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STELLAR CAPITAL PARTNERS LIMITED - Condensed interim results for the six month period ended 31 December 2018

Release Date: 19/02/2019 09:30
Code(s): SCP     PDF:  
Wrap Text
Condensed interim results for the six month period ended 31 December 2018

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

CONDENSED INTERIM RESULTS
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2018

INTRODUCTION 

Stellar Capital Partners Limited ("Stellar Capital" or the "Company" or the "Group") presents its unaudited interim results for the
six month period ended 31 December 2018.

As at 31 December 2018, the net asset value per share (NAVPS) of Stellar Capital is R1.20, representing an increase of 15 cents
per share from 30 June 2018. This increase is primarily driven by the listed share price of Torre, which increased from R0.71 on
30 June 2018 to R1.04 on 31 December 2018, offset by a further reduction in the valuation of Tellumat.

OPERATIONAL UPDATE

Prescient
The process to empower Prescient has commenced and the first transaction has been concluded whereby Prescient
repurchased 15% of its own shares in issue from Stellar Capital for R228.8 million. Further repurchases are expected to be
concluded by 31 March 2019 for an estimated R146.7 million, which will occur simultaneously with the issuing of new shares by
Prescient to both management and the B-BBEE partner. After closing all transactions, Stellar Capital will hold an effective 19.4%
economic interest in Prescient.

Client assets under management/administration of Prescient remain stable and in line with expectations. Prescient continues
to invest in line with a 5-year growth plan, the results of which is expected to come to fruition in years 3, 4 and 5.

Friedshelf (including Cadiz)
The implementation of certain aspects of the transaction with Warwick and the substantial downscaling of the traditional
operations continues. Management have continued to extract excess capital and remain focused on leveraging the licenses
retained in order to grow the revenue streams and are in discussions with various parties in this regard.

Praxis
Since the capital restructuring in March 2018, the business has improved its profitability, concluded its development of a
technology platform to enable scalability and engaged with various funders to provide capital for further growth. A key con-
straint remains the balance between meeting the demand for parts funding and managing the company's debt levels. The
working capital cycle of the business and the cost of debt funding remains a key focus for management. Improvements in these
areas have been slower than targeted and remains an area of focus in the upcoming period.

Greenpoint
Greenpoint Capital, the manager of the various Greenpoint Funds, is tracking budget for its financial year ending June 2019.
Greenpoint continues to build its platform of alternative credit solutions via expansion of its offering and the growth of the
underlying credit portfolios.

Stellar Capital remains an investor of the Greenpoint Specialised Lending (GSL) Fund with R106.6 million indirectly held at
31 December 2018. The mezzanine credit fund continues to perform well with no defaults occurring during the period under
review.

During the period under review, Greenpoint Special Opportunities (GSO) Fund was established, with Stellar Capital as one of
the initial investors with an initial R10 million investment, funded via a redemption from the GSL Fund. The GSO Fund is a credit
led investment vehicle in the convertible debt space.

In addition to the GSO Fund, the Greenpoint Senior Debt (GSD) Fund was established and purchased 300 Stellar Capital
preference shares in July 2018 (subordinated in favour of other preference shareholders) and a further 66 Stellar Capital
preference shares in December 2018 (unsubordinated), bringing the total assets under management to R366 million, which
mirrors Stellar Capital's investment in the GSD Fund as at 31 December 2018.

Inyosi Solutions
The manager of the Inyosi Supplier and Enterprise Development Funds is tracking budget for its financial year ending June
2019 and paid a maiden dividend of R1.0 million following its 2018 financial year. The assets under management increased from
R292.1 million at 30 June 2018 to R335 million at 31 December 2018. The business continues to look at additional service
offerings for its clients and has scaled up its team to enable a more expansive service offering in the future.

Torre
On 24 January 2019 Torre shareholders approved the scheme in terms of which the Torre shareholders shall dispose of their
shares for a maximum consideration of R1.15 per share, comprising R1.05 per share for cash and a maximum top-up payment of
R0.10 per share. The investment in Torre is held at the closing price of R1.04 per share (consistent with valuation methodologies
in previous periods) as at 31 December 2018 as shareholder approval was only obtained subsequent to this reporting date.

