Wrap Text
Audited provisional summarised consolidated financial statements for the year ended 30 June 2018
Tiso Blackstar Group SE
(Incorporated in England and Wales)
(Company number SE 000110)
(Registered as an external company with limited liability in the Republic
of South Africa under registration number 2011/008274/10)
ISIN: GB00BF37LF46
Share code: TBG
(“Tiso Blackstar” or the “Company” or the “Group”)
Audited Provisional Summarised Consolidated Financial Statements for the
year ended 30 June 2018
Highlights
Core(1) EBITDA(2) growth of 11.2% (from R370.7 million to R412.4
million)
EBITDA operating cash flow conversion ratio of 88.9%
Revenue growth of 0.9% in a challenging economic environment
Operating profit of R245.0 million (+12.7%)
Reduction in Group debt to R1,000.8 million
Progress on sale of non-core businesses
(1) Core includes the segments Hirt & Carter Group, Media, Broadcast and
Content, and Other
(2) EBITDA is defined as Tiso Blackstar Trading Performance per the Segmental
information note, which is calculated from profit interest and tax after adding
back depreciation, amortisation, straight lining of leases and share based payment
expenses. It excludes items outside of the ordinary day-to-day activities.
Overview
The financial year under review corresponded with exceptionally ongoing difficult
economic conditions with consumers under increasing financial pressure. These
conditions are expected to remain in the near term with many consumer facing
businesses likely to experience low or negative growth until there is an
improvement in the economy and investor sentiment.
The Group’s core businesses, housed under Blackstar Holdings Group Proprietary
Limited (“BHG”) (previously Times Media Group Proprietary Limited) experienced
double digit core EBITDA growth despite these conditions and higher input costs,
and are well positioned for any
improvement in economic activity.
The business is managed efficiently and is able to act nimbly should there be
further macro-economic deterioration. The Group’s flat structure means it is
able to adapt and implement required changes speedily, as well as take advantage
of any opportunities that arise.
The growth in revenue and above inflation growth in its core EBITDA was achieved
despite significant investment in digital media to position the business for the
future, further investment in quality content and customer delivery, and the
impacts of the ongoing task of unwinding the costly historical legacy structures
of a traditional media house. The Group made a significant investment in state of
the art facilities in Durban to house all the Hirt & Carter Group business units.
The Group has achieved significant reductions in its debt levels and will
continue to focus on de-gearing the business going forward and strengthening
the balance sheet. A major focus area has been on working capital and terms
from suppliers.
Core business review
Actual Prior year (1) Current year
Growth
30 June 30 June 30 June
2018 2017 2018
R millions R millions %
Revenue 3 813.3 3 781.1 0.9%
Hirt & Carter Group 1 911.3 1 733.5 10.3%
Media – Excluding
Booksite and STS 1 421.5 1 479.7 (3.9%)
Media –
Booksite and STS. 101.5 112.8 (10.0%)
Broadcast and Content 377.5 441.2 (14.4%)
Other 1.5 13.9 (89.2%)
Tiso Blackstar
Trading Performance –
core EBITDA 412.4 370.7 11.2%
Hirt & Carter Group 281.0 253.8 10.7%
Media –
Excluding Booksite
and STS (2) 118.0 104.8 12.6%
Media - Booksite and STS 10.1 13.7 (26.3%)
Broadcast and Content 31.9 32.0 (0.3%)
Other (28.6) (33.6) 14.9%
(1) Prior year end amounts have been restated. Refer to note 2 and 4.
(2) Smartcall Technology Solutions Proprietary Limited (“STS”) was sold for
R21.5 million during August 2018 and Booksite has been ear-marked for sale.
Media
Media delivered a solid performance. After adjusting for loss of earnings from
the sale of STS and poor trading by Booksite, EBITDA grew by 12.6%. The growth
in profitability is particularly positive given the heavy losses posted by our
publishing competitors.
This performance was achieved on the back of better than expected advertising
revenue and continued tight cost management supported by innovative new revenue
streams in Events, Digital and Magazines, as well as continued stringent cost
management.
Media remains driven by its focus on quality content as its core differentiator,
with focused content teams enhancing audience and revenues, while scooping most
of the country’s top media awards. It is this strength that will ensure our
products remain relevant in a mature market and produce sustainable returns
into the future. While reader revenue in print is under pressure as a result of
economic weakness, good growth in digital subscriptions means this now forms
part of our core business with new paywall product releases planned.
The cost of distribution remains a challenge and management is pursuing structural
changes to its delivery networks to reduce costs. Advertising revenues have
plateaued and, in some cases, increased.
Magazines continue to perform well, both as standalone products and as newspaper-
inserted supplements, while the closure of the Times newspaper in December 2017
and its replacement with our new digital product, Times Select, has significantly
reduced costs in printing and production and had good market response so far with
over 200,000 unique users a month.
The Events business, which was started less than three years ago, delivered 48.4%
growth in revenue and a swing to profitability for the first time. It is expected
to continue to grow aggressively and our events venue – The Empire – has secured
the hosting of the State Capture Commission for the next two years.
The launch of our first digital subscription product, BusinessLive, has proved a
success, with digital subscriptions now representing almost 30% of the Business
Media subscriber base. More paywall products will be launched in the new financial
year. Tiso Blackstar remains the second largest digital publisher across its titles
with more than 5.5 million monthly unique readers.
The continued growth in magazine and newspaper supplements and native advertising
reflected the benefits of a dedicated team focused on content and revenue innovation.
The industry wide decline in advertising revenue has slowed, while a focus on
various digital advertising streams such as Native Advertising, Multimedia and
Programmatic helped more than offset the decline in traditional CPM advertising.
The focus in the coming year will be on innovative growth opportunities, both
organic and acquisitive, while keeping tight control of costs in traditional
products. The launch of an integrated editorial system will allow for seamless
flow between print and digital, which will create a unique strength for our
newsroom as well as create efficiencies in the production process.
Broadcast and Content
The Broadcast and Content business experienced flat EBITDA growth despite lower
revenue and difficult market conditions. The division, whose revenues were
impacted by tough economic and market conditions, made significant strategic
progress in various areas.
Films business, Empire Entertainment, retained its market leading position in
independent film distribution across Africa, while increased film attendances
on the African continent strengthened its position, especially in Nigeria.
Diversification through investment in local and international films offers
revenue and earnings growth potential. During the period under review, Empire
Entertainment was appointed to represent Metro-Goldwyn-Mayer (MGM) in addition
to Warner Bros and 20th Century Fox and the Indigenous Film Distribution
released the internationally acclaimed Inxeba, among others. Investing
directly in local films through Indigenous Film Distribution will diversify
earnings further.
TV channels business, Blackstar TV, was impacted by negative advertising
trends in the industry, with revenue down 2.0% but EBITDA was 18.6% higher
due to tight cost control. Television Production business Ochre had a
softer year due to limited new commissioning from free to air channels,
although it is well positioned with a solid pipeline.
Gallo continued to trade profitably in the current year and is well
positioned to extract value from the transition to digital although the
physical music market continues to decline. The business continues to
mine its extensive and popular catalogue – the largest independent
catalogue in Africa. Gallo Music continued to develop its frontline
offering signing Nathi Mankayi, among others.
The music industry remains in transition with the shift to digital, but
Gallo is well positioned for the anticipated growth in revenues from
subscription streaming services such as Spotify. Full year performance
was impacted by the shift to consignment for physical products at Musica,
but overall Gallo continues to trade profitably.
Radio stations, Rise FM and Vuma FM, both continued to improve, growing
revenues and reducing losses. Vuma FM has trebled its audience over the
past year due to a new programming and music strategy and, according to
RAM (Radio Audience Measurement), the official South African radio
audience research provided by The Broadcast Research Council of South
Africa, Vuma FM was the fastest growing commercial radio in South Africa
over the past twelve months. Rise FM has also shown solid growth. Vuma
FM and Rise FM reduced operating losses by 21.5% and 22.4%, respectively.
Hirt & Carter Group
The Hirt & Carter Group performed well with increased revenue, EBITDA and
margins by focusing on costs, efficiencies and servicing key customers.
Hirt & Carter Group managed to grow its customer base among retailers and
manufacturers.
H&C core print division sales grew by 10.3% driven by growth from both
retailers and manufacturers.
Triumph Packaging grew sales by 30.4%, driven by a mix of core customer
growth and cross selling opportunities from the rest of the Group.
