term borrowing facilities 6 924,265 895,492 886,842
------------------------------------ ------ ------------ ------------ ----------
Non-current liabilities held
for sale 3 10,695 - -
------------------------------------ ------ ------------ ------------ ----------
TOTAL LIABILITIES 4,502,215 4,470,039 4,848,920
------------------------------------ ------ ------------ ------------ ----------
TOTAL EQUITY AND LIABILITIES 8,100,156 8,136,838 8,417,814
------------------------------------ ------ ------------ ------------ ----------
Condensed consolidated statement of changes in equity
------------------------------------------------------------------------------------
for the six months ended 31 December 2017
------------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
----------------------------------- ------ ------------ ------------ ----------
31 December 31 December 30 June
----------------------------------- ------ ------------ ------------ ----------
2017 2016 2017
----------------------------------- ------ ------------ ------------ ----------
Unaudited Unaudited Audited
----------------------------------- ------ ------------ ------------ ----------
Notes R'000 R'000 R'000
----------------------------------- ------ ------------ ------------ ----------
Balance at the beginning
of the period 3,568,894 3,493,549 3,493,549
------------------------------------ ------ ------------ ------------ ----------
Changes in reserves:
------------------------------------ ------ ------------ ------------ ----------
Total comprehensive income
(loss) for the period 25,548 1,223 (58,701)
----------------------------------- ------ ------------ ------------ ----------
Deemed Acquisitions - 1,235 1,235
----------------------------------- ------ ------------ ------------ ----------
On acquisition or disposal
of subsidiary/business 109 (7,443) (31,080)
----------------------------------- ------ ------------ ------------ ----------
FSP share based payment
expense 4,321 - -
----------------------------------- ------ ------------ ------------ ----------
Purchase of treasury shares (2,158) (10,697) (18,326)
----------------------------------- ------ ------------ ------------ ----------
Non-controlling interests
equity loan (16,485) - 15,258
----------------------------------- ------ ------------ ------------ ----------
Dividends paid/payable (12,545) (12,004) (23,803)
----------------------------------- ------ ------------ ------------ ----------
Changes in non-controlling
interests:
------------------------------------ ------ ------------ ------------ ----------
Total comprehensive income
(loss) for the period 12,335 (6,934) (24,550)
----------------------------------- ------ ------------ ------------ ----------
Deemed Acquisitions - 204,295 204,295
----------------------------------- ------ ------------ ------------ ----------
On acquisition or disposal
of subsidiary/business 7 5,913 10,332 20,407
----------------------------------- ------ ------------ ------------ ----------
Non-controlling interests
equity loan 16,848 - -
----------------------------------- ------ ------------ ------------ ----------
Dividends paid to non-controlling
interests (4,839) (6,757) (9,390)
----------------------------------- ------ ------------ ------------ ----------
Balance at the end of the
period 3,597,941 3,666,799 3,568,894
------------------------------------ ------ ------------ ------------ ----------
Comprising:
------------------------------------ ------ ------------ ------------ ----------
Share capital and premium 3,255,248 3,255,248 3,255,248
----------------------------------- ------ ------------ ------------ ----------
Treasury shares (30,281) (20,494) (27,079)
----------------------------------- ------ ------------ ------------ ----------
Other reserves (37,761) 6,651 (1,739)
----------------------------------- ------ ------------ ------------ ----------
Retained earnings 189,717 224,458 151,702
----------------------------------- ------ ------------ ------------ ----------
Non-controlling interests 221,018 200,936 190,762
----------------------------------- ------ ------------ ------------ ----------
3,597,941 3,666,799 3,568,894
----------------------------------- ------ ------------ ------------ ----------
Condensed consolidated statement of cash flows
-----------------------------------------------------------------------------------
for the six months ended 31 December 2017
-----------------------------------------------------------------------------------
Six months Six months Year
ended ended ended
----------------------------------- ------ ------------ ------------ ----------
31 December 31 December 30 June
----------------------------------- ------ ------------ ------------ ----------
2017 2016 2017
----------------------------------- ------ ------------ ------------ ----------
Unaudited Unaudited Audited
----------------------------------- ------ ------------ ------------ ----------
Notes R'000 R'000 R'000
----------------------------------- ------ ------------ ------------ ----------
Cash flow from operating
activities
----------------------------------- ------ ------------ ------------ ----------
Cash generated by operations 139,614 281,291 457,791
----------------------------------- ------ ------------ ------------ ----------
Dividend income received
from investments 2,723 18,695 24,738
----------------------------------- ------ ------------ ------------ ----------
Net finance costs paid (109,176) (115,001) (129,572)
----------------------------------- ------ ------------ ------------ ----------
Net taxation paid (21,179) (11,540) (40,831)
----------------------------------- ------ ------------ ------------ ----------
Net cash generated by operating
activities 11,982 173,445 312,126
----------------------------------- ------ ------------ ------------ ----------
Cash flow from investing
activities
----------------------------------- ------ ------------ ------------ ----------
Acquisitions of tangible
assets (57,674) (176,056) (280,196)
----------------------------------- ------ ------------ ------------ ----------
Proceeds on disposal of
tangible assets 3,541 102,957 144,409
----------------------------------- ------ ------------ ------------ ----------
Additions to intangible
assets (11,915) (3,774) (27,890)
----------------------------------- ------ ------------ ------------ ----------
Proceeds on disposal of
intangible assets 3 - -
----------------------------------- ------ ------------ ------------ ----------
Net movement in investments,
loans and receivables 13,910 (14,958) (27,867)
----------------------------------- ------ ------------ ------------ ----------
Non-controlling interests
equity loan - - 15,258
----------------------------------- ------ ------------ ------------ ----------
On acquisition or disposal
of subsidiary/business 7 (12,302) (611,268) (706,329)
----------------------------------- ------ ------------ ------------ ----------
Cash and cash equivalents
disclosed as non-current
