HOSKEN CONSOLIDATED INVESTMENTS LIMITED - Reviewed Provisional Consolidated Results for the year ended 31 March 2018

Release Date: 23/05/2018 17:41
Code(s): HCI
 
Wrap Text
Reviewed Provisional Consolidated Results for the year ended 31 March 2018

HOSKEN CONSOLIDATED INVESTMENTS LIMITED
Incorporated in the Republic of South Africa
Registration number: 1973/007111/06
Share code: HCI
ISIN: ZAE000003257
("HCI" or "the company" or "the group")


REVIEWED PROVISIONAL CONSOLIDATED RESULTS 
for the year ended 31 March 2018


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                             Reviewed       Audited
                                                                             31 March      31 March
                                                                                 2018          2017
                                                                                R'000         R'000

ASSETS                    
Non-current assets                                                         61 902 246    61 845 515 
Property, plant and equipment                                              24 913 188    25 127 835 
Investment properties                                                       9 587 532     8 510 174 
Goodwill                                                                    4 700 758     4 785 158 
Interest in associates and joint ventures                                   1 719 947     1 454 782 
Other financial assets                                                      1 324 206     1 275 663 
Intangibles                                                                18 691 786    19 605 686 
Deferred taxation                                                             487 352       379 252 
Operating lease equalisation asset                                             96 628        80 393 
Long-term receivables                                                         380 849       626 572 
Current assets                                                              8 090 494     8 563 616 
Inventories                                                                   939 711       955 733 
Programme rights                                                              870 674       866 244 
Other financial assets                                                         18 317        38 333 
Trade and other receivables                                                 2 478 554     2 541 697 
Taxation                                                                       59 433       101 431 
Bank balances and deposits                                                  3 723 805     4 060 178 
Disposal group assets held for sale                                           329 473       126 632 
Total assets                                                               70 322 213    70 535 763 
                    
EQUITY AND LIABILITIES                    
Equity                                                                     35 661 005    36 119 875 
Equity attributable to equity holders of the parent                        15 273 850    15 755 603 
Non-controlling interest                                                   20 387 155    20 364 272 
Non-current liabilities                                                    24 864 963    22 868 060 
Deferred taxation                                                           7 595 270     8 081 558 
Long-term borrowings                                                       16 275 305    13 999 138 
Operating lease equalisation liability                                        242 094       254 740 
Provisions                                                                    249 247       278 496
Other                                                                         503 047       254 128 
Current liabilities                                                         9 691 070    11 543 748 
Trade and other payables                                                    3 036 220     3 210 411 
Current portion of borrowings                                               3 857 154     5 194 588 
Taxation                                                                      171 331       124 115 
Provisions                                                                    394 672       335 905
Bank overdrafts                                                             2 033 702     2 396 036 
Other                                                                         197 991       282 693 
Disposal group liabilities held for sale                                      105 175         4 080 
Total equity and liabilities                                               70 322 213    70 535 763 
Net asset carrying value per share (cents)                                     17 785        17 897 


CONDENSED CONSOLIDATED INCOME STATEMENT
                                                                             Reviewed       Audited
                                                                             31 March      31 March
                                                                      %          2018          2017*
                                                                 change         R'000         R'000

Revenue                                                                    14 960 540    14 310 035 
Net gaming win                                                              8 841 724     8 805 745 
Income                                                             3.0%    23 802 264    23 115 780 
Expenses                                                                  (17 516 637)  (16 580 970)
EBITDA                                                            (3.8%)    6 285 627     6 534 810 
Depreciation and amortisation                                              (1 397 887)   (1 377 634)
Operating profit                                                            4 887 740     5 157 176 
Investment income                                                             304 490       266 792 
Finance costs                                                              (1 797 766)   (1 606 475)
Share of profits/(losses) of associates and joint ventures                    102 967       (74 752)
Gain on bargain purchase                                                            -        81 764 
Investment surplus                                                            134 030        88 663 
Fair value adjustments of investment properties                               (72 604)      941 655 
Impairment reversals                                                           40 653             -   
Asset impairments                                                            (951 938)      (25 134)
Fair value adjustments of financial instruments                               (23 690)            -   
Impairment of goodwill and investments                                       (103 897)      (33 159)
Profit before taxation                                           (47.5%)    2 519 985     4 796 530 
Taxation                                                                     (441 132)   (1 066 537)
Profit for the year from continuing operations                              2 078 853     3 729 993 
Discontinued operations                                                      (102 470)     (455 516)
Profit for the year                                                         1 976 383     3 274 477 
                              
