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BCK - Blackstar Group SE - Full Year results for the year ended
31 December 2011
Blackstar Group SE
Previously Blackstar Group PLC
(Incorporated in England and Wales)
(Company number SE 30)
(registered as an external company with limited liability in the Republic of
South Africa under registration number 2011/008274/10)
Share code: BCK
ISIN: GB00B0W3NL87
("Blackstar" or "the Company" or "the Group")
Full Year results for the year ended 31 December 2011
Blackstar, the specialist investment company whose principal focus is to gain
exposure to the growth on the African continent largely through companies in
South Africa, is pleased to announce full year results for the year ended 31
December 2011.
Key highlights
During the review period
- Successful listing on the Altx of the JSE Limited and capital raising of
R100 million (GBP8.9 million)
- Realisation of investment in Ferro Industrial Products (Pty) Limited
("Ferro") for R200 million (GBP18.2 million), generating a return of 4.0
times money
- Payment of a special dividend of 80.53 cents (6.5 pence) per ordinary share
- Repurchase of 3.75% of the Company`s ordinary shares in issue
- Successful restructuring and de-risking of Blackstar`s exposure to its
steel interests
Post the review period
- Acquisition of 28% in Mvelaphanda Group Limited for R470 million (GBP38
million) in January 2012;
- Entered into an agreement to dispose of half of Blackstar`s investment in
Litha Healthcare Group Limited for R201 million (GBP16.6 million), which will
generate a return of 4.6 times money in South African Rand and 5.4 times
money in Pounds Sterling when completed;
- Current portfolio now diverse and represents good growth opportunities;
- Blackstar now well positioned to pursue new opportunities;
- Net asset value ("NAV") per share at 31 March 2012 of R13.32 (GBP1.09).
Commenting on the results and prospects for 2012, Andrew Bonamour, Non-
executive Director, said:
"It has been a very busy 12 months for Blackstar in which we listed on our
home exchange in Johannesburg and also completed the acquisition of
Mvelaphanda earlier this year. Our current portfolio of assets now
represents some outstanding opportunities to realise significant returns for
shareholders and our current pipeline continues to look encouraging."
"The Board therefore remain positive about the long-term trading prospects
for Blackstar and believe 2012 could be a landmark year in terms of
operational performance."
Directors` statement
Introduction
The period under review had many highlights for Blackstar as we exited a
number of investments on very favourable terms and invested in some excellent
businesses. Completing the sale of its 54% interest in Ferro for GBP18.2
million, realising a return of 4.0 times money and an internal rate of return
of 72% in Pounds Sterling was an excellent deal for our shareholders. Our
investment in Ferro is a great example of our ability to identify
investments, generate cash flows from the investment and then execute a
successful exit.
Our struggling carbon steel division Baldwins, was sold for a 5% interest in
Robor (Pty) Limited ("Robor"). This removed significant funding risk from the
Group and gave Blackstar an interest in a well managed, diversified steel
business with appropriate scale. During 2011, Blackstar received a dividend
of GBP0.1 million from Robor.
I recommend that shareholders refer to Annexure A, which provides a breakdown
of Blackstar`s most recent intrinsic NAV at 31 March 2012. The Directors
believe this is a useful tool in identifying the true inherent value of each
investment held. Annexure A also includes an analysis of the Turnover and
Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA")
which provides an indication of the performance of the underlying
investments.
Secondary Listing on the JSE
Blackstar completed a secondary listing on the Altx of the JSE Limited
("JSE") on 12 August 2011 and raised R100 million (GBP8.9 million) through
the issue of new shares to South African investors as part of the secondary
listing process. The listing was positive for the Group and has attracted
shareholder interest in South Africa.
The listing is beginning to reap the desired benefits. Trading in the
Company`s shares on the JSE has attracted increased interest from South
African based investors and over the first three months has steadily
improved. In addition, South African institutions have acquired shares off
the Alternative Investment Market of the London Stock Exchange ("AIM") and
transferred those shares to the JSE shareholders` register. As a result,
future tradability and liquidity of the share will be further enhanced as a
result of its listing on the JSE.
Investment and Market Review
Steel Investments
During the review period, Blackstar completed a successful restructuring of
its steel interest`s (representing 18.2% of the current gross asset value),
which included the following:
- the sale of the carbon steel division Baldwins for a 5% equity interest in
Robor, a large, dividend paying, diversified steel business with a strong
experienced management team;
- the separation of the two remaining divisions namely, Global Roofing
Solutions (Pty) Limited ("GRS") and Stalcor (Pty) Limited ("Stalcor"),
previously KMG Steel Service Centres (Pty) Limited, into two independent
operating companies, and the closure of Stalcor`s head office and two of its
branches; and
- the successful re-banking of GRS and Stalcor with two other banks, with the
resultant ring-fencing of working capital facilities within the individual
businesses.
Blackstar now holds its steel interests in three distinct companies:
- 6% stake in Robor - South Africa`s largest tube and pipe manufacturer;
- 100% of GRS - the largest steel roofing and cladding company in South
Africa; and
- 100% of Stalcor - one of the three appointed distributors of stainless
steel and aluminium in South Africa.
