– Headline earnings per share +38,7%
– Earnings per share +33,5%
– Profit before tax +21,2%


See PDF under Annual Financial Section


See PDF under Annual Financial Section


See PDF under Annual Financial Section


See PDF under Annual Financial Section


See PDF under Annual Financial Section

The overall improvement in headline earnings of the group to R531 million for the six-month period under review (2011: R380 million) is pleasing. Increased contributions to headline earnings from Tsogo Sun, as a result of an increase in gaming win as well as hotel occupancies, and our media assets, predominantly through higher advertising and subscription revenue, were well supported by the results of HCI Coal and Vukani Gaming. Both these assets have increased their underlying profitability in the current period and are significant generators of cash for the group. New developments by Galaxy Bingo have been successful to date and the company has reported its first headline profit since being acquired by the group. Our investment in Australia also produced its first headline profit after the reverse acquisition of Oceania Capital Partners in February of this year. Your directors remain confident in the underlying quality of these assets and their prospects going forward.

Our difficulties with turnarounds in Seardel, Formex and KWV have not yet resulted in positive earnings coming through, though we are confident Seardel is well on track for that to happen in future periods. Turnaround activity at KWV remains at a high input level and we are happy with the progress to date despite the losses the company has shown in the current period.

Progress at Formex has been disappointing and we have brought in the management team at Seardel to assist, given their experience with operating manufacturing plants with tight margins and powerful customers.

Montauk’s results largely followed the very low commodity prices for natural gas in the USA in the period under review. Nevertheless, the forward curve on Nymex continues to tick steadily upwards over the next two years and Montauk should not experience results as poor as the current period going forward.

Labour issues
South Africa has experienced quite volatile conditions in relation to labour disputes in the period under review.
While the group is a large employer of labour and operates across a large number of industries, it weathered a difficult period with little disruption from its own staff. Strike action was limited to a partial stay away from work in the home textiles area, affecting a few hundred workers. While this affected the performance of that business unit for the period under review, it is not expected to have any ongoing negative effect. In relation to the group’s performance overall, this was insignificant.

The transport strike disrupted our supply of coal to Eskom during September, which had some effect on our half year results for the coal mining operation but we have already caught up a significant portion of this interruption in the flow of coal and do not expect the full year’s results to show any adverse effect. Likewise, we had fears that delivery of our first significant export order at Seardel might be delayed by the backlogs that developed at the port, but managed to bypass the problem without incident.

Listing of Niveus
During the period under review we successfully listed Niveus Investments Limited as a separate company
holding non-casino gaming assets and the group’s interest in the liquor company, KWV. This listing was
achieved by the group disposing of 45% of Niveus to HCI shareholders in exchange for buying back and
cancelling approximately 4 million HCI shares. The share has performed strongly on the exchange, rising from R7,68 to above R11 a share currently. This gives a sense of the correctness of our decision to allow the market direct access to these smaller companies in HCI that appeared somewhat hidden in the larger mix of assets held. HCI continues to hold 55% of Niveus.

Investment activity
We increased our consolidated holding in KWV somewhat, raising our stake to just below 40%. Likewise,
Tsogo Sun continued to clean up minorities in the Suncoast Casino and is currently making an offer to buy
out all minorities remaining there. It also purchased the Southern Sun Hyde Park hotel. Our media subsidiary rebranded the eNews channel as eNCA so as to allow it an international footprint and launched eNCA on the Sky bouquet out of London. HCI’s property division started building two new shopping malls at The Point (Cape Town) and at a newly acquired property in Upington. Seardel likewise commenced the development of its industrial property at Mobeni (Durban). These developments are for rent to tenants outside the group.
Vukani Gaming opened its doors in Swaziland. Apart from completing upgrades to its facilities in Gauteng,
Galaxy Bingo has opened new premises in Amanzimtoti. HCI Coal has issued tenders to complete capital
developments required at Mbali mine, which should come into operation from April next year. Montauk is
likewise in the process of constructing a 5 megawatt electric facility at its landfill site at AEL in Tulsa which should come on line about the same time.

During the period under review, Ms B Hogan was appointed to the board of HCI as an independent non-
executive director with effect from 29 August 2012.

The directors of HCI have resolved to declare ordinary dividend number 46 of 24 cents (gross) per HCI share.

The salient dates for the payment of the dividend are as follows:

Last day to trade cum dividend
Commence trading ex dividend
Record date
Payment date



Friday, 7 December 2012
Monday, 10 December 2012
Friday, 14 December 2012
Tuesday, 18 December 2012


No share certificates may be dematerialised or rematerialised between Monday, 10 December 2012 and Friday, 14 December 2012, both dates inclusive.

In terms of the new Dividends Tax (“DT”) effective 1 April 2012, the following additional information is disclosed:
– The local DT rate is 15%.
– The total STC credits utilised as part of this declaration amount to R30 946 531.20.
– The number of ordinary shares in issue at the date of this declaration is 128 943 880.
– The total STC credits utilised per share amount to 24 cents per share.
– The dividend to utilise for determining the DT due is Nil cents per share.
– The DT amounts to Nil cents per share.
– The net local dividend amount is 24 cents per share for all shareholders who are not exempt from the DT.
– Hosken Consolidated Investments Limited’s income tax reference number is 9050/177/71/7.

In terms of the DT legislation, any DT amount due will be withheld and paid over to the South African Revenue Service by a nominee company, stockbroker or Central Securities Depository Participant (collectively “regulated intermediary”) on behalf of shareholders. All shareholders should declare their status to their regulated intermediary as they may qualify for a reduced DT rate or exemption in future.