assets held for sale (239) - -
----------------------------------- ------ ------------ ------------ ----------
Net cash utilised by investing
activities (64,676) (703,099) (882,615)
----------------------------------- ------ ------------ ------------ ----------
Cash flow from financing
activities
----------------------------------- ------ ------------ ------------ ----------
Borrowings, finance leases
and instalment sale obligations
raised 41,829 101,653 250,028
----------------------------------- ------ ------------ ------------ ----------
Borrowings, finance leases
and instalment sale obligations
repaid (100,185) (189,910) (328,919)
----------------------------------- ------ ------------ ------------ ----------
Cash settled share based
payment of subsidiary (455) - (24,128)
----------------------------------- ------ ------------ ------------ ----------
Purchase of treasury shares (2,158) (10,697) (18,326)
----------------------------------- ------ ------------ ------------ ----------
Dividends paid (12,545) - (23,803)
----------------------------------- ------ ------------ ------------ ----------
Dividends paid to non-controlling
interests (4,839) (6,757) (9,390)
----------------------------------- ------ ------------ ------------ ----------
Net cash utilised by financing
activities (78,353) (105,711) (154,538)
----------------------------------- ------ ------------ ------------ ----------
Net decrease in cash and
cash equivalents (131,047) (635,365) (725,027)
----------------------------------- ------ ------------ ------------ ----------
Net cash and cash equivalents
at the beginning of the
period (711,941) 13,086 13,086
----------------------------------- ------ ------------ ------------ ----------
Net cash and cash equivalents
at the end of the period 6 (842,988) (622,279) (711,941)
----------------------------------- ------ ------------ ------------ ----------
Notes to the condensed consolidated financial statements
for the six months ended 31 December 2017
1. Basis of preparation
Investors should consider non-Generally Accepted Accounting
Principles ("non-GAAP") financial measures shown in this
announcement in addition to, and not as a substitute for or as
superior to, measures of financial performance reported in
accordance with IFRS. The IFRS results reflect all items that
affect reported performance and therefore it is important to
consider the IFRS measures alongside the non-GAAP measures.
The principal accounting policies adopted in the preparation of
the condensed consolidated financial statements for the six months
ended 31 December 2017 have been consistently applied across all
periods presented in the condensed consolidated financial
statements. All the condensed consolidated financial statements are
presented in South African Rands and all financial information has
been rounded to the nearest thousand unless stated otherwise. The
condensed consolidated financial statements for the six months
ended 31 December 2017 have not been reviewed and reported on by
the Company's external auditors.
While the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of IFRS published by the International
Accounting Standards Board ("IASB") as endorsed for use by the
European Union ("EU") and South Africa, this announcement does not
itself contain sufficient information to comply with IFRS. The
financial information is a set of condensed consolidated financial
statements which was approved by the Tiso Blackstar Board on 27
March 2018. The condensed consolidated financial statements have
been prepared on the historical cost basis, except for financial
assets and financial liabilities held at fair value through profit
and loss, non-current assets held for sale and investment property
that have been measured at fair value.
The accounting policies and methods of computation are in terms
of IFRS and are consistent with those applied in the annual
consolidated financial statements for the year ended 30 June
2017.
The Company has a dual primary listing on the Main Board of the
JSE in South Africa and the AIM market of the LSE. Effective 17
April 2018, the Company's AIM listing will be cancelled and the
Company will continue with a primary listing on the JSE.
1.1 JSE listing
The condensed consolidated financial statements for the six
months ended 31 December 2017 are prepared in accordance with and
containing the information required by IAS 34 Interim Financial
Reporting, as well as the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards
Council.
1.2 AIM listing
The financial information for the six months ended 31 December
2017 does not constitute statutory accounts as defined in sections
435(1) and 435(2) of the UK Companies Act 2006 ("Companies Act
2006"). Statutory accounts for the year ended 30 June 2017 have
been delivered to the Companies House in the UK following the
Company's Annual General Meeting held on Tuesday, 21 November
2017.
1.3 Going concern
The Tiso Blackstar Board has reviewed the working capital
requirements of the Group along with the funding requirements for
the Group, from the date of approval of the condensed consolidated
financial statements for the six months ended 31 December 2017, and
has found that the Group will remain a going concern for at least
the next twelve months.
Subsequent to the end of this reporting period, KTH commenced
negotiations with Tiso Blackstar on the basis that the intended
buy-back of the Group's investment of 213,235 ordinary shares in
KTH (constituting 22.9% of KTH's issued ordinary share capital,
excluding treasury shares), as announced on 6 July 2017 could no
longer be completed. Due to adverse market conditions in the latter
half of 2017, which resulted in a decline in the KTH portfolio
valuation, it was not in the best interests of KTH to continue with
the full quantum of the buy-back. Based on this, all parties
concerned have agreed to terminate this agreement and pursue a
transaction which would realise value for Tiso Blackstar, which is
expected to be achieved in two phases. Refer to note 14 for further
details.
Due to the failure to finalise the KTH sale as originally
envisaged, the Company is currently in discussions with its funders
about the restructuring of the KTH acquisition debt raised in
2015.
The Tiso Blackstar Board is not aware of any material
uncertainties which may cast significant doubt over the Group's
ability to continue as a going concern.
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
1. Basis of preparation (continued)
1.4 Foreign currencies
The functional currency of the Company is South African Rands,
being the currency of the primary economic environment in which the
Company and its subsidiaries operate.
The Company has a dual primary listing on the Main Board of the
JSE in South Africa and the AIM market of the LSE. As per the
announcement released on 13 March 2018, effective 17 April 2018,
the Company's dual primary listing on AIM will be cancelled and the
Company will have a primary listing on the JSE only.
