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STELLAR CAPITAL PARTNERS LIMITED - Unaudited Interim Results for the six months ended 31 May 2015

Release Date: 31/07/2015 09:00
Code(s): SCP     PDF:  
Wrap Text
Unaudited Interim Results for the six months ended 31 May 2015

STELLAR CAPITAL PARTNERS LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/015580/06)
Share code: SCP
ISIN: ZAE000198586

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MAY 2015

INTRODUCTION

Stellar Capital Partners Limited (formerly ConvergeNet Holdings
Limited) (“Stellar Capital” or the “Company”) presents its
interim results for the six month period ended 31 May 2015
following the completion of the Company’s conversion from an
operating entity to an investment holding company (refer to note
18).

During the period under review, the Company continued the
balance sheet cleanup exercise which it commenced during the
prior financial period, disposing of its investment in
Northbound Communication Solutions (Pty) Ltd and completing the
disposal of its remaining operating entities. The losses
incurred on the disposal of the entities predominantly relate to
the derecognition of historic minority balances with a
concomitant entry to profit and loss which does not impact on
the net asset value of the Group. The period under review
furthermore included once-off corporate advisory expenses in the
amount of R2.9 million which related to the establishment of the
investment holding company.

Shareholders are advised that these results do not yet
incorporate the sale of the Company’s investment in Digicore
Holdings Limited or the results of the offers to acquire 100% of
the issued ordinary share capital of Cadiz Holdings Limited and
a strategic minority stake in Torre Industries Limited as
announced by the Company on SENS on 19 June 2015 and 6 July 2015
respectively.

HIGHLIGHTS

  -   NET ASSET VALUE - R534 MILLION
  -   NAV PER SHARE - 189 CENTS
  -   TNAV PER SHARE - 188 CENTS


CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION AS AT 31
MAY 2015

                                              Unaudited   Unaudited    Audited
                                                  as at    as at 28   as at 30
                                                 31 May    February   November
R'000                                Notes         2015        2014       2014

ASSETS
NON-CURRENT ASSETS
Listed investments held at fair
value                                    8     241,451           -          -
Unlisted investments held at fair
value                                    8     100,119           -          -
Other financial assets                   9      59,934    111,300           -
Property, plant and equipment                        -         507          -
Intangible assets                                    -         339          -
Deferred taxation                                3,216       1,724      3,216
CURRENT ASSETS
Other financial assets                   9     113,870         900     76,000
Inventories                                          -          34          -
Trade and other receivables                         46       2,449        571
Cash and cash equivalents                        5,516      13,469      3,334
Non-current assets held for sale                     -     105,356     29,668
TOTAL ASSETS                                   524,152     236,078    212,789
EQUITY AND LIABILITIES
EQUITY
Equity attributable to owners of
the parent                               10    533,701     188,831     193,329
Non-controlling interest                      (14,221)    (19,400)    (14,221)
CURRENT LIABILITIES
Other financial liabilities                          -      37,015          -
Current tax payable                                  -         490        421
Trade and other payables                 11      4,672       5,743      3,711
Liabilities of disposal group
held for sale                                        -      23,399     29,549
TOTAL LIABILTIES                                 4,672      66,647     33,681
TOTAL EQUITY AND LIABILITIES                   524,152     236,078    212,789

Net asset value per share (cents)                  189         188        192
Tangible net asset value per
share (cents)                                      188         186        189

CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME FOR
THE SIX MONTHS ENDED 31 MAY 2015

                                            Unaudited   Unaudited     Audited
                                             6 months    6 months   15 months
                                                ended    ended 28    ended 30
                                               31 May    February    November
R'000                               Notes        2015        2014        2014