Silo delivered a flat sales year, as retailers pulled back on their
e-commerce projects. This has had a short-term impact on the business
and will not affect the long-term strategy.
H&C Software sales remained flat as new customers were bedded down and
some projects were put on hold by clients.
Bothma Brandings Solutions Proprietary Limited (“BBS”), acquired at the
beginning of the financial year, delivered sales growth of 24.7%, ahead
of our acquisition plans.
Uniprint Forms sales declined by 1.2% as the prior year included both
the IEC and Zambian election (combined value of R34.0 million) which
was only partially offset by the Lesotho election of R7.0 million.
Uniprint Labels experienced a tough year with sales down 4.2%. While
volumes remained steady, pricing and margin pressure affected the
business adversely, particularly in the petroleum sector.
The new Durban facility in Cornubia, outside Umhlanga, was delivered
below budget and on time. The major integration opportunities between
H&C, particularly in the new Cornubia facility, are likely to be realised
from 1 July 2019, when all business units are housed in one place.
Various cost reduction initiatives are under way, which will reflect
positively in the next financial year’s results and key cross selling
opportunities have been identified to continue to deliver revenue growth.
H&C was recently awarded a major instore contract spanning 3 years,
effective June 2018. The benefit of this contract will be realised in
the H&C core print division as well as the newly acquired BBS. Various
other growth opportunities have been secured in H&C and these should
enhance the top line during the 2019 financial year.
Consolidation of the Group sales teams into a cohesive unit represents
the single biggest opportunity to grow the business with smart cross-
selling, unlocking opportunities with existing customers.
The market remains tough, and in some products extremely competitive,
but opportunities exist for the Group across all divisions.
Key sales leadership in both Uniprint Forms, and Uniprint Labels is a
priority to ensure a continued, sustainable push to grow the topline.
Africa (excluding South Africa)
Multimedia group in Ghana has in the past 18 months shown significant
improvement after a period of macro-economic instability and investment
in its TV platform. A stronger, more stable economy and a turnaround to
profitability in TV helped deliver strong 2017 results.
The first half of 2018 has been lagging due to renewed economic instability,
however management has put in place contingency measures to endure any
further difficulties.
Kenyan business, Radio Africa group, has underperformed in the past two
years, driven by weakness in the radio market, investment in TV, and
politically driven economic instability. Although the long term view
remains positive for the Company, market volatility and continued
economic instability are likely to hamper performance in the short
to medium-term.
Radio Africa group relies on radio for its profitability and it continues
to command significant share of voice, but a highly competitive and soft
advertising market has put pressure on revenue.
Both Multimedia group and Radio Africa group are equity accounted for as
associates and do not contribute significantly to earnings or cash flow at
this stage and are yet to pay a dividend.
Financial review
Group trading from continuing operations was resilient in difficult
circumstances through tight cost control and growth in new revenue streams.
A significant movement from a R42.7 million gain in the prior year to a
R11.4 million loss in the current year in “other gains and losses”, together
with an abnormally high taxation charge, and the effects of losses and
impairments from discontinued operations, resulted in the strong trading
performance not translating to performance on the bottom line and earnings
per share basis. Plans have been executed to ensure non-deductible interest
and expenses are minimised.
The Group's financial statements include significant prior year reclassifications,
due to both CSI and Robor being reclassified as discontinued operations and
therefore being excluded from trading results for continuing operations in the
comparative period. Total prior year revenue was impacted by the restatement
of STS’s revenue of R453.0 million. The restatement was required as a result
of STS incorrectly accounting for revenue on the principle basis, when it
should have been accounted for on an agency basis. There was, however, no
impact on earnings from this restatement as cost of sales decreased by the
corresponding amount.
Trading performance
Total Group revenue from continuing operations increased by 0.9% to R3,813.3
million. The decline in revenue from the closure of The Times and TV production
reductions in Ochre was made up for in increases in revenue from Hirt & Carter
Group, digital media and Events.
Cost of sales was virtually the same as the prior year at around R2,606 million,
resulting in a slight gross profit margin increase to 31.7% from 31.1%. Operating
expenses were well controlled, declining 1.7% to R900.8 million.
Operating profit grew 12.7% to R245.0 million, a commendable performance in
a challenging economic environment. The Group continues to focus on adding
revenue streams and controlling costs.
Other (losses) / gains and finance costs
Other (losses) / gains in the prior year included gains on disposal of investment
properties and property, plant and equipment, gains from a right back of provisions
and losses from impairments of associates. As the Group continues to wind down its
non-core operations and execute on its media focused strategy, there were fewer
transactions of this nature resulting in a substantial reduction of the gain of
R42.7 million in the prior year to a loss of R11.4 million in the current year.
The majority of the loss in the current year relates to a write-off of current
and historic minimum guarantee payments in Empire Entertainment. Net finance
costs reduced by 3.3% to R145.6 million due to lower Group debt levels in
continuing operations.
Taxation
Taxation expense grew 20.3% to R77.3 million. This charge is significantly above
the South African corporate taxation rate. A R10.0 million impairment of tax
assets together with non-deductible finance costs on acquisition debt raised
for the purchase of KTH shares and non-deductible UK based head office costs,
contributed to the majority of this inefficiency. The KTH acquisition debt held
at head office has been reduced to R167.4 million at year end from R407.2 million
in the prior year. This should improve tax efficiencies going forward.
Discontinued operations
The investments in KTH and Robor, and the CSI disposal group met the definition
of discontinued operations at 30 June 2018, due to the active plans implemented
to realise these investments and the probability that they will be realised within
the next twelve months from the reporting date. In the prior year, KTH met the
definition of a discontinued operation. Significant progress has been made in
respect of all sales. In particular, KTH shareholder discussions are progressing
well with the shareholders having jointly appointed an independent advisor to
advise them on the most optimal approach to achieving KTH’s shareholders’
desired objectives.
The loss from discontinued operations of R295.6 million comprises an impairment
raised against the goodwill and intangible assets of CSI on remeasurement to
fair value less cost to sell of R178.8 million; a R38.5 million loss on sale
of a 3.61% interest in KTH; a R25.0 million profit on sale of intangible assets
within Robor; a R5.8 million gain on sale of a 3.4% interest in Robor and the
balance being ongoing trading losses of both CSI and Robor.
On the balance sheet, the Group’s investment in the associates Robor and KTH,
and the CSI disposal group are presented as non-current assets held for sale,
carried at the lower of their carrying value and fair value less costs to sell,
with a total net carrying value of R1,401.1 million.
Earnings
Earnings include income from associates of R13.5 million, of which R10.9 million
arises from the Group’s equity accounted share of profits in Multimedia group,
Radio Africa group and Coopers.
It is important to note that profit from continuing operations of R19.9 million
includes amortisation of intangible assets of R58.7 million. This is a non-cash,
notional expense arising from the allocation of the purchase price to intangible
assets on the deemed acquisition of subsidiaries when the Company changed its
reporting from being an investment entity in the prior year.
Basic loss attributable to shareholders declined to R276.0 million from a profit
of R7.8 million, mostly due to the loss from discontinued operations. Headline
loss declined to R124.8 million from R33.5 million. Weighted average number of
shares, net of treasury shares amounted to 265,061,804 resulting in a basic loss
per share of 104.11 cents from basic earnings per share of 2.95 cents in the
prior year. Headline loss per share was 47.09 cents per share from 12.63 cents
per share in the prior year. The losses in the per share metrics were due to
the discontinued operations impairments and trading losses.
Cash flow
Cash generated from operations declined by 19.9% to R366.6 million but was
still an impressive 88.9% of reported EBITDA. Finance costs paid in an amount
of R220.3 million were high due to the settlement of accrued interest and
fees in the debt restructure during the year. Taxation paid of R61.8 million
was lower than the tax charge of R77.3 million with the difference mainly due
to the impairment of taxation assets and current year deferred taxation.
Cash flow from investing activities showed a net inflow of R487.9 million
from an outflow of R897.9 million. Inflows this year included R197.9 million
on the disposal of a 3.61% interest in KTH; R431.1 million reduction of working
capital facilities related to Robor recognised as a result of it no longer being
consolidated; and proceeds of R20.8 million arising on the disposal of property,
plant and equipment and investments. Cash outflows from investing activities
mainly arose as a result of additions to property, plant and equipment of
R130.8 million and a R40.9 million investment in computer software for both
Media and the Hirt & Carter Group. The significant move in the prior year was
the notional cash outflow of R714.0 million relating to the Deemed Acquisition
of subsidiaries on the change from an Investment Entity to applying consolidated
accounting. Cash outflow from financing was flat year-on-year at around R115 million.