Stalcor has been rebranded, relaunched, has a new management team in place
and we believe after a lot of hard work, the company is on the road to
recovery having returned to profitability in early 2012. Stalcor also
launched a Customer Loyalty Trust which has been a huge success and is
beginning to have positive results for the business. Together with Stalcor`s
management, Blackstar is looking at a number of strategic alternatives for
the business.
GRS, Robor and Stalcor should be beneficiaries of the South African
Government`s proposed R3.2 trillion infrastructure spend as articulated in
the recent Budget speech. Robor and GRS are well managed companies with large
African footprints. Robor exports to 55 countries worldwide, 16 of which are
within Africa. GRS are in the process of consolidating their Gauteng
operations into one facility and effective January 2012 GRS has closed its
paint line, which due to the age of the equipment is no longer able to
produce cost effectively. Both these initiatives are expected to result in
significant cost savings and earnings enhancement for GRS.
While the steel market remains challenging, Blackstar has seen a significant
turnaround in its steel investments following the restructuring of the
various underlying companies that took place during 2011.
During February 2012, Blackstar acquired additional shares in Robor for an
amount of R5 million which represented an additional 1% in Robor, increasing
its holding to 6%. The amount paid for the additional shares was at an
attractive price relative to the value placed on the initial 5% Blackstar
received for selling its Baldwins interest to Robor.
Litha
Litha Healthcare Group Limited ("Litha") (representing 32.7% of the current
gross asset value) continued to perform well and recently reported an
earnings per share increase of 40%. Since Blackstar`s executive involvement
with Litha the share price has increased some 300% from 2010 to 31 March
2012. Blackstar has played a key role in the development of Litha and in our
view Litha`s prospects have never looked better.
In February 2012 Litha announced its acquisition of 100% of Pharmaplan (Pty)
Limited ("Pharmaplan") from Toronto listed Paladin Laboratory Inc.
("Paladin") for R590 million in cash and shares. Pharmaplan is one of the
fastest growing specialist pharmaceutical companies in South Africa.
Blackstar was intimately involved in securing, structuring and negotiating
the transaction.
The acquisition of Pharmaplan will change the Litha business, giving it the
appropriate scale in all three divisions in which it operates, namely
pharmaceuticals, vaccines and medical devices. Following the Paladin
acquisition, the Litha Pharma Division is expected to become Litha`s most
profitable division by earnings, and as such the Litha group`s profitability
is expected to be positively impacted. Our involvement with Litha has been
another great example of how deployment of Blackstar`s intellectual capital
into its portfolio investments can be transformative for the company whilst
also delivering real value for Blackstar shareholders.
Properties
Blackstar continued to grow its real estate portfolio (representing 1.8% of
the current gross asset value) by acquiring, through its 100% held
subsidiary, Blackstar Real Estate (Pty) Limited ("BRE"), a commercial
property in Midrand, Gauteng, South Africa for R58 million (GBP5.3 million).
The property is held through a property holding company with BRE owning 70%
of the ordinary shares and Litha owning 30% of the ordinary shares. Blackstar
secured R45 million (GBP4.1 million) of debt funding from a bank, to be held
in the property holding company over 10 years and Litha has entered into a 12
year lease to occupy the property.
This acquisition was a significant addition to Blackstar`s property portfolio
and the Group now has gross property assets of R109 million (GBP8.7 million)
which offers the Group exposure to the South African commercial, retail and
industrial real estate sectors. Blackstar believes that the property
transactions that have been structured by the Group make attractive
investment propositions as all of the properties are situated in key
locations and have long term leases signed with strong tenants.
The Group continues to explore property opportunities in the South African
real estate sector. Blackstar invests in property opportunities where the
tenant`s ability to meet rental obligations can be reasonably assessed and
understood and the resultant returns on equity can be enhanced by leverage.
Given Blackstar`s investment portfolio mix, the Group is able to structure
opportunities that are cash flow neutral post initial investment and that
allow significant returns on patient capital over the life of the leases.
Opportunities out of Blackstar`s portfolio companies represent good examples
of these.
Other
At year-end Blackstar held an investment of GBP1.2 million in Shoprite
Holdings Limited ("Shoprite") (representing 1.0% of the current gross asset
value). Shoprite is the largest fast moving consumer goods retailer in
Africa, with a presence in 16 countries. Blackstar acquired the shares in
Shoprite`s secondary listing in Lusaka, Zambia, instead of the Johannesburg
Stock Exchange because the Lusaka shares traded at a 43% discount to JSE
share price. The Zambian PE ratio of 13x, dividend yield of 4%, contrasted
favourably with the comparable Johannesburg multiples of 22x and 2%.
Blackstar`s investment in Shoprite has appreciated by 30% at year-end since
date of acquisition, largely due to the narrowing of the discount between its
share price in Lusaka and its share price in South Africa.
