Tiso Blackstar income down 21%

Higher operating costs and an increase in net finance costs affect company’s performance

THE NEW look Tiso Blackstar Group, formerly known as Blackstar, announced last week that its total comprehensive income fell 21 percent to R146 million last year from R184m in 2013.

The decrease in income can be partly attributed to higher operating costs and an increase in net finance costs. The company’s total income fell to R245m last year down by 6 percent from R261m in 2013. Blackstar said that its intrinsic net asset value (NAV) increased by 23.3 percent over its latest financial year to R1.6 billion.

The group last week declared an 11.9c after tax dividend as it at the same time sought to use its assets base to look for other acquisitions, the group said in its results for the year to December 2014.

The group is in the process of buying Tiso Investment Holdings’s 22.9 percent stake in Kagiso Tiso Holdings for R2.06bn and buying out shareholders in Times Media Group (TMG). At the moment the it owns 32.5 percent of TMG.

“We were also able to arrange two large transactions, which are in the process of being concluded in 2015, that will not only enhance Blackstar’s scale and profitability but also put the group on a new growth path,” the group said.

“The acquisition with Tiso Investment Holdings and the acquisition of the remaining 67.5 percent of Times Media Group that Blackstar doesn’t already own, will herald a new era for the new Tiso Blackstar Group,” Blackstar added.

The acquisitions will substantially increase Blackstar’s scale and intrinsic NAV to about R4.5bn without materially adding to the head office costs of the group.

“The new combined group called Tiso Blackstar will have a London office and focus on PanAfrican investment opportunities to benefit from the longterm demographic trends that will grow Africa’s economies over the next decades.

“The underlying, marketleading assets of Tiso Blackstar, predominantly based in South Africa, give the company a solid foundation for its growth aspirations as it seeks to become the capital partner of choice to businesses growing in Africa,” the group said.

The group, which has nearly tripled its asset base, is better placed to acquire assets in its focus areas of financial services, media, property and fastmoving consumer goods.

The group debt reduced from R175m, when initially raised in February 2014 to finance an additional 7.3 percent interest in TMG, to R72.7m. TMG made up 62.8 percent of the Blackstar intrinsic NAV as at December 31, 2014.

The two-step tie-up created a substantially larger entity, with investments beyond media and a controlling black empowerment shareholder.

During the year, Blackstar realised R36.1m from the dis- posal of its investment in Cadiz Holdings, successfully generating a return of 39 percent on funds invested.

The group said its steel interests, Stalcor and Global Roofing Solutions (GRS) which were merged into one cost effective streamlined business Consolidated Steel Industries performed way above expectations. “GRS in particular is growing nicely into Africa where we now generate close to 40 percent of the total GRS turnover,” the group said.

The company’s shares on the JSE have been suspended since December 8, 2014.