Statement of financial position / Balance sheet
The balance sheet strengthened substantially with total liabilities decreasing by
R941.0 million and non-controlling interests decreasing by R154.8 million. This,
and most of the other significant changes in balances, was due to the effects of
no longer consolidating Robor, and both the investment in Robor and the CSI
disposal group being classified as non-current assets held for sale. Total
interest bearing borrowings of R1,000.3 million decreased by R189.8 million
through scheduled repayments of debt and additional capital settlement of a
portion of the debt, utilising the proceeds from the KTH sale.
Net asset value per share declined by 8.3% to R11.68 predominantly due to
impairments and losses from discontinued operations.
Long term incentives
During the financial year, the Company issued 4,015,973 new shares under the
Group’s long term Management Incentive Scheme – a Forfeitable Share Plan (“FSP”).
In the prior year 3,012,349 shares were issued out of treasury shares. For
accounting purposes, shares issued under the FSP are not considered as issued.
The total share based payment expense amounted to R9.9 million for the current
financial year.
Dividends and buy backs
During the current year, the Company repurchased a total of 1,995,542 Tiso
Blackstar shares in the open market at an average price per share of R4.90
and a total cost of R9.8 million. These shares are held as treasury shares.
At 30 June 2018, Tiso Blackstar held 9,023,864 treasury shares, of which
6,887,236 shares (net of shares forfeited on resignation) have been awarded
under the long term Management Incentive Scheme, and are not considered
issued for International Financial Reporting Standards (“IFRS”) purposes.
Tiso Blackstar has taken the prudent approach of not declaring an interim
or final dividend for the year ended 30 June 2018 in light of its current
gearing levels. Dividends will be reconsidered as soon as some or most of
the non-core investments are realised and earnings permit.
Financial strength
The realisation of the KTH investment will give Tiso Blackstar a stronger
financial position and allow the Group to capitalise on growing the Group’s
media platforms and reducing leverage. The financial effects of the non-core
businesses are dealt with in more detail in the Financial Review, but disposals
in the near future have further strengthened the Group’s financial position.
Although tough economic conditions have persisted in making the business
environment very challenging, management in the extended Group are taking
the necessary steps to ensure operations are stable and remain as profitable
as possible. This includes focusing on profit margins, reducing working
capital levels, an ongoing drive to reduce operating costs and a continuous
search for innovative ways to increase revenue and add new income streams.
Sustainability
Sustainability guides our strategy, and informs our business operations. At
all times, we are guided by global standards of best practice and responsible
corporate citizenship. Internal policies articulate our philosophy and our
progress will be detailed in our Integrated Annual Report.
Given the Group’s leadership in newspaper publishing and its resulting position
in society, a strong ethical foundation underpins all our businesses and our
continued compliance with the laws and regulations during the period and into
the future remains critical. Our leadership role as a good corporate citizen
advocating transformation is important to the Group. We are proud of the
operating business maintaining a Level 2 rating under the Broad-Based Black
Economic Empowerment Act, 53 of 2003 and for being more than a 51.0% black
owned business. The Group expects that the operating business will improve
on its existing rating on the completion of its verification. At the
signature date of this report BHG was a level 2, however, BHG was in the
process of being audited by its verification agency and BHG’s management
believe that a level 1 will be achieved.
Subsequent events
The disposal processes of both CSI and Robor are progressing well and
finalisation of these exits is expected in the next few months. Subsequent
to year end, an amount of R50.0 million was transferred to CSI as a short
term, interest free equity loan repayable on transfer of ownership of CSI.
The Company was released from its guarantee of R50.0 million on transfer
of these funds. The shareholders of KTH have appointed an independent party
to advise on the most optimal approach to meet the shareholders desired
objectives. It is anticipated that the KTH implementation plan will be
finalised and approved by KTH shareholders shortly with execution well
under way, if not completed by 30 June 2019. STS was sold during August
2018 for R21.5 million.
Outlook
The core business has evolved significantly over the past year and we
look forward to ongoing growth in the Hirt & Carter Group and continuous
improvement in the Media and Broadcast and Content’s performance. The
Group’s focus on quality content through employing the best people, as
well as prioritising client service through innovative and quality
products, will continue to drive organic growth. The Group is continually
assessing several bolt on acquisition opportunities to drive inorganic
growth and broaden our audiences and products to meet our client’s needs.
The much appreciated hard work and dedication of the Tiso Blackstar Board,
the management and all our employees, has resulted in a credible operating
performance in an extremely challenging economic environment. With our
diversified market leading brands and businesses and lean operating
structure, the Group is well positioned to benefit from any upturn
in the economy.
AD Bonamour DKT Adomakoh
Chief Executive Officer Non-executive Chairman
26 September 2018
Summarised consolidated statement of profit and loss and other
comprehensive income
for the year ended 30 June 2018
Audited Audited
Restated and
reclassified
30 June 30 June
2018 2017 *
Notes R'000 R'000
Continuing operations
Revenue 3 813 318 3 781 139
Cost of sales (2 606 329) (2 606 892)
Gross profit 1 206 989 1 174 247
Operating expenses (900 847) (916 250)
Depreciation and amortisation (150 943) (138 784)
Straight lining of leases (8 650) 28 431
Operating income 98 453 69 763
Operating profit 245 002 217 407
Other (losses) / gains (11 386) 42 651
Net profit 233 616 260 058
Net finance costs (145 565) (150 515)
Finance income 7 026 4 891
Finance costs 3 (152 591) (155 406)
Share of profit /
(loss) of associates –
equity accounted 13 538 (282)
Impairment loss of investment
in associates –
equity accounted (4 351) -
Profit before taxation 97 238 109 261
Taxation (77 254) (64 212)
Profit from continuing
operations 19 984 45 049
Loss from discontinued
operations, net of taxation 4 (295 643) (60 496)
Loss for the year (275 659) (15 447)
Other comprehensive income /
(loss), net of taxation 5 9 746 (67 804)
Items that may subsequently
be reclassified to profit
and loss:
Currency translation
differences on the
translation of foreign
operations 7 494 (70 471)
Items that will not
subsequently be reclassified
to profit and loss:
Actuarial gains on
post-retirement medical
aid benefits 2 252 2 667
Total comprehensive loss
for the year (265 913) (83 251)
Loss for the year
attributable to:
Equity holders of the parent (275 959) 7 823
Non-controlling interests 300 (23 270)
(275 659) (15 447)
Other comprehensive income /
(loss), net of taxation
attributable to:
Equity holders of the parent 9 169 (66 524)
Non-controlling interests 577 (1 280)
9 746 (67 804)
Total comprehensive loss
for the year attributable to:
Equity holders of the parent (266 790) (58 701)
Non-controlling interests 877 (24 550)
(265 913) (83 251)
Basic (loss) / earnings
per ordinary share (in cents)
attributable to equity holders 6 (104.11) 2.95
Diluted (loss) / earnings
per ordinary share (in cents)
attributable to equity holders 6 (102.36) 2.93
Basic earnings per ordinary
share (in cents) attributable
to equity holders from
continuing operations 6 3.19 15.27
Diluted earnings per ordinary
share (in cents) attributable
to equity holders from
continuing operations 6 3.13 15.17
Weighted average number of
shares in issue (net of
treasury shares, in thousands) 6 265 062 265 279
Weighted average number of
shares in issue (in thousands) 6 269 601 266 879
* Refer notes 2 and 4
Summarised consolidated statement of financial position
as at 30 June 2018
Company registration number: SE 000110
Audited Audited
30 June 30 June
2018 2017
Notes R'000 R'000
ASSETS
Non-current assets 3 064 213 3 964 466
Property, plant and equipment 376 147 965 816
Investment property - 12 674
Straight lining of lease asset 15 169
Goodwill 7 1 080 696 1 224 936
Intangible assets 1 175 147 1 289 933
Investment in associates –
equity accounted 360 316 346 161
Other investments, loans
and receivables 18 173 29 704
Deferred taxation 53 719 95 073
Current assets 1 505 846 2 953 348
Inventories 241 730 1 088 622
Straight lining of lease asset 2 462 3 282
Trade and other receivables 847 360 1 656 453
Current tax assets 19 798 30 090
Cash and cash equivalents 8 394 496 174 901
Non-current assets held for
sale 4 2 449 829 1 500 000
TOTAL ASSETS 7 019 888 8 417 814
