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Audited preliminary consolidated summarised results for the year ended 31 December 2014 and 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 PRELIMINARY CONSOLIDATED SUMMARISED RESULTS for the year
ended 31 December 2014 and cash dividend declaration
HIGHLIGHTS
Headline earnings per share 444,7 cents
Dividends per share 43,0 cents
Net asset value per share 2 683 cents
CONSOLIDATED SUMMARISED STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
31 Dec 31 Dec
2014 2013
Audited Audited
R’000 R’000
Non-current assets 1 380 032 1 226 403
Property, plant and equipment 1 529 962
Investment holdings 1 378 503 1 225 441
Unlisted investments 1 070 973 978 000
Listed investments 307 530 247 441
Current assets 175 714 173 669
Finance advances and receivables 11 545 14 959
Offshore investment holdings 164 018 151 107
Share portfolio 99 813 88 427
Bond portfolio 40 958 50 179
Equity investment 23 247 12 501
Cash balances 151 7 603
Total assets 1 555 746 1 400 072
Ordinary shareholders’ equity 1 233 073 1 085 011
Non-current liabilities 237 859 175 699
Interest-bearing debt 60 000 –
Deferred tax liabilities 177 859 175 699
Current liabilities 84 814 139 362
Interest-bearing debt 69 040 127 555
Current portion of
interest-bearing debt – 40 000
Offshore portfolio finance 64 049 66 281
Other interest-bearing debt 4 991 21 274
Accounts payable and provisions 15 774 11 807
Total equity and liabilities 1 555 746 1 400 072
Net asset value per share – cents 2 683 2 358
Number of shares in issue less held in
share trust/treasury – 000’s 45 960 46 015
CONSOLIDATED SUMMARISED STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
31 Dec 31 Dec
2014 2013
Audited Audited
R’000 R’000
Cash generated by operating activities 19 713 21 040
Cash generated by/(utilised in)
investing activities 37 102 (31 705)
Cash effects of financing activities * 16 378 65 445
Cash utilised for the payment
of dividends (64 362) (63 508)
Change in cash and cash equivalents 8 831 (8 728)
Cash balances, less current
interest-bearing debt excluding
portfolio finance, at beginning
of year (13 671) (4 943)
Cash balances, less RSA interest-bearing
debt, at end of year (4 840) (13 671)
* Financing activities comprise movements in long-term debt and
portfolio finance.
CONSOLIDATED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
31 Dec 31 Dec
2014 2013
Audited Audited
R’000 R’000
Gross income from operations
and investments 246 857 360 562
Dividends received 47 114 46 617
Interest received 5 425 3 473
Income on financial instruments
and shares 17 972 9 518
Fees and sundry income 2 461 2 067
Fair value adjustments to investments 173 885 298 887
Direct transactional costs (1 066) (1 939)
Impairments 35 57
Interest paid (7 328) (5 101)
Net income before expenses
and exceptional items 238 498 353 579
Less: Expenditure (31 732) (26 831)
Operating costs (31 453) (26 683)
Depreciation (279) (148)
Net income before taxation 206 766 326 748
Taxation – deferred (2 160) (46 922)
Net income for the year attributable
to equity shareholders 204 606 279 826
Translation of foreign subsidiary 9 211 14 833
Total comprehensive income
attributable to equity shareholders 213 817 294 659
Earnings per share – cents *1 445,0 607,9
Dividends per share (proposed after
interim/year-end) – cents 43,0 40,0
Special dividend per share – cents 100,0 100,0
Weighted average number of shares
in issue – 000’s 45 975 46 031
Headline earnings per share – cents *1 444,7 607,9
Reconciliation of headline earnings
Net income for the year 204 606 279 826
Profit on sale of property, plant
and equipment (170) (1)
Headline earnings for the year 204 436 279 825
*1 There are no diluting instruments.