Attributable to:                              
Equity holders of the parent                                                  939 749     1 237 909 
Non-controlling interest                                                    1 036 634     2 036 568 
                                                                            1 976 383     3 274 477 
                        
* Restated                        


CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
                                                                             Reviewed       Audited
                                                                             31 March      31 March
                                                                                 2018          2017
                                                                                R'000         R'000

Profit for the year                                                         1 976 383     3 274 477 
Other comprehensive income:                    
Items that may subsequently be reclassified to profit or loss                     
Foreign currency translation differences                                     (192 785)     (230 431)
Reclassification of foreign currency differences on disposal                   (1 448)     (253 799)
Cash flow hedge reserve                                                       (54 906)      (92 005)
Available-for-sale financial asset revaluations                                 3 401       (10 879)
Items that may not subsequently be reclassified to profit or loss                     
Revaluation of land and buildings                                              42 413             - 
Actuarial gains on post-employment benefit liability                           11 073           580 
Total comprehensive income                                                  1 784 131     2 687 943 
                    
Attributable to:                    
Equity holders of the parent                                                  803 795       805 310 
Non-controlling interest                                                      980 336     1 882 633 
                                                                            1 784 131     2 687 943 


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                             Reviewed       Audited
                                                                             31 March      31 March
                                                                                 2018          2017
                                                                                R'000         R'000

Balance at the beginning of the year                                       36 119 875    32 928 450 
Share capital and premium                    
Treasury shares released                                                       32 179        18 571 
Shares repurchased                                                           (377 261)   (1 727 194)
Current operations                    
Total comprehensive income                                                  1 784 131     2 687 943 
Equity-settled share-based payments                                            13 509        13 084 
Acquisition of subsidiaries                                                     1 536     2 914 131 
Disposal of subsidiaries                                                        7 688      (319 422)
Effects of changes in holding                                                (770 728)      478 583 
Dividends                                                                  (1 149 924)     (874 271)
Balance at the end of the year                                             35 661 005    36 119 875 

RECONCILIATION OF HEADLINE EARNINGS
                                                                       Reviewed                    Audited
                                                                     31 March 2018              31 March 2017
                                                        %         Gross           Net         Gross           Net
                                                   change         R'000         R'000         R'000         R'000

Earnings attributable to equity holders                                                   
  of the parent                                    (24.1%)                    939 749                   1 237 909 
                                                  
Gain on bargain purchase                                              -             -       (81 764)      (35 463)
Impairment of goodwill                                           31 299        13 415         3 958         1 552 
Loss on disposal of business assets                                   -             -       503 629       113 178 
Gains on disposal of property                                   (63 600)      (49 354)            -             - 
Losses on disposal of plant and equipment                         2 910         2 450         5 660         1 575 
Impairment of property, plant and equipment                     111 124        47 024         7 655         1 788 
Foreign currency translation reserve recycled                    (1 448)         (686)     (253 799)     (216 292)
Losses from disposal/part disposal of subsidiary                 13 704         7 633       405 186       391 839 
Impairment of associates and joint arrangements                  72 598        31 237        29 286        11 989 
Reversal of impairment of assets                                    (77)          (46)            -             - 
Profits on disposal of intangible assets                        (70 430)      (55 370)            -             - 
Impairment of intangible assets                                 831 028       286 374         8 281         2 639 
Recycle of fair value reserves relating to 
  available-for-sale financial instruments                            -             -       (46 250)      (20 060)
Profits on disposal of investment property                            -             -       (36 339)       (7 973)
Fair value adjustment to investment property                     72 604        (2 820)     (941 655)     (258 748)
Impairment of non-current assets held for sale                    1 307           617             -             - 
Insurance claim for capital assets                                  (30)          (18)            -             - 
Remeasurements included in equity-accounted 
  earnings of associates and joint arrangements                 (60 371)      (56 663)       82 992        82 077 
                                                  