Stellar Capital received a special cash dividend of R102.7 million from Torre in December 2018 as part of this disposal process.

Amecor
Amecor remained a good investment with consistent operational performance. The valuation at 31 December 2018 is
unchanged from R398.2 million at 30 June 2018. Stellar concluded a deal on or about 14 December 2018 (subject to a number of
conditions precedent) which would result in cash proceeds payable to Stellar Capital of R413 million as well as an escalation at
10% per annum in the event that the Closing Date is delayed beyond 31 March 2019. In addition, Stellar Capital will be entitled to
pre-Closing Date dividends, amounting to R31 million in respect of the financial period 1 July 2018 to the Closing Date (R21 million
already received during the period under review). The anticipated profit on disposal combined with total dividends received are
expected to result in a return on investment of approximately 82% since acquisition in October 2016.

Tellumat
The performance of the Tellumat group continues to disappoint and during the previous year the Board of Directors of
Stellar Capital took the decision to consider a disposal strategy with respect to the investment and engaged a corporate
finance service provider to drive the disposal process. Following this and engagements with prospective buyers, Stellar Capital
is considering a break-up strategy. In ensuring a conservative approach to our valuations, divisions which do not have positive
engagement in respect of active disposal processes have been valued on the basis of estimated recoverability of the net asset
value. The remaining divisions have been valued using a consistent 5.3 times EBITDA multiple.

OUTLOOK

Stellar Capital has embarked on a number of disposals of its industrial assets in the period. These have predominantly been
driven by the committed intention to reduce group debt and the implementation of all of these transactions in the next period
will see the group debt completely settled and Stellar having a strong cash position. Stellar will settle debt as a priority and
should the conclusion of any transaction result in surplus cash, Stellar will communicate how it expects to deploy such cash.

Stellar will continue to reduce its exposure to the industrial space in an organised fashion but with cognisance of protecting
shareholder value. Stellar expects to build stronger relationships with its partners and co-shareholders in Prescient in exploring
its exposure to the financials services market. Stellar will focus its efforts on supporting the growth strategies underway at
Prescient as all shareholders seek to expand the platform business into new services and across greater geographies. Stellar is
excited about the prospects it sees in its alternative financial service businesses.

The economic and political environment in South Africa remains challenging in a year of elections. International markets are
also uncertain with Brexit in Europe as well as turmoil in the United States. This all means we need to remain flexible to change
in the global economy and the potential impact on markets that impact our various businesses.

CHANGES TO THE BOARD OF DIRECTORS

There have been no changes to the Board of Directors for the six month period under review.

SUM-OF-THE-PARTS (SOTP) VALUATION AS AT 31 DECEMBER 2018
                                    % of              As at          As at              As at   
R'000                          portfolio   31 December 2018   30 June 2018   31 December 2017   
Financial Services                                                                              
Prescient                            25%            481 211        710 005            699 052   
Friedshelf                            2%             35 030         69 217             82 033   
Praxis                                1%             20 973         20 973                  -   
Greenpoint Capital                    0%              2 595          2 595              8 802   
Inyosi Solutions                      0%              4 931          4 931                  -   
Industrials and Technology                                                                      
Torre                                16%            305 197        208 355            293 458   
Amecor                               21%            398 207        398 207            391 808   
Tellumat 1                            5%             86 550        110 971            121 284   
Corporate Assets                                                                                
Financial assets                      0%              1 242         26 647             26 690   
Loan portfolio                        6%            116 633        125 134            152 135   
Venture capital portfolio 2           2%             30 817         29 958             27 425   
Greenpoint Senior Debt               19%            366 000              -                  -   
Cash and cash equivalents             2%             28 080         39 649             81 986   
Other assets                          1%             17 709         36 333             13 586   
Total Assets                                      1 895 175      1 782 975          1 898 259   
Preference share liability                        (592 855)      (584 392)          (576 186)   
Other financial liabilities                        (12 669)       (26 576)          (100 000)   
Trade and other payables                            (2 453)       (44 509)           (20 883)   
SOTP value                                        1 287 198      1 127 498          1 201 190   
Net shares in issue (?000)                        1 075 032      1 075 032          1 075 032   
SOTP value per share (Rand)                            1.20           1.05               1.12   

