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Audited Condensed Results For The Year Ended 31 December 2012 And Cash Dividend Declaration
SABVEST LIMITED
Incorporated in the Republic of South Africa
Registration number 1987/003753/06
Sabvest or the group or the company
ISIN: ZAE000006417 ordinary shares
ISIN: ZAE 000012043 N ordinary shares
Share code: SBV ordinary shares
Share code: SVN N ordinary shares
AUDITED CONDENSED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
AND CASH DIVIDEND DECLARATION
HIGHLIGHTS
Headline Earnings per share 300,9 cents increased by 68,9%
Dividends per share 32 cents increased by 33,3%
Intrinsic Net Asset Value per share 1 855 cents increased by 18,7%
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
as at 31 December 2012
31 Dec 31 Dec
2012 2011
Audited Audited
R000 R000
Non-current assets 671 873 563 755
Property, plant and equipment 971 616
Share trust receivables 2 759 4 131
Investment holdings 668 143 559 008
Associates 437 693 403 072
Long-term investments 230 450 155 936
Current assets 64 304 18 385
Finance advances and receivables 22 061 5 943
Other financial instruments 7 727
Short-term investments 38 489 2 363
Cash balances 3 754 2 352
Total assets 736 177 582 140
Ordinary shareholders equity 665 027 517 323
Non-current liability 54 494 49 417
Interest-bearing debt 40 000 40 000
Deferred tax liability 14 494 9 417
Current liabilities 16 656 15 400
Interest-bearing debt 8 697 7 915
Accounts payable 7 959 7 485
Total equity and liabilities 736 177 582 140
Shareholders equity with investments
in associates at intrinsic value 854 652 721 520
Net asset value per share cents 1 444 1 120
Net asset value per share with
investments in associates at
directors valuation (intrinsic
value) cents 1 855 1 563
Number of shares in issue less held
in share trust/treasury 000s 46 061 46 172
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
for the year ended 31 December 2012
31 Dec 31 Dec
2012 2011
Audited Audited
R000 R000
Cash generated by operating activities
excluding dividends paid 14 806 4 533
Cash generated by investing activities 1 900 9 111
Cash effects of financing activities (1 323) (9 441)
Cash utilised for the payment of
dividends (14 763) (7 867)
Change in cash and cash equivalents 620 (3 664)
Current short-term interest-bearing
debt, less cash balances, at
beginning of year (5 563) (1 899)
Current short-term interest-bearing debt,
less cash balances, at end of year (4 943) (5 563)
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2012
2012 2011
Audited Audited
R000 R000
Gross income from operations
and investments 172 845 115 522
Dividends received 37 788 29 302
Interest received 739 881
Income on financial instruments
and shares 22 422 6 223
Fees and sundry income 2 730 2 407
Fair value adjustments to investments 48 497 21 027
Equity accounted retained income
of associates 60 669 55 682
Share of net income of associates 94 733 81 631
Less: Dividends received (34 064) (25 949)
Direct transactional costs 1 284 209
Impairments/(reversal) (1 279) 1 013
Interest paid 5 275 4 741
Net income before expenses and
exceptional items 167 565 109 559
Less: Expenditure 22 385 24 610
Operating costs 22 263 24 460
Depreciation 122 150
Exceptional items losses 692
Net income before taxation 145 180 84 257
Taxation deferred 6 257 2 606
Net income for the year attributable
to equity shareholders 138 923 81 651
Translation of foreign
subsidiary/associates 1 723 2 289
Total comprehensive income for the year
attributable to equity shareholders 140 646 83 940
Earnings per share cents 301,2 176,6
Dividends per share (proposed after
interim/year-end) cents 32,0 24,0
Weighted average number of shares
in issue 000s 46 126 46 236
Headline earnings per share cents 300,9 178,1
Reconciliation of headline earnings
Net income for the year 138 923 81 651
Exceptional losses group 985
Exceptional losses associates (293)