CONSOLIDATED SUMMARISED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Non-
distri- Distri-
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 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
Total
comprehensive
income for
the year – – 9 211 204 606 213 817
Loss in
share trust – – (1) – (1)
Shares held in
treasury –
written back 8 3 411 – – 3 419
Shares held in
treasury –
cancelled (8) (4 771) – – (4 779)
Shares held in
share trust –
written back 3 2 778 – – 2 781
Shares held in
share trust –
cancelled (3) (2 810) – – (2 813)
Dividends paid – – – (64 362) (64 362)
Balance as at
31 December
2014 856 45 748 35 397 1 151 072 1 233 073
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 R1 021
Year 2 R1 113
Year 3 R480
INVESTMENT HOLDINGS
as at 31 December 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 48,0
1 070 973
* Voting interest 48,5%
LISTED INVESTMENTS Ordinary shares
Brait S.E. 1 000 000 78 700
Datatec Limited 200 000 11 140
Metrofile Holdings Limited 20 000 000 100 000
Torre Industries Limited 23 000 000 93 840
Transaction Capital Limited 3 000 000 23 850
307 530
Long-term investment holdings 1 378 503
Offshore investment holdings 164 018
Share portfolio 99 813
Bond portfolio 40 958
Corero Network Security Plc 8 320 000 23 247
TOTAL HOLDINGS 1 542 521
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,
acquires debt instrument portfolios from time to time and
undertakes other fee and profit earning activities.
CHANGES IN INVESTMENT HOLDINGS
During the year Sabvest:
– acquired 23m shares in Torre Industries Limited (Torre) for
R50,6m, representing a 7% interest in Torre;
– increased its holding in Sunspray Food Ingredients (Pty) Ltd
(Sunspray) from 46% to 48% arising from a share buy-back by
the company;
– acquired 53 980 Sabvest “N” ordinary shares for R1,3m;
– increased its investment in Transaction Capital Limited by
1,8m shares to 3,0m shares for R13,5m;
– expanded its focus on the cyber security segment of the IT
market by increasing its investment in Corero Network Security
Plc (Corero) by 4,3m shares to 8,3m shares, representing an 8%
interest in Corero, for US$1,1m and also added new investments
in FireEye, Palo Alto Networks and Splunk to its offshore
general equity portfolio in an amount of $1,0m – a total
investment in the cyber security sector of $3,2m at cost;
– 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;
– sold 525 081 shares in Brait SE realising R38m, and reducing
its holding to 1 000 000 shares; and
– cancelled all of the Sabvest ordinary and Sabvest “N” ordinary
shares held by a subsidiary and by the share trust with the
result that there are now 17 076 804 ordinary shares and
28 883 000 “N” ordinary shares in issue and no treasury shares
held.
Subsequent to the reporting date:
– agreements entered into in November 2014 became effective in
February 2015 resulting in Sabvest’s interest in Sunspray
reducing from 48% to 22% in a new structure in which Shalamuka
Capital, RMB Corvest and management are co-invested with
Sabvest. The reduction in interest resulted in a net amount of
R48,5m being received by Sabvest in February 2015;
– the board of Set Point Group (Pty) Limited (SPG) received a
proposal from Torre to conclude a scheme of arrangement which
would result in SPG becoming a wholly owned subsidiary of
Torre and SPG shareholders receiving Torre shares in exchange.
Sabvest, which owns 49,9% of SPG, has indicated that it will
support the proposal. If it is approved Sabvest will receive
approximately 37m Torre shares at 500 cents per share (subject
to top-up and claw-back mechanisms relating to warranties by
SPG and Torre). Accordingly, relative to the carrying value of
Sabvest’s interest in SPG at the financial year-end, Sabvest
will book a gain of R62m at the transaction price (which may
reduce or increase depending on the adjustment mechanism); and
– Sabvest increased its investment in Transaction Capital
Limited by 2m shares to 5m shares for R16,9m.
FINANCIAL RESULTS
Sabvest recorded satisfactory results for the 2014 financial year
although not at the record levels of the prior financial year.
HEPS decreased by 27% to 445 cents per share.
NAV increased by 14% to 2 683 cents per share. This increase
would have been 18% if the special dividend of 100 cents per
share in 2014 had not been paid.
Income after taxation decreased by 27% to R205m. Although lower
than the prior year, the level of dividend income and the fair
value adjustments were satisfactory and in line with budgets.
Overheads increased due to provisions for incentive bonuses and
LTIPs which were higher in the previous period.
Shareholders’ funds increased by 14% to R1,233m.