Shoprite have subsequently laid charges against their transfer secretary in
Zambia, Lewis Nathan Advocates, whom it accuses of selling Shoprite treasury
shares outside its mandate. Shoprite have also suspended all dividends to
shareholders on the Zambian exchange pending the outcome of the legal action
against Lewis Nathan. Blackstar along with other shareholders has engaged
Shoprite on this matter and is working to resolve the shareholder element of
the dispute.
The remainder of the portfolio fared well in 2011, in line with expectations.
The services derivative investment (representing 8.9% of the current gross
asset value) is expected to be realised in the second or third quarter of
2012.
Post year-end activities
In January 2012, Blackstar acquired 28% of Mvelaphanda Group Limited ("MVG")
(representing 36.7% of the current gross asset value) for a total cash
consideration of R470 million (GBP38 million), equivalent to R3.20 per MVG
share and has become the largest single investor in MVG. To fund this
acquisition, Blackstar used R150 million (GBP12 million) of its own cash
resources and R320 million (GBP26 million) from a debt facility provided by
Investec Bank Limited ("Investec") for the purpose of this transaction. The
Investec debt is repayable in two bullet payments over the next two years and
bears interest at South African Prime rate plus 15 basis points with the
interest payable semi annually in arrears. While the debt is in place there
are the normal restrictive covenants.
MVG is an iconic South-Africa-focused broad-based black economically
empowered investment holding company listed on the Main Board of the JSE.
MVG`s diversified portfolio includes significant investments in South
Africa`s financial, media, entertainment, construction and healthcare
sectors. Andrew Bonamour and William Marshall-Smith, Chief Executive Officer
and Director of Blackstar Group (Pty) Limited ("Blackstar SA") respectively
have been appointed to the MVG board. Andrew has assumed the role of interim
chief executive officer and William the role of interim financial director of
MVG, with their directors` fees to be paid to Blackstar. MVG`s offices have
been relocated to Blackstar`s premises and we are now actively involved in
MVG`s various investments.
As previously mentioned, in February 2012, Blackstar announced that it had
entered into a conditional agreement for the sale of 72,989,078 ordinary
shares in Litha to Paladin for a cash consideration of R201 million (GBP16.6
million). The disposal represents 50% of Blackstar`s interest in Litha and
equates to R2.75 per Litha share. On completion, the disposal proceeds will
represent a 4.6 times return on investment in South African Rand and 5.4
times return in Pounds Sterling, which equates to a 32% IRR and 36% IRR,
respectively, over the five year holding period.
The disposal forms part of a larger transaction, facilitating Litha`s
acquisition of 100% of Pharmaplan from Paladin for R590 million in cash and
shares. Following this transaction, Blackstar will retain 13.4% of the
ordinary share capital of Litha. Blackstar will also earn a R5 million
(GBP0.4 million) corporate finance fee, payable in cash, for its role as
originator and underwriter of the transaction.
The sale agreement is subject to the fulfilment of certain suspensive
conditions, which are standard in a transaction of this nature, including the
approval of the South African Competition Authorities. Blackstar`s remaining
shares will be subject to a six-month lock up, with Paladin having a pre-
emptive right over these shares. The transaction is expected to be completed
in the second half of 2012.
Financial review
The financial review encompasses the results of Blackstar`s four reporting
segments namely: Investment activities (being the Blackstar investment
portfolio including property company BRE and its subsidiaries, and the
associate Navigare (Pty) Limited ("Navigare"); Industrial metals (being
Stalcor, GRS and its subsidiaries); Industrial chemicals (being Ferro up to 1
July 2011, being the effective date of sale); and Healthcare (being the
associate Litha). Associates Litha and Navigare have been equity accounted
and included as single line items on the consolidated income statement and
balance sheet.
Financial performance
As a result of the sale of Baldwins, closure of two of Stalcor`s branches and
the sale of Ferro, the results of these operations have been separately
disclosed in the consolidated income statement under the heading "profit from
discontinued operations" and comparatives have been restated. A detailed
income statement for discontinued operations is provided within the notes to
the consolidated financial statements.
The operating profit before net investment income of GBP3.5 million for the
current financial year therefore comprises the results of the remaining
trading businesses - GRS and Stalcor as well as net gains on associates. GRS
contributed GBP2.1 million to the Group`s operating profit from continuing
operations, whilst Stalcor generated an operating loss of GBP0.1 million.
Blackstar`s share of profit from associates amounted to GBP2.9 million, of
which Litha contributed the majority of the profit.
An exceptional gain of GBP2.2 million has been recognised under net gains
from associates on dilution of Blackstar`s shareholding in Litha from 45% to
39% as Litha issued shares in April 2011 at R2.20 to non-controlling
shareholders in order to implement its acquisition of the remaining 49% of
Litha Healthcare Holdings (Pty) Limited.
A net gain on investments of GBP0.6 million was recognised in the current
financial year which includes a gain of GBP2.4 million that arose as
Blackstar entered into a forward exchange contract to convert the Ferro South
African Rand proceeds to Pounds Sterling, and a loss of GBP1.8 million mainly
arising on the disposal of the investment in Adreach Group (Pty) Limited. The
Group also generated GBP0.9 million in fees, dividends and interest during
the current financial year.