Notes:
1. The value comprises the sum of the investments in Tellumat and Amalinde Technologies (previously Masimong Technologies)
2. Held in Stellar International

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                              Unaudited as at   Audited as at    Unaudited as at   
R'000                                Notes   31 December 2018    30 June 2018   31 December 2017   
Non-current assets                                    515 992         828 402          1 238 352   
Listed investments at fair value         7                  -         208 355            293 458   
Unlisted investments at fair value       7            514 658         577 852            942 022   
Other financial assets                                  1 099          13 985              1 847   
Loans to portfolio companies                                -          27 975                  -   
Property, plant and equipment                               -               -                801   
Deferred taxation                                         235             235                224   
Current assets                                      1 379 183         954 573            659 907   
Listed investments at fair value         7            305 197               -                  -   
Unlisted investments at fair value       7          1 028 289         894 139            540 517   
Other financial assets                                    143          12 662             24 843   
Loans to portfolio companies                           15 000           4 948              3 100   
Current tax receivable                                      -               -                105   
Trade and other receivables                             2 474           3 175              9 356   
Cash and cash equivalents                              28 080          39 649             81 986   
Total assets                                        1 895 175       1 782 975          1 898 259   
Equity                                              1 287 198       1 127 498          1 201 190   
Ordinary share capital                              2 347 806       2 347 806          2 347 806   
Preference share capital                               32 044          32 044             32 044   
Accumulated loss                                  (1 092 652)     (1 252 352)        (1 178 660)   
Non-current liabilities                                     -               -            523 005   
Preference share liability                                  -               -            523 005   
Current liabilities                                   607 977         655 477            174 064   
Preference share liability                            592 855         584 392             53 181   
Other financial liabilities                            12 669          26 576            100 000   
Current tax payable                                       159             127                  -   
Trade and other payables                                2 294          44 382             20 883   
Total equity and liabilities                        1 895 175       1 782 975          1 898 259   

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                         Unaudited 6 month   Audited 12 month   Unaudited 6 month   
                                                              period ended       period ended        period ended   
R'000                                            Notes    31 December 2018       30 June 2018    31 December 2017   
Fair value adjustments                               8              30 689          (366 692)           (252 712)   
Fair value movements on listed investments                         199 675          (228 203)           (143 100)   
Fair value movements on unlisted investments                      (23 589)           (54 654)            (52 779)   
and other financial assets                                                                                          
Fair value adjustments resulting from capital                   (145 397)           (83 835)            (56 833)   
distributions from portfolio companies                                                                              
Dividend revenue                                     9             192 470            217 716             120 510   
Capital distributions                                              145 397             83 835              56 833   
Earnings distributions                                              47 073            133 881              63 677   
Interest revenue                                                     1 562              5 845               1 803   
Gross profit/(loss) from investments                               224 721          (143 131)           (130 399)   
Other income                                                           906              2 259                 978   
Finance costs                                                     (50 350)           (86 627)            (41 802)   
Net profit/(loss) before operating expenses                        175 277          (227 499)           (171 223)   
Management fee                                                     (8 798)           (19 921)            (10 454)   
Operating expenses                                                 (5 456)            (9 012)             (4 327)   
Transaction costs                                                    (954)            (3 311)             (1 181)   
Profit/(Loss) before tax                                           160 069          (259 743)           (187 185)   
Taxation                                                             (369)            (1 426)               (292)   
Profit/(Loss) for the period                                       159 700          (261 169)           (187 477)   
Weighted number of shares in issue (?000)                        1 075 032          1 075 032           1 075 032   
Profit/(Loss) per share (cents)                                      14.86            (24.29)             (17.44)   
Headline profit/(loss) per share (cents)                             14.86            (24.23)             (17.44)   

RECONCILIATION BETWEEN PROFIT/(LOSS) AND HEADLINE PROFIT/(LOSS)
                                        Unaudited 6 month   Audited 12 month   Unaudited 6 month   
                                             period ended       period ended        period ended   
R'000                                    31 December 2018       30 June 2018    31 December 2017   
Profit/(Loss) for the period                      159 700          (261 169)           (187 477)   
Impairment of receivable                                -                347                   -   
Write-off of fixed assets                               -                293                   -   
Headline profit/(loss) for the period             159 700          (260 529)           (187 477)   

There are no items which give rise to a dilutive effect on profit/(loss) and headline profit/(loss) per share. The issue of 600
convertible redeemable preference shares has not been treated as dilutive as the conversion thereof will result in an increase in
earnings per share from continuing operations (i.e. the conversion is anti-dilutive).