Previously, Tiso Blackstar had two presentational currencies
being South African Rands ("Rands") and Pounds Sterling. During the
current period, Tiso Blackstar determined that only one
presentational currency, being Rands, was necessary as this is more
reflective of the Group's activities and operations. In terms of
IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors,
there is no impact on the Rands information previously presented
and therefore there are no retrospective adjustments required.
2. Finance costs
Finance costs for the reporting periods can be analysed as
follows:
Six months Six months
ended ended Year ended
---------------------------------- ------------ ------------ -----------
31 December 31 December 30 June
---------------------------------- ------------ ------------ -----------
2017 2016 2017
---------------------------------- ------------ ------------ -----------
Unaudited Unaudited Audited
---------------------------------- ------------ ------------ -----------
R'000 R'000 R'000
---------------------------------- ------------ ------------ -----------
BHG (core subsidiary) (46,886) (49,426) (97,514)
---------------------------------- ------------ ------------ -----------
CSI (non-core subsidiary) (23,819) (20,908) (47,025)
---------------------------------- ------------ ------------ -----------
Robor (non-core subsidiary) (25,421) (16,831) (46,444)
---------------------------------- ------------ ------------ -----------
Other: (28,074) (31,162) (57,892)
---------------------------------- ------------ ------------ -----------
Finance costs on KTH acquisition
debt (27,557) (25,281) (51,478)
---------------------------------- ------------ ------------ -----------
Finance costs within the
property subsidiaries (517) (5,881) (5,757)
---------------------------------- ------------ ------------ -----------
Finance costs on loans from
non-controlling interests - - (657)
---------------------------------- ------------ ------------ -----------
(124,200) (118,327) (248,875)
---------------------------------- ------------ ------------ -----------
3. Non-current assets held for sale and discontinued
operation
During 2016, Tiso Blackstar announced its change in strategy to
focus on investments in media and related industries, and to
therefore dispose of its non-core assets. In line with this, Tiso
Blackstar commenced negotiations to dispose of its interest in KTH
during the 2016 financial year and post 30 June 2017 concluded an
agreement of sale, the terms of which were finalised in July
2017.
KTH is disclosed as a discontinued operation, and classified and
disclosed as a non-current asset held for sale in accordance with
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
during the current and prior periods.
Subsequent to the end of this reporting period, KTH commenced
negotiations with Tiso Blackstar on the basis that the intended
buy-back of the Group's investment of 213,235 ordinary shares in
KTH (constituting 22.9% of KTH's issued ordinary share capital,
excluding treasury shares), as announced on 6 July 2017 could no
longer be completed. Due to adverse market conditions in the latter
half of 2017, which resulted in a decline in the KTH portfolio
valuation, it was not in the best interests of KTH to continue with
the full quantum of the buy-back. Based on this, all parties
concerned have agreed to terminate this agreement and pursue a
transaction which would realise value for Tiso Blackstar, which is
expected to be achieved in two phases. Refer to note 14 for further
details.
At 31 December 2017, the Group's interest in the wholly owned
property subsidiary Fantastic met the requirements to be disclosed
as a non-current asset held for sale in the consolidated statement
of financial position in terms of IFRS 5. The consolidated assets
and liabilities of Fantastic are recognised at their carrying
values in terms of the measurement criteria of IFRS 5. Fantastic
does not meet the criteria to be disclosed as a discontinued
operation in the current period, and is therefore included in
continuing operations in the consolidated statements of income and
other comprehensive income.
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
4. Other comprehensive (loss) income, net of taxation
Other comprehensive (loss) income mainly comprises of the
foreign currency translation adjustments recognised in the Foreign
currency translation reserve. These currency adjustments arise on
translation of the Group's investments in its African based
associates Radio Africa group, Multimedia group and Coopers as well
as the African based foreign operations held by CSI and BHG to the
Group's functional currency Rands at the closing rate at 31
December 2017.
Items recognised in other comprehensive (loss) income comprise
of the following:
Six months Six months Year
ended ended ended
------------------------------------- ------------ ------------ ---------
31 December 31 December 30 June
------------------------------------- ------------ ------------ ---------
2017 2016 2017
------------------------------------- ------------ ------------ ---------
Unaudited Unaudited Audited
------------------------------------- ------------ ------------ ---------
R'000 R'000 R'000
------------------------------------- ------------ ------------ ---------
On translation of the following
foreign operations and associates: (25,241) (45,522) (70,471)
------------------------------------- ------------ ------------ ---------
Foreign operations held
by CSI and BHG (3,353) (2,757) (3,648)
------------------------------------- ------------ ------------ ---------
Investment in associate
Radio Africa group (8,098) (16,126) (27,388)
------------------------------------- ------------ ------------ ---------
Investment in associate
Multimedia group (12,380) (24,929) (37,297)
------------------------------------- ------------ ------------ ---------
Investment in associate
Coopers (1,410) (1,710) (2,138)
------------------------------------- ------------ ------------ ---------
Actuarial gain on PRMA 340 - 2,667
------------------------------------- ------------ ------------ ---------
(24,901) (45,522) (67,804)
------------------------------------- ------------ ------------ ---------
5. Earnings per share ("EPS")
5.1 Basic and diluted earnings per ordinary share
Six months Six months Year
ended ended ended
-------------------------------------- ------------ ------------ --------
31 December 31 December 30 June
-------------------------------------- ------------ ------------ --------
2017 2016 2017
-------------------------------------- ------------ ------------ --------
Unaudited Unaudited Audited
-------------------------------------- ------------ ------------ --------
R'000 R'000 R'000
-------------------------------------- ------------ ------------ --------
Profit for the period attributable
to equity holders of the
parent from continuing operations 49,942 34,609 15,430
-------------------------------------- ------------ ------------ --------
Profit (Loss) for the period
attributable to equity holders
of the parent from discontinued
operation 507 12,136 (7,607)
-------------------------------------- ------------ ------------ --------
Profit for the period attributable
to equity holders of the
parent 50,449 46,745 7,823
-------------------------------------- ------------ ------------ --------
Weighted average number
of shares in issue (net
of treasury shares, in thousands)^^ 265,259 267,175 265,279
-------------------------------------- ------------ ------------ --------
Weighted average number
of shares in issue (in thousands) 269,578 267,175 266,879
-------------------------------------- ------------ ------------ --------