Profit on sale of property, plant and
equipment (118)
Headline earnings for the year 138 805 82 343
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN EQUITY
as at 31 December 2012
Non-
distri- Accu-
Share Share butable mulated
capital premium reserves profit Total
R000 R000 R000 R000 R000
Balance as at
1 January 2011 864 50 618 278 753 96 863 427 098
Total
comprehensive
income for
the year 2 289 81 651 83 940
Loss in share
trust
written back 11 11
Attributable
income of
associates 55 975 (55 975)
Movement in
translation and
other reserves
of associates 15 470 15 470
Shares held
in treasury (7) (1 255) (1 262)
Shares held in
treasury
written back 3 362 365
Shares held in
share trust (3) (2 778) (2 781)
Shares held in
share trust
written back 2 349 2 349
Dividends paid (7 867) (7 867)
Balance as at
31 December
2011 857 49 296 352 498 114 672 517 323
Total
comprehensive
income for
the year 1 723 138 923 140 646
Loss in share
trust (2) (2)
Attributable
income of
associates 60 669 (60 669)
Movement in
translation and
other reserves
of associates 18 000 5 145 23 145
Disposal of
associate (46 036) 46 036
Shares held in
treasury (7) (2 577) (2 584)
Shares held in
treasury
written back 7 1 255 1 262
Shares held in
share trust (3) (2 778) (2 781)
Shares held in
share trust
written back 3 2 778 2 781
Dividends paid (14 763) (14 763)
Balance as at
31 December
2012 857 47 974 386 852 229 344 665 027
CONTINGENT LIABILITIES
1. The group has rights and obligations in terms of shareholder and purchase and sale agreements relating to its present and former investments.
2. Commitments for the lease of premises are as follows:
Year 1 R860 000
Year 2 R937 000
Year 3 to 5 R2 614 000
INVESTMENT PORTFOLIO
at 31 December 2012
Economic Carrying Intrinsic
interest value value
% R000 R000
Unlisted Industrial Associates
SA Bias Industries (Pty) Limited* 57,3
Set Point Group (Pty) Limited 49,9
Sunspray Food Ingredients
(Pty) Limited 46,1
437 693 741 600
* Voting interest 48,5%
Listed Long-term
Investments Ordinary shares
Brait S.E. 1 513 654 55 612
Datatec Limited 1 000 000 49 050
Metrofile Holdings Limited 27 571 496 107 529
Net1 UEPS Technologies Inc 211 884 8 899
Transaction Capital (Pty)
Limited 1 200 000 9 360
230 450 230 450
Long-term Investment Holdings 668 143 972 050
Short-term Investments Foreign 38 489 38 489
Total portfolio 706 632 1 010 539
PERFORMANCE INDICATORS
Compound Compound
Growth Growth Growth
1 year 3 years 8 years
Cents (%) (%) (%)
Intrinsic net asset
value per share 1 855 18,7 19,3 19,5
Dividends per share 32 33,3 31,7 34,4
Headline earnings
per share 300,9 68,9 36,3 23,6
COMMENTARY
PROFILE
Sabvest is an investment group which has been listed since 1988. Its ordinary and N ordinary shares are quoted in the Financials Equity Investment Instruments sector of the JSE Limited. Sabvest has significant or joint controlling interests in three unlisted industrial groups which are accounted for as associates, a long-term portfolio of five RSA listed investments and a short-term foreign bond and share portfolio, both accounted for on a fair value basis.
In addition, Sabvest maintains finance advances and debt instrument portfolios and undertakes other fee and profit earning activities.
Changes in investment holdings during the period
Sabvest:
- Increased its investment in Metrofile Holdings Limited by 7,1m shares to 27,5m shares, representing a 6,7% holding in the company, for an amount of R20,8m.
- Increased its investment in Transaction Capital Limited by 0,2m shares to 1,2m shares for an amount of R1,6m.
- Increased its investment in Net1 UEPS Technologies Inc by 111,884 shares to 211,884 shares for an amount of R9,2m.
- Disposed of its short term portfolio in South Africa for R2,9m.
- Disposed of its interests in Korbitec and Korbicom for R21,4m.
- Disposed of its remaining interests in the West Central Fund and Nimble Credit Opportunities Fund for R10,4m.