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                         Unaudited 6 month   Audited 12 month   Unaudited 6 month   
                                              period ended       period ended        period ended   
R'000                                     31 December 2018       30 June 2018    31 December 2017   
Balance at the beginning of the period           1 127 498          1 388 667           1 388 667   
Profit/(Loss) for the period                       159 700          (261 169)           (187 477)   
Balance at the end of the period                 1 287 198          1 127 498           1 201 190   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                             Unaudited 6 month   Audited 12 month       Unaudited 6 month   
                                                                  period ended       period ended            period ended   
R'000                                                         31 December 2018       30 June 2018        31 December 2017   
Operating activities                                                   138 330            224 981                 110 668   
Cash generated from operations and                                                                                  
capital distributions received                                         136 786            221 333                 109 179   
Interest revenue                                                         1 885              4 879                   1 803   
Tax paid                                                                 (341)            (1 231)                   (314)   
Investing activities                                                  (94 104)           (54 115)                 (7 508)   
Acquisitions of investments                                          (366 000)           (28 076)                 (7 452)   
Disposals of investments                                               228 918              1 000                       -   
Net disposals / (acquisitions) of other financial assets                25 079              2 375                     625   
Net loans (advanced to) / repaid by portfolio companies               17 899             (29 983)                   (715)   
Disposal / (purchase) of property, plant and equipment                       -                569                      34   
Financing activities                                                  (55 795)          (144 771)                (34 728)   
Net (repayments)/proceeds from other financial liabilities            (12 542)           (75 000)                       -   
Preference share financing costs                                      (36 105)           (62 972)                (29 855)   
Other financing costs                                                  (7 148)            (6 799)                 (4 873)   
Cash and cash equivalents at the beginning of the period               39 649              13 554                  13 554   
Cash and cash equivalents at the end of the period                      28 080             39 649                  81 986   
Net increase / (decrease) in cash and cash equivalents                (11 569)             26 095                  68 432   

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. REPORTING ENTITY

Stellar Capital is a South African domiciled investment holding company listed on the main board of the JSE Limited (JSE). The
condensed consolidated interim financial statements of the Group as at and for the six month period ended 31 December 2018
comprise the Company and its Consolidated Subsidiary, Stellar Management Services Proprietary Limited.

The Company has significant interests in both listed and unlisted investments, which are more fully set out in note 7. As an
investment holding company, Stellar Capital has applied the investment entity exception and accounts for its investments on a
fair value basis, in accordance with IFRS 10 Consolidated Financial Statements.

2. FINANCIAL PREPARATION AND REVIEW

These condensed consolidated interim financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS), including the disclosure requirements of IAS 34 Interim Financial Reporting (IAS 34) and
comply with the Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, as well as the JSE Listings Requirements and the
Companies Act, No 71 of 2008.

The results include, as a minimum, the information required by IAS 34 and do not include all the information required
for a complete set of IFRS financial statements and it is advised that these results be read in conjunction with the
consolidated annual financial statements of the Group for the period ended 30 June 2018, which are available at
http://www.stellarcapitalpartners.co.za/financial-results/.

These condensed consolidated interim financial statements have been prepared by W Dreyer under the supervision of
S Graham CA(SA), the Chief Financial Officer and have not been audited or reviewed by the Group's auditors.

These condensed consolidated interim financial statements were approved by the Board of Directors on 19 February 2019. The
Directors take full responsibility for the preparation of these results.

3. ACCOUNTING POLICIES

The accounting policies applied by the Group in these condensed consolidated interim financial statements are consistent with
those applied in the consolidated annual financial statements for the year ended 30 June 2018.