Continuing operations
Fair value adjustments to
                                      8
investments                                 (15,919)           -         414
Interest income                      12        8,753       2,305       7,913
Dividends received                                 9           -           -
Other revenue                                      -         510         797
Cost of sales                                      -       (485)       (490)
Gross (loss) / income from
investments and operations                   (7,157)       2,330       8,634
Other income                                      78          91      10,853
Finance costs                                  (140)     (1,972)     (2,360)
Net (loss)/ income before
operating expenses                           (7,219)         449      17,127
Operating expenses
 - Management fee                    13      (3,249)           -           -
 - Other operating expenses          14      (9,694)     (9,955)    (15,328)
(Loss)/ profit before taxation              (20,162)     (9,506)       1,799
Taxation                                         421         110       1,617
(Loss)/ profit from continuing
operations                                  (19,741)     (9,396)       3,416
Discontinued operations              15
Net loss from discontinued
operations                                   (8,747)    (85,981)    (92,469)
Total comprehensive loss for the
period                                      (28,488)    (95,377)    (89,053)

Loss for the period attributable
to:
Equity holders of the parent                (28,488)    (97,589)    (94,293)
Non-controlling interests                          -       2,212       5,240
(Loss) / profit from continuing
operations attributable to:
Equity holders of the parent                (19,741)     (9,458)     (1,824)
Non-controlling interests                          -          62       5,240
(Loss) / profit from discontinued
operations attributable to:
Equity holders of the parent                 (8,747)    (88,131)    (92,469)
Non-controlling interests                          -        2,150           -


                                     Unaudited        Unaudited       Audited
                                      6 months         6 months     15 months
                                         ended         ended 28      ended 30
                                        31 May         February      November
R'000                                     2015             2014          2014

Basic and diluted loss per share
(cents)
From continuing operations                (8.90)        (9.59)         (1.82)
From discontinued operations              (3.94)       (89.39)        (92.30)
Basic loss for the period                (12.84)       (98.98)        (94.12)

Headline and diluted headline
loss per share (cents)
From continuing operations                (8.43)        (9.60)         (1.79)
From discontinued operations              (1.72)       (14.30)        (14.48)
Headline loss for the period             (10.15)       (23.90)        (16.27)

Weighted and diluted weighted
average number of shares           221,740,565     98,592,416 100,180,601
Total number of shares in issue
(net of treasury shares)           282,353,707 100,514,281 100,514,281


Reconciliation between loss and headline loss attributable to
equity holders of the parent
                                        Unaudited Unaudited       Audited
                                         6 months   6 months     15 months
                                            ended   ended 28      ended 30
                                           31 May   February      November
R'000                                        2015       2014          2014

Continuing operations
Basic loss for the period attributable
to equity holders of parent               (19,741)      (9,458)      (1,824)
Impairment of intangible assets                 -            -           32
Profit on disposal of assets                    -          (6)            -
Loss on disposal of subsidiary               1,048           -            -
Tax effect of adjustments                       -            1            -
Headline loss for the period
attributable to equity holders of
parent                                    (18,693)      (9,463)      (1,792)
Discontinued operations
Basic loss for the period attributable
to equity holders of parent                (8,747)     (88,131)     (92,469)
Loss on sale of disposal group
held for sale                               4,847       39,207        71,466
Loss on disposal of property,
plant and equipment                           109            -        1,058
Impairment of goodwill                          -       34,822        5,435
Tax effect of adjustments                    (31)            -            -
Headline loss for the period
attributable to equity holders of
parent                                     (3,822)     (14,102)      (14,510)


CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY FOR THE
SIX MONTHS ENDED 31 MAY 2015

                                         Unaudited       Audited
                                          6 months     15 months
                                             ended      ended 30
                                            31 May      November
R'000                                         2015          2014

Balance at the beginning of the
period as reported                        179,108        210,508
Total comprehensive loss for the
period                                   (28,488)       (89,053)
Issue of shares                           363,678              -
Capitalisation of share issue
costs                                     (5,412)                -
Equity settled share based
payments                                         -         3,420
Shares vested in terms of
forfeitable share plan                           -         1,350
Own shares acquired by subsidiaries,
held as treasury shares                          -          (78)
Transactions with non-controlling
shareholders                               10,594         52,961
Balance at the end of the period          519,480        179,108


CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS FOR THE SIX
MONTHS ENDED 31 MAY 2015

                                         Unaudited   Unaudited     Audited
                                          6 months    6 months   15 months
                                             ended    ended 28    ended 30
                                             31 May    February   November
R'000                                          2015        2014       2014

Net cash flow from operating
activities                                  (3,688)    (6,513)      2,258
Net cash flow from investing
activities                                (144,122)          6     26,958
Net cash flow from financing
activities                                  150,000     18,409    (26,761)
Total cash movement for the
period                                        2,190     11,902      2,455
Cash and cash equivalents at the
beginning of the period                       3,334      3,579      (377)
Disposal of subsidiary                          (8)          -      1,256
Total cash and cash equivalents
at the end of the period                      5,516     15,481      3,334

NOTES TO THE CONSOLIDATED SUMMARISED INTERIM FINANCIAL
STATEMENTS

   1. REPORTING ENTITY

   Stellar Capital is a South African domiciled investment holding
   company listed on the Main Board of the Johannesburg Stock
   Exchange. The consolidated summarised interim financial
   statements of the Group as at and for the six months ended 31
   May 2015 comprise the company and its subsidiaries (collectively
   referred to as the “Group”).

   The Company has significant interests in four listed investments
   and two unlisted investments which are more fully set out in
   note 8. The Company’s interests in its investments are
   accounted for on a fair value basis. The following subsidiaries
   which were acquired prior to the conversion to an investment
   holding company, have been consolidated:

    -   ConvergeNet Management Services (Pty) Ltd
    -   ConvergeNet SA (Pty) Ltd (dormant)
    -   Navix Distribution (Pty) Ltd (dormant)
    -   SIMAT Management Company (Pty) Ltd (dormant)

During the period under review, the Company disposed of its 100%
interest in Northbound Communication Solutions (Pty) Ltd which
was previously held as a dormant subsidiary.

2. STATEMENT OF COMPLIANCE

These consolidated summarised interim financial statements have
been prepared in accordance with IAS 34 International Financial
Reporting Standards, Interim Financial Reporting and the
Financial Reporting Guides issued by the Accounting Practices
Board of SAICA, as well as the Companies Act (No 71 of 2008).
These interim financial statements should be read in conjunction
with the consolidated financial statements of the Group for the
period ended 30 November 2014, which contain information
required for full annual financial statements, which are
available at http://www.stellarcapitalpartners.co.za/financial-
results/.

3. APPROVAL

These consolidated summarised interim financial statements were
approved by the Board of Directors on 30 July 2015.

4. ACCOUNTING POLICIES

The accounting policies applied by the Group in these
consolidated summarised interim financial statements are
consistent with those applied by the Group in the consolidated
financial statements for the period ended 30 November 2014, with
the exception of the treatment of investments held at fair value
through profit and loss. In prior periods, the Company
consolidated all investments in subsidiaries and joint ventures.
Following conversion to an investment holding company, the
Company has applied the exception to consolidation in terms of
paragraph 31 of IFRS 10 Consolidated Financial Statements in
respect of subsidiaries, save for subsidiaries whose main
purpose and activities relate to providing services that relate
to the Company’s investment activities which continue to be
consolidated.

5. FINANCIAL PREPARATION

These results have been prepared under the supervision of CB de
Villiers, the Chief Financial Officer of Stellar Capital.

6. COMPARATIVE FIGURES

Unless otherwise indicated, comparative figures refer to the six
months ended 28 February 2014. During the previous financial
period, the Board resolved to amend the financial year end of
the Company from 31 August to 30 November. As such, the
comparative period is presented for the six months ended 28
February 2014.

In accordance with the requirements of IFRS 5 Non-current assets
held for sale and discontinued operations, the statement of
comprehensive income and statement of cash flows have been re-
presented for the disclosures that relate to the operations of
Structured Connectivity Solutions Proprietary Limited and
Chrystalpine Investments 9 Proprietary Limited (incorporating
Andrews Kit Proprietary Limited) which had been discontinued by
the end of the previous reporting period (refer note 15).

