- 2015-11-19 03:53:24 PM
Hosken Consolidated Investments Limited released its unaudited condensed consolidated interim results for the six month period ended 30 September 2015.
Revenue, including net gaming win, increased by 87.5%. Excluding Tsogo Sun, revenue increased by 5.6%. Revenue in respect of media and broadcasting includes revenue of R1 146 million from Sabido Investments and R43 million contributed by Sunshine Coast Broadcasters in Australia. Sabido Investments recorded a decrease in revenue of 7% as a result of a decrease in advertising revenue.
New scheduling and programming since March 2015 have lead to the regaining of previously lost market share, but increased advertising revenue is yet to occur. Subscription and pay television revenue increased marginally.
Net gaming win from non-casino gaming increased by 15% with the number of active machines in Vukani increasing by 3.4% and average GGR per machine by 3.2%. Revenue in respect of casino gaming and hotels was recognised for one month only in the prior period as compared to the whole current period.
Transport managed to increase revenue by 5% despite reduced passenger numbers experienced in the last two months of the period. Properties' revenue increased by 57% due to additional revenue from completed property developments. Revenue in respect of mining decreased by 14% as a result of a 28% reduction in sales volumes at the Palesa colliery. This was a result of difficulties with coal qualities mined and inconsistent results received from Eskom laboratories in the period.
The Mbali colliery sales volumes increased by 32%, but these gains were off-set by a 6% decrease in average net selling price per ton as compared to the prior period. Branded products and manufacturing increased revenue by 6% as a result of a low base in the prior period for textiles and chemicals. Other includes R151 million in revenue from Crimsafe Security Systems in Australia, which was acquired effective 31 March 2015.
EBITDA for the group increased by 139.9%. Excluding Tsogo Sun, EBITDA would have decreased by 10.8%. EBITDA from media and broadcasting decreased by 47% due to losses in the e.tv multi-channel and Platco businesses. These were compounded by a reduction of profits from the e.tv traditional business following reduced advertising revenue and increased investment in new programming. EBITDA from non-casino gaming increased with gains in Vukani assisted by similar gains in Galaxy Bingo.
Casino gaming and hotels is not comparable due to its inclusion for only one month in the prior period. Transport managed to increase EBITDA by 25%, as a result of lower fuel prices aided by reduced overhead spend. Beverages' EBITDA decreased by 80% following an increase in forex losses. EBITDA for properties increased by 50% to R68 million due to reasons mentioned above. Mining EBITDA decreased by 57% to R34 million, mainly as a result of the cost of reworking failed stockpiles and additional mining costs associated with the coal quality issues encountered in the pit at Palesa colliery.
The Mbali colliery EBITDA was 40% lower due to reduced export prices. Branded products and manufacturing EBITDA from continuing operations increased by 86%. Increased revenue in the textile division and higher margin in Seartec aided the increase in EBITDA. EBITDA losses from other reduced significantly following a decrease in losses in HCI Australia's non-media businesses.
Profit before tax decreased by 60.2%. Profit before tax for media and broadcasting reduced by 60%, significantly for the same reasons as mentioned above. Sunshine Coast Broadcasters contributed profits that reduced by 21%. Non-casino gaming's profit before tax was stagnant as a result of a 30% increase in depreciation following the roll-out of sites in Galaxy Bingo and a 68% increase in finance costs following increased utilisation of facilities. The contribution by casino gaming and hotels decreased by 66% to R1 101 million. A fair value adjustment to the investment in associate of R2 757 million was recognised prior to the consolidation of Tsogo Sun in the prior period.
Due also to the equity accounting of Tsogo Sun for five months in the prior period, the profit before tax is not comparable to the current period. Information technology's profit before tax ended 14% below the prior period. This was the result of increased bad debts which were marginally off-set by reduced overhead spend. Beverages' profit in the prior period turned into a loss of R9 million, significantly following the increased forex losses and lost sales volumes on brandy following reduced price discounts.
Properties' increase in EBITDA was all but eliminated by increased finance costs following the completion of The Point development. Profits relating to mining increased slightly, with capitalised box-cut expenditure in the amount of R43 million being depreciated for the Mbali colliery in the prior period and not recurring in the current period. This resulted in the EBITDA reduction being significantly off-set. Other profit before tax was significantly impacted by R47 million in investment income earned on the Ithuba funding arrangements for the first time in the current period and increased profitability in the group's Australian non-media operations. Head office finance costs increased by R26 million following the issue of preference share borrowings in March and July 2015.
Discontinued operations' losses decreased by R61 million. The results of Sabido Investments' offshore operations have been reclassified to discontinued operations in the income statement in the prior comparative period. These include a R5 million profit on disposal of associate in the current period and an impairment of R27 million in the prior comparative period, both of which relate to The Africa Channel. Losses in respect of the group's natural gas business that was unbundled by the group in December 2014 were included in the prior comparative period's discontinued operations.
Headline earnings increased by 27%. Non-casino gaming recorded a decrease of R6 million, with an increase in taxation reducing profitability. Casino gaming and hotels recorded an increase of 22% in headline earnings. Included in Tsogo Sun's headline earnings in the prior period was a R118 million share-based payment expense, which did not recur and which impacted its contribution to the group's earnings by R49 million.
Further factors contributing to increased earnings of casino gaming and hotels are the closure for renovation of certain hotels and the Silverstar casino in the prior period. It is important to note that the final purchase price allocation in respect of the Tsogo Sun acquisition has given rise to additional depreciation and amortisation, reducing contributed headline earnings by R18 million in the current period, as opposed to only R3 million in the prior comparative period. Excluding this adjustment headline earnings for the group would have shown an increase of 31%. Other headline losses reduced following increased profitability of the group's Australian non-media operations, investment income earned on the Ithuba funding arrangements and reduced head office overhead spend.
Hosken Consolidated Investments is a JSE listed black empowerment investment holding company.