All subsidiaries classified as portfolio investments are accounted for at fair value through profit or loss (FVTPL) in terms of
IFRS 9: Financial Instruments (and previously IAS 39 Financial Instruments: Recognition and Measurement) and all associates
classified as portfolio investments are accounted for at FVTPL in terms of the exemption from applying the equity method of
accounting provided in IAS 28 Investments in Associates and Joint Ventures.

4. JUDGEMENTS AND ESTIMATES

Management is required to make estimates and assumptions that affect the amounts presented in the financial statements and
related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates.
Actual results in the future could differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in
applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to
the consolidated annual financial statements for the year ended 30 June 2018.

5. SEGMENT INFORMATION

As the Group has only one business segment which is managed as a single pool of capital irrespective of the sector in which the
Group's investees trade, segmental reporting is not applicable.

6. DIVIDENDS

No ordinary dividends were declared during the six month period ended 31 December 2018. Preference share dividends are
based on 120% of prime on preference share capital of R600 million for the six month period ended 31 December 2018 and
preference share dividends of R36.1 million were paid, which included a payment of R0.9 million to Mr. CJ Roodt, an independent
non-executive director of Stellar Capital.

7. INVESTMENTS HELD AT FAIR VALUE

All subsidiaries and associates have a principle place of business in South Africa with the exception of Stellar International,
which has a principle place of business in Mauritius.

Listed investments
                                                                          % HELD            % HELD            % HELD                                       
ENTITY                  NATURE OF OPERATIONS                         31 DECEMBER           30 JUNE       31 DECEMBER                        
                                                                            2018              2018              2017
                        Industrial group that distributes and
                        rents capital equipment and supplies
Torre                   aftermarket parts to the mining,                     57%               57%               57%
                        manufacturing, construction and
                        industrial markets across Africa

                        Processing and screening of coal fines, a
MRI                     byproduct of coal mining (under care                   -               14%               14%
                        and maintenance)

Unlisted investments
                                                                          % HELD            % HELD            % HELD                                       
ENTITY                  NATURE OF OPERATIONS                         31 DECEMBER           30 JUNE       31 DECEMBER                          
                                                                            2018              2018              2017
                        Diversified financial services group 
                        offering investment management, fund 
Prescient               services, administration, stockbroking,              40%               49%               49%
                        wealth investment, retail and institutional 
                        and insurance products

Friedshelf              Financial services group specialising in            100%              100%              100%
                        alternative investments

                        Provider of short term finance to the panel
Praxis                  beating industry to address motor body               37%               37%               60%
                        repairers' working capital needs

Greenpoint Capital      Provision of management services                     51%               51%              100%

Inyosi Solutions        Provision of management services                     75%               75%               75%

                        Technology solutions and services in                100%              100%              100%
Amecor                  security                                            
                        
                        Technology solutions and services in
                        manufacturing, air traffic control systems,
Tellumat                defence and security and turnkey                     49%               49%               49%
                        infrastructure solutions for the
                        telecommunications industry

Amalinde
Technologies (1)        A subsidiary of a diversified B-BBEE                100%              100%              100%                                  
(previously             investment holding company and B-BBEE         preference        preference        preference
Masimong                partner of Stellar Capital for Tellumat           shares            shares            shares                                                  
Technologies)               

Greenpoint              Credit fund specialising in mezzanine                  -              100%              100%
Specialised Lending     financing                                              

Stellar International   Holding company for international venture           100%              100%              100%
                        capital investments in disruptive markets

Preference share        Preference share investment in a 100% held          sole              sole              sole                        
(investment in GSL      subsidiary of Friedshelf                      preference        preference        preference                      
and GSO Funds)                                                             share             share             share

Greenpoint Senior       Credit fund specialising in senior debt     B shares (2)                 -                 -
Debt                    financing                                   

1   The preference shares held in Amalinde Technologies are non-cumulative and redeemable at the instance of the issuer.
2   The B shares held in Greenpoint Senior Debt do not carry voting rights.