Once-off exceptional costs of GBP2.4 million were incurred during the year
which include: costs incurred on the secondary listing on the Altx;
conversion of the Company to a Societas Europaea and transfer to Malta; and
deal costs arising on the aborted offer to acquire the entire share capital
of MVG.
Total impairments of GBP12.2 million (2010: GBP11.7 million) have been
recognised on goodwill and intangible assets. These impairments were the main
reason for the overall reported loss from continuing operations of GBP12.9
million. Impairments are discussed in the goodwill and intangibles section
below.
Net profit from discontinued operations amounted to GBP5.7 million in 2011
which comprises the trading results of the discontinued operations from 1
January 2011 to date of closure or sale which amounted to net loss of GBP2.2
million (2010: GBP9.3 million) and the net gains on disposal of the
discontinued operations which amounted to GBP7.9 million.
The loss after taxation attributable to equity holders of Blackstar amounted
to GBP7.6 million for the year ended 31 December 2011 compared to a loss of
GBP11.1 million in the prior year.
Balance sheet changes
Gross assets amounted to GBP95.1 million at 31 December 2011. The decline
from the prior year is mainly attributable to the sale of Ferro and Baldwins
and further impairments recognised on goodwill and intangible assets during
the current financial year.
Investments in associates comprise GBP16.3 million in respect of Litha and
GBP0.1 million in respect of Navigare. Investments classified as loans and
receivables amounted to GBP2.2 million at year-end, a minor increase from the
prior year. Investments at fair value through profit and loss amounted to
GBP14.1 million at year-end and comprise the derivative investment in a
services company of GBP7.7 million, shares in Robor received on the sale of
the Baldwins divisions with a fair value of GBP3.5 million, and other smaller
listed and unlisted investments.
Borrowings declined from GBP13.8 million to GBP7.7 million at year-end mainly
due to the exclusion of Ferro`s debt as a result of the sale of Ferro during
the current financial year. Additional mortgage bonds were also taken out by
the property companies within the Group amounting to GBP5.2 million.
Other financial liabilities declined from GBP29.5 million to GBP7.1 million
at year end. This is attributable to the restructuring that took place within
Stalcor and the sale of the Baldwins division. Stalcor no longer requires an
inventory financing facility and GRS`s facility remained unutilised at year-
end. Such facilities amounted to GBP15.9 million at the end of the prior
year. In addition, the debtors invoice discounting facility utilised by both
Stalcor and GRS was reduced from GBP9.1 million to GBP6.1 million. All debt
is ring-fenced within each subsidiary.
GBP8.9 million was raised through the capital raising and secondary listing
on the Altx of the JSE Limited, which resulted in the increases to share
capital and share premium. The shares bought back by the Company in December
2011 were held in treasury at year-end, until such time as the shares have
been cancelled.
The significant difference between intrinsic NAV (as referred to in Annexure
A) and consolidated NAV would mainly be due to the fact that Litha is equity
accounted in the consolidated balance sheet with a carrying value of GBP16.3
million compared to a fair value of GBP32.6 million at year-end.
Cash and cash equivalents increased by GBP1.2 million to GBP20.3 million at
year-end. Significant cash flow movements during the year included: GBP23.1
million cash inflow on disposal of discontinued operations; GBP16.8 million
cash outflow on settlement of other financial liabilities mainly in Stalcor
and GRS; GBP5.0 million cash outflow on acquisition of investment property
and GBP4.3 million cash inflow as a result of external debt raised to finance
these acquisitions; GBP8.9 million cash inflow on capital raising; GBP6.2
million cash outflow on payment of a dividend to shareholders; and GBP2.3
million cash outflow on buy-back of shares.
Goodwill and intangible assets
Blackstar`s intangible assets declined from GBP13.3 million to GBP2.9 million
at year-end. The decrease of GBP10.4 million arose mainly on the disposal of
Ferro and its intangible assets of GBP7.7 million as well as amortisation and
impairments of intangible assets which were recognised on acquisition of GRS.
The remaining intangible assets at year-end comprise acquired marketing-
related intangibles (brand names and registered trademarks) that arose on the
acquisitions of GRS.
Goodwill declined from GBP18.8 million to GBP2.9 million at year-end.
Goodwill is tested for impairment at each reporting date. An impairment of
GBP1.9 million was recognised, which arose on the acquisition of GRS as a
result of the difficult market conditions. The goodwill in relation to
Blackstar SA and the internalisation of investment advisory arrangements was
impaired by GBP9.4 million in line with the decline in Blackstar Group`s net
asset value and the term of the previous investment advisory agreement. The
balance of the decrease arose on the disposal of Ferro.
The remaining goodwill comprises GBP1.9 million relating to the acquisition
of Blackstar SA and the internalisation of investment advisory arrangements,
and GBP0.9 million relating to acquisitions made by GRS.
Share buy-backs
In December 2011, Blackstar purchased 3,200,000 ordinary shares of EUR0.76
each in the Company at a price of 71 pence per share, representing 3.75% of
the issued ordinary share capital prior to such purchases. The shares were
cancelled in January 2012. Further buy-backs are not permitted under the
terms of the Investec debt facility.