Basic earnings per ordinary
share (in cents) attributable
to equity holders 19.02 17.50 2.95
-------------------------------------- ------------ ------------ --------
Diluted earnings per ordinary
share (in cents) attributable
to equity holders 18.71 17.50 2.93
-------------------------------------- ------------ ------------ --------
Basic earnings per ordinary
share (in cents) attributable
to equity holders from continuing
operations 18.83 12.95 5.82
-------------------------------------- ------------ ------------ --------
Diluted earnings per ordinary
share (in cents) attributable
to equity holders from continuing
operations 18.53 12.95 5.78
-------------------------------------- ------------ ------------ --------
^^ Shares issued during the current and prior periods
(either as a fresh issue or out of treasury shares
held) under the long term Management Incentive Scheme
are contingently returnable shares and are excluded
from the EPS calculation until such date as they
are not subject to recall
----------------------------------------------------------------------------
Reconciliation of Weighted average number of shares
in issue
----------------------------------------------------------------------------
Six months Six months Year
ended ended ended
------------------------------------ ------------ ------------ ----------
31 December 31 December 30 June
------------------------------------ ------------ ------------ ----------
2017 2016 2017
------------------------------------ ------------ ------------ ----------
Unaudited Unaudited Audited
------------------------------------ ------------ ------------ ----------
Shares issued 4,015,973 - 3,012,349
------------------------------------ ------------ ------------ ----------
Estimated vesting percentage 67.7% - 53.1%
------------------------------------ ------------ ------------ ----------
Number of shares expected
to vest 2,718,814 - 1,599,557
------------------------------------ ------------ ------------ ----------
Number of shares expected
to vest (in thousands) 2,719 - 1,600
------------------------------------ ------------ ------------ ----------
Weighted average number
of shares in issue (in thousands) 269,578 267,175 266,879
------------------------------------ ------------ ------------ ----------
Less number of shares expected
to vest (in thousands) -
First tranche (1,600) - (1,600)
------------------------------------ ------------ ------------ ----------
Less number of shares expected
to vest (in thousands) -
Second tranche (2,719) - -
------------------------------------ ------------ ------------ ----------
Weighted average number
of shares in issue (net
of treasury shares, in thousands) 265,259 267,175 265,279
------------------------------------ ------------ ------------ ----------
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
5. Earnings per share ("EPS") (continued)
5.2 Basic and diluted headline earnings (losses) per ordinary
share
Six months Six months Year
ended ended ended
------------------------------------ ------------ ------------ ---------
31 December 31 December 30 June
------------------------------------ ------------ ------------ ---------
2017 2016 2017
------------------------------------ ------------ ------------ ---------
Unaudited Unaudited Audited
------------------------------------ ------------ ------------ ---------
R'000 R'000 R'000
------------------------------------ ------------ ------------ ---------
Profit for the period attributable
to equity holders of the
parent, adjusted for: 50,449 46,745 7,823
------------------------------------ ------------ ------------ ---------
Gains arising on investment
properties (36) (36,808) (2,858)
------------------------------------ ------------ ------------ ---------
Gains recognised on acquisition
of subsidiaries, step up
acquisitions - (12,183) (41,697)
------------------------------------ ------------ ------------ ---------
Gain on bargain purchase (440) (1,745) (1,745)
------------------------------------ ------------ ------------ ---------
(Gains) Losses on disposal
of investments (45) 2,411 2,413
------------------------------------ ------------ ------------ ---------
Impairment of investments - - 25,270
------------------------------------ ------------ ------------ ---------
Gains on investments held
for trading - - (256)
------------------------------------ ------------ ------------ ---------
Loss (Profit) on disposal
of property, plant and
equipment 5,383 (697) (22,133)
------------------------------------ ------------ ------------ ---------
Reversal of impairment
of property, plant and
equipment - - (11,379)
------------------------------------ ------------ ------------ ---------
Profit on disposal of intangible
assets - - (49)
------------------------------------ ------------ ------------ ---------
Total tax effects of adjustments (1,089) 10,434 11,099
------------------------------------ ------------ ------------ ---------
Headline earnings (losses) 54,222 8,157 (33,512)
------------------------------------ ------------ ------------ ---------
Basic headline earnings
(losses) per ordinary share
attributable to equity
holders (in cents) 20.44 3.05 (12.63)
------------------------------------ ------------ ------------ ---------
Diluted headline earnings
(losses) per ordinary share
attributable to equity
holders (in cents) 20.11 3.05 (12.56)
------------------------------------ ------------ ------------ ---------
6. Net cash and cash equivalents
---- ---------------------------------------------------------------------------
Net cash and cash equivalents for the reporting
periods can be analysed as follows:
---- ---------------------------------------------------------------------------
Six months Six months
ended ended Year ended
---- ---------------------------------- ------------ ------------ -----------
31 December 31 December 30 June
---- ---------------------------------- ------------ ------------ -----------
2017 2016 2017
---- ---------------------------------- ------------ ------------ -----------
Unaudited Unaudited Audited
---- ---------------------------------- ------------ ------------ -----------
R'000 R'000 R'000
---- ---------------------------------- ------------ ------------ -----------
BHG (core subsidiary) (90,291) (14,347) 15,478
--------------------------------------- ------------ ------------ -----------
CSI (non-core subsidiary) (325,741) (289,838) (347,422)
--------------------------------------- ------------ ------------ -----------
Robor (non-core subsidiary) (431,146) (330,811) (393,965)
--------------------------------------- ------------ ------------ -----------
Other 4,190 12,717 13,968
--------------------------------------- ------------ ------------ -----------
(842,988) (622,279) (711,941)
--------------------------------------- ------------ ------------ -----------
Cash and cash equivalents 81,277 273,213 174,901
--------------------------------------- ------------ ------------ -----------
Bank overdrafts and other
short term borrowing facilities (924,265) (895,492) (886,842)
--------------------------------------- ------------ ------------ -----------
Net cash and cash equivalents
per the statement of cash
flow (842,988) (622,279) (711,941)
--------------------------------------- ------------ ------------ -----------
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
7. Acquisitions and disposals of consolidated subsidiaries
7.1 Acquisition of a consolidated subsidiary
Effective 1 July 2017, the Hirt & Carter Group acquired a
51.0% interest in Bothma for R14.3 million. Bothma design, produce
and execute branding solutions in the formal and informal retail
markets.