- Disposed of its 40% interest in Flowmax Holdings Limited (BVI/UK) to SA Bias Industries (Pty) Limited for R56m (as approved by Sabvest shareholders in general meeting).
- Reopened its foreign share and bond portfolio which had a carrying value of R38,5m at the year-end comprising shares in Apple, Astra Zeneca, Aviva, Comcast, Google, Microsoft, Vodafone and Yum.
- Bought back 4,975 Sabvest ordinary shares and 106,116 Sabvest N ordinary shares for R1,3m through a subsidiary.
With regard to the groups investee companies:
- Transaction Capital listed on the JSE in June 2012.
- SA Bias Industries acquired a 60% interest in Flowmax Holdings Limited (BVI/UK) as a result of which Sabvest retains an indirect 34% interest in Flowmax.
- Set Point Group established a new thermography and vibration unit as part of its analytics division.
FINANCIAL RESULTS
Sabvest achieved record results for the year. PAT increased by 68% to R139m and HEPS by 69% to 301 cents per share.
The major contributor to the increase in the groups results was the material increase in the market values of the groups major listed investments Brait, Datatec and Metrofile. In all three groups the increases were underpinned by strong operating performances.
The other major contributor was the gains on sales of unlisted investments.
The groups unlisted industrial associates performed in line with expectations with Sabvests share of their net income increasing 16% to R94,7m.
SA Bias Industries produced satisfactory results assisted by the effect of a weaker Rand on offshore earnings.
The Set Point Group achieved a material increase in profitability for the year to 31 August 2012.
Flowmax produced softer results in a difficult trading climate in the UK.
Sunspray Food Ingredients produced stable results in line with budgets.
Shareholders funds with investments at intrinsic value (net of notional CGT) increased by 19% to R855m. This increase was achieved notwithstanding that the provision for deferred tax was increased by R28,3m relating to the current and prior years due to the increase in the enacted CGT rate (which is effective in the next financial year). The full adjustment was taken in this period with no changes made to prior periods.
Accordingly, intrinsic value per share increased by 19% to 1 855 cents per share. The increase was also aided by the effects of the weaker Rand.
The groups debt levels remain conservative. New facilities have been raised offshore and will be utilised to gear the foreign investment portfolio in Sabvests offshore subsidiary.
PERFORMANCE AND VALUATION OF INDUSTRIAL ASSOCIATES
On a look-through basis, the unaudited combined
revenue of the four groups (including Flowmax for the full year) increased by 14% to R1,77 bn (2011: R1,55 bn). Sabvests share of retained earnings increased by 16% to R94,7m.
Sabvests associates are valued for intrinsic value purposes using the maintainable earnings (NOPAT) model, multiples of NOPAT between 7 and 7,5 and adjusting for net cash/investments and interest bearing debt.
Shareholders Funds at Intrinsic Value 2012
Intrinsic valuation of associates 741 600
Carrying value of associates 437 693
Accumulated revaluation 303 907
Provision for notional CGT * 114 282
189 625
Shareholders Funds on balance sheet 665 027
Shareholders Funds at intrinsic value 854 652
* Calculated relative to base cost
DIVIDENDS
Dividends are determined relative to Sabvests own recurring cash flows from investments and services and relative to current and expected capital receipts that are not earmarked for new transactions.
It is the groups policy to consider dividends twice annually.
The level of cash generation from the groups investee companies continues to increase. A final dividend of 20 cents has been declared, bringing the total for the year to 32 cents, an increase of 33% on the prior year.
As referred to in the dividend declaration, the group has used STC credits to an extent sufficient for no withholding tax on dividends to be deducted for any shareholders. After the use of these credits, the company still has credits equal to 301 cents per share.
RELATED PARTIES
Related party transactions exist between subsidiaries and the holding company, fellow subsidiaries and associated companies, and comprise fees, dividends and interest.
Transactions with directors relate to fees and monies lent to the group by individuals and companies controlled by the directors.
COMPANY SECRETARY
Mr R Pleaner resigned as company secretary and Mrs P Atkins was appointed as company secretary, both on 12 December 2012.