7. USE OF ESTIMATES AND JUDGEMENTS

The preparation of these interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. Actual
results may differ from these estimates.

In preparing these consolidated summarised interim financial
statements, the significant judgments made by management in
applying the Group’s accounting policies and the key sources of
estimation uncertainty were the same as those that applied to
the consolidated financial statements for the period ended 30
November 2014.

In addition to the significant judgments applied by management
in preparation of the consolidated financial statements for the
period ended 30 November 2014, management has during the period
under review applied significant judgement in relation to the
assessment and application of the investment entity criteria in
terms of paragraph 31 of IFRS 10 read with the application
guidance and in the relation to the determination of the fair
value of the Company’s investments in accordance with IFRS 13
Fair Value Measurement.

8. INVESTMENTS HELD AT FAIR VALUE

                                      % held    Principal place of
                                                          business
Listed investments
Cadiz Holdings Limited                16.46%          South   Africa
Digicore Holdings Limited             19.26%          South   Africa
Goliath Gold Mining Limited           21.77%          South   Africa
Mine Restoration Investments          33.58%          South   Africa
Limited
Unlisted investments
Praxis Financial Services (Pty)          51%          South Africa
Ltd
Tellumat (Pty) Ltd                       30%          South Africa


                                    Unaudited   Unaudited      Audited
                                        as at    as at 28     as at 30
                                       31 May    February     November
 R'000                                   2015        2014         2014

 Investments in listed entities
 Cadiz Holdings Limited               44,497          -              -
 Digicore Holdings Limited           121,932          -              -
 Goliath Gold Mining Limited          54,930          -              -
 Mine Restoration Investments
 Limited                              20,092          -              -
 Investments in unlisted
 entities
 Praxis Financial Services
 (Pty) Ltd                                 -          -              -
 Tellumat (Pty) Ltd                  100,119          -              -
 Total value of investments
 held at fair value                  341,570          -              -


Investments held at 30 November 2014 were disclosed as other
financial assets (see note 9).

LISTED INVESTMENTS

Listed investments have been valued by applying the market
approach valuation technique using the closing quoted market
price of each listed investment as at 31 May 2015, save for the
Company’s investment in Digicore Holdings Limited as stated
below.

Cadiz Holdings Limited (“Cadiz”)

Cadiz’ results for the year ended 31 March 2015 were poor. A
decline in assets under management, the core business, resulted
in reduced revenue for the group, despite an improved
performance from the corporate advisory business. Profitability
was also impacted by restructuring costs and the recognition of
a substantial impairment of goodwill directly related to the
weak performance of the asset management unit. Stellar Capital’s
offer to acquire the remaining ordinary shares of Cadiz,
announced on SENS on 19 June 2015, will facilitate a reduction
in the cost base of the business and allow greater flexibility
in divesting of non-core assets, incentivising key staff and
driving strategic growth initiatives. Cadiz has a strong
institutional base and many talented staff and it is the
intention to rebuild the business into one of the leading fund
managers in South Africa.

Digicore Holdings Limited (“Digicore”)