The book value of the assets and liabilities acquired
approximated the fair value on acquisition date.
Six months
ended
------------------------------------------------ ------------
31 December
------------------------------------------------ ------------
2017
------------------------------------------------ ------------
Unaudited
------------------------------------------------ ------------
R'000
------------------------------------------------ ------------
Tangible assets 5,644
------------------------------------------------ ------------
Goodwill 440
------------------------------------------------ ------------
Intangible assets 10,147
------------------------------------------------ ------------
Inventories 2,687
------------------------------------------------ ------------
Trade and other receivables 7,553
------------------------------------------------ ------------
Cash and cash equivalents 1,971
------------------------------------------------ ------------
Deferred taxation (682)
------------------------------------------------ ------------
Finance leases and instalment sale obligations (1,361)
------------------------------------------------ ------------
Trade and other payables (3,173)
------------------------------------------------ ------------
Current tax liabilities (1,015)
------------------------------------------------ ------------
Contingent liability (1,585)
------------------------------------------------ ------------
Identifiable assets and liabilities at fair
value at acquisition date 20,626
------------------------------------------------ ------------
Non-controlling interests recognised at the
fair value of the identifiable assets and
liabilities (5,913)
------------------------------------------------ ------------
Gain on bargain purchase (440)
------------------------------------------------ ------------
Purchase consideration paid in cash 14,273
------------------------------------------------ ------------
Consideration paid (14,273)
------------------------------------------------ ------------
Net cash and cash equivalents received 1,971
------------------------------------------------ ------------
Net cash outflow as per the statement of
cash flow (12,302)
------------------------------------------------ ------------
7.2 Closure of a consolidated subsidiary
Tiso Blackstar Holdings Plc was deregistered and removed from
the register at the Registrar of Companies in the UK, during August
2017.
7.3 Business combinations in the prior period
Business combinations in the prior period, mainly comprised
subsidiaries which were no longer carried at fair value but rather
consolidated ("the Deemed Acquisitions"), due to the change in the
Group's status from an Investment Entity to a trading entity.
8. Tiso Blackstar long term Management Incentive Scheme
The Company adopted a new management incentive scheme during the
prior financial year in the form of a Forfeitable Share Plan
("FSP") that is limited to executives, senior management and other
key employees selected by the Tiso Blackstar Board. The number of
shares awarded is decided by the remuneration committee annually,
by taking into account the limits within the FSP rules and the
particular circumstances at that time.
Shares awarded under the FSP
The following share based payment arrangements were in existence
during the current period:
First Second
Tranche Tranche
------------------------------------------ ----------- ------------
30 June 30 November
Grant date 2017 2017
------------------------------------------ ----------- ------------
Fair value of share on grant date R9.31 R8.99
------------------------------------------ ----------- ------------
31 October 31 October
Vesting date 2019 2020
------------------------------------------ ----------- ------------
Number of shares awarded 3,012,349 4,015,973
------------------------------------------ ----------- ------------
Total equity settled share based
payment expense recognised in operating
expenses during the six months ended
31 December 2017 (in R'000) 2,760 559
------------------------------------------ ----------- ------------
All forfeitable share awards will either vest or expire on the
vesting date, or one month after the resignation of the executive
or employee, whichever is the earlier.
As the FSP was adopted in the prior year and the first tranche
of shares issued on 30 June 2017, there was no equity settled share
based payment expense recognised in the prior reporting periods in
respect of the FSP.
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
9. Segmental information
For the purpose of reporting to the Tiso Blackstar Board (who
are considered to be the Chief Operating Decision Maker ("CODM") of
the Company), the Group is organised into segments. It is the
CODM's strategy for the Group to focus on owning and growing
diversified revenues streams from media businesses with leading
market position, strong cash flows, historic earnings growth and
ability to continue as a going concern.
The Group has identified its operating segments based on their
nature and the reportable segments are as follows:
- Media: the division houses the Group's interest in the
distribution of knowledge and content via print, online assets and
other platforms;
- Hirt & Carter Group: the division includes the activities
on retail advertising production systems and related database
management and development, and retail print via H&C and
Uniprint;
- Broadcast and Content: the division includes the television
and radio platforms, radio assets, films business which is the
leading all-rights distributor of local and international films,
and Gallo the music business;
- Africa (excluding South Africa): includes the Group's
interests in the associates Radio Africa group in Kenya, Multimedia
group in Ghana and Coopers in Nigeria (all the African interests
are equity accounted and the share of profits from these interests
are therefore not shown in the tables below);
- CSI: a wholly owned subsidiary comprising of Stalcor which is
a processor, distributor and stockist of carbon steel, stainless
steel and aluminium in the form of high quality sheet, plate and
coil as well as structural and other long product profiles, and GRS
which is a steel roofing and cladding company;
- Robor: in which the Group holds a 51.0% interest is a
manufacturer and supplier of welded steel tube and pipe and cold
formed steel profiles; and
- Other: comprising of investments that are not deemed to be
material to the Group (including the property subsidiaries) as well
as other consolidated Group companies, including head office,
holding companies and the investment advisor Tiso Blackstar SA
Proprietary Limited ("Tiso Blackstar SA").