BASIS OF PREPARATION
These condensed consolidated annual financial statements have been prepared in accordance with the framework concepts, the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and comply with the disclosure requirements of International Accounting Standard 34: Interim Financial Reporting as issued by the International Accounting Standards Board (IASB), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the JSE Listings Requirements and the requirements of the Companies Act No. 71 of 2008, as amended.
They have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair value or at amortised cost. The significant accounting policies and methods of computation are consistent in all material aspects to those applied in the previous financial year, except as disclosed below. The significant accounting policies are available for inspection at the groups registered office. There has been no material change in judgments or estimates of the amounts reported in prior reporting periods.
The group adopted the new revised or amended accounting pronouncements as issued by the IASB which were effective and applicable to the group from 1 January 2012. The application of these changes, however, had no impact on the groups financial results for the period.
The preparation of these condensed consolidated financial statements was supervised by the Chief Financial Officer, R Pleaner C.A. (S.A.).
AUDIT OPINION
These condensed group annual financial statements have been audited in compliance with any applicable requirements of the Companies Act of South Africa.
The auditors, Deloitte & Touche, have issued an unmodified audit opinion on the groups annual financial statements for the year ended 31 December 2012. Their audit was conducted in accordance with International Standards on Auditing. A copy of their audit report is available for inspection at the companys registered office. The condensed financial information presented has been derived from the audited annual financial statements for the year ended 31 December 2012. The auditors report does not necessarily cover all of the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors work they should obtain a copy of that report together with the accompanying financial information from the registered office of the company.
PROSPECTS
The groups three industrial associates have sound growth prospects particularly those of the extensive international operations of SA Bias Industries. However, Set Point Group is experiencing difficult trading conditions arising primarily from the disruption in the mining sector and this will impact its results in the current year.
The groups listed investee companies are performing well. However, the required use of IFRS fair value accounting based solely on listed share prices at the reporting dates and the major run up in the share prices of the groups holdings in 2012 make it very unlikely that the same level of fair value adjustments will be achieved in 2013. As a result we expect a reduction in PAT and HEPS in 2013 compared to the record levels in 2012.
Nevertheless, we expect continued growing cash inflows and growth in intrinsic net asset value.
The above forecast information has not been reviewed and reported on by the groups external auditors.
For and on behalf of the Board
Haroon Habib Christopher Seabrooke Raymond Pleaner
Chairman CEO CFO
Sandton
26 February 2013
CASH DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend of 20 cents (2011: 20 cents) per ordinary share and N ordinary share, out of income reserves, for the twelve months ended 31 December 2012 has been declared making a total of 32 cents (2011: 24 cents) for the year.
The issued share capital of the company at the declaration date is 17 295 984 ordinary and 29 479 854 N ordinary shares (excluding treasury shares). The income tax number of the company is 9375/105/716.
The company has utilised STC credits amounting to 20 cents per share. As a result there will be no dividend withholding tax from the final dividend for any Sabvest shareholders including those who are not exempt by definition.
Last date to trade CUM dividend Thursday, 14 March 2013
Trading EX dividend commences Friday, 15 March 2013
Record date Friday, 22 March 2013
Dividend payment date Monday, 25 March 2013
No dematerialisation or rematerialisation of share certificates will be allowed during the period Friday, 15 March 2013 to Friday, 22 March 2013, both days inclusive.
Registered address: 4 Commerce Square, 39 Rivonia Road, Sandhurst, Sandton 2196
Communications: Postal address: PO Box 78677, Sandton 2146, Republic of South Africa
Telephone: (011) 268 2400
Fax: (011) 268 2422
e-mail: ho@sabvest.com
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Marshalltown 2001
(PO Box 61051, Marshalltown 2107)
Directors: H Habib# (Chairman), P Coutts-Trotter (Deputy Chairman), CS Seabrooke* (Chief Executive), CP Coutts-Trotter, NSH Hughes#, DNM Mokhobo#, GE Nel, R Pleaner*, BJT Shongwe# *Executive #Independent
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 26/02/2013 01:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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