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 profit of R80 million (2021: a loss of R182 million). The increase in KTH’s headline earning for the year was driven by a recovery of the Kagiso Media business units from the prior years impact of Covid-19 and improved share of results from associates, largely driven by Momentum Metropolitan experiencing strong growth and less severe impact of Covid-19 on earnings, and equity accounting that was caught up as a result of the reclassification of the investment in Aurora Wind Power Proprietary Limited back to investments in associates from IFRS 5 due to the disposal not being approved by the regulators. This was offset by negative fair value adjustment on the preference shares held in Momentum Metropolitan driven by the decrease in share price over the financial year.

Net finance costs for the period were R106 million (2021: R102 million).

KTH’s attributable earnings for the year amounted to a profit of R47 million (2021: a loss of R426 million) due to the following:

• Revenue performance for the group improved compared to the prior year, driven by the Kagiso Media operating businesses showing recovery from Covid-19. This resulted in revenue being up 23% and Lupo Bakery Proprietary Limited achieving revenue growth of 18%.
• Share of results from equity accounted investments increased to R240 million profit (2021: a loss of R111 million) as a result of improved results from associates, largely driven by Momentum Metropolitan, and a recovery seen in Kagiso Media radio associates.
• Significant impairments were recognised at Servest due to a decline in the valuation as a result of changes made to the peer set and increase in the WACC driven by an increase in the risk free rate.
• The negative fair value adjustment on investments relates to the preference shares held in Momentum Metropolitan, whose share price has decreased.

In November 2021, KTH concluded the disposal of its majority interest in Kagiso Asset Management. At 30 June 2021 this investment was classified as non-currents assets held for sale and discontinued operations.

At 30 June 2021, the investment in Aurora was classified as non-currents assets held for sale and discontinued operations. In December 2021, regulatory approval was not met, and the transactions did not proceed. This investment was reclassified as an associate.

At 30 June 2022, the investment in Imvelo Concession Company Proprietary Limited and Actom Investment Holdings Proprietary Limited were classified as non-currents assets held for sale and discontinued operations.