KTH was disclosed as a discontinued operation, and classified
and disclosed as a non-current asset held for sale in accordance
with IFRS 5 for both the current and prior reporting periods. The
segment information reported does not include any amounts for KTH,
which is described in more detail in note 3.
Each segment within the Group is assessed by the CODM based on
Segmental EBITDA. Segmental EBITDA is net profit (loss) before
depreciation, amortisation, straight lining of leases, share based
payment expenses and other gains (losses) which are considered to
be income or costs considered to be outside of the ordinary scope
of business. Tiso Blackstar's Trading Performance is an internal
measurement of performance which is utilised by the CODM to assess
the Group's performance as a whole. Tiso Blackstar's Trading
Performance is defined as Segmental EBITDA including other gains
(losses).
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
9. Segmental information (continued)
Segmental results
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Hirt
& Carter Broadcast
31 December 2017 Media Group and Content CSI Robor Other Total
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Unaudited R'000 R'000 R'000 R'000 R'000 R'000 R'000
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Revenue 1,004,080 1,006,513 190,535 1,294,579 1,003,577 355 4,499,639
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Cost of sales (813,252) (616,303) (130,601) (1,141,556) (905,971) 6,625 (3,601,058)
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Gross profit 190,828 390,210 59,934 153,023 97,606 6,980 898,581
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Operating expenses (130,316) (232,101) (44,260) (115,097) (132,042) (57,132) (710,948)
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Depreciation, amortisation
and straight lining of
leases
^ (20,727) (35,734) (5,671) (15,898) 35,443 (25,164) (67,751)
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Other income 13,700 5,056 578 1,494 28,935 8,757 58,520
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Operating profit (loss) 53,485 127,431 10,581 23,522 29,942 (66,559) 178,402
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Other gains (losses) 193 (1,577) (868) (4,394) 7,562 26,780 27,696
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Net profit (loss) 53,678 125,854 9,713 19,128 37,504 (39,779) 206,098
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Reconciliation of net
profit
(loss) to EBITDA
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Depreciation, amortisation
and straight lining of
leases
^ 20,727 35,734 5,671 15,898 (35,443) 25,164 67,751
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
FSP share based payment
expense 2,389 590 - - - 340 3,319
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Share based payment expense
of subsidiary for
discontinued
incentive scheme 455 - - - - - 455
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Other gains (losses) (193) 1,577 868 4,394 (7,562) (26,780) (27,696)
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Total Segmental EBITDA 77,056 163,755 16,252 39,420 (5,501) (41,055) 249,927
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Other gains (losses) 193 (1,577) (868) (4,394) 7,562 26,780 27,696
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
Tiso Blackstar Trading
Performance 77,249 162,178 15,384 35,026 2,061 (14,275) 277,623
---------------------------- ---------- ---------- ------------- ------------ ---------- --------- ------------
^ Straight lining of leases is required under IAS 17 Leases and is excluded
to determine actual operating costs
----------------------------------------------------------------------------------------------------------------------
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
9. Segmental information (continued)
Segmental results (continued)
----------------------------------------------------------------------------------------------------------------------
Hirt &
Carter Broadcast
31 December 2016 Media Group and Content CSI Robor Other Total
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Unaudited R'000 R'000 R'000 R'000 R'000 R'000 R'000
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Revenue 1,066,698 865,166 218,505 1,252,378 1,114,768 16,835 4,534,350
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Cost of sales (876,060) (536,009) (160,534) (1,087,732) (1,011,366) (13,105) (3,684,806)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Gross profit 190,638 329,157 57,971 164,646 103,402 3,730 849,544
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Operating expenses (103,731) (183,551) (48,501) (120,440) (108,655) (40,755) (605,633)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Depreciation,
amortisation
and straight lining
of leases
^ (12,995) (26,995) (5,735) (14,577) (20,393) (36,322) (117,017)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other income - - - 1,302 4,709 13,523 19,534
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Operating profit
(loss) 73,912 118,611 3,735 30,931 (20,937) (59,824) 146,428
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) 27,162 (2,429) - (6,359) 2,516 2,157 23,047
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Net profit (loss) 101,074 116,182 3,735 24,572 (18,421) (57,667) 169,475
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Reconciliation of net
profit
(loss) to EBITDA
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Depreciation,
amortisation
and straight lining
of leases
^ 12,995 26,995 5,735 14,577 20,393 36,322 117,017
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Share based payment
expense
of subsidiary for
discontinued
incentive scheme 144 - - - - 2,651 2,795
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) (27,162) 2,429 - 6,359 (2,516) (2,157) (23,047)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Total Segmental
EBITDA 87,051 145,606 9,470 45,508 (544) (20,851) 266,240
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) 27,162 (2,429) - (6,359) 2,516 2,157 23,047
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Tiso Blackstar
Trading Performance 114,213 143,177 9,470 39,149 1,972 (18,694) 289,287
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Hirt &
Carter Broadcast
30 June 2017 Media Group and Content CSI Robor Other Total
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Audited R'000 R'000 R'000 R'000 R'000 R'000 R'000
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Revenue 2,045,556 1,733,554 441,186 2,428,645 2,478,212 13,857 9,141,010
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Cost of sales (1,670,344) (1,075,644) (313,912) (2,080,785) (2,280,755) - (7,421,440)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Gross profit 375,212 657,910 127,274 347,860 197,457 13,857 1,719,570
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Operating expenses (285,990) (433,502) (98,055) (271,054) (237,483) (94,742) (1,420,826)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Depreciation,
amortisation
and straight lining
of leases