                                   As at          As at              As at   
R'000                   31 December 2018   30 June 2018   31 December 2017   
Listed                           305 197        208 355            293 458
Torre                            305 197        208 355            293 458   
MRI                                    -              -                  -   
Unlisted                       1 542 947      1 471 991          1 482 539
Prescient                        481 211        710 005            699 052   
Friedshelf                        35 030         69 217             82 033   
Praxis                            20 973         20 973                  -   
Greenpoint Capital                 2 595          2 595              8 802   
Inyosi Solutions                   4 931          4 931                  -   
Amecor                           398 207        398 207            391 808   
Tellumat                          42 323         54 376             59 308   
Amalinde Technologies             44 227         56 595             61 976   
Stellar International             30 817         29 958             27 425   
Greenpoint Funds                 482 633        125 134            152 135   
Total                          1 848 144      1 680 346          1 775 997   

Torre (current)
The investment has been valued at the closing quoted market price of R1.04 per share on 31 December 2018 (R0.71 per share on
30 June 2018 and R1.00 per share on 31 December 2017).

Mine Restoration Investments Limited (MRI)
The investment was exited during the period under review and a fair value gain of R0.1 million was recognised on disposal.

Prescient (current and non-current)
Prescient repurchased 256 851 502 of the shares held by Stellar Capital for R228.8 million during the period under review, being
the first in a series of transactions, which will ultimately result in Stellar Capital retaining an effective 19.4% economic interest in
Prescient (refer to SENS dated 26 July 2018).

As at 31 December 2018, the fair value of the investment in Prescient has been estimated by management using the sustainable
earnings model, which is consistent with the valuation method used at 30 June 2018. Management considers the P/E multiple
to be the most appropriate valuation method and has valued the investment based on the estimated sustainable earnings of
the group. The valuation is based on an estimated sustainable NPAT of R101.6 million (R101.4 million in June 2018) and a P/E
multiple of 14.1 times (14.3 times in June 2018), less any debt plus any excess cash held in Prescient. Included in the current year
operational performance are certain expenditures that are incurred in line with a 5 year growth plan, but are not excluded for
purposes of valuation. A reasonable possible change of 5% in either the estimated sustainable NPAT or the P/E multiple would
result in an adjustment to the estimated fair value of R28.4 million.

R'000         31 December 2018   30 June 2018   31 December 2017   
Non-current            334 496        355 002            699 052   
Current                146 715        355 003                  -   
Total                  481 211        710 005            699 052   

The current portion of the investment has been determined using the best estimate of the proceeds on the part-disposal, based
on the information available at 31 December 2018.

Friedshelf (non-current)
During the period under review, the investment was reduced by R34.2 million as a result of a corresponding capital distribution
to Stellar Capital of the same amount.

As at 31 December 2018, the estimated fair value of the investment is supported by the remaining net asset value of the group
entities as the basis for the estimated fair value. A reasonable possible increase/decrease by 10% in the net asset value by would
result in an increase/decrease in the estimated fair value of R3.5 million.

Praxis (non-current)
As at 31 December 2018, the fair value of the investment is based on an estimated sustainable NPAT of R7.3 million and a P/E
multiple of 7.4 times, both of which are unchanged from June 2018. A reasonable possible change of 10% in either the estimated
sustainable NPAT or the multiple used would result in an adjustment to the estimated fair value of R2.1 million.

The Company has pledged and ceded in securitatem debiti to the GSL Fund the shares held in Praxis as a continuing general
covering collateral security in respect of amounts owed by Praxis.

Greenpoint Capital (non-current)
As at 31 December 2018, the fair value of the investment is based on an estimated sustainable NPAT of R0.6 million and a P/E
multiple of 8.6 times, both of which are unchanged from June 2018. A reasonable possible change of 10% in either the estimated
sustainable NPAT or the multiple used would result in an adjustment to the estimated fair value of R0.3 million

Inyosi Solutions (non-current)
As at 31 December 2018, the fair value of the investment is based on an estimated sustainable NPAT of R1.0 million and a P/E
multiple of 6.6 times, both of which are unchanged from June 2018. A reasonable possible change of 10% in either the estimated
sustainable NPAT or the multiple used would result in an adjustment to the estimated fair value of R0.5 million.

Amecor (current)
As at 31 December 2018, the fair value of the investment is based on an estimated sustainable EBITDA of R64.2 million and an
EV/EBITDA multiple of 6.2 times, both of which are unchanged from June 2018. A reasonable possible change of 5% in either
the estimated sustainable EBITDA or the multiple used would result in an adjustment to the estimated fair value of R19.9 million.