EQUITY AND LIABILITIES
Capital and reserves
attributable to the Group's
equity holders 3 076 011 3 378 132
Share capital and premium 3 255 248 3 255 248
Other reserves 28 383 39 637
Foreign currency
translation reserve (62 276) (68 455)
(Accumulated losses) /
Retained earnings (145 344) 151 702
Non-controlling interests 35 962 190 762
TOTAL EQUITY 3 111 973 3 568 894
LIABILITIES
Non-current liabilities 1 412 276 1 737 972
Borrowings 909 874 1 069 260
Straight lining of
lease liability 24 914 83 907
Other financial liabilities 6 397 8 491
Finance lease and
instalment sale obligations 123 610 135 956
Post-retirement benefits
liabilities 25 359 54 355
Provisions 5 734 11 246
Deferred taxation 316 388 374 757
Current liabilities 1 446 942 3 110 948
Borrowings 90 967 120 885
Straight lining of
lease liability 2 -
Other financial liabilities 5 673 6 660
Finance lease and
instalment sale obligations 50 259 59 495
Post-retirement benefits
liabilities 4 506 7 551
Provisions 60 520 115 441
Trade and other payables 922 350 1 882 123
Current tax liabilities 27 103 31 951
Bank overdrafts and
other short term
borrowing facilities 8 285 562 886 842
Non-current liabilities
associated with non-current
assets held for sale 4 1 048 697 -
TOTAL LIABILITIES 3 907 915 4 848 920
TOTAL EQUITY AND LIABILITIES 7 019 888 8 417 814
Summarised consolidated statement of changes in equity
for the year ended 30 June 2018
Audited Audited
30 June 30 June
2018 2017
Notes R'000 R'000
Balance at beginning
of the year 3 568 894 3 493 549
Changes in reserves:
Total comprehensive loss
for the year (266 790) (58 701)
Deemed Acquisitions - 1 235
Acquisition of
subsidiaries/businesses - (31 080)
FSP share based payment
expense 9 456 -
Tax charge on FSP
share based payment
expense recognised
directly in equity 2 558 -
Arising on change in
holding in a subsidiary (8 542) -
Purchase of treasury shares (9 772) (18 326)
Equity loan from
non-controlling interests 9 (16 486) 15 258
Dividends paid (12,545) (23,803)
Changes in non-controlling
interests:
Total comprehensive income /
(loss) for the year 877 (24 550)
Arising on change in
holding in a subsidiary 8 542 -
Deemed Acquisitions - 204 295
Acquisition of
subsidiaries/businesses 9 5 913 20 407
Equity loan from
non-controlling interests 16 486 -
Interest accrued on equity loan
from non-controlling interests 363 -
Loss of control in Robor 9 (177 113) -
Dividends paid to
non-controlling interests (9 868) (9 390)
Balance at the end of the year 3 111 973 3 568 894
Summarised consolidated statement of cash flows
for the year ended 30 June 2018
Audited Audited
Restated and
reclassified *
30 June 30 June
2018 2017
Notes R'000 R'000
Cash flow from operating
activities
Cash generated by operations 366 555 457 791
Dividend income received from
investments 5 321 24 738
Cash settled share
based payment of subsidiary - (24 128)
Net finance costs paid (220 267) (129 572)
Net taxation paid (61 795) (40 831)
Net cash generated by
operating activities 89 814 287 998
Cash flow from investing
activities
Acquisition of property,
plant and equipment (130 839) (279 784)
Proceeds on disposal of
property, plant and equipment 10 728 55 925
Additions to investments (3 042) (34 505)
Proceeds on disposal of KTH 197 940 -
Proceeds on disposal of
investments 10 041 6 638
Additions to investment
properties - (412)
Proceeds on disposal of
investment properties - 88 484
Additions to intangible
assets (40 902) (27 890)
Proceeds on disposals of
intangible assets 25 003 -
Acquisition of
subsidiaries/businesses 9 (13 887) (713 972)
Disposal of
subsidiaries/businesses 9 1 728 7 643
Loss of control in Robor 9 431 145 -
Net cash generated
(utilised) by investing
activities 487 915 (897 873)
Cash flow from financing
activities
Borrowings raised 322 407 250 028
Borrowings repaid (406 172) (328 919)
Equity loan from
non-controlling interests - 15 258
Purchase of treasury shares (9 772) (18 326)
Dividends paid (12 545) (23 803)
Dividends paid to
non-controlling interests (9 440) (9 390)
Net cash utilised by
financing activities (115 522) (115 152)
Net increase / (decrease)
in cash and cash
equivalents 462 207 (725 027)
Cash and cash equivalents
at the beginning of the year (711 941) 13 086
Cash and cash equivalents
at the end of the year 8 (249 734) (711 941)
* Refer note 2
Notes to the summarised consolidated financial statements
for the year ended 30 June 2018
1. Basis of preparation
Investors should consider non-Generally Accepted Accounting Principles
(“non-GAAP”) financial measures shown in this announcement in addition
to, and not as a substitute for or as superior to, measures of financial
performance reported in accordance with International Financial Reporting
Standards (“IFRS”). The IFRS results reflect all items that affect reported
performance and therefore it is important to consider the IFRS measures
alongside the non-GAAP measures.
The principal accounting policies adopted in the preparation of the provisional
summarised consolidated financial statements for the year ended 30 June 2018
have been consistently applied across all periods presented in the provisional
summarized consolidated financial statements. All the provisional summarised
consolidated financial statements are presented in South African Rands and
all financial information has been rounded to the nearest thousand unless
stated otherwise.
While the financial information included in this announcement has been
prepared in accordance with the framework concepts, recognition and
measurement criteria of IFRS published by the International Accounting
Standards Board (“IASB”) as endorsed for use by the European Union
(“EU IFRS”) and IFRS as issued by the International Accounting Standards
Board (“IFRS”), this announcement does not itself contain sufficient
information to comply with IFRS. The financial information is a set of
provisional summarised consolidated financial statements extracted from
the consolidated financial statements included in the Integrated Annual
Report which was approved by the Tiso Blackstar Board on 26 September 2018.
The provisional summarised consolidated financial statements have been
prepared on the historical cost basis, except for financial assets and
financial liabilities held at fair value through profit and loss, non-
current assets held for sale and investment property that has been
measured at fair value.
The accounting policies and methods of computation are in terms of IFRS
and are consistent with those applied in the consolidated annual financial
statements for the year ended 30 June 2017. The provisional summarised
consolidated financial statements are only a summary of the financial
information in the consolidated financial statements included in the
Integrated Annual Report for the year ended 30 June 2018 and does not
contain full or complete details. Any investment decision by investors
and/or shareholders should be based on consideration of the consolidated
financial statements included in the 2018 Integrated Annual Report to be
published on the Company’s website as a whole.
1.1 JSE listing
These provisional summarised consolidated financial statements for the
year ended 30 June 2018, have been prepared in accordance with the
framework concepts and the measurement and recognition requirements
of IFRS and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements
as issued by the Financial Reporting Standards Council, and includes,
at a minimum, information required by IAS 34 Interim Financial
Reporting and the JSE Listings Requirements.
These provisional summarised consolidated financial statements are
extracted from the audited consolidated financial statements. The
directors take full responsibility for the preparation of the
provisional summarised consolidated financial information and
confirm that the financial information and related commentary has
been correctly extracted from the underlying audited consolidated
financial statements.
The Group’s South African auditors, Deloitte & Touche, have issued
their opinion on the consolidated financial statements for the year
ended 30 June 2018. The audit was conducted in accordance with
International Standards on Auditing. Deloitte & Touche has issued an
unmodified opinion on the Group’s consolidated financial statements.
A copy of the auditor’s report together with a copy of the audited
consolidated financial statements are available for inspection at
the Company’s registered office.
These provisional summarised consolidated financial statements have
been derived from the consolidated financial statements and are
consistent in all material respects with the consolidated financial
statements. The provisional summarised consolidated financial
statements have been audited by Deloitte & Touche, who have issued
an unmodified opinion. The auditors’ report does not necessarily
report on all of the information contained in this announcement.
Shareholders are advised, that in order to obtain a full understanding
of the nature of the auditors’ engagement they should obtain a copy of
that report together with the accompanying financial information from
the Company’s registered office. Any reference to future financial
information included in this announcement has not been reviewed or
reported on by the auditors.