Dividends
Following the sale of Ferro, the Board declared and paid a special dividend
of 6.5 pence per ordinary share for shareholders on the UK register or 80.53
cents per ordinary share for shareholders on the South African register.
As the Company is currently utilising its debt facility with Investec, the
Board has resolved not to declare a further dividend for the year.
Conversion to a Societas Europaea and Transfer to Malta
After obtaining approval from shareholders on 22 June 2011, Blackstar
converted into a Societas Europaea or European public limited liability
company on 27 June 2011.
Following approval by Blackstar`s shareholders on 10 February 2012 of the
transfer of the Company`s registered office from the United Kingdom to Malta,
the Company shall in accordance with Council Regulation (EC) No 2157/2001 of
8 October 2001 on the Statute for a European Company, take all steps
necessary to effect the transfer to Malta. It is expected the transfer will
become effective during the second quarter of 2012.
Current Trading and Outlook
New capital regulatory requirements, including those of Basel 3, are causing
a shift on both a global and local front in regard to on-balance sheet
investments held by commercial and investment banks. Their capital allocation
reviews in regard to such investments is providing private equity groups with
an avenue to source new deals.
2011 was a successful year for Blackstar. I feel the consolidated financial
statements prepared under International Financial Reporting Standards
("IFRS") do not give a full reflection of this success, mainly due to the
discontinued operations representing the disposal of the investment in Ferro,
the restructuring of Blackstar`s exposure to its steel interests and the
lower value of our Litha investment, which is equity accounted as an
associate rather than carried at fair value. As a result I recommend that
shareholders refer to Annexure A, which provides shareholders with a true
understanding of the value inherent in Blackstar`s portfolio. The intrinsic
net asset value ("NAV") of R13.23 (GBP1.09) at 31 March 2012, reflects the
solid asset base and strong financial position of the company.
The move to Malta will significantly reduce the administrative and legal
costs which arise from being present in two jurisdictions. Blackstar also
believe that Malta will be the most efficient jurisdiction for the Company
with respect to distributions to shareholders. The Group will continue to
focus its attention on unlocking further value from its current portfolio of
investments as evidenced by some of the abovementioned post year-end
transactions. Blackstar`s strong balance sheet has positioned it favourably
to pursue a range of interesting new NAV enhancing opportunities in 2012.
Andrew Bonamour
Luxembourg
12 April 2012
Annexure A
Intrinsic NAV as at 31 March 2012
Unaudited Unaudited
GBP`000 R`000
Mvelaphanda Group Limited 41,384 505,950
Litha Healthcare Group Limited 36,836 450,343
Global Roofing Solutions (Pty) Limited 12,678 155,000
Services derivative 10,015 122,441
Stalcor (Pty) Limited 3,681 45,000
Robor (Pty) Limited 4,172 51,000
Blackstar Real Estate (Pty) Limited 2,053 25,098
Other listed 1,176 14,379
Other unlisted 692 8,455
Net debt (23,262) (284,396)
Intrinsic NAV 89,425 1,093,270
Intrinsic NAV per share (in Sterling/Rands) 1.09 13.32
Ordinary share price on 31 March 2012 0.77 9.80
Ordinary share price discount to NAV 29% 26%
Notes
1 The intrinsic NAV provides a measure of the underlying value of the Group`s
assets and does not indicate when the investments will be realised, nor does
it guarantee the value at which the investments will be realised.
2 For the purposes of determining the intrinsic values, listed investments on
recognised stock exchanges are valued using quoted bid prices and unlisted
investments are shown at directors` valuation, determined using the
discounted cash flow methodology. This methodology uses reasonable
assumptions and estimations of cash flows and terminal values, and applies an
appropriate risk-adjusted discount rate that quantifies the investment`s
inherent risk to calculate a present value. Given the subjective nature of
valuations, the Group is cautious and conservative in determining the
valuations and has a track record of selling its unlisted investments in the
ordinary course of business above the levels at which it values them.
3 50% of the investment in Litha Healthcare Group Limited has been valued at
R2.75 per share, being the price of the disposal of 50% of Blackstar`s
interest, and the balance has been valued using quoted bid price on 31 March
2012.
4 The investment in Blackstar Real Estate (Pty) Limited is carried at cost,
being the capital invested plus accrued interest, where applicable.
5 All amounts have been translated using the closing exchange rates at 31
March 2012.
6 Net debt represents debt less cash at the centre, excluding subsidiaries
and comprises Investec debt less cash resources.
7 Other unlisted comprises investments in Navigare Securities (Pty) Limited
and FBDC Investors Offshore L.P ("Facebook").