Tellumat and Amalinde Technologies (current)
Following the decision to exit both investments taken in the previous financial year, Stellar Capital is currently considering a
piecemeal exit approach. As at 31 December 2018, the fair value of the investments in Tellumat and Amalinde Technologies
(previously Masimong Technologies), which owns 51% of Tellumat, are based on this approach. This represents a change in
estimate since June 2018 when the fair value was based on an estimated sustainable group EBITDA of R20.9 million and an
EV/EBITDA multiple of 5.3 times.

In accordance with the Group's accounting policy, the primary valuation method used is the sustainable earnings multiple,
unless this is not considered to be appropriate. The estimated fair value of the divisions of Tellumat which are engaged in active
exit strategies via a sale process are based on a total estimated sustainable EBITDA of R13.7 million and an EV/EBITDA multiple
of 5.3 times (consistent with previous periods). The remaining divisions have on a conservative basis been based on the
estimated recoverability of these divisions through a net asset value realisation rather than a sale process.

A reasonable possible change of 10% in either the estimated sustainable EBITDA or the multiple would result in an adjustment to
the estimated fair value of R3.5 million for Tellumat and R3.7 million for Amalinde Technologies. A reasonable possible change
of 10% in the estimated net asset value realisation would result in an adjustment to the estimated fair value of R1.7 million for
both Tellumat and Amalinde Technologies.

Greenpoint Funds (non-current and current)
As at 31 December 2018, Stellar Capital indirectly holds R106.6 million worth of B Units in the Greenpoint Specialised Lending
(GSL) Fund and R10 million worth of B Shares in the newly established Greenpoint Special Opportunities (GSO) Fund and
directly holds R366 million worth of B Shares in the Greenpoint Senior Debt (GSD) Fund. The fair values of the investments
in the Greenpoint Funds are determined with reference to the B Unit or B Share values as determined by the fund manager
(Greenpoint Capital).

The investment in the GSL Fund has decreased from R125.1 million in June 2018 as a result of redemptions of R18.5 million during
the period. The non-current investments in the GSL and GSO Funds are held via a preference share in a 100% held subsidiary
of Friedshelf.

As at 31 December 2018, the GSD Fund holds 366 Stellar Capital preference shares (with a face value of R366 million), of which
300 have been subordinated in favour of other preference shareholders. As the Stellar Capital preference shares are to be
redeemed by no later than 31 May 2019, the investment has been classified as current.

Stellar International (current)
The functional currency of Stellar International is the US Dollar. As at 31 December 2018, the fair value of the investment has
been estimated by using the price of recent investment valuation method and the respective acquisition prices, along with the
balance of cash, have been converted to Rands using the foreign exchange spot rates on 31 December 2018.

Level 3 investments
With the exception of Torre, a listed entity, all portfolio companies are classified as Level 3. The Board of Directors has approved
the valuation methodologies used by management for Level 3 investments. The Company receives the latest available reports
from portfolio companies at each reporting date, either in the form of audited financial statements or unaudited management
accounts, which are then used in the valuation techniques. The table below shows the reconciliation of Level 3 movements:

R'000                                                         31 December 2018   30 June 2018   31 December 2017   
Opening balance                                                      1 471 991      1 588 724          1 588 724   
Additions                                                              366 000         26 660              6 035   
Disposals                                                            (228 918)         (1000)                  -   
Fair value movements                                                  (23 438)       (58 558)           (55 387)   
Fair value adjustments resulting from capital distributions           (42 688)       (83 835)           (56 833)   
Closing balance                                                      1 542 947      1 471 991          1 482 539   

Transfers to Level 3 occur in instances where management assesses that the quoted market price of a listed investment is
not representative fair value at the measurement date. Similarly, transfers from Level 3 occur where previously management
assessed that the quoted market price of a listed investment was not representative of fair value, but where a change in factors
results in management concluding that the quoted market price is considered to be an appropriate basis for estimating fair
value. There were no transfers between levels during the period under review.