1.2 UK Statutory requirements
The financial information for the year ended 30 June 2018 does not
constitute statutory accounts as defined in sections 435(1) and 435(2)
of the UK Companies Act 2006 (“Companies Act 2006”) but has been derived
from those accounts. Statutory accounts for the year ended 30 June 2018
will be delivered to the Companies House in the UK following the Company’s
Annual General Meeting (“AGM”).
Further information relating to the AGM will be provided to shareholders
in a further announcement.
Deloitte LLP, the external auditor registered in the UK, has reported on
the statutory accounts for the year ended 30 June 2018. Their report was
unqualified, did not include a reference to any matters to which auditors
draw attention by way of emphasis of matter and did not contain a statement
under section 498(2) or 498(3) of the Companies Act 2006. Copies of their
audit report are available for inspection at the Company’s registered office.
The statutory accounts have been prepared in accordance with IFRS and IFRS
Interpretations Committee interpretations adopted for use by the EU, with
those parts of the Companies Act 2006 applicable to companies reporting
under IFRS.
1.3 Going concern
The Tiso Blackstar Board has reviewed the working capital requirements of
the Group along with the funding requirements for the Group, from the date
of approval of the provisional summarised consolidated financial statements,
and has concluded that the Group will remain a going concern for at least
the next twelve months and there is a reasonable expectation that the
Group has adequate resources to continue into the foreseeable future.
To make this determination, the Group closely monitors and manages its
liquidity through reviewing Group management accounts and producing cash
forecasts regularly. Sensitivities to forecast revenue, forecast costs,
forecast liquidity and impacts on banking covenants are considered in
cash flow forecasting scenarios. The Tiso Blackstar Board believe that
the Group’s cash position net of overdrafts of R108.9 million and
unutilised facilities of R245.4 million at 30 June 2018 provides
sufficient liquidity.
In reaching their conclusion, the Tiso Blackstar Board has considered
a range of factors, including the disposal of CSI and Robor, and the
realisation of the investment in KTH. The Tiso Blackstar Board is not
aware of any material uncertainties which may cast significant doubt
over the Group’s ability to continue as a going concern.
1.4 Foreign currencies
The functional currency of the Company is South African Rands, being
the currency of the primary economic environment in which the Company
and its subsidiaries operate.
Previously, Tiso Blackstar had two presentational currencies being
South African Rands (“Rands”) and Pounds Sterling.
During the current year, Tiso Blackstar determined that only one
presentational currency, being Rands, was necessary as this is more
reflective of the Group's activities and operations. In terms of
IAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors,
there is no impact on the Rands information previously presented
and therefore there are no retrospective adjustments required.
2. Correction of prior period errors
2.1 Restatement of statement of cash flows
It is noted that the following classification errors were made in the
summarised consolidated statement of cash flows for the year ended
30 June 2017:
- Cash payments to and on behalf of employees were incorrectly shown
under “Cash flow from financing activities” instead of “Cash flow from
operating activities”; and
- Equity loans from non-controlling interests were incorrectly shown
under “Cash flow from investing activities” instead of “Cash flow from
financing activities”.
The prior period error was identified through the JSE’s proactive
monitoring process.
The misallocation of these amounts in the prior year is a prior period
accounting error which has been adjusted for retrospectively in terms
of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Consequently, the Group has restated comparative amounts as detailed below.
The summarised consolidated statement of cash flows for the
year ended 30 June 2017 was restated as follows:
Restatement
for
Previously Classification
Reported errors Restated
30 June 30 June 30 June
2017 2017 2017
R'000 R'000 R'000
Cash flow from
operating activities
Cash settled share based
payment of subsidiary - (24 128) (24 128)
Net cash generated by
operating activities 312 126 (24 128) 287 998
Cash flow from
investing activities
Equity loan from
non-controlling
interests 15 258 (15 258) -
Net cash utilised
by investing
activities (882 615) (15 258) (897 873)
Cash flow from
financing
activities
Cash settled share
based payment of
subsidiary (24 128) 24 128 -
Equity loan from
non-controlling
interests - 15 258 15 258
Net cash utilised
by financing
activities (154 538) 39 386 (115 152)
This accounting restatement only affected the line items within the
summarised consolidated statement of cash flows, and had no impact on
profit for the year, basic and headline earnings per share or any line
items within the summarised consolidated statement of financial position.
2.2. Restatements for STS
Smartcall Technology Solutions Proprietary Limited (“STS”), a subsidiary
in which the Group holds a 50.0% interest plus one share option, has
historically recognised revenue on a principal basis in terms of IAS 18
Revenue. An entity is acting as a principal when it has exposure to the
significant risks and rewards associated with the sale of goods or the
rendering of services. In accordance with IAS 18, an entity is acting
as an agent when it does not have exposure to the significant risks and
rewards associated with the sale of goods or the rendering of services.
On further inspection of the manner in which STS accounts for its revenue
with its clients, it was noted that STS was acting as an agent and the
revenue earned by STS should therefore have been recognised on an agency
basis. This is a prior period accounting error and it has been adjusted
retrospectively in terms of IAS 8. Because STS was only acquired during
the 2017 financial period, the restatement only relates to the year ended
30 June 2017 and it does not impact on any earlier periods.
The condensed statement of profit and loss for the year ended
30 June 2017 was restated as follows:
Reclassification
for Restated
Previously Restatement discontinued and
Reported for STS operations* reclassified
30 June 30 June 30 June 30 June
2017 2017 2017 2017
R'000 R'000 R'000 R'000
Continuing
operations
Revenue 9 141 010 (453 014)^ (4 906 857) 3 781 139
Cost of
sales (7 421 440) 453 014 4 361 534 (2 606 892)
Gross
profit 1 719 570 - (545 323) 1 174 247
* Refer note 4
^ Agency revenue
This accounting restatement only affected the line items revenue and
cost of sales, and had no impact on profit for the year, basic, diluted
and headline earnings per share or any line items within the summarised
consolidated statement of financial position.
3. Finance costs
Finance costs for the reporting periods can be analysed as follows:
30 June 30 June
2018 2017 *
R'000 R'000
Finance costs
Interest expense on bank overdrafts (16 618) (8 745)
Interest expense and finance costs
on borrowings from banks (119 026) (132 433)
Amortisation of loan raising fee (1 525) -
Interest expense on non-controlling
interest loan (324) (873)
Interest expense on finance lease
and instalment sale obligations (14 945) (13 246)
Interest expense on other financial
liabilities and trade and other payables (153) (109)
(152 591) (155 406)
* Refer note 4
4. Discontinued operations and non-current assets held for sale
4.1 Reclassification in terms of IFRS 5
During 2016, Tiso Blackstar announced its change in strategy to focus on
investments in media and related industries, and to therefore dispose of
its non-core assets. As the Group progresses the disposal of its non-core
investments, to move towards being a single sector investment holding
company, the Group commenced negotiations to dispose of its interests
in CSI and Robor, the terms of which will be finalised during the 2019
financial year.
The investments in CSI and Robor met the requirements of IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations, and have been separately
classified and presented, as non-current assets held for sale and discontinued
operations at 30 June 2018. It is anticipated that the disposal of CSI and Robor
will be through a sale of shares and the Group has received various offers after
actively marketing the investments. In accordance with IFRS 5, profit and loss
for the comparative year ended 30 June 2017 has been reclassified, to reflect
CSI and Robor as discontinued operations in the prior year.
KTH was classified as a discontinued operation, and classified and presented
as a non-current asset held for sale in accordance with IFRS 5 at 30 June 2017.
The investment in KTH remains classified and presented as a non-current asset
held for sale in the condensed statement of financial position and is carried
at its fair value less costs to sell. The Tiso Blackstar Board, together with
other KTH shareholders, have jointly appointed an independent advisor to advise
them on the most optimal approach to achieving the shareholders desired objectives,
which includes Tiso Blackstar exiting KTH within the next twelve months.
During the current year, the Group disposed of a 3.4% interest in Robor for
R16.5 million, reducing its interest from 51.0% to 47.6% and thereby resulting
in a loss of control and step down from a subsidiary to an associate, and a
3.61% interest in KTH for R197.9 million, reducing its interest from 22.9%
to 20.01%.