8 Other listed comprises investments in Shoprite Holdings Limited.
Analysis of Turnover and EBITDA
2011 2011 2010 2010
GBP`000 R`000 GBP`000 R`000
Turnover from continuing
operations
Litha Healthcare Group Limited 150,230 1,747,026 111,017 1,254,873
Global Roofing Solutions (Pty)
Limited 48,178 560,274 46,904 530,179
Stalcor (Pty) Limited 42,880 501,497 44,687 505,111
Robor (Pty) Limited * 213,197 2,479,273 168,685 1,906,714
EBITDA from continuing
operations
Litha Healthcare Group Limited 11,568 161,107 10,054 144,770
Global Roofing Solutions (Pty)
Limited 2,519 29,290 1,045 11,812
Stalcor (Pty) Limited 257 2,984 107 1,206
Robor (Pty) Limited * 17,243 200,515 15,482 175,002
* These figures are stated as per the audited financials for the year ended
30 September 2011.
Consolidated income statement
for the year ended 31 December 2011
As restated*
2011 2010
GBP`000 GBP`000
Revenue 91,058 91,591
Cost of sales (78,887) (78,792)
Gross profit 12,171 12,799
Sales and distribution costs (1,551) (1,590)
Administrative expenses - Trading businesses
Administrative expenses (9,885) (12,013)
Impairment of goodwill (1,945) (2,808)
Impairment of intangible assets (861) (732)
(12,691) (15,553)
Other income-Trading businesses 497 195
Net gain in respect of associates
Share of profits of associates 2,902 1,539
Exceptional gain on dilution of interest in associate 2,188 -
5,090 1,539
Operating profit/(loss) before net investment income 3,516 (2,610)
Net investment income
Net gains on investments 632 5,666
Fees, dividends and interest from loans, receivables
and investments 866 1,247
Administrative expenses - Investments 1,498 6,913
Administrative expenses - Impairment of goodwill (9,437) (3,500)
Foreign exchange (losses)/gains (1,316) 596
Exceptional costs (2,374) -
Administrative expenses - Other (3,288) (3,217)
(16,415) (6,121)
Other income 454 1,162
Loss from operations (10,947) (656)
Finance income 191 229
Finance costs (1,732) (2,282)
Loss before taxation (12,488) (2,709)
Taxation (421) (1,180)
Loss from continuing operations
(12,909) (3,889)
Discontinued operations
Profit/(loss) from discontinued
operations, net of taxation 5,692 (9,280)
Loss for the year (7,217) (13,169)
(Loss)/profit for the period attributable to:
Equity holders of the parent (7,584) (11,121)
Non-controlling interests 367 (2,048)
(7,217) (13,169)
Basic and diluted losses per ordinary share
attributable to equity holders (in pence) (9.62) (14.39)
Basic and diluted losses per ordinary share
attributable to equity
holders from continuing operations (in pence) (16.25) (4.05)
* The comparative information for the year ended 31 December 2010 was
restated to present income generated and expenses incurred by discontinued
operations separately from continuing operations.
Headline earnings reconciliation
As restated*
2011 2010
GBP`000 GBP`000
Loss for the period attributable to equity
holders of the parent (7,584) (11,121)
Adjusted for:
Exceptional gain on dilution of interest in associate (2,188) -
Gain on disposal of discontinued operation (7,861)
Gain on deemed disposal of a subsidiary - (870)
Impairment of intangible assets 861 1,729
Impairment of goodwill 11,382 10,003
Impairment of property, plant and equipment 202 -
Reclassification adjustments from other
comprehensive income - (2,684)
Non-headline items included in equity accounted
earnings of associates (248) 168
Profit on disposal of property, plant and equipment (91) (25)
Total tax effects of adjustments (272) (477)
Total non-controlling interests` effects
of adjustments 15 (163)
Headline losses (5,784) (3,440)
Basic and diluted headline losses per ordinary share
attributable to equity holders (in pence) (7.34) (4.45)
Disclosure of headline earnings has been provided in accordance with the JSE
Listings Requirements.
