|Contribution to headline earnings||30 June
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 (Momentum Metropolitan) and Servest Group Proprietary Limited.
|FINANCIAL HIGHLIGHTS||Year ended
30 June 2023
|Operating profit||1 033||637.9|
|Headline earnings||1 005||455.2|
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 amounted to R437 million (2022: R80 million).
KTH’s attributable earnings for the year amounted to a profit of R949 million (2022: R27 million) due to the following:
- Revenue was up 9% when compared to the prior year.
- Successfully concluded the disposal of Actom resulting in the derecognition of the investment and recognising of a profit from discontinued operations of c.R42 million.
- Income from equity accounted investments for the year was R256 million largely driven by results accounted from Momentum Metropolitan of R260 million including Kagiso Media associates of R29 million offset by Servest equity accounted losses.
- Positive fair value adjustments for the year were recognised on Momentum Metropolitan of R99 million and waiver of Actom debt of c.R520 million.
- Impairment on the investment in Servest of R82 million was recognised in the current period.
KTH’s headline earnings for the year increased to R1 billion from R181 million in the comparative period due to:
- Kagiso Media revenue was 6% above the comparative period at R1.34 billion (2022: R1.26 billion) and revenue from Lupo Bakery Proprietary Limited (Lupo) increased by 23% above the comparative period at R406 million (2022: R330 million).
- The current economic trading environment had a significant impact on the operations of Lupo with rising costs of packaging, increased costs of diesel and paraffin, a spike in the price of wheat and an overall increase in material costs for all general lines diluting margins and this is reflected in the raw materials and consumables line. Urban Brew Studios Proprietary Limited revenue mix impacted its gross margin due to the increase in location shows versus studio shows which delivered a lower gross margin.
- KTH recognised a positive fair value movement on the preference share investment held in Momentum Metropolitan (R99 million) driven by the increase in the Momentum Metropolitan share price (2022: loss of R152 million). As part of the conclusion of the disposal transaction in Actom, Nedbank waived its right to receive payment of the remaining balance of the amounts outstanding under the term loan agreement. This resulted in KTH recognising a debt forgiveness gain of c.R520 million.
- KTH’s income from equity accounted investments increased by 1% from R232 million to R234 million largely driven by positive equity accounting recognised on its investment in Momentum Metropolitan (R260 million), Kagiso Media Radio associates (R29 million) and Aurora Wind Power Proprietary Limited (R13 million). This was offset by an equity accounted loss recognised on Servest for the period of R69 million.
- Net finance costs for the year were R39 million (2022: R107 million). Interest earned on cash balances was positively impacted by improved returns. Finance costs were negatively impacted by an increase in the prime rate during the period. The settlement of the debt associated with the Actom investment will result in a reduction of group finance costs going forward.
KTH paid a dividend of R37 million to shareholders in November 2022 and R43 million in April 2023.
Prescient China Equity Fund (Prescient)
Prescient, which uses a systematic, quantitative approach to seek long-term capital growth, invests in listed stocks in the Chinese market and is benchmarked to the Shanghai Shenzhen CSI 300 index.
Asia Partners I LP and Asia Partners II LP (Asia Partners)
Asia Partners makes private equity and private equity-related investments in technology or technology-enabled companies focused primarily on the Southeast Asia region.