Headline profit                                    (10.9%)                  1 163 542                   1 306 010 
                                                  
Basic earnings per share (cents)                                                  
Earnings                                           (19.0%)                   1 062.91                    1 312.99 
Continuing operations                                                        1 151.47                    1 593.47 
Discontinued operations                                                        (88.56)                    (280.48)
                                                  
Headline earnings                                   (5.0%)                   1 316.04                    1 385.22 
Continuing operations                                                        1 388.88                    1 357.29 
Discontinued operations                                                        (72.84)                      27.93 
                                                  
Weighted average number of shares in issue ('000)                              88 412                      94 282 
Actual number of shares in issue at the end of 
  the year (net of treasury shares) ('000)                                     85 882                      88 034 
                                                  
Diluted earnings per share (cents)                                                  
Earnings                                           (18.7%)                   1 056.23                    1 298.47 
Continuing operations                                                        1 144.24                    1 575.85 
Discontinued operations                                                        (88.01)                    (277.38)
                                                  
Headline earnings                                   (4.5%)                   1 307.76                    1 369.90 
Continuing operations                                                        1 380.14                    1 342.28 
Discontinued operations                                                        (72.38)                      27.62 
                                                  
Weighted average number of shares in issue ('000)                              88 972                      95 336 


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                             Reviewed       Audited
                                                                             31 March      31 March
                                                                                 2018          2017
                                                                                R'000         R'000

Cash flows from operating activities                                        2 842 768     3 337 138 
Cash generated by operations                                                6 795 004     7 275 484 
Net finance costs                                                          (1 596 864)   (1 429 302)
Changes in working capital                                                   (237 466)     (531 924)
Taxation paid                                                                (968 276)     (970 155)
Dividends paid                                                             (1 149 630)   (1 006 965)
                    
Cash flows from investing activities                                       (2 773 743)   (3 202 455)
Business combinations and disposals                                          (109 923)      230 635 
Investments acquired                                                         (425 581)   (1 592 425)
Dividends received                                                            116 156        63 387 
Decrease in loans and receivables                                              69 944       359 869 
Intangible assets                     
- Additions                                                                   (59 744)      (32 788)
- Disposals                                                                    85 004             - 
Investment properties                     
- Additions                                                                  (924 105)     (617 768)
- Disposals                                                                    27 811       166 806 
Property, plant and equipment                    
- Additions                                                                (1 681 145)   (1 854 710)
- Disposals                                                                   127 840        74 539 
                    
Cash flows from financing activities                                          (11 176)    1 060 825 
Ordinary shares issued and treasury shares released                            26 616         8 078 
Ordinary shares repurchased                                                  (377 261)     (438 070)
Other liabilities raised                                                          908         5 756 
Transactions with non-controlling shareholders                               (748 810)     (930 813)
Net funding raised                                                          1 087 371     2 415 874 
                    
Increase in cash and cash equivalents                                          57 849     1 195 508 
Cash and cash equivalents                     
At the beginning of the year                                                1 673 363       520 432 
Foreign exchange differences                                                   (9 713)      (42 577)
At the end of the year                                                      1 721 499     1 673 363 
                    
Bank balances and deposits                                                  3 723 805     4 060 178 
Bank overdrafts                                                            (2 033 702)   (2 396 036)
Cash in disposal groups held for sale                                          31 396         9 221 
Cash and cash equivalents                                                   1 721 499     1 673 363 


