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Unaudited interim results for the six months ended 30 June 2014 and cash dividend declarations
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
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
AND CASH DIVIDEND DECLARATIONS
HIGHLIGHTS
Special cash dividend per share 100 cents
Interim dividend per share 18 cents
Net Asset Value per share 2 419 cents
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 30 June 2014
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2014 2013 2013
R’000 R’000 R’000
Non-current assets 1 244 815 1 017 076 1 238 904
Property, plant and equipment 1 636 943 962
Share trust receivables – 2 886 –
Investment holdings 1 243 179 1 013 247 1 237 942
Unlisted investments 940 600 752 700 978 000
Listed investments 302 579 260 547 259 942
Current assets 124 078 143 205 161 168
Finance advances and
receivables 12 716 10 122 14 959
Offshore bond portfolio 88 780 52 193 50 179
Offshore share portfolio – 68 256 88 427
Cash balances 22 582 12 634 7 603
Total assets 1 368 893 1 160 281 1 400 072
Ordinary shareholders’
equity 1 111 814 910 418 1 085 011
Non-current liability 209 636 174 008 175 699
Interest-bearing debt 40 000 40 000 –
Deferred tax liability 169 636 134 008 175 699
Current liabilities 47 443 75 855 139 362
Interest-bearing debt 38 120 68 780 127 555
Current portion of
interest-bearing debt – – 40 000
Offshore portfolio finance 11 053 59 921 66 281
Offshore loans payable 7 322 – –
Other interest-bearing debt 19 745 8 859 21 274
Accounts payable 9 323 7 075 11 807
Total equity and liabilities 1 368 893 1 160 281 1 400 072
Net asset value per share
– cents 2 419 1 978 2 358
Number of shares in issue
less held in share trust/
treasury – 000’s 45 965 46 023 46 015
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2014 2013 2013
R’000 R’000 R’000
Cash generated by operating
activities 16 519 6 799 21 040
Cash generated by/(utilised in)
investing activities 59 176 (48 123) (31 705)
Cash effects of financing
activities * (49 064) 59 251 65 445
Cash utilised for the payment
of dividends (10 123) (9 209) (63 508)
Change in cash and cash
equivalents 16 508 8 718 (8 728)
Cash balances, less current
interest-bearing debt
excluding offshore portfolio
finance, at beginning
of period (13 671) (4 943) (4 943)
Cash balances, less interest-
bearing debt, excluding
offshore portfolio finance
at end of period 2 837 3 775 (13 671)
* Financing activities comprise movements in long-term debt and
portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2014 2013 2013
R’000 R’000 R’000
Gross income from operations
and investments 48 039 75 339 360 562
Dividends received 31 634 20 456 46 617
Interest received 3 047 924 3 473
Income on financial
instruments and shares 6 269 5 075 9 518
Fees and sundry income 2 053 632 2 067
Fair value adjustment to
investments 5 036 48 252 298 887
Direct transactional costs (610) (706) (1 939)
Impairments 25 31 57
Interest paid (3 573) (2 490) (5 101)
Net income before expenses
and exceptional items 43 881 72 174 353 579
Less: Expenditure (12 990) (11 357) (26 831)
Operating costs (12 875) (11 283) (26 683)
Depreciation (115) (74) (148)
Net income before taxation 30 891 60 817 326 748
Taxation – deferred 6 063 (5 232) (46 922)
Net income for the period
attributable to equity
shareholders 36 954 55 585 279 826
Translation of foreign
subsidiary *1 1 131 10 061 14 833
Total comprehensive income
attributable to equity
shareholders 38 085 65 646 294 659
Earnings per share – cents 80,4 120,8 607,9
Interim dividend per share
(proposed after reporting
date) – cents 18,0 18,0 40,0
Special dividend per share
(proposed after reporting
date) – cents 100,0 – 100,0
Weighted average number of
shares in issue – 000’s 45 977 46 033 46 031
Headline earnings per
share – cents *2 80,0 120,7 607,9
Reconciliation of headline
earnings
Net income for the period 36 954 55 585 279 826
(Profit)/loss on sale of
property, plant and equipment (170) (2) (1)
Headline earnings for
the period 36 784 55 583 279 825
*1 This item may subsequently be classified to profit and loss.