Digicore has performed steadily since acquisition, continuing to
build on the cost-cutting initiatives of management. Recent
interim results showed revenue growth of 5%, underpinned by
strong operating cash flows, which enable the group to increase
its investment in rental assets, as well as to reduce its debt
outstanding. The group also achieved a profit before tax margin
of 34% and an earnings per share of 11.10 cents. On 19 June 2015
Novatel Wireless Inc., a NASDAQ listed ICT Group, announced its
firm intention to acquire all of the issued ordinary share of
Digicore for a consideration of R4.40 per Digicore share
(“Digicore Offer”). No adjustment has been made to the fair
value of the Digicore investment for the impact of the Digicore
Offer as this represents a non-adjusting post reporting date
event. In respect of the Company’s investment in Digicore
originally acquired from Titan Premier Investments (Pty) Ltd
(“Titan”), being 38,692,770 Digicore shares, shareholders are
further reminded of paragraph 5.4.3 of the Company’s circular to
shareholders dated 15 December 2014 which states that “If,
within six months of the Effective Date, ConvergeNet disposes of
the Digicore Consideration Shares acquired from Titan for a cash
amount of more than R2.50 per Digicore share, then the Digicore
Purchase Consideration payable to Titan will be adjusted upwards
on a rand-for-rand basis. ConvergeNet will settle the difference
owing by way of the issue of additional ConvergeNet shares to
Titan at an issue price of R2.00 per share.” The net impact of
the application of the aforementioned agreement will, in respect
of the Digicore Shares acquired from Titan, result in an
increase in the net asset value and cash and cash equivalents
balance, but will have no impact on the net asset value per
share. Accordingly, the Digicore shares originally acquired from
Titan have been valued at cost of R2.50 per share whilst a
further 9,000,000 Digicore shares held by the Company have been
valued at R2.80 per share which represents the market closing
price of Digicore on 29 May 2015.

The company expects to issue a further 36,758,132 shares to
Titan in terms of the aforementioned purchase price adjustment,
to the extent the Digicore Offer is implemented.

Goliath Gold Mining Limited (“Goliath Gold”)

Goliath Gold posted a basic and headline loss of 52 cents (2013:
loss of 30 cents) per share for the year ended 31 December 2014,
resulting primarily from exploration and pre-feasibility
expenses. The increase of approximately 40% in the group’s
consolidated gold resource estimate was largely offset by a
substantial increase in amounts owing to shareholders which
funds exploration activities. It is the intention of the
Company to dispose of this investment in the near term and no
liquidity discount has been applied in arriving at the fair
value of the Company’s investment due to management’s assessment
of the likelihood of the realisation of the investment at its
carrying value.

Mine Restoration Investments Limited (“MRI”)

MRI intends on acquiring up to 39.2% of Iron Mineral
Beneficiation Services (Pty) Ltd ("IMBS") and to raise R200m
through a share issue at 7 cents per share to part fund the IMBS
deal as announced in a detailed cautionary on SENS on 26 June
2015. IMBS was formed in 2006 to become a global iron production
company. Through the deployment of its modular, proprietary and
patented technology, IMBS is currently commissioning its first
production facility in Phalaborwa, South Africa. The technology
is a highly efficient and cost effective way of making metallic
iron for sale into the steel-making industry as a scrap
supplement. This transaction represents an exciting
diversification of MRI’s operations and an opportunity for the
business to achieve genuine scale in a relatively short time
period.

From an operational perspective MRI has recently experienced
challenging conditions – primarily related to water supply
shortages - at its coal fines processing and briquetting
operations. These issues are being actively addressed by
management but have materially offset improved performance and
feasibility reports during the previous financial period.

Shareholders are reminded of paragraph 6.4.3 of the Company’s
circular to shareholders dated 15 December 2014 which states
that “In the event that the shares in MRI acquired from ASOF are
sold for an amount of less than R0.10 per share, or in the event
that MRI is liquidated or wound-up as a result of an insolvency
event, within 12 months of the date of acquisition of such
shares, ASOF shall be liable to ConvergeNet for an amount equal
to 50% of the direct loss suffered by ConvergeNet as a result.
ASOF may discharge that liability in cash or by way of the
transfer to the Company of MRI Consideration Shares (or the
relevant portion thereof).” As a result, no liquidity discount
has been applied in arriving at the fair value of the Company’s
investment in MRI. The potential further loss to the Company
arising from the liquidation or wind-up of MRI is R7.46 million,
assuming no value is realized from the investment.

UNLISTED INVESTMENTS
Unlisted investments have been valued by applying the income
approach technique (supplemented by the market approach
valuation technique as reasonability assessment). No
adjustments have been made to the Company’s fair value
determination performed on the acquisition of Praxis Financial
Services (Pty) Ltd and Tellumat (Pty) Ltd and as such, the cost
of these investments fairly approximate their value at the
reporting date.