^ (53,166) (71,589) (6,188) (26,988) (41,472) 20,589 (178,814)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other income 42,015 20,560 6,450 14,086 9,989 749 93,849
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Operating profit
(loss) 78,071 173,379 29,481 63,904 (71,509) (59,547) 213,779
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) 17,076 8,843 (62,558) (3,006) 26,050 83,789 70,194
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Net profit (loss) 95,147 182,222 (33,077) 60,898 (45,459) 24,242 283,973
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Reconciliation of net
profit
(loss) to EBITDA
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Depreciation,
amortisation
and straight lining
of leases
^ 53,166 71,589 6,188 26,988 41,472 (20,589) 178,814
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Share based payment
expense
of subsidiary for
discontinued
incentive scheme - - - - - 4,836 4,836
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) (17,076) (8,843) 62,558 3,006 (26,050) (83,789) (70,194)
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Total Segmental
EBITDA 131,237 244,968 35,669 90,892 (30,037) (75,300) 397,429
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Other gains (losses) 17,076 8,843 (62,558) (3,006) 26,050 83,789 70,194
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
Tiso Blackstar
Trading Performance 148,313 253,811 (26,889) 87,886 (3,987) 8,489 467,623
---------------------- ------------ ------------ ------------- ------------ ------------ --------- ------------
^ Straight lining of leases is required under IAS 17 Leases and is excluded
to determine actual operating costs
----------------------------------------------------------------------------------------------------------------------
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
10. Financial risk management overview
10.1 Financial risk factors
The Group has exposure to the following risks from its use of
financial instruments: credit risk; liquidity risk; and market risk
(which comprise currency risk, interest rate risk and market price
risk).
The condensed consolidated financial statements for the six
months ended 31 December 2017 do not include all financial risk
management information and disclosures required in the annual
consolidated financial statements, and should be read in
conjunction with the Group's annual consolidated financial
statements as at 30 June 2017. There have been no material changes
in the Group's credit, liquidity and market risk, or key inputs in
measuring fair value since 30 June 2017.
10.2 Fair value estimation
The fair values of financial instruments that are accounted for
at amortised cost have been determined for both the current and
prior periods and approximate the carrying amounts at the
respective period ends due to either the short term nature of the
instrument or because it attracts a market related rate of
interest.
IFRS 13 Fair Value Measurement requires disclosures relating to
fair value measurements using a three-level fair value hierarchy.
The level 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. Assessing the
significance of a particular input requires judgement, considering
the factors specific to the asset or liability. The following table
shows financial instruments recognised at fair value, categorised
between those whose fair value is based on:
Level Quoted (unadjusted) market prices in active
1 - markets for identical assets or liabilities;
------ ---------------------------------------------------
Level Valuation techniques for which the lowest level
2 - input that is significant to the fair value
measurement is directly or indirectly observable;
or
------ ---------------------------------------------------
Level Valuation techniques for which the lowest level
3 - input that is significant to the fair value
measurement is unobservable.
------ ---------------------------------------------------
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
10. Financial risk management overview (continued)
10.2 Fair value estimation (continued)
Recurring fair value measurement of assets
------------------------------------------------------------------
Level Level
1 Level 2 3 Total
------------------------ ------- ---------- ------- ----------
31 December 2017 R'000 R'000 R'000 R'000
------------------------ ------- ---------- ------- ----------
Financial assets
------------------------ ------- ---------- ------- ----------
Financial assets held
for trading 5,425 - 2,917 8,342
------------------------ ------- ---------- ------- ----------
Non-current net assets
held for sale - 1,503,558 - 1,503,558
------------------------ ------- ---------- ------- ----------
5,425 1,503,558 2,917 1,511,900
------------------------ ------- ---------- ------- ----------
Level Level
1 Level 2 3 Total
------------------------ ------- ---------- ------- ----------
31 December 2016 R'000 R'000 R'000 R'000
------------------------ ------- ---------- ------- ----------
Financial assets
------------------------ ------- ---------- ------- ----------
Investment property - - 17,617 17,617
------------------------ ------- ---------- ------- ----------
Financial assets held
for trading 16,171 - 158 16,329
------------------------ ------- ---------- ------- ----------
Non-current asset held
for sale - 1,520,000 - 1,520,000
------------------------ ------- ---------- ------- ----------
16,171 1,520,000 17,775 1,553,946
------------------------ ------- ---------- ------- ----------
Level Level
1 Level 2 3 Total
------------------------ ------- ---------- ------- ----------
30 June 2017 R'000 R'000 R'000 R'000
------------------------ ------- ---------- ------- ----------
Financial assets
------------------------ ------- ---------- ------- ----------
Investment property - - 12,674 12,674
------------------------ ------- ---------- ------- ----------
Financial assets held
for trading 17,005 - 158 17,163
------------------------ ------- ---------- ------- ----------
Non-current asset held
for sale - 1,500,000 - 1,500,000
------------------------ ------- ---------- ------- ----------
17,005 1,500,000 12,832 1,529,837
------------------------ ------- ---------- ------- ----------
Transfers between levels
------------------------------------------------------------------
There were no transfers between levels in the current
and prior periods.
------------------------------------------------------------------
10.3 Valuation techniques
10.3.1 Level 2
Non-current net assets held for sale
The investment in KTH, and the consolidated assets and
liabilities of Fantastic, are classified as non-current assets held
for sale and are carried at the values determined in terms of the
measurement criteria of IFRS 5 (refer note 3).
10.3.2 Level 3
Investment property
The fair value of the investment property in the prior periods
was based on the directors' valuation, which included the straight
lining of leases asset. The valuation was performed annually by the
directors and independently every three to five years, and was
based on available market information of similar properties in the
same condition and location.
