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Audited consolidated summarised results for the year ended 31 December 2013 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 CONSOLIDATED SUMMARISED RESULTS for the year ended
31 December 2013 and cash dividend declaration
– Headline Earnings per share 607,9 cents increased by 97%
– Dividends per share 40 cents increased by 25%
– Net Asset Value per share 2 358 cents increased by 27%
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 31 December 2013
31 Dec 31 Dec 31 Dec
2013 2012 2011
Audited Restated Restated
R’000 R’000 R’000
Non-current assets 1 289 083 975 780 838 327
Property, plant and equipment 962 971 616
Share trust receivables – 2 759 4 131
Investment holdings 1 288 121 972 050 833 580
Unlisted investments 978 000 741 600 677 644
Listed investments 259 942 230 450 155 936
Offshore bond portfolio 50 179 – –
Current assets 110 989 64 304 18 385
Finance advances and
receivables 14 959 22 061 5 943
Other financial instruments – – 7 727
Offshore share portfolio 88 427 38 489 2 363
Cash balances 7 603 3 754 2 352
Total assets 1 400 072 1 040 084 856 712
Ordinary shareholders’
equity 1 085 011 854 652 721 520
Non-current liabilities 175 699 168 776 119 792
Interest-bearing debt – 40 000 40 000
Deferred tax liability 175 699 128 776 79 792
Current liabilities 139 362 16 656 15 400
Interest-bearing debt 127 555 8 697 7 915
Offshore portfolio finance 66 281 – –
Current portion of long-term
liability 40 000 – –
Other 21 274 8 697 7 915
Accounts payable 11 807 7 959 7 485
Total equity and liabilities 1 400 072 1 040 084 856 712
Net asset value per
share – cents 2 358 1 855 1 563
Number of shares in issue
less held in share
trust/treasury – 000’s 46 015 46 061 46 172
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 December 2013
31 Dec 31 Dec
2013 2012
Audited Audited
R’000 R’000
Cash generated by operating activities 21 040 14 806
Cash (utilised in)/generated by
investing activities (31 705) 1 900
Cash effects of financing activities * 65 445 (1 323)
Cash utilised for the payment of dividends (63 508) (14 763)
Change in cash and cash equivalents (8 728) 620
Cash balances, less interest-bearing debt
excluding offshore portfolio finance,
at beginning of year (44 943) (45 563)
Cash balances, less interest-bearing
debt, excluding offshore portfolio
finance
at end of year (53 671) (44 943)
* Financing activities comprise movement in portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
2013 2012
Audited Restated
R’000 R’000
Gross income from operations
and investments 360 562 220 180
Dividends received 46 617 37 788
Interest received 3 473 739
Income on financial instruments
and shares 9 518 26 335
Fees and sundry income 2 067 2 730
Fair value adjustments to investments 298 887 152 588
Direct transactional costs 1 939 1 284
Impairment reversals (57) (1 279)
Interest paid 5 101 5 275
Net income before expenses and
exceptional items 353 579 214 900
Less: Expenditure 26 831 22 385
Operating costs 26 683 22 263
Depreciation 148 122
Net income before taxation 326 748 192 515
Taxation – deferred 46 922 50 164
Net income for the year attributable
to equity shareholders 279 826 142 351
Translation of foreign subsidiary *1 14 833 6 868
Total comprehensive income
attributable to equity shareholders 294 659 149 219
Earnings per share – cents 607,9 308,6
Dividends per share (proposed after
interim/year-end) – cents 40,0 32,0
Special dividends 100,0 –
Weighted average number of shares
in issue – 000’s 46 031 46 126
Headline earnings per share – cents *2 607,9 308,4
Reconciliation of headline earnings
Net income for the year 279 826 142 351
Profit on sale of property, plant
and equipment (1) (118)
Headline earnings for the year 279 825 142 233
*1 This item may subsequently be classified to profit and loss.
*2 There are no diluting instruments.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013
Non-
distri- Accu-
Share Share butable mulated
capital premium reserves profit Total
R’000 R’000 R’000 R’000 R’000
Restated balance
as at
1 January 2012 857 49 296 4 489 666 878 721 520
Restated total
comprehensive
income for
the year – – 6 868 142 351 149 219
Loss in share trust – – (2) – (2)
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)
Restated balance
as at
31 December 2012 857 47 974 11 355 794 466 854 652
Total comprehensive
income for
the year – – 14 833 279 826 294 659
Loss in share trust – – (1) – (1)
Shares held in
treasury (8) (3 411) – – (3 419)
Shares held in
treasury
– written back 7 2 577 – – 2 584
Shares held in
share trust (3) (2 778) – – (2 781)
Shares held in
share trust
– written back 3 2 778 – – 2 781
Unclaimed dividends
– written back – – – 44 44
Dividends paid – – – (63 508) (63 508)
Balance as at
31 December 2013 856 47 140 26 187 1 010 828 1 085 011
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 R937 000
Year 2 R1 021 000
Year 3 to 4 R1 593 000
INVESTMENT HOLDINGS
as at 31 December 2013
Economic Fair
interest value
% R’000
Unlisted investments
SA Bias Industries (Pty) Ltd* 57,3
Set Point Group (Pty) Ltd 49,9
Sunspray Food Ingredients (Pty) Ltd 46,1
978 000
* Voting interest 48,5%
Listed investments Ordinary shares
Brait S.E. 1 525 081 79 975
Corero Network Security Plc 4 000 000 12 501
Datatec Limited 700 000 36 253
Metrofile Holdings Limited 21 983 758 102 884
Net1 UEPS Technologies Inc 211 884 18 909
Transaction Capital Limited 1 200 000 9 420
259 942
Offshore bond portfolio 50 179
Long-term investment holdings 1 288 121
Offshore share portfolio 88 427
TOTAL HOLDINGS 1 376 548
COMMENTARY
PROFILE
Sabvest is an investment group which has been listed since 1988.