The effect of restating STS for the correct revenue recognition principals,
and reclassifying CSI and Robor as discontinued operations, had the following
impact on the condensed statements of income and other comprehensive income:
Reclassification Restated
Previously for discontinued Restatement and
Reported operations for STS* reclassified
30 June 30 June 30 June 30 June
2017 2017 2017 2017
R'000 R'000 R'000 R'000
Continuing
operations
Revenue 9 141 010 (4 906 857) (453 014) 3 781 139
Cost of
sales (7 421 440) 4 361 534 453 014 (2 606 892)
Gross
profit 1 719 570 (545 323) - 1 174 247
Operating
expenses (1 420 826) 504 576 - (916 250)
Depreciation
and
amortisation (184 469) 45 685 - (138 784)
Straight
lining of
leases 5 655 22 776 - 28 431
Other
income 93 849 (24 086) - 69 763
Operating
profit 213 779 3 628 - 217 407
Other gains /
(losses) 70 194 (27 543) - 42 651
Net profit 283 973 (23 915) - 260 058
Net finance
costs (240 700) 90 185 - (150 515)
Finance
income 8 175 (3 284) - 4 891
Finance
costs (248 875) 93 469 - (155 406)
Share of profit /
(losses) of
associates –
equity
accounted 7 395 (7 677) - (282)
Profit before
taxation 50 668 58 593 - 109 261
Taxation (58 508) (5 704) - (64 212)
(Loss) / Profit
from
continuing
operations (7 840) 52 889 - 45 049
Loss from
discontinued
operations,
net of
taxation (7 607) (52 889) - (60 496)
Loss for
the year (15 447) - - (15 447)
* Refer note 2
4.2 Discontinued operations
Results from the discontinued operations
The results from the discontinued operations which are included in the
condensed statements of profit and loss are as follows:
30 June 30 June
2018 2017*
R'000 R'000
Loss for the year from
discontinued operations
Revenue 3 515 847 4 907 992
Cost of sales (3 150 416) (4 361 534)
Gross profit 365 431 546 458
Income 32 297 52 501
Expenses (455 979) (553 037)
Net finance costs (75 088) (90 185)
Loss before taxation (133 339) (44 263)
Taxation 16 467 3 767
Loss before remeasurement to
fair value less costs to sell (116 872) (40 496)
Loss on remeasurement to fair
value less costs to sell (178 771) (20 000)
Loss for the year from
discontinued operations (295 643) (60 496)
* Refer notes 2 and 4.1
4.3 Non-current assets and liabilities held for sale
The investments in Robor and KTH, and the CSI disposal group, are classified
and presented as non-current assets held for sale at 30 June 2018 and are
valued at the lower of carrying value and fair value less costs to sell.
5. Other comprehensive income / (loss), net of taxation
Other comprehensive income / (loss) mainly comprises the foreign currency
translation adjustments recognised in the foreign currency translation reserve.
These currency adjustments arise on translation of the Group’s investments in
its African-based associates, Radio Africa group, Multimedia group and Coopers,
as well as the African based foreign operations held by CSI and BHG, to the
Group’s functional currency Rands at the closing rate at
30 June 2018.
Items recognised in other comprehensive income / (loss) comprise of the following:
30 June 30 June
2018 2017
R'000 R'000
On translation of the following
foreign operations and associates: 7 494 (70 471)
Foreign operations held by CSI and BHG (1 805) (3 648)
Investment in associate Radio Africa group 14 882 (27 388)
Investment in associate Multimedia group (4 915) (37 297)
Investment in associate Coopers (668) (2 138)
Actuarial gain on post-retirement
medical aid benefits 2 252 2 667
9 746 (67 804)
6. (Loss) / Earnings per ordinary share, Net asset value per ordinary share,
Tangible net asset value per ordinary share and Dividends per ordinary share
30 June 30 June
2018 2017
Basic (loss) / earnings
per ordinary share (in cents)
From continuing operations 3.19 15.27
From discontinued operations (107.30) (12.32)
Total basic (loss) / earnings
per ordinary share (in cents) (104.11) 2.95
Diluted (loss) / earnings
per ordinary share (in cents)
From continuing operations 3.13 15.17
From discontinued operations (105.49) (12.24)
Total diluted (loss) / earnings
per ordinary share (in cents) (102.36) 2.93
Net asset value per
ordinary share (in cents)
Net asset value 3 076 011 3 378 132
Number of shares in issue
(in thousands) 263 283 265 279
Net asset value per
ordinary share (in cents) 1 168.33 1 273.43
Tangible net asset value
per ordinary share (in cents)
Tangible net asset value 820 168 863 263
Number of shares in issue
(in thousands) 263 283 265 279
Tangible net asset value
per ordinary share (in cents) 311.52 325.42
Dividends per ordinary
share (in cents)
Dividends paid 12 545 23 803
Number of shares in issue
(in thousands) 272 307 268 291
Dividends per ordinary
share (in cents) 4.61 8.87
6.1 Basic (loss) / earnings and
weighted average number of shares
30 June 30 June
2018 2017
R'000 R'000
Profit for the year attributable
to equity holders of the parent
from continuing operations 8 448 40 496
Loss for the year attributable to
equity holders of the parent from
discontinued operations (284 407) (32 673)
(Loss)/Profit for the year
attributable to equity holders
of the parent (275 959) 7 823
Weighted average number of shares
in issue (net of treasury shares,
in thousands) ^^ 265 062 265 279
^^ Shares issued during the current and prior financial years (either as a
fresh issue or out of treasury shares held) under the long term Management
Incentive Scheme are contingently returnable shares and are excluded from
the loss per shares calculation until such date as they are not subject
to recall
6.2 Diluted (loss) / earnings
and weighted average number
of shares
30 June 30 June
2018 2017
R'000 R'000
Profit for the year attributable
to equity holders of the parent
from continuing operations 8 448 40 496
Loss for the year attributable
to equity holders of the parent
from discontinued operations (284 407) (32 673)
(Loss)/Profit for the year
attributable to equity holders
of the parent (275 959) 7 823
Weighted average number of
shares in issue (in thousands) 269 601 266 879
Reconciliation of weighted average
number of shares in issue
Weighted average number of shares
in issue (in thousands) 269 601 266 879
Less number of shares expected
to vest (in thousands) (4 539) (1 600)
Weighted average number of
shares in issue (net of treasury
shares, in thousands) 265 062 265 279
6.3 Basic and diluted headline
loss per ordinary share
30 June 30 June
2018 2017
R'000 R'000
(Loss) / Profit for the year
attributable to equity holders
of the parent (275 959) 7 823
Profit on disposal of property,
plant and equipment (1 488) (22 133)
Profit on disposal of
intangible assets (25 000) (49)
Reversal of impairment of
property, plant and equipment - (11 379)
Impairment of intangible assets 761 -
Gains arising on investment properties (36) (2 858)
Impairment of investments - 25 270
Loss on disposal of
subsidiaries/businesses 2 099 1 695
Gains on investments - (256)
(Gains) / Loss on disposal of associates (187) 718
Impairment of associates 4 351 -
Gain on loss of
control in Robor (5 821) -
Loss on part disposal of KTH 38 523 -
Loss on remeasurement of fair
value less costs to sell CSI 178 771 -
Gains recognised on step
up acquisitions - (41 697)
Gain on bargain purchase - (1 745)
Total non-controlling interests
and tax effects of adjustments (40 825) 11 099
Headline loss (124 811) (33 512)
Basic headline loss per ordinary
share (in cents) attributable to
equity holders of the parent (47.09) (12.63)
Diluted headline loss per
ordinary share (in cents)
attributable to equity holders
of the parent (46.29) (12.56)
7. Goodwill
The aggregate carrying amounts of goodwill per segment are as follows:
30 June 30 June
2018 2017
R'000 R'000
Media 420 421 420 421
Hirt & Carter Group 616 121 579 468
Broadcast and Content 44 154 44 154
CSI - 109 439
Robor - 71 454
1 080 696 1 224 936
8. Net cash and cash equivalents
30 June 30 June
2018 2017
R'000 R'000
Cash and cash equivalents 394 496 174 901
Cash on hand 442 526
Deposits and cash at bank 394 054 128 430
Other cash and cash equivalents - 45 945
Bank overdrafts and other short
term borrowing facilities (285 562) (886 842)
Bank overdrafts (285 562) (94 194)
Working capital facilities - (792 648)
Net cash and cash equivalents 108 934 (711 941)
Cash and bank overdrafts
included in the CSI disposal
group held for sale (358 668) -
Net cash and cash equivalents per
the statement of cash flows (249 734) (711 941)
9. Business combinations
9.1 Acquisition during the current year
Effective 1 July 2017, the Hirt & Carter Group acquired a 51.0% interest
in Bothma Branding Solutions Proprietary Limited (“BBS”) for R15.9 million.
BBS design, produce and execute branding solutions in the formal and
informal retail markets.
