Tiso Blackstar on growth track
Tiso Blackstar is poised for acquisitions as money from the sale of its stake in Kagiso Tiso starts rolling in.
Once it gets funding agreements and approval from the competition authorities, the R1.5bn in proceeds will "almost entirely" cut debt at the media company, according to CEO Andrew Bonamour, speaking after the release of full-year numbers on Wednesday.
Net debt for the period under review was steady at R1.38bn. Bonamour said the first year’s results as an operating company "look a bit messy" but when the company finally sold its embattled steel divisions — Robor and Consolidated Steel Industries (CSI) — "the last remnants of our private equity past" will be out of the numbers.
On a consolidated basis, turnover grew to R9.1bn from R8.1bn previously.
The media division — which owns Business Day, Sowetan and Sunday Times, among other titles — grew earnings before interest, tax, depreciation and amortisation (ebitda) by 25.8% to R131.2m, on revenue of R2bn. Overall, consolidated ebitda rose 30% to R467.6m, although on a post-tax basis, Tiso Blackstar made a loss of R15.45m for the year. Still, the board has recommended a final dividend of 4.6c a share, as well as a special dividend of R40m to be paid to shareholders on completion of the Kagiso Tiso sale.
Bonamour said that after cutting the cost base Tiso Blackstar had also managed to create the right business model for the media division. "We’ve got a commercial model that works, it makes money and my view is really simple: it’s about what people want to read so you have got to give them good content."
Tiso Blackstar is pumping money into digital media and recently prevailed on the JSE not to scrap strictures requiring companies to publish their results in local newspapers.
The BusinessLIVE subscription paywall has grown media’s subscription base by more than 10% in less than three months.
Retail marketing business Hirt & Carter, which Bonamour described as the "jewel" in the group, lifted earnings to R245m from R235m the year before, notwithstanding pressure on the retail sector. "In its simplest form, Hirt & Carter work with marketers. Retailers still have to spend, they still have to market their products – and when they go overseas [like Spar], Hirt & Carter go with them.
"Some of the big players in the US have approached us to use our software because it’s quite far advanced compared to what you can find on the international circuit."
Bonamour said trading had been "good" in the first three months of the new financial year.
As for its steel assets, Robor, which manufactures steel pipes, slid to an ebitda loss of R30m. CSI, which specialises in roofing, grew earnings 63% to R91m, and Bonamour said the business was now "sellable".
"It’s the largest business in terms of market share in SA in roofing and stock. We’ve been approached by numerous people so I’m confident we’ll sell that soon.
"Robor is going to take longer because we have to fix a few things. But in our view the steel market needs to consolidate so we’re hoping that Robor can be sold into some of that consolidation," he said.
The share price closed 3.4% higher at R9.20.