Diversified investment vehicles

Profile:

KTH is an established black economic controlled company with a focus on investment banking services, media and strategic investments. Its major investments include Kagiso Media Limited, Momentum Metropolitan Holdings Limited and Servest Group Proprietary Limited.

Kagiso Tiso Holdings Proprietary Limited (KTH)

KTH is a leading black-owned investment holding company with a strong and diversified asset portfolio comprising a mix of listed and private investments in the media, financial services, industrial, services and healthcare sectors.

KTH’s contribution to Remgro’s headline earnings for the year amounted to a loss of R182 million (2020: loss of R164 million). The decrease in KTH’s headline earning loss was mainly because of negative fair value adjustments on the shareholder loans to Actom Investment Holdings Proprietary Limited (Actom) (R159 million) and preference share investment held in Actom (R275 million). This was offset by a positive adjustment on preference shares held in MMH (R60 million) driven by the improved share price. The increase in loss to Remgro is due to Remgro effective holding increasing from 36.3% to 43.5%.

Net finance costs for the period were R102 million (2020: R106 million).

KTH’s attributable earnings for the year amounted to a loss of R426 million (2020: loss of R595 million) due to the following:

• Kagiso Media revenue for the period was negatively impacted by the underperformance of the advertising market and delays in start of the academic year.
• Share of results from equity accounted investments increased to R109 million loss (2020: R55 million loss), mainly due to a loss of R150 million from Servest. Covid-19 restrictions continued to negatively impact Servest as some of the clients reduced the number of services procured from Servest or cancelled contracts. Servest’s results were further impacted by goodwill impairments recognised relating to its cleaning, office services and landscaping subsidiaries. This was offset by positive results from MMH that contributed R26 million for the current period in comparison to the previous year’s R10 million and Kagiso Media’s radio associates contributing R20 million compared to the previous period’s R19 million.
• Significant impairments were recognised in the previous period on Servest, Kaya FM Proprietary Limited (Kaya FM) and goodwill relating to Urban Brew Studios Proprietary Limited and Mediamark Proprietary Limited during the period totalling R215 million. For the current period an impairment reversal was recognised on Servest of R85 million and Kaya FM of R15 million due to the fair value exceeding the carrying value dropping due to historical impairments recognised on these investments. This was offset by the impairment of the investment in Imvelo.
• Net loss on investments of R374 million was mainly driven by negative fair value adjustments on the shareholder loans to Actom (R159 million) and preference share investment held in Actom (R275 million). This was offset by a positive adjustment on preference shares held in MMH (R60 million) driven by the improved share price.

During the period, KTH concluded two buyback transactions with shareholders. The details of these transactions are as follows:

• Tiso Blackstar Holdings SE concluded a transaction with KTH that involved their shareholding being sold to Tiso Investment Holdings Proprietary Limited (TIH) for R850 million. TIH entered into a sale of shares agreement with a current shareholder, Kagiso Capital Proprietary Limited, whereby it sold 42 256 shares held in KTH for R200 million. KTH bought back and cancelled the remaining 179 590 shares from TIH for R650 million in exchange for its wholly owned subsidiary KTH Africa Investments (investment structure that holds the Fidelity Bank (Ghana) Limited investment). This transaction was concluded and implemented on the 13 November 2020.
• KTH concluded a buyback transaction through its wholly owned subsidiary Cardona Investments 428 Proprietary Limited (RF) with a minority shareholder whereby KTH bought back and cancelled 1 575 shares for R11 million.