*2 There are no diluting instruments.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
as at 30 June 2014
Non-
distri- Disti-
Share Share butable butable
capital premium reserves reserves Total
R’000 R’000 R’000 R’000 R’000
Balance as at
1 January 2013 857 47 974 11 355 794 466 854 652
Total comprehensive
income for
the period – – 14 833 279 826 294 659
Accumulated 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
Total comprehensive
income for the
period – – 1 131 36 954 38 085
Loss in share trust
– written back – – 1 – 1
Loss in share trust – – (1) – (1)
Shares held in
treasury (8) (4 570) – – (4 578)
Shares held in
treasury – written
back 8 3 411 – – 3 419
Shares held in
share trust (3) (2 778) – – (2 781)
Shares held in
share trust –
written back 3 2 778 – – 2 781
Dividends paid – – – (10 123) (10 123)
Balance as at
30 June 2014 856 45 981 27 318 1 037 659 1 111 814
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 R978 000
Year 2 R1 066 000
Year 3 R1 057 000
INVESTMENT HOLDINGS
as at 30 June 2014
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 48,1
940 600
* Voting interest 48,5%
Listed Investments Ordinary shares
Brait S.E. 1 525 081 99 588
Corero Network Security Plc 5 500 000 24 503
Datatec Limited 200 000 10 760
Metrofile Holdings Limited 20 000 000 96 000
Torre Industries Limited 23 000 000 63 940
Transaction Capital Limited 1 200 000 7 788
302 579
Long-term investment holdings 1 243 179
Offshore bond portfolio 88 780
TOTAL HOLDINGS 1 331 959
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. The group’s investment holdings are set out
in detail in the table above.
Changes in investment holdings
Sabvest:
• acquired 23m shares in Torre Industries Limited for R50,6m
representing a 7% interest in Torre;
• acquired an additional 1,5m shares in Corero Network Security
Plc for R5,1m (GBP 289 990), thereby increasing its holding to
5,5m shares representing a 7% interest in Corero;
• increased its holding in Sunspray Food Ingredients (Pty)
Limited from 46% to 48% arising from a share buy-back by the
company;
• acquired 50 000 Sabvest “N” ordinary shares for R1,2m;
• sold 500 000 shares in Datatec Limited realising R25,6m and
reducing its holding to 200 000 shares;
• sold 1 983 758 shares in Metrofile Holdings Limited realising
R9,7m and reducing its holding to 20m shares;
• sold 211 884 shares in Net1 UEPS Technologies Inc for R25,5m;
and
• sold its entire offshore general equity portfolio realising
R114,7m ($10,7m).
The proceeds of the sales of shares as above has created the
financial capacity for the special dividend declared today, with
the surplus being utilised towards the purchase of the Torre
shares and a reduction of offshore portfolio finance utilised.
FINANCIAL RESULTS
Headline earnings per share reduced by 33,7% to 80 cents per
share relative to the prior interim reporting period. While
satisfactory investment gains were made on the group’s listed
portfolio, the valuations of the unlisted industrial investments
were affected by poorer trading in South Africa mainly due to the
direct and indirect effects of the strikes in the mining
industry.
Retained NAV per share of 2 419 cents was 2% higher than at the
financial year-end and 22% higher than at 30 June 2013.
Shareholders’ funds amounted to R1 112m – largely unchanged from
the financial
year-end.
The group’s net debt levels reduced materially due to the sales
of RSA listed investments and the offshore equity portfolio.
The medium-term loan of R40m has been refinanced and now falls
due R10m in 2017 and R30m in 2018.
UNLISTED INVESTMENTS
On a look-through basis the unaudited combined revenue of the
three unlisted industrial groups for the six months was R914,8m
(30 June 2013: R930,7m) and PAT for the six months was R60,5m (30
June 2013: R83,6m). Sabvest’s look-through share of the PAT was
R33,5m (30 June 2013: R45,3m).
With regard to the performance of our unlisted investments:
• The local operations of SA Bias Industries performed below
expectations due to the effects of the strikes and the weak
economy. International Trimmings and Labels (ITL) performed
satisfactorily although it experienced some reduction in
demand from its US chain store customers. Notwithstanding, ITL
is in the process of expanding its production capacity with
new factories being established in Vietnam, Bangladesh and
Visag in India to augment its existing primary overseas
production units in China, Hong Kong, Sri Lanka, Turkey and
India. The Flowmax Group in the UK performed to expectations.
• Set Point Group continued to experience difficult trading
conditions due to the mining strikes in South Africa and
weaker levels of activity in related industries; and
• Sunspray Food Ingredients performed satisfactorily with
profitability increasing in line with budgets.
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
periods. Sabvest’s attributable share of the valuation of the
business operations was R778,8m and adding cash and investments
and subtracting debt in the three groups was R940,6m.
The effect of the fair value measurement for the six months
through profit and loss was a loss of R37,4m (30 June 2013:
R23,2m gain) before providing for a recoupment of 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 this investment has now been sold to facilitate
the payment of Sabvest’s special dividend.
As advised in the year-end results, Sabvest has acquired a 7%
interest in Torre Industries Limited – a fast growing acquisitive
Africa focused industrial group.
Sabvest increased its holding in Corero Network Security Plc to
5,5m shares representing a 7% interest in Corero. 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. Sabvest is of the view that the
increasing demand for effective new generation cyber security
will result in superior growth rates in this segment. Subsequent
to the reporting date it has accordingly made initial investments
for its offshore portfolio in NASDAQ listed FireEye, Palo Alto
Networks and Splunk.