SEGMENTAL ANALYSIS                                        
                                                      31 March 2018             31 March 2017*
                                                             Net gaming                 Net gaming
                                                    Revenue         win       Revenue           win
                                                      R'000       R'000         R'000         R'000

Media and broadcasting                            2 196 250           -     2 303 112             -
Gaming and hotels**                               6 067 285   8 841 724     5 748 169     8 805 745 
Transport                                         1 808 472           -     1 682 964             -
Properties                                          503 354           -       469 615             -
Mining                                            1 202 161           -     1 093 957             -
Branded products and manufacturing***             3 158 125           -     3 010 187             -
Other                                                24 893           -         2 031             -
Total                                            14 960 540   8 841 724    14 310 035     8 805 745 
                                        
                                                                                     EBITDA
                                                                                    31 March
                                                                                 2018          2017*
                                                                                R'000         R'000

Media and broadcasting                                                        195 876       428 075
Gaming and hotels**                                                         5 057 644     5 068 557
Transport                                                                     462 135       447 851
Properties                                                                    246 175       225 234
Mining                                                                        311 517       244 452
Branded products and manufacturing***                                          95 420       242 445
Other                                                                         (83 140)     (121 804)
Total                                                                       6 285 627     6 534 810
                                        
                                                                                Profit before tax
                                                                                    31 March
                                                                                 2018          2017*
                                                                                R'000         R'000

Media and broadcasting                                                        (21 278)      248 790 
Gaming and hotels**                                                         1 967 850     4 018 672 
Transport                                                                     333 832       331 566 
Properties                                                                    126 307       265 257 
Mining                                                                        361 722       142 212 
Branded products and manufacturing***                                            (596)      148 583 
Other                                                                        (247 852)     (358 550)
Total                                                                       2 519 985     4 796 530 
                    
                                                                                Headline earnings
                                                                                     31 March
                                                                                 2018          2017
                                                                                R'000         R'000

Media and broadcasting                                                         16 519        97 773 
Gaming and hotels**                                                         1 028 882     1 006 680 
Information technology                                                              -         4 970 
Transport                                                                     224 839       230 134 
Beverages                                                                           -        16 483 
Properties                                                                     64 850        63 094 
Mining                                                                        168 791       105 958 
Branded products and manufacturing***                                         (19 949)       41 064 
Other                                                                        (320 390)     (260 146)
Total                                                                       1 163 542     1 306 010 

*   Restated
**  Non-casino gaming operations' results reclassified to the gaming and hotels segment in the 
    current and prior year
*** Vehicle component manufacture operations' results reclassified to the branded products and 
    manufacturing segment in the current and prior year



NOTES AND COMMENTARY

BASIS OF PREPARATION AND ACCOUNTING POLICIES

The results for the year ended 31 March 2018 have been prepared in accordance with International 
Financial Reporting Standards ("IFRS"), the disclosure requirements of IAS 34, the SAICA Financial 
Reporting Guides as issued by the Accounting Practices Committee, the requirements of the 
South African Companies Act, 2008, and the Listings Requirements of the JSE Limited. The accounting 
policies applied by the group in the preparation of these condensed consolidated financial statements 
are consistent with those applied by the group in its consolidated financial statements for the year 
ended 31 March 2017. As required by the JSE Limited Listings Requirements, the group reports 
headline earnings in accordance with Circular 2/2015: Headline Earnings as issued by the 
South African Institute of Chartered Accountants.

These financial statements were prepared under the supervision of the financial director, 
Mr TG Govender, B.Compt (Hons).

DISCONTINUED OPERATIONS AND DISPOSAL GROUPS HELD FOR SALE 

Media and broadcasting
The Board of eMedia Investments resolved to exit certain of its offshore and local non-core 
operations during the financial year ended 31 March 2015. Further local non-core operations have 
been reclassified to discontinued operations in the current year and the prior year results restated 
for these. The results of these operations, which are included in the media and broadcasting 
segment, are included in discontinued operations in the current and prior year. Assets of 
R263 million (31 March 2017: R54 million) and liabilities of R105 million (31 March 2017: 
R2 million) in disposal groups held for sale in the statement of financial position relate to 
these non-core operations.