Its ordinary and “N” ordinary shares are quoted in the Equity
Investment Instruments sector of the JSE Limited.
Sabvest has significant interests in three unlisted industrial
groups, long-term holdings in six listed investments and a
foreign share and bond portfolio, all accounted for on a fair
value basis. In addition, Sabvest makes finance advances, has
debt instrument portfolios and undertakes other fee and profit
earning activities.
CHANGES IN INVESTMENT HOLDINGS
Sabvest:
– Acquired 4m shares in Corero Network Security Plc for R10,2m
(GBP0,59m);
– Bought back 25 250 Sabvest ordinary shares and 20 890 Sabvest
“N” ordinary shares for R0,85m through a subsidiary;
– Increased its foreign share and bond portfolios from R38,5m to
R138,6m ($13,2m);
– Sold 300 000 shares in Datatec Limited realising an amount of
R16,9m; and
– Sold 5 587 738 shares in Metrofile Holdings Limited realising
an amount of R26,4m.
The proceeds of the sales of Datatec and Metrofile shares were
utilised to fund the special dividend of R46m paid by Sabvest in
December.
Subsequent to the reporting date, Sabvest has opened guarantees
of R50,6m for the purchase of 23m shares in Torre Industrial
Holdings Limited at 220 cents per share in April 2014.
CHANGE IN ACCOUNTING POLICY
As advised to shareholders on SENS on 31 May 2013, with effect
from 1 January 2013 Sabvest accounts for all its investments on a
fair value basis, including unlisted associates which were
previously equity accounted. The 2011, 2012 and 2013 figures are
presented on this basis.
FINANCIAL RESULTS
Sabvest produced record results in the 2013 financial year. HEPS
increased by 97% to 607 cents per share. NAV per share increased
by 27% to 2 358 cents per share. This increase would have been
32% if the special dividend had not reduced NAV by 100 cents per
share.
Income before taxation increased by 69% to R327m and income after
taxation by 96% to R280m.
The increase was a result of growth in the share prices of its
listed holdings in South Africa, a strong performance by its
offshore portfolio, good overall operating results from the
unlisted portfolio aided by the weak rand and the consolidation
of 60% of Flowmax Holdings for the first time in SA Bias
Industries.
Gains on financial instruments and shares arose from realisations
in the foreign and local listed portfolios.
Overheads increased materially due to provisions for incentive
bonuses which were higher in the current period.
Shareholders’ funds increased by 27% to R1 085m
– exceeding R1bn for the first time.
The group’s debt levels remain conservative. Internationally,
borrowings amounted to R66,3m which are directly utilised to fund
the foreign portfolio of bonds and shares. In South Africa, the
group has net short-term debt of R21,3m. The medium-term loan of
R40m which falls due in 2014 is reflected as a current debt. It
is the intention to refinance the loan.
UNLISTED INVESTMENTS
On a look-through basis the unaudited combined revenue of the
three unlisted groups for the twelve months was R1 876m and PAT
for the twelve months was R228m. Sabvest’s share of the PAT was
R123m (2012: R95m), including income on investments.
With regard to our unlisted investments:
– The international operations of SA Bias Industries through its
International Trimmings and Labels and Flowmax Group divisions
performed satisfactory. The South African operations performed
close to budget;
– Set Point Group experienced difficult trading conditions due
to the disruptions and weaker levels of activity in the mining
and related industries; and
– Sunspray Food Ingredients performed well with a satisfactory
increase in profitability.
Unlisted investments are fair valued using the maintainable
earnings (NOPAT) model, multiples of NOPAT between 7 and 7,5 and
adjusting for net cash/investments and interest-bearing debt. The
multiples utilised are the same as in the prior reporting period.
Sabvest’s attributable share of the valuation of the business
operations was R821m and adding cash and investments and
subtracting debt in the three groups was R978m. The effect of the
fair value measurement for the year through profit and loss was
R236,4m (2012: R109,1m) before providing for deferred CGT.
