Wrap Text
Unaudited Condensed Consolidated Financial Statements for the six months ended 31 December 2017
Tiso Blackstar Group SE
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")
Unaudited Condensed Consolidated Financial
Statements for the six months ended
31 December 2017
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 20th 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 of the KTH disposal.
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 Certificate 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
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
ended ended Year 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
ended ended Year 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
ended ended Year 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
ended ended Year 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.
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.
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
ended ended Year 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
ended ended Year 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
ended ended Year 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
5.2 Basic and diluted headline earnings (losses) per ordinary share
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
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)
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 Tranche Second Tranche
Grant date 30 June 2017 30 November 2017
Fair value of share on grant date R9.31 R8.99
Vesting date 31 October 2019 31 October 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.
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).
Segmental results
Hirt & Carter Broadcast and
31 December 2017 Media Group 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
Hirt & Carter Broadcast and
31 December 2016 Media Group 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 and
30 June 2017 Media Group 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
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 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; or
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
Recurring fair value measurement of assets
Level 1 Level 2 Level 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 1 Level 2 Level 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 1 Level 2 Level 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.
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.
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
Date: 27/03/2018 01:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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