Consolidated statement of comprehensive income
for the year ended 31 December 2011
2011 2010
GBP`000 GBP`000
Loss for the year (7,217) (13,169)
Other comprehensive income:
Currency translation differences on investments and
Rand denominated assets and liabilities (3,966) 3,342
Currency translation differences on translation of
foreign subsidiaries and associates (5,109) 1,300
Release of foreign currency translation reserve on
disposal of subsidiary (1,261) -
-
Net comprehensive (loss)/income recognised directly
in equity (10,336) 4,642
Total comprehensive loss for the year (17,553) (8,527)
Attributable to:
Equity holders of the parent (18,095) (6,216)
Non-controlling interests 542 (2,311)
(17,553) (8,527)
Consolidated statement of changes in equity
for the year ended 31 December 2011
Capital Treasury
Share redemption shares
Share capital premium reserve reserve
GBP`000 GBP`000 GBP`000 GBP`000
Balance as at 31 December
2009 53,023 - 30,156 -
Total comprehensive
income/(loss) for the period
Loss for the period - - - -
Other comprehensive
income/(loss) for the period - - - -
- - - -
Charge for share-based payment - - - -
Cancellation of capital
redemption reserve fund - - (30,156) -
Buy-back of ordinary shares (2,893) - 2,893 -
Arising on acquisition
of a subsidiary - - - -
Reduction in non-controlling
interests arising on acquisition
of additional interests
in subsidiary - - - -
Arising on deemed
disposal of
subsidiary on additional
shares being issued by
the subsidiary - - - -
Reduction in non-controlling
interest arising on conversion
of preference shares held in a
subsidiary into ordinary shares - - - -
Interim dividend paid - - - -
Balance as at 31
December 2010 50,130 - 2,893 -
Foreign currency
Retained translation Attributable to
earnings reserve equity holders
GBP`000 GBP`000 GBP`000
Balance as at 31 December
2009 8,976 9,594 101,749
Total comprehensive
income/(loss) for the period
Loss for the period (11,121) - (11,121)
Other comprehensive
income/(loss) for the period - 4,905 4,905
(11,121) 4,905 (6,216)
Charge for share-based payment 23 - 23
Cancellation of capital
redemption reserve fund 30,156 - -
Buy-back of ordinary shares (3,079) - (3,079)
Arising on acquisition of a
subsidiary - -
-
Reduction in non-controlling
interests arising on acquisition
of additional interests in
subsidiary 14 - 14
Arising on deemed disposal of
subsidiary on additional
shares being issued by the
subsidiary - 105 105
Reduction in non-controlling
interest arising on conversion
of preference shares held in
a subsidiary into ordinary
shares (1,907) - (1,907)
Interim dividend paid (493) - (493)
Balance as at 31 December 2010 22,569 14,604 90,196
Non-
controlling Total equity
interests
GBP`000 GBP`000
Balance as at 31 December 2009 (1,994) 99,755
Total comprehensive
income/(loss) for the period
Loss for the period (2,048) (13,169)
Other comprehensive
income/(loss) for the period (263) 4,642
(2,311) (8,527)
Charge for share-based payment 8 31
Cancellation of capital
redemption reserve fund - -
Buy-back of ordinary shares - (3,079)
Arising on acquisition of a subsidiary 10,122 10,122
Reduction in non-controlling
interests arising on acquisition
of additional interests in subsidiary (14) -
Arising on deemed disposal of subsidiary
on additional shares being issued by
the subsidiary (10,192) (10,087)
Reduction in non-controlling
interest arising on conversion
of preference shares held in a
subsidiary into ordinary shares 1,907 -
Interim dividend paid - (493)
Balance as at 31 December 2010 (2,474) 87,722
An interim dividend of 0.65 pence per ordinary share was declared on 29
October 2010.
Capital Treasury
Share Share redemption shares
capital premium reserve reserve
GBP`000 GBP`000 GBP`000 GBP`000
Balance as at 31 December
2010 50,130 - 2,893 -
Total comprehensive
income/(loss) for the period
Loss for the period - - - -
Other comprehensive
income/(loss) for the period - - - -
- - - -
Capital raising 6,923 1,974 - -
Buy-back of ordinary shares - - - (2,272)
Arising on reclassification of
investment, now a subsidiary - - - -
Reduction in non-controlling
interests arising on subsidiary
share buy-back of shares from
non-controlling shareholders - - - -
Reduction in non-controlling
interests arising on acquisition
of additional interests in
subsidiary - - - -
Arising on disposal of subsidiary - - - -
Release of foreign currency
translation reserve on
disposal of investments
Dividend paid - - - -
Balance as at 31 December
2011 57,053 1,974 2,893 (2,272)
Foreign
currency
Retained translation Attributable to
earnings reserve equity holders
GBP`000 GBP`000 GBP`000
Balance as at 31 December 2010 22,569 14,604 90,196
Total comprehensive
income/(loss) for the period
Loss for the period (7,584) - (7,584)
Other comprehensive
income/(loss) for the period - (10,511) (10,511)
(7,584) (10,511) (18,095)
Capital raising - - 8,897
Buy-back of ordinary shares - - (2,272)
Arising on reclassification of
investment, now a subsidiary - - -
Reduction in non-controlling
interests arising on subsidiary
share buy-back of shares from
non-controlling shareholders (4,577) - (4,577)
Reduction in non-controlling
interests arising on acquisition
of additional interests in
subsidiary (415) - (415)
Arising on disposal of subsidiary - - -
Release of foreign currency
translation reserve on disposal
of investments 815 (815) -
Dividend paid (6,217) - (6,217)
Balance as at 31 December
2011 4,591 3,278 67,517
Non-
controlling Total equity
interests
GBP`000 GBP`000
Balance as at 31 December 2010 (2,474) 87,722
Total comprehensive income/(loss) for the period
Loss for the period 367 (7,217)
Other comprehensive income/(loss) for the period 175 (10,336)
542 (17,553)
Capital raising - 8,897
Buy-back of ordinary shares -
(2,272)
Arising on reclassification of investment,
now a subsidiary 6 6
Reduction in non-controlling interests
arising on subsidiary share buy-back of
shares from non controlling shareholders 4,577 -
Reduction in non-controlling interests
arising on acquisition of additional
interests in subsidiary 415 -
Arising on disposal of subsidiary (3,126) (3,126)
Release of foreign currency translation reserve
on disposal of investments - -
Dividend paid - (6,217)
Balance as at 31 December 2011 (60) 67,457
A final dividend of 0.90 pence per ordinary share was declared on 6 May 2011.