Praxis Financial Services (Pty) Ltd (“Praxis”)

Praxis is an innovative provider of working capital finance to
the motor body repairer industry. A 51% investment in Praxis
was acquired for a nominal consideration during May 2015.
Working with a newly introduced management team, Stellar Capital
led key initiatives to refine operating processes and
information technology systems, reduce long-outstanding trade
receivables and contract the business’ working capital cycle
which have started to yield positive results.

Tellumat (Pty) Ltd (“Tellumat”)

The group has achieved steady revenue growth since acquisition,
supplemented by healthy trading margins and the announcement
that the group has been awarded, as part of a tender consortium,
the contract to deliver set-top boxes as part of government’s
programme to migrate existing analog broadcasting to digital
broadcasting.

Reconciliation of investments at fair value through profit or
loss

                                  Unaudited   Unaudited     Audited
                                   6 months    6 months   15 months
                                      ended    ended 28    ended 30
                                     31 May    February    November
   R'000                               2015        2014        2014

   Opening balance                   3,267          -           131
   Acquisitions                    355,649          -        14,777
   Proceeds from disposals         (1,427)          -       (11,924)
   Realised gains                      78           -            -
   Unrealised (losses)/ gains     (15,997)          -            414
   Transferred to disposal
   group held for sale                  -                      (131)
   Closing balance                341,570           -          3,267


9. OTHER FINANCIAL ASSETS


                                 Unaudited   Unaudited      Audited
                                     as at    as at 28     as at 30
                                    31 May    February     November
  R'000                               2015        2014         2014

  Financial assets at fair
  value through profit or loss

  Listed shares                         -              -     3,267
  Listed shares have been
  separately disclosed in the
  2015 financial period (refer
  to note 8).
  Other financial assets at
  amortised cost
  X-DSL Networking Solutions
  (Pty) Ltd                             -        2,200         100
  This loan bore interest at
  the prime rate and was
  repaid in full on 8 December
  2014.
  Loan Participation 1                  -            -       10,231
  The loan accrued interest at
  prime plus 8.5% per annum
  and was serviced quarterly.
  On 24 April 2015 the loan
  was refinanced and was
  incorporated into Loan
  Participation 3.
  Loan Participation 2                12,000           -     12,000
  The loan accrues interest at
  2% per month, which is
  serviced monthly.    This
  loan participation is
  repayable on or before 31
  August 2015 and is secured
  by listed shares at a
minimum cover ratio of three
times the face value of the
outstanding amount of debt.

Loan Participation 3                  66,029         -          -
The loan accrued interest at
prime plus 9.75% per annum
and is serviced monthly.
This loan participation is
repayable on or before 30
April 2018. The loan is
secured by a cession of
unlisted shares in the
borrower. The loan is also
secured by a cession by the
borrower of the bank account
and insurance policies as
well as a pledge of
inventory and all movable
property in terms of a
general notarial bond. R6
million of the capital was
repaid in June 2015.

Loan Participation 4                   43,068        -        -
The loan accrues interest at
20% per annum and is
repayable on 30 November
2016. Interest accrues up to
30 June 2015, whereupon it
becomes due and payable.
Thereafter, interest accrues
at the same rate, but is
serviced monthly. The loan
is secured by cession of
book debts, a pledge of
shares in the borrower and
personal sureties. R 1.48
million interest was
received in June 2015 and a
further interest amount of R
1.48 million during July
2015.
Tellumat (Pty) Ltd                     3,707          -        -
The working capital loan
accrues interest at prime
plus 4% per annum for the
duration that the capital
  amount remains outstanding.


  Deposit with Titan Financial
  Services (Pty) Ltd                   49,000         -          -
  The non-interest bearing
  deposit is secured by shares
  in unlisted companies which
  are under due diligence by
  the Company. The deposit is
  repayable on conclusion of
  the diligence process which
  is expected to be completed
  on or before 30 September
  2015.