BBS was acquired to continue with the expansion of the Group’s media focused
strategy. Goodwill of R36.7 million arose on acquisition of BBS. The goodwill
recognised was for a control premium and expected synergies. These benefits
are not recognised separately from goodwill because they do not meet the
recognition criteria for intangible assets. Goodwill is not expected to be
deductible for tax purposes. BBS has contributed revenue of R77.6 million
and a profit for the year of R7.8 million to the Group’s results for the
year ended 30 June 2018.
The carrying value of the assets and liabilities acquired approximated
the fair value on acquisition date.
The Group acquired a 51.0% controlling interest in BBS and has two
representatives on the BBS board. On this basis, BBS was accounted
for as a subsidiary and consolidated.
30 June
2018
R'000
Property, plant and equipment 5 644
Intangible assets 4
Inventories 2 687
Trade and other receivables 7 553
Cash and cash equivalents 1 971
Net deferred taxation (682)
Borrowings and other financial liabilities (1 361)
Current tax payable (1 015)
Trade and other payables (3 173)
Identifiable assets and liabilities at fair value
at acquisition date 11 628
Non-controlling interest (1) (5 913)
Goodwill 36 653
Purchase consideration 42 368
Less: Purchase consideration included in
trade and other payables (26 510)
Purchase consideration paid in cash 15 858
Cash flow
Purchase consideration paid in cash (15 858)
Add: Cash and cash equivalents acquired 1 971
Net cash flow on acquisition of subsidiaries/businesses (13 887)
(1) Measured with reference to the non-controlling interest’s share of the
identifiable assets and liabilities at fair value, at acquisition date
9.2 Disposals of subsidiaries and changes in holdings during the current year
The Group disposed of a 3.4% interest in Robor during the current year for
R16.5 million reducing its interest in Robor from 51.0% to 47.6% and thereby
resulting in a loss of control and a step down from a subsidiary to an associate.
Subsequent to this, the investment in Robor was classified and disclosed as a
non-current asset held for sale at 30 June 2018 (refer note 4).
During the year, other less significant disposals of subsidiaries and businesses
took place ("Other Disposals") and comprise of:
the disposal of the Group’s entire shareholding in its wholly owned subsidiary
Fantastic Investments 379 Proprietary Limited (“Fantastic”) for R2.0 million; and
the disposal of the Group’s 51.0% interest in Backbone Studios Proprietary
Limited (previously Orange View Studios Proprietary Limited) for R26,000.
Robor Other Total
Disposals
30 June 2018 R'000 R'000 R'000
Property, plant and
equipment 465 637 - 465 637
Investment property - 12 710 12 710
Intangible assets 127 - 127
Goodwill 71 454 - 71 454
Investments in associates,
joint ventures, other
investments, loans
and receivables 11 800 - 11 800
Other financial assets 687 133 820
Inventories 358 466 - 358 466
Trade and other receivables 406 143 185 406 328
Current tax receivable 3 847 19 3 866
Cash and cash equivalents 63 544 297 63 841
Net deferred taxation (22 842) 913 (21 929)
Borrowings and other
financial liabilities (141 314) (9 644) (150 958)
Provisions (11 575) - (11 575)
Trade and other payables (374 246) (489) (374 735)
Bank overdrafts and
other short term
borrowing facilities (494 689) - (494 689)
Identifiable assets and
liabilities disposed of 337 039 4 124 341 163
Less: Fair value of
remaining shareholding
on loss of control (149 261) - (149 261)
Less: Consideration received (16 486) (2 025) (18 511)
Less: Non-controlling
interests (177 113) - (177 113)
(Gain) / loss on disposal (5 821) 2 099 (3 722)
Consideration received
Cash consideration
received in cash - 2 025 2 025
Deferred sales proceeds 16 486 - 16 486
Total consideration received 16 486 2 025 18 511
Cash flow
Consideration received in
cash and cash equivalents - 2 025 2 025
Less: Cash and cash
equivalents disposed of 431 145 (297) 430 848
Net cash flow on disposal
of subsidiaries/businesses 431 145 1 728 432 873
9.3 Business combinations in the prior year
Business combinations in the prior year, mainly comprised subsidiaries
which were no longer carried at fair value but rather consolidated (the
''Deemed Acquisitions''), due to change in the Group's status from an
Investment Entity to a trading entity.
10. Segmental information
For the purpose of reporting to the Tiso Blackstar Board (who are considered
to be the Chief Operating Decision Maker (“CODM”) of the Company), the Group
is organised into segments. The CODM’s strategy for the Group to focus on
owning and growing diversified revenues streams from media businesses with
leading market positions, strong cash flows, historic earnings growth and
an ability to continue as a going concern.
The Group has identified its operating segments based on their nature, and
the reportable segments are as follows:
Core operations:
Media: the division houses the Group's interest in the distribution of knowledge
and content via print, online assets and other platforms;
Hirt & Carter Group: the division includes the activities on retail advertising
production systems and related database management and development, and retail
print via H&C and Uniprint;
Broadcast and Content: the division includes the television and radio platforms,
radio assets, Empire Entertainment which is the leading all-rights distributor
of local and international films business, and Gallo the music business;
Africa (excluding South Africa): includes the Group's interests in the associates
Radio Africa group in Kenya, Multimedia group in Ghana and Coopers in Nigeria
(all the African interests are equity accounted as associates and the share of
profits from these interests are therefore not shown in the tables below); and
Other: comprising of investments that are not deemed to be material to the Group
(including the property subsidiaries) and other consolidated Group companies,
including head office, holding companies and the investment advisor Tiso
Blackstar SA Proprietary Limited (“Tiso Blackstar SA”).
Non-core operations:
The investments in KTH and Robor, and the CSI disposal group, are classified
and presented as discontinued operations and non-current assets held for sale
(refer note 4).
CSI: a wholly owned subsidiary comprising of Stalcor which is a processor,
distributor and stockist of carbon steel, stainless steel and aluminium in
the form of high quality sheet, plate and coil as well as structural and
other long product profiles, and GRS which is a steel roofing and cladding
company;
Robor: in which the Group holds a 47.6% interest is a manufacturer and
supplier of welded steel tube and pipe and cold formed steel profiles; and
KTH: in which the Group holds a 20.01% interest is an investment holding
company established in July 2011. Its investments include market leaders
in key sectors such as media, resources, infrastructure, power and
financial services, and comprise a mix of listed and private investments.
Its major investments are Kagiso Media, MMI and Servest.
Each segment within the Group is assessed by the CODM based on EBITDA. EBITDA
is defined as Tiso Blackstar Trading Performance, which is calculated from
profit before interest and tax after adding back depreciation, amortisation,
straight lining of leases and share based payment expenses. It excludes items
outside of the ordinary day-to-day activities. Segmental EBITDA is defined
as net profit before depreciation, amortisation, straight lining of leases,
share based payment expenses and other gains / (losses).