A special dividend of 6.5 pence per ordinary share was declared on 11
November 2011.
Consolidated balance sheet
as at 31 December 2011
2011 2010
GBP`000 GBP`000
Non-current assets
Property, plant and equipment 7,563 21,666
Investment properties 7,018 -
Goodwill 2,884 18,835
Intangible assets 2,947 13,281
Investments in associates 16,437 14,637
Investments classified as loans and receivables 1,303 873
Investments at fair value through profit and loss 10,398 12,056
Other financial assets - 52
Deferred tax assets 92 125
Current assets
48,642 81,525
Investments classified as loans and receivables 883 502
Investments at fair value through profit and loss 3,687 545
Other financial assets 2 26
Current tax assets 24 423
Trade and other receivables 11,540 25,105
Inventories 10,042 27,006
Cash and cash equivalents 20,334 19,196
46,512 72,803
Total assets 95,154 154,328
Non-current liabilities
Borrowings (7,077) (12,538)
Other financial liabilities (785) (3,937)
Provisions (199) (197)
Deferred tax liabilities (1,499) (4,733)
Current liabilities
(9,560) (21,405)
Borrowings (602) (1,295)
Other financial liabilities (6,308) (25,540)
Provisions (93) (288)
Current tax liabilities (85) (442)
Trade and other payables (11,044) (17,635)
Bank overdrafts (5) (1)
(18,137) (45,201)
Total liabilities (27,697) (66,606)
Total net assets 67,457 87,722
Equity
Share capital 57,053 50,130
Share premium 1,974 -
Capital redemption reserve 2,893 2,893
Treasury shares reserve (2,272) -
Foreign currency translation reserve 3,278 14,604
Retained earnings 4,591 22,569
Total equity attributable to equity holders 67,517 90,196
Non-controlling interest (60) (2,474)
Total equity 67,457 87,722
Net asset value per share (in pence) 79 121
Consolidated cash flow statement
for the year ended 31 December 2011
2011 2010
GBP`000 GBP`000
Cash flow from operating activities
Cash generated by operations 2,013 13,795
Interest received 310 461
Interest paid (1,627) (4,525)
Dividends received 230 5,798
Taxation paid (1,431) (2,645)
Cash (absorbed)/generated by operating activities (505) 12,884
Cash flow from investing activities
Purchase of property, plant and equipment (1,164) (2,748)
Purchase of investment property (5,018) -
Additions to investments classified as loans
and receivables (1,883) (746)
Purchase of investments at fair value through profit
or loss (2,965) (5,019)
Acquisition of subsidiaries, net of cash acquired 2 (176)
Cash outflow on acquisition of subsidiary and subsequent
deemed disposal - (4,950)
Proceeds from disposal of property, plant and equipment 446 127
Proceeds from disposal of investments 3,080 21,667
Disposal of discontinued operations, net of cash disposed 23,006 -
Cash generated by investing activities 15,504 8,155
Cash flow from financing activities
Proceeds from borrowings 4,728 1,312
Repayment of borrowings (2,181) (14,866)
Movement in other financial liabilities (including
short-term funding facilities) (16,804) (2,232)
Buy-back of ordinary shares (2,272) (3,079)
Capital raising 8,897 -
Dividends paid to equity holders of the parent (6,217) (493)
Cash absorbed by financing activities (13,849) (19,358)
Net increase in cash and cash equivalents 1,150 1,681
Cash and cash equivalents at the beginning of the year 19,195 17,319
Exchange (losses/)gains on cash and cash equivalents (16) 195
Cash and cash equivalents at the end of the year 20,329 19,195
Notes to the consolidated financial statements
for the year ended 31 December 2011
1. Financial information
The financial statements have been prepared in accordance with International
Financial Reporting Standards.
The financial information set out above does not constitute the Company`s
statutory accounts for the year ended 31 December 2011 or 2010 as defined in
section 434 of the Companies Act 2006. Statutory accounts for the year ended
31 December 2010 have been delivered to the Registrar of Companies and those
for the year ended 31 December 2011 will be delivered following the Company`s
annual general meeting. The auditors have reported on those accounts, their
reports were unqualified and did not include references to any matters to
which the auditors drew attention by way of emphasis without qualifying their
reports. Their reports for the year ended 31 December 2011 and 31 December
2010 did not contain statements under Sections 498(2) or (3) of the Companies
Act 2006.
2. Distribution of the annual report and accounts to shareholders
Copies of the Group`s audited statutory accounts for the year ended 31
December 2011 will be dispatched to shareholders shortly.
For further information, please contact:
Blackstar Group SE
John Kleynhans
+352 402 505 427
Liberum Capital Limited
Chris Bowman/Christopher Britton
+44 (0) 20 3100 2222
PSG Capital (Pty) Limited
David Tosi/Willie Honeyball
+27(0) 21 887 9602
Buchanan
Jeremy Garcia/Gabriella Clinkard
+27 (0) 20 7466 5000
Date: 12/04/2012 08:00:02 Supplied by www.sharenet.co.za
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