  Zaloserve (Pty) Ltd                       -      110,000     50,000
  The loan accrued interest at
  prime less 2%, payable
  monthly in arrears, and was
  fully settled on 31 December
  2014.
  
Sizwe Africa IT Group (Pty)
  Ltd                                     1,867         -      1,867
  This relates to expenses
  settled on behalf of Sizwe
  Africa IT Group (Pty) Ltd.
  The loan is payable on
  demand and does not bear any
  interest.

  Total other financial assets
  at amortised cost                     175,671      112,200     77,465
  Impairment of loans and
  receivables                           (1,867)           -      (1,465)
                                        173,804      112,200     76,000

  Non-current assets                     59,934      111,300          -
  Current assets                        113,870          900     76,000
                                        173,804      112,200     76,000


Loan syndication agreements have been entered into between
Stellar Capital and AfrAsia Special Opportunities Fund (Pty) Ltd
(“ASOF”), whereby the Company has participated in loans advanced
by ASOF to various entities. The credit risk of the participated
loans is shared by all syndicated parties in accordance with the
proportion of the funding provided by each syndication party.
ASOF’s counterparty in respect of Loan Participation 4 is Praxis
Financial Services (Pty) Ltd, an investee company of Stellar
Capital. Stellar Capital’s rights and obligations in relation
to the loan are the same as those of ASOF.

The balance of long-outstanding amounts due from Sizwe Africa IT
Group (Pty) Ltd were impaired during the current reporting
period which resulted in a charge to the statement of
comprehensive income in the amount of R 402,000 (2013: R 1.46
million). The carrying amounts of the remaining other financial
assets approximate their fair values as the balances are neither
past due nor impaired.

10.   SHARE CAPITAL

During the six months under review, the Company issued a total
of 181,839,426 ordinary shares of no par value at R2.00 each as
follows:

  -   75,000,000 shares at R2.00 each for a total consideration
      of R150 million;
  -   2,525,200 shares at R2.00 each in lieu of underwriting and
      commitment fees;
  -   59,615,963 shares at R2.00 each in settlement of the
      acquisition of 19.26% Digicore Holdings Limited;
  -   32,062,131 shares at R2.00 each in settlement of the
      acquisition of 21.77% Goliath Gold Mining Limited; and
  -   12,636,332 shares at R2.00 each in settlement of the
      acquisition of 30.32% Mine Restoration Investments Limited.

11.   TRADE AND OTHER PAYABLES

Trade and other payables materially comprise management fees due
to Thunder Securitisations (Pty) Ltd (“Manco”), the management
company of Stellar Capital, in the amount of R 3.25 million
(refer to note 13). The amount was fully settled on 29 June
2015.

12.   INTEREST INCOME
                                   Unaudited   Unaudited     Audited
                                    6 months    6 months   15 months
                                       ended    ended 28    ended 30
                                      31 May    February    November
R'000                                   2015        2014        2014

Syndicated loans                       6,607           -           -
Loans to portfolio companies             638           -           -
Other loans and receivables                -       2,297       7,615
Bank                                   1,508           8         298
                                       8,753       2,305       7,913


13.   MANAGEMENT FEE

                                  Unaudited    Unaudited     Audited
                                   6 months     6 months   15 months
                                      ended     ended 28    ended 30
                                     31 May     February    November
R'000                                  2015         2014        2014

Base fee                              3,995           -            -
Performance fee                           -           -            -
Recoveries*                           (746)           -            -
                                      3,249           -            -

*During the period under review, the Company incurred expenses
 on behalf of Manco which were recovered from the base management
 fee.

Management fees are determined in accordance with the agreement
between Stellar Capital and Manco. Base fees are calculated on a
quarterly basis and are earned on the net asset value of the
Group as follows:

  -   2% on the portion of a net asset value of less than R500
      million;
  -   1.5% on the portion of the net asset value which is in
      excess of R500 million, but not greater than R1 billion;
      and
  -   1% on the portion of the net asset value which is in excess
      of R1 billion.