10.1 Reconciliation of net profit to Tiso Blackstar Trading Performance – Core EBITDA
Hirt & Broadcast
Carter and
Media Group Content Other Total
30 June 2018 R'000 R'000 R'000 R'000 R'000
Revenue 1 523 035 1 911 297 377 496 1 490 3 813 318
Segmental revenue including inter-segmental
spend 1 523 528 1 915 659 379 889 1 490 3 820 566
Inter-segmental revenue (493) (4 362) (2 393) - (7 248)
Cost of sales (1 172 366) (1 181 375) (252 588) - (2 606 329)
Gross profit 350 669 729 922 124 908 1 490 1 206 989
Operating expenses (272 380) (493 409) (91 379) (43 679) (900 847)
Depreciation, amortisation and straight
lining of leases (65 035) (88 252) (6 242) (64) (159 593)
Operating income 48 580 40 597 7 079 2 197 98 453
Operating profit/(loss) 61 834 188 858 34 366 (40 056) 245 002
Other (losses)/gains 717 2 014 (8 677) (5 440) (11 386)
Net profit/(loss) 62 551 190 872 25 689 (45 496) 233 616
Reconciliation to Segmental EBITDA after other
gains/(losses)
Depreciation, amortisation and straight lining
of leases 65 035 88 252 6 242 64 159 593
Share based payment expense 537 1 833 - 7 541 9 911
Total Segmental EBITDA after other gains/
(losses) 128 123 280 957 31 931 (37 891) 403 120
Reconciliation to Tiso Blackstar Trading
Performance– Core EBITDA
Impairment of property investment - - - 6 541 6 541
Loss on disposal of listed investment - - - 2 714 2 714
Total Tiso Blackstar Trading Performance –
Core EBITDA 128 123 280 957 31,931 (28 636) 412 375
Notes to the summarised consolidated financial statements continued
for the year ended 30 June 2018
10. Segmental information (continued)
10.1 Reconciliation of net profit to Tiso Blackstar Trading Performance (continued)
Restated
Hirt & Broadcast and
Carter and reclassified
Media* Group Content Other* Total*
30 June 2017 R'000 R'000 R'000 R'000 R'000
Revenue 1 592 542 1 733 554 441 186 13 857 3 781 139
Segmental revenue including
inter-segmental spend 1 593 873 1 748 856 447 207 13 857 3 803 793
Inter-segmental revenue (1 331) (15 302) (6 021) - (22 654)
Cost of sales (1 217 330) (1 075 644) (313 912) (6) (2 606 892)
Gross profit 375 212 657 910 127 274 13 851 1 174 247
Operating expenses (285 990) (433 502) (98 055) (98 703) (916 250)
Depreciation, amortisation and
straight lining of leases (53 166) (71 589) (6 188) 20 590 (110 353)
Operating income 42 015 20 560 6 450 738 69 763
Operating profit / (loss) 78 071 173 379 29 481 (63 524) 217 407
Other (losses) / gains 17 076 8 843 (62 558) 79 290 42 651
Net profit / (loss) 95 147 182 222 (33 077) 15 766 260 058
Reconciliation to Segmental
EBITDA after other gains /
(losses)
Depreciation, amortisation and
straight lining of leases 53 166 71 589 6 188 (20 590) 110 353
Share based payment expense - - - 4 836 4 836
Total Segmental EBITDA after other
gains / (losses) 148 313 253 811 (26 889) 12 375 247
Reconciliation to Tiso Blackstar
Trading Performance – Core EBITDA
Profit on disposal of property (29 775) - - - (29 775)
Impairment of loans - - 25 270 - 25 270
Correction of segmental allocation - - 33 643 (33 643) -
Total Tiso Blackstar Trading
Performance – Core EBITDA 118 538 253 811 32 024 (33 631) 370 742
*Refer to note 2 and 4
10.2 Geographical information
30 June 30 June
2018 2017
R'000 R'000
South Africa 3 746 342 3 734 472
Rest of Africa 45 553 25 316
North America 15 134 15 296
Europe 5 557 6 045
Asia 606 10
Australia 126 -
Total revenue by geographic
location 3 813 318 3 781 139
11. Financial instruments and financial risk management
11.1 Financial risk factors
The Group has exposure to the following risks from its use of financial instruments:
credit risk; liquidity risk; and market risk (which comprise currency risk, interest
rate risk and market price risk).
The provisional summarised consolidated financial statements for the year ended
30 June 2018 do not include all financial risk management information and disclosures
required in the annual consolidated financial statements, and should be read in
conjunction with the Group's annual consolidated financial statements as at
30 June 2018. There have been no material changes in the Group's credit, liquidity
and market risk, or key inputs in measuring fair value since 30 June 2017.
11.2 Fair value estimation
The fair values of financial instruments that are accounted for at amortised cost have
been determined for both the current and prior years and approximate the carrying
amounts at the respective year ends due to either the short term nature of the
instrument or because it attracts a market related rate of interest.
IFRS 13 – Fair Value Measurement requires disclosures relating to fair value measurements
using a three-level fair value hierarchy. The level within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level input that
is significant to the fair value measurement. Assessing the significance of a particular
input requires judgement, considering the factors specific to the asset or liability. The
following table shows financial instruments recognised at fair value, categorised between
those whose fair value is based on:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or
liabilities;
Level 2 - Valuation techniques for which the lowest level input that is significant to
the fair value measurement is directly or indirectly observable; or
Level 3 - Valuation techniques for which the lowest level input that is significant to
the fair value measurement is unobservable.
Recurring fair value measurement of assets and liabilities
Level 1 Level 2 Level 3 Total
As at 30 June 2018 R'000 R'000 R'000 R'000
Financial assets
Financial assets
held for trading - - 1 112 1 112
Non-current assets
and liabilities
held for sale - 1 401 132 - 1 401 132
Total - 1 401 132 1 112 1 402 244
Level 1 Level 2 Level 3 Total
As at 30 June 2017 R'000 R'000 R'000 R'000
Financial assets
Investment property - - 12 674 12 674
Financial assets
held for trading 17 005 - 158 17 163
Non-current assets
held for sale - 1 500 000 - 1 500 000
Total 17 005 1 500 000 12 832 1 529 837
Transfers between levels
There were no transfers between levels during the current and prior years.
11.3 Valuation techniques
11.3.1 Level 2
Non-current assets and liabilities held for sale
The investments in KTH and Robor, and the CSI disposal group, are classified and
presented as non-current assets held for sale at 30 June 2018, and are carried at
the lower of carrying value and fair value less costs to sell (refer note 4).
Their fair values have been determined with reference to the anticipated value
expected to be realised on disposal.
11.3.2 Level 3
Investment property
The fair value of the investment property in the prior year was based on the
directors' valuation, which included straight lining of leases. The valuation
was performed annually by the directors and independently every three to five
years, and was based on available market information of similar properties in
the same condition and location.
Financial assets held for trading
Investments included in financial assets held for trading are not material and the
valuation is based on directors' valuation.
This announcement does not include the information required pursuant to paragraph
16A(j) of IAS34. This information is included in the full set of consolidated
financial statements which is available for inspection at Tiso Blackstar’s
registered offices and upon request.
12. Contingencies and guarantees
Tiso Blackstar together with one of its subsidiaries has a written cession in
securitatem debiti and pledge agreement with RMB and Standard Bank which operates
as a security cession in respect of the facility held.
Tiso Blackstar provided a guarantee limited to R50.0 million to a bank in respect
of financing facilities provided to CSI. Subsequent to year end, R50.0 million was
transferred to CSI as a short term, interest free equity loan repayable on transfer
of ownership of CSI. The Company was released from its guarantee of R50.0 million on
transfer of these funds.
Tiso Blackstar has a guarantee limited to R10.0 million to a bank for the obligations
of CSI. The Company will be released from this guarantee on disposal of CSI.
Tiso Blackstar provided a guarantee limited to R160.0 million to a bank for the
obligations of Robor. The Company will be released from this guarantee on the
disposal of Robor.
During the year, the Group sold a 3.6% interest in KTH for R197.9 million. These
sale proceeds were funded from an investment KTH held in a company. As part of this
sale, RMB issued a guarantee for R225.4 million to the company which has recourse
to Tiso Blackstar.
During the prior year, Tiso Blackstar provided a guarantee to a bank in respect of
a mortgage bond taken out by one of its property subsidiaries to acquire a property
for the amount of R11.6 million. The shares held in Fantastic were sold in March 2018
and Tiso Blackstar was released from the guarantee.
There have been no significant changes to contingencies from what was disclosed in
the annual consolidated financial statements for the year ended 30 June 2017.
13. Comparatives
Certain comparative figures have been restated and/or reclassified as disclosed in
notes 2 and 4.
14.Changes in directors and directorships
The capacity of Andrew Bonamour changed from a non-executive director to chief
executive officer with effect from 17 July 2017.
Richard Wight resigned from his position as a non-executive director effective
20 July 2017.
15. Subsequent events
The disposal processes of both CSI and Robor are progressing well and finalisation
of these exits is expected in the next few months. Subsequent to year end, an amount
of R50.0 million was transferred to CSI as a short term, interest free equity loan
repayable on transfer of ownership of CSI. The Company was released from its guarantee
of R50.0 million on transfer of these funds. The shareholders of KTH have appointed
an independent party to advise on the most optimal approach to meet the shareholders
desired objectives. It is anticipated that the KTH implementation plan will be finalised
and approved by KTH shareholders shortly with execution well under way, if not completed
by 30 June 2019. STS was sold during August 2018 for R21.5 million.
16. Related parties
There have been no significant changes to related parties from what was disclosed in
the consolidated annual financial statements for the year ended 30 June 2017.
This announcement contains inside information for the purposes of Article 7 of Regulation
(EU) 596/2014.
London, United Kingdom
26 September 2018
For further enquiries, please contact:
Tiso Blackstar Group SE Leanna Isaac +44 (0) 20 7887 6017
JSE Sponsor: One Capital Sholto Simpson +27 11 550 5000
Date: 27/09/2018 09:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
