Page 44 - Stellar IAR2015

REPORT OF THE BOARD OF DIRECTORSTO THE SHAREHOLDERS OF STELLAR CAPITAL PARTNERS LIMITEDThe directors have pleasure in presenting the annual nancial statements of the Company and the Group for the year ended 30 November 2015.NATURE OF BUSINESSStellar Capital Partners Ltd is a JSE listed investment holding company. Stellar Capital has appointed Manco as its dedicated investment manager to manage the portfolio of the Company in accordance with Section 15 of the JSE Listings Requirements. The Manco, in terms of its management agreement with the Company, acts on behalf of the Company in sourcing, negotiating, concluding and executing investment opportunities for the Company. The Company holds a diversi ed portfolio of investments spanning the industrial, engineering and communications, nancial services and mining and support services sectors.CORPORATE ACTIVITY DURING THE YEAR AND UP TO THE DATE OF THIS REPORTDuring the year, Stellar Capital undertook a number of corporate actions, the details of which are set out below:ESTABLISHMENT OF INVESTMENT ENTITYOn 16 January 2015, shareholders approved:• the change of the Company’s name;• the transfer of the Company’s listing to the “Investment Companies” sub-sector of the JSE;• a R150 million speci c issue for cash;• the disposal of a 100% interest in Andrews Kit (Pty) Ltd (Contract Kitting) and Structured Connectivity Solutions (Pty) Ltd;• the acquisition of an initial portfolio of investments comprising 30% of Tellumat (Pty) Ltd, 19.26% of Digicore Holdings Ltd,an additional 30.32% of Mine Restoration Investments Ltd and an additional 21.77% of Goliath Gold Ltd.• All corporate actions were unconditional on 16 January 2015, save for the disposal of Contract Kitting which becameunconditional on 9 February 2015 and the name change which came into e ect on the JSE on 2 April 2015.CADIZ ACQUISITIONOn 7 April 2015, Stellar Capital acquired a 16.45% investment in Cadiz Holdings Ltd for a total consideration of R45.3 million. On 15 October 2015, Stellar Capital increased its e ective holding in Cadiz to 45.99% by way of a scheme of arrangement in terms of s114 of the Companies Act. In terms of the scheme, o eree shareholders were o ered 5 Stellar Capital shares at R2.00 per share for every 8 Cadiz shares at an e ective price of R1.25 per Cadiz share alternatively such o erees could elect to remain shareholders in the unlisted Cadiz business by accepting 1 share in Friedshelf 1678 Ltd (Bidco) for each 1 Cadiz share held. Stellar Capital issued 41 912 707 ordinary shares at R2.00 per share in settlement to o eree shareholders. The JSE listing of Cadiz was terminated on 3 November 2015. On 30 November 2015, Stellar Capital announced its intention to further increase its e ective stake in Cadiz (through Bidco) to 85.03% for a total consideration of R114.1 million (which transaction is still conditional at the date of this report) and on 21 January 2016 announced the acquisition of a further 12.18% investment in Cadiz for an amount of R35.2 million which acquisition became unconditional on 27 January 2016.DIGICORE DISPOSALOn 15 September 2015, Stellar Capital disposed of its 19.26% investment in Digicore Holdings Ltd for a cash consideration of R209.8 million. Per paragraph 5.4.3 of the acquisition circular which was posted to Stellar Capital shareholders on 15 December 2014, and outlined the terms of the initial acquisition of Stellar Capital’s Digicore investment at an entry price of R2.50, an upward purchase price adjustment was required in respect of 38 692 770 of the Digicore shares originally acquired in the event that an irrevocable o er was made to acquire such shares on or before 16 July 2015 at a price above R2.50 (Adjustment). As a result of the Adjustment, a further 36 758 132 shares were issued at R2.00 per share on 5 October 2015.TORRE ACQUISITIONWith e ect from 26 October 2015, Stellar Capital acquired a 34.62% investment in Torre Industries Ltd for a total consideration of R912.6 million settled by way of a R132.4 million cash payment and the issuance of 390 086 494 Stellar Capital shares at R2.00 per share.40 | STELLAR CAPITAL PARTNERS