LISTED INVESTMENTS
The five JSE listed investments performed according to
expectations with particularly strong operating performances from
Brait, Metrofile and Transaction Capital. Datatec experienced
weakness in some of its markets. Net1’s results improved
materially but uncertainties still exist relating to the SASSA
tender.
Sabvest has made an initial purchase of 4m shares in Corero
Network Security Plc which is listed on the AIM market of the
LSE. This represents an interest of 4,7% in Corero.
The Chairman of and largest shareholder in Corero is well known
to Sabvest. Sabvest has invested successfully in a number of
companies with which he has been associated over the years.
Corero is a developer of network security solutions against
distributed denial of service attacks and cyber threats at the
point of connectivity to the internet for cloud data centres and
virtual machine environments.
Subsequent to the reporting date Sabvest has committed to acquire
23m shares in Torre Industrial Holdings Limited. This will
represent a 7% interest in Torre. Torre is a young, fast growing
industrial group whose business units include SA French,
Forktech, Tractor, Grader Supplies and Kanu Equipment. Torre is
also currently in the process of acquiring a 100% of Control
Instruments Group Limited.
Sabvest regards Torre as an exciting investment opportunity and
looks forward to working with Torre’s management and board.
The foreign portfolio is held through a ring-fenced entity
capitalised to the extent of $8m and geared only on the security
of the underlying portfolio. Sabvest regards it as a managed fund
and is itself the manager. At the reporting date it comprised a
spread of 17 shares and 7 redeemable or callable reset bonds due
2016 to 2018. Full details of the portfolio are available on
Sabvest's website. The returns for 2013 were 24,7% on average
invested equity in US dollars.
DIVIDENDS
Dividends are determined relative to Sabvest’s own recurring cash
flows from investments and services and capital receipts that are
not earmarked for new transactions.
Dividends are considered twice annually. The level of cash
generation from the group’s investee companies continues to
increase. Accordingly the dividend for the year has been
increased by 25% to 40 cents per share.
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 212 cents per share. The ability to use these credits
expires on 31 March 2015.
The group advised shareholders in October 2013 that the board is
considering ways to use some or all of these credits before they
expire. To this end a special dividend of 100 cents per share was
declared and paid in December 2013.
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.
ACCOUNTING POLICIES
These audited summary consolidated annual financial statements
have been prepared in accordance with the framework concepts, the
recognition and measure 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
issued by the Accounting Practices Committee and Financial
Pronouncements issued by the Financial Reporting Standards
Council, the JSE Listings Requirements and the requirements of
the Companies Act of South Africa .
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 group’s 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 2013. The application of these changes, however, had no
impact on the group’s financial results for the year. The
preparation of these summary consolidated financial statements
was supervised by the Chief Financial Officer, R Pleaner C.A.
(S.A.).
AUDIT OPINION
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated separate annual financial statements
for the year ended 31 December 2013. Their audit was conducted in
accordance with the International Standards of Auditing. The
summary financial information presented has been derived from the
audited annual financial statements for the year ended 31
December 2013. The auditors, Deloitte & Touche, have issued an
unmodified opinion on the consolidated summarised financial
information. 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 with the accompanying financial
information from the registered office of the company. A copy of
the audit report and report on this consolidated summarised
financial information is available for inspection at the
company’s registered office.
BOARD OF DIRECTORS
Mr Graham Nel retired as a director at the end of the financial
year after many years on the board. The board records its thanks
to Graham for his services over the period and wishes him well in
his future endeavours.
PROSPECTS
The group’s unlisted investee companies are budgeting for
improved profitability in 2014. The results may be negatively
affected by any strengthening of the Rand and if the disruption
and low level of activity in the mining and associated industries
continues.
The group’s listed investee companies are performing to
expectations. However, the future movements in share prices are
obviously uncertain.
Overall, we anticipate a satisfactory year for the group but with
results at lower levels than in 2013.
The above forecast information has not been reviewed and reported
on by the group’s external auditors.
For and on behalf of the Board
Haroon Habib Christopher Seabrooke
Chairman CEO
Raymond Pleaner Sandton
CFO 28 February 2014
CASH DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend of 22 cents
(2012: 18 cents) per ordinary shares and “N” ordinary share, out
of income reserves, for the twelve months ended 31 December 2013
has been declared.
The issued share capital at the declaration date is 17 295 984
ordinary and 29 479 854 “N” ordinary shares. The income tax
number of the company is 9375/105/716.
The company has utilised STC credits amounting to 22 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, 20 March 2014
Trading “EX” dividend commences Monday, 24 March 2014
Record date Friday, 28 March 2014
Dividend payment date Monday, 31 March 2014
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 24 March 2014 to
Friday, 28 March 2014, both days inclusive.
SABVEST LIMITED
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) Ltd,
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#, R Pleaner*, BJT Shongwe#
*Executive #Independent
Sponsor: Rand Merchant Bank (A division of FirstRand Bank
Limited)
www.sabvest.com
Date: 27/02/2014 05:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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