The group’s debt levels remain conservative. Internationally,
borrowings amounted to R64m which are directly utilised to fund
the foreign portfolio. In South Africa the group increased its
medium-term debt to R60m which falls due in 2017 and 2018.
Locally, short-term debt was negligible and subsequent to the
year-end the group is in a net cash position due to the Sunspray
receipt.
LISTED INVESTMENTS
Sabvest’s JSE-listed investments performed according to
expectations with particularly strong operating performances from
Brait, Metrofile and Transaction Capital.
Torre achieved results in line with expectations. If the SPG
transaction is concluded by Torre, Sabvest expects to hold 60m
Torre shares with a market value of R300m, representing a 12%
interest in Torre. Sabvest has high expectations for the
successful execution of Torre’s strategy and its future
positioning and growth in its selected industrial markets.
The foreign portfolio is held through a ring-fenced entity
capitalised to the extent of US$8,9m and geared only on the
security of the underlying portfolio. At the reporting date it
comprised the equity investment in Corero, 23 shares and 6 bonds
and bond funds. Full details of the portfolio are available on
Sabvest’s website. The returns for 2014 were 7,6% on average
equity (excluding Corero) in US dollars (2013: 24,7%).
UNLISTED INVESTMENTS
Unlisted investments are fair valued using the maintainable
earnings model (NOPAT), a multiple of NOPAT unchanged from prior
year, and adjusting for net cash/investments and interest-bearing
debt. The investment in Sunspray was valued based on the expected
receipt from the transaction concluded in November 2014. The
investment in SPG was valued on a multiple basis as above, taking
no account of the possible transaction with Torre.
The effect of the fair value measurement for the year through
profit and loss relating to the unlisted investments was R93m
(2013: R181,9m) before providing for deferred CGT.
With regard to the performance of our unlisted investments:
– the international operations of SA Bias Industries through its
International Trimmings and Labels and Flowmax Group divisions
performed satisfactorily. The South African operations faced a
difficult economic environment but produced a satisfactory
result;
– SPG again experienced difficult trading conditions due to the
disruptions and weaker levels of activity in the mining and
related industries but is well positioned for a return to
growth; and
– Sunspray performed well with a satisfactory increase in
profitability.
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.
The group advised shareholders in October 2013 that the board was
considering ways to use its remaining STC credits before they
expired. To this end a special dividend of 100 cents per share
was declared and paid in December 2013 and a second and final
special dividend of 100 cents per share was declared and paid in
August 2014.
Normal dividends are considered twice annually. The dividend for
the year was increased by 7% to 43 cents per share. The group
utilised its remaining STC credits and no withholding tax on
dividends has been deducted for any shareholders.
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
The 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 for preliminary reports
and the requirements of the Companies Act of South Africa.
The financial statements 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. 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 2014.
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 CA(SA).
AUDIT OPINION
The auditors, Deloitte & Touche, have issued an unmodified audit
opinion on the consolidated and separate financial statements for
the year ended 31 December 2014. Their audit was conducted in
accordance with the International Standards of Auditing. The
summary financial information presented has been derived from the
audited financial statements for the year ended 31 December 2014.
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 its 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 on
the full consolidated and separate financial statements and
report on this consolidated summarised financial information are
available for inspection at the company’s registered office.
PROSPECTS
The group’s unlisted investee companies are budgeting for
improved profitability in 2015.
The group’s listed investee companies are performing to
expectation. However, future movements in share prices are
obviously uncertain.
Overall we anticipate a satisfactory year for the group in 2015.
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 Raymond Pleaner
Chairman CEO CFO
Sandton
27 February 2015
CASH DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend of 25 cents
(2013: 22 cents) per ordinary share and “N” ordinary share, out
of income reserves, for the twelve months ended 31 December 2014
has been declared.
The issued share capital at the declaration date is 17 076 804
ordinary shares and 28 883 000 “N” ordinary shares. The income
tax number of the company is 9375/105/716.
The company has utilised STC credits amounting to 25 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 Friday, 20 March 2015
Trading “EX” dividend commences Monday, 23 March 2015
Record date Friday, 27 March 2015
Dividend payment date Monday, 30 March 2015
No dematerialisation or rematerialisation of share certificates
will be allowed during the period Monday, 23 March 2015 to
Friday, 27 March 2015, 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: 26/02/2015 05:28:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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