8. FAIR VALUE ADJUSTMENTS                                                                                                
                                                              Unaudited 6 month   Audited 12 month   Unaudited 6 month   
                                                                   period ended       period ended        period ended   
R'000                                                          31 December 2018       30 June 2018    31 December 2017   
Fair value movements on listed investments                              199 675          (228 203)           (143 100)   
Torre                                                                   199 551          (228 203)           (143 100)   
MRI                                                                         124                  -                   -   
Fair value movements on unlisted investments                           (23 589)           (54 654)            (52 779)   
Prescient                                                                     -             10 953                   -   
Friedshelf                                                                    -           (12 816)                   -   
Praxis                                                                        -           (29 671)            (29 671)   
Greenpoint Capital                                                            -            (1 207)                   -   
Inyosi Solutions                                                              -              1 281                   -   
Amecor                                                                        -             38 499              32 100   
Tellumat                                                               (12 053)           (32 828)            (27 896)   
Amalinde Technologies                                                  (12 368)           (34 532)            (29 151)   
Stellar International                                                       859              1 763               (769)   
Other financial assets                                                     (27)              3 904               2 608   
Fair value adjustments resulting from capital distributions           (145 397)           (83 835)            (56 833)   
Total                                                                    30 689          (366 692)           (252 712)   

9. DIVIDEND REVENUE                                                                            
                                    Unaudited 6 month   Audited 12 month   Unaudited 6 month   
                                         period ended       period ended        period ended   
R'000                                31 December 2018       30 June 2018    31 December 2017   
Capital distributions                         145 397             83 835              56 833   
Torre                                         102 710                  -                   -   
Friedshelf                                     34 186              4 829               4 829   
Greenpoint Capital                                  -              4 000               4 000   
Friedshelf (GSL Fund redemptions)               8 501             75 006              48 004   
Earnings distributions                         47 073            133 881              63 677   
Torre                                               -              8 761               8 761   
Prescient                                           -             44 132              24 518   
Greenpoint Capital                                  -              1 066               1 066   
Inyosi Solutions                                  750                  -                   -   
Amecor                                         21 000             53 000              18 000   
Greenpoint Senior Debt                         15 184                  -                   -   
Friedshelf (GSL Fund returns)                  10 139             26 922              11 332   
Total                                         192 470            217 716             120 510   

10. RELATED PARTY TRANSACTIONS
Related party transactions are entered into in the ordinary course of business and comprise (i) transactions with portfolio
companies, including loans advanced/repaid, interest income, dividends received and amounts received or paid in respect of
services provided; and (ii) management fees paid to Thunder Securitisations Proprietary Limited (the appointed investment
manager to Stellar Capital).

11. CONTINGENT LIABILITIES
At the reporting date, the Company has issued limited corporate guarantees in favour of the creditors of Praxis for R32.5 million
(R32.5 million as at 30 June 2018). The guarantees provided are subject to 3 months' notice of termination.

12. EVENTS AFTER THE REPORTING PERIOD
The Board of Directors are not aware of any other events after the reporting date and until the date of approval, which have a
material impact on the condensed consolidated interim financial statements as presented.


By order of the Board

DD Tabata

Chairman of the Board

19 February 2019

FORWARD LOOKING STATEMENTS

Any forward-looking statements included in this results announcement involve known
and unknown risks, uncertainties and other factors, which may cause the actual results,
performance or achievements of the Group to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking statements.
Any reference to forecast information included in this results announcement does
not constitute an earnings forecast and has not been reviewed or reported on
by the Group's external auditors.

DIRECTORS
DD Tabata (Chairman)*, PJ Van Zyl (Chief Executive Officer),
S Graham (Chief Financial Officer), CJ Roodt#, MM Ngoasheng*,
MVZ Wentzel*, L Potgieter*, HC Steyn^, PJ Bishop^

#Lead Independent non-executive
*Independent non-executive
^Non-executive

COMPANY SECRETARY
Wilma Dreyer

REGISTERED OFFICE AND BUSINESS ADDRESS
Fourth Floor
The Terraces
25 Protea Road
Claremont
Cape Town
7708

POSTAL ADDRESS
Suite 229
Private Bag X1005
Claremont
Cape Town
7735

TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited

SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)


Date: 19/02/2019 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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