Financial assets held for trading
Other investments included in financial assets held for trading
are not material and the valuation is based on directors'
valuation.
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
11. Contingencies and guarantees, and Commitments
11.1 Contingencies and guarantees
There have been no significant changes to contingencies and
guarantees from what was disclosed in the annual consolidated
financial statements for the year ended 30 June 2017.
11.2 Commitments
Six months
ended
----------------------------------- ------------
31 December
----------------------------------- ------------
2017
----------------------------------- ------------
Unaudited
----------------------------------- ------------
R'000
----------------------------------- ------------
Capital commitments - expenditure
approved by directors
------------------------------------ ------------
Actual expenditure (costs
incurred in current period)
------------------------------------ ------------
- Property, plant & equipment 21,241
------------------------------------- ------------
- Intangible assets 3,887
------------------------------------- ------------
Committed
------------------------------------ ------------
- Property, plant & equipment 15,400
------------------------------------- ------------
- Intangible assets 1,500
------------------------------------- ------------
Not committed
------------------------------------ ------------
- Property, plant & equipment 4,970
------------------------------------- ------------
- Intangible assets 2,100
------------------------------------- ------------
49,098
----------------------------------- ------------
12. Comparatives
As the Group progresses the disposal of its non-core investments
to move towards being a single sector investment holding company,
it ceased to be regarded as an Investment Entity during the prior
financial year. The Group no longer accounts for its net
investments in subsidiaries and associates as investments held at
fair value through profit and loss but rather consolidates its
subsidiaries and equity accounts its investments in associates. As
a result of the Group's change in status, certain line items within
the consolidated statement of financial position as at 31 December
2016 have been reclassified for consistency with the current period
and with the 30 June 2017 classifications. This change does not
affect the quantitative value of amounts previously presented.
13. Changes in directors and directorships
The capacity of Andrew Bonamour changed from a non-executive
director to CEO with effect from 17 July 2017.
Richard Wight resigned from his position as a non-executive
director effective 20 July 2017.
14. Post balance sheet events
14.1 Disposal of KTH
Subsequent to the end of this reporting period, KTH commenced
negotiations with Tiso Blackstar on the basis that the intended
buy-back of the Group's investment of 213,235 ordinary shares in
KTH (constituting 22.9% of KTH's issued ordinary share capital,
excluding treasury shares), as announced on 6 July 2017 could no
longer be completed. Due to adverse market conditions in the latter
half of 2017, which resulted in a decline in the KTH portfolio
valuation, it was not in the best interests of KTH to continue with
the full quantum of the buy-back.
Based on this, all parties concerned have agreed to terminate
this agreement and pursue a transaction which would realise value
for Tiso Blackstar, which is expected to be achieved in two phases.
Phase one of this process has resulted in the Group signing a new
share purchase agreement with KTH and Kagiso Trust Strategic
Investments Proprietary Limited ("Kagiso"), on 23 March 2018,
whereby Kagiso has agreed to purchase 33,645 of the Group's holding
in the ordinary shares in KTH constituting 3.61% of KTH's issued
ordinary share capital (excluding treasury shares), for a cash
purchase price of R197.9 million. The proceeds are expected to be
received by 30 April 2018.
Notes to the condensed consolidated financial statements
continued
for the six months ended 31 December 2017
14. Post balance sheet events (continued)
14.1 Disposal of KTH (continued)
Following the implementation of this buy-back, the Group's
effective interest will be 20.01% of the issued ordinary shares of
KTH (excluding treasury shares). Despite the cancellation of the
intended transaction, the remaining interest in KTH will continue
to be classified as a non-current asset held for sale, as Tiso
Blackstar management are committed to a plan to sell. As part of
phase two, negotiations are currently underway, to successfully
realise this investment which has been identified as non-core to
the Group. The Group's remaining interest in KTH has subsequently
declined in value as a result of the adjustments to the KTH
portfolio valuation. In light of the events as detailed above, the
special dividend of R40.0 million, which was conditional upon
completion of the original KTH sale agreement, will be reconsidered
as part of phase two of the KTH disposal.
14.2 Cancellation of AIM listing
On 13 March 2018, the Company announced that it has decided to
apply for the cancellation of the primary listing of its shares on
AIM to be effective from 17 April 2018. The primary listing of Tiso
Blackstar shares on the exchange operated by the JSE will continue
and is not affected by the cancellation of the AIM listing. On
cancellation of the AIM listing, the shares held on the UK Register
will be transferred to the South African Register.
Tiso Blackstar's AIM shareholding has declined significantly
since listing on the JSE and the liquidity of the shares on AIM has
been low. The cancellation of the AIM listing will result in
substantial savings for the Company in both recurring and future
deal-related costs and will reduce complexity.
14.3 Debt restructure
Due to the failure to finalise the KTH sale as originally
envisaged, the Company is currently in discussions with its funders
about the restructuring of the KTH acquisition debt raised in
2015.
15. Related parties
There have been no significant changes to related parties from
what was disclosed in the annual consolidated financial statements
for the year ended 30 June 2017.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
London, United Kingdom
------------------------------------------------------------
27 March 2018
------------------------------------------------------------
For further enquiries, please contact:
------------------------------------------------------------
Tiso Blackstar
Group SE Leanna Isaac +44 (0) 20 7887 6017
------------------- ---------------- ---------------------
Northland Capital
Partners Tom Price +44 (0) 20 3861 6625
------------------- ---------------- ---------------------
JSE Sponsor: One
Capital Sholto Simpson +27 11 550 5000
------------------- ---------------- ---------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BBGDXGGDBGIR
(END) Dow Jones Newswires
March 27, 2018 07:15 ET (11:15 GMT)
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