With regard to Sabvest’s foreign direct holdings, these are held
through a ring-fenced entity capitalised to the extent of $9m at
the reporting date and geared only on the security of the
underlying portfolio. During the period Sabvest disposed of its
entire general equity portfolio and increased its bond portfolio
to R88,8m ($8,3m). At the reporting date it comprised a spread of
15 redeemable or callable reset bonds and bond funds. Full
details of the portfolio are available on Sabvest’s website.
Corero is also held in this entity.
DIVIDENDS
Dividends are determined relative to Sabvest’s own recurring cash
flows from investment and services and capital receipts that are
not earmarked for new transactions.
Dividends are considered twice annually. The interim dividend has
been maintained at 18 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.
The group advised shareholders in October 2013 that the Board
would consider ways to use some or all of the STC credits it has
before they expire. To this end a special dividend of 100 cents
per share was declared and paid in December 2013.
A second special dividend of 100 cents per share has been
declared today. STC credits will be utilised and no withholding
tax on the special dividend will be deducted for any
shareholders.
Sabvest intends to use the remaining STC credits for the
cancellation of treasury shares in the next six months and for
the final dividend that will be considered by the Board in
February 2015.
The group does not expect to declare any further special
dividends.
RELATED PARTIES
Related party transactions exist between subsidiaries and the
holding company, fellow subsidiaries and associated companies,
and comprise fees, dividends and income.
Transactions with directors relate to fees and monies lent to the
group by individuals and companies controlled by the directors.
ACCOUNTING POLICIES
The unaudited condensed interim financial statements have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and comply with IAS 34, Interim Financial
Reporting, the SAICA Financial Reporting Guides issued by the
Accounting Practices Committee and Financial Pronouncements
issued by the Financial Reporting Standards Council, the JSE
Limited Listings Requirements as well as the requirements of the
Companies Act of South Africa and have been supervised by the
CFO, Mr R Pleaner. The accounting policies used are consistent
with those applied to the audited financial statements for the
year ended 31 December 2013.
KING III COMPLIANCE REPORT
A detailed report has been placed on Sabvest’s website.
BOARD OF DIRECTORS
As advised to shareholders, Mr Haroon Habib retired as a director
and Chairman of the company on 22 April 2014 after eighteen years
on the Board. The Board extends its sincere thanks and gratitude
to Haroon and wishes his wife Ruwaida and him good health and
much happiness in the more relaxed years ahead.
Mr Philip Coutts-Trotter has been appointed Non-Executive
Chairman, Mrs Dawn Mokhobo as Non-Executive Deputy Chairperson
and Mr Nigel Hughes as lead independent director of the company.
The Board now comprises seven directors of whom five are non-
executive and of whom three are independent.
PROSPECTS
The group’s unlisted investee companies are trading
satisfactorily overall but their South African operations are
unlikely to show growth in profitability until 2015 once the
South African economy has stabilised from the effects of the
strikes.
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 the record performances of 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
Philip Coutts-Trotter Christopher Seabrooke
Chairman CEO
Raymond Pleaner
CFO
Sandton
30 July 2014
INTERIM CASH DIVIDEND DECLARATION
Notice is hereby given that an interim gross cash dividend of 18
cents (2013: 18 cents) per ordinary and “N” ordinary share for
the six months ended 30 June 2014 has been declared out of income
reserves.
The issued share capital of the company 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 18 cents per
share. As a result there will be no dividend withholding tax from
the interim dividend for any Sabvest shareholders including those
who are not exempt by definition.
Last date to trade “CUM” dividend Friday, 15 August 2014
Trading “EX” dividend commences Monday, 18 August 2014
Record date Friday, 22 August 2014
Dividend payment date Monday, 25 August 2014
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 18 August 2014 to
Friday, 22 August 2014, both days inclusive.
SPECIAL CASH DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a special
cash dividend of 100 cents per ordinary and “N” ordinary share
out of income reserves. The necessary SARB approval has been
obtained for the declaration of the special dividend.
The company has utilised STC credits amounting to 100 cents per
share. As a result there will be no dividend withholding tax from
the special dividend for any Sabvest shareholders including those
who are not exempt by definition. The company’s unutilised STC
credits after the special dividend will be 72 cents per share.
The issued share capital of the company 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.
Last date to trade “CUM” dividend Friday, 15 August 2014
Trading “EX” dividend commences Monday, 18 August 2014
Record date Friday, 22 August 2014
Dividend payment date Monday, 25 August 2014
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 18 August 2014 to
Friday, 22 August 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: P Coutts-Trotter (Chairman), DNM Mokhobo# (Deputy
Chairman), CS Seabrooke* (Chief Executive), CP Coutts-Trotter,
NSH Hughes# (Lead Independent Director), R Pleaner*, BJT Shongwe#
*Executive #Independent
Sponsor: Rand Merchant Bank (A division of FirstRand Bank
Limited)
www.sabvest.com
Date: 30/07/2014 10:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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