Branded products and manufacturing
Deneb Investments resolved to rationalise the operations of Bergriver Textiles, all but the 
Gauteng-based business of Seartec and its branded sporting goods' international activities during 
the year. The results of these operations, which are included in the branded products and 
manufacturing segment, have been reclassified to discontinued operations in the current year and 
the prior year results restated for these. 

Property, plant and equipment to the value of R1 million is held as disposal group assets held 
for sale.

Other
During March 2017 the group contracted to dispose of subsidiaries Jacaranda Royal Casino, 
VSlots Lesotho and VSlots Swaziland. The disposals were concluded in June 2017 and the results of 
these businesses included in discontinued operations in the current and prior years.

Gaming and hotels
The assets acquired by Tsogo Sun Holdings upon the acquisition of Hospitality Property Fund 
included properties held for sale and are consequently included in disposal group assets held for 
sale. The carrying value of these properties totalled R66 million at 31 March 2018.

The results of discontinued operations were as follows (R'million):

                    eMedia non-core       Niveus gaming          Deneb textiles, automation
                         operations              assets        and branded goods operations
Losses after tax                (13)                 (8)                                (81)


Beverages
The group disposed of its interest in the business operations of La Concorde (previously 
KWV Holdings), included in the beverages segment in the prior year. The results of these operations 
were accordingly included in discontinued operations in the prior year.      

Media and broadcasting and Other
The group's Australian based subsidiary, HCI Investments Australia, was disposed of during the 
prior year and the results of its operations were accordingly included in discontinued operations 
in the prior year. 

Information technology
During the prior year the group disposed of its information technology operations (Syntell). 
The results of these operations were included in discontinued operations in the prior year in the 
income statement.

DISPOSALS

The group disposed of the following businesses during the current year:
-  Jacaranda Royal Casino, VSlots Lesotho and VSlots Swaziland, effective June 2017, for an 
   aggregate consideration of R24 million and at an aggregate loss of R18 million.   
-  Lalela Music and etv Botswana, effective June and September 2017, respectively, for total 
   proceeds of R6 million, at an aggregate gain of R5 million. 

BUSINESS COMBINATIONS

Branded products and manufacturing
Effective 31 December 2017 the group acquired 100% and 60% of the shares in New Just Fun Group and 
Oops Global SA, respectively, for a total consideration of R100 million. Goodwill of R35 million 
arose on acquisition, for which the purchase price allocation is provisional. New Just Fun Group 
is a local distributor of toys from leading toy brands. Oops Global SA is a company based in 
Switzerland, which specialises in the design, conception and sale of toys for children from birth 
to the age of five. 

NOTES AND COMMENTARY TO THE RESULTS

GROUP INCOME STATEMENT AND SEGMENTAL ANALYSIS

Revenue increased by 3.0% to R23 802 million
EBITDA decreased by 3.8% to R6 286 million
Profit before tax decreased by 47.5% to R2 520 million
Headline earnings decreased by 10.9% to R1 164 million
Headline earnings per share from continuing operations increased by 2.3% to 1 389 cents per share

Media and broadcasting
Revenue in respect of media and broadcasting includes only revenue from eMedia in the current and 
prior years as revenue from Sunshine Coast Radio in Australia is included in discontinued operations 
in the prior year. eMedia recorded a decrease in revenue of 5% against the backdrop of a 27% 
decrease in licence revenue, for eNCA and the five channels provided to DSTV combined, due to the 
implementation of the new licence agreement. A 5% increase in advertising revenue was recorded in 
a difficult television advertising environment. Property and facility and content revenue decreased 
by a combined 15%. EBITDA contributed decreased by 54% and is all attributable to eMedia. 
R55 million was expensed in respect of the SES-5 satellite contract, which will not recur, 
and R68 million in programming rights were written off. The decrease in EBITDA is further 
attributable to the decrease in subscription revenue and a R24 million reduction in foreign 
exchange gains on foreign creditors. Profit before tax decreased by R270 million following 
impairments of goodwill and investments in associates of R95 million. 