Performance fees are payable quarterly in relation to the
increase in net asset value per share of the Group during the
respective quarter. Where the net asset value per share for the
respective quarter is lower than the previous highest net asset
value per share, no performance fees are payable for that
quarter.

14.   OTHER OPERATING EXPENSES

Significant expenses incurred during the six months under review
related to audit fees in the amount of R1.7 million and
corporate advisory fees to establish the investment holding
entity in the amount of R2.9 million.

15.   DISCONTINUED OPERATIONS

The net loss from discontinued operations resulted from the
disposal of Structured Connectivity Solutions (Pty) Ltd and
Chrystalpine Investments 9 (Pty) Ltd (incorporating Andrews Kit
(Pty) Ltd), which became effective on 1 February 2015.

16.   DIVIDEND

No dividend has been proposed for the six month period under
review.

17.   CHANGE TO THE BOARD OF DIRECTORS

Charl de Villiers was appointed to the board as Chief Financial
Officer with effect from 1 February 2015 and Peter van Zyl was
appointed as Chief Executive Officer from this date.

18.   CHANGE TO THE NATURE OF OPERATIONS

As required by paragraph 9A of IFRS 12 Disclosure of Interests
in Other Entities, the significant judgements and assumptions
that Stellar Capital’s management has made in determining that
the Company qualifies as an investment entity in terms of
paragraph 31 of IFRS 10, are:

  -   IFRS 10.27(a): Stellar Capital has obtained funds from one
      or more public investors for the purpose of providing those
      investors with investment management services.

  -   IFRS 10.27(b): Stellar Capital has committed to its
      investors that its business purpose is to invest funds
      solely for returns from capital appreciation, investment
      income, or both; and

  -   IFRS 10.27(c): Stellar Capital measures and evaluates the
      performance of substantially all of its investments on a
      fair value basis.

19.   EVENTS AFTER THE REPORTING PERIOD

  -   Novatel Wireless Inc., a NASDAQ listed ICT Group, on 19
      June 2015 announced its firms intention to acquire all of
      the issued ordinary shares of Digicore for a consideration
      of R4.40 per Digicore share. The Company has irrevocably
      undertaking to vote in favour of all resolutions required
      to implement the Digicore Offer.
  -   On 19 June 2015, Stellar Capital announced its firm
      intention to acquire all of the issued ordinary shares in
      Cadiz Holdings Limited not already held by the Company
      acting through a special purpose vehicle (Bidco) to be
      incorporated as a wholly-owned subsidiary of Stellar
      Capital.
  -   On 7 July 2015, Stellar Capital announced its firm
      intention to acquire a strategic minority interest in Torre
      Industries Limited.

20.   OUTLOOK

The Group’s listed investments are currently subject to
increased corporate activity, the impact of which will largely
only crystalise within the results of the Group during the
medium term. The unlisted investments are trading
satisfactorily.

The board and Manco continues to evaluate opportunities to
implement the investment strategy of the Group.
By order of the board

D Tabata
Chairman
31 July 2015

CORPORATE INFORMATION

Directors
DD Tabata (Chairman)*, PJ van Zyl (Chief Executive Officer), CB
de Villiers (Chief Financial Officer), L Mangope*, CE Pettit*, J
de Bruyn*, CC Wiese*, CH Wiese*
(* Independent non-executive)

Company Secretary
The Secretarial Company
Empire Park
Parktown
Johannesburg
2193

Registered office
Level P3
Oxford Corner
c/o Jellicoe Avenue and Oxford Road
Rosebank
Johannesburg
2196

Business address
Office 202, Cape Quarter, The Square
27 Somerset Road
Green Point
Cape Town
8001

Postal address
Suite 54,Dixon Street
Cape Town
8001
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg
2001

Corporate Finance Adviser and Sponsor
Stellar Advisers (Pty) Ltd (previously AfrAsia Corporate
Finance)
Office 202, Cape Quarter, The Square
27 Somerset Road
Green Point
Cape Town
8001

Date: 31/07/2015 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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