For and on behalf of the board of directors


MJA Golding
Executive Chairman



JA Copelyn
Chief Executive Officer


Cape Town
19 November 2012

Basis of preparation and accounting policies
The results for the six months ended 30 September 2012 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), the disclosure requirements of IAS 34, the AC 500 series of interpretations as issued by the Accounting Practices Board (“APB”), the requirements of the South African Companies Act, 2008, and the Listings Requirements of the JSE Limited. The accounting policies of the group are consistent with those applied for the year ended 31 March 2012. As required by the JSE Limited Listings Requirements, the Group reports headline earnings in accordance with Circular 3/2012: Headline Earnings as issued by the South African Institute of Chartered Accountants.

The comparative results of a previous subsidiary and current associate, Tsogo Sun Holdings Limited (“TSH”), have been restated as follows:

In terms of IAS 19: Employee Benefits, a provision of R88 million relating to long service awards was recognised retrospectively in the statement of financial position of TSH as at 31 March 2011 for the reporting period ended 31 March 2012.

The impact of this restatement on the results presented by HCI for the six months ended 30 September 2012 is that opening equity attributable to equity holders of the parent has been decreased by R5,5 million in the prior corresponding reporting period.

These financial statements were prepared under the supervision of the financial director, Mr T.G. Govender, B.Compt(Hons).

Discontinued operations and non-current assets held for sale
Discontinued operations as disclosed in the group income statement for the period under review relate to the following:
– the door module and pulley division of Formex Industries (Pty) Limited; and
– certain clothing divisions of Seardel Investment Corporation Limited.

The non-current assets held for sale, as disclosed in the group statement of financial position, relate to the following:

– the remaining assets of the pulley division of Formex, the operations of which had ceased in the year to March 2010; and
– certain assets of the Seardel group which have been committed to being disposed of following the
closure of the related divisions.

Comparative figures in the group income statement have been restated to reflect any changes to the above.

Group income statement
The group results reflect an overall increase of 40% in headline earnings when compared to the prior comparative period. Basic earnings attributable to HCI shareholders increased by 34%.

Group income has grown by 4.9% when compared to the prior period. Significant increases were recorded in
media and broadcasting mainly due to continued subscription revenue growth (up 16%), with notable increased contributions from mining (up 11%), limited payout gaming (up 29%) and transport (up 9.8%). Decreases were recorded in information technology (15%), vehicle component manufacture (28%) and natural gas (15%) reflecting the difficult trading conditions in these industries.

Despite notable increases in EBITDA from media and broadcasting and limited payout gaming, decreases in
EBITDA recorded by vehicle component manufacture and natural gas resulted in group EBITDA growing by
2% when compared to the prior period. Natural gas was severely affected by the decline in commodity prices during this period (down 100%). Mining was also negatively affected by the recent labour unrest and transport strikes resulting in delays in the supply of coal to Eskom.

Profit from associates and joint ventures for the period comprises mainly the share of the group’s equity-accounted earnings of its 41,4% interest in Tsogo Sun Holdings Limited which itself recorded growth in headline profits of 39% when compared to the prior period.

Investment surplus comprises of the profit on the disposal of the interest in African Unity Insurance.

Segmental results
Media and broadcasting recorded a modest 4% growth in headline profits when compared to the prior period.
During the period under review, HCI increased its interest in the offshore media holding company Longkloof Limited from 64% to 80%. Longkloof presently holds many start up businesses which recorded losses of R20 million (2011: R6 million). Accordingly the growth in headline profits in this sector have been somewhat reduced due to the increased portion of these start up losses.

Limited payout gaming continues to perform well, recording good growth in EBITDA and headline profits.
The comparative headline profit of R35 million excluded R11,8 million of holding company interest which was eliminated on consolidation whilst the current year figure of R34,8 million is net of interest on bank borrowings.
Headline profits for casino gaming is up 39% in comparison to the prior period due to the improved earnings from the Tsogo Sun Group.

Natural gas recorded increased headline losses for the period mainly due to the weak commodity prices and
the weakening of the R/$ exchange rate resulting in larger losses being translated.

Mining recorded a higher increase in profit before tax (53%) than in headline earnings (15%) in comparison to the prior period due to an increased deferred tax charge of R7 million.

Beverages represents the group’s share of its equity accounted headline losses from its liquor company, KWV.

Properties’ headline earnings included an effective R45 million expense in the prior period, that related to the settlement of a dispute with SARS, and net rental income relating to the Pan African Parliament building on the Gallagher Estate premises, both of which have not been included in the current period’s result.

Group statement of financial position and cash flow
The group’s overall financial position remains strong with the major businesses still generating strong cash flows.

Group long-term borrowings at 30 September 2012 comprise borrowings of R346 million at head office level
and R836 million in operating subsidiaries. Included in current liabilities is R240 million of preference share debt and R360 million of short-term facilities at head office level that is in the process of being refinanced into longer-term borrowings.

Cash flow from operating activities shows a decrease compared to the prior corresponding period predominantly due to the investment of R104 million in programming rights by the group’s media interests in the period under review. The group invested R409 million in property, plant and equipment, R67 million in distribution rights and other intangible assets and R195 million in new and existing investments during the period under review. Also included in cash flow from investing activities is the dividend of R182 million received from Tsogo Sun Holdings.
Funding was raised in the group’s transport, property and media interests.