Gaming and hotels
The bingo and limited payout operations of Niveus Investments were acquired by Tsogo Sun effective 
end of November 2017. Due to this amalgamation of the group's gaming operations, the results of 
Niveus Investments' previously held bingo and limited payout operations have been incorporated 
into those of Tsogo Sun in the gaming and hotels segment for the current and prior years.

Revenue in respect of gaming and hotels increased by 6%. Overall net gaming win was stagnant, 
with casino gaming win decreasing by 2%. SA hotel revenue grew by 8%, aided by additional revenue 
from Hospitality Property Fund following its inclusion for an additional five months in the current 
year. Significant decreases in revenue were recorded in Montecasino (2.5%), and Silverstar (6.7%), 
impacted by the opening of Time Square casino in Menlyn and the general weak trading environment. 
EBITDA decreased by 0.2%, with reduced profits in casino gaming largely off-set by an increase in 
SA hotels and alternative gaming. Profit before tax decreased by 51%. Included in the prior year 
results were certain positive non-recurring items totalling R910 million and detailed in the prior 
year results. In the current year the group recognised impairment charges on the carrying values of 
casino licences and properties recognised upon the acquisition of Tsogo Sun in August 2014. 
The casino licences were valued at R19 billion at that time, as compared to a carrying value of 
R4 billion by Tsogo Sun. The weak economic environment in certain areas where the group's casino 
licences are situated necessitated the reassessment of forecasts and the consequent valuations 
performed at the time of the acquisition, resulting in these impairments. The total 
impairment amount is R823 million in respect of casino licences in Mbombela (Emnotweni), 
Emalahleni (The Ridge), East London (Hemingways), Welkom (Goldfields) and Newcastle (Blackrock). 
The group further recognised R98 million in impairments of property, plant and equipment, 
significantly in respect of items demolished at Suncoast casino and building shells at 
The Ridge casino in Emalahleni. A downward revaluation of investment properties in the amount 
of R191 million related to HPF investment properties. Contribution to headline earnings increased 
by 2% to R1 029 million, including the Group's limited payout and bingo operations. This includes 
an effective share of a deferred tax liability reversal following the sale of certain hotel 
properties to HPF. Excluding the effect of this reversal, it results in a decrease in contribution 
to headline earnings of approximately 11%.

Net gaming win from Vukani increased by 7% and other alternative gaming by 25% in the current year. 
The number of active machines in Vukani has increased by 6% to 5 894 and average GGR per machine by 
8% to R22 167. The number of electronic bingo terminals increased by 15% to 2 900 during the period. 

Transport
Golden Arrow Bus Services ("GABS"), part of the newly established and recently listed Hosken 
Passenger Logistics and Rail Group ("HPL&R"), managed to increase revenue by 8%, aided by a subsidy 
increase and the Metro Rail inefficiencies experienced during January to March of 2018. EBITDA 
increased by 3% only, significantly impacted by higher bus driver overtime wage rates. Certain provisions 
in respect of staff remuneration were reversed in the current year, off-setting the higher wages. 
Headline earnings in respect of GABS decreased by 2%, following the effect of the 27% non-controlling 
interest arising on the restructure of the group's interest in GABS.   

Properties
Properties' revenue increased by 7% due to new development revenue from Whale Coast Village Mall, 
The Palms, the Makro PE premises and Shell House, with annual escalations in the rest of the 
portfolio off-set slightly by a reduction in revenue in the Gallagher Estate exhibition business. 
EBITDA increased by 9%, in line with the increase in revenue. EBITDA gains were somewhat off-set 
by an increase in finance charges of R23 million, originating from increased facilities in respect 
of the Monte Circle precinct, The Palms and The Point. Headline earnings increased by a reduced 
margin of 3% due to the decrease in earnings in the Gallagher Estate exhibition business and 
excludes fair value adjustments on investment properties of R28 million, as included in profit 
before tax.

Mining
Increased revenue was recorded at the Palesa (1%) and Mbali (24%) Collieries. Sales volumes at the 
Palesa Colliery decreased by 1% following an extended closure in April due to a fatality. 
In addition, mining contractor inefficiencies resulted in a reduction of 6% in run of mine volumes. 
Management have addressed these inefficiencies subsequent to the reporting date. Sales volumes at 
the Mbali Colliery increased by 11%. In addition, export sales prices achieved at the Mbali Colliery 
were an average of 20% higher than the prior year. EBITDA increased by 27%, significantly as a 
result of increased export sales prices and an improvement in gross profit margins. R131 million of 
the increase in profit before tax is attributable to the profit on disposal of the Nokuhle mining 
rights and associated land and a decrease in depreciation following the full depreciation of the 
box cut at the Mbali Colliery in the prior year.

Branded products and manufacturing
Branded products and manufacturing increased revenue by 5%, with growth attributable to their 
industrials and branded products divisions. Revenue in Formex increased by 25% following additional 
tooling sales and new supply contracts in its pressings division. EBITDA decreased by 61%. 
Most business units faced reduced gross margins. Unplanned clearances in the branded products 
division followed disappointing trade ahead of the holiday season. Headline earnings includes the 
group's share of discontinued operations' losses of R81 million and its share of deferred tax 
income of R81 million. Impairments of R13 million are included in discontinued operations' losses 
and consequently excluded for headline earnings.

Other
EBITDA losses from other decreased by 32%, significantly as a result of a share-based payment charge 
in respect of cash-settled options to directors of Niveus in the prior year not recurring and 
rentals received by La Concorde (previously KWV Holdings) following the sale of its operational 
assets in the prior year. Losses before tax decreased compared to the prior year. The decrease in 
losses is significantly attributable to a decrease of R152 million in equity-accounted losses (to a 
profit of R29 million) from the group's 46% interest in Impact Oil and Gas, which entity's equity-
accounted earnings in the current year includes an effective R54 million profit on part disposal of 
an exploration licence. Interest at head office increased by 5%. Included in the current year's 
losses is R35 million in equity-accounted profits from associates, head office finance costs, and 
head office and other overheads of the company, Niveus Investments and La Concorde. Headline earnings 
included R20 million profit from HCI Australia (non-media) and R40 million investment income for the 
Ithuba funding arrangements in the prior year, both of which are not included in the current year.

Notable items on the consolidated income statement include:

Finance costs increased following an increase in Tsogo Sun finance costs of R160 million and 
HCI Properties finance costs of R23 million. 

Investment surpluses recognised were in respect of the mining rights and land of the Nokuhle 
property sold by HCI Coal.

Fair value adjustments of investment properties consist of R(191) million in respect of HPF 
properties, R75 million in respect of HCI Properties and other retail and office buildings, 
and R44 million recognised by Deneb Investments on industrial properties.

Impairment reversals of R41 million are in respect of working capital loans advanced to associate 
and joint venture investments of Tsogo Sun.

Asset impairments consist significantly of R823 million in respect of casino licences and 
R98 million in respect of casino and hotel properties, plant and equipment.

Impairment of goodwill and investments consist significantly of goodwill and investments in 
associates impaired by eMedia.

Headline earnings per share decreased by 5.0% with gross headline earnings decreasing 10.9%. 
The weighted average number of shares in issue in the prior year of 94 282 000 was reduced to 
88 412 000 in the current year due to 16 million shares being repurchased during August 2016. 
The 2.7 million share repurchase transacted in the current year was only implemented in March 2018.

GROUP STATEMENT OF FINANCIAL POSITION AND CASH FLOW

Group long-term borrowings at 31 March 2018 comprise central borrowings of R784 million, central 
investment property-related borrowings of R1 782 million, borrowings in Tsogo Sun of R12 667 million 
and the remainder in other operating subsidiaries. Included in the current portion of borrowings is 
R1 666 million central borrowings and R941 million in short-term borrowings in Tsogo Sun. 
Current central borrowings of R1 500 million is expected to be refinanced into longer-term borrowings 
prior to the end of the new financial year. Bank overdraft facilities include R1 707 million in 
Tsogo Sun.

Included in cash flows from investing activities is net expenditure on investment properties of 
R896 million and R1 553 million on property, plant and equipment. Included in cash flows from 
financing activities is net funding raised during the year of R1 087 million. Transactions with 
non-controlling shareholders totalling R749 million include proceeds received in the rights issue 
concluded by HPF during the year and payments made by Tsogo Sun to non-controlling shareholders in 
respect of the bingo and limited payout gaming operations of Niveus Investments.  

Shareholders are referred to the individually published results of eMedia Holdings Limited, 
Tsogo Sun Holdings Limited, Niveus Investments Limited, Hosken Passenger Logistics and Rail Limited 
and Deneb Investments Limited for further commentary on the media and broadcasting, gaming and 
hotels, transport, and branded products and manufacturing operations.

AUDITOR'S REVIEW

These condensed consolidated financial statements for the year ended 31 March 2018 have been reviewed 
by Grant Thornton Johannesburg Partnership, who expressed an unmodified review conclusion. A copy of 
the auditor's review report is available for inspection at the company's registered office together 
with the financial statements identified in the auditor's report.

The auditor's report does not necessarily report on all of the information contained in this 
announcement/financial results. Shareholders are therefore advised that in order to obtain a full 
understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's 
report together with the accompanying financial information from the issuer's registered office.

CHANGES IN DIRECTORATE

There were no changes in directorate during the year under review.

DIVIDEND TO SHAREHOLDERS

The directors of HCI have resolved to declare a final ordinary dividend number 57 of 190 cents 
(gross) per HCI share for the year ended 31 March 2018 from income reserves. The salient dates for 
the payment of the dividend are as follows:

Last day to trade cum dividend                    Tuesday, 19 June 2018
Commence trading ex dividend                    Wednesday, 20 June 2018
Record date                                        Friday, 22 June 2018
Payment date                                       Monday, 25 June 2018

No share certificates may be dematerialised or rematerialised between Wednesday, 20 June 2018 and 
Friday, 22 June 2018, both dates inclusive.

In terms of legislation applicable to Dividends Tax ("DT") the following additional information 
is disclosed:

- The local DT rate is 20%.
- The number of ordinary shares in issue at the date of this declaration is 92 814 648.
- The DT amounts to 38 cents per share.
- The net local dividend amount is 152 cents per share for all shareholders who are not exempt 
  from the DT.
- Hosken Consolidated Investments Limited's income tax reference number is 9050/177/71/7.

For and on behalf of the board of directors 

JA Copelyn                                TG Govender
Chief Executive Officer                   Financial Director

Cape Town 
23 May 2018


Directors: 
JA Copelyn (Chief Executive Officer), TG Govender (Financial Director), Y Shaik, MSI Gani*, 
MF Magugu*, NM Mhlangu**, ML Molefi*, VE Mphande* (Chairman), JG Ngcobo*, R Watson* 
*  Independent non-executive
** Non-executive 

Website address: 
www.hci.co.za

Company secretary: 
HCI Managerial Services Proprietary Limited

Registered office: 
Suite 801, 76 Regent Road, Sea Point, Cape Town, 8005
PO Box 5251, Cape Town, 8000
Telephone: 021 481 7560
Telefax: 021 434 1539

Auditors: 
Grant Thornton Johannesburg Partnership
@Grant Thornton, Wanderers Office Park, 52 Corlett Drive, Illovo, 2196
Private Bag X10046, Sandton, 2146

Transfer secretaries: 
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 
PO Box 61051, Marshalltown, 2107

Sponsor: 
Investec Bank Limited
100 Grayston Drive, Sandton, Sandown, 2196


